Skip to main content

The Culture of Cheating: after Forest City claimed "We do not expect to ask for more subsidy," they started asking for more

It wasn't a lie, but it sure doesn't look like forthrightness, either. Consider it part of the "culture of cheating" that pervades Atlantic Yards.

Let's go back to a July 2009 Q&A sponsored by the Empire State Development Corporation (ESDC), as a prelude to a public hearing on re-approval of the Atlantic Yards plan, and one of the few times Forest City Ratner executives have been subjected to challenging questions from the public.

"Has Forest City Ratner asked the city and/or state for additional subsidies, including 'extraordinary infrastructure costs'?" asked moderator Craig Hammerman, District Manager of Community Board 6, reading a question from the audience. "If so, how much and, to Forest City Ratner, do you anticipate asking for more subsidies?"

ESDC attorney Steve Matlin responded, “I think on every project that ESDC has been involved in, the developer always asks for more, and there’s always a dialogue and always a negotiation. The level of state commitment has remained the same; it’s a hundred million dollars.”

He did not answer whether FCR hac asked the city for additional subsidies; indeed, the city, not the state, had already increased its commitment. (The new sum was originally announced at $105 million but city officials later claimed it was $79 million.)

Querying Forest City

Hammerman followed up: “Does Forest City Ratner anticipate asking for more?”


(Video by Jonathan Barkey)

A union member in the audience heckled, “If these guys keep holding the project up, up, they’ll need more.”

FCR Executive VP MaryAnne Gilmartin smiled as she took the microphone and waited for the hubbub to die down.

“Forest City does not expect to ask for more subsidy,” she responded carefully, then put the microphone down. There was no follow-up.

Yes, there was no mention about housing subsidies. But housing could certainly qualify.

Asking for more

Indeed, some 16 months later, it was clear Forest City had changed its tune regarding housing subsidies.

As I reported Aug. 26 in an article for City Limits' Brooklyn Bureau, in November 2010, Gilmartin, who oversees Atlantic Yards, sent a note to Marc Jahr, head of the New York City Housing Development Corporation, and Rafael Cestero, then the Commissioner of the city Department of Housing, Preservation, and Development (HPD).

"I continue to believe that if HPD successfully addresses our $10m subsidy request, we can convince our [Board of Directors] to rally behind a 2011 start date," she wrote.

As reported, HPD did not add $10 million, but city agencies made other concessions. And it's quite likely that $10 million request had been pending for a while.

Part of a pattern

Forest City Ratner tends to ask for more from the government.

Indeed, a telling episodes in the Atlantic Yards saga came in a 4/2/08 earnings conference call that parent Forest City Enterprises (FCE) held with investment analysis. Then-CEO Chuck Ratner expressed satisfaction in the developer’s relationship with local government, and said he expected more support.

At the time of the call, Forest City Ratner, FCE's New York subsidiary, had gained $105 million in city subsidies on top of the initially pledged $200 million from the city and state. (City officials now say total city subsidies are $179 million or $171.5 million, not $205 million.)

Since then, FCR gained (beyond other stated subsidies and tax breaks):
  • a speed-up in delivery of pledged state and city subsidies
  • an additional $31 million for land purchase (allegedly from infrastructure funds)
  • a revised deal with the Metropolitan Transportation Authority for the Vanderbilt Yard, with only $20 million down (instead of $100 million), a smaller permanent yard, and a generous 6.5% interest rate to pay back the remaining $80 million
  • a Development Agreement with gentle penalties and generous deadlines (12 years for Phase 1, 25 years for Phase 2)
Upcoming--and hinted at in the call--was the developer's effort to claim scarce subsidies for affordable housing.

Registering success, looking for more

"[J]ust in these past six or eight months, we got the various governmental agencies, state, city, borough, in New York, to increase their commitments to Atlantic Yards by $105 million on top of the 200 [million] they committed," Ratner said. "We still need more."

We still need more.

That's has nothing to do with being a "civic developer," a phrase Bruce Ratner likes to say. That has to do with delivering for shareholders.

"So you look at New York and you realize it’s a huge city, with, obviously, huge challenges and issues, but there’s very few major things that are happening, that are gonna happen," Chuck Ratner continued. "We’re one of the few in these places that continue to offer opportunities for development, in these major urban markets. They clearly have the resources to support them and I think they’ll put them toward these projects."

Then-COO Joanne Minieri chimed in: "With respect to New York, the city and the state, they really put an emphasis on affordable housing programs… a project like Atlantic Yards, of such significance, really furthers their commitment to the housing program. So as I said… we work very closely with them, because it’s a public-private partnership that will enable us to all come together."

In other words, she hinted, Forest City would be asking for more subsidy for the housing program.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…