Thursday, November 29, 2012

FAQ on Forest City Ratner's B2 plans: timing, cost ($24M less than 80 DeKalb), profits, workers, union deal, affordability

Updated with new numbers about the cost of the building.

Some questions and answers regarding what's known about Forest City Ratner's plans for B2, the first residential tower in the Atlantic Yards project, claimed to be cheaper, faster, greener--and with less impact on the surroundings (though see questions for tonight's community meeting.)

So, why did Forest City Ratner wait until yesterday to announce that B2 would be modular, given there was much evidence that plan was already in place?

As Gib Veconi wrote in Prospect Heights Patch:
But as we found out yesterday from the New York Times, the factory has been in operation for some time. Because modular construction means fewer jobs and lower pay for construction workers, the more practical reason for the delay in announcing the use of modular has more to do with negotiating a deal with their unions who were strong initial supporters of the project. 
Image via NY Daily News
I'd add that they also had to get a financing deal in place. But the announcement was well coordinated: a scoop for the New York Times, with questions unanswered, then a press release (below).

What will the building look like?

Check the image at left, from the Daily News. Then consider the perspective, from a hovercraft, given how small the arena looks. From the street, however, there should be glass.

How much will the building cost? How does it compare to other buildings, notably Forest City Ratner's 80 DeKalb? (Updated with NYC HDC figures.)

In a little noticed companion press release (also below), the firm Skanska announced that the contract to build the tallest modular building in the United States--they're not saying the world, perhaps because of plans in China to build much bigger--at $117 million.

Beyond that, information from the New York City Housing Development Corporation (NYC HDC) puts the total at $183 million, including a tax-exempt first mortgage of nearly $92 million, an HDC second mortgage of $11.6 million, $10.7 million and Forest City equity of $68.7 million.

That latter figure, however, includes a $34.3 million land acquisition cost, which suggests that Forest City has had to raise only $34.4 million in outside financing.

So this does look like a better deal for Forest City Ratner than the similar 80 DeKalb Avenue tower, which Forest City Ratner regarded as a test run for Atlantic Yards housing. That building cost $207.3 million, including $109.5 million in tax-exempt bonds and $27.5 million in taxable bonds from the New York State Housing Finance Agency. (See graphic below.)

Also note that the $117 million construction cost announced by Skanska leaves $3 million in wiggle room, given the NYC HDC figure of $120 million in construction costs.

The numbers for 80 DeKalb
Will Forest City Ratner reach its goal of $161/square foot for modular construction (excluding such things as foundation work and elevators) as described in negotiations with a previous firm?

It appears so. The Skanska press release stated:
As part of the contract, Skanska will subcontract approximately $56 million to a company created together with FCRC, called FC+Skanska Modular, LLC. The new company will fabricate the modular components of the building in a 150,694 square-feet factory located in the Brooklyn Navy Yard.
340,000 square feet multiplied by $161/sf comes out to $54.74 million.

When will the building be finished?

The Forest City and Skanska press releases both said 2014. The Daily News reported that the developer said summer 2014. Note that the groundbreaking date has been repeatedly pushed back.

Who'll get the benefit of the profits?

The Daily News reported:
"The idea is to make the development more cost effective," said William Flemming, president and CEO of Skanska USA Building. "How they pass along the savings to the end user is up to them. This is not a new type of building. We're working to perfect it with each new project type."
Forest City Ratner executive MaryAnne Gilmartin told investment analysts last month:
"We believe if we go modular, it would be invisible to the consumer. This building should perform at the level of finish, fit and feel commensurate with a conventional building, so it is priced accordingly."
Does modular mean cookie-cutter?

Forest City says no. As noted in the Daily News, "There will be 23 different unit types with 64 variations."

How many workers will there be at the factory?

The Forest City press release stated, "They estimate that there will be 125 unionized workers employed at the fabrication facility beginning in late spring, 2012 when modular production is fully under way."

However, Curbed reported in November 2011:
Aaaaand about those unions: though only 40% of the labor force will work onsite, the labor required at the factory adds up to what the developer claims is the same amount of total labor hired for the project, around 190 workers.
I interpreted that as meaning 190 people would work in the factory. But if 125 workers represent 60% of the total, the total would be about 208 workers. So maybe 190 is the total.

Update: There will be 125 union workers and 25 supervisors at the factory, according to Forest City Ratner. That means additional workers on site.

Will there still be 15,000 or 17,000 construction jobs, in job-years? 

So claimed Forest City spokesman Joe DePlasco last November. Ratner told the Times last November that modular construction would "probably" require the same number of workers. In calculations yesterday, I suggested the number of workers could be cut by more than 50%.

(A commenter disagreed with my math, but let's see if more details emerge.)

Update: Forest City says the number of man-hours will be approximately the same, but wouldn't answer a question about a similar calculation: the number of job-years involved.

What do the unions say?

From the Forest City press release:
Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said, “Today, we move forward with an innovative approach to development that will allow us to realize the vision of the Atlantic Yards project and create traditional construction jobs that may otherwise have been at risk. And as we bring training, skill, quality and safety to modular construction through a strong labor-management partnership on this project, we see the potential to have this approach improve our competitiveness elsewhere in the local market and expand into an export industry to create even more sustainable union jobs that pay good wages and benefits.”
From the Times:
Under the new agreement, Mr. La Barbera said union factory workers would earn $55,000 a year, 25 percent less than the average union construction worker. But, he said, the trade-off is that the factory worker will work steady hours throughout the year, regardless of the weather.
“We see this as an opportunity to get into markets we’re not in,” Mr. La Barbera said. We can’t ignore an emerging industry. We see it as creating more job opportunities in residential construction.”
From the Daily News:
"The industry is evolving and we have to evolve with it," said Gary La Barbera, president of the Building and Construction Trades Council of Greater New York. "This is an area that we are not actively involved in. It opens up new markets for us and allows us to make inroads with residential and affordable building, two areas we need to do better."
And the pay cut?
"It's not a pay cut," said La Barbera. "We're trying to create jobs for our members. I mean this as a 125-person modular jobs and we have 100,000 members. Also, the first six months of this job are no different than a regular job with site excavation and building the steel structure. This whole thing is a win-win for everyone."
Do those arguments make sense?

Maybe. Partly. There is a clear pay cut. The number of workers at Atlantic Yards seems to be far fewer than the number promised, with the wages lower. 

However, if this new industry is successful--and questions remain--it could mean more union jobs overall. But could there be union work at the factory, with non-union jobs outside the factory?

The unions, interestingly enough, apparently agreed that they didn't have enough leverage to maintain the original Atlantic Yards promises. Given that Forest City Ratner promised to build union, it would seem that the unions had great leverage.

Would half "of the 363 apartments... be for poor and working-class families," as the Times suggested yesterday?

No. That's sloppy shorthand for subsidized, "affordable" units for low- to moderate-income households, with the highest "affordable" rents currently estimated at $2,700 a month for a two-bedroom unit--below market, but hardly cheap.

There will be 150 studios (41%), 165 one bedroom (46%) and 48 two bedrooms (13%). Most of the "families" will be pretty small, though 20% of the affordable units will be two-bedroom units.

How does that compare to initial promises, that 50% of the affordable units, in terms of floor area, would be two- and three-bedroom units?

Way off. There aren't even any three-bedroom units.

Why is that?

Because the city offers subsidy per unit, not per bedroom, and it costs Forest City more to build larger units. Also, the city and Forest City's Community Benefits Agreement partners have pushed back only partially, accepting a deviation from the pledge.

Also, I suspect that it's far easier to rent high-cost market-rate units to transient singles and couples, rather than families raising kids. Who wants to raise kids next to an arena, with crowds most nights a week in the early evening? Remember, the towers around the arena were originally supposed to be office buildings, with the tenants leaving the premises before arena events.

What will the building look like?

See graphics up top and zoning diagram at right (also below, in PDF). From the Forest City press release:
The exterior of the building will have a series of setbacks that have been articulated and integrated into the overall building’s massing. In addition to these volumetric breaks a variety of materials, colors and fabrication techniques have been utilized to create an intricate play of light, pattern and texture over the fa├žade. Deep metal frames cantilever beyond the glazed openings of the residential units, each being accented by a series of beveled and perforated metal panels. The inlaid metal panels are dressed with accents of color, heightening the play of light and shadow across their smooth and articulated surfaces. At grade, full story glazed storefronts will be accented by covered entrances to the three new towers extending a more scaled intimacy, typical of Brooklyn’s streetscape along all the elevations of the arena site.
Has journalism on this been tough?

Here's a comment on the Daily News article: "We know that the NYDN is in the tank for the Barclays Center, home of Daily News Plaza. Now in the tank for Bruce Ratner as well? Rewritten press release above."


Modular Building Release b 2 Zoning Diagram A source-provided video  Attached to the Times article yesterday was a nifty animation, with all the modules popping in together, without any human intervention. No source was provided.  
On this Times video page, however, and on the link from the embedded video, it's clear the source is the engineering firm Arup, a partner in the venture with Forest City Ratner.

5 comments:

  1. Anonymous8:28 AM

    Anything about the Rusty Turtle's rust dripping problems, as reported in NY Times?

    ReplyDelete
    Replies
    1. Can you point to the specific source? The whole idea of *pre*rusting the arena facade was to minimize dripping.

      Delete
  2. Anonymous2:11 PM

    NY Times last 1/3 of this article. Buried.
    http://www.nytimes.com/2012/11/27/nyregion/house-featured-in-radio-days-survives-hurricane.html?_r=0

    ReplyDelete
    Replies
    1. Thanks for pointing this out. Was traveling.

      The relevant paragraphs:

      "The deliberately rusted facade has dripped patches of bright orange onto some of the surrounding sidewalks, and left them looking as though a very tall and mischievous teenager had gone at them with a can of pumpkin-colored spray paint.

      ...Joe DePlasco, a spokesman for the Barclays Center, said in an e-mail that the arena staff had expected the discoloration and planned to clean the sidewalk with, essentially, a 'sidewalk power wash,' sometime in the next few weeks and then again as needed."

      Well, pre-rusting was not expected to accomplish everything. So some dripping may be expected. Then again, the potential for such dripping on the sidewalk was not, to my knowledge, publicly disclosed or analyzed.

      Delete
  3. Modular construction off site will require significantly less labor than conventional construction. Also, since the bulk of the workers in the modular shops will be shop carpenters and shop electricians who make way less than their field counterparts, the bulk of the remaining work will be done for significantly less pay.

    That's why Ratner and Skanska like it.

    ReplyDelete