Skip to main content

Flashback: at MTA board meeting and in affidavit, agency officials misleadingly suggested that platform over railyard was prerequisite to Forest City reaping revenue

Forest City Ratner's plan to build four towers on the southeast block of the Atlantic Yards site before constructing a platform for construction over the Vanderbilt Yard not only raises questions about whether the project would remove blight in a timely fashion, as I wrote 10/23/12, it also places litigation over the railyard in a new light.

After all, one justification for a revised 2009 deal for the railyard, as detailed in an affidavit from the then-Chairman of the Metropolitan Transportation Authority (MTA) Dale Hemmerdinger, was that the platform must be built before Forest City could start earning revenue.

That was misleading then, because there were other places for Forest City to build. And it's even more misleading now.

Current plans

As I reported last month, one investment analyst asked if, given the rents today, whether building a platform for towers over the railyard works. (The far western segment of the railyard, perhaps one-fourth of the 8.5 acres, has already been used for part of the arena block.)

Platform designs, executive MaryAnne Gilmartin said, "have become quite sophisticated and simplified at the same time," given other developers' plans to build on the West Side Yards in Manhattan and other projects.

While Forest City has planned scenarios "where we build the platform at certain estimated costs," she said, "certainly the focus of the day is the arena block... There's a second block, 1129, which is terra firma... These four buildings here... we have seven buildings that we we will build before we commence construction on any platform buildings. And so, we're working on it, but I can tell you that the focus today is on the arena block."

The MTA lawsuit: platform crucial?

Several groups, led by Develop Don't Destroy Brooklyn, sued unsuccessfully to annul the 2009 revision of the Vanderbilt Yard deal, in which Forest City, instead of paying $100 million for railyard development rights up front, would put $20 million down and have up to 21 years to pay the rest, at a gentle interest rate. It also could build a smaller permanent replacement railyard than originally approved.

In an affidavit, Hemmerdinger stated: "The board also took into consideration the 'tremendous up front investment by the buyer to actually build the platform' over the VD [Vanderbilt] Yard, which must be made before the developer can build the revenue generating portions of the proposal."

His statement pointed to page 4 of the transcript, which referred to comments by board member Mark Page
So, what we are selling is the space above [the rail yard] and to have an opportunity to actually realize value for the space above our land requires a tremendous up front investment by the buyer to actually build the platform which comes in up front expensive major investment before the buyer can then move on to building whatever they are going to build which would ultimately enable them to realize revenue to pay for all of this."
Misleading statements

The statements from both Hemmerdinger and Page, though not quite the same, are misleading. But both leave the impression that, only only after building the platform could Forest City realize value from its investment.

Not so.

Yes, only the platform would produce revenue from the air rights directly above it.

However, the MTA deal unlocked the revenue-generating potential for the entire project, including the arena; the towers around it on the arena block; and towers on the rest of the project site outside the Vanderbilt Yard.

Those latter towers include the southeast block; Site 5 (on the west side of Flatbush Avenue); and even the site just east of Sixth Avenue between Dean and Pacific streets.

What's different now?

What's different between then and now?

Now we know for sure that Forest City plans to build on the southeast block before building a platform, rather than proceeding--as once suggested--in a more methodical clockwise fashion, building on both the railyard and adjacent land.

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…