On October 3, Atlantic Yards developer Forest City Ratner for the second time pushed back its obligation to formally start a new railyard to store and service Long Island Rail Road (LIRR) trains in Brooklyn near the Barclays Center.
The Metropolitan Transportation Authority (MTA) again asserts the deal “enhances the position of the MTA and LIRR,” because Forest City must post a $10 million guarantee to perform continuing work for six months, “with no change to the scheduled completion date [September 2016] or diminution of our underlying security.”
Then again, by delaying the official start date to June 2014 from December 31 of this year, Forest City gets six more months to post a full completion guarantee, which would put additional capital at risk. (The MTA would not specify the value of that guarantee, deferring to Forest City.)
The agreement also gives Forest City time to share the risk with the new investors it's seeking for the overall Atlantic Yards project, which involves 15 additional towers beyond the one under construction. Indeed, as was revealed last week, the MTA deal was signed right after Forest City signed a memorandum of understanding (MOU) with potential investors.
While this is hardly the most dramatic renegotiation between the MTA and Forest City regarding Atlantic Yards, it's another sign that deals can be reopened. That pattern raises questions about whether more weighty Forest City obligations—finishing the new railyard, paying off railyard development rights, and building the platform needed to exercise those development rights and thus construct all the promised affordable housing—will get renegotiated.
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…