Thursday, October 24, 2013

Veconi on Forest City's planned deal with Greenland to sell 70% of Atlantic Yards: scrutiny and oversight needed

Prospect Heights resident and BrooklynSpeaks leader Gib Veconi weighs in on the recent news--broken by the Wall Street Journal and, bizarrely, not followed up by the other dailies--that a Chinese government-owned company, Greenland Group, has signed a memorandum of understanding with Forest City Ratner Companies to buy 70% of the remaining 15-tower plan.

In Atlantic Yards, Pacific Investors: Will the Greenland deal really speed construction? Governor Cuomo better get it in writing., Veconi, writing in Prospect Heights Patch, questions some of the rhetoric:
And Forest City's press release quoted Mayor Michael Bloomberg as saying, "This investment would allow us to move forward with one of the most ambitious affordable housing programs in our City's history," as if any housing at the Atlantic Yards site was dependent upon the closing of the proposed transaction, instead of being an obligation of a deal signed four years ago between Forest City and the State of New York.
It is of course an obligation, but the deal might either move it ahead faster or allow it to proceed as agreed to with a (seemingly typical) renegotiation of terms.

Despite the posturing, Veconi points to previous promises unfulfilled, such as regarding the timing of the project and the promised office jobs (actually in four towers, not the one on-hold tower at the intersection of Flatbush and Atlantic avenues).

Veconi suggests that "one probable result of the Greenland transaction is that Forest City will be taking money out of Atlantic Yards before the project has delivered any of its promised public benefits," though the public will not have gotten a return on its subsidies.

Who's in charge?

He warns of future choppy waters:
Since Greenland would be on the hook to provide most of the future capital, it’s very likely it will also demand representation in decision-making about the schedule for future development as part of the final deal with Forest City. Maybe that’s why in its most recent 10-Q filed with the SEC, Forest City Enterprises disclosed its search for a joint venture partner at Atlantic Yards by stating, "if we are successful, it could result in forming joint ventures whereby we grant joint control or lose control of the asset."
And Greenland Holdings is owned by the government of China. While we may not find any problem with Chinese investment in New York City real estate, the idea that a foreign government could have a say on when affordable housing is made available to Brooklyn residents in danger of displacement is another question entirely. That possibility is particularly galling given the continuous calls for reform of Atlantic Yards oversight made by civic groups, affordable housing organizations and elected officials since the project’s approval in 2006. If it has been difficult for the public, its elected representatives, and the ESDC to get Forest City Ratner to deliver on its commitments, how much more influence can they expect in Beijing?
What next?

His bottom line: not only must ESDC finish the "study of development alternatives required by the court-ordered environmental impact statement," including the option of bidding out sites to other developers.

If does move forward with Greenland, new commitments regarding timing and oversight must be made in writing, with "terms worked out in conjunction with elected officials representing the communities surrounding the Atlantic Yards site."

That could be a major step up. After all, the Chinese government, despite the rhetoric in the initial press release, doesn't give a fig about affordable housing in Brooklyn. It's in this to make money, and has even fewer obligations to the public--or fear of future government pressure--than a local company.

The time for government pressure is before this deal closes, not after.

Here's the full column.

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