Skip to main content

Fred Siegel: like Bloomberg, de Blasio supported Barclays Center "crony capitalism"; FCR adjusts explanation regarding Atlantic Yards delays

In Fred Siegel on the future of New York City under Mayor de Blasio: A Public Sector Inc.org Q&A, published 11/6/13, Fred Siegel, author and a senior fellow of the Manhattan Institute’s Center for State and Local Leadership, suggested that some things will change under new Mayor Bill de Blasio, and some won't.:
What won’t change under de Blasio is the sense of the city being run on a top-bottom basis. De Blasio has no more interest in the middle class than Bloomberg did. He has an interest in the well-to-do as a source of funds to tap to provide benefits to his core constituency on the lower end of the population. But neither of them have much concern for New York’s losing its middle class population. I think people are going to be surprised to the degree of similarities than they might expect. In both cases you’ll have considerable cases of crony capitalism. The outstanding example of crony capitalism in the Bloomberg years is the building of the Barclays Center in Atlantic Yards. That was a billion dollars in subsidies from the city and the state combined and that was supported by both Bloomberg and de Blasio.
Actually, if de Blasio is interested in replicating the subsidized housing planned for Atlantic Yards, that 50% market/30% moderate- or middle-income/20% low-income model would help the middle-class, and more than poor.

That illustrates a lesser-known aspect of the Atlantic Yards "affordable housing": though it was "negotiated" by ACORN and will be managed by successor group New York Communities for Change, likely more than half the subsidized units will go to households far better off than ACORN's long-time constituency.

Siegel's right that there's continuity regarding "crony capitalism" and Atlantic Yards. A billion dollars in subsidies? Well, no. According to figures revised from the Independent Budget Office report, the overall benefit--tax breaks and subsidies--approaches $700 million.

Then again, that figure omits the freebie of naming rights the state gave Forest City Ratner to sell--another $200 million. And it also doesn't count the enormously clever financing scheme which involves PILOTS (payments in lieu of taxes) directed to pay off the construction bonds rather than go to the city treasury.

Cause of Action's report gets TV exposure, new FCR explanation

Beyond the Real Deal, the only local news outlet to take on the Cause of Action report on Forest City Enterprises has been WPIX/11, which offered Barclays developer accused of taking taxpayer dollars, but not delivering on promises.

This is 1) true 2) not really new, and 3) not in violation of any of the loose deadlines set in state contracts. "We intend to meet all of our commitments, as we've been doing all along," said Forest City Ratner spokesman Joe DePlasco.

What's interesting is that DePlasco told WPIX that construction delays were "initially caused" by a lawsuit, then worsened during the economic crisis. That's a distinct shift from last week's explanation, which blamed only lawsuits.

Of course, Forest City itself made unrealistic plans and promoted unrealistic timetables. As I reported last week, CEO Bruce Ratner once said it would it will take probably another five or six years to complete all the housing" and deputy Jim Stuckey claimed "we hope to do better than" the announced ten-year timeline. Instead, Forest City negotiated a 25-year deadline.

The WPIX report ends with Gib Veconi of the Prospect Heights Neighborhood Development Council, who says, regarding the planned investment by Chinese government-owned Greenland Group, "this time we need written commitments that are enforceable," with oversight by local elected officials.

Tighe pushes AY

New York Post real estate columnist Steve Cuozzo today published Mayor Bill de Blasio’s real estate to-do list, which, among other people, quoted Mary Ann Tighe, Tri-state region CEO, CBRE:
There is no choosing between the World Trade Center, Hudson Yards and Atlantic Yards. Those ships have already been launched, and the de Blasio administration will benefit mightily from each.
Tighe, who regularly works for Forest City Ratner, might have a little bit of a conflict here, but of course that doesn't get pointed out. Yes, the Atlantic Yards "ship" has already been launched, but there's a lot of room for course correction, including the mayor's hand on the subsidy spigot, new oversight, and any role in approving the planned new Chinese investor.

Two de Blasio plans with AY implications

Crain's New York Business on 11/10/13 offered New mayor's to-do list, including two relevant to Atlantic Yards.
CREATE OR PRESERVE 200,000 AFFORDABLE-HOUSING UNITS: Mr. de Blasio's 10-year plan relies on zoning bonuses coupled with mandates for developers. He can simply direct his planning commissioner to require affordable housing with any zoning change. Industry insiders say forcing its construction will actually prevent it. Difficulty rating: 4 [Heavy lift]
I wouldn't be surprised if Forest City Ratner's modular factory, assuming no further snags, becomes a model for de Blasio's policy, and perhaps receives special subsidies or innovation grants.
MOVE MADISON SQUARE GARDEN: The city has already limited the Garden's land-use permit to 10 years. But that extends beyond Mr. de Blasio's maximum tenure. Finding a site and getting MSG's approval remain challenges. Difficulty rating: 2 [Just a matter of time]
de Blasio has been a steady critic of Madison Square Garden, less to enable a new Penn Station but rather to support the Communications Workers of America, who've been battling MSG owner Cablevision. The Garden's just been renovated and surely will put up a fight. If a new MSG is on the way, this might leave the Barclays Center--for an interim period or even longer--the city's leading arena.

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…