Thursday, December 12, 2013

Was Atlantic Yards a lesson in asking developers for too much? Ratner made the promises

I'm astounded how Forest City Ratner's mistakes and bad luck in proposing Atlantic Yards have been transformed into Stephen J. Smith's Next City post, How Atlantic Yards Set the Benchmark for Asking Too Much:
Unbeknownst to even Ratner himself, the developer performed a great act of charity for the city: He subsidized affordable housing to the tune of hundreds of millions of dollars. The company admitted this in a Securities and Exchange Commission filing this week, in which it revealed the value of its initial $500 million investment to be half that, at most, taking a write-down of between $250 million and $350 million once the project sells to Chinese developer Greenland Group.

...And it wasn’t necessarily the recession that killed the project’s finances. (After all, the New York City real estate market has largely returned to its pre-crash peak.) Instead it was higher-than-expected costs and, if you believe the company, delays caused by the project’s controversy.
The loss is poetic justice for a developer who many saw as using his political savvy to take advantage of New York, but it should give pause to affordable housing advocates and those who want to see new construction fund infrastructure projects. The costs that sunk the project turn out to be the very things that many people want the city ask for more of in the future:
...Turns out it’s possible to ask developers for too much. New York may have inadvertently pulled one over on Ratner to get hundreds of millions in extra benefits, but developers in the future won’t make the same mistake.
My comments:
Way too conclusory on several levels: "He subsidized affordable housing to the tune of hundreds of millions of dollars." Wait til that affordable housing is built, and we'll see how it's produced/financed. Also consider Ratner's 5% development fee, and how much of the infrastructure cost was driven by the arena, not the housing.
"Turns out it’s possible to ask developers for too much." You gotta be kidding. Neither the city nor state *asked* Ratner to build the affordable housing. He came up with the program, and used it to muscle aside any competition for the site and subsidies.
We'll see how it all turns out; Atlantic Yards is a #NeverSayNever project.

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