Skip to main content

Before MTA Committee meets, Staff Summary positive toward Forest City's proposal to move ahead on platform work while pushing back permanent railyard

It looks routine. Tomorrow, the Metropolitan Transportation Authority's Long Island Rail Road Committee will discuss Forest City Ratner's proposal to move ahead on building of the platform needed for vertical development over the Vanderbilt Yard, while asking for 15 months' delay in the required completion of a permanent railyard.

A Staff Summary (below) provided to the committee looks favorably on the proposal: the platform work would be helpful, while the delay in the railyard is acceptable, because the permanent railyard was needed to support the East Side Access project bringing trains to Grand Central Statement, which is delayed:
This proposed amendment is in the MTA's interest, as progressing the construction of foundation work for the overbuild platform for the air space development, at the same time as the LlRR Permanent Yard is constructed, would eliminate significant future disruption to operations in the LlRR Permanent Yard after its completion. The extension of the construction completion deadline will not have a detrimental effect on LlRR's operation, as completion of the L1RR Permanent Yard was initially scheduled to coincide with the completion of the East Side Access project, which has been delayed, and in the meanwhile the LlRR Temporary Yard that FCR has provided will continue to suffice for all of LlRR's purposes. 
So I don't expect a lot of dissent, nor on Wednesday, June 25, when the MTA's full board should approve the plan. MTA Headquarters, 347 Madison Avenue (44th-45th Streets), 5th Floor Board Room, 10 am.

After all, the MTA is controlled by the governor and mayor, who support Atlantic Yards.

The plan and the pitfalls

The railyard is used to store and service LIRR trains. Previously, it operated in the western segment of the Vanderbilt Yard, now part of the Barclays Center. A temporary railyard was built to the east, presaging a larger, modernized yard.

As I wrote 4/29/14, the permanent railyard, with capacity for 56 cars (though it was supposed to be bigger), is supposed to be finished by 9/1/16. Forest City twice got the MTA to push back the deadline to formally start the permanent railyard and post the completion guaranty for the work.

Under Forest City's new proposal, the current deadline to post that completion guarantee, 6/30/14, would remain. But Forest City wants an extension of the deadline to finish the permanent year to 12/1/17.

The public material leaves some fuzziness. As I wrote, Forest City Ratner's letter about the plan does not estimate exactly how much time would be saved, how much of the necessary work would be completed, or when the platform would be built.

Forest City has until 2025 to start the platform, which is needed to construct six towers over the below-grade railyard, the clearest example of the blight the project was supposed to remove. There's no timetable to build the platform, though the proposed work is described as accelerating progress on it.

Also, I'd suggest, an agreement by the MTA on Forest City's plan to proceed with partial foundation work would make it more difficult to unwind the deal should Forest City and its joint venture partner, the Chinese government-owned Greenland Group, not meet promised milestones.

Similarly, partial progress could give the joint venture leverage to gain future extensions or concessions in renegotiations. Beyond the deadline for the permanent yard, the Vanderbilt Yard deal, announced in 2005, was subject to a major renegotiation in 2009 in Forest City Ratner's favor.

A new Tech Memo from ESD

According to the MTA Staff Summary, lead agency Empire State Development (ESD) has completed a Technical Memorandum, which concludes that the extension of the permanent yard completion date will have no significant environmental impact not previously addressed.

That document is not yet public, but I will try to get a copy.

MTA Staff Summary

According to the Staff Summary (below)
To request authorization for the Chairman and/or his designee( s) to enter into amended project agreement( s) ( 1) permitting the developer of the Atlantic Yards overbuild project to commence early construction of overbuild platform foundations, simultaneously with its construction of the LIRR permanent yard facilities, and (2) in consideration of the expanded scope of work, and upon the posting of an additional guaranty, extending the completion deadline for the LIRR permanent yard from September 1, 2016 until December 1, 2017,
In June, 2009, the Board authorized the Chairman and/or Executive Director and their designees to enter into contracts with entities associated with the Forest City Ratner Companies ("FCR") which, among other things: (1) authorized the sale to FCR of a fee interest in property that did not have a continued transportation use, and a fee interest in the air space above a limiting plane over property that did have a continued transportation use; (2) required construction by FCR for LIRR of first a temporary rail yard (the "LIRR Temporary Yard") and then a permanent rail yard ("LIRR Permanent Yard"),
to replace the then existing yard, which was to be displaced by an arena; (3) required payment by FCR of $20 million in cash for the arena parcel; (4) required payment by FCR of $80 million for the air rights parcel, with payments to be made in specified installments; (5) required construction by FCR of a new subway station entrance for NYCT; (6) required FCR to provide the MTA at contract signing with an $86 million letter of credit to secure construction of the LIRR Permanent Yard (the "Letter of Credit"); and (7) required FCR to supplement such letter of credit when FCR commenced work on the
LIRR Permanent Yard with a completion guaranty from FCR's parent company Forest City Enterprises (the "Parental Guaranty") . In December, 2006, the Board adopted a resolution adopting findings pursuant to the State Environmental Quality Review Act ("SEQRA"); Empire State Development Corp. ("ESD") was the lead agency with respect to SEQRA.
Pursuant to the Board authorization, the execution and delivery of the relevant agreements occurred in March, 2010. Pursuant to such agreements, FCR posted the Letter of Credit, has paid the MTA the $20 million purchase price for the arena site, and has been making the required payments with respect to the air rights over LIRR Permanent Yard. It has also completed the LIRR Temporary Yard and the new NYCT subway station entrance, and is otherwise substantially in compliance with the requirements of the project agreements. FCR recently partnered with a Chinese investor, the Greenland Group. 
Although (as previously reported to the Board) FCR has been permitted to defer posting the aforementioned parental guaranty until June 30, 2014, FCR has performed substantial excavation and other preparatory work in order to ensure that the LlRR Permanent Yard could be completed by June, 2016, as the agreements currently require. And, as required, FCR is prepared in all events to post such parental guaranty by such deadline. However, FCR is currently requesting an amendment to the relevant agreements, which would: (1) authorize it to commence early foundation work for the platform to be constructed over the L1RR Permanent Yard during the construction of the LlRR Permanent Yard; and (2) in recognition of such increased scope of work, extend the construction completion deadline for the LlRR Permanent Yard until December 1, 2017. Such amendment would be contingent upon the Parental Guaranty being modified to include completion of such foundations.

This proposed amendment is in the MTA's interest, as progressing the construction of foundation work for the overbuild platform for the air space development, at the same time as the LlRR Permanent Yard is constructed, would eliminate significant future disruption to operations in the LlRR Permanent Yard after its completion. The extension of the construction completion deadline will not have a detrimental effect on LlRR's operations, as completion of the L1RR Permanent Yard was initially scheduled to coincide with the completion of the East Side Access project, which has been delayed, and in the meanwhile the LlRR Temporary Yard that FCR has provided will continue to suffice for all of LlRR's purposes. Moreover, as part of its environmental review of the overall Atlantic Yards Project, lead agency ESD has completed a Technical Memorandum, which concludes that the extension of the LlRR Permanent Yard completion date will have no Significant environmental impact not previously addressed; that memorandum has been provided to the Board under separate cover.

That the Board approve the attached resolution, authorizing the Chairman and/or his designees to take any and all actions on behalf of the MTA and LlRR, including entering into and executing any and all agreements, amendments, and other documents, and to perform such further acts as are necessary, desirable or convenient, in order to effectuate the above­ described transactions.
Following that is a third page containing a resolution authorizing an amended agreement.


Popular posts from this blog

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.