Skip to main content

Reports on $5M fines for delayed towers obscure switch; Forest City can slow construction on arena block while green roof is built

Like a game of Telephone, an un-analytical New York Times report yesterday on the $5 million fines faced by Forest City Ratner for delay on the next two towers tumbled around the journalistic food chain, suggesting that somehow the fines are new and meaningful.

They're new only in part, and not so meaningful.

In fact, the revised formula allows Forest City to delay building a second tower (B3) on the arena block until 2015, providing crucial wiggle room while it pursues unanticipated construction of a green roof over the Barclays Center.

And the formula allows Forest City to evade building a third tower on the arena block promptly. Instead, it can fulfill its obligation by building where construction is less complicated.

It does require Forest City to start two towers within a year, rather than one by December 2014 and another by December 2016. But that schedule conforms to what Forest City had already public pledged.

(Far more meaningful are other penalties negotiated, notably a $2,000/month penalty for each affordable housing unit delayed past May 2025.)

A report cascades

The Times reported yesterday, in Plan Expedited for Affordable Housing Near Barclays Center in Brooklyn:
Under the agreement, the next two residential buildings — a total of 600 units — will be entirely affordable housing. If the developer fails to begin construction within the next year, it must pay what would essentially be a fine of up to $5 million.
That cascaded around. Capital New York offered:
Under the new agreement, the development authority will have the ability to levy large fines again Forest City for not staying on schedule. For example, the authority could impose a fine of up to $5 million if the developer doesn’t begin construction within the next year.
Newsday reported:
The developer, Forest City Ratner, has agreed that if construction doesn't begin in the time frame, it would cost the company a penalty of as much as $5 million.
Brownstoner summarized it:
State officials, the de Blasio administration and local community groups have wrangled a deal with Forest City Ratner to accelerate the delivery of affordable housing at Atlantic Yards or pay a fine as high as $5 million, The New York Times reported.
Curbed re-blogged it as:
Specifically, 11 years after the whole project kicked off, Forest City Ratner has formally—like, in an actual agreement with the state, with the risk of a $5 million fine if they don't follow it—agreed to speed up construction.
I noted in passing that the incentives were already present for the second tower to begin two years after the first tower, but were accelerated by 18 months to June 2015 for the third tower. But I didn't drill down.

Looking more closely

From the Empire State Development Board materials and letter:
Second, ESD will require that two affordable buildings, totaling not less than 590 units of affordable housing, be built in the next phase of Project development: Building 14 (B14) will be commenced by December 31, 2014 and Building 3 (B3) will be commenced by June 30, 2015. ESD will utilize existing enforcement mechanisms to require prompt completion of these two buildings. The existing Liquidated Damages in the Development Agreement for failure to commence the first three buildings on the Arena Block (i.e., $5M each over a 12 month period) will apply to B2 (as currently contemplated) as the first Required Building, B14 as the second Project Building, and B3 as the third Project Building... For the purposes of Development Agreement Section 8.6(d)(i), the “Second Commencement Deadline” and the “Third Commencement Deadline” will be December 31, 2014 and June 30, 2015, respectively.
(Emphases added)
According to the Development Agreement, the first tower was required to start within three years from the project Effective Date, which was in May 2010. It launched in December 2012.

The second tower on the arena block was supposed to start two years after the first tower, or by December 2014, with the penalty $5 million over the course of the year.

That's not happening.

Shifting obligations

Rather, by December 2014, Forest City plans to start B14, which is on the southeast block now used as a surface parking lot.

The state has allowed Forest City to shift its obligation from the arena block to the southeast block, which is terra firma (unlike the railyard, which requires a deck) and is not the subject of separate construction (as with the green roof).

Now Forest City is supposed to start B3, at the southeast corner of the arena--once the cranes for the green roof are gone--by June 2015, though the Times said it would start in March.,

In other words, the revised agreement would penalize Forest City $5 million if it doesn't do what it already plans to do.

Note that, by substituting B14 for a building on the arena block, the agreement excludes B4, the tower at the northeast corner of the arena block, from the lockstep formula of construction two years after its predecessor.

Without the change, Forest City would have had to start B3 by December 2014 and B4 by December 2016.

The original fine





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…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

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…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …

"There is no alternative": DM Glen on de Blasio's affordable housing strategy

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.” Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.

It suggests the limits to …