This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Note: archive at right.
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Prokhorov takeover of Barclays Center only needs ESDC staff approval; Veconi calls for AY CDC input before decision
It's widely known that Forest City Ratner/Forest City Enterprises has decided, in principle, to sell its 55% share in the Barclays Center operating company and 20% share in the Brooklyn Nets to Mikhail Prokhorov's Onexim, currently the owner of the other shares in the arena/team.
That transfer has not officially closed, apparently.
Will the sale need an approval vote by the board of Empire State Development (ESD)?, asked Prospect Heights resident Gib Veconi, at the bi-monthly Atlantic Yards/Pacific Park Community Update meeting last night, held at 55 Hanson Place.
After all, ESD, the state authority that oversees/shepherds Atlantic Yards/Pacific Park, technically owns the arena, thus allowing issuance of tax-exempt bonds to fund construction, and leases it to the arena operator under a sweet deal, in exchange for PILOTs (payments in lieu of taxes) that do not go to the state but are diverted pay off those bonds.
No, said ESD Senior VP Marion Phillips III, it's a staff action.
Veconi, a leader of the Prospect Heights Neighborhood Development Council, which, as a member of the coalition BrooklynSpeaks, has pushed to improve the project, expressed dismay. He noted that the arena relies on state-approved tax-exempt bonds, and sits on land assembled through threat of eminent domain. (And some was actually transferred via eminent domain.)
Phillips repeated that the transfer fell under the category of issues that only require staff actions.
Note that last year, the transfer of 70% interest in Atlantic Yards, excluding the arena and the B2 tower, to the Shanghai government-owned Greenland Group did not need ESD board consent, but the board did vote approval in order to avoid doubt or ambiguity. This seems a somewhat parallel situation.
Atlantic Yards CDC input requested
"Well, I would like to go on record as suggesting that Atlantic Yards Community Development Corporation [AY CDC] board is convened before that decision is made," Veconi responded, citing the advisory body set up last year as part of a settlement aimed to deliver project affordable housing by 2025. (That's ten years faster than the previous extended deadline, though still 16 years after the project's most recent approval.)
"The idea that we're now going to transfer controlling interest in an arena to a foreign owner strikes me as not a good idea unless we have already agreed on a plan to address some of these issues," he said.
I'd add that, putting aside whether the owner is foreign or not, the sale means that the arena operator is no longer an owner of the rest of Atlantic Yards/Pacific Park, and thus has less incentive to respond to public concerns. In fact, the arena operator and the owners of the rest of the project may now be at odds.
"I don't think a new owner will be motivated to address them more than the current owners," Veconi said. "I would like Atlantic Yards CDC to have an abillity to weigh in on what some of the mitigations might be" before the transaction is approved.
The next AY CDC meeting, however, has not been scheduled.
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…
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.
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 , 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…
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…
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…
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…