Wednesday, September 30, 2015

From the latest Atlantic Yards/Pacific Park Construction Update: Atlantic Avenue crane to be removed; Saturday work at three sites

The latest Atlantic Yards/Pacific Park Brooklyn Construction Update was sent at 5:11 pm yesterday, after the second business day of ten concluded, by Empire State Development after preparation by Greenland Forest City partners, covers the two weeks beginning Sept. 28 and Oct. 5, though the document (see bottom), oddly enough, says October 11.

Among the notable changes are the disassembly of the Atlantic Avenue crane for the arena green roof on Saturday, Oct. 10 (though that will not reopen traffic lanes); foundation work for the B3 site (Dean Street and Sixth Avenue), and the transfer of a mobile crane to the B3 site from the B14 site, at Carlton Avenue and Dean.

Here's the previous alert: note no previous mention of demolition on Block 1120--buildings that jut into railyard from Atlantic Avenue--and no mention of current demolition on Block 1128, site of B15, though there it appears to be ongoing. no mention of continuation of work cleaning out the contents of 666 Pacific Street, which was described in the previous alert "As part of mobilizing for the demolition."

Also note ongoing Saturday work at the B2 site, at Flatbush Avenue and Dean Street, the B15 site, at Sixth Avenue and Pacific Street; and the B14 site.

The sections below are verbatim, with the new information highlighted in bold.

B2 - 461 Dean Street, Modular Residential
During this reporting period:
 Interior work will continue on modules that have already been installed.
 *Exterior façade adjustments and paint repairs ongoing. All work will be performed within the construction fenced perimeter. Work will commence on the ground floor storefront. Enclosure work of the Arena Dean Street entrance area will be substantially completed.
 Saturday work to address field conditions within the site will occur during this reporting period. This work includes all work listed above.
B3 - 38 Sixth Avenue
During this reporting period:
 Foundation activities, including the drilling of piles and material delivery, shall occur during this reporting period. Mass excavation is complete. Minor excavation will continue as required for pile caps and footings. Soil that has been classified as clean or contaminated will continue to be removed from the site and brought to appropriate disposal locations.
 Saturday work to address field conditions within the site will occur during this reporting period. This work includes all work listed above.
*A small mobile crane will move to the B3 site from where it is currently staged at B14.
 *Pile installation will continue through this reporting period. Foundation work is expected to begin during the week of September 27th. 
 *Concrete pours will for foundation work will commence
Arena Green Roof
During this reporting period:
 Delivery of material continues during this reporting period and will be lifted to the roof utilizing the Atlantic Avenue crane when needed. Deliveries will come through the Atlantic Avenue gate utilizing flagmen to direct traffic.
* Pursuant to permits the Atlantic Avenue crane will be disassembled on Saturday, October 10; a community notice will be distributed. 
 Protocols for the trucks entering and exiting the site have been put in place to provide clarification and instruction for on roadway routing to and from the project site, queuing of trucks while on site and vehicle idling restrictions.
LIRR Yard Activities - Block 1120 & 1121
During this reporting period:
 During this reporting period, the Contractor will continue excavation and hauling of soil from Blocks 1120 and 1121. Soil that has been classified as clean, contaminated or hazardous will be removed from the site as part of the excavation activities and brought to appropriate disposal locations. Protocols for the trucks entering and exiting the site have been put in place. These protocols provide instruction on roadway routing to and from the project site, queuing of trucks while on site and vehicle idling restrictions.
 Support of Excavation (SOE) work including the installation of lagging and tiebacks will continue within this area during this reporting period.
 Manhole and duct bank installations will be ongoing in Blocks 1120 and 1121 during this reporting period.
 Foundation footing and pier rebar, formwork, and concrete installations will be ongoing in Blocks 1120 and 1121 throughout this reporting period.
 Pacific Street Retaining wall rebar, formwork, concrete installations and back-filling behind wall will be ongoing in Block 1120 and 1121 throughout this reporting period.
 Excavation, formwork and underpinning for future removal of LIRR Atlantic Avenue Tunnel wall will continue throughout this reporting period.
 *Building and platform foundation pile installation and testing will be ongoing during this reporting period.
LIRR Yard Activities – Atlantic Avenue
 MPT
LIRR Yard Activities – Night/Weekend Work
Tunnel Work
 Weekend Electrical Utility work (conduit and support installation) is being performed inside the LIRR Tunnel and will continue during this reporting period and is currently scheduled to continue through 2015.
Block 1129
B11 – 550 Vanderbilt Avenue:
During this reporting period:
 Superstructure phase of construction continues. A crawler crane has been installed. All related equipment and materials will be delivered to the site for ongoing superstructure work including concrete pours. Carpenters are performing formwork for 6th floor columns, shear walls and slabs. Concrete pours will continue on a daily base.
*Temporary standpipe will be installed during this period.
 *Delivery for masonry will start.
B14- 535 Carlton Avenue:
During this reporting period:
 Saturday work as well as work up until 9 pm during weekdays to address field conditions within the site will occur during this reporting period. This work includes all work listed below.
o The sidewalk on the west side of the 6th Avenue Bridge (between Pacific and Atlantic) will remain closed to pedestrians;
o The MPT will remain in place on the far west lane of the 6th Avenue Bridge from Pacific Street to Atlantic Avenue.
 *Superstructure work is continuing with the framing and pouring of the ground floor. The framing of the 1st floor will occur in this reporting period as well.
 *Foundation backfill and waterproofing will continue throughout this reporting period. Conveyor belt may be used to assist in backfill efforts.
 
 *Foundation backfill and waterproofing will continue throughout this reporting period. Conveyor belt may be used to assist in backfill efforts.
B-15 (6th Ave and Pacific Street)
During this reporting period:
 Geotechnical borings and test pits will continue this period. Soil and well borings will be drilled with the use of a limited access drill rig, when required. Test pits within the sidewalks and basements of existing properties will be hand excavated, with use of a jackhammer.
 Some of the geotechnical borings and test pits will be performed on the sidewalks along Pacific Street, Dean Street and Sixth Avenue. In all cases the sidewalks will be partially closed, however a five foot pedestrian lane will be maintained in accordance with obtained DOT permits.
 Broadcast lot will be shared/ utilized by both the arena and the B2 site for temporary storage of equipment.
 Saturday work to address field conditions within the site will occur during this reporting period. This work includes all work listed above.

*Block 1120 & 1128 Demolition
During this reporting period:
 *Contractor will commence clean out of buildings on Block 1120 during this reporting period.


How to Reach Pacific Park Brooklyn Community Liaison Office (CLO)
The Community Liaison Office is located at Atlantic Center Mall, 625 Atlantic Avenue on the 3rd floor. Visitors seeking the office should enter through the mall entrance located at the corner of Atlantic Avenue and So. Portland Avenue. The CLO’s hours are M-F from 9am – 4pm and can be reached by phone at 866-923-5315 and by email at communityliaison@pacificparkbrooklyn.com
Noise Receptor Control Program
You may be eligible to receive and have installed double paned or storm windows and an in-window air conditioning unit for certain residential units where such air conditioning and/or double paned windows/storm windows do not exist today. The cost of any windows and any air conditioning units, and the cost of their installation, would be borne by the Developer.
The locations that may be eligible at this time are the residential sites in proximity to site construction and identified in the 2006 Final Environmental Impact Statement (FEIS) or the 2014 Final Supplemental Environmental Impact Statement (FSEIS) as having the potential to experience significant adverse noise impacts during the construction of the Pacific Park Brooklyn project.
In order to schedule an on-site inspection by the Developer to determine which windows may be eligible for replacement and/or AC units provided please contact:
Roberta Fearon
Forest City Ratner Companies Tel: (718) 923-5314 Email: rfearon@fcrc.com
or
Irma Barrera
Forest City Ratner Companies Tel: (718) 923-5306 ibarrera@fcrc.com


NY Post on 550 Vanderbilt: "How New York City is building new neighborhoods from nothing" (!)

Remember how original Atlantic Yards architect Frank Gehry got flak for saying--according to the New York Times's erroneous transcription--that the project was "building a neighborhood from scratch"? (He'd said "practically from scratch," which was already a stretch.)

Well, Forest City Ratner CEO MaryAnne Gilmartin likes to say "neighborhood from scratch" today, and she's getting lapdog treatment in some media outlets. Consider the New York Post Real Estate page article today, How New York City is building new neighborhoods from nothing. (Actually, it appears in the luxury supplement, Alexa--see bottom.)

From the lead:
Density ought to be embraced, and vertical living ought to be celebrated,” pronounces MaryAnne Gilmartin, president of NYC real estate giant Forest City Ratner Companies. It’s a bold statement, but she’s talking about a bold project: Pacific Park, the 22-acre, 15-building complex rising over Brooklyn’s Atlantic Rail Yards, near Barclays Center.
The massive undertaking will create an entirely new neighborhood of 6,000 apartments, multiple retail spaces and eight acres of parkland. Megaprojects like Pacific Park — which offer residents every convenience in a compact, preplanned area — are front and center in New York’s new-building barrage.
Luxury developers are pairing residential towers with amenities like schools, playgrounds, food courts, office spaces and even subway stops — and bringing in starchitects and A-list designers to craft spaces that blend home, work and play.
Note the effrontery of the headline, then note that complex is not rising "over Brooklyn's Atlantic Rail Yards." The 22-acre project will rise, in part, over the Vanderbilt Yard, though, other than the small segment of the former yard occupied by the arena, all the buildings under construction are on terra firm.

It won't be a park, but rather privately managed, publicly accessible open space. And while it surely will be a new complex, it hardly will be a new neighborhood. There were people and businesses. Moreover, the new infrastructure, including one school, will hardly be enough to handle the entire population. 

And, by the way, "New York City" is not building anything. Atlantic Yards/Pacific Park is a state project, built by Greenland Forest City Partners, which is 70% owned by Greenland Holdings, itself controlled by the government of Shanghai. Greenland gets no mention in the article.

Sales figures

The Post reports:
When 550 Vanderbilt, a Pacific Park condo designed by COOKFOX, launched sales this summer, 30 percent of its 278 units entered contract “within weeks,” according to Gilmartin. Prices for the building, which opens for move-ins in 2016, range from $625,000 for a studio to $6.86 million for a penthouse....
Summing up

The article closes with Gilmartin, as well:
And Gilmartin says the open space at Pacific Park will be available to all comers.
“It was critically important for us to include the community,” she emphasizes. “Our goal is to knit together the surrounding neighborhoods with this development.” She says the project is an exercise not just in real estate development, but in master planning meant to blend into the fabric of NYC.
Still, she concedes that such unique projects are no small task: “It’s a big responsibility to build up a neighborhood from scratch.”
Um, their goal is to make a profit. As for including the community, the amount of open space per person will actually go down, given the huge new population.

Tuesday, September 29, 2015

After extensions from lender (expire?), Forest City will prematurely pay off $45M loan for troubled modular tower (+$11.6M subordinate loan)

See update below that confirms that Forest City is paying off an additional $11.6 million to NYC HDC.

Redemption planned for Oct. 6
In an unusual occurrence surely prompted in part by delays and construction problems, developer Forest City Ratner next week will pay off $45 million in tax-exempt financing for the B2 modular tower rather than enjoying the fruits of the low-interest loan until 2046.

Nor does the New York City Housing Development Corporation (NYC HDC) plan to issue the additional $45 million in tax-exempt financing once planned for the tower, also known as 461 Dean Street.

That $90 million total would have gone halfway to paying for a tower initially slated to cost $183 million (including $117 million for construction).

Delays and costs overruns have added perhaps $80 million to the cost of the tower. It should open late next year, after some 3.75 years of construction, nearly twice as long as initially expected, leaving a cloud over Forest City's once-heralded plans to revolutionize construction in New York.

A loan on shaky ground

The 2012 loan is not in default, but has been on shaky ground.

Sept. 28 construction photo via Tectonic
 Last October, Forest City disclosed that the Bank of New York Mellon had suspended disbursement financing because construction had stopped for 21 days. 

It's unclear whether such disbursements resumed when construction re-started this year, after Forest City began operating the modular factory without former partner Skanska and engaged Tishman to build the tower. Construction has proceeded steadily in the past months.

But evidence points to an extended freeze, given that the forbearance agreement was steadily extended. 

In August, parent Forest City Enterprises (FCE) in its Form 10-Q warned:
we can provide no assurance that our lender will agree to extend the forbearance agreement. Depending on the outcome of our lender discussions, we may be required to repay the current outstanding balance of $45,000,000 currently secured by, amongst other things, $37,500,000 of restricted bond proceeds included in restricted cash, $10,000,000 of cash in escrow and an equity letter of credit of $9,300,000. In the meantime, we continue to fund construction costs with equity.
So, while evidence suggests the lender may have decided not to extend that agreement, forcing the bond redemption, Forest City would not confirm that. 

Forest City's statement

Forest City Ratner responded briefly to my queries:
With a relatively short period of time remaining to complete our work in the factory and field, we made the decision to use equity to continue construction and will evaluate procuring new financing at a later date.

Forgoing the unissued bonds gives the NYC HDC an opportunity to use the unused allocation for other projects to create additional affordable housing in the City. The affordable program at 461 Dean Street will remain the same.
That may indeed assist affordable housing, but surely no developer chooses to use their own equity when they can use other people's money. 

As David A. Smith, an affordable housing analyst in Boston whom I consulted, observed, "In general, never use equity when affordably-priced non-recourse debt is available." (Non-recourse means an lender seeking to be paid can only go after the collateral, not the developer's other assets.)

Forest City did not respond to follow-up questions regarding whether disbursements ever resumed or whether the lender had forced their hand.

Should 461 Dean open successfully, it could be a candidate for new financing. CEO MaryAnne Gilmartin has said, "The building, when it stands at the corner of Dean and Flatbush, will tell us whether high-rise modular has an application in the city."

Disclosure of default avoided

Even if disbursements had resumed, the future would have been grim. "The likeliest conclusion," observed Smith, when asked about the scenario in which Forest City was redeeming a bond that was being disbursed, "is simply that FCE concluded it would never be able to meet the bond takeout criteria in any practical timeframe, and it decided to eliminate the complications of having a public debt issue outstanding." 

To resolve such a debt issue in standard fashion, Smith observed, the property typically has to be finished, with its trade creditors paid, leased up to a stipulated threshold, and with a stipulated net operating income.

"Failure to achieve conversion within a certain time frame is normally also a default, even if the interim interest is being paid," he added. "When this happens, you don’t want to be paying standby fees, or having a property in default (something you may have to disclose on other regulatory filings or your financial statements), and if external capital is cheap (e.g. from China), then you are by far the best served by wiping out the proposed financing and hence eliminating the reporting and disclosure requirements."

Note that new investor Greenland Holdings owns 70% of Atlantic Yards/Pacific Park going forward, excluding B2 and the Barclays Center. The clearance of the loan removes one obstacle to new investment, though the legal issues likely need to be settled first.

NYC HDC 2014 audit
NYC HDC statement

NYC HDC spokeswoman Christina Sanchez told me that the loan was not in default, as Forest City Ratner was able to extend the forbearance agreement with the Bank of New York Mellon.

"However, the borrower has decided to pay off the HDC mortgage loan and HDC will redeem the bonds on October 6th," she wrote. "The HDC Regulatory Agreement that is recorded against the property enforcing the affordability of the units will remain."

"It is not common for HDC loans to be paid off during construction," she added, in response to my query, "and we are unaware of any plans for additional HDC financing."

One scenario in which loans are paid off early might be when interest rates plunge, so a borrower could refinance at a lower interest rate.

Fees for the loan, via NYC HDC
That is not the case here. Indeed, the interest rate was .02% to .12%, according to a 2014 NYC HDC audit (see screenshot above), though there were much larger annual fees associated with the issuance (see graphic at left).
Why now--harvesting losses?

Beyond potential pressure from the lender, it's possible that FCE wants to harvest as many losses as possible before the end of the calendar year, when its financial structure changes.

As I noted in January when the firm announced its plan to become an REIT, CEO David LaRue in August 2014 told investment analysts that, while the company was still a C Corporation, "We still have substantial NOLs [net operating losses] that allow us as a C Corp to continue to be very tax-efficient... As we go through repositioning, and go through non-core asset sales, it gives us some additional flexibility."

A tangled tale, and another loan to be paid off

The NYC HDC financing of 461 Dean Street contemplated two bond issuances to fund the entire mortgage loan. The first tranche was issued with the closing of the loan in December of 2012, while the second was supposed to come in 2013. It did not, perhaps because the modular factory was behind schedule.

Even earlier this year, that loan seemed to be contemplated. According to minutes from the 4/20/15 board meeting, NYC HDC executive Catherine Townsend said "that a second tranche of bonds for 461 Dean Street, which was authorized by the Members in December 2012, was not expected to be issued until construction resumes."

Construction did resume. However, Sanchez told me, "Since the borrower has decided to pay off the construction loan, HDC will not be issuing the second tranche of bonds and will redeem the bonds on the first tranche."

Also, according to a November 2012 memo (excerpt at right) from NYC HDC President Marc Jahr, this building was to receive an additional loan from the agency of $11.6 million, with a 1% interest rate. 

Update: "HDC provided a $11.6M subordinate loan at the loan closing for B2 in December of 2012," Sanchez confirmed. "Forest City Ratner is not in default on this subordinate loan. However, they will pay off the subordinate loan in conjunction with the first mortgage loan on October 6."

A rising price tag

The price tag for 461 Dean Street has skyrocketed. Last November, FCE said that, while it had designated $155 million for B2, related to land, building and capitalized interest, total project costs could reach $215 million to $265 million. 

That said, it does hope to recover some of those cost increases after litigation with former partner Skanska, which was hired to build the tower and lead the operation of the modular factory.

As noted last February, Forest City in 2014 recorded an impairment charge of $146,300,000--a loss of value--regarding the building in 2014. This past August, it stated:
As of June 30, 2015, we have $74,182,000 capitalized on the Consolidated Balance Sheet related to B2 BKLYN. Based on the most current information available, total project costs are estimated to be $162,100,000, after giving effect to an impairment charge recorded in 2014. 
Does that mean that building's overall cost to Forest City could exceed $300 million, with the impairment added to the the project costs? Unclear.

Impairment charges can be murky. "There’s a huge body of financial reporting requirements around when you take an impairment, when you reverse it, and so on," Smith commented. "They are a mixture of science, art, and necromancy."

The redemption notice


Monday, September 28, 2015

WPIX promotes Premiere Week at Barclays Center

WPIX, which has a studio in the Barclays Center, is still practicing synergy, offering a sweepstakes for Premiere Week, when the New York Islanders season begins.


Here's the PIX11 page for stories tagged Barclays Center. Below is the page in PDF form:

News flash: Nets player finally moves to Brooklyn

As the Brooklyn Nets begin their fourth season in Brooklyn, there's some news, as noted by the Brooklyn Game not so grammatically, The Nets finally have a player that lives in Brooklyn.

The post cites ESPN, which quotes forward Thaddeus Young, who said he and his wife wanted stability for their five year-old son:
"It's a good environment," Young said. "We like to come down and walk on the piers and walk on the bridges and stuff like that. Plus, the practice facility is gonna be in Industrial City [in February] so that's gonna be probably 10-15 minutes away from here, and like I said, Barclays Center is right up the street.
That suggests the location is in the Downtown Brooklyn area. Update, it's sort-of Brooklyn Heights, actually a large condo building in a former factory.

Because the Nets have practiced in New Jersey, it made logistical sense for many players to live in Manhattan or even New Jersey. Early next year a practice facility will open in Brooklyn.

Sunday, September 27, 2015

Synergy! 550 Vanderbilt sales office opens at arena (plus a pricey penthouse)

What a difference (nearly) 12 years makes. When Atlantic Yards was announced in December 2003, the project was to include 4500 rental apartments, half of them below market, and 2 million square feet of office space. Jobs, housing, and hoops.

By 2005, thousands of condos had been swapped for office space, and ultimately 1,930 condos were approved, for a project renamed last year Pacific Park.

Combine that opportunity with the continuing growth of the Brooklyn and Prospect Heights market and the result, as noted by DNAinfo in a report from the launch of a sales office for the first condo building, 550 Vanderbilt, a 2,859-square-foot penthouse condo with a wrap-around terrace, for $6.8 million. (Should we expect more articles when the other two penthouses are unveiled.)

And, featured at the sales office, as noted below, are the cookbook from Franny's (born April 2004) and food from Brooklyn Larder (born June 2009). In other words, the delay in construction certainly fueled increased property values.

And, as shown in the photos below from Twitter, the arena and Brooklyn surely offer synergy.











On Monday, Barclays Center seeks CB 6 nod to add additional (58th) liquor point of sale

The Calendar for Brooklyn Community Board 6 notes that, on Monday, Sept. 28, the Environmental Protection Permits & Licenses Committee will review numerous applications, include "a new on-premises liquor license application submitted to the State Liquor Authority" on behalf of the Barclays Center.

According to the application, which CB 6 shared with me, the arena food and beverage operator, Levy Premium Foodservice, aims to add one new point of sale to the current total of 57. The location will be on the main concourse, at entry level, as shown in the graphic below, with be full liquor service.

Given the relatively modest change requested, I wouldn't expect it to provoke much pushback.

The meeting is at 6:30 pm at the auditorium of John Jay Educational Campus, 237 7th Avenue, between 4th & 5th Streets.


Saturday, September 26, 2015

Looking at Bisnow's Atlantic Yards roundup: a "place-making juggernaut" (?) and some errors/omissions

There's not much new in the THE BARCLAYS CENTER SHAKEUP: JAY Z’S OUT, CHINA’S IN AND ATLANTIC YARDS LIVES ON, from the real estate publication Bisnow, published 9/24/15.

And there's a good deal ignored, such as the actual affordability of the planned subsidized housing, the continuing temporary certificate of occupancy, and the reasons for the arena's new green roof.

But there are a few interesting observations--and mistakes--as well as some clues to how business-friendly publications may frame the project.

The only person quoted is Forest City Ratner CEO MaryAnne Gilmartin--where's new majority owner Greenland?--who calls Barclays Center "a place-making juggernaut," citing 5.5 million visitors. 

That's an interesting term, because, while the number of visitors is undeniable, the "place" is very much in process--not just the under-construction towers, but also unresolved retail, such as at the long-lingering, prime location building at Flatbush Avenue, Dean Street, and Fifth Avenue that once housed Triangle Sports.

The evolution and the rebrand

Writes Billy Gray:
Three years after its debut, the Barclays Center is still drawing crowds and name-brand entertainers. A concentrated building boom has suddenly given Downtown Brooklyn a skyline of note (with a proposal recently unveiled for a tower that would dwarf the Empire State Building) and a bevy of cultural gems. Yet housing at Atlantic Yards (interestingly rebranded as Pacific Park) has lagged, its construction hurdles documented (with no small amount of glee) by local micro-bloggers just as even flashier mixed-use developments in Midtown and Williamsburg have grabbed the spotlight amid murmurs of a coming residential oversupply in DTBK.
Local micro-bloggers? That's a jab, but not accurate.

"Interestingly rebranded"? How about "strategically rebranded," as I've suggested, given the taint associated with Atlantic Yards. Later Gray acknowledges that issue, writing:
At first, there was little explanation of the change. But Gilmartin has since said since Atlantic Yards was “always a working title” and that the rebranding came about to distance the complex from the defunct rail yards it has overtaken that bore the same name. (Perhaps an even bigger development site above old rail yards, these ones on Manhattan’s Far West Side, was another justification.) It was also tempting to read the Pacific Park moniker as an attempt to shed the decades’ worth of baggage accumulated during the project’s still-bumpy road to realization. 
Um, the "defunct rail yards" 1) are still working and 2) formally called the Vanderbilt Yard, never "Atlantic Yards," which was a brand name for a development.

Financial success?

How well is the arena doing? Gray acknowledges the combination of big names but "more sobering financial data," without assessing the future. Nor does he assess how and whether Greenland got a bargain when it bought a 70% stake in the project going forward (excluding the Barclays Center and B-2 modular tower).

Gilmartin cites “significant progress” at the B-2 modular tower, though there's no mention of the history of leaks and mold. As to the future of modular, why not quote Gilmartin as acknowledging it's unclear.

The new "park"

This part is rich:
Gilmartin called an eight-acre park whose master plan was recently revealed “the spine of” the development. “There will no longer be a dearth of green space in the heart of Brooklyn,” she says. The creation of the park will proceed over the next decade. 
First, it's not a park. Second, while the amount of green space is growing, the ratio per resident would actually decline, because of the 14,000 new residents.

Affordable errors

If the affordable apartments "are not completed by 2025—10 years earlier than initially required—Forest City will have to pay a $5M fine," according to the article.

That's wrong on two counts.

First, the $5 million fine would have applied only to delays in the next two buildings, which did launch; rather, the fine for delay will be $2,000 per month per unit.

Second, 2025 is not "10 years earlier than initially required," though that same error has been made multiple times, including by ESD Chair Howard Zemsky. Rather, the project, when approved in 2006 and again in 2009, was supposed to take 10 years. Then the Development Agreement gave a 25-year "outside date," or 2035.

A revised schedule agreed to in 2014--part of negotiations with community groups who claimed a rather imperfect victory--set a completion deadline of 2025. That makes for 10 years earlier than the previously extended outside date, but not "10 years earlier than initially required."

Looking forward and looking back

Writes Gray:
The steroidal growth of Downtown Brooklyn beyond Pacific Park has shed the development’s struggles in an especially harsh light.... The Downtown Brooklyn Partnership estimated earlier this year that a staggering 13,000 affordable and market rate units were in the pipeline, inevitably tacking on the real estate jargon of that influx making downtown a “24/7 neighborhood.” 
Yes, and no. First, Downtown Brooklyn was rezoning in 2004, *after* Atlantic Yards was announced, and the AY site is in Prospect Heights, most of it a good distance from Downtown Brooklyn.

His conclusion:
Ironically, though, the anger lavished on the project seems to have distracted people from the more seismic changes redefining the broader borough. It’s not always easy being the frontrunner, and Pacific Park’s freighted history has, to an extent, lingered through its problematic present. Its ultimate success may hinge on how those affordable units allay a housing crisis in the increasingly chic borough and for that burden Pacific Park has itself to blame.
To some degree, that's true, but it's also true that Atlantic Yards was more bold, aggressive, and neighborhood-invading than the other projects--and it came via a process that was wired from the start.

Hence, the resistance. Were such a project suggested now, after such development, there'd a different reaction, with both sides likely more able and willing to negotiate. Remember, the "anger lavished on the project" was in proportion to the implacable arrogance of those proposing it.

As for the ultimate success of AY/PP, those affordable units--many not so affordable--will be a drop in the bucket, as we have long known.

Friday, September 25, 2015

From City & State: When Barclays Admitted a Felony, It Should Have Lost the Brooklyn Arena

I have an essay in in the political magazine City & State NY, OPINION: WHEN BARCLAYS ADMITTED A FELONY, IT SHOULD HAVE LOST THE BROOKLYN ARENA
Basically, I argue that, after the parent company Barclays PLC pleaded guilty to a felony regarding rigging the foreign exchange market, its affiliate, Barclays Services Corporation, qualifies as a "Prohibited Person" and thus should not be able to contract with the arena operator.

Here are screenshots from some backing documents for the essay.

Barclays pleads to felony

From Department of Justice
No contract with a Prohibited Person
From Development Agreement

Definition of a Person and Prohibited Person

From Development Agreement


How is Barclays Services Corporation connected to Barclays PLC?

Barclays Services Corporation is wholly owned by Barclays Group US, which is wholly owned by Barclays Bank PLC, which is wholly owned by Barclays PLC.
From Barclays document
From Barclays annual report

Thursday, September 24, 2015

The New York Nobody Knows doesn't know Atlantic Yards

The New York Nobody Knows: Walking 6000 Miles in the City, by sociologist William Helmreich, has received lots of enthusiastic reviews since it was published in 2013. (The paperback just came out.)

I'll write elsewhere about the book as a whole--it's a great conceit, but mixed in execution--but here want to address the significant sloppiness regarding Atlantic Yards.

The AY mention

Atlantic Yards gets a few mentions, but the main passage is below right, from Chapter Six.

It could have used some fact-checking. Some of these errors may be small, but it shows how easy it is to get wrong, fueling future errors from those relying on this source.

No, the Atlantic Yards development project is not "designed by famed architect Frank Gehry." (He was the original designer, and credited master planner, but he was long gone by the time of this book's completion.)

Nor is it "in downtown Brooklyn." (Try Prospect Heights.)

Nor was it approved by Mayor Mike Bloomberg. (Bloomberg delivered subsidies, but the project was approved by the Empire State Development Corporation, a state authority.)

No, it's not quite accurate to say the "yards are owned by the New York Metropolitan Transportation Authority." (The "yards"--actually the Vanderbilt Yards, an 8.5-acre piece of a 22-acre project--were owned by the MTA, a state agency, but at the time of this book's completion, development rights to one parcel had already been purchased. Also, it's not made clear that the "yards" ≠ Atlantic Yards.)

No, the developer can't "take" properties by eminent domain. (Rather, the developer can get properties conveyed that the government has taken by eminent domain.)

No there are no plans to develop 4.5 million square feet of office space. (Actually, about the space would be about one-tenth of that total, and even those plans are on hold.)

Yes, Ratner did pursue tactics to overcome community opposition, but not via a Community Benefit Agreement. (It was, rather, a Community Benefits Agreement, or CBA.)

Ratner did not quite agree to "give the community various housing benefits." (Rather, they require a commitment from the developer but also public subsidies. Also, the CBA was supposed to go well beyond housing benefits to include things like job training and free tickets to arena events.)

Was there a "flood of boutiques, upscale eateries, and the like, opening at the rate of one a week on Flatbush Avenue"? (Maybe briefly, but that's a overbroad summary.)

Going back to the first sentence, it's not wrong to say that Atlantic Yards exemplifies how "government programs are intertwined with gentrification," but it's a missed opportunity to explain that Atlantic Yards, by offering "affordable housing," was supposed to stem gentrification.

Wednesday, September 23, 2015

Barclays Center releases updated event calendars for October through December

The Barclays recent released updated event calendars for the next few months, which make some tweaks from the previously issued ones, published here.

The October calendar has added the Tapped beer fest on Oct. 25, while canceling the previously scheduled Dr. Who Symphony concerts on Oct. 7. (Here's October 2014.)


The November calendar has added concerts Nov. 18 and Nov. 19 for The Weeknd. (Here's November 2014.)

The December calendar has added pro wrestling for Dec. 28. (Here's December 2014.)


Tuesday, September 22, 2015

Plans filed for 37 Sixth Avenue (aka B-15); update on school: Forest City says it *would* be 100,000 sf, with 30,000 sf below-grade

As reported first by The Real Deal yesterday, in Greenland Forest City files plans for Pacific Park resi, school building, the joint venture yesterday filed plans with the Department of Buildings for B-15, a market-rate rental building with a school to be known as 37 Sixth Avenue, designed by Marvel Architects. (Across the street is B-3, or  38 Sixth Avenue.)

The masonry concrete building, slated to rise 26 stores and 272 feet, will include 323 units in 273,930 square feet of residential space (that's an average of 848 sf/unit). As noted by The Real Deal, there would be eight apartments on the sixth floor, 16 units on the seventh floor, 17 apartments on each of the eighth through 10th floors, 18 units on each of the 11th through 16th floors and 14 units on each of the 17th through 26th floors.

The lot area is 21,155, with 80% lot coverage and no outside open space.

A smaller school? 

The first through fifth floors would house a 616-seat public school, which, according to the filing (also below) would encompass 69,858 square feet. But that doesn't mean a cut from the 100,000 square feet planned.

Update: Forest City spokesman Joe DePlasco writes, "The combined footage of the entire school is the 100,000 SF as announced. Approximately 70,000 is zoning square feet, which is above grade, and there’s approximately 30,000 square feet of long span programmable space (gym, auditorium, etc.) below grade."

The 30,000 sf below grade means two levels below ground, at least.

According to the June 2014 Second Amended Memorandum of Environmental Commitments agreed to by the developer and Empire State Development, the state agency overseeing/shepherding Atlantic Yards, Forest City Ratner agreed to "convey or lease to DOE [Department of Education], space within a development parcel sufficient in size to allow for the development of an approximately 100,000 gross square foot elementary and intermediate public school of contiguous space."

There's similarly language in the 2009 Atlantic Yards Development Agreement.

Two ads for 550 Vanderbilt in the New York Times Magazine: "a contextual extension of the surrounding neighborhood" (!)

Not one but two pages in this past Sunday's New York Times Magazine were devoted, at least in part, to the 550 Vanderbilt condo tower at the southeast end of Atlantic Yards/Pacific Park. Both show that deceptive rendering that s-t-r-e-t-c-h-e-s the three story brick building at left and tilts the substantial 202-foot tower into the distance, diminishing its bulk.

The two ads, actually, contradict each other a bit. Note the full-page ad below, on p. 31:
550 Vanderbilt, designed by the celebrated architect COOKFOX, brings 278 exceptional residents to the heart of Pacific Park, Brooklyn's newest neighborhood.
One, Two, and Three Bedroom Condominium Residents from $830,000
Um, it's not a neighborhood. Note that one-bedroom units are said to start at $830,000. According to the building's page on StreetEasy, one past listing for a one-bedroom was $800,000, but the current least expensive one-bedroom is $815,000.


According to StreetEasy, of 278 units, there are 80 active sales, of which 62 are in contract, and 19 past sales. That means 81 units are off the table, with only 18 currently available, and 179 yet to be made available.

No sale prices have been announced, but, at least according to figures based on the marketed prices, the in-contract sales average $1,353 per square foot, while the previous sale averaged $1,535 per square foot. (When I wrote about the issue in June, the eight announced sales averaged $1,436/sf.)
Among new developments

Near the back of the magazine, a good part of a ten-page advertising insert, "Fall Preview: New Developments," is devoted to 550 Vanderbilt, which, unlike some of the other projects listed, does not have an ad within the section. (Its ad is the standalone above, in front of the magazine.)

The same rendering is reproduced, and the copy states (with emphases added):
550 Vanderbilt is the first of four condominium buildings that will be built at Pacific Park Brooklyn, a collection of 14 residential buildings connected to eight acres of open green space designed by the acclaimed landscape architecture firm Thomas Balsley Associates. At the northwest corner of Vanderbilt Avenue and Dean Street in Prospect Heights, 550 Vanderbilt is being designed by COOKFOX Architects to create a contextual extension of the surrounding neighborhood, matching the 60-foot street wall of Dean Street and gradually setting back, giving residents expansive light and extensive views through the oversized windows. The site is served by 11 subway lines and the Long island Rail Road, all within walking distance, and offers easy access to the Brooklyn and Manhattan Bridges and major airports.
Views to the new eight-acre park adjoining 550 Vanderbilt are possible from the lobby, shared rooftop terrace and elevator vestibules as well as from the residences, many of which include private terraces. There are more than 10,000 square feet of amenities beyond the landscape roof terrace, including a residents' lounge with fireplace, library, children's playroom, guest chefs' kitchen for entertaining and private events, and a fitness center. There is also a live-in resident manager and 24/7 doorman and concierge service, and residents will have access to bicycle storage, private storage units and underground parking.
Residents will feel like the building is an extension of the park," said Jodi Ann Staase, managing director of new developments for Corcoran Sunshine Marketing Group. "With 278 residences, it is a large building with a huge amenity and service package that Brooklyn hasn't seen before. With studios to four bedrooms, we expect to attract a diverse mix of young professionals, growing families and empty nesters looking for maintenance-free living. We have something for everyone in this building. 
550 Vanderbilt is currently under construction with first occupancy scheduled for the end of next year. Studios start in the low $600,000 range, with one-bedroom units starting at $890,000. Two bedrooms start at $1.7 million, with three bedrooms starting at $1.9 million. For more information, visit 550vanderbilt.com or call 718-679-9000. 
Looking more closely

550 Vanderbilt is bottom right in the map
Well, just in the course of the magazine, they've raised the price of the studios.

In the second ad, they identify the location as Prospect Heights, while in the first they're still claiming to be part of "Brooklyn's newest neighborhood."

The open space will not be a park, and the eight acres will only "adjoin" it by a very thin ribbon of green.

It would be hard to call the building "an extension" of the open space for ten years, until it's finished.

Most curious is the claim that the 60-foot street wall--required as part of the Atlantic Yards Design Guidelines is somehow "a contextual extension of the surrounding neighborhood, matching the 60-foot street wall of Dean Street."

Below are two photos--screenshots from Google Street View--of the Dean Street street wall below the southeast block of the project site. Most buildings are actually two, three, and four stores, some 25 to 45 feet tall.

In the screenshot immediately below, the tallest building near 550 Vanderbilt, in the distance, is 660 Dean Street,  54 feet, according to its Certificate of Occupancy.



Immediately below, the tallest building on the block, far from 550 Vanderbilt and near Carlton Avenue, is 610 Dean Street, which is 60 feet, according to its Certificate of Occupancy. So, yes, there's one building on Dean Street that's 60 feet tall. But that's no street wall.


Monday, September 21, 2015

As third anniversary approaches, Barclays Center on 16th TCO (Citi Field slower, Yankee Stadium faster)

As its three-year anniversary approaches at the end of September, the Barclays Center remains on a Temporary Certificate of Occupancy (TCO), apparently its 16th, according to Department of Buildings (DOB) records. See document at bottom, which is dated 7/25/15 and lasts 90 days before it must be renewed.

As I wrote in October 2013, an extended TCO is nothing new for sports facilities. Yankee Stadium got its Final Certificate of Occupancy in March 2012, after nearly three years, which is faster than Barclays, but Citi Field, which also opened in the spring of 2009, got its document in July 2013, more than four years later.

What is arena waiting for?

The Barclays Center TCO states, "There are 26 outstanding requirements. Please refer to BISWeb for further detail."

No, it's not easy to figure them out, though in the past unfinished retail space was clearly part of the total. I asked DOB and was sent a link to the page highlighted below, which actually indicates 25 open items of of 140 required.

Most but not all of the requirements seem to be document signoffs, as they can be resolved by documents presented to clerical staff (see "N"). A few others ("T") must be reviewed by a plan examiner.

Some of the latter may have been accomplished but are not fully complete, including seemingly significant items like sprinklers and smoke detection. Also note pending approval for "green roof acoustical wall," which remains under construction.

Past requirements

There were 67 outstanding requirements two weeks before the Barclays Center opened, then 29 outstanding requirements when it opened, according to the 9/26/12 TCO. That's no so different than now, at least in quantity.

As the document below indicates, the 9/14/12 TCO indicated unfinished retail.

Sunday, September 20, 2015

As vote on REIT conversion approaches next month, Forest City identifies arena/Nets as part of taxable subsidiaries

Forest City Enterprises has filed with the Securities and Exchange Commission a proxy statement sent to shareholders regarding the 10/20/15 vote to reorganize the Ohio-based corporation into a Maryland corporation that will qualify as a real estate investment trust (REIT).

By reorganizing, Forest City Realty Trust will not be subject to federal corporate income taxes on distributions. As a REIT, Forest City must distribute annually at least 90% of its REIT taxable income, which will exclude any taxable real estate investment trust subsidiary (TRS) unless that TRS pays dividends to the REIT. 

Regarding the TRS

The document states:
We plan to hold certain of our assets and operations and to receive certain items of income through one or more TRSs. These assets and operations consist principally of Forest City’s (i) military housing business, (ii) land development projects at Stapleton in Denver, Colorado, and Mesa del Sol in Albuquerque, New Mexico, (iii) condominium development projects at Pacific Park Brooklyn, a mixed-use project in Brooklyn, New York, and (iv) ownership interests in Barclays Center, the arena in Brooklyn, New York, and The Brooklyn Nets. Those TRS assets and operations would continue to be subject, as applicable, to U.S. federal and state corporate income taxes. 
Note that the 20% ownership in the Nets and 55% ownership interest in the arena are up for sale, and may well be resolved either before the vote or by the end of the year. Forest City is aiming to diminish subsidiaries that are not part of the core REIT.

Changing corporate structure, from the document

BEFORE THE MERGER



THE MERGER




AFTER THE MERGER




CREATION OF OUR OPERATING PARTNERSHIP




(1) Forest City converts to a Delaware limited partnership, with the REIT as its general partner and the REIT and FCILP as limited partners. We refer to these steps as the reorganization of Forest City into a limited partnership.

AFTER THE CREATION OF OUR OPERATING PARTNERSHIP




(1) Forest City Enterprises, L.P. (the Operating Partnership) is the result of the conversion of Forest City, as the surviving company in the Merger, from an Ohio corporation to a Delaware limited partnership; following this conversion, the REIT will be the sole general partner of the Operating Partnership and also will own, directly and through its interest in FCILP, all of the outstanding limited partnership interests in the Operating Partnership. The REIT may identify one or more persons or entities who agree to acquire (through purchase or exchange) and hold limited partnership interests in the Operating Partnership following the REIT Conversion. Nevertheless, the REIT will remain the sole general partner of the Operating Partnership and the Operating Partnership and its assets will still be assets of the REIT in the consolidated financial statements of the REIT. FCILP will be a taxable real estate investment trust subsidiary of the REIT. FCILP’s only asset will be a limited partnership interest in the Operating Partnership, which will be less than 1% of the limited partnership interests in the Operating Partnership. Forest City TRS, LLC will be a TRS of the REIT and is being formed to hold the REIT’s non-real estate investment trust assets and operations, which we expect will consist primarily of our (i) military housing business, (ii) land development projects at Stapleton in Denver, Colorado, and Mesa del Sol in Albuquerque, New Mexico, (iii) condominium development projects at Pacific Park Brooklyn, a mixed-use project in Brooklyn, New York, and (iv) ownership interests in Barclays Center, the arena in Brooklyn, New York, and The Brooklyn Nets.


Saturday, September 19, 2015

As Islanders unveil "Brooklynified" alternate jerseys, pols offer free publicity

It's the visuals that count.

The large photo below accompanies a New York Times Sports section piece today, Islanders Embrace Their Future in Brooklyn While Staying Connected With the Past.

See Brooklyn Borough President Eric Adams, NHL Commissioner Gary Bettman, WFAN's Craig Carton, Barclays Center developer Bruce Ratner, and arena/Nets CEO Brett Yormark all posing with new alternate, black-and-white jerseys for the New York Islanders. It's would look perfect in a press release.

Hey, where are the Islanders' owners? Do note that New York City Bill de Blasio did model a jersey, too, as pictured above right.

Photo: Alex Goodlett for the New York Times
Bettman, once skeptical of the move to Brooklyn, talked up the location. The Times reports:
Bettman cited history as he touted Barclays Center, where the Islanders will host the Stanley Cup champion Chicago Blackhawks in the season opener on Oct. 9.
“An arena sits where Walter O’Malley wanted to build a domed stadium for the Dodgers,” Bettman said, referring to the ill-fated plan to keep Brooklyn’s baseball team from leaving for Los Angeles. “It took a lot of work to fill the vision he had in mind. We look forward to a new fan base in Brooklyn.”
Actually, O'Malley didn't want to build there, but nearby. The Times notes that the players and practice aren't moving to Brooklyn yet, but rather will stay on Long Island. (With the Nets practicing in New Jersey--which should change this season--most players lived in Manhattan.)

The new jersey and the reaction

The new jersey, which takes cues from the Nets' color scheme while dropping blue and orange, got very mixed views from from commenters on Lighthouse Hockey, in New York Islanders Reveal Third Jersey, with a more optimistic and strategic take from NetsDaily, With Move to Brooklyn, Islanders Looking More and More like Nets.

The Brooklyn Paper published  Jersey bounce: Islanders fans dis new Brooklyn uniform, then a poll suggesting readers by a 56% to 32% margin dislike the jersey. (That's based on all of 70 respondents.) 

(The Brooklyn Paper did follow up with the more promotional Sit on it, Bossy! Hockey legend visits Downtown to promote glass-side seats.)

So the New York Daily News, sponsor (at least for now?) of the arena plaza, yesterday published an admonishing editorial, Finally in the black: Islanders fans should get used to their new alternate Brooklynified jerseys.

That's important to know.

WPIX comes through

Also, the ever-loyal PIX11 reports, A very special organ makes the move to Barclays Center.

Friday, September 18, 2015

Crane installation Saturday and Sunday may temporarily close NE sidewalk at Carlton and Pacific

A notice from Pacific Park Brooklyn:
Community Notice 
On Saturday, September 19 & Sunday, September 20 from 6AM to 9PM as part of the construction of the Pacific Park development, a crane is being assembled within the construction site on Pacific Street between Vanderbilt Avenue and Carlton Avenue.

To accommodate this, the North East sidewalk at Carlton Avenue & Pacific Street may be temporarily closed to pedestrians during this time. 
As always, please feel free to reach out to our offices with any questions or concerns. 
Thank you,
Pacific Park Brooklyn Community Liaison Office
1-866-923-5315
communityliaison@pacificparkbrooklyn.com 
Empire State Development
(212) 803-3736
atlanticyards@esd.ny.gov

B12 condo tower emerges, 278 feet, with huge units, dwarfs neighboring buildings, but materials aim for context

At the periodic Community Update meeting Wednesday night, Greenland Forest City Partners unveiled the design for the B-12 tower, 615 Dean Street, one building in from the 550 Vanderbilt tower at the southeast corner of the site, which is Vanderbilt Avenue and Dean Street.

Notably, 615 Dean is the tallest but not the bulkiest building among the four on the southeast block, rising 278 feet (the maximum height is 287 feet, so we'll see if that's met) and encompassing 321,000 gross square feet, including two retail spaces ofr 4,000 and 1,000 sf. (The maximum square footage is 317,185, but some flexibility is allowed as long as total is capped.)

Via New York YIMBY
By contrast, the 550 Vanderbilt condo tower maxes at 202 feet and 330,778 square feet, and the 535 Carlton affordable rental tower, at the corner of Carlton Avenue and Dean Street, maxes at 184 feet and 283,971 sf.

Notably, 615 Dean Street, with about 250 units, would have huge apartments, each averaging larger than 1,200 square feet. As a commenter on Brownstoner wrote, "how do you spell L.U.X.U.R.Y.?"

Josh Chaiken
The building does try, as KPF architect Josh Chaiken explained, to take context from both the residential/industrial block of Dean Street across the street as well as the towers bookending the block, designed by CookFox.

That means use of brick at the Dean Street facade and industrial precast concrete on other segments, which are bunched in three story segments, set back from Dean Street behind a 60-foot street wall. (That's the street wall of the other buildings.)

Among other things, Chaiken--a Park Slope resident--has designed a huge tower in Shanghai, the centerpriece of the Roppongi Hills project in Tokyo, and 50-story Ritz-Carlton hotel and condominium tower in Toronto.

Below is his slide presentation, posted by Empire State Development, which told me yesterday it would be posted that morning (but came a day late).



Sussing out the site

Chaiken said that the site differed from the other two nearby sites because it's midbock, and "three of the facades of the building are in the park." (He continually used the inaccurate word "park" to describe the privately-managed, publicly-accessible open space.)

He said that "we wanted to draw on the scale and quality of the brownstone street" and "wanted to reference some of the great older industrial buildings in Brooklyn." At the same time, given the size of the building, they aimed at a "sculptural quality" to break up the bulk into sections, with vertical and horizontal blocks.

B12 is second from right. B11 is at right, B14 two buildings west of B12


Along Dean Street, "we were trying to break the scale down with these vertical elements," he said, "reflecting the scale and rhythm of the street."

The entry to residences will be under a canopy at the western end of the building, with two retail segments to the east, punctuated by a ramp to a below-ground parking garage. There's a "secondary entry on the park side," he said.

550 Vanderbilt, aka B11, tilts into distance
Only when questioned did Chaiken and representatives of Greenland Forest City clarify the building's height and bulk.

Clarity and context

Dean Street resident Peter Krashes, who noted he lives across the street, said, "First, I want to thank you for showing a presentation that appears to have a true sense of scale to it."

In some other presentations, he added, "the scale is not apparent relative to the existing community. Y’know, it’s very difficult to do… I don't look at the building illustration and think it is apologizing for the scale by hiding that. And I want to thank you for that."

(As Krashes spoke, Forest City Ratner executive Ashley Cotton smiled a bit sardonically.)

Indeed, I've suggested that the 550 Vanderbilt tower, rendering at right, was skewed to diminish the size.

535 Carlton, aka B14, fades into distance
"I think that's why people are asking about the scale," Krashes continued. "It's also the first [time]  that we've actually seen what all of Dean Street looks like... we have not seen what the CookFox buildings look like from Dean Street... which I think is something the developer can correct."

There will be 860 parking spaces underground, with the curb cuts near the B12 (615 Dean) and B14 (535 Carlton) sites.