Tuesday, August 23, 2016

AY down the memory hole: Vanderbilt Yard improvements portrayed with no mention of shrunken railyard, bargain on development rights, and source of funds

Again, Atlantic Yards down the memory hole, with the sunny side of a revised deal gaining notice, while the developer's savings are ignored.

Yesterday amNY published As part of 'West Portal' LIRR project at Vanderbilt Yard in Brooklyn, crews cut through 100-year-old rail tunnel:
Construction crews have punched through a 100-year-old rail tunnel in the LIRR’s Vanderbilt Yard as part of ongoing work to modernize the Brooklyn storage facility.
Underneath congested Downtown Brooklyn streets, the 4-foot-thick concrete wall of the tunnel was blasted open this summer to build a direct train path between the yard and Atlantic Terminal for the first time.
The connection will be known as the “West Portal,” one of several operational enhancements that Greenland Forest City Partners, a joint venture between developers Greenland and Forest City Ratner, are delivering to the yard as part of a real estate deal to build part of its $5 billion Pacific Park project above the facility.
Here's the key section:
That process blocks other trains from using the tunnel for six to eight minutes at a time, which adds up to about two hours of wait time each day, according to the MTA.
The upgrade was a condition in the MTA’s deal to sell the air rights to the developers for Pacific Park, the 22-acre, mixed-use commercial and residential space formerly called “Atlantic Yards” that, after several delays, will be built over the next decade.
Along with the portal, crews will install electric signals to replace manual counterparts. Sewer connections will be built out from one to all nine of the yards’ tracks. The enhancements will also give MTA staff more space to navigate train cars.
(Emphasis added)

An MTA spokeswoman says that improved service will "sift down to benefit the customers."

No doubt.

What's missing

I bet this article was pitched by the public relations firm representing the developer. 

Here's what's missing: the lowered cost of the railyard, the bargain on development rights, and the source of the money for the railyard. 

As I wrote last November, keep in mind that the 2005 deal to build a modernized replacement Vanderbilt Yard to store and service Long Island Rail Road trains was revised, at Forest City Ratner's request, in 2009, and accepted by the Metropolitan Transportation Authority.

The permanent railyard, instead of having nine tracks with capacity for 76 cars, will have seven tracks with capacity for 56 cars. While there would be several improvements, the new railyard would be valued at $147 million, while the MTA's Gary Dellaverson in 2009 said the previous iteration could be worth $250 million, after inflation.

Also, as I wrote last November, the sale of development rights nearby suggests the value of the Vanderbilt Yard development rights would be worth $948 million before subtracting the additional cost of the new railyard, deck, and transit entrance--plus the benefit to the affordable housing.

But Forest City in 2005 promised $100 million in cash, then renegotiated an extension in 2009, at a gentle interest rate. At the very least, the MTA should have asked for a piece of the potential upside when it had leverage in 2009.

Moreover,  as I reported 5/8/15, Forest City and Greenland raised $249 million in the second round of cheap EB-5 financing from immigrant investors, which can be be used to build that railyard. 
A September 2014 letter) from Empire State Development, the state agency overseeing/shepherding Atlantic Yards/Pacific Park, makes it clear:

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