

The Atlantic Yards project, at 9.1 million square feet in its current configuration, would be larger cumulatively than the 37 projects that Forest City Ratner completed in the past 18 years. Those projects involve about 8.5 million square feet, with another 2.5 million square feet "in the development pipeline." Atlantic Yards is not yet in that pipeline, Ratner said, though he was optimistic.
Atlantic Yards

(If it wasn't developed, then whose responsibility was that? Also,Ratner is apparently not on board with the Downtown Brooklyn mantra.)
He continued: Itās an area where thereās railyards, older buildings and so on. It will include 4500 rental housing units, 2000 condos, retail, office and hotel. Itās a public-private partnership I would say in a lot of ways. Whatās important to the city, which is affordable housing, residential housing, along with the importance of course of doing an arena and getting sports team.
(Has the number of condos been shrunk from 2800 to 2000, or was that just Ratner speaking casually? And what about the 600 to 1000 affordable condo units? If he didn't mention them, are they going offsite?)
Here's what he said about timing: That project is on its way to being entitled. Probably in early fall, middle fall of this year we should have our entitlement and start construction in the next four to five months after that.
(Maybe, but the environmental review process is still in the early phase, and legal challenges, including one over the use of eminent domain, could delay the process. Perhaps that's why Forest City Ratner has been renegotiating the lease on the Continental Airlines Arena, and may stay until 2010.)
Ratner hinted that the project, once launched, might take longer than initially planned: The master plan includes a basketball arena and 16 buildings designed by Frank Gehry. Itās multiphase, over ten to 15 years.
(Initially, a company press release stated: Itās estimated that the full Brooklyn Atlantic Yards development will take approximately 10 years to complete.)
He touted the Community Benefits Agreement: An MOU is a memorandum of understanding in our business, thatās been executed in 05, with a commitment of substantial funds. We signed something, which I think is terrific and extensive and I think will be a model for many other cities and many other developments. The Community Benefits Agreement, CBA, I canāt stress how important that is.
(Others, however, have their doubts.)

(Actually, Forest City Ratner and supporters referred to all the residential units, which at that point were rentals.)
He offered a cursory account of the acquisition of the Metropolitan Transportation Authority's Vanderbilt Yard: We won the bid for the competition to purchase the MTA yards, there was one other bidder.
(Omitted was that the rival, Extell, made a higher cash bid, and both were below the appraised value.)
Regarding the Nets
Ratner was recruited to buy the Nets by Brooklyn Borough President Marty Markowitz, and it's well-known he wasn't a longtime hoops fan:We are the principal owner of the Nets basketball team, itās been a real experience for me firsthandā¦ Thereās 41 games, I try to go to every one. It was really the linchpin of this devpment. Without the basketball team and arena, we wouldnāt be able to do this development. It created the opportunityā¦ We very often start our projects with an anchor, in this case itās an arena and a basketball team. I think both will be very successful.
Is the basketball team making or losing money, Ratner was asked. "Itās losing money," he replied, though he didn't offer specifics. The Star-Ledger reported 3/19/06 that, despite gains in ticket sales, the team will lose between $20 million and $30 million, and Ratner hopes "to sell $60 million of equity in the team to help cover his costs until he can build an arena in Brooklyn and move the team."
(Note that Ratner has required two previous loans in the past two years.)
But Ratner was optimistic:
When it moves to Brooklyn, it should make moneyā¦ Itās doing actually quite well. Weāve got a 20% increase in ticket sales and revenueā¦. I think eventually we will break even on the operating side. And I think itās actually a business you can do decently well withā¦ I look at as a business challenge, I think itās one weāre really up to.ā¦ The arena will be brand new, Frank Gehry, it will do extremely well. The arenaās going to also make money, together with the team, we project a decent amount of cash flow going out in 2009-10.
(Note: Projections by Andrew Zimbalist, the Smith College economist Forest City Ratner paid to provide a report on project benefits, assume revenues from the arena premised on several factors, including no arena in Newark. The latter is already under construction.)
Beginning in Brooklyn
Ratner first described the MetroTech project, the company's first:
I used to start all my presentation, Brooklyn has the best downtown in America. And they laughed. It has great transportation, great housing stock, right across the river from Manhattan. It has a tremendous artists' community.
...Here you see the MetroTech site in 1986. And much like Atlantic Yards site, it was a combination of older buildings, some parking lots, some buildings occupied, some buildings not occupied. And if you look at it todayā¦ It was a long hard road, because when we first talked about Brooklyn, people really didnāt believe it could beā¦ It was high crime areaā¦But we capitalized on something very important. We capitalized on the strong economics of New York City.
Atlantic Terminal empty?
He described the project over the transit hub at Atlantic and Flatbush avenues:
Atlantic Terminal retail and office. That was the site that was cleared by Robert Moses in the late 50s, and it was cleared to be housing, at one point, the Dodgers were going to move there. It really was fallow for 40 years.
(Note: the aboveground Long Island Rail Road wasn't demolished until 1990)
He pointed to changes in public safety as spurring changes in retail:
Crimewise, you couldnāt walk around this site ten or 15 years agoā¦ In 1992, I lived in New York, there were 2200 homicides. Last year, there was something like 560 or 570 homicidesā¦. That gives you an idea how New York has changed.
Brooklyn's lost Kmart?
Ratner showed a picture of the Atlantic Terminal mall: So we took a piece of vacant landā¦ I remember this piece of land--itās probably about six acresā¦ I remember taking Kmart in 1994 to look on the top of the Williamsburgh Savings Bank, I said you could have this whole site if you wanted to put a Kmart on it allā¦Now this site today has 400,000 square feet of office space and almost 400,000 square feet of retail anchored by Target.
Part of our portfolio includes big box retailā¦ Weāve done 37 projects in the city, and about half of that is retail. Itās all big box retail, nearly allā¦. We were the first after Home Depot to do big box in New York. That Target is between one and 10 nationally in terms of sales.

New developments
Ratner described five projects in the development pipeline, including Ridge Hill in Yonkers, East River Plaza in Harlem ("one of the most important largest retail developments in New York City for big boxes"), and Beekman Tower in Lower Manhattan. That building, which the company describes as "a 1 million square foot luxury condominium and rental building."
(Unlike with Atlantic Yards, there's apparently no affordable housing planned. Maybe company spokesman Joe DePlasco was only referring to Brooklyn when he told the New York Times, "Forest City Ratner Company believes firmly that supporting nonprofits and community groups, and working with them to identify and address needs, is at the foundation of what they do. It's that simple.")
Ratner's comments about the building likely apply to the residential component of the Atlantic Yards project:
Weāre entering a very strong rental market. I think the NYC residential rental market, which has been good but relatively slack the last four or five years... as interests rates are going up, people are looking for other alternatives, and most importantly thereās been almost no development in the rental residential arena in New York City in five or six years.
On the Times
Ratner also described the Times Tower, designed by Renzo Piano built in collaboration with the New York Times Company, and expected to open at the beginning of 2007. The Timse will have 26 floors; FCR will rent 22 floors. āTheyāve been wonderful partners, itās a great company,ā he said.
Given criticisms by me and others of the New York Times's coverage of Forest City Ratner, some might wonder if he was suggesting that the "wonderful" partnership extends to the pages of the newspaper. But it's clear he was referring to the parent company.
Eminent domain "wonderful"
After Bruce Ratner finished his presentation, a Forest City Enterprises official, apparently Bruce's cousin president/CEO Charles Ratner (I couldn't quite tell), offered an anecdote. āI have one wonderful story to tell you about public-private partnerships," he said. "We need those in order to make these projects competitive."
"As you all know thereās a lot of debate now about eminent domain. Clearly for us, in our business, eminent domain has been a wonderful avenue for development," he continued, noting that Chicago mayor Richard Daley called it the "most important tool" a mayor has to do development. (It wasn't clear if he meant the current mayor, Richard M. Daley, or his father, but it's likely the former, who, along with other big city mayors, signed a resolution supporting the use of eminent domain.)
The story, he said, had been told by Albert Ratner, co-chairman of the company board, when he was honored last year by the Urban Land Institute.
So Albert tells this story. In 1950s, he was in the office, putting his coat on, he was going out of the building. His father, Uncle Leonard, said, "Al, where are you going?"
"Iām going to meet the Ohio Department of Transportation."
"How come?"
"Dad, you know the land we have on Mayfield Road. Theyāre going to take that and put a highway right through that land."
And Uncle Leonard looked at Albert and said, "Thatās going to be terrific for our land. How much do we have to pay them for that?"
Albert said, āNo, Dad, you have it mixed up. We donāt pay them, they pay us."
At this point, Uncle Leonard said, āWhat a country.ā
A difference between that exercise of eminent domain and the version that may be exercised for the Atlantic Yards project is that the former was clearly for public use rather than the "public purpose" of economic development, which is how the "public use" doctrine has evolved. Another difference: those who would have to sell their land for the Atlantic Yards project wouldn't be stakeholders in new development stimulated by the project.
The backlash
The backlash to the Supreme Court's Kelo decision, The Next American City suggests, is playing "into the hands of the anti-urban bias of conservatives." But the magazine suggests reforms:
State legislatures considering reducing eminent domain powers should be mindful of the fact that they could create another problem as serious as the one they are trying to solve: if denied the tools necessary to stimulate economic development, distressed municipalities will turn to the state for other forms of assistance. Instead, legislatures could consider requiring strict additional findings before private homes be taken but otherwise allowing eminent domain for economic development to continue.
Comments
Post a Comment