Skip to main content

A Cleveland Ratner offers timeline candor: Arena by 2010; project would take 15 years

Forest City Ratner (FCR) executives have claimed that the planned Brooklyn arena (aka Barclays Center) would open in 2009 and the Atlantic Yards project would take ten years. However, executives from the parent company were far more candid while speaking on Tuesday to investment analysts.

The arena would open by 2010, at best.

The project would take at least 15 years--and that's from a CEO who acknowledges that the company is "terrible" at predicting when a project will go from idea to reality.

Skepticism surfaces

Since December, even project supporters have expressed skepticism about the proposed ten-year time frame. Kathryn Wylde, CEO of the Partnership for New York City, predicted that the project would require a 15- to 20-year buildout.

Two weeks ago, in the New York Observer, Forest City Ratner executive Jim Stuckey contradicted project landscape architect Laurie Olin, who had claimed the project would take 20 years. “We don’t believe it is going to take 20 years. We expect that it will take 10,” Stuckey said.

A 20-year buildout, of course, would deliver the promised affordable housing at half the speed.

Earlier this week, an unindentified "insider"--perhaps from the developer--suggested to Crain's NY Insider that the Nets should occupy "the new Prudential Center in Newark before relocating to Brooklyn in 2009 or 2010," thus floating the possibility of a move later than promised.

(FCR CEO Bruce Ratner last week, in the New York Times, called the 2009 target "aggressive, but I think we can do it.")

Webcast candor

Stuckey and Ratner were speaking to the press. Investment analysts get a different story--though it still requires some footnotes.

In a webcast of a Forest City Enterprises (FCE) presentation at the Citigroup 2007 Global Property CEO Conference on Tuesday, CEO Chuck Ratner (right) and Executive Vice President, Finance and Investment Bob O’Brien answered a series of questions about Atlantic Yards with candor and optimism. (Cleveland-based FCE is the parent of New York-based FCR.)

(The sequence starts at 1:21:35.)

BO: We’ve been working on Atlantic Yards for a little over three years now.

CR: Everybody know the project? It’s Downtown Brooklyn, it’s the current Illinois--the current LIRR yards, it sits right on Flatbush and Atlantic. It’s a great piece of real estate. We’re trying to develop it into a mixed-use project.

Actually, it's in Prospect Heights, and the railyards would be 8.5 acres of a 22-acre site.

More office space?

BO: It’s development of an arena to take the New Jersey Nets, which we have an ownership interest in, relocate them to Brooklyn, to bring a professional sports franchise to Brooklyn, in an arena venue, to compete in… one of the best marketplaces in the world. With that would come, in the neighborhood of 6000 housing units, up to a million and a half to 2 million square feet of office and about 300,000 square feet of retail.
(O'Brien at right)

O'Brien's numbers are curious. The project, according to the Executive Summary of the Final Environmental Impact Statement (p. 3), would include 6430 apartments and 336,000 square feet of office space. An alternative plan would include 5325 apartments and 1.6 million square feet of office space. But the market for office space is weak and the market for housing is hot, as Chuck Ratner was to observe a few minutes later.

Final approval? Not quite

BO: We reached a significant milestone in 2006. The Public Authorities Control Board, which had the right to review and approve our development plans, after we completed our full environmental impact statement, that was completed and they approved that in mid-December, that was one major milestone. Many of you who are in New York know that this is in the paper often. It’s a controversial project and there is some very vocal, articulate opposition. That’s the American way, and that’s fine.

Note that he calls it "our" environmental impact statement (EIS) rather than the state's. It reflects, inadvertently or not, that the developers foot the bill for the environmental review.

BO: We are making our way through that process. We control about 90 percent of the land--own or control 90 percent of that land for the full development of that project. While we have a number of hurdles to get through yet and we’re not home free, we’ve begun to move some dirt on the site to relocate the Long Island Rail Road tracks so we can begin to build some of the infrastructure.

The term "own or control" is flawed, as I've written, since Forest City Ratner owns some buildings whose tenants won't leave without eminent domain, and it "controls" some leases in buildings it doesn't own. Indeed, that percentage just went down to about 85 percent, if State Supreme Court Justice Ira Harkavy's decision regarding a lease of Henry Weinstein's property stands.

Timeline questions

O'Brien was asked about the hurdles and the timeline.

BO: The timeline is as soon as possible. We’re actually 18-24 months behind what our original estimates were. Those hurdles are getting through the final approvals, not the least of which is full control of 100 percent of the land, which may involve eminent domain, that’s obviously something that will likely take lawsuits to ultimately get through. We would expect and our goal is to have vertical construction up and operating within 30 to 36 months, and hopefully, the current timeline is to have the ball team open in 10-11?

CR: 10-11.

From March 2007, 30 months would be September 2009; 36 months would be March 2010. It seems that a September 2009 opening would be unlikely.


A questioner asked if the delay in the project affects anticipated returns. Ratner acknowledged a 15-year buildout.

CR: Return expectations have not changed since we started. That is--this is going to be a 15-year buildout, so obviously, we believe over time that we’ll be able to make up for this, as we have. MetroTech was a perfect example. We had the same kind of issue.

Indeed, MetroTech was supposed to take five years. It took 14, as the New York Observer's Matthew Schuerman reported last September.

CR: And we believe that over time—what’s happened in Brooklyn, all that’s happened during the delay is the market’s gotten much stronger. Nobody knows that better than you and the rest of you in the room from New York. There’s just been an article recently in the Times about what’s happened to housing in Brooklyn, and it’s largely housing. I have a daughter who lives in Park Slope. She’s just had a second baby, she’s looking for a place to move--it’s unbelievable to me what she has to pay. So I don’t expect our returns to moderate.

Subsidies still murky

CR: What we are still doing…it’s not just getting through the issue with the opposition and the lawsuits. We also have a public entitlement in this process. There’s a public subsidy, it’s been announced, $200 million. There’s an affordable housing requirement in this, a moderate housing requirement in this, and we’re still negotiating with the public authorities as to how that will come out.

Actually, the direct subsidy would now be $305 million, given the apparent doubling of the city's contribution. No public entity has acknowledge the amount of housing subsidies, though a Forest CIty Ratner document released by the ESDC last week cited $1.15 billion in tax-exempt bonds.

More than 15 years?

Ratner then went off on a peroration on how even his 15-year estimate could be wrong: I’m confident that Bob is right, we will start within that time frame. I’m not at all confident of how long it will take us to finish. Y’know, it’s an amazing thing, this San Francisco thing. If you’d have told me… in 1994 that we’d open this [San Franciso] project in 2006, I’d have said “You’re insane, it couldn’t possibly take that long.”

We’re very good at estimating markets, we’re very good at estimating rents, at estimating lease-ups, and estimating costs. We are terrible, and we’ve been a developer for 50 years, on these big multi-use, public private urban developments, to be able to predict when it will go from idea to reality. All we know is that if we pick the right place and we’re in with the right people, that over time we’re going to create tremendous value.

Track record

Ratner pointed to the developer's track record and public support:
And we’ve done this before, and that’s a track record that adds to credibility. We did it in MetroTech, we did it in Cambridge, we’re doing it in Stapleton, we did it in Central Station. And I’m convinced that this is a great market, and it’s a unique piece of real estate. We’ll get it done. We have very strong political support. The mayor, the borough president, the governor, have all been steadfast in supporting what we’re doing and in supporting Bruce.

Well, new Governor Eliot Spitzer has been historically supportive of the project, but, then again, he didn't know much about it, last October calling a promised 8% reduction in the project a "reasonable compromise," betraying no knowledge that the cutback would bring the project back to the square footage originally proposed.

Now, apparently, his downstate economic development chief, Patrick Foye, is getting up to speed on Atlantic Yards.

One of the first things he should get straight, apparently, is the timeline.


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 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…

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 …

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…

"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 …