Yesterday, on the Leonard Lopate Show, Charles Bagli, who covers real estate and economic development for the Times, was the sole guest in a segment discussing Atlantic Yards. Now Bagli deserved the slot, given that he broke the big story last Friday, but another voice was in order, because, while Bagli made some worthwhile points, he missed some important details.
(He’s got a good track record as a reporter, but he’s way overstretched to master AY; the Times had a beat reporter on AY from October 2005 to December 2006, then promoted him, apparently thinking AY was a done deal.)
The arena cost
Bagli said of Ratner:
Officially, he very much wants to go forward with the project, but what he’s talking about is he's focused on the arena itself, a project that has swelled from a little more than $600 million to more than $900 million, which would make it the most expensive arena in the country.
Actually, when the arena was announced at $435 million, it would have be the most expensive arena in the country.
Timing issue
Lopate asked if Ratner would "forget about the residential towers, the affordable. housing, the Miss Brooklyn tower?”
Bagli wisely pointed out that it ain't over, but didn't look carefully enough at the timing issue:
Forget about it is probably not the way to go…When this project was approved by the state in December of 06, they envisioned the entire project being done in ten years. The first section, Phase 1, would've been the arena, the office building known as Miss Brooklyn, and three residential buildings… as well as Site 5, a building across the street….
What they're focusing on right now is the arena, period, and they're hoping that, by the time that's finished, maybe they'll be able to finish the first residential building…. What it amounts to is a much more drawn out process. Like I said, when it was approved in December of '06, the entire buildout was supposed to take ten years. Nine months later in September of '07, Ratner and the state came together on a funding agreement. And the funding agreement gives him now 12 years to build Phase 1. So I think they've sort of—they were on to the new realities here.
Whoa. As has been documented, business leader Kathryn Wylde (December '06), project landscape architect Laurie Olin (February '07) and Chuck Ratner (March '07), an executive at parent Forest City Enterprises, estimated 15-20 years. When the project was approved, the timetable was already out of date. Also, before the credit crunch, the city and state suffered from a serious deficit in bonds for affordable housing--enough to delay the project unto itself.
It's notable that the 12-year timetable has not been mentioned in the Times. Rather, I reported on it in my blog.
What’s to blame?
Lopate asked how much should be blamed on economics, how much on lawsuits.
CB: The lawsuits certainly play a factor, if only because... the cost of materials is still rising, anywhere between 1 and 2% a month. That adds up to a lot of money. Ratner says these lawsuits had stalled him for almost two years. That has a profound effect. But I don't know that anyone imagined that you would go from a situation where the banks and other lenders were just throwing money at real estate ... but now, it's not just Ratner, but any developer who wants to start to try to move forward today with a large real estate project is having an impossible time trying to find someone to lend him the money.
True, but the lack of affordable housing financing preceded the credit crunch.
The Beekman Tower
Bagli continued:
…He's got a project downtown called the Beekman Tower, very big, 70+ stories, it's over 900 apartments. He had finished in early December… he finished the foundation and moved a crane onto the site…it's been idle ever since, even though the crane is there--which means you're paying for the crane to stand there, and you’re paying for your crews… his problem is he wasn’t able to put together a $700 million construction loan. Again, 18 months ago, he could've gone to one bank and gotten the loan. But today they're trying to put together a half dozen different lenders to come up with the financing for the tower… They told me they anticipated closing on the financing for Beekman Tower by the end of this month. I don't know if they're on track. But it’s illustrative of the difficulties; here you are in midstream, so to speak, and you’re having an awful time putting together the finances.
The Downtown Express also reported on contradictory explanations for delays on the project, notably a planned school. The School Construction Authority asserts there’s a delay in delivering a shipment of steel, but Ratner has cited difficulties in getting financing.
Eminent domain & triage
Lopate pointed to Gov. David Paterson’s 2005 call for a moratorium on eminent domain. Bagli noted that the evidence of any current policy is absent.
CB: Yes, he did. We haven't heard a word from him since. Who knows how he feels today. Eminent domain was very much on the front burner back in 2005... a variety of projects where the state was wiling to condemn private property... It is clear that the Spitzer people took a long time to get their arms around economic development. Now we have a new administration. The big question is, how long are they going to take? Will he do a complete housecleaning… or is he going keep some executives in place, so there's some institutional memory. But we’re in a very difficult time, I think both the city and the state are going to have to sort of open up a M*A*S*H tent and start doing triage, and decide what are the most important projects that need to go forward today and then what are the projects that are going to have to wait or fall off the table.
Starchitects in Brooklyn
LL: Some people are concerned that Brooklyn is going to lose a group of buildings by one of the world's major architects. Should that be a concern?
Bagli made an important distinction: Y'know, it's wonderful to have these world-famous architects, they tend to be very expensive and they do provide a different kind of building. But I'm not sure that should be the primary concern, particularly for these public private partnership when the public is making a huge investment, and they’ve got to be concerned about what they get back for that, and given all the project that are in motion, I think the city and state are going to be forced to make decisions about what is most important.
It was always doubtful that Gehry could complete all the buildings.
A rezoning?
LL: If the Atlantic Yards project never really gets built or doesn't get built completely, what happens to the rest of the land?
CB: First of all, I think the land has been rezoned, so the value of that property is higher than it was five years ago… I think Ratner may do a portion of it, and then sell it off. But it won't be like nothing every gets built over there.
Rezoning is a city process. In this case, the Empire State Development Corporation, a state agency, will override city zoning (regarding placement of an arena within 200 feet of residences, current density, signage, and more). That's an important basic fact.
(He’s got a good track record as a reporter, but he’s way overstretched to master AY; the Times had a beat reporter on AY from October 2005 to December 2006, then promoted him, apparently thinking AY was a done deal.)
The arena cost
Bagli said of Ratner:
Officially, he very much wants to go forward with the project, but what he’s talking about is he's focused on the arena itself, a project that has swelled from a little more than $600 million to more than $900 million, which would make it the most expensive arena in the country.
Actually, when the arena was announced at $435 million, it would have be the most expensive arena in the country.
Timing issue
Lopate asked if Ratner would "forget about the residential towers, the affordable. housing, the Miss Brooklyn tower?”
Bagli wisely pointed out that it ain't over, but didn't look carefully enough at the timing issue:
Forget about it is probably not the way to go…When this project was approved by the state in December of 06, they envisioned the entire project being done in ten years. The first section, Phase 1, would've been the arena, the office building known as Miss Brooklyn, and three residential buildings… as well as Site 5, a building across the street….
What they're focusing on right now is the arena, period, and they're hoping that, by the time that's finished, maybe they'll be able to finish the first residential building…. What it amounts to is a much more drawn out process. Like I said, when it was approved in December of '06, the entire buildout was supposed to take ten years. Nine months later in September of '07, Ratner and the state came together on a funding agreement. And the funding agreement gives him now 12 years to build Phase 1. So I think they've sort of—they were on to the new realities here.
Whoa. As has been documented, business leader Kathryn Wylde (December '06), project landscape architect Laurie Olin (February '07) and Chuck Ratner (March '07), an executive at parent Forest City Enterprises, estimated 15-20 years. When the project was approved, the timetable was already out of date. Also, before the credit crunch, the city and state suffered from a serious deficit in bonds for affordable housing--enough to delay the project unto itself.
It's notable that the 12-year timetable has not been mentioned in the Times. Rather, I reported on it in my blog.
What’s to blame?
Lopate asked how much should be blamed on economics, how much on lawsuits.
CB: The lawsuits certainly play a factor, if only because... the cost of materials is still rising, anywhere between 1 and 2% a month. That adds up to a lot of money. Ratner says these lawsuits had stalled him for almost two years. That has a profound effect. But I don't know that anyone imagined that you would go from a situation where the banks and other lenders were just throwing money at real estate ... but now, it's not just Ratner, but any developer who wants to start to try to move forward today with a large real estate project is having an impossible time trying to find someone to lend him the money.
True, but the lack of affordable housing financing preceded the credit crunch.
The Beekman Tower
Bagli continued:
…He's got a project downtown called the Beekman Tower, very big, 70+ stories, it's over 900 apartments. He had finished in early December… he finished the foundation and moved a crane onto the site…it's been idle ever since, even though the crane is there--which means you're paying for the crane to stand there, and you’re paying for your crews… his problem is he wasn’t able to put together a $700 million construction loan. Again, 18 months ago, he could've gone to one bank and gotten the loan. But today they're trying to put together a half dozen different lenders to come up with the financing for the tower… They told me they anticipated closing on the financing for Beekman Tower by the end of this month. I don't know if they're on track. But it’s illustrative of the difficulties; here you are in midstream, so to speak, and you’re having an awful time putting together the finances.
The Downtown Express also reported on contradictory explanations for delays on the project, notably a planned school. The School Construction Authority asserts there’s a delay in delivering a shipment of steel, but Ratner has cited difficulties in getting financing.
Eminent domain & triage
Lopate pointed to Gov. David Paterson’s 2005 call for a moratorium on eminent domain. Bagli noted that the evidence of any current policy is absent.
CB: Yes, he did. We haven't heard a word from him since. Who knows how he feels today. Eminent domain was very much on the front burner back in 2005... a variety of projects where the state was wiling to condemn private property... It is clear that the Spitzer people took a long time to get their arms around economic development. Now we have a new administration. The big question is, how long are they going to take? Will he do a complete housecleaning… or is he going keep some executives in place, so there's some institutional memory. But we’re in a very difficult time, I think both the city and the state are going to have to sort of open up a M*A*S*H tent and start doing triage, and decide what are the most important projects that need to go forward today and then what are the projects that are going to have to wait or fall off the table.
Starchitects in Brooklyn
LL: Some people are concerned that Brooklyn is going to lose a group of buildings by one of the world's major architects. Should that be a concern?
Bagli made an important distinction: Y'know, it's wonderful to have these world-famous architects, they tend to be very expensive and they do provide a different kind of building. But I'm not sure that should be the primary concern, particularly for these public private partnership when the public is making a huge investment, and they’ve got to be concerned about what they get back for that, and given all the project that are in motion, I think the city and state are going to be forced to make decisions about what is most important.
It was always doubtful that Gehry could complete all the buildings.
A rezoning?
LL: If the Atlantic Yards project never really gets built or doesn't get built completely, what happens to the rest of the land?
CB: First of all, I think the land has been rezoned, so the value of that property is higher than it was five years ago… I think Ratner may do a portion of it, and then sell it off. But it won't be like nothing every gets built over there.
Rezoning is a city process. In this case, the Empire State Development Corporation, a state agency, will override city zoning (regarding placement of an arena within 200 feet of residences, current density, signage, and more). That's an important basic fact.
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