Skip to main content

ESDC/FCR say eviction delay past May 17 would "cripple" Atlantic Yards, but claims of continued losses and jeopardized benefits seem overblown

On the eve of a crucial court hearing regarding the fate of condemnees still in the Atlantic Yards footprint, the Empire State Development Corporation (ESDC) and Forest City Ratner (FCR) are arguing that the failure to evict those occupants by May 17 would cause "enormous harm" and significant financial losses to the developer.

It is unclear how many of the six households (15 people) and three businesses yet to reach agreements with the developer will resist the condemnation, but a response to those legal arguments--likely stating that this is unusually swift for a condemnation cast--will be filed tomorrow, before a 9:30 10 a.m. hearing before state Supreme Court Justice Abraham Gerges at Supreme Court in Brooklyn, 320 Jay Street.

According to my preliminary analysis, several ESDC/FCR claims overstate the damage anticipated, emphasize the costs without acknowledging significant subsidies, and fail to provide sufficient detail to establish the argument for speed.

(Also see my coverage of FCR's claims regarding Develop Don't Destroy Brooklyn's legal strategy and alternative condos offered project opponent Daniel Goldstein. Note that, beyond those totaled above, some other businesses and residents remain in the footprint, but have reached agreements to leave. Crain's totals 32 residents and three businesses.)

ESDC affidavit

ESDC attorney Charles Webb summarizes the argument made in an affidavit from the developer:
Delay in achieving vacant possession would halt work on the Project, causing enormous harm by (i) prolonging the time in which FCRC must carry the real property and the Project's overhead without generating income, which costs FCRC $6,700,000 per month, (b) prolonging the Nets basketball team's operating losses of approximately $35 million a per year arising from its New Jersey location, and (c) jeopardizing the delivery of 2,250 affordable housing units, and significant public amenities, including a new transit entrance and eight acres of publicly accessible open space.
$6.7 million in losses?

The $6.7 million figure doesn't add up. An affidavit in the package from FCR executive Maryanne Gilmartin explains that, among other things, it costs the developer $2.9 million per month to carry the property and $2.5 million per month to defray the Brooklyn Arena Local Development Corporation's liability to bondholders for interest on the bonds.

That $2.5 million cost will continue until vacant possession is achieved, and bond proceeds can be released. The bond sale would be rescinded if vacant possession is not achieved by 12/17/10, which is unlikely.

Subtract that new $2.5 million cost from $6.7 million and the total is $4.2 million. However, in an affidavit filed 1/17/08 in a separate AY case--long before bonds were issued, adding that new cost of $2.5 million--Gilmartin swore that the monthly carrying cost was already $6 million.

(Forest City Ratner lawyer Jeffrey Braun, unaccountably doubled down and claimed the tab was $12 million a month. Gilmartin's new affidavit draws significantly on standard language in that affidavit from 2008.)

Losses in New Jersey

The affidavits make no mention of the Nets' move from the antiquated Izod Center to the Prudential Center in Newark for at least the next two seasons.

While that location would not be as profitable as the expected Barclays Center, where the developer would gain the benefit from naming rights and other sponsorships, there's no reason to think that the team's losses would approach $35 million.

Affordable housing

The affordable housing would be slowed by a delay in arena construction only in the most general way.

The affordable housing units depend most crucially on sufficient subsidies, which is why the ESDC allows the developer to assert an Affordable Housing Subsidy Unavailability, part of a timeline that allows 25 years to build the project rather than the ten years officially announced.

Open space

As for the eight acres of open space, they're not due until Phase 2 of the project. Forest City Ratner has 12 years--plus extensions--to build Phase 1. And the eight acres wouldn't arrive until the project was completed--perhaps 25 years.

FCR investment: $280 million?

Gilmartin stated:
A failure to promptly issue the Writs of Assistance would cripple the Project, would be injurious to the public interest, and would wrongfully expose the Project's sponsors to enormous financial harm.
Forest City, according to Gilmartin, "has invested about $280 million in acquiring properties from willing sellers and carrying those properties."

Unmentioned: New York City taxpayers have contributed $131 million, nearly half that figure, to subsidize FCR's investment.

Bond fees

Regarding the $511 million in tax-exempt bonds issued to help build the arena, Gilmartin states:
The professional fees an other costs that were incurred for this tax-exempt financing by FCRC (which is responsible for the fees and costs of all of the participants in the transaction) are enormous.
Consider the savings Forest City Ratner gains via the tax-exempt bonds, which surely dwarf the "enormous" fees.

The New York City Independent Budget Office (IBO), in a September 2009 report that presumed $678 million in tax-exempt arena bonds, estimated that the federal tax break was worth $194 million. A commensurate percentage would make the federal tax break on $511 million worth $146.2 million.

One interruption

Gilmartin writes:
Furthermore, construction activities commenced at the Project site in 2007 and have continued with only one interruption since then.
To an unwitting reader, that "interruption" sounds like it might be a brief hiatus, a weekend or two. Actually, Forest City Ratner stopped railyard work in early December 2008 and didn't start back until the fall of 2009.

Need for demolition

Gilmartin's affidavit points to specific buildings in the developer's path, presumably occupied by the few people yet to reach agreements.

One is Goldstein's condo:
Furthermore, so long as the former Goldstein unit remains occupied, it is necessary to keep Pacific Street open to traffic to allow access to and egress from the building. Pacific Street occupies a large portion of real estate that is essential to construction of the arena because it runs through the middle of the arena site. Therefore, the inability to close Pacific Street and excavate the street for the arena, due to continuing occupancy of the former Goldstein unit, substantially impedes further progress on construction of the arena.
Another involves Henry Weinstein's building at 752 Pacific Street on the southeast block, Block 1129. Block 1129 will be used for construction-related activities, storage of machinery and materials, and parking for construction workers.

The package of legal papers lists two businesses, Freddy's Bar & Backroom and Pack It Away Storage, as not having come to agreements with the developer. Since then, Freddy's has reached a settlement.

Weinstein, however, is said not to have possession of his building and associated parking lots; he has since retaken possession, though the issue is in dispute.

Construction sequence

Gilmartin states that delays threaten an October 2012 arena opening, though a specific construction schedule is not included in the package of papers:
All of the various construction-related activities described in this affidavit are part of a carefully developed and very intricate sequence of work that is now intended to allow the Barclays Center arena to open in time to permit the Nets to play home games at the Barclays Center by the beginning of the 2012-13 NBA season Furthermore, it takes at least three to four months to commission an arena like Barclays Center--i.e., to test and refine the various buildings systems and the various operations (such as security and food services) that must be performing properly and efficiently before the arena can be opened for the professional basketball season. In other words, it is essential that the arena be completed by early July 2012, so that the commission process can be completed by the opening of the basketball season in October 2012. To achieve that goal, it is essential to now vacate the buildings required for phase 1 of the Project, because the critical path to completion of the arena on schedule requires prompt realization of vacant possession of those properties.
Order to Show Cause ESDC, Atlantic Yards Condemnation Case


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…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming + FAQ (post-dated pinned post)

This graphic, posted in February 2018, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed--but not yet approved--shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

How many people are expected?

Atlantic Yards/Pacific Park has a projected 6,430 apartments housing 2.1 persons per unit (as per Chapter 4 of the 2006 Final Environmental Impact Statement), which would mean 13,503 new residents, with 1,890 among them in low-income affordable rentals, and 2,835 in moderate- and middle-income affordable rentals.

That leaves 8,778 people in market-rate rentals and condos, though let's call it 8,358 after subtracting 420 who may live in 200 promised below-market condos. So that's 5,145 in below-market units, though many of them won…

The passing of David Sheets, Dean Street renter, former Freddy's bartender, eminent domain plaintiff, and singular personality

David Sheets, longtime Dean Street renter, Freddy's bartender, eminent domain plaintiff, and singular personality, died 1/17/18 in HCA Greenview Hospital in Bowling Green, KY. He was 56.

There are obituary notices in the Bowling Green Daily News and the Wichita Eagle, which state:
He was born in Wichita, KS where he attended public Schools and Wichita State University. He lived for many years in Brooklyn, NY, and was employed as a legal assistant. David's hobby was cartography and had an avid interest in Mass Transit Systems of the world. David was predeceased by his father, Kenneth E. Sheets. He is survived by his mother, Wilma Smith, step-brother, Billy Ray Smith and his wife, Jane all of Bowling Green; step-sister, Ellen Smith Alexander and her husband, Jerry of Bella Vista, AR; several cousins and step-nieces and step-nephews also survive. Memorial Services will be on Monday, January 22, 2018 at 1:00 pm with visitation from 10:00 am to 1:00 pm Monday at Johnson-Vaughn-Phe…

Some skepticism on Belmont hockey deal: lease value seems far below Aqueduct racino; unclear (but large?) cost for LIRR service

As I wrote for The Bridge 12/20/1, The Islanders Say Bye to Brooklyn, But Where Next?, the press conference announcing a new arena at Belmont Park for the New York Islanders was "long on pomp... but short on specifics."

Notably, a lease valued at $40 million "upfront to lease up to 43 acres over 49 years... seems like a good deal on rent for the state-controlled property." Also, the Long Island Rail Road will expand service to Belmont.

That indicates public support for an arena widely described as "privately financed," but how much? We don't know yet, but some more details--or at least questions--have emerged.

An Aqueduct comparable?

Well, we don't know what the other bid was, and there aren't exactly parcels that large offering direct comparables.

But consider: Genting New York LLC in September 2010 was granted a franchise to operate a video lottery terminal under a 30 year lease on 67 acres at Aqueduct Park (as noted by Gov. Andrew Cuomo).


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…