Skip to main content

If FCR doesn't build over the railyard, would "the vast majority" of benefits be realized, as the developer claimed last year to the ESDC? Not at all

What happens if Forest City Ratner doesn't build a platform over the Vanderbilt Yard and build out the full Atlantic Yards project?

That's a possibility, given the renegotiation of the railyard deal last June with the Metropolitan Transportation Authority, which allows FCR bow out of railyard development after Phase 1 by paying out less than the cost of building a new permanent railyard.

Astonishingly, FCR in March 2009 told the Empire State Development Corporation that "the vast majority" of benefits for the community would be "entirely realized in the remote circumstance of MTA's default scenario."

As I explain below, that's not true in the slightest, given vast differences in the amount of jobs and affordable housing, and the complete absence of any analysis of tax revenues.

FCR, as a "show of good faith" in its commitment to the full project, said it would ensure that $2 million of $3 million planned for local parks and public spaces would be available in the first phase.

But that's hardly a guarantee that Phase 2, which would cost a few billion dollars, would be built.

A default?

Atlantic Yards would be built in two main phases: the arena block, and the rest.

According to the June 2009 MTA staff summary, below, Forest City Ratner must pay $20 million cash for the piece of the railyard needed for the arena block, then pay $2 million a year over four years to June 2015, after which is would pay about $11 million a year over 15 years.

If it abandons the project after Phase 1, rather than spent $147 million on railyard improvements, it would forfeit an $86 million letter of credit.

According to the Development Agreement, there are specific penalties for delayed construction of the first three towers beyond the arena, but the penalties are fairly gentle; the third tower need not be started for ten years.

The developer is supposed to build housing on Block 1129, the southeast block below the railyard, but there are no penalties other than general penalties for default.

Looking at the benefits

What's wrong with FCR's claims? Take a look at the chart below. (It includes the 150 square foot meditation room mentioned yesterday. I obtained the document and a cover letter via a Freedom of Information Law request.)

Atlantic Yards Benefit Chart

First, taking FCR's narrow definition of benefits, nearly half the construction jobs would be cut. The document indicates that instead of 17,000 construction jobs, there would be 9000 jobs; in both cases, the reference should be to job-years.

Second, it looks like more than half of the affordable housing wouldn't be built. Instead of 2250 units on full buildout, a partial buildout would mean at least 300 to 500 units on the arena block, "plus a proportional share of the affordable units in Phase II."

Third, while the percentages of minorities and women hired for construction jobs would remain the same, as would the percentages of minority- and women-owned businesses, the raw totals would be much lower.

Perhaps most importantly, the chart takes a notably limited perspective on "benefits to the community."

It omits permanent jobs (office, retail, arena) and it omits new tax revenues, the calculation of which is key to the city's conclusion--however dubious--that the project would be a net gain for the city.

The cover letters

The document was attached an an email message from an FCR executive to Empire State Development Corporation staffers and their outside counsel:
As requested last Friday, attached is a summary of the many benefits for the community under the Atlantic Yards Development plan. As you will see in the attached chart, the vast majority of these benefits are still entirely realized in the remote circumstance of MTA's default scenario. However, in an effort to demonstrate our commitment to the full project and as show of good faith, we are prepared to commit to expending $2 million of our $3 million total commitment to improve local parks and public spaces in connection with the Phase I development, and we will create interim open space where possible, should the development of the residential buildings differ from our intended schedule.
Exepedited construction?

Lower down on the page, a previous email in the sequence refers to negotiation over terms in the development agreement:
Following our conversation yesterday, the attached draft language responds to your requests to expedite the Arena Block residential construction (and to provide a substantial penalty if we fail to do so), and to expedite the construction of the platform once Phase 2 begins. Please note that when the phase 1 and phase 2 time periods were originally negotiated, they were intended to provide flexibility in the event that there was a downturn in the market. Now that we are in the midst of an economic crisis we view these significantly more aggressive time schedules as a major concession and sign of our unwavering commitment to the project and to a Master Closing immediately following resolution of the 207 [eminent domain] case.
(I didn't see any evidence that the ESDC responded to FCR's claims.)

The previous negotiations apparently refer to the City and State Funding Agreements.

Compare to the two earlier documents, the Development Agreement does provide a timetable and penalties for the first three towers. And, yes, it's prudent for developers and government entities to plan for changing economic times.

However, the "significantly more aggressive time schedules"--which require the third of 16 towers to be started within a decade-- have nothing to do with the ten-year buildout on which project benefits, including new tax revenues, have been premised.

In other words, if the city and state wanted to give Forest City Ratner ten to 25 years to build Atlantic Yards, depending on the economic climate, they should have calculated the benefits--and impacts--over multiple periods of time, as well.

MTA Staff Summary Regarding June 2009 Revision of Vanderbilt Yard Deal


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 (post-dated pinned post)

This graphic, posted in November 2017, 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 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't be so cheap.


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…

Atlantic Yards/Pacific Park in 2017: no new towers, unfilled affordable units, Islanders prepare to leave, project timetable fuzzy

My 2018 preview.

It was another wait-and-see year for Atlantic Yards/Pacific Park, with one big twist--the beginning of a slow goodbye for the New York Islanders--but continued delays for towers, a lost (mostly) 421-a subsidy for condos, and new skepticism about unfilled not-so-affordable housing units.

So ongoing questions linger regarding the project's pace, affordability, and even future ownership.

In my 2017 preview, I predicted--not exactly going out on a limb--that two and likely three more towers would open, though it would be unclear how fast they'd lease up and sell.

Indeed, we've learned that the middle-income below-market units at 461 Dean (which opened in 2016) and 535 Carlton have leased very slowly, while it's too soon to assess progress for commensurate units at 38 Sixth. (At 535 Carlton and 38 Sixth, middle-income units make up half the "100% affordable" buildings.) Meanwhile, many apartments are up for rent at the 550 Vanderbilt condo buildin…