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

Comments

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 Matzav.com 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 …