Skip to main content

ESDC in 2009 promised B2, first affordable housing tower, wouldn't be delayed; is hold-up due to search for bank financing or new subsidies?

The first tower planned for the Atlantic Yards arena block is delayed yet again, even though, when the project was re-approved by the Empire State Development Corporation (ESDC) in 2009, the agency asserted that at least that building--Building 2, at the corner of Flatbush Avenue and Dean Street--was on track.

According to the June 2009 Technical Memorandum:
These potential delays due to prolonged adverse economic conditions would not affect the timing of the development of the arena, the transit access improvements, the construction of the new LIRR rail yard, the reconstruction of the Carlton Avenue Bridge or the construction of Building 2. It could, however, delay the construction of some of the remaining buildings on the arena block as well as the Phase II sites.
It's unclear whether the delay is caused by the unavailability of affordable housing bonds, bank financing, or both.

But as of August 2009, as the Times reported, the developer was already seeking additional affordable housing subsidies, beyond the standard incentives.

A month later, Bruce Ratner told his company's favorite reporter:
“They [opponents] are 100 percent wrong about the affordable housing. It’s another red herring. We’re required to build affordable housing and it has been my personal commitment from the very beginning,” said Ratner.
If and when the building gets started, construction should take 18 months.

Bond financing


At the 7/22/09 informational meeting preceding the ESDC's public hearing, one questioner asked whether the ESDC had conducted an analysis that indicates that the bond financing would be available for the affordable housing subsidies the project would require over its life cycle.

The answer came not from the ESDC but from Forest City Ratner project leader MaryAnne Gilmartin, who deflected the question; “There are bonds being issued for the construction of the arena, and there are programs that are being accessed for construction housing, and there are two different things. 80/20 bonds, which are the bonds used to build market-rate housing with 20 percent low-income, are volume cap bonds, which are readily available in this state, because there’s an absence of construction, nothing, frankly, is being built right now, so there is not a concern about the availability of that financing for housing. The financing on the arena, which is a different form of financing, will take place by the end of 2009, as we indicated. Again, we’re optimistic we can sell the bonds necessary to commence construction on the arena."

She did not mention that the buildings with 50 percent affordable housing are supposed to be financed through a separate program known as 50/30/20, involving 30 percent middle- and moderate-income units, and 20 percent low-income units.

A week later

A week later, at the 7/29/09 public hearing on the revised Atlantic Yards plan, David Pechefsky, the Green Party candidate for the 39th Council District and a former City Council budget analyst, brought up the issue of the project's financial viability.

He noted that, at the informational meeting, he asked about Forest City Ratner’s internal rate of return--which had not been voluntarily made public by the developer, but had come through in some documents--and FCR refused to answer.

“If this is truly a public project for the public good, it absolutely should be talked about,” said Pechefsky.

(Photo by Tracy Collins.)

Back in 2006, he said, “I looked at the numbers on the rental buildings… What they suggested to me that the affordable housing was really unlikely to get built in the time frame of the project, unless there was going to be additional public subsidies.”

His point was never addressed by the pro-project affordable housing advocates who spoke later.

Lingering questions

At the 11/4/10 Atlantic Yards District Service Cabinet meeting, Gilmartin said the developer intended to release designs and start construction of B2 in the first quarter of 2011. That was not to be.

She said the developer is committed to making the building 50% affordable, but "the actual program itself is still being worked out." As I suggested, that means that subsidies from the city and state are being sought.

"We are able to build for-sale housing on the arena block. I will tell you that, based on the current state of the market, and what we think is financeable and executable, we think it's more likely these buildings will be rental," Gilmartin said.

"We as a company do like the rental product," she said. "80 DeKalb has proved to us the rental market is strong enough we can convince banks to finance the building and be successful."

However, 80 DeKalb is an 80/20 building, not a 50/30/20 building.

So, the questions remain:
  • has Forest City convinced the banks to finance B2?
  • is Forest City seeking additional subsidies for B2?
Failure to require guarantees

The Atlantic Yards Development Agreement, signed in December 2009, allows an Affordable Housing Subsidy Unavailability to be claimed for up to eight one-year periods for each Phase 1 building.

A draft of the ESDC's General Project Plan in 2006 seemed to consider city and state actions to fund the affordable housing as part of the official approval process. Such language was dropped before the ESDC approved the plan.

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…

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…

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 …

For Atlantic Yards Quality of Life meeting Sept. 19, another bare-bones agenda (green wall?)

A message from Empire State Development (ESD) reminds us that the next Atlantic Yards/Pacific Park Quality of Life Meeting--which aims to update community members on construction and other issues--will be held:
Tuesday, September 19, 2017 @ 6 pm
Shirley Chisholm State Office Building
55 Hanson Place
1st Floor Conference Room
Brooklyn, NY 11217 The typically bare-bones, agenda, below, tells us nothing about the content of the presentation. One thing to look for is any hint of plans to start a new building on the southeast block of the project by the end of the year.

If not, ESD is supposed to re-evaluate a longstanding request from project neighbors to move back a giant wall encroaching on part of Dean Street between Carlton and Vanderbilt avenues. It's said to enclose construction activity, but, in recent months, has significantly served to protect worker parking.

Also, by the way, if you search for Atlantic Yards on Google or the ESD website, it leads to this page for the Atlantic Ya…