FCR considers "world's tallest prefab steel structure" for first affordable tower; big savings, but promised union jobs, tax revenues lost, new risks

Updated 8:00 am.

In what seems to be a desperate--or maybe innovative--effort to save money and time, Forest City Ratner may build the world's tallest modular structure to deliver the affordable housing long promised as an Atlantic Yards benefit, the New York Times reports in a front-page story today.

In doing so, however, FCR would establish its own factory to manufacture the components, severely cutting expected on-site union jobs, and presumably cutting deeply into projected tax revenues, thus upending the always optimistic estimates (city, state) of project benefits. (The Independent Budget Office was more critical.)

FCR's Lego-like solution would severely antagonize union construction workers who, fulfilling requests by the developer and their own leadership, fervently and sometimes obnoxiously backed the project at rallies and public hearings. And, as noted by Develop Don't Destroy Brooklyn (below), it would continue a string of broken promises.

Also, in building a 34-story tower at first, FCR would take risks by venturing into a construction technology that is still developing, the current record-holder only rises 25 stories.

FCR's pattern of renegotiation

And the bait-and-switch would continue a pattern of renegotiating contracts in order to save money.

For example, FCR in 2005 bid $100 million in cash for the rights to build on the Metropolitan Transportation Authority's Vanderbilt Yard, only to renegotiate the contract in 2009, paying only $20 million out of the $100 million pledged, with 22 years to pay the rest, at a gentle interest rate.

Similarly, in 2009, FCR renegotiated its business terms with the Empire State Development Corporation, planning to acquire project land through eminent domain in two or more stages, rather than all at once, thus saving on acquisition costs and carrying costs.

DDDB on broken promises

In a press release, Develop Don't Destroy Brooklyn stated:

Jobs, Housing & Hoops! Touted Atlantic Yards “Benefits” Continue to Disappear
Construction Unions Latest Victims of Forest City’s Broken Promises

BROOKLYN, NY—First it was the promised “10,000 permanent jobs.” Then it was the “arena roof garden.” Next it was the “world-class Frank Gehry design.” Then it was the “2,250 units of affordable housing.” Then the “urban room.” And the “eight acres of publicly accessible open space.” Now comes the latest casualty among Forest City Ratner’s endless string of cynical, empty, broken promises – a large chunk of the relentlessly touted construction jobs.

I'd note that the affordable housing and the open space are still supposed to be delivered, albeit on a much longer schedule, and the Urban Room would arrive if and when an office tower, for which there is currently no market, is built.

A scoop for the Times

Charles Bagli of the New York Times, who has paid intermittent attention to the project but is a go-to guy for scoops, has the story, headlined in print as "Atlantic Yards Plans to Build Tallest Prefab," and online as Prefabricated Tower May Rise at Brooklyn’s Atlantic Yards .

(Curiously, the Times's web site last night indicated an alternate headline, with a tougher slant: "In Brooklyn, a Prefabricated Tower May Anger Unions." The Times is accepting comments on the article; here's mine, which focuses on the EB-5 story the newspaper has missed.)

The newspaper reports:

In a bid to cut costs at his star-crossed Atlantic Yards project in Brooklyn, the developer Bruce C. Ratner is pursuing plans to erect the world’s tallest prefabricated steel structure, a 34-story tower that would fulfill his obligation to start building affordable housing at the site.

The prefabricated, or modular, method he would use, which is untested at that height, could cut construction costs in half by saving time and requiring substantially fewer and cheaper workers. And the large number of buildings planned for the $4.9 billion Atlantic Yards — 16 in all, not including the Nets arena now under construction — could also make it economical for the company to run its own modular factory, where walls, ceilings, floors, plumbing and even bathrooms and kitchens could be installed in prefabricated steel-frame boxes.

The 34-story building, with roughly 400 apartments, would comprise more than 900 modules that would be hauled to Atlantic Yards, lifted into place by crane and bolted together at the corner of Flatbush Avenue and Dean Street, next to the arena.

The current record-holder

The tallest modular building in the world, according to a 9/2/09 article in Building Design and Construction, is Victoria Hall, a 25-story apartment tower in Wolverhampton, England. A 9/21/09 article in National Real Estate Investor (source of the photo) calls it 24 stories.

Note the prefab appearance. Does Forest City Ratner's claim that buzzy firm SHoP will design the building apply to the modular units? Or, more likely, would SHoP merely graft a "skin" on the building, as with the Ellerbe Becket arena?

Some flaws

The Times suggests that tall modular buildings require significant bracing, but modular buildings can have their flaws. A 3/26/08 Times article describes a modular building at Yale University that was built in 2004:

“They tried to blend in the appearance of the building with what’s here already,” said Martin Dominguez, a first-year medical student who was also an undergraduate at Yale and has lived in the modular building for 18 months. “They did a reasonably good job, though the building obviously looks pretty modern relative to the other architecture.”

Mr. Dominguez said he was not happy with the quality of the dormitory’s construction — some of the walls do not quite fit together and the floor is uneven in the bathroom, he said.

However, the Times reported, campus housing administrators at another college were impressed with the work and decided to go the modular route.

The benefits of modular

The Modular Building Institute, a trade group, explains that Modular Delivers More than Speed to Completion:

Commercial modular buildings are cutting-edge facilities of the highest quality, efficiency, endurance, and design: cost-effective permanent and temporary buildings that respond to ever-changing demands...

Today, multi-story, multi-unit buildings can be constructed in a factory from steel and concrete. The units, shipped to the site either on a flatbed trailer or on their own axles and tires, are craned into place and joined on site. Once completed, these high-end, factory-built buildings are indistinguishable from site-built construction. There generally are no visual or structural differences whatsoever....

The advantages of modular construction remain the same, however. Commercial modular structures are built in a climate- and quality-controlled environment, where savings of as much as 50% in overall construction time are not uncommon.

Ratner savings, union tensions

The Times reported that Forest City has been designing both a conventional tower and a modular one, and is looking for sites in Long Island City for a factory:

“The company is interested in modular, high-rise construction in an urban setting,” [FCR's] Ms. [Maryanne] Gilmartin said. “It’s driven by cost and efficiencies.”

But it would also infuriate the construction workers who were Mr. Ratner’s most ardent supporters during years of stormy community meetings, where they drowned out neighborhood opponents with chants of, “Jobs, jobs, jobs.”

The Times notes that Forest City promised Atlantic Yards would generate “upwards of 17,000 union construction jobs.” Actually, that's job-years, so 1700 jobs a year over ten years or, more likely, many fewer jobs a year over a much longer period of time, perhaps 25 years.

The Times reports:

Not to worry, Ms. Gilmartin said, “We’re a union shop, and we build union.”

But under current wage scales, union workers earn less in a factory than they do on-site. A carpenter earns $85 an hour in wages and benefits on-site, but only $35 an hour in a factory.

Need for a cost-benefit analysis

Gilmartin should be asked to estimate the actual number of expected jobs, as well as the total in wages. Or the Empire State Development Corporation should do so.

Such numbers should be plugged into the cost-benefit analyses conducted by the city, state, and Independent Budget Office.

Forest City is clearly under pressure to fulfill its obligations and make its expected profits. City officials denied a request for $10 million in additional housing subsidies.

Going to 34 stories?

A firm located in the Brooklyn Navy Yard, Capsys, states that its system is good for 12 stories:

Our system of structural steel framing, concrete floors, and steel-framed walls is ideal for projects as high as 12 stories. Our in-house engineering group is capable of designing modular structures that fit the floor plan of almost any residential building.

Those quoted by the Times say taller buildings are possible, but pose challenges:

“At a smaller scale, prefab buildings have proven to be more efficient, more sustainable and less expensive,” said Thomas Hanrahan, dean of Pratt Institute’s School of Architecture. “The taller the building, the logistical and structural issues become much more complex.”

Keeping the arena block quieter

Unmentioned in the Times: prefab construction would clearly make it easier to build towers around the arena while conducting arena activities.

After all, cranes would be at the site for less time, and fewer workers would be at the site, as well.