FCR says "overall schedule is fixed," but when will project be done: 2025? 2032? 2035?

Now that Atlantic Yards/Pacific Park faces unspecified delays, confessed earlier this month by Forest City Ratner's (FCR) parent Forest City Realty Trust (FCRT), when will the project get done? We don't know.

A Bloomberg article 11/17/16 about how FCR's market-rate rentals at 461 Dean face significant competition noted that parent Forest City Realty Trust took an accounting loss on the delayed Pacific Park project:

"We remain committed to bringing the entire project to completion, but there are a number of existing and near-term market factors that we must consider,” MaryAnne Gilmartin, CEO of Forest City Ratner, said in an e-mailed statement. Those include the new development supply, rising labor costs and the resolution of issues surrounding a New York affordable housing program, she said.
“While the overall schedule is fixed, and we will meet it, there is flexibility in terms of individual buildings, especially given the amount of work underway,” she said.

(Emphasis added)

That is the same line that Gilmartin deputy Ashley Cotton used at a meeting last week. But she would not provide a specific timetable.

So we don't know what the overall schedule is.

Looking more closely: 2025? 2035?

Cotton also said that "the Greenland Forest City joint venture is fully committed to Pacific Park and our obligations under our government agreements," which means a new permanent railyard, a deck, and a May 2025 deadline for the project's affordable units, about 1,470 (out of 2,250) of which remain to be built. 

That deadline comes with $2,000/month fines for each unit not built--that's $1 million per month if there are 500 units outstanding--though that could be delayed if they invoke lack of subsidies. (Or, perhaps, there could be another renegotiation. After all, Atlantic Yards is a "never say never" project.) 

But even if the joint venture does build the 2,250 below-market units by 2025, that doesn't mean they have to finish all the commensurate 2,250 market-rate rentals and 1,930 condos (200 of which are supposed to be below-market) by then.

CFO Bob O'Brien of parent Forest City Realty Trust said in an 11/4/16 conference call with investment analysts that the firm's financial model "extends to 2035, 20 years from now."

As I wrote, that doesn't necessarily mean project completion by 2035, but it's a pretty strong clue that the project won't be finished by 2025.

The 2035 date may represent stabilization of income, but presumably that's two-to-five years after which the final building is constructed. 

The developer does have until 2035 before it defaults and would lose the right to develop the project.

Why 2032 might make sense

Another important date is June 1, 2030, which is when the last of 15 annual payments of about $11 million for Vanderbilt Yard development rights is due to the Metropolitan Transportation Authority.

According to the 6/22/09 MTA staff summary, when Forest City Ratner renegotiated its deal to buy those development rights, the payments have an implied interest rate of 6.5%, a gentle figure. That offers reason for the developer to wait, as long as other factors, including subsidies and the cost of construction, remain challenging.

From MTA Staff Summary

There is incentive to speed up payments: only such payments unlock each development parcel. But if they wait until June 1, 2030 to make that final payment, then start construction of the final tower, that suggests project completion no earlier than 2032.

It's all more complicated, though, since it's likely that market-rate and affordable units will be combined in several buildings, and the market for the former--currently tight--will fluctuate. If Forest City must meet that 2025 affordable housing deadline, then a good number of market-rate units must be built by then.

More details on plan for railyard development space

The 2014 Final Supplemental Environmental Impact Statement, Project Description, lays out the process:

• An FCRC affiliate is granted the right “from time to time” until June 1, 2031 [sic] to purchase any of the Air Space Subparcels, subject to certain conditions. One such condition is that FCRC has constructed the new LIRR rail yard in accordance with the Yard Relocation and Construction Agreement (which is discussed below).
• At the closing of such Air Space Subparcel, MTA is to deliver fee title to such Subparcel to a specified FCRC affiliate or its designee. It is anticipated that ESDC will be the designee, and will simultaneously lease such Air Space Subparcel to an affiliate of FCRC. The FCRC affiliate that has so acquired the Air Space Subparcel for the Project is granted the right to convey its rights in such Air Space Subparcel to another entity (such as a third-party developer) subject to certain conditions.
• The MTA may terminate FCRC’s right to acquire the Air Space Parcel if the new LIRR rail yard is not completed by 90 days after September 1, 2016, subject to certain extensions and payment of per diem fees.

Note that the June 1, 2031 date should be a year earlier, as far as I can tell. Also note that the deadline for the railyard has been extended to Dec. 1, 2017, and could be extended again.

Also from that Project Description:

• FCRC is obligated to have substantially completed construction of the entire platform within 25 years from the “Project Effective Date” (i.e., May 12, 2035), subject to specified force majeure and other provisions.