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Greenland, Forest City not in sync: joint venture overseer claims one or two towers may start this year; 25% affordable could be new configuration

The Real Deal's Konrad Putzier reports, Greenland boss says Pacific Park likely to break ground on new buildings in 2017, but notes that joint venture partner Forest City is more cautious. After all, the two partners are not reading from the same page.

The lead:
Pacific Park’s developers will likely break ground on one or two new buildings by the end of the year, Greenland USA’s CEO Hu Gang said Thursday.
Gang added that the next building will likely be a rental building under the Affordable New York tax incentive program, with 25 percent of units set aside as affordable. He did not specify which site the developers plan to build on.
Gang’s comments are a departure from Forest City Realty Trust CEO David LaRue’s more cautious public stance. Speaking at REITWeek Monday, LaRue said there is no immediate timetable for further construction at the megaproject and that the partners will wait and see how the market responds to 30,000 new development residential units hitting the market across Brooklyn and Queens.
LaRue was essentially repeating the company's stance, as expressed last November when it--presumably with Greenland--announced an unspecified pause in the project. Just two days ago a spokeswoman for the joint venture again expressed uncertainty about the project timing.

Squaring the circle?

So, how to square this circle? A spokesperson for the joint venture told the Real Deal, "Forest City and Greenland USA continue to work in lockstep on Pacific Park Brooklyn – we both are committed to completion of the project and will move forward together with each individual building considering all critical factors like market conditions and 421a implications."

Um, that doesn't answer much. Perhaps Greenland will buy Forest City out of a specific parcel, or find another investor. The joint venture in April 2016 began the process--yet unfulfilled--to find more partners (or buyers) for three development sites.

Nor does it explain when they expect to finish the project--2033 anyone?

While it's certainly possible a building or two might start, Greenland does not exactly have a sterling record for predictions.

After all, before Greenland USA formalized the deal for 70 percent of the project going forward (excepting the Barclays center and the 461 Dean tower), company chairman Zhang Yuliang predicted the entire project would be done in just eight years. That's not happening.

A changing configuration?

Two towers have been designed and are grandfathered in with 421-a benefits, including 615 Dean (B12), a condo, and 664 Pacific (B15), a 100% market-rate tower with a school. While the latter had been delayed by a legal dispute (and is still delayed by negotiations with a neighbor), there's no reason, other than the market, to pause 615 Dean.

My October 2016 annotation of the tentative site plan, no longer accurate regarding timing and maybe configuration
So they could start that, but maybe the timing's not right.

The Real Deal said "Sources close to the company say plans for the two sites are likely to change to take into account the new tax incentive program." Not necessarily, but if Gang does plan a building with 25% affordability, perhaps they're aiming for a different unbuilt site. That would likely be B13, another site on the southeast block.

A new affordability percentage: 25%

If a rental building with 25% affordability gets built, that will mark a third configuration for rentals. All 4,500 rental units were once supposed to be in buildings with 50% affordable units--so called 50/30/20 buildings with 50% market-rate units, 30% moderate- and middle-income ones, and 20% low-income units.

After building one such tower, the developer then announced a condo building and two 100% below-market buildings, with a significant skew to middle-income units.

Under the city's Mandatory Inclusionary Housing program, if a building has 25% affordable housing, all the units would likely be low-income (see chart below). In a 300-unit building, that would mean 75 low-income units. That could make up for the 58 "missing" low-income units that I've calculated, given the past skew.

It also would make this building not so far from the longstanding 80/20 model from which Atlantic Yards/Pacific Park was supposed to depart.


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