On podcast, Gilmartin talks Atlantic Yards: subway entrance cost way more than original budget, Barclays Center "a friendly neighbor" (oh?)
In a world where companies and organizations can produce their own media, in the form of press releases and videos, why not a podcast? So let's note Hey BK – The Brooklyn Transformation Podcast, hosted by Ofer Cohen, founder & CEO of TerraCRG, the Brooklyn-focused commercial real estate firm.
The first two interviews involve real estate executives David Kramer, of Hudson Companies, and , MaryAnne Gilmartin, just before she left Forest City New York for L&L MAG. The Gilmartin podcast is quick--about 16 minutes.
Some of the anecdotes and background are familiar to those who've encountered other Gilmartin interviews, but I wanted to look more closely at a couple of them.
(Ignored in this friendly interview: the unsuccessful modular venture, the corporate pause in building the project, Forest City's relationship with joint venture partner/overseer Greenland USA, and the project's actual affordability, among other things.)
She was candid about the arena. The Barclays Center, as Gilmartin said, "really started in 2003, we bought the basketball team, to control the move to Brooklyn." Pretty much, though the team purchase was announced in January 2004.
The recession and the equity
"It was a community divided, there were politics galore, and it was the advent of the great recession," said Gilmartin, recalling her ascension to oversee Atlantic Yards in 2007. "We had $500 million of our investment, of our equity, in the dirt, when the recession hit, and not a single vertical building to show for it."
I'm not sure what date she's picking for the recession, but let's say December 2007. Even assuming Gilmartin was rounding off, I suspect she was rounding up--though the general point that they'd put put a lot of money at risk is indisputable.
Why might she have been rounding up? According to a Forest City Enterprises press release, 12/9/13, CEO David LaRue said:
The affordable housing
Gilmartin is speaking without documents in front of her, I assume, and her numbers are... imprecise.
After the arena opened, Gilmartin said, "I set my sights on how are we going to build this housing and really finish what we started... and today, as you know, there are over 1,000 units of housing being built. Of those thousand, close to 900 are affordable."
That's significant rounding off: down in terms of total and up in terms of affordable units. There are 782 affordable units (see annual report) of 1,242 total apartments.
The subway entrance completion
The arena, as Gilmartin first disclosed in September 2015, endured another close call. The $72 million subway entrance had to be ready for Jay-Z's inaugural arena performance 9/28/12.
"We were really hanging on by a cat hair, because we did not have the Certificate of Occupancy for the entrance," Gilmartin said in 2015. "So it was my great fear” she’d have to tell her boss Bruce Ratner "we cannot open the arena."
She spoke similarly in the podcast. "I had nightmares, I would wake up in a cold sweat thinking I'd have to walk into Bruce's office" and say it wasn't ready. "It was the week that Jay-Z's concert opened that we got substantial completion sign-off."
Gilmartin hasn't explain how it was resolved. The documents are ambiguous. According to a 7/9/13 report from Merritt & Harris, which was monitoring arena construction for bond buyers, there were four relevant documents:
If the standard were substantial completion, as Gilmartin indicated colloquially, well, they well, they were late, at least regarding the overall transit improvements, not the elevator and escalator, and should not have opened. There's no evidence that the key signoff came during the week of Jay-Z's 9/28/12 concert debut.
The subway entrance cost
Regarding the subway entrance, Gilmartin said, "In the original pro forma, we had it for something like $6 million. It ended up costing $72 million."
It's possible that, as of the project unveiling in December 2003, they'd estimated $6 million, but "mass transit improvements" were budgeted at $29 million as of Forest City's July 2005 bid to Metropolitan Transportation Authority for Vanderbilt Yard development rights, as shown in the graphic at right and link above.
Either way, Forest City apparently under-estimated either the actual cost and/or the potential escalation of costs, and likely not just for this piece of infrastructure.
Triumphing over the naysayers
"In addition to this amazing evening when we opened the building," Gilmartin said, "for me, the far more glorious moment was the next day, when Brooklyn was not swallowed whole by a traffic jam," thanks to the Quality of Life and Traffic Enforcement Agents.
"And rather than getting chest bumps for the job that we did, I would say it's the deafening silence that tells you that you nailed it," she said, "because people stopped railing against the arena."
Well, yes, but. The arena did not cause the significant ripple effects that people feared, in part because of the developer's efforts, but also because so few people drove from New Jersey--compared to original expectations--and also because the estimates of congestion were based on an arena opening with four large towers around it.
Meanwhile, though Gilmartin calls it "a beautiful building, a friendly neighbor," she's not exactly taking into account those on nearby blocks, who have been regularly vexed by arena operations and construction. Remember why the green roof was installed? "Sound absorptive qualities."
The first two interviews involve real estate executives David Kramer, of Hudson Companies, and , MaryAnne Gilmartin, just before she left Forest City New York for L&L MAG. The Gilmartin podcast is quick--about 16 minutes.
Some of the anecdotes and background are familiar to those who've encountered other Gilmartin interviews, but I wanted to look more closely at a couple of them.
(Ignored in this friendly interview: the unsuccessful modular venture, the corporate pause in building the project, Forest City's relationship with joint venture partner/overseer Greenland USA, and the project's actual affordability, among other things.)
She was candid about the arena. The Barclays Center, as Gilmartin said, "really started in 2003, we bought the basketball team, to control the move to Brooklyn." Pretty much, though the team purchase was announced in January 2004.
The recession and the equity
"It was a community divided, there were politics galore, and it was the advent of the great recession," said Gilmartin, recalling her ascension to oversee Atlantic Yards in 2007. "We had $500 million of our investment, of our equity, in the dirt, when the recession hit, and not a single vertical building to show for it."
I'm not sure what date she's picking for the recession, but let's say December 2007. Even assuming Gilmartin was rounding off, I suspect she was rounding up--though the general point that they'd put put a lot of money at risk is indisputable.
Why might she have been rounding up? According to a Forest City Enterprises press release, 12/9/13, CEO David LaRue said:
"As our investors are aware, we have been actively committed to Atlantic Yards in Brooklyn for a decade, even as the project has been delayed by numerous lawsuits from opponents and the impact of the recession. To date, we and our minority partners have invested equity of approximately $545 million, with total costs of approximately $770 million, including debt."Is it possible that Forest City spent only some $45 million more in six years?
The affordable housing
Gilmartin is speaking without documents in front of her, I assume, and her numbers are... imprecise.
After the arena opened, Gilmartin said, "I set my sights on how are we going to build this housing and really finish what we started... and today, as you know, there are over 1,000 units of housing being built. Of those thousand, close to 900 are affordable."
That's significant rounding off: down in terms of total and up in terms of affordable units. There are 782 affordable units (see annual report) of 1,242 total apartments.
The arena, as Gilmartin first disclosed in September 2015, endured another close call. The $72 million subway entrance had to be ready for Jay-Z's inaugural arena performance 9/28/12.
"We were really hanging on by a cat hair, because we did not have the Certificate of Occupancy for the entrance," Gilmartin said in 2015. "So it was my great fear” she’d have to tell her boss Bruce Ratner "we cannot open the arena."
She spoke similarly in the podcast. "I had nightmares, I would wake up in a cold sweat thinking I'd have to walk into Bruce's office" and say it wasn't ready. "It was the week that Jay-Z's concert opened that we got substantial completion sign-off."
 |
| From Merritt & Harris report |
- NYC Transit Memorandum, dated September 12, 2012, certifying Beneficial Use of the Subway Entrance
- Developer's letter to NYC Transit, dated November 2, 2012, indicating projected substantial completion date for the subway entrance was October 18, 2012
- Joseph Neto & Associates, Inc. letters, dated September 4, 2012, certifying completion of the elevator and the escalator at the subway entrance
- NYC Transit letter, dated November 21, 2012, certifying that the Transit Improvements have been substantially complete
If the standard were substantial completion, as Gilmartin indicated colloquially, well, they well, they were late, at least regarding the overall transit improvements, not the elevator and escalator, and should not have opened. There's no evidence that the key signoff came during the week of Jay-Z's 9/28/12 concert debut.
The subway entrance cost
Regarding the subway entrance, Gilmartin said, "In the original pro forma, we had it for something like $6 million. It ended up costing $72 million."
Either way, Forest City apparently under-estimated either the actual cost and/or the potential escalation of costs, and likely not just for this piece of infrastructure.
Triumphing over the naysayers
"In addition to this amazing evening when we opened the building," Gilmartin said, "for me, the far more glorious moment was the next day, when Brooklyn was not swallowed whole by a traffic jam," thanks to the Quality of Life and Traffic Enforcement Agents.
"And rather than getting chest bumps for the job that we did, I would say it's the deafening silence that tells you that you nailed it," she said, "because people stopped railing against the arena."
Well, yes, but. The arena did not cause the significant ripple effects that people feared, in part because of the developer's efforts, but also because so few people drove from New Jersey--compared to original expectations--and also because the estimates of congestion were based on an arena opening with four large towers around it.
Meanwhile, though Gilmartin calls it "a beautiful building, a friendly neighbor," she's not exactly taking into account those on nearby blocks, who have been regularly vexed by arena operations and construction. Remember why the green roof was installed? "Sound absorptive qualities."
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