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Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

"Unavoidable Delay": as Pacific Park faces timetable questions, some flex in the 2025 affordable housing deadline

Given ongoing question marks over the future of Atlantic Yards/Pacific Park, with the developer acknowledging the full buildout should take until at least 2035, rather than 2025 as previously projected, it's worth another look at the settlement announced in June 2014.

We know that the community negotiators, representing the BrooklynSpeaks coalition, were able to get the developer and state to commit to a May 2025 deadline for the project's 2,250 units of affordable housing, with seemingly stiff penalties for delay. (Here are the deal documents.)

But it's worth looking at that commitment again, since a close read suggests it came with some flexibility, given its connection to the Development Agreement. So I've bolded some passages for emphasis

(Also, of course, Atlantic Yards/Pacific Park agreements have been modified in the past, though this one would seemingly require participation of a third party, the potential plaintiffs.)

Flex in the timetable?

The most significant achievement in the settlement was that new deadline for the affordable units, of which 782 have now been built. All 2,250 affordable units must have either a Temporary Certificate of Occupancy or a Certificate of Occupancy by May 2025, "subject to extensions set forth in the Development Agreement and the General Project Plan." If not, the developer would pay $2,000/month per delayed unit.

That language comes from the letter, excerpted below, from Empire State Development (ESD), the state authority charged with overseeing and shepherding Atlantic Yards/Pacific Park:

What could those extensions offer? I don't see any extensions set forth in the 2009 Modified General Project Plan (which, on p. 18, said full buildout was scheduled for 2019). However, that guiding contract could always be amended.

Looking at the Development Agreement

As to the Development Agreement, released in January 2010, the most relevant section is Section 8.7 on p. 20, regarding completion of Phase II, which at that point meant the project east of the arena block.

Notably, the last sentence in Section 8.7 (below) states that, for the purposes of that section only, "the term 'Unavoidable Delay' shall include any delays in the performance of the Development Work resulting because of the terms of Section 8.8(a)(iii) below and the continuation of an Affordable Housing Subsidy Unavailability."

Starting from the last clause, if affordable housing subsidies are unavailable, they can wait. (That might depend on whether the developer has a friendly or adversarial relationship with the city at the relevant time.)

What about delays related to the terms of Section 8.8(a)(iii)? As shown below, that section notes that no more than 50% of the residential units in this phase can be built without completing half the required site affordable housing units. That doesn't seem like an issue at this point, given the developer's recent reluctance to build market-rate units.

But that's not all.

That above mentioned Section 8.8(a)(iii) is also "subject to Section 8.8(d)."

What does that mean? As excerpted at right, this longer section
Click to enlarge
describes how the developer can apply for financing, but the lack of financing shall not diminish the affordable housing obligation.

But that doesn't apply in this case, because of the override cited in Section 8.7.

In other words, for the purposes of the Phase II construction, Unavoidable Delay does include delays resulting from the terms of Section 8.8(a)(iii), which includes--as per Section 8.8(d)--the lack of financing.

Delays possible

Bottom line: it seems possible that lack of financing could delay parts of the project, jeopardizing the 2025 deadline for the affordable housing.

That doesn't automatically make it likely, especially since the developer has repeatedly said it would meet project obligations. But we shouldn't rule it out.

By the way, the 76th page of the Development Agreement (Appendix A-18) lists Unavoidable Delays, which excludes the inability to obtain financing.

How the damages could add up

The liquidated damages would go to the New York City Housing Trust Fund, administrated by the New York City Department of Housing Preservation and Development, and thus support affordable housing.

It might seem a lot of money. Consider 300 unbuilt affordable units, at $2,000 a month. That's $600,000 a month or $7.2 million a year. Let's double that: 600 unbuilt affordable units means $1.2 million a month or $14.4 million a year.

Perhaps that might not be too onerous in the big picture. Or, more likely, if those fines seem to be approaching, the developer might look at the more expansive definition of Unavoidable Delay.

The general question of 2035

Given the admission by the developer that “the remaining buildings, and the balance of the public park, [are] projected to be completed in phases by 2035,” that means, in general, a longer construction timetable affecting neighbors in Prospect Heights (and, for Site 5, in Park Slope).

It also means delays in the promised open space, a public amenity. Wrote Gib Veconi, who helped negotiate the settlement for Brooklyn Speaks, on Twitter: