Skip to main content

Featured Post

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

Yes, Pacific Park condo buyers were told in June 2015 of timetable wiggle room. But Forest City revised "overall project schedule" in Nov. 2016.

In the wake of the news that Greenland Forest City Partners by May 2018 started acknowledging that the Atlantic Yards/Pacific Park buildout should last until 2035--instead of the previously projected 2025--that raises a question: when could they have acknowledged the new timetable?

Answer: I'd say November 2016, when Forest City Realty Trust (part of the joint venture with Greenland USA) announced a pause in the project and revised schedule, with a new financial model--though not necessarily timetable--lasting through 2035. That said, the fine print in the original Offering Plan for the 550 Vanderbilt condominium, filed in June 2015, left wiggle room, saying that the 2025 projection was subject to changing conditions.

In other words, it would've been unwise to have taken 2025 as a hard deadline. But it would've been wise to update the projection earlier, whether or not it was legally obligated (and I'm not a legal expert on condo disclosure requirements).

What buyers told as of June 2015

In the Special Risks section of Offering Plan, buyers were told that "substantial completion of Pacific Park Brooklyn... is anticipated to conclude by 2025," though there was no guarantee about what might start when. 
That was part of a section called "Additional Building Work," which noted that "construction in general is a complicated process... all of which is subject to unanticipated delays and difficulties and necessarily involves noise, disruption and inconvenience."

In the main section of the Offering Plan, after the Special Risks introductory section, a description of Pacific Park Brooklyn offered a more explicit warning.

It stated that, "[a]s of the filing date of this Plan, it is anticipated that the additional phases of development... will be completed by 2025. Purchasers are advised that the time required to complete a project of this magnitude may be extensive and completion of the improvements contemplated for Pacific Park Brooklyn and/or described in the Plan may be subject to circumstances beyond Sponsor's control."

The subsequent amendments

Since then, 14 amendments to the plan have been filed with the New York State Attorney General's Office, noting such things as price changes, updated floor plans, and smoking restrictions

From Amendment 1
Amendment 7 was submitted 12/19/16. I'll get back to that date below.

Six more amendments were filed before Amendment 14, submitted 5/23/18, offered the new estimate. Interestingly enough, the heading stated (as excerpted above right):
The purpose of this amendment is to (1) disclose the issuance of a preliminary certificate of eligibility for 421-a real estate tax benefits; (2) designate a replacement for one of the two principals of Sponsor; (3) disclose the occurrence of the First Annual Meeting and a new Board of Managers; (4) provide recording information for the Park Restrictive Dec; (5) provide an updated certification by Sponsor’s architect of record with respect to the PCO Escrow Amount; and (6) disclose a Special Risk concerning changes in the tax law.
The one thing it omits is the section (below) titled "Update on Status of Construction of Pacific Park Brooklyn," which acknowledges that "the remaining buildings, and the balance of the public park [are] projected to be completed in phases by 2035," and that "completion of the improvements... may be subject to further extensions of time and /or subject to circumstances beyond Sponsor’s control."

Looking back at December 2016

Each Amendment, putting aside the changes delineated, contains typical boilerplate stating, "The plan, as hereby amended, does not knowingly omit any material fact."

What's a "material fact"? Here's one legal definition: "A fact that would be important to a reasonable person in deciding whether to engage or not to engage in a particular transaction."

Well, it might be argued that the Offering Plan warned people not to take the 2025 date as certain. Then again, when Amendment 7 was filed, on 12/19/16, there was an opportunity to offer a new estimate.

In an 11/3/16 news release, Forest City Realty Trust, parent of Forest City Ratner (now Forest City New York), stated, regarding Pacific Park:
During the quarter, in light of changing market conditions directly impacting the Brooklyn residential market, the company, as part of a formal strategic plan update, made the decision to revise the overall project schedule to delay future vertical development.
(Emphasis added)

Forest City owned 30% of the project going forward at the time, but apparently was able to make such a unilateral decision, which was never formally affirmed by the joint venture.

Representatives of Greenland Forest City Partners in Brooklyn avoided offering any specific estimates. (In retrospect, it may have signaled that Forest City and Greenland were not necessarily on the same page. To the extent that Forest City could control the schedule, that's gone, given that Greenland, as of this June, has bought out all but 5% of Forest City's share.)

However, as I wrote 11/5/16, in response to an investment analyst's question, Forest City Realty Trust CFO Bob O'Brien said his firm's financial model "extends to 2035, 20 years from now," incorporating many factors, including cost of infrastructure, condo prices, and absorption of units.

As I wrote, that didn't necessarily mean a completion date by 2035, but it did suggest that the project wouldn't be done by 2025, the deadline for the affordable housing. The 2035 date, I suggested, might represent stabilization of income, but presumably that was no more than five years--maybe sooner--after which the project should be completed.

In retrospect, that was probably generous. Still, if Forest City had changed the financial model and the "overall project schedule," that would've been a good time for Greenland Forest City to update potential buyers and the public, even if that June 2015 boilerplate encompassed uncertainty.

Then again, maybe a more explicit update wouldn't helped condo sales.