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Atlantic Yards CDC: not much chance to hire its own consultants on project changes, as per 2018 proposal

This is the second of five articles regarding the 3/15/19 meeting of the Atlantic Yards Community Development Corporation (AY CDC), set up to advise the parent Empire State Development (ESD). The first article concerned the expected 2022 completion date for the middle school. The third article concerned updates from the AY CDC President and from developer Greenland USA. The fourth article concerned a failed effort to get a building-by-building timetable for affordable units. The fifth article analyzed the likelihood of building all railyard towers by 2025.

Seemingly routine talk about the authorization of the AY CDC's $250,000 budget for 2019-20 (see last three pages here) prompted a few questions about the entity's funding, and its ability to hire its own consultants to advise on a pending project change. Answer: it can't.

The budget is "expected to be funded in its entirety by an imprest account funded by project developers and maintained at and by Empire State Development," the board materials said. (An imprest account is a cash account, replenished routinely.)

The budget covers two employees (salary and fringe benefits), plus $46,300 in other costs, including insurance and occupancy, such as hosting meetings. It's an increase from $235,000.

In response to a question from board member Cy Richardson, AY CDC Executive Director Tobi Jaiyesimi said the increase was anticipated in a cost letter negotiated in 2014 with the developer for the first five years. "We anticipate that, now that we have an understand of actual cost that should be projected, the budget will stay at 250,000," she said. (The other salaried employee is Greg Lynch, an onsite monitor.)

How does imprest account work?

Regarding the project at large, she said, each imprest account is funded to the scope of work and the developer that's responsible for it, including outside counsel, environmental monitor, and owner's representative.

In the early stages of the project, when it was fully controlled by original developer Forest City Ratner, it funded the imprest account. It sold a 45% stake in the arena operating company to Mikhail Prokhorov's BSE Global, and later sold the rest. There is now a separate imprest account related to any Barclays Center charges, Jaiyesimi said.

When, in 2014, the joint venture Greenland Forest City Partners (GFCP) was established, with 70% ownership by Greenland USA, a joint venture imprest account was established, she said. Last year, Greenland bought all but 5% of the project going forward from Forest City, then sold development rights to three sites to two developers, TF Cornerstone and The Brodsky Organization.

"There are new entities," she said, "and there will be imprest accounts established."

Amending the budget 

What, asked board member Gib Veconi, is the procedure for amending the budget in the course of the fiscal year? His reason: it's long been expected that GFCP will propose relocating density from the unbuilt B1 tower--originally slated for the location of the arena plaza--to create a giant two-tower project at Site 5, currently home to P.C. Richard and Modell's.

(That's been slowed by litigation involving P.C. Richard, which claims it was promised space in the replacement building, and won a first-round ruling.)

The AY CDC, said Veconi, "might benefit from expert opinion and analysis that would require some budget." That seemingly referenced a 2018 proposal by departing board member Jaime Stein, who suggested that the advisory body be able to hire independent third-party consultant to evaluate such new plans.

The proposal got bureaucratically buried by AY CDC President Marion Phillips III, an ESD executive, who said it would work by amending existing ESD contracts with law firms and environmental consultants.

"Since we might not be able to anticipate the scope," asked Veconi, could they be certain those contracts would be sufficient?

Phillips said the parent ESD could modify the project's overall Modified General Project Plan, if necessary, while a proposal for the AY CDC to hire consultants would require a slow, unwieldy procurement process. "I think the contracts we have in place would be sufficient."

Unmentioned: those existing consultants are the ones that have eased the project's path forward in the interest of the developer and the state. (See discussion here of environmental consultant AKRF.) It's quite questionable that they could offer a more community-oriented perspective.

Regarding Site 5

"As it relates to Site 5, in terms of P.C. Richard and Modell's, that has not gone forward," said Phillips. It's still in negotiations, with the court case pending, "so there's really nothing to report there."

He did not mention that P.C. Richard had won the first round, so it's likely that board members don't know that; it hasn't been reported beyond my blog, and it was not mentioned in board materials. That kind of limits the ability of the board to be advisory.

The board, Phillips noted, has asked about greater community engagement, and when they get to the point of modifying the plan for Site 5, "that's something we're committed to doing."

Meeting infrequently

How, asked Richardson, does the AY CDC deal with the recommended hiring of consultants. "It's an ongoing, kind of fluid conversation, we meet once a year," he said, with a touch of chagrin. (The board last met in March 2018.)

"As you know, we ought to meet quarterly," Phillips responded, citing the challenge of getting quorums. "If you had a need to amend the budget, we would amend the budget through our regular meeting process."

Later in the meeting, he acknowledged an "upside and downside of not meeting" for so long.

While not meeting was a downside, "the reason it did not have a great of an effect had more to do with the fact because we were not going vertical at the time," since most of the work on the project was at the Vanderbilt Yard. "The upside, we're ready to go forward and start going vertical," given that two buildings are starting in the first half of the year.

Welcoming new board member

There's been a lot of turnover on the 14-person board, which some members resigning before the end of their three-year appointments and others choosing not to continue after that.

Of the total, nine are appointed by the Governor, and five are appointed respectively by the President Pro Tem of the New York State Senate, Speaker of the New York State Assembly, Mayor of New York City, Borough President of Brooklyn, and Speaker of the New York City Council. The latter five appointments all involve input from local elected officials.

Currently, three gubernatorial appointments are pending, as is the mayor's appointment; an appointment by the City Council is being vetted.

Phillips at one point welcomed Veconi, the Assembly appointment. "Welcoming Gib is like welcoming the guy who's been at the family dinner in the last 20 years," he said, a reference to Veconi's longtime role in the project as a leader of the BrooklynSpeaks coalition, and a negotiator of the 2014 settlement that accelerated the delivery of affordable housing to 2025 (after the deadline had been extended), as well as the establishment of the AY CDC.

"It's good to welcome someone who's been a partner," Phillips said, "who's been very constructive in moving the project forward."

That's not necessarily the language that those more wary of the project might appreciate, though, in the context of the AY CDC, Veconi is more informed than other board members, and, as I'll report separately, pressed (unsuccessfully) for a more specific, building-by-building timetable for the project buildout, aiming to understand how the required 2,250 units of affordable housing will be built by 2025.

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