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

Looking back at Gilmartin's 2015 speech: the real story of the green roof; how loss of modular added burden to neighbors; how Greenland deal had gone "very well"

In September 2015, I wrote about a 6/29/15 speech MaryAnne Gilmartin, then CEO of Forest City Ratner, gave to a friendly audience at Terra CRG's Fifth Annual Brooklyn Real Estate Summit. At times, she was candid; at other times, she obscured the truth.

After watching it again, I noticed some more things, as detailed below. The bottom line, as I said during my remarks at the "What's Next for Atlantic Yards" forum on Monday, is "the devil's in the details," so developer claims deserve close attention, and follow-up.



First, a quick recap:
  • Gilmartin was a "deep believer” in Forest City's modular experiment (which didn't work)
  • problems at the B2 modular tower were "really about the hiccup we had with our partner” Skanska (which was more than that)
  • "So we're bullish on Brooklyn, and super bullish on Pacific Park Brooklyn" (though they'd already sold 70% of the project going forward to Greenland USA, and later sold nearly all the rest)
  • the arena was a catalyst, "the ticket to the dance" to build the rest of the project (which is why some called it a Trojan Horse)
  • "It's our plan, or goal, and our hope and to bring a number of architectural voices into the mix" (which makes sense, but contrasts her company's former line)
  • the modular building was "being done in a fraction of the time, a fraction of the cost" (actually, it took way longer than planned, and lost Forest City lots of money)
But I want to look more closely at a few other things, some of which I mentioned but should be seen in a new light, and a few that I missed.

What happened to the green roof?

Gilmartin, as I reported, said the original plan for an arena green roof "needed to be value-engineered... We built the arena, it's a rubber roof, originally, with Barclays' logo on top of it, quite uninspired, and you can see it from a number of vantage points around the area."

That's interesting, because state officials in 2012 justified the Barclays logo, saying, inaccurately, that it could not be seen from street level. She also claimed the green roof didn't benefit the arena itself but as an amenity for neighbors; actually, it helped with needed noise and vibration dampening.

But let's check a larger about the green roof: "it was originally part of the design that we had and, like many things, it needed to be value engineered, we just couldn't afford it."

The reason that's relevant is that Forest City had not previously cited cost. In May 2008, it told WNYC that the earlier version of the green roof was technically impossible. In other words, it wasn't.

(By the way, I--and others--think she said that the green roof was a "$15 million" investment, though it also sounds like "$50 million," which seems unrealistic.)

The green wall and construction noise

The wall on Dean Street
Gilmartin described the "ginormous" green wall at Dean Street and Carlton Avenue as "an incredibly obnoxious sidewalk bridge... fact imposed upon us through our partnership with Empire State Development."

That green wall was quite frustrating, since it blocked traffic, and lasted even after construction stopped. As I wrote in November 2017, portions of the wall had lingered for some three years, vexing neighbors especially as the rationale for its presence has diminished.

But the notion of a 16-foot fence, which was extended into the street for support, instead of an 8-foot one, derived from a plan to shield noise from neighbors.

That raises a question: why no 16-foot fence around the B15 site across from the arena, where construction is very loud? We haven't been told, but my best guess is that it doesn't work logistically. So neighbors bear the brunt.

Also relevant is a comment Gilmartin made at about 14:30 of the tape, regarding the sustainability of modular construction: "If you can imagine taking the process of construction--dirty, noisy--off the streets, bring it into a factory, and then create a much more better situation for the people who live in the neighborhood around the buildings."

In other words, that's an admission that, in a situation where "it's a very tight fit" (another of my Atlantic Yards mantras), the margin for error is tiny, and noisy construction can be truly disruptive for some.

Affordability levels

In response to a question, Gilmartin said the affordability levels "are all mandated by the government, it's based on AMIs [Area Median Incomes]."

Actually, it's negotiable, I wrote, and Forest City managed to get the percentages of AMI to rise.

What I missed was that Gilmartin inaccurately said two upcoming "100 affordable" buildings would house tenants in the range from 40% of AMI to 150% of AMI.

As of May 2014, she surely knew, the New York City Housing Development Corporation had signed off on an income range in which the maximum would be 165% of AMI, for both B14 (535 Carlton) and B3 (38 Sixth), with rent levels set at 160% of AMI. (In other words, rent would be 30% of that latter income level, adjusted for size of unit and household.)

That's a not insignificant change. A decade earlier in the Affordable Housing Memorandum of Understanding (MOU) that Forest City signed with the housing advocacy group ACORN, the top income level was 160% of AMI, with rents set at 150% of AMI.

But Gilmartin is today gone from the project, now at L&L MAG, and Forest City is essentially gone. And, as I said at the forum, required affordable housing need not conform to the MOU, which was incorporated in the Community Benefits Agreement, but rather participate in city, state, or federal regulatory and subsidy programs. That offers a lot of leeway.

The Brooklyn Brand

At about 7:08 of the video, Gilmartin talked about marketing bonds for the arena.

"I went to every forgettable office park in the Northeast talking about the arena with Goldman Sachs selling the bonds," she said. "We had no sense of whether we could in fact float these bonds"--I noted that the Times had reported on Forest City's confidence--"and I would say along the way I realized and by the way the Nets were a terrible team then we didn't even have a franchise player. So we were talking about basketball we're talking about a team and we were talking about a project that really had a very complicated story around it.

"And somewhere along the way I realized that this was not about any of that," she continued. "It was about brand Brooklyn and what it really meant was that you were building something in a place that had such deep demand, such deep capacity and such you know cultural richness that if you build it they would come."

Of course, not long after that "GQ Declares 'Brooklyn is the Coolest City on the Planet'," the Barclays Center proclaimed in a press release, which omitted headline’s addendum: "An Eater's Guide."

The Greenland partnership

As in other speeches, Gilmartin was positive about the relationship with Greenland USA, which had bought the majority of the project. In response to the last question in the video, she noted that major real estate assets in New York and nationally were owned by the Chinese.

"And I would say to you that it's a global economy and I think, for us and as somebody who negotiated the transaction, it was about the equity," she said. "An enormous amount of equity needs to get put into this project in a relatively short period of time to make it happen. And that was really important to us. 

They did need a lot of equity. They didn't get it all. That's why Greenland has since negotiated development leases to four parcels--on terra firma--with other developers and faces a big lift to build six towers over the railyard, with an expensive platform as precursor.

"And a company that could understand the enormity of this project--there aren't a lot out there," Gilmartin said, "and so the fact that the Greenland Group which is built in 80 provinces in China, seven of the tallest buildings in China, was deeply capable of understanding what this project needed."

Maybe she meant municipalities; China has 23 provinces. And Greenland maybe understood the project but also was over-optimistic, with the company chairman in 2013 somehow claiming it would be an eight-year buildout, faster than anyone then imagined and, as we now know, far behind actual performance.

After negotiating a cooperation agreement, Gilmartin said, "I would say to you that, to their credit, they understand that this is a neighborhood that you must know to be able to excel in. And so the face of the partnership is Forest City and the work that goes on the office is is a global enterprise in some ways. There are 15 Chinese professionals working in our headquarters but there are 50 to 60 people at Forest City that are driving this project forward."

Not any more.

"And so to my mind, if it goes faster, if the quality is honored, if the cooperation is there, what better example of what the global economy should mean than to do this in partnership with other international names," she said. 

It hasn't.

"You know that our partner in the basketball team is a Russian company and we very successfully managed the partnership where he owns 45% of the arena," Gilmartin said, citing Mikhail Prokhorov, who today owns 100% of the arena operating company and a majority of the Nets, though he's expected to sell the remainder to Joe Tsai (and perhaps the arena operating company, too).

"So we have a little UN situation going on on the corner of Flatbush and Atlantic," she said, "but I can tell you that it has gone very well. It's a tribute to the borough and to our city that there is so much international interest in investing in our real estate."

In retrospect, that was truly happy talk.

Comments

  1. I'm not gonna be able to get that song from "South Pacific" out of my head for the rest of the week...

    ReplyDelete

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