A dispute over infrastructure costs halts (for now) Long Island City project; city may have less leverage with developers

De Blasio recedes from development agenda as pandemic response consumes City Hall, Politico's Sally Goldenberg reported yesterday, highlighting a project in Long Island City for the former Amazon campus dubbed (a bit disingenuously, to me) YourLIC:

Negotiations with Mayor Bill de Blasio’s team were inching along, and the developers had hoped to begin a public review process after the summer. But tensions flared when City Hall demanded they cover all infrastructure costs, including off-site investments developers contended were not their responsibility. After administration officials informed the group on a Zoom call in June that they would have to pay $75 million to relocate a municipal building on the site, talks fell apart, according to several sources involved in the negotiations. On Thursday the administration officially announced its opposition to the proposal.

Deputy Mayor Vicki Been had a different take:

As for the recent Long Island City dispute, she said the developers were not willing to cover some $500 million to fortify the surrounding area for a massive influx of people and activity.
...“It’s just a sideshow,” Been said. “They’re just trying to distract from the broader point. … You can’t have three private developers coming in and asking for a huge, huge project and not paying their own way, and I made that clear from day one.”

Well, without a look at the contract--which of course can evolve--it's tough to judge.

By the way, one of the involved developers is former Forest City Ratner/Forest City New York head MaryAnne Gilmartin's MAG Partners--or is it L&L MAG?

The YourLIC web site lists both, one in text, one via logo.

A shifting balance, and the Atlantic Yards example

But what this dispute suggests to me is that the balance between public costs and private obligations is a negotiation, influenced by the perceived strength of each party, the political winds, and the economic tides.

It also depends on whether there's an open bidding for a site or, as in this case, a prepackaged plan. With Long Island City, TF Cornerstone was previously designated as a developer of public sites, and the other sites were privately owned, limiting city leverage.

I suspect that the current state of the economy limits city leverage, as well. Depending on the level of their investment--the Plaxall sites have been family owned for years--and debt, the developers can wait.

There's also a case for writing a more complex contract that balances risks and shares benefits--that, say, public costs could be repaid upon reaching certain benchmarks. (Writing such a contract isn't easy, since Atlantic Yards repayments for public property seem unlikely.)

By comparison--yes, it all comes back to Atlantic Yards--I'm reminded of the bid for the Metropolitan Transportation Authority's Vanderbilt Yard, which was an inside track for Forest City Ratner during an economic boon. The MTA let Forest City renegotiate even though a rival bidder agreed to pay more cash (though without plans for an arena).

So it looked like a great deal for Forest City--and it was, for the time. But the recession caused renegotiation--a better deal for the developer, with payments stretched out. That gave some breathing room as the project foundered and a new main developer entered the picture.