Advocate Veconi: as affordable housing deadline approaches, and platform (with future towers) not economically viable, Atlantic Yards faces "realignment"

It's a glaring reality that the developers of Atlantic Yards/Pacific Park cannot meet the May 2025 deadline to deliver another 877 (or 876) units of affordable housing before fines of $2,000/month kick in for each missing unit.

Surely developer Greenland Forest City Partners--dominated by Greenland USA, the arm of a Shanghai-based firm--has little interest in paying those fines.  

Updated graphic on plans and progress

This past June, Greenland USA's Scott Solish, for the first time, hinted that they'd seek an extension by invoking a provision in the guiding Development Agreement that covers "the availability of financing for affordable housing and also project financing." 

(Whether the first clause can be invoked is by no means clear, because the loss of the crucial 421-a tax break is not necessarily the same thing as the unavailability of a subsidy. And it's not clear that a rise in interest rates means qualifies either. Then again, Empire State Development (ESD)--the state authority that oversees/shepherds the project--has treated the developer gently.)

Meanwhile, though Solish in May announced that, pending permits, they planned to start construction of the first phase of the two-block platform over the Vanderbilt Yard, which would ultimately support six towers--including B5, for which a rendering was released--nothing has happened. A statement in September blaming the delay on water main work no longer seems tenable.

But without any statement from Greenland or ESD, outsiders must prognosticate, and one of the best informed, Gib Veconi, recently told the  Prospect Heights Neighborhood Development Council (PHNDC) that some kind of "realignment" was inevitable, as described below.

What does it mean?

What might mean in terms of penalties, incentives, new timelines, new commitments, and even new participants? Unclear.

The gubernatorially-controlled ESD has made no effort to pressure Greenland regarding its obligations nor to enforce--even in the interest of leverage--fines for the unbuilt (and largely forgotten) Urban Room, a glass atrium at the base of the unbuilt "Miss Brooklyn" tower, once slated to loom over the arena.

Also note that, in the "Crossroads" series of community conversations organized last winter by the BrooklynSpeaks coalition, which Veconi helps lead, the discussion largely focused on the future of one parcel: Site 5, longtime home to P.C. Richard and (now closed) Modell's, catercorner from the arena.

I observed a seeming effort by BrooklynSpeaks to get public (and elected officials') support for the developer's plan to build a very large tower (or towers) at that site--transferring bulk from the unbuilt "Miss Brooklyn" flagship towers, once planned to loom over the arena-- as long as they contined a good measure of deeply affordable housing, which has been missing from the most recent towers.

Veteran urban planner Ron Shiffman said at the time that he saw less a planning process from BrooklynSpeaks than a "bargaining process that accepts the existing program as is. I would urge them to abandon a bargaining process and aggressively pursue the redesign of the project.” 

Shiffman, for example, envisioned a likely public bailout for the project, justifying a commensurate increase in community control, with a wider group of stakeholders. For example, he'd like to see the towers over the railyard no longer oriented to mainly luxury housing, as well as reduced in scale.

Well, there's a difference between a public bailout, and an extension from public agencies, but both advantage the developer, and should generate commensurate increases in the public interest. 

Meanwhile,  ESD CEO Hope Knight, at an 11/16/22 panel, suggested that office space in business districts might be converted to housing. “We need to create more mixed-use communities because office-based neighborhoods are suffering,” she said. “We need 24/7 communities in order to rethink commercial real estate in New York City.”

That doesn't directly apply to Atlantic Yards/Pacific Park, but it does suggest that the remaining towers might reflect that reality, with work-from-home space plus some office space.

Reporting back on Atlantic Yards

Veconi made his report at the PHNDC's 10/27/22 annual meeting. He wears a lot of hats: a founder of PHNDC, a leader of BrooklynSpeaks (which in 2014 negotiated the settlement that included the May 2025 affordable housing deadline), a key member of Community Board 8's Land Use Committee, and an appointee to the Atlantic Yards Community Development Corporation, the (purportedly) advisory body created as part of that 2014 settlement.

     

"We continue to be very concerned about the future viability of the Atlantic Yards project," Veconi said, noting the failure to proceed with the platform and press conference organized by BrooklynSpeaks--which includes neighborhood organizations and housing/transportation groups but is essentially run by a few people--regarding the promised Urban Room, the glass atrium attached to the unbuilt "Miss Brooklyn."

The failure to deliver the Urban Room, an obligation forgotten/ignored by nearly everybody, means a potential $10 million penalty, but ESD has made no effort to pursue it and hold the developer accountable.

The bigger deadline

That concern, Veconi said, connects to a "much bigger deadline," the requirement to complete the affordable housing. With $2,000/month fines, "if you do the math, in June of '25, they're on track to start writing checks for about a million-seven [$1.7 million] a month."

"That's why we continue to believe that there is is going to be some kind of refactoring or realignment of that project in the near future," he said. 

(Note: Veconi has a programming background and refactoring, according to Wikipedia, "is the process of restructuring existing computer code—changing the factoring—without changing its external behavior.")

 

Asked by resident Robert Puca to elaborate, Veconi said he'd consulted with "relatively senior individuals in urban planning, in project finance, and in development, and there is no one who expects the project will be completed according to the plan that's currently in effect."

"There's extreme skepticism that the railyards can be decked, that that's at all viable right now economically," he said, since "that's the most expensive part of the project and it's been saved for the end." 

Technically, the arena is the most expensive, but his point is surely that it's been far less costly to build residential towers on terra firma, given the lower cost in infrastructure. There just aren't any such sites left, other than the unresolved Site 5, but there are six parcels over the two-block railyard.

Two other factors Veconi cited are rising interest rates, which make financing tougher, and the loss of the 421-a tax break, which expired in June and has not yet been renewed, which Solish has said is necessary to proceed. (Some version of the tax break may recur, in some form, now that Gov. Kathy Hochul was elected to a full term.)

"Tremendous doubt"

"So there's tremendous doubt that anything can happen there," Veconi said. Beyond that, Greenland USA is part of Shanghai-based Greenland Holdings Corp., "that's facing a lot of the same problems other developers in China are facing. They're heavily leveraged and they can't get any more capital." In fact, Greenland's credit rating has been hammered and its stock has plunged.

"The sense that I've gotten again from people who have real expertise in development in New York City is the project's going to need to go back to the drawing board and be refactored," Veconi said, and "there will have to be some decisions made about what can be done now at this stage with what remains."

Edge of Site 5 in foreground at left

"I don't think the state is there yet," he said. "I don't think they are inclined to to to sort of go public with that, but I think it's well understood that the project can't be completed in its current design."

I'd note that ESD has lost some staffers and just recently named a new Executive VP for Real Estate, Arden Sokolow, who's actively hiring. That's a first-order challenge.

About Site 5

Asked by resident Raul Rothblatt about plans for Site 5, Veconi noted that a building 25 stories tall has been approved, but the developer has since 2016 floated plans to transfer the bulk of the unbuilt "Miss Brooklyn" across Flatbush Avenue, which would lead to "a building about the same bulk as the Chrysler Building."

(At the time, they contemplated 785 feet, considerably larger than the 12-story and 16-story buildings to the south, as shown in the photo above.)

Site 5 could involve two towers, as posited in the image at right. 

That requires ESD to change the guiding Modified General Project Plan, Veconi noted, "and I think the state is reluctant to get involved with that without having a solution for the rail yards."

So "one of the concerns that we've [BrooklynSpeaks leaders] stressed to the state and to elected officials," he said, is to recognize that "any plan that allowed that transfer to take place" would "effectively let Greenland USA monetize all of those rights and, you know, take the money and literally run." 

The development rights to Site 5 could be worth $300 million, maybe more (or less), depending on the interest rate environment as well as the attendant obligation to include truly affordable below-market housing. 

Veconi told me that the meeting BrooklynSpeaks had with ESD was before May, and "We have continued to reinforce this point in briefings we’ve had with local elected officials and staff since then." A key local official, and long prominent in BrooklynSpeaks, is Assemblymember Jo Anne Simon, but other local electeds participated in the Crossroads efforts.

Since then, the context has changed: the platform was announced, but hasn't moved forward.

Before the platform stalled, I was expecting a proposal to allow Site 5--despite its location bordering row-house Pacific Street--to be built to the developer's maximum, while including enough deeply affordable housing to gain support from housing advocates like Michelle de la Uz of the Fifth Avenue Committee, another key player in BrooklynSpeaks.

That, Veconi said at PHNDC's recent meeting, "would leave the rail yard undeveloped and with no capital available to complete it." And since that's where the affordable housing is expected to go, "that wouldn't be an acceptable solution."

"They're going to have to somehow understand that the fate of Site 5 is tied to the railyards as well," he said.

So that suggests that any "realignment" or "refactoring" will have to be a package deal beyond simply the configuration and program of Site 5.