The clock ticks: the May 31, 2025 affordable housing deadline is two years away. The developer will try to avoid fines. Will renegotiation serve public interest?

From 2/22/18 Forest City Realty Trust annual report:

On June 27, 2014, the City of New York and State of New York entities revised certain project requirements with the goal of accelerating the construction of affordable housing. Among the requirements, affordable units are required to constitute 35% of all units for which construction has commenced until 1,050 affordable units have been started, after which the percentage drops to 25%. Failure to meet this requirement will prevent the joint venture from seeking new building permits, as well as give the State the right to seek injunctive relief. Also, temporary certificates of occupancy (“TCOs”) for a total of 2,250 affordable housing units are required to be issued by May 31, 2025 or a $2,000 per unit per month penalty will be imposed for those affordable units which have not received TCOs by such date, until issued.

(Emphasis added)

That deadline won't be met, given the failure to start a platform over the Metropolitan Transportation Authority's Vanderbilt Yard. Each of two platform blocks would support three towers.

But it won't be Forest City's problem. Forest City Realty Trust doesn't exist anymore, having been absorbed by Brookfield Asset Management in 2018. 

And Altantic Yards/Pacific Park is owned by Greenland Forest City Partners, owned 95% by Greenland USA, an arm of a Shanghai-based congolmerate, with 5% owned by Brookfield/Forest City.

Enforcement questions

Empire State Development (ESD), the New York State authority that oversees/shepherds Atlantic Yards/Pacific Park, has sounded distinctly uninterested in enforcing that deadline, with 876 (or 877) more units, of the required 2,250, to be built.

This past April, at a meeting of the advisory Atlantic Yards Community Development Corporation (AY CDC), Director Gib Veconi asked about the fines: "What’s ESD’s position about collecting those remedies?”

ESD representatives, he noted, had previously claimed that the remedies were non-negotiable, so he asked if that was “still the agency’s perspective?”

“The project documents haven’t changed, so the requirements on the project are still the same,” ESD's Tobi Jaiyesimi stated carefully. “We recognize where we are with the developer’s ongoing discussion with the MTA as it relates to the platform… but at this time there have been no changes to the project documents, so those obligations are still standing.”

Renegotiation coming?

It's likely Greenland Forest City would argue, not without some logic, that a combination of the pandemic, rising interest rates, and the loss of the 421-a tax break all represent changed circumstances that have made development--for them and for others--more difficult.

But that also flies in the face of the developer's longtime insistence that it would meet its obligations, and ESD's assurance that it would enforce those obligations.

So if there is any renegotiation, it should start with more transparency and a much greater recognition of the public interest.