The Brooklyn Daily Eagle follows up on Pacific Park foreclosure, but gets a lot wrong.

So the Brooklyn Daily Eagle--which has a handful of staffers, none with a history covering Atlantic Yards/Pacific Park--last night posted Owner of Pacific Park defaults on site, auction set for January, without byline. It was promoted in this morning's email.

On one level--it's a low bar!--it's good that they followed up on the news that surfaced more than a week ago, since, for example, neither the Brooklyn Paper nor the city's major dailies have done so. 

(The news was broken by The Real Deal, which the Eagle helpfully described as a "well-known New York real estate publication," and followed up by my coverage and also Crain's New York Business and the real-estate site Bisnow.)

But the Eagle distillation has major errors, starting with--as Gib Veconi (a leader in BrooklynSpeaks and the Atlantic Yards Community Development Corporation) pointed out--the default affects not the entire 22-acre site, which has eight buildings (plus the arena) with multiple owners/operators, but rather the six development sites over the Vanderbilt Yard. See at bottom for images.

Then there are mistakes regarding the timetable, the modular building, and the bigger picture.

My posted comment:

I know you're summarizing previous coverage, but the lender is not the U.S. Immigration Fund. It's the middleman, which organized loans (at $500,000 each) from Chinese investors seeking green cards under the EB-5 program.

The arena (not named Barclays Center until the naming rights deal was announced in 2007) was proposed in 2003 (not 2004). Ratner didn't purchase the site in 2004. He began various purchases, but required the state to use eminent domain years later to gain properties from those who didn't want to sell (and to clear leases in buildings it had sold).

Also, the deal to buy development rights to the MTA's Vanderbilt Yard--about 8.5 acres of the 22-acre site=was first approved in 2006 and revised in 2009. That purchase will/would not be complete until 2030.

Technically, to enable the sale of tax-exempt bonds, the arena is owned by New York State. The arena operator--Ratner, Prokhorov, now Tsai--is responsible for paying off financing via Payments in Lieu of Taxes, or PILOTs. That saves actual property taxes--$40-$50 million a year. (MSG also is tax-exempt.)

The modular building is hardly a triumph. Bruce Ratner and his company once claimed they'd "cracked the code" and would build the entire Atlantic Yards project (before the name change) via modular construction. Instead of taking less than two years, it took four years to build and was plagued, in the initial stage, by leaks.

Forest City and partner Skanska were embroiled in lawsuits. Forest City resumed construction, then sold the modular factory. Forest City gave up on the modular plan and eventually sold the building.

Whether the buildings are "pet-friendly" is hardly the most important thing to know about the extant Atlantic Yards/Pacific Park towers. Rather, it's that the affordable housing--better to say "below-market"--delivered is far less affordable than promised to the public.

That connects to the announced foreclosure sale. Because the Eagle is relying, as far as I can tell, on the Real Deal, there's no mention that the developers have a May 2025 deadline to deliver 2,250 units of affordable housing, with 876 (or 877) more to go, with $2,000/month fines for each missing unit.

Does that obligation transfer to the sites in the foreclosure sale? They're the only places--excepting on other site, which requires separate state action--where the affordable units could be built.

So Empire State Development (ESD), the New York State public authority that oversees/shepherds Atlantic Yards/Pacific Park, needs to publicly state what conditions apply. Similarly, given that the sites can't be built on with an expensive platform over two blocks of the Vanderbilt Yard, how is that obligation factored it?

Until we learn those assumptions, and whether and how ESD has communicated with potential bidders, I think there's a reasonable chance this sale of development rights won't happen as scheduled.