At AY CDC, a curious motion to hasten tower progress at Site 5, catercorner to Barclays, omits scale but prompts talk of asking arena operator to pay for plaza

This is the second of two articles about the meeting yesterday (link) of the advisory Atlantic Yards Community Development (AY CDC). held at offices of the parent Empire State Development (ESD) in Manhattan. The first concerned a potential developer emerging for the railyard sites.

In a surprise, AY CDC Chair Daniel Kummer, displaying an unusual amount of personal conviction, steered the conversation to developing Site 5, the parcel catercorner to the arena across Flatbush Avenue long home to the big-box stores P.C. Richard and the now-closed Modell's. 

After all, it's usually staff of the parent Empire State Development (ESD), the state authority that oversees/shepherds Atlantic Yards/Pacific Park, who propose project changes.

Site 5, approved in 2006 for a substantial 250-foot, 439,050-square foot building, has since 2015-16 been eyed by developer Greenland Forest City Partners, now much Greenland USA, for a giant, two-tower project, at least if the bulk from the unbuilt flagship tower (B1, aka "Miss Brooklyn") were transferred across Flatbush Avenue.

In 2016, Greenland posited a two-tower project, with towers maxing at 785' and 383', containing more than 1.1 million square feet. 

That plan ran aground when P.C. Richard sued over original developer Forest City's promises to include the retailer in the future project. But that lawsuit was settled.

2016 Site 5 proposal

Before Greenland's railyard sites went into foreclosure, there was concern, expressed notably by the BrooklynSpeaks coalition and one of its leaders, Gib Veconi, that the developer not be allowed to monetize Site 5 and potentially walk away from the project without committing to build a platform and develop the railyard sites.

Now there may be plan for the railyard sites, as I wrote. And while Veconi, a member of the AY CDC, was absent from yesterday's meeting, I suspect he would've supported Kummer's push. (After the meeting, I sought to ask Kummer about the backstory to his proposal, but he declined comment.)

A role for Greenland?

Kummer first asked if any representatives of Greenland USA were in attendance. Answer: no, though ESD staff had previously said they'd be invited.

It's unlikely Greenland, even if it gains changes in the project plan, would want to proceed itself with Site 5, the development rights for which might be worth $300 million, depending on encumbrances such as affordable housing and the ability to move bulk from B1.

It sold development rights to three of the most recent buildings to rise (B15, B12/B13), and did a joint venture with The Brodsky Organization for the fourth building (B4), which was steered by Brodsky.

Greenland, part of a Shanghai-based company that's faced financial struggles, may well see Site 5 not as a site to develop but a piece of land worth selling. After all, should a new developer emerge for the railyard sites, as reported today, Greenland would have no role in the rest of the project.

The question of urgency

"We can't just simply let [Site 5] sit to be developed in a kind of sequential way, the way that some extent the project has proceeded thus far," Kummer said.

That ignores how economic and political cycles--a glut of nearby residential units, rising interest rates, fluctuating tax-break and subsidy programs--have influenced the project's sequencing.

Kummer warned against waiting for a new developer to complete the six-tower railyard development--which could, of course, take until 2035, or longer.

"I think everyone would agree, in its current state, it's really a blight sitting in the middle of Downtown Brooklyn," he said. "A huge empty store site that only housed Modell's, and P.C. Richard is still operating."

I wouldn't call it the "middle of Downtown Brooklyn" but rather the edge, but it is a key crossroads. And it's far easier to develop at Site 5, which is terra firma, than to develop over the railyard, which requires an expensive platform that would take three years in each of two phases.

Scale questions

What's delayed Site 5 is likely not the market for the approved development bur rather the inability of the developer and the state to agree on the transfer of development rights. That roadblock may be removed if a new developer emerges for the railyard.

Unmentioned at the meeting: there's much to discuss about the parameters of the future Site 5 project. Should it be twice as dense, as previously proposed, as the buildings enabled by the Downtown Brooklyn rezoning? 

Should it be 50% larger than the 80 Flatbush project, aka the Alloy Block, just a block away up Flatbush Avenue, with a Floor Area Ratio (FAR), of 23.5, as proposed? Should be bigger?

In other words, if there's an urgency to develop Site 5, is that an effort to give the developer carte blanche on height and bulk, at least if--as would be likely--it would contain more deeply affordable units than in other buildings.

But Kummer wanted action, proposing that the AY CDC Directors ask ESD to have the developer propose a residential project on that site. "It was originally intended to be an office building but that's not what's going to get built," he observed, noting the previous proposal to transfer bulk from B1.

"It's time for them to come forward," he said, noting that the new tax incentive program, 485-x, succeeds the 421-a program and should incentivize development. Notably, it also sets a requirement of 25% affordability at an average of 60% of Area Median Income (AMI). 

Indeed, that does offer more certainty to any developer's financial calculations.

Community concerns

"I have a couple of concerns," observed Director Ron Shiffman, a veteran advocacy planner and Pratt Institute academic. "That site is a very intense site," given traffic on Flatbush, Fourth, and Atlantic avenues, and "it may not be suitable for affordable housing for families or individuals... I don't expect it to be six stories, but 70 stories... would not be appropriate for housing."

Shiffman noted a New York Times article about a 14-story building in Inwood and a six-story one Sunset Park that co-located public facilities.

"So," he said, "I would urge the developer to engage with the community boards, engage with the local civic organizations and come back with a plan," rather than invert the process.

Kummer said he'd accept a friendly amendment that the outreach to the developer from ESD include recommendations for open space, co-location of community facilities, and community consultation.

"I was going to recommend that we ask them to present a plan within 60 days, but that obviously wouldn't accommodate the kind of consultation Ron is suggesting," said Kummer. "So let's start with 90 days."

Capturing some of the arena's upside

Shiffman then cited my article, published earlier that day in Common Edge, headlined As Brooklyn Nets’ Value Booms, a Missed Opportunity With the Arena, which suggested the public should get a piece of the dramatic increase in the value of the Brooklyn Nets, Barclays Center operating company, and parent BSE Global, as evidenced by a new investment by the Koch family.

Shiffman acknowledged that "the public is getting something mapping that site in front of the arena as a public place." That's both true and, to my mind, a little generous. 

Yes, it has been and can be used for public gatherings, notably since the 2020 protests. But it's named Ticketmaster Plaza and is a canvas for promotion.

Before a transfer of bulk from B1, Shiffman suggested, "why don't we go to the present owner" of the Nets, Joe Tsai, who also has a philanthropic arm, "and see whether or not they aren't willing to pay something for that land that we are now granting."

The failure to build "Miss Brooklyn," Shiffman said, would enhance the value of Tsai's properties. Inversely, the as-of-right decision to build that approved tower, which Greenland could start, would diminish them.

So, he said, "why shouldn't we be able to claw back some of [the] financial gain for the public benefit?"

Cautionary response

Kummer, an attorney, noted that the team/arena company owner has no rights to the B1 parcel.

But they would suffer if it were built, responded Shiffman, suggesting "there is a wedge in here to open up a negotiations with them and get them to think about their kinder angels."

Kummer proposed that the board first deal with the motion on the table regarding Site 5 and then return to Shiffman's proposal. Shiffman said they should be linked, aiming to get the most for lower-income people.

Kummer proposed amending the motion to add a second recommendation: that ESD consider ways to assess value and then approach the arena company owners "with respect to realizing some value from the transfer of those rights and essentially the provision of an open space."

Shiffman noted, as I had written, that the Regional Plan Association had proposed a way to ensure that private profit was shared as the project proceeded.

Lawyerly response

ESD attorney Richard Dorado pushed back, saying that the BSE Global transaction "has nothing to do with the real estate at the actual site." 

I'm not so sure. The plaza is, in part, a development parcel that has been temporarily ceded to the arena.

"I understand that there's this idea that if construction doesn't take place on Site 1 that there may be a perceived benefit to the people that use the teams and enterprises that use the arena," Dorado said, "but there's no connection between the two."

Kummer acknowledged there's no overt connection, but "we need to have a better understanding of what is the value of having that site open as opposed to containing a huge office building."

Well, there's a huge value to arena operations, for crowds to gather, and to use the space for advertising and promotion.

Dorado, echoing previous arguments by Greenland and ESD, said the plaza "has become a symbolic site" given its use by protesters. "If you were to plunk a building on that site, that would be I would think offensive to people who now accept that as an important symbolic site."

Maybe, but they also could gather across the street at Atlantic Terminal. And the symbolic site is also an advertising site.

Evaluation questions

Kummer wondered if the state could put a value on it.

Dorado said "we don't have--other than the rights that we have with respect to Site 5, we don't have a stake in what's going on with respect to the ownership of the Nets and the entities that have that. I agree that there may be an implicit connection. But we already have a site that the public has an expectation will not be built on."

Wait a sec--ESD also has the right to decide what should be done with the B1 parcel.

As Dorado's said before, regarding an evaluation of the remainder of Atlantic Yards/Pacific Park, he suggested hiring appraisers would cost "substantial amounts of money."

Arden Sokolow, Executive VP, Real Estate Development and Planning, said they'd have to look at the arena transaction documents "to see if there's even any way to do this."

There are, perhaps, lots of ways to do it, starting with a decision to not transfer all or some of the B1 development rights.

Moving B1 bulk

Kummer asked about the value to Greenland of the development rights that could be transferred.

He didn't get an answer, but, as a rough estimate, I've suggested $300 million.

Shiffman noted that, in 2018, then AY CDC Director Jaime Stein, a colleague of his at Pratt, proposed that ESD undertake a "planning and financial evaluation" of Site 5 before anything is built on.

I don't think she specifically suggested a calculation of development rights, but she did recommend that, when a new Site 5 proposal is released, the AY CDC Board and ESD hire third-party planning, design and construction consultants to review the proposal to inform the board and the public.

Kummer said that, even if it had been undertaken, the market is changed.

Toward a vote

Kummer recapped the motion, which recommended that ESD request a proposal from the developer for Site 5, with amenities, and also explore "approaching the owners of the arena and the sports teams with regard to possibly a contribution in recognition of the value that they would be obtaining as a private matter in having the development rights transferred away from B1 and maintaining it as an open public space."

Shiffman again raised the question of housing at Site 5.

"I agree that in theory, but what else is going to be-- I mean, nobody's gonna build an office building," Kummer said.

Director Tamara McCaw pointed to other high-rises down Flatbush Avenue. True,, though most are somewhat shorter--400-550 feet--and not geared to affordable housing.

Affordability levels

Joel Kolkmann, ESD's Senior VP, Real Estate, said that the future community engagement process would address affordability levels.

The new 485-x tax break would require at least 25% affordability, with the weighted average of all income bands not exceeding 60% of Area Median Income, with no more than three income bands, and no income band exceeding 100% of AMI.

Currently, 60% of AMI has risen to $65,220 for one person, $74,580 for two, $83,880 for three, and $93,180 for four. So this would be lower than in the recent buildings, but well above the original "low-income" levels.

Kummer asked if the B5 tower, the first to be built over the railyard, could be built under the old 421-a program, given that foundations were installed.

ESD staff said yes. But Kolkmann noted that, not only is there a 2031 deadline, the extension doesn't apply to projects that were taking advantage of the option of 30% middle-income units at 130% of AMI, "so they would have to adjust their income levels."