With meeting set for first-ever Executive Session, big questions about whether Atlantic Yards CDC can impose that restriction. It doesn't transact, just advises.

It's perplexing that, for the first time ever, a meeting of the advisory Atlantic Yards Community

Development Corporation (AY CDC) will consider (link) an important matter in Executive Session, which seems designed to exclude the public and press.

That matter is described as "Platform Site Update (Oral Report)." The agenda was disclosed yesterday, less than 48 hours before the meeting and less than 24 hours before the deadline for public comment. 

 

That refers to the six development sites over the Vanderbilt Yard and, presumably, the foreclosure of master developer Greenland USA's interest in the companies holding rights to develop them.

The sites currently offer 3.5 million square feet of development rights, though Greenland has previously sought an additional 1 million square feet.

Those rights were assigned as collateral for two loans from immigrant investors under the EB-5 visa program, and the failure to repay those loans has led to a foreclosure process.

But no developer--reported to be Related Companies--would simply bid, since taking over most of the remaining project also means facing $2,000/month fines--for each of the 876 units of affordable housing that are required to be delivered by May 2025. 

Rather, that's likely subject to renegotiation with Empire State Development (ESD), the parent of the AY CDC. Also, ESD must approve a transfer, ensuring the role of a Permitted Developer (with sufficient experience) who is not a Prohibited Person (with a felony record and/or in breach of city/state obligations).

Why Executive Session?

It's hardly clear to me that the state Open Meetings Law (also at bottom) includes this matter. Most of the topics subject to Executive Session involve public safety, investigations, litigation, examinations, and employment matters.

The one topic remotely on point is "the proposed acquisition, sale or lease of real property or the proposed acquisition of securities, or sale or exchange of securities held by such public body, but only when publicity would substantially affect the value thereof."

(Emphases added)

My reading of that language is that "public body" affects all the possible transactions itemized previously. (Otherwise, why would they care about a private transaction?)

Questions about AY CDC role

However, the Atlantic Yards Community Development Corporation, as an advisory body, has no role in acquiring, selling, or leasing property.

That's the job of the parent ESD.

Questions about ESD role

Even if this were an ESD meeting, it's hardly clear that it would merit an Executive Session. ESD has not been involved in the foreclosure transaction between representatives of the lending entities and a potential new developer.

When I inquired about the auction's timing, I was told, "Norman: recommend reaching out to lender as ESD does not manage the auction." 

That was a reference to an affiliate of the U.S. Immigration Fund (USIF), a regional center that recruited the EB-5 investors and packaged their investments. It's not actually the "lender" but manages the lending entity.

Even if ESD is involved in discussions with the potential new developer regarding changes to the Atlantic Yards/Pacific Park guiding Development Agreement and Modified General Project Plan, they do not necessarily regard property held by ESD. 

After all, the development rights are being sold by the Metropolitan Transportation Authority.

Drilling down

The ownership issue was raised at a January AY CDC meeting. "Who now owns the rights to develop the six lots over the railyards?" asked Director Gib Veconi.

“AY Platform Developer,” ESD lawyer Richard Dorado responded, then correcting himself to say, “AY Phase II Developer"--most likely AY Phase II Development Company--"has the obligations to develop the platform sites."

“Who owns that?” Veconi asked.

“The two entities that borrowed the EB-5 loans,” Dorado said.

“And who owns them?” Veconi asked.

“They are currently owned by another Greenland affiliate,” he was told. 

It's hardly clear that ESD or the AY CDC would be a counterparty at this point.

Value questions

Even if the transaction were deemed to regard property "held by such public body," it's hardly clear that "publicity would substantially affect the value thereof." 

We don't know the transactions being discussed, but presumably they involve the purchase of development rights out of foreclosure and the future contract with ESD, including the renegotiation of the affordable housing obligations.

The first is a transaction between private entities. The second might eventually involve property nominally owned by ESD, but not yet.

Nor is there any reason why publicity might "substantially affect the value," since ultimately the future contract with ESD would have to be discussed in a public setting.

Another wrinkle

Also, if ESD--putting aside the AY CDC--could be a counterparty because of property held "by such a public body," that raises another wrinkle.

[Updated] As I argue, the USIF, led by a man who pleaded no contest after being charged with a felony, should be considered a Prohibited Person, and ESD should not have permitted a contract with any USIF affiliates, at least assuming he didn't plead to a reduced charge.