Related's new joint venture about to qualify as "permitted developer" to build on six railyard sites. NYS officials claim project contours not under negotiation.
This is the first of two articles on the Nov. 14 meeting of the advisory Atlantic Yards Community Development Corporation (AY CDC). The second concerned "community engagement" regarding the future of the six tower sites over the Vanderbilt Yard platform.
OK, my prediction was a little off.
Empire State Development (ESD), the state authority that oversees/shepherds the project, was not quite ready to announce that a new joint venture involving Hudson Yards developer Related Companies has qualified as a “permitted developer,” thus stepping in, thanks to a foreclosure auction, to develop six development sites (B5-B10) over the Metropolitan Transportation Authority’s Vanderbilt Yard.
But they’re pretty close. ESD’s Anna Pycior, Senior VP, Community Relations, said the state authority was “completing our review of their documents, and once the review is satisfactory… we would proceed with the new joint venture. We don't anticipate issues moving forward.”
That could happen “within weeks,” added her colleague Joel Kolkmann, Senior VP, Real Estate and Planning. (Here's the meeting video.)
The joint venture involves the U.S. Immigration Fund (USIF), a “regional center” that recruited immigrant investors under the EB-5 investor visa program; Fortress Investment Group, a private equity fund known for seeking upside in distressed assets; and Related, which actually has the expertise to build.
The development sites were offered as collateral by Greenland USA, for now the project’s master developer, for $349 million in EB-5 loans, of which about $286 million remain unpaid. USIF is not “the lender,” though that's bad shorthand; rather, thanks to advantageous contract language, it controls the debt.
A “permitted developer”
No AY CDC Director brought up a question raised in previous meetings: whether USIF founder Nicholas Mastroianni II, whose criminal record includes an arrest on felony drug charges, disqualifies the joint venture from qualifying as “permitted developer.” Felons are barred. (It’s unclear whether he pleaded “no contest” to a reduced charge.)
It took until the public comment section at the end, when Prospect Heights resident Robert Puca asked if ESD had investigated Mastronianni: “I'm still confused how he could be considered to represent a permitted developer.”
AY CDC Chair Daniel Kummer noted that, early in the meeting, he’d said that the public comment section was not a question-and-answer session, but allowed it was an issue upon which the board had expected an update.
“We're still looking at it,” said ESD lawyer Matthew Acocella. “But based on the information we've gotten and based on the structure of the [joint venture], we don't see any any bar to proceeding with this joint venture as the permitted developer with Related and USIF.”
Does that mean that Mastroianni is not a felon? Or if he is, it doesn’t count? Could it be that that only the company that builds the project, not any financial partners, gets evaluated as a permitted developer? (If so, welcome to developers partnering with mobsters?)
Changes in the plan?
“Are there any proposed increases in density?” asked AY CDC Director Ron Shiffman.
“We're not in discussion about the plan itself,” Pycior maintained. “It's about who's on the other side of the table for future conversations.”
That is tough to believe, given Related’s extensive lobbying on Atlantic Yards, including with the Metropolitan Transportation Authority, presumably over building the platform that would be the base for six towers.
It’s also tough to believe, given a 2023 proposal by current master developer Greenland USA to supersize the project, gaining more than 1 million square feet over the six railyard sites, while extending project deadlines and promising, on a more extended schedule, more affordable housing.
Allison Mingus, a staffer for Assemblymember Jo Anne Simon, relayed Simon’s concerns about “whether the private equity firm involved in the joint venture is up to the task of representing the community's interest when it comes to the affordable housing promises.”
Supporting affordable housing
AY CDC Director Gib Veconi, a leader of BrooklynSpeaks, built on that comment, noting that a neighborhood rezoning plan known as the Atlantic Avenue Mixed-Use Plan (AAMUP), covering a stretch of mostly industrially zoned land stretching east of the Vanderbilt Avenue border of Atlantic Yards/Pacific Park, is going through public review and likely will be approved by the City Council in April 2025.
One goal, he said, is to create significant amounts of affordable housing in both privately constructed buildings (thanks to additional bulk), but also on city-owned land that, while outside the actual rezoning area is included to ensure community benefits.
That, for example, includes lots on Bergen Street and Dean Street near the Atlantic Yards site, owned by then city, that will be 100% affordable housing. (I’d say that they’re also being included to make the AAMUP look better.)
The remedies from the 2014 Atlantic Yards agreement, Veconi said, are supposed to be paid to the New York City Housing Trust Fund to create and preserve affordable housing in the Community Districts near the project site.
“I can't emphasize how unusual the situation is,” he said. “This is a situation where a state project that was responsible for affordable housing but can't deliver it has an opportunity to fund affordable housing, literally next door.”
Kummer said the comment was helpful. ESD reps looked stoic. The chances of enforcing that agreement are low, given discussion last year.
Quality of Life meeting report back
Nor was I correct in predicting that the Community Engagement section of the meeting would apply to a report back on the Quality of Life meeting held Nov. 6.
OK, my prediction was a little off.
Empire State Development (ESD), the state authority that oversees/shepherds the project, was not quite ready to announce that a new joint venture involving Hudson Yards developer Related Companies has qualified as a “permitted developer,” thus stepping in, thanks to a foreclosure auction, to develop six development sites (B5-B10) over the Metropolitan Transportation Authority’s Vanderbilt Yard.
But they’re pretty close. ESD’s Anna Pycior, Senior VP, Community Relations, said the state authority was “completing our review of their documents, and once the review is satisfactory… we would proceed with the new joint venture. We don't anticipate issues moving forward.”
That could happen “within weeks,” added her colleague Joel Kolkmann, Senior VP, Real Estate and Planning. (Here's the meeting video.)
The joint venture involves the U.S. Immigration Fund (USIF), a “regional center” that recruited immigrant investors under the EB-5 investor visa program; Fortress Investment Group, a private equity fund known for seeking upside in distressed assets; and Related, which actually has the expertise to build.
The development sites were offered as collateral by Greenland USA, for now the project’s master developer, for $349 million in EB-5 loans, of which about $286 million remain unpaid. USIF is not “the lender,” though that's bad shorthand; rather, thanks to advantageous contract language, it controls the debt.
A “permitted developer”
No AY CDC Director brought up a question raised in previous meetings: whether USIF founder Nicholas Mastroianni II, whose criminal record includes an arrest on felony drug charges, disqualifies the joint venture from qualifying as “permitted developer.” Felons are barred. (It’s unclear whether he pleaded “no contest” to a reduced charge.)
It took until the public comment section at the end, when Prospect Heights resident Robert Puca asked if ESD had investigated Mastronianni: “I'm still confused how he could be considered to represent a permitted developer.”
AY CDC Chair Daniel Kummer noted that, early in the meeting, he’d said that the public comment section was not a question-and-answer session, but allowed it was an issue upon which the board had expected an update.
“We're still looking at it,” said ESD lawyer Matthew Acocella. “But based on the information we've gotten and based on the structure of the [joint venture], we don't see any any bar to proceeding with this joint venture as the permitted developer with Related and USIF.”
Does that mean that Mastroianni is not a felon? Or if he is, it doesn’t count? Could it be that that only the company that builds the project, not any financial partners, gets evaluated as a permitted developer? (If so, welcome to developers partnering with mobsters?)
Changes in the plan?
“Are there any proposed increases in density?” asked AY CDC Director Ron Shiffman.
“We're not in discussion about the plan itself,” Pycior maintained. “It's about who's on the other side of the table for future conversations.”
That is tough to believe, given Related’s extensive lobbying on Atlantic Yards, including with the Metropolitan Transportation Authority, presumably over building the platform that would be the base for six towers.
It’s also tough to believe, given a 2023 proposal by current master developer Greenland USA to supersize the project, gaining more than 1 million square feet over the six railyard sites, while extending project deadlines and promising, on a more extended schedule, more affordable housing.
Allison Mingus, a staffer for Assemblymember Jo Anne Simon, relayed Simon’s concerns about “whether the private equity firm involved in the joint venture is up to the task of representing the community's interest when it comes to the affordable housing promises.”
That’s an understatement. Fortress, owned mainly by an Abu Dhabi-based wealth fund, is a bit of a black box, known for making savvy bets on distressed assets with significant financial upside, not for fulfilling public obligations.
Simon also hoped to get clarity about the roles of the three parties in the joint venture, and the substance of ESD’s review process. (That would’ve been helpful to raise during the meeting, since Simon, at a previous meeting, was allowed to ask questions.)
Finally, her aide asked, how has the joint venture affected the timeline for completing the platforms and required affordable housing? How know affordable housing units would be built, and how affordable would they be?
Presumably ESD would say they’re not ready to discuss it, but, heck, they were discussing it last year with Greenland.
Enforcement
A 2014 settlement agreement the state signed in response to pressure from the coalition BrooklynSpeaks required all 2,250 of the below-market "affordable" units to be built by May 2025, but 876 remain to be built.
Simon also hoped to get clarity about the roles of the three parties in the joint venture, and the substance of ESD’s review process. (That would’ve been helpful to raise during the meeting, since Simon, at a previous meeting, was allowed to ask questions.)
Finally, her aide asked, how has the joint venture affected the timeline for completing the platforms and required affordable housing? How know affordable housing units would be built, and how affordable would they be?
Presumably ESD would say they’re not ready to discuss it, but, heck, they were discussing it last year with Greenland.
Enforcement
A 2014 settlement agreement the state signed in response to pressure from the coalition BrooklynSpeaks required all 2,250 of the below-market "affordable" units to be built by May 2025, but 876 remain to be built.
State Sen. Jabari Brisport, at the meeting, raised the issue: “I'm concerned about ESD not enforcing any penalties on the developer that eventually takes control of the site."
Indeed, while ESD next year would collect $2,000/month in damages for each of the unbuilt units, ESD representatives, at public meetings, have sounded distinctly unwilling to push the developers.
Supporting affordable housing
AY CDC Director Gib Veconi, a leader of BrooklynSpeaks, built on that comment, noting that a neighborhood rezoning plan known as the Atlantic Avenue Mixed-Use Plan (AAMUP), covering a stretch of mostly industrially zoned land stretching east of the Vanderbilt Avenue border of Atlantic Yards/Pacific Park, is going through public review and likely will be approved by the City Council in April 2025.
One goal, he said, is to create significant amounts of affordable housing in both privately constructed buildings (thanks to additional bulk), but also on city-owned land that, while outside the actual rezoning area is included to ensure community benefits.
That, for example, includes lots on Bergen Street and Dean Street near the Atlantic Yards site, owned by then city, that will be 100% affordable housing. (I’d say that they’re also being included to make the AAMUP look better.)
The remedies from the 2014 Atlantic Yards agreement, Veconi said, are supposed to be paid to the New York City Housing Trust Fund to create and preserve affordable housing in the Community Districts near the project site.
“I can't emphasize how unusual the situation is,” he said. “This is a situation where a state project that was responsible for affordable housing but can't deliver it has an opportunity to fund affordable housing, literally next door.”
Kummer said the comment was helpful. ESD reps looked stoic. The chances of enforcing that agreement are low, given discussion last year.
Quality of Life meeting report back
Rather, as I’ll explain in my follow-up article, Community Engagement regards public meetings on the future of the site.
Had the Agenda been a wee bit more forthcoming—say, “Community Engagement related to project’s future”—perhaps members of the public might have been prepared to make meaningful comments.
Pycior said that such Quality of Life meetings had previously been “strictly related” to community concerns during construction of various portions of the project.
Had the Agenda been a wee bit more forthcoming—say, “Community Engagement related to project’s future”—perhaps members of the public might have been prepared to make meaningful comments.
Pycior said that such Quality of Life meetings had previously been “strictly related” to community concerns during construction of various portions of the project.
Not so, since they always included Barclays Center operational issues, as well as pending projects like the revamp of Times Plaza open space.
Blinkered summary of blinkered meeting
Blinkered summary of blinkered meeting
“There had, over months, accumulated a number of issues, and we we convened a Zoom that was attended by members of the community,” Pycior said, citing the presence of Brisport and also staff for some local elected officials. (Unmentioned: barely a dozen people attended, the day after the election.)
“We we discussed a number of issues that we've previously spoken about: concerns about use of park space, plaza lighting, etc, but I wanted to update you that that was, in fact, held,” Pycior said.
That was pretty weak tea. For example, Pycior neglected to mention the controversy over the noisy dog run outside the 595 Dean West tower, and the need for the previously phantom Pacific Park Conservancy to both limit hours and explore ways to limit sound, leaving both dog owners and neighbors frustrated.
Nor did she acknowledge that the meeting’s online format—with attendees muted, unable to chat, and unable to see others’ questions—was designed to tamp down community engagement (See my Weekly Digest for coverage.)
“We we discussed a number of issues that we've previously spoken about: concerns about use of park space, plaza lighting, etc, but I wanted to update you that that was, in fact, held,” Pycior said.
That was pretty weak tea. For example, Pycior neglected to mention the controversy over the noisy dog run outside the 595 Dean West tower, and the need for the previously phantom Pacific Park Conservancy to both limit hours and explore ways to limit sound, leaving both dog owners and neighbors frustrated.
Nor did she acknowledge that the meeting’s online format—with attendees muted, unable to chat, and unable to see others’ questions—was designed to tamp down community engagement (See my Weekly Digest for coverage.)
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