Even before May 31 deadline for affordable units, there's a May 12 deadline to start the platform. Time for an "Unavoidable Delays" escape hatch?

It's widely known that a May 31 deadline looms for 876 units of affordable housing, with penalties of $2,000/month for each unbuilt unit. Questions loom over whether Empire State Development (ESD), the state authority that oversees/shepherds the project, will enforce the deadline, and on whom.

However, there's a May 12, 2025 deadline to start the platform over the Vanderbilt Yard, to protect the working railyard, used to store and service Long Island Rail Road trains, while towers are built above. (I previously wrote about this April 21, 2024 and Feb. 21, 2023.)

However, what I once thought "shouldn't be too hard to meet" now won't be met, because the project is stalled and no new development team is ready to take over the six railyard development sites facing a foreclosure auction.

Those sites can't be developed without the platform, expected to be built on two parts between Atlantic Avenue and Pacific Street: one block between Sixth and Carlton avenues and the other between Carlton and Vanderbilt Avenues.

Any new joint venture must be renegotiating the affordable housing penalties and other terms.

Previous plans

As of April 2022, various plans had been announced for the first platform block, between Sixth and Carlton avenues and Atlantic Avenue and Pacific Street.

Filed with Department of Buildings

But developer Greenland USA did not move forward. In 2023, it proposed a new plan to supersize the project to make it viable. That plan didn't fly, and in November, Greenland faced foreclosure of its rights to develop those six parcels.

Looking east from Sixth Avenue near Atlantic Avenue. Photo: Norman Oder

Fifteen years later

Why May 12, 2025? That, as I wrote, is the 15th anniversary of the project's "Effective Date," which is the date ESD finally cleared vacant possession of key project properties after previous condemnation.

As I wrote, when the project's Development Agreement first surfaced, the section regarding the project's platform stated that the developer must begin construction of the platform over the railyard no later than the 15th anniversary of the Effective Date.

That deadline was one of several that indicated that the project likely would not, as often projected, be completed in ten years but rather could take 25 years, until 2035.

See excerpt below, which states that the AYDC, or Atlantic Yards Development Company, shall Commence Construction by that 15th anniversary, but with an asterisk.

The AYDC at the time was controlled by Forest City Ratner. Now it or a successor is controlled--I think--by Greenland USA, but that's not clear. 

That's a question that could be answered at the next meeting of the Atlantic Yards Community Development Corporation (AY CDC), which is supposed to advise ESD.

"Unavoidable Delays"

Note the escape hatch in the third line: the platform requirement is subject to "Unavoidable Delays."

So ESD can suspend the deadline.

What's the penalty?

Even if it weren't, the penalty may not be too painful. Failure to Commence Construction would be an Event of Default, as noted in section 17.1(g) of the Development Agreement. 

As noted in section 17.2(a)(iii), the developer would then be precluded from requesting the severance of a development parcel or begin any development work.

That would be a meaningful penalty only if the deadline were not met at a time when parcels on terra firma were ready for development. 

Could penalty affect Site 5?

As of now, the only parcel that qualifies would be Site 5, across from the arena block, where Greenland aims to build a large, two-tower much larger project there, which, though already encouraged by ESD in an Interim Lease, would require a public approval process.

Otherwise, building at the six tower sites over the railyard necessarily require the platform to be built, and thus no development would start unless the platform started.

That still leaves ESD with some leverage. 

Let's say the platform project, no longer controlled by Greenland, is stalled. ESD presumably--depending on how contract language is revised--could tell Greenland, even if it no longer controls the railyard sites, that it can't profit by building Site 5 or selling those development rights until a platform project emerges.

Milestone issues

What does "Commencement of Construction" mean?

In this case, it means delivery of a completion guarantee required by the applicable development lease for a tower, and the execution of documents that affirm that the platform--"or any portion thereof"--that can support a building in accordance with that development lease, with documents showing agreement with the Metropolitan Transportation Authority (MTA) and its affiliates.

Note that there's no deadline to complete the platform, just to complete the project, within 25 years of that Effective Date. In other words, as long as they get started, they meet the benchmark. Note that I wouldn't be surprise if the 2035 "outside date" faces renegotiation.

Previous expectations

B5 center-left, plus (built) B4; Dattner Architects

I had previously thought the deadline would be met, given that Greenland was designing B5, across Sixth Avenue from the arena block, and was beginning to design adjacent B6 and B7.

Indeed, Greenland released designs for B5 and later said that it had come to an agreement with the MTA The first three towers would cover one of two blocks requiring a platform.

In early 2022, construction seemed imminent, but it never started. 

In August 2023, a Greenland rep and an MTA rep at a meeting of the Atlantic Yards Community Development Corporation (AY CDC) said they had come to agreement, but the Greenland rep said there was no business reason to proceed.

Later in 2023 came the foreclosure.