Monday, March 31, 2008

Sunday in NYC: Avella denounces overdevelopment; Luxury Living showcase draws throng

Longshot mayoral candidate Tony Avella, a maverick City Council Member from Northeast Queens, officially launched his candidacy yesterday afternoon at a City Hall press conference. Seeking to distinguish himself from the highly-scripted typical politicians, Avella declared that he hadn't written a speech but instead would speak about three main issues.

Indeed, two of Avella's issues barely registered with the crowd of supporters behind him: lowered taxes and a revamped education system. Rather, they applauded heartily when he condemned overdevelopment, asserting that the real estate industry has too much power and "the city has done very little to preserve quality of life."

"Overdevelopment," he said, "is destroying the character of every community. That absolutely must stop."

Brooklyn in the house

While most of Avella's supporters appeared to be from Queens, I did spot a couple of Brooklyn activists in the crowd. Avella has opposed the Atlantic Yards plan and the use of eminent domain, though his opposition to Mayor Mike Bloomberg's congestion pricing plan, which does have support in Brownstone Brooklyn, might put him out of synch with some Brooklyn supporters.

Asked if he felt he was handicapped facing politicians with stronger Manhattan or citywide identities--other candidates include fellow Democrats like City Council Speaker Christine Quinn and Comptroller William Thompson--Avella declared, "The issues are the same. It all revolves around planning, development, quality of life."

Luxury Living

After leaving Avella's press conference, where some supporters carried signs asserting "The revolution starts... now!", it took just three stops uptown along the #6 subway line to visit the New York Observer's Luxury Living: New York Condo Showcase at the Puck Building at Lafayette and Houston streets.

Compared to the crowd at City Hall, this group was less gritty and better-dressed. There was a bar, musical entertainment, and other festive accoutrements. And all these projects, and their buyers, gain benefits from the belatedly-reformed 421-a tax break, which has fueled development all over the city, including the Queens districts that constitute Avella's base.

Brownstone brand

Booths showed off eight condo developments from the Upper West Side, eight from the Upper East Side, two from Midtown East, three from Midtown West, seven from Downtown, two from Riverdale, one from Long Island City--and seven from Brooklyn.

The Brooklyn list:
One Brooklyn Bridge Park
150 Myrtle Avenue
The Edge
Northside Piers
80 Metropolitan
One Hanson Place

Note how the display for Forte condos in Fort Greene used the brownstone scale of the rest of the neighborhood as a selling point.

Trickle down

There was obviously lots of revenue attached to the event, but a nonprofit organization got the proceeds from ticket sales ($5-$10):
The Coalition for the Homeless is among the nation's oldest and most progressive advocacy and direct service organization helping homeless men, women, and children. We are dedicated to the principle that decent shelter, sufficient food, affordable housing, and the chance to work for a living wage are fundamental rights in a civilized society.

The Community Boards face cuts, but the system needs a boost

It was a relatively small article on page 5 of the City section of the New York Times, sandwiched in between pieces on the closing of a beloved laundry in Cobble Hill and after-school life at a coffee/tea/spice shop in Park Slope, but it touched on a very important issue: New Yorkers have way too few resources to pursue democracy at the neighborhood level. What it didn't explain is why the Community Board (CB) system needs reform, and may well become an issue in the next mayoral race.

The article, headlined Not Quite Passing the Hat, but Already Feeling the Pain, concerns cuts of 5%-8% at the CBs, which may not sound like much, but cut into already limited resources.

After all, the CBs serve the equivalent of decent-sized cities, as the districts contain 35,000 to 200,000 people, but have a paid staff of three. (The board members are volunteer appointees, as are committee members.)

Perhaps the main role the CBs play is in advising and/or voting on major land use issues. (Remember, because Atlantic Yards was a state project, the three affected CBs didn't even get an advisory vote, though they did indicate opposition and concern.) However, unlike independent cities of equivalent size, the CBs don't have professional staff in planning and other departments.

Cuts hurt more

Outside of funds for salaries, the Times reported, board members "contend that their allocation has not been increased in about 15 years." (That's either a fact or not.) And, given the small budgets, the cuts have disproportionate impacts.

The Times reported:
“Our computers don’t speak to each other,” said Wally Rubin, district manager of Community Board 5 in Manhattan. “We have no I.T. person. We have a cabinet filled with information that the Charter mandates we keep, and we can’t even open the drawer. And now we’re talking about a $10,000 budget cut?”

In response, John Gallagher, a mayoral spokesman, said in an e-mail message, “In these difficult economic times, all city agencies and government entities must do more with less.”

That's cold.

CBs and community plans

The role of the CBs was highlighted last Monday in a Municipal Art Society (MAS) Planning Center Forum: Elected Officials Respond to Communities That Plan for Themselves. (Two more panels, on sustainability and neighborhood planning in the face of large-scale development, are scheduled for April 14 and May 14, with some Atlantic Yards activists scheduled for the latter panel.)

MAS President Kent Barwick, previewing the launch April 15 of the Planning Center's online Atlas of Community-Based Plans, pointed out that the atlas would include 87 plans, perhaps half of them serving communities the equivalent of Richmond, Virginia (population 192,913).

"These are the plans you don't hear a lot about in the press," declared Eve Baron, who heads the Planning Center. "They're not the Bruce Ratner plans. They're not the [Sheldon] Solow plans."

Improving CBs

Manhattan Borough President Scott Stringer, a panelist, described how he revamped CBs in Manhattan by establishing an independent screening panel to deflect political interference and offered training sessions in land use and zoning.

Still, he said that CBs are too involved in service delivery and not involved enough in planning. He said the next mayor should "mandate the hiring of a planner for every community district." In fact, he said, mayoral candidates should be evaluated on their commitment to planning. (He's been mentioned as a potential candidate.)

Commented moderator Ron Shiffman, a longtime community planner and former member of the City Planning Commission (CPC), "It's not unfair to say the CPC is more a rezoning agency than a planning agency, and has been that way for a long time." The Department of City Planning, the agency attached to the CPC, has "far fewer people per capita" than in most other major cities.

City Council Member Gale Brewer, who represents the Upper West Side, lamented that CBs often don't have the resources to be proactive, to say "This alternative works." The Atlas is an attempt to change that, to show what community planners have been doing.

Support from the Borough President and others, Brewer said, can be key to empowering the CBs. Most don't have the staff to keep up with all the changes in their community and put all documents online. "Maybe Craig Hammerman"--District Manager of Brooklyn CB 6, which has an extensive web site--"because he's a nut," Brewer said affectionately, but few others manage similarly.

Sunday, March 30, 2008

The view from Dean Street, as the Ward Bakery gets hollowed out

Demolition continues at the Ward Bakery, a complex with several components occupying a good chunk of the block between Carlton and Vanderbilt avenues and Pacific and Dean streets, the southeast block of the Atlantic Yards footprint. (Photographic panoramas by Jonathan Barkey; click to enlarge.)

While most of the terra cotta facade on Pacific Street remains, there has been significant progress in hollowing out the building from the Dean Street side, as pictured. Indeed, there's nothing left to the southeast side of the building. Interim surface parking may be on its way.

Miss Brooklyn: dead, not dead, or simply not animatronic just yet?

OK, is Atlantic Yards dead? What about the Miss Brooklyn tower? Let's try to sort through the coverage, given that the two major Brooklyn weeklies, the Brooklyn Paper and the Courier-Life chain, are providing diametrically different coverage.

The short answer: Atlantic Yards, at the timetable envisioned, is obviously dead, but a major project somewhat like it might arrive on a much attenuated schedule. As for Miss Brooklyn, it's not "killed," but rather delayed, though developer Forest City Ratner seems to be seriously spinning its chances.

The Times's coverage

So far, the developer hasn't contradicted the basic premise of the 3/21/08 Times story, which began:
The slowing economy, weighed down by a widening credit crisis, is likely to delay the signature office tower and three residential buildings at the heart of the $4 billion Atlantic Yards project in Brooklyn, the developer said.

The Brooklyn Paper

The Brooklyn Paper's package of stories linked to the news, declaring Atlantic Yards dead and stating "Ratner kills Miss Brooklyn," while the text of the article cited the Times and overstated:
The proposed “Miss Brooklyn” skyscraper at the intersection of Flatbush and Atlantic avenues — a building Ratner and his architect Frank Gehry once wanted to be the tallest in Brooklyn — does not have an anchor tenant and will not be built, even in its scaled-back, 511-foot form.

“Until we get a tenant, we won’t start Miss Brooklyn,” Ratner told the Times.

Well, that means it won't be built until a tenant is found, not that it's been killed.

The Courier-Life

This week's Courier-Life chain has an article (not yet online) headlined "Miss Brooklyn building ain't dead yet." That strikes me as more accurate than "Ratner kills Miss Brooklyn," but the developer's spin deserves a close look:

The proposed iconic Miss Brooklyn building remains alive and may still be looking down into the glassfaced Barclay's Arena when the Brooklyn Nets play their first hoop game in the borough, according to a Forest City Ratner Companies spokesperson.

"Rumors of Miss Brooklyn's demise have been greatly exaggerated. We will build Miss Brooklyn when we get an anchor tenant and we have only just begun a very targeted, direct outreach to a select group of elite companies," said Forest City spokesperson Loren Riegelhaupt.

Riegelhaupt clarified a recent New York Times story that stated the Atlantic Yards' project celebrity architect, Frank Gehry, sent letters to chief executives of many of the city's biggest corporations asking if they would be interested in becoming an anchor tenant of the building.

Riegelhaupt said less than 20 letters went out and it included corporations outside the city, as well.

"Thus far, there has been significant interest and responses have been very positive," said Riegelhaupt. "We believe this is a very unique office space and are looking for a unique tenant recognizing the stunning beauty of Mr. Gehry's architecture."

The Times on the tower

The Times reported:
In another indication of the problems facing the project, Forest City recently sent a letter signed by the project’s celebrity architect, Frank Gehry, to chief executives of many of the city’s biggest corporations, inviting them to become a tenant in the “centerpiece of the project,” Miss Brooklyn. It was originally scheduled to be completed in July 2009.

Brokers said that developers usually home in on companies actively looking for new headquarters, rather than cast such a wide net. Forest City’s approach was more akin to cold-calling to solicit interest, a possible sign, they said, that the developer was struggling to find tenants.

That doesn't sound like "very targeted, direct outreach." And "fewer than 20 letters" doesn't exclude "many of the city's biggest corporations."

Note that the Courier-Life article ignored the generous timetable--6+ years to build the arena and 12+ years for the first phase--granted by the Empire State Development Corporation.

Saturday, March 29, 2008

FCR's Beekman tower finally financed; school will be a year late

Despite the credit crunch, Forest City Ratner shows it can cobble together major financing from several sources, announcing yesterday that it had secured $680 million in financing for the Frank Gehry-designed Beekman Tower in Lower Manhattan.

The bonds are issued by the New York City Housing Development Corporation (NYC HDC) but are not the tax-exempt housing bonds needed to construct the market-rate and affordable rentals in the Atlantic Yards project. Rather, they are a combination of tax-exempt Liberty Bonds, aimed to revive Lower Manhattan, and taxable bonds.

Specifically, NYC HDC contributed $190 million in Liberty Bonds and $476.1 million in taxable bonds to finance the 904 market-rate apartments and the New York State Housing Finance Agency contributed $13.9 million from its Liberty Bond allocation.

One year late

Forest City Ratner had said the school planned for the site would open in 2009; now, reports the Observer, the planned opening is 2010. Note that the School Construction Authority had cited a delay in steel, while the delay in financing was more clearly to blame. FCR had previously ducked a request from Assembly Speaker Sheldon Silver regarding the timetable.

On the Leonard Lopate Show Thursday, the New York Times's Charles Bagli said the developer anticipated closing on financing by the end of the month.

On Hudson Yards plan, Times hails "real bidding process"

From a New York Times editorial yesterday on the Metropolitan Transportation Authority's plan for the Hudson Yards, headlined Finally, a Vision for the West Side:
The M.T.A., we are pleased to say, conducted a real bidding process. That was a refreshing change from years past when it looked as though the yards might be given away in a back-room deal. It would take a lot more vigilance and transparency to ensure that the new Hudson Yards work for all New Yorkers.

And when did the Times editorialize about the not-so-real bidding process for the MTA's Vanderbilt Yard in Brooklyn, a process that began 18 months after the city and state announced their backing for Forest City Ratner's plan?

Friday, March 28, 2008

"Deeply troubled" Jeffries says it's time to evaluate changes in AY; Brennan's subsidy bill resurfaces

Last night, I spoke to Assemblyman Hakeem Jeffries, whose district includes Prospect Heights and the Atlantic Yards footprint, about the Atlantic Yards stall and the potential response in Albany.

He indicated dismay about the apparent major delay in affordable housing and said it was too soon to assess new Governor David Paterson’s posture on the project.

He said the legislature may look at a bill, sponsored in 2006 by Assemblyman Jim Brennan and revived in February, that would trade a one-third cut in the size of Atlantic Yards for direct and indirect subsidies worth some $700 million over 30 years, with nearly half of that up front.

Also, he said a legislative committee might take another look at the Empire State Development Corporation’s (ESDC) stewardship of Atlantic Yards.

"Deeply troubled"

“I’m deeply troubled by the notion of moving forward with an arena without a firm commitment to advance the affordable housing connected to the project,” he said. “I’m still firmly committed to the position that eminent domain should not be used to build a basketball arena and will articulate that position to Governor Paterson and his administration.”

Collective evaluation

Is there an alternative plan? “It’s too soon to say anything publicly," he said. "We are still in the process of collectively evaluating where we need to go to see if we can form common ground among the state elected officials who represent the district or neighborhoods affected by this project.” He cited State Senator Velmanette Montgomery, Assemblywoman Joan Millman, and Assemblyman Jim Brennan.

He said State Senator Eric Adams “ultimately will be involved in whatever discussion takes place,” but said, from an institutional perspective, a Senatorial colleague, Montgomery, not anyone in the Assembly, will engage with Adams.

Brennan’s bill returns

On February 26, well before the stall that emerged last Friday, a bill sponsored by Brennan and cosponsored by Millman was quietly reintroduced; it would cut the project, estimated at 8 million square feet, to no greater than 5.85 million square feet; with a minimum of 1800 units of affordable housing.

A subsidy arrangement would provide between $12.6 million per year for 30 years ($378 million) for 1800 units, up to $15.4 million over 30 years ($462 million) for a maximum of 2200 units. The towers could get green building tax credits of up to $2 million per year per building. Also, the developer would be relieved of the obligation to pay about $310 million to the MTA for the development of the Vanderbilt Yard. (Forest City Ratner values its bid, which includes $100 million in cash, at $450 million if infrastructure expenditures are included, the bill indicates.)

The bill is essentially the same as one proposed in 2006; indeed, it may be something of a placeholder for a revision. The text is out of date, since it calls for the ESDC not to approve the project if unchanged and, of course, the project has been approved.

What’s Jeffries’ posture? “I don’t support the bill in its current version, but open to considering it, as it’s amended, as it relates to affordable housing," he said. "I’d also like to take a closer look at how the bill deals with eminent domain issue.”

If the bill is considered, surely legislators should evaluate exactly how much affordable housing costs, and what's the bang for the buck.

ESDC reevaluation

I asked if legislators could ask why the ESDC gave Forest City Ratner such flexible deadlines, 6+ years to build the arena and 12+ years to build Phase One.

“I certainly would welcome another public hearing, and plan to speak to Richard Brodsky, chairperson of the Corporations Committee, in that regard," Jeffries responded. "I sit on that committee, which has oversight jurisdiction over ESDC. Last spring, there was an ESDC hearing, as it relates to a variety of projects… I questioned [Downstate Chairman] Pat Foye about Atlantic Yards, essentially making the point that the Spitzer administration evaluated the state of [the] Javits [Convention Center project], Moynihan Station, and the World Trade Center, determined they were insufficient in their original contemplation, and proposed modest or in some cases considerable changes."

"I argued that the precedent had already been established, based on how the Spitzer administration reevaluated those projects, to undertake a meaningful reevaluation of Atlantic Yards," he continued. "My recollection of his testimony was that he argued that Atlantic Yards was at a different stage than the other three, based on the fact that there had been PACB [Public Authorities Control Board] approval. I still maintain the position that if those others can be evaluated, so can Atlantic Yards."

Go back to PACB?

I asked about project opponents’ contention that the PACB should again vote on the project. He said he wasn’t sure of the legal obligation, but “I’m not convinced that remedies the issue. We need ESDC to be responsive to the concerns in a meaningful way.”

Dismay from de Blasio

The Brooklyn Paper reported further dismay from an Council Member Bill de Blasio, a longtime supporter of the project who has grown more critical in recent months (and is a leading candidate for Brooklyn Borough President).

The Paper reported:
“My support has always been conditional [on] the creation of affordable housing and local union jobs,” said Councilman Bill DeBlasio (D–Park Slope). “Ratner’s comments are very troubling because they suggest a scaling back of the project that by definition could greatly reduce the amount of affordable housing. This raises the question of whether he’ll live by [his promises]. If he does not, I can not support the project.”

DeBlasio also warned Ratner against seeking additional public subsidies for the flagging project.

“There has already been very generous public investment,” he said. “I don’t see how we can go any farther.”

That's a view from the city side.

Why Atlantic Yards depends on a Democratic administration in DC

Besides the credit crunch and the lack of a market for office space, both acknowledged by Atlantic Yards developer Forest City Ratner, the project depends crucially on a sufficient supply of tax-exempt bonds, a "crisis"--in the words of city housing head Shaun Donovan--evident well before the downturn in the economy.

And, despite efforts in Washington by top legislators representing New York, the problem likely won't be alleviated until a Democratic administration and a Democratic Congress revamp the rules and allow hard-pressed states like New York additional "volume cap," or the capacity to issue bonds free of federal taxes.

Former city official: demand is 10 times the capacity

That point was reinforced Wednesday at a panel, ,THE LONG VIEW: How Can New York Preserve Housing Affordability?, at the New School's Milano management and urban policy school.

Emily Youssouf, Managing Director and Head, Housing Finance Division, JP Morgan Securities, reflected on her four years heading the New York City Housing Development Corporation (NYC HDC), the nation's leading issuer of bonds for multi-family affordable housing.

The federal government, Youssef, explained, provides $85 per capita in volume cap per state, and every state uses it. "New York State gets about $2 billion" a year, she said. (Actually, closer to $1.6 billion, according to her successor, Marc Jahr.)

That total covers not just bonds issued by NYC HDC for multi-family housing, but bonds issued by the state housing finance agency for single-family housing as well as bonds issued by industrial development authorities. "The demand for these bonds is like ten times that in every given year," Youssef said.

While Sen. Charles Schumer and Rep. Charles Rangel have pushed to increase volume cap, she said, they've met resistance from Republicans in the Senate, whose "pay-as-you-go" philosophy means that the future tax loss must be balanced by future revenue.

Youssef said she hoped the situation will change "with a change in the administration."

The AY need: $1.4B and growing

Surely Forest City Ratner agrees. State documents project a need for $1.4 billion in bonds for the 50/30/20 program of rental housing, though rising construction costs suggest the total would grow.

Over a decade, that's $140 million a year, nearly ten percent of the state's capacity. Would any one project get such a large chunk?

Either Atlantic Yards will take much longer than announced--as all evidence, including flexible state deadlines, suggests--or significant changes in Washington will make it easier for many developers, not just FCR, to build affordable housing in New York City.

If you read only the dailies, you're missing Atlantic Yards news

New Yorkers who limit themselves to newspapers--as opposed to, say, online compendiums and coverage at No Land Grab and AYR--might wind up with a very skewed view of the current status of the Atlantic Yards project, since they sure haven't read about the Empire State Development Corporation's (ESDC) generous deadlines, 6+ years to build the arena, then 12+ years to build the first five towers.

Think about it. The New York Times broke the big news last Friday about the Atlantic Yards stall, but hasn't followed up with reporting about the ESDC's willingness to give developer Forest City Ratner a very long leash (though reporter Charles Bagli mentioned it on the Leonard Lopate show yesterday), nor the developer's plan to sell luxury suites.

The New York Post followed up Saturday with a brief article but Monday offered a much longer article about the suite deal. Nothing about the deadlines.

The New York Daily News offered no news article on the stall but ran two sympathetic columns, then a short article Monday about the suites. Nothing about the deadlines.

Online and Brooklyn

Online, the news was linked by the Gowanus Lounge and Curbed and picked up by Brownstoner (which has hired reporter Sarah Ryley from the Brooklyn Eagle).

On Wednesday, the Village Voice's Runnin' Scared blog picked up the story, adding this curious detail:
Yesterday, ESDC spokesperson Warner Johnston confirmed in a telephone call that the funding agreement was signed in September and posted on Friday, in response to numerous inquires from reporters.

That's curious because the ESDC didn't exactly send out a press release announcing that the document was available.

Yesterday, the Brooklyn Paper published a package of stories linked to the news, declaring Atlantic Yards dead; while the plan as announced is indeed dead, it's way to soon to count out some significant Forest City Ratner development.

I wrote a piece for the Brooklyn Downtown Star, published yesterday under the headline Atlantic Yards Stalled, But Arena Remains Goal that rounds up some of my previous reporting.

Marty in the Sun

The New York Sun ignored all this but offered a mostly positive profile Monday of Brooklyn Borough President Marty Markowitz, headlined Mayor Marty? The Idea Entices From a Booth at Junior’s. The article noted that Markowitz is officially undecided, "but he is sure sounding a lot like a candidate." Then again, the departure of chief aide Greg Atkins offers some counter-evidence.

The Sun reported:
A run for mayor, however, could galvanize New Yorkers opposed to the Atlantic Yards development in downtown Brooklyn that Mr. Markowitz has trumpeted. A spokesman for Develop Don’t Destroy Brooklyn, Daniel Goldstein, said his organization “would look forward to a Markowitz mayoral run as it would make certain the failing Atlantic Yards project and the other egregious overdevelopment he has overseen in Brooklyn would be major issues in the race, as they should be.”

Mr. Markowitz has said the project will bring affordable housing, in addition to a new city center and a professional basketball arena, to downtown Brooklyn. He appears to get as excited as a boy on a first trip to an amusement park when envisioning attending the first Brooklyn Nets game in the new stadium.

The lack of context is unfortunate, since Goldstein sounds like he's spinning hard when he calls AY "failing," but the news that broke last Friday offers some support for his contention. Similarly, Markowitz's sunniness should be contextualized by his expression of confidence in Forest City Ratner, despite Friday's news.

Rezonings & starchitects: filling in some blanks from the Leonard Lopate Show’s AY discussion

Yesterday, on the Leonard Lopate Show, Charles Bagli, who covers real estate and economic development for the Times, was the sole guest in a segment discussing Atlantic Yards. Now Bagli deserved the slot, given that he broke the big story last Friday, but another voice was in order, because, while Bagli made some worthwhile points, he missed some important details.

(He’s got a good track record as a reporter, but he’s way overstretched to master AY; the Times had a beat reporter on AY from October 2005 to December 2006, then promoted him, apparently thinking AY was a done deal.)

The arena cost

Bagli said of Ratner:
Officially, he very much wants to go forward with the project, but what he’s talking about is he's focused on the arena itself, a project that has swelled from a little more than $600 million to more than $900 million, which would make it the most expensive arena in the country.

Actually, when the arena was announced at $435 million, it would have be the most expensive arena in the country.

Timing issue

Lopate asked if Ratner would "forget about the residential towers, the affordable. housing, the Miss Brooklyn tower?”

Bagli wisely pointed out that it ain't over, but didn't look carefully enough at the timing issue:
Forget about it is probably not the way to go…When this project was approved by the state in December of 06, they envisioned the entire project being done in ten years. The first section, Phase 1, would've been the arena, the office building known as Miss Brooklyn, and three residential buildings… as well as Site 5, a building across the street….

What they're focusing on right now is the arena, period, and they're hoping that, by the time that's finished, maybe they'll be able to finish the first residential building…. What it amounts to is a much more drawn out process. Like I said, when it was approved in December of '06, the entire buildout was supposed to take ten years. Nine months later in September of '07, Ratner and the state came together on a funding agreement. And the funding agreement gives him now 12 years to build Phase 1. So I think they've sort of—they were on to the new realities here.

Whoa. As has been documented, business leader Kathryn Wylde (December '06), project landscape architect Laurie Olin (February '07) and Chuck Ratner (March '07), an executive at parent Forest City Enterprises, estimated 15-20 years. When the project was approved, the timetable was already out of date. Also, before the credit crunch, the city and state suffered from a serious deficit in bonds for affordable housing--enough to delay the project unto itself.

It's notable that the 12-year timetable has not been mentioned in the Times. Rather, I reported on it in my blog.

What’s to blame?

Lopate asked how much should be blamed on economics, how much on lawsuits.

CB: The lawsuits certainly play a factor, if only because... the cost of materials is still rising, anywhere between 1 and 2% a month. That adds up to a lot of money. Ratner says these lawsuits had stalled him for almost two years. That has a profound effect. But I don't know that anyone imagined that you would go from a situation where the banks and other lenders were just throwing money at real estate ... but now, it's not just Ratner, but any developer who wants to start to try to move forward today with a large real estate project is having an impossible time trying to find someone to lend him the money.

True, but the lack of affordable housing financing preceded the credit crunch.

The Beekman Tower

Bagli continued:
…He's got a project downtown called the Beekman Tower, very big, 70+ stories, it's over 900 apartments. He had finished in early December… he finished the foundation and moved a crane onto the site…it's been idle ever since, even though the crane is there--which means you're paying for the crane to stand there, and you’re paying for your crews… his problem is he wasn’t able to put together a $700 million construction loan. Again, 18 months ago, he could've gone to one bank and gotten the loan. But today they're trying to put together a half dozen different lenders to come up with the financing for the tower… They told me they anticipated closing on the financing for Beekman Tower by the end of this month. I don't know if they're on track. But it’s illustrative of the difficulties; here you are in midstream, so to speak, and you’re having an awful time putting together the finances.

The Downtown Express also reported on contradictory explanations for delays on the project, notably a planned school. The School Construction Authority asserts there’s a delay in delivering a shipment of steel, but Ratner has cited difficulties in getting financing.

Eminent domain & triage

Lopate pointed to Gov. David Paterson’s 2005 call for a moratorium on eminent domain. Bagli noted that the evidence of any current policy is absent.

CB: Yes, he did. We haven't heard a word from him since. Who knows how he feels today. Eminent domain was very much on the front burner back in 2005... a variety of projects where the state was wiling to condemn private property... It is clear that the Spitzer people took a long time to get their arms around economic development. Now we have a new administration. The big question is, how long are they going to take? Will he do a complete housecleaning… or is he going keep some executives in place, so there's some institutional memory. But we’re in a very difficult time, I think both the city and the state are going to have to sort of open up a M*A*S*H tent and start doing triage, and decide what are the most important projects that need to go forward today and then what are the projects that are going to have to wait or fall off the table.

Starchitects in Brooklyn

LL: Some people are concerned that Brooklyn is going to lose a group of buildings by one of the world's major architects. Should that be a concern?

Bagli made an important distinction: Y'know, it's wonderful to have these world-famous architects, they tend to be very expensive and they do provide a different kind of building. But I'm not sure that should be the primary concern, particularly for these public private partnership when the public is making a huge investment, and they’ve got to be concerned about what they get back for that, and given all the project that are in motion, I think the city and state are going to be forced to make decisions about what is most important.

It was always doubtful that Gehry could complete all the buildings.

A rezoning?

LL: If the Atlantic Yards project never really gets built or doesn't get built completely, what happens to the rest of the land?

CB: First of all, I think the land has been rezoned, so the value of that property is higher than it was five years ago… I think Ratner may do a portion of it, and then sell it off. But it won't be like nothing every gets built over there.

Rezoning is a city process. In this case, the Empire State Development Corporation, a state agency, will override city zoning (regarding placement of an arena within 200 feet of residences, current density, signage, and more). That's an important basic fact.

Thursday, March 27, 2008

Brooklyn historian befuddled by Brooklyn blogs

Y'know, I agree with critics who say blogs (in general) are too often insubstantial. But there are some solid Brooklyn blogs, and when a dead-tree writer criticizes them in print, he ought to get his facts straight.

Here's an excerpt from a Brooklyn Daily Eagle essay headlined Historically Speaking: Researching Brooklyn — Online, by former Brooklyn Borough Historian John Manbeck:
The Gowanus Lounge has a blog with its slogan: “Only the Blog Knows Brooklyn.” The Atlantic Yards Report has news about the Nets.

Adventures in Brooklyn and BK 11201 recount personal tales with pictures. Brooklyn Enthusiast deals with food and recipes as does Bread, Coffee, Chocolate, Yoga and All in Brooklyn. Frisket of Hicks Street recently became Frisket of Main Street: it’s about this dog. Two others have Brooklyn Bridge pix: Never Sleepist and Sam I Am.

To me, most of the material I encountered in blogs has been gossipy and unreliable. While the Web sites are more substantial, information there must be further researched in, say, a book.

Further research shows

Um, The Gowanus Lounge, which includes firsthand reporting often critical of the Brooklyn real estate firmament, is different from the eclectic but homier Only the Blog Knows Brooklyn. Suffice it to say that Borough President Marty Markowitz is unlikely to hail GL's Bob Guskind at his final "State of the Borough" address, as he did OTBKB's Louis Crawford, founder of the annual Brooklyn Blogfest (the third annual event will be May 8).

While AYR obviously touches on the Nets, Atlantic Yards is about much more than basketball, as any casual reader would know. For news about the Nets, go to NetsDaily.

I've read some very good stuff by Manbeck over the years; his 11/13/05 op-ed on AY for the New York Times was not, however, his most incisive work. Nor is this one.

News analysis: The Times gives the ESDC a bye

A New York Times News Analysis today of the West Side Yards deal, headlined :For Railyards, the Hard Part Is Still Ahead, leaves out some important Atlantic Yards context:
In the end, the project could take well over a decade to complete, and its look could change significantly from the current designs by Helmut Jahn and Peter Walker.

In Brooklyn, the developer Bruce Ratner has already acknowledged that his $4 billion Atlantic Yards project will take longer than the 10 years originally envisioned.

“This will get built over a generation,” said Robert Yaro, president of the Regional Plan Association, said of the railyards project. “It’s a 15-to-20-year build-out, and it’ll change according to market conditions. The buildings will look very different when they get built than the images we see today. And it wouldn’t surprise me to see the commercial towers get built later, rather than sooner.”

First, the Times should have pointed out that, not only has Ratner acknowledged that the project would take longer than ten years, others in his firm and outside observers had been making the same observation, and that the Empire State Development Corporation (ESDC) has given some generous deadlines: 6+ years to build the arena, 12+ years to build the first five towers, and an unspecified amount of time to build the rest.

Also, whatever Yaro says applies equally well to Atlantic Yards. If built, it will change significantly from Frank Gehry's renderings.

Ravitch's criticism

The Times article raises the question of financing for the project in Manhattan:
That is why Richard Ravitch, a former chairman of the Metropolitan Transportation Authority, is a critic of the deal. He said the authority should not have tried to sell the development rights in a down market on the promise that the developer will build towers and pay rent at some point in the future.

“Jerry Speyer is an eminently responsible developer,” Mr. Ravitch said, “but I don’t yet understand how this helps the M.T.A. meet its capital needs. They sold an illiquid investment for another illiquid investment.”

This raises a question: what would Ravitch think of the Atlantic Yards deal? Yes, the overall market has turned down since December 2006, when the Atlantic Yards deal was approved by the ESDC and the Public Authorities Control Board. However, the lack of affordable housing financing had already cast doubt on the project.

And what about those for-sale affordable units? The fine print is vague

A major question raised about the 600 to 1000 affordable for-sale units, on and off-site, announced by developer Forest City Ratner as part of the Atlantic Yards Housing Memorandum of Understanding (MOU) is why they were absent from the General Project Plan approved by the Empire State Development Corporation. That wasn't cause for confidence.

The recently-unveiled State Funding Agreement does, however, mention the pledge that's contained in the agreement FCR signed with the advocacy group ACORN.

However, as far as I can tell, the document has no teeth, since it asserts no deadlines and no penalties, though it does assign deadlines for other phases of the project and penalties for failure to meet those deadlines.

For one thing, if FCR doesn't build as many market-rate condos--and all housing is now on hold--the MOU appears to give the developer an out. Also, the construction of for-sale affordable units depends on unspecified subsidies.

Big pledge?

The developer, in a 12/20/06 statement after the approval by the Public Authorities Control Board, suggested that the total was ironclad, even if some onsite units were a goal rather than a certainty:
As part of the affordable housing program, FCRC has already agreed to build 600 to 1,000 affordable home ownership units on or off site. Today, FCRC announced that it will seek to build at least 200 of these affordable home-owner units on site (they will be part of the proposed 6,430 units of housing already approved as part of the Atlantic Yards FEIS/GPP). FCRC will also seek to build the remaining affordable home-owner units as close to Atlantic Yards as possible.

Has condo plan changed?

Here's the pledge from the MOU for affordable condos:
For sale housing - Pursuant to paragraph 5 of the MOU, Developer and ACORN will work on a program to develop affordable for-sale units, which are intended to be in the range of 600 to 1000 units, over the course of ten (10) years and can be on or off site. It is currently contemplated that a majority of the affordable for-sale units will be sold to families in the upper affordable income tiers.

That ten-year promise has not surfaced elsewhere. Note that the pledge of 600 to 1000 for-sale units, however, was meant to match, at least in part, the 1930 market-rate condos added to the plan, to help achieve the 50/50 affordable housing goal.

But read the fine print: If the projected number of residential units should increase for any reason that the Developer determines to be economically necessary, both the Developer and ACORN will work towards developing a program that follows the same guidelines and principles set forth in this document.

In other words, the for-sale affordable units depend on the market-rate condos. That's logical, but it also means that if those condos don't get built--or are built over a very long period--the affordable for-sale units could lag as well.

What the document says

Perhaps that's why the State Funding Agreement (Part 34) is so vague:
Developer shall provide 600-1000 units of affordable home ownership units [sic] as close to the Atlantic Yards project site as possible, including but not limited to the following neighborhoods: Prospect Heights, Fort Greene, Bedford Stuyvesant, Crown Heights, Clinton Hill and Park Slope. Developer shall seek to build 200 of these affordable home ownership units directly on the Atlantic Yards project site (assuming the appropriate subsidy required to fund these affordable home ownership units is available and the density levels approved in the ESDC GPP are maintained). Developer shall seek to make the affordable home ownership units affordable to families with income up to 150% of AMI and to make homeownership opportunities available to families with incomes below 100% AMI.

However, despite seemingly forceful language ("shall provide"), the document, as far as I can tell, offers no guarantees or sanctions for failure to meet the target.

Ouroussoff: AY a "fiasco" with "city approval"

In an essay in today's New York Times on plans for the West Side Yards, architecture critic Nicolai Ouroussoff refers to Atlantic Yards as a "fiasco." He writes:
If built, the project would be a pathetic distortion of the original design. And the developer already has city approval.

Actually, the developer already has government approval, but the city has nothing to do with it. The Empire State Development Corporation approved the project. I sent in a correction on Saturday after Ouroussoff made the same mistake in his essay on AY last Friday.

The Times didn't address the correction yet. But the distinction remains important; had the project gone through the city approval process, there would have been more public oversight and discussion.

Wednesday, March 26, 2008

Brooklyn Tech pledge appears, with major caveat, in State Funding Agreement

Remember Forest City Ratner's 12/20/06 pledge, upon the approval of Atlantic Yards by the Public Authorities Control Board, to build a new Brooklyn Tech High School?

The Daily News overhyped that pledge into a speculative story headlined Nets go High Tech: Ratner throws in new home for elite Brooklyn HS in arena deal.

Well, the pledge does appear, sort of, in the State Funding Agreement signed last September by the Empire State Development Corporation (ESDC), but it contains a big caveat implied but not spelled out in the developer's initial pledge.

Initially, the developer stated, "FCRC will also work with the City, State and the United Federation of Teachers on the creation of a new 21st Century Brooklyn Tech High School, at a yet to be determined location in the borough."

Alumni fight back

Given alumni concerns that Forest City Ratner wanted the Brooklyn Tech building, well located adjacent to Fort Greene Park, city school officials last April insisted that the building would remain a school, and Forest City Ratner spokesman Joe DePlasco backpedaled from any pledge.

State document

The document (Part 34) states:
Developer shall agree to work with the City, State and the United Federation of Teachers on the creation of a brand new 21st Century Brooklyn Tech High School, to the extent the City and the Department of Education elect to build such a school.
(Emphasis added)

Now they tell us.

Flashback: the Sun's (wise) failure to offer an AY projection

On 3/3/08, more than three weeks ago, under the headline Unease Erodes Ambition in Real Estate, the New York Sun observed "troubling symptoms" in the real estate market, including Atlantic Yards:

The number of citywide building permits is expected to drop, public and private funding for projects is drying up, and a stream of multibillion-dollar plans is coming in over budget and behind schedule, with many designs being scaled back or scrapped altogether.

...A shortage of federal housing subsidies and ongoing litigation from resident groups is threatening Bruce Ratner's $4 billion Atlantic Yards project near downtown Brooklyn. The list of public and private projects on hold seems to grow on a weekly basis.

Graphic missing AY

The accompanying graphic included four other stopped or slowed development projects cited in the article, but excluded Atlantic Yards. A graphic might have announced 2016 as the official completion date, with the arena due in 2010 (though it was initially projected at 2006) and and simply ??? as the latest projected completion date.

Now, however, we know that the developer has a lot of time--6+ years to build the arena, 12+ years for Phase 1, and an unspecified amount for the rest of the project..

Tuesday, March 25, 2008

The Coney contrast: no eminent domain, "constant public input"

As Atlantic Yards has become the poster child for bad public process and inadequate urban planning, it's worth watching the city's posture toward other major development projects.

And the city is treading carefully in Coney Island, where a rezoning plan would avoid use of eminent domain, even though the major landowner in the amusement area, Thor Equities' Joe Sitt, so far has very different plans for his property and has not yet agreed to a suggested swap of city land to the west.

Early in the process, a panel

At a panel last Wednesday on Coney Island at the Museum of the City of New York, Coney Island Development Corporation President Lynn Kelly explained the city's fallback tactics and offered the de rigeur assertion, "No zoning plan that the city has done was successful without constant public input and public participation."

Of course, Atlantic Yards was not a rezoning and, as everybody learned two days later, the chances for success have gone down significantly.

Kelly, in describing the anticipated process under the city's Uniform Land Use Review Procedures (ULURP), offered another unremarkable assertion--but, in the Atlantic Yards context, notable--that it would be "the market responding to the zoning we put in place."

At one point, Moderator Brad Lander of the Pratt Center for Community Development observed that "it's refreshing" to hear a discussion about "the public vision" as opposed to dealing with a developer's vision.

What's the fallback?

The city wants to map all land in the prime amusement area as parkland; that allows the city to issue and RFP and find a developer who can get a loan for a lease, as opposed to a concession, Kelly said.

The city stated its policy in the 11/8/07 press release, "The City does not intend to use eminent domain to acquire the property in the amusement park. The City intends to work with each property owner to acquire the land in Coney East in order to realize the vision for its future."

But what's the fallback if Sitt and the other three major property owners don't agree to sell? "If we're not successful at acquiring it as parkland, there are other options we're considering," Kelly said.

Queried to clarify that, she said, "If negotiations don't work, we'll consider other options, where different landowners could partake" in the city's plan. That sounds like giving them a cut in the (increased) value of their land--something certainly not considered for Atlantic Yards.

Coverage in the New York Observer's The Real Estate suggested this was a departure from the city's posture; it strikes me more as an elaboration.

The Sitt posture

Sitt's plan has a huge supporter in Dominic Recchia, the local City Council member, who described Sitt as the only developer willing to "step up to the plate" and challenge two entrenched property owners, Hy Singer and Horace Bullard, who had been sitting on their property waiting for the market to change.

(The line echoed praise for Bruce Ratner from Community Benefits Agreement signatory the Rev. Herbert Daughtry, who said at the 8/23/06 DEIS hearing, “I don’t remember any developer stepping up.")

"I've always found Joe Sitt to be very trustworthy and charitable," Recchia said "his family is from the neighborhood. [Gravesend, nearby.] He's a Brooklyn boy. He wants to see it developed."

Kinetic Carnival, a blog that's taken a critical look at Thor's plans, suggested that Recchia's criticisms of the city's plan had some legitimacy, but "the fact that Recchia was also clearly shilling for one particular land owner detracted from these arguments."

Indeed, David Gratt of Coney Island USA described bait-and-switch negotiations with Thor and declared, "We have not found Thor to be particularly trustworthy." Indeed, he noted Coney Island USA founder Dick Zigun has publicly said that Thor lied to them.

The MAS critique

The Municipal Art Society (MAS) commented that the "new zoning plan appears to achieve a balance between the needs of real estate developers and the need to maintain the area as an amusement park destination for the entire city,” but suggested "three critical concerns must be addressed."

MAS said:
First, Coney Island must be a genuinely regional destination, with its entertainment and amusement district pulling in visitors from a wide area. The city should explore ways of achieving this, including: different ratios of indoor and outdoor activities; expanding the entertainment district to encompass the area west of KeySpan Park known as “Coney Island West”; and reducing the amount of housing adjacent to the amusement district. As important as these, is the need for new and rapid mass transit connections, notably express subways and ferries, to make Coney Island more easily accessible.

Second, the city needs to broaden its plan beyond the current 19 blocks surrounding the boardwalk. Coney Island Creek and the Coney Island Railyards offer major development opportunities, and the city’s priority should be to figure out how to plan for these and other nearby areas in a way that would complement and enhance the current plan.

Finally, as the planning goes ahead for the future of Coney Island, the city should not lose sight of the area’s immediate future. It will be several years — even decades — before redevelopment is complete, and the city should create an interim plan to ensure that Coney Island remains a vital destination during this period. Current amusement uses, particularly Astroland, should be retained for as long as possible, and the city should program exciting temporary uses like food and antique markets, music and performance spaces, and art installations for the vacant sites along the boardwalk.

Thor's support

Recchia was asked if he got financial contributions from Thor and Taconic, the two most active developers in Coney Island. "Yes, I do work with Taconic," he said. "I do work with Thor. I said Joe Sitt is a friend. he's supported me. That has nothing to do with my decisionmaking or what I think is best for my community... Not many people would invest in Coney Island."

Recchia noted that Sitt has developed some properties; Gratt, on the other hand, pointed to Sitt's record as a "flipper" of property.

How much has Recchia received? A search of the New York City Campaign Finance Board (contributions $250 or more) shows that, since 2003, the Council Member has received $8750 in contributions from members of the Sitt family or people who report employment at Thor Equities.

That's certainly not a majority of his contributions, but it's not chump change, either.

Bottom line

Gratt got off perhaps the best summary: "Coney needs to be filled with rides and hotels. We're hopeful this will be resolved fairly quickly."

Coney's spirit

Lander wondered whether the city's economic development tools could support the "electic, freakish, democratic" nature of Coney Island.

"Amanda Burden loves Shoot the Freak," Kelly interjected, citing the patrician City Planning Commission Chair.

Just for the record, this is the pitch at Shoot the Freak: "Live human target. You shoot him, he don't shoot back."

The true spirit of Brooklyn?

The standalone arena makes the Coney option look stronger

Ok, it's not on the city's radar screen, given other ambitious plans for Coney Island, but Forest City Ratner's intention to proceed with an Atlantic Yards arena and wait--perhaps for a very long while--before building office space and housing suddenly removed some major objections to the once front-burner plan to put an arena in Coney Island.

And the city's intention to press for express train service would remove another objection. That's not to say an arena is likely, but the discussion deserves a second look.

Express train coming?

At a panel last Wednesday on Coney Island at the Museum of the City of New York, Coney Island Development Corporation President Lynn Kelly said that a "next step is we need to convince the MTA to get express service" to Coney Island.

Such express service would further help Coney compete with the more central location near the Atlantic Terminal subway/LIRR hub. Remember, Forest City Ratner points to ten subway lines and the suburban train, while Coney Island has only four subway lines.

However, that's deceptive; because Coney's a terminus, it has eight subway tracks, versus ten at the Atlantic Avenue/Pacific Street hub, and it's easier to load people on and off at a terminus.

FCR's package deal

Remember, at a 5/4/04 City Council hearing, now-departed FCR point man Jim Stuckey contrasted the Atlantic Yards site with two potential alternatives, the Brooklyn Navy Yard and Coney Island, and declared them inferior: The Brooklyn Navy Yard could never result in the jobs that we would be able to create here, because you could not build the amount of office space that we are talking about building here. And the Brooklyn Navy Yard would never permit us to build the amount of housing that we can build on this site, nor could Coney Island. It could not sustain it, it does not have the development ability and you could not attract the companies to go to those locations...

However, Stuckey was arguing for an iteration of the plan that promised 10,000 office jobs and, until last week, the promise was of space for 1340 such jobs. Now the promise may be zero, which makes the central location less crucial.

And Coney Island might make a fine place for new housing, as the city's rezoning plan suggests--it's just that Forest City Ratner didn't acquire a site to propose such a package deal.

Ouroussoff's Gehry defense was more "hero worship" than civic concern

So what exactly did New York Times architecture critic Nicolai Ouroussoff mean last Friday when he counted himself among "we" opponents of the Atlantic Yards project?

I observed that "more likely, he’s an opponent of [architect Frank] Gehry’s vision being stymied." Indeed, more of that perspective emerged in a Sunday essay headlined Nice Tower! Who’s Your Architect? that also involves a Gehry project for Forest City Ratner.

Writing about the architect's Beekman Tower in Lower Manhattan, Ouroussoff, with satisfaction recounted how Gehry got over on the big developer:
Some architects were able to work around conventional real estate wisdom by forging exteriors that would impose a specific experience on the interior spaces. By the time the consultants at Forest City Ratner, the developer behind Mr. Gehry’s Beekman building, realized that the wrinkled walls of the architect’s tower would be mirrored inside the apartments, for example, it was too late to change without a costly reworking of the design.

What about interiors?

But Ouroussoff would like to see architects helping transform the interior layouts, and that was not to be:
...Yet neither Mr. Gehry nor [architect Neil] Denari was allowed to tinker with the actual layout of the apartments, which will be the same loftlike interiors that have become as much of an urban cliché as the gated Mediterranean community has in suburbia.

This echoes an exchange during a 1/7/06 Times Talk interview conducted by the critic. Would Ratner let Gehry work on the 'internal social organism' of the project, Ouroussoff wondered: "Will the developer let you play with those things, the way you were able to with your own house?"

"No," Gehry said, citing in-house marketing people and architects at Forest City Ratner. "They do apartment layouts. We tweak them, but we can't really make a big architectural statement... We can influence them, make sure they are in the right places with the right views... but it’s fairly conventional...."

Hero worship

It's a little late for Ouroussoff. Critic Karrie Jacobs, a champion of innovative architecture but an opponent of backroom deals, observed last Friday on her blog:
But the thing that really gets me is the naive hero-worship embedded in Ouroussoff worldview (or should I say weltanshauung?):

"If large-scale development is unavoidable, why not enlist serious talents like Mr. Gehry to come up with an alternative to the bottom-line proposals that have been the accepted norm for decades? Finally a big developer had turned to a legitimate architectural hero for help, rather than the usual corporate hacks."

Finally? Has he not noticed that architectural heroes have become the new corporate hacks?

Monday, March 24, 2008

Suite deal: despite skyrocketing costs, arena would be paid for mostly by luxury suites

The Daily News breaks the news that, despite the Atlantic Yards stall and an unspecified date for the arena to open--up to six years after the close of litigation, as I report today--Forest City Ratner is putting on sale "130 Frank Gehry designed suites [that] will average $300,000 and top out at $540,000," or $39 million a year.

(The New York Post has a longer story that gushes about the suites and calculates $30-$35 million a year. Here's a PDF of renderings. Note the Barclays logo.)

That average is higher than that I assumed in February 2007 after reading the KPMG report. And it means that, despite the skyrocketing cost of the arena, up to $950 million, suites and sponsorships would go a long way to paying for it.

Suite deal

Let's try the math. At a 5% interest rate, over 30 years, bond payments would be $61.2 million a year. (That's a somewhat arbitrary interest rate and an online calculator, so my math could be off.)

Barclays would pay $400 million, or $20 million a year, over 20 years. Add $39 million in suites and the $59 million total nearly reaches $61.2 million.

Add a couple of million dollars in other sponsorships--"14 totally integrated partners" are expected--and the arena bond is paid for, at least for the first 20 years. Remember, FCR would pay no taxes, but instead the bond payments would act as payments in lieu of taxes.

It's a suite deal. No wonder they're moving ahead.

Read the fine print: ESDC gives Ratner 6+ years to build arena, 12+ years for Phase One

How long might Atlantic Yards be stalled? In the New York Times's coverage Friday of the Atlantic Yards stall, developer Bruce Ratner would "not specify the kinds of delays possible, but suggested that construction could be put off for years."

The Times apparently didn't check with the Empire State Development Corporation (ESDC), but the state agency has been talking out of both sides of its mouth.

The General Project Plan, approved in December 2006 by the ESDC, stated (right) that Phase 1 of the project was "anticipated to be completed by 2010" and Phase II was "anticipated to be completed by 2016." However, nine months later, in September 2007, the ESDC signed a funding agreement that gives developer Forest City Ratner much more time and also posits a scenario in which much less housing and open space would be built.

The details:
  • Ratner would have six years to build the arena after the close of litigation and the ESDC's exercise of eminent domain to acquire needed properties.

  • Ratner would have 12 years to build the five towers of Phase I after the close of litigation and the ESDC's exercise of eminent domain to acquire needed properties.

  • Ratner would have an unspecified amount of time to build the eleven towers of Phase II, with an option for the ESDC to buy back the land from the developer.

  • Should the project be abandoned, the city might pursue a plan that would bring 1845 units of housing 646 of them affordable, and 2 acres of open space, as opposed to 6430 units, 2250 of them affordable, and 8 acres of open space.
The State Funding Agreement

I first spotted the State Funding Agreement on the ESDC's Atlantic Yards site on Saturday; I'm told it was uploaded on Friday, after the news broke.

It's chopped up into 37 parts. "This large document is divided into subsections for easier downloading," the ESDC states, but it's not that easy to read: the subsections lack headings and the document is a scanned PDF, which means you can't search the text.

[Note that the document (see Part 6) is signed by an ESDC representative but not a Forest City Ratner one. I assume that it was ultimately signed by FCR; otherwise, why was it posted?]

The document makes reference to a "City Funding Agreement," which I assume covers the $205 million so far pledged by the city. That document has yet to surface publicly, though City Council Member David Yassky has requested it. Given the presence of the state document, the city counterpart should be available. [Update: see April 30 post.]

The Effective Date

Key to the document is a term known as the Effective Date, the date on which all litigation... shall have been sufficiently concluded so as to permit such financing and construction to proceed.... [and] ESDC has acquired and delivered vacant possession of the Project Site.

In other words, the Effective Date is several months, if not longer, down the road, given that an appeal in the state case challenging the environmental review won't be heard until September and plaintiffs are making a long-shot appeal to the U.S. Supreme Court of the dismissal of the eminent domain case.

Presumably, if the Supreme Court does not accept the appeal, and other cases regarding tenants in the footprint are resolved, the ESDC could proceed with condemnation. But financing might not be available until all the lawsuits are cleared.

Arena construction: 6+ years

The key timeline issues are in Part 33. How long does Forest City Ratner have to build the arena? The document states:
Developer or its Affiliates shall commence construction on the Arena within one year after the Effective Date Subject to up to four years of delay resulting from Force Majeure events or material adverse changes affecting the financing of the Arena... Developer or its Affiliates shall complete construction of the Arena within six years of the Effective Date, subject to Force Majeure.

And what are the remedies? To pay back [updated] an unspecified portion of the $100 million in state funding and to pay Liquidated Damages to the city as set forth in the City Funding Agreement, a document that has yet to be made public.

Phase I timetable: 12+ years

How long would Forest City Ratner have for the rest of Phase I, the four buildings on the arena block and the tower on Site 5, between Atlantic, Fourth, and Flatbush avenues and Pacific Street?

The document states:
Developer or its Affiliates shall complete the construction of Buildings 1-4 and Site 5, and related affordable housing and infrastructure, (collectively, "Phase 1") within twelve years of the Effective Date, subject to Force Majeure.

Again, a failure to complete the construction means the developer would have to pay back [updated] an unspecified portion ofthe money advanced as well as pay those not-yet-public Liquidated Damages.

Phase II timetable: unspecified

How long would the developer have to build the additional eleven towers? The document states:
Developer or its Affiliates shall complete the construction of Buildings 5-15 on the blocks east of 6th Avenue, and related affordable housing and infrastructure, (collectively, "Phase 2"), subject to Force Majeure, by a date to be established in the Project Documentation, which date will take into account the need for satisfaction of Governmental Authorities' obligations to the Project, (the "Final Deadline").

If Developer or its Affiliates fails to complete the balance of Phase 2 by the Final Deadline, subject to Force Majeure and subject to Governmental Authorities making available to the Project affordable housing subsidies then customarily available to developers of such housing, ESDC shall have an option to purchase Developer's or its Affiliates' interest in the parcels not yet developed pursuant to the GPP, as it may be amended. Such option to purchase shall be pursuant to terms negotiated in the Project Documentation and shall provide for a purchase price equal to the Developer's or its Affiliates' cost and land carrying cost, adjusted for inflation.

Final Deadline

Note that the Final Deadline will be established in project documentation that has not yet been completed. The Times reported:
[Ratner] has been working with Avi Schick, chief executive of the Empire State Development Corporation, to complete all the documents for the project this summer, so that the state can start and finish condemnation by the end of the year.

A smaller alternative

The document (see Part 25) makes reference to a "City Purpose Covenant" that would govern not just Forest City Ratner but any future owners of the premises. It offers the possibility of a significantly smaller project.

It sets out a hierarchy of uses for the "Premises," with the Project, "as set forth in the GPP [General Project Plan]" as the priority.

However, if the GPP is abandoned, the site would be used for not less than 1845 units of housing, of which 35 percent shall be Affordable Housing... and not less than 1.98 acres of environmentally sustainable publicly accessible open space.

Note that 35 percent of 1845 would be 646 affordable housing units. Why such a smaller project and so much less open space? That's unclear, but it seems likely that it would not involve demapping Pacific Street to create a superblock in Phase II.

If the stall continues

What if lawsuits continue to stall the project and the ESDC does not complete condemnations? If the Effective Date does not occur prior to December 19, 2009 and Forest City Ratner fails to pursue the site litigation or take "reasonable steps" in furtherance of the project, it "will be deemed abandoned," and the ESDC will get its money back.

Is that a good deal for Forest City Ratner? It's worthy of discussion.

Remedies for Abandonment

What are the remedies if Forest City Ratner wants to walk away? The document states that if FCR abandons the project before the Effective Date--before litigation is closed--the developer would have to pay back the ESDC the "Required Amount."

The Required Amount

What's the "Required Amount"? The state payments, plus interest, plus Liquidated Damages.

Again, we don't know what those Liquidated Damages are. It's time to see the City Funding Agreement. [Updated: Here it is.]

Nets go carbon neutral; Times Sports section doesn't check News section

A New Jersey Nets press release about going carbon neutral got play in yesterday's New York Times Sports section, though a not dissimilar story in another section of Saturday's Times generated much more skepticism about what actually was being accomplished, calling the tactic "sleight-of-hand accounting."

The Sports article stated:

Nets’ New Environment

While the Nets are busy struggling for the eighth and final playoff spot in the East, and planning their move to Brooklyn, they have taken the time to become the first professional sports team to be certified as carbon neutral.

In a league known more for sideline celebrities and fancy cars, the Nets are standing out with their commitment to going green. To achieve the certification while working to make its facilities more friendly to the environment, the team is purchasing carbon credits that offset its carbon footprint.

“We have a social responsibility to do our part to combat climate change, but it also makes business sense as well,” Brett Yormark, the Nets’ chief executive, said in a news release.

The press release

The press release provides some more elaboration:
To achieve this position, the Nets plan to lower their carbon footprint by focusing on improving energy efficiency, recycling rates, water efficiency, indoor environmental quality and establishing green procurement policies for the materials the Nets use on a regular basis. To get to net zero CO2 as these changes begin, the Nets are purchasing guaranteed and verified carbon credits that support renewable energy projects around the world.

Probably the most green thing the Nets could do would be to move to an urban arena that minimizes parking. An Atlantic Yards arena would be more green than the current Izod Center--though it raises a whole lot of other questions about traffic--but, given that such an arena would likely be three years away, a move to Newark would be green.

Skepticism elsewhere

In an article Saturday headlined Lofty Pledge to Cut Emissions Comes With Caveat in Norway, the Times offered this skepticism:
Then, in January, the Norwegian government went a step further: Norway would be carbon neutral by 2030, it said.

But as the details of the plan have emerged, environmental groups and politicians — who applaud Norway’s impulse — say the feat relies too heavily on sleight-of-hand accounting and huge donations to environmental projects abroad, rather than meaningful emissions reductions.

Oops! Unfortunate timing on AY for the Courier-Life chain

An article (not yet online) in this week's Courier-Life chains about the Bear Stearns sale suggests that Forest City Ratner's MetroTech office complex might not be hurt--new owner J.P. Morgan assumes a lease that lasts until 2024--and ends with this heartening news about Atlantic Yards:

[FCR spokesman Loren] Riegelhaupt also sought to dispel the notion that the softening economy will hurt the company's Atlantic Yards project.

"We are a company that built in Brooklyn for over 20 years and we built in all business cycles," said Riegelhaupt.

"The Atlantic Yards project is an important component to the growth of Brooklyn and we're very excited about it."

Oops! The article is dated March 21, the same day the New York Times reported that the project, except for the arena, was essentially stalled.

Now, given that the deadline for the Courier-Life article was before the Times's report, the Courier-Life can't be completely blamed for accepting Riegelhaupt's spin. Then again, given the copious statements about delays facing the project, the Courier-Life (and the Times) should've been more skeptical.