Atlantic Yards Saga Continues (GlobeSt.com)

Cody Lyon
From www.globest.com
NEW YORK CITY-The Metropolitan Transportation Authority board voted 10 to 2 to sell its 8.5 acres of Vanderbilt Yards property at the planned Atlantic Yards site in Brooklyn to developer Forest City Ratner Cos. for $20 million down, and $80 million spread over the next 21 years. As MTA board chairman H. Dale Hemmerdinger pointed out after the votes were cast on Wednesday, "in real estate, you get what you can when you can."
Despite the latest generosity from the public coffers, the New York Times reported that FCRC needs to raise more than $500 million in bonds by Dec. 31 to build the project’s arena and qualify for tax-exempt status.

Specifically, Wednesday’s vote and subsequent new MTA payment schedule allows the developer to spread out payments until 2031. The new terms compare to FCRC’s 2005 original offer of $100 million up front. Even then, the $100 million FCRC bid was $50 million less than a competing offer from Extell Development Corp. for the property.

In a statement released after the MTA vote, Forest City Ratner sounded almost apologetic, saying “delays due to litigation and a difficult economic environment required the approved changes.” The statement adds “we have worked very hard, however, as have our colleagues in government, to ensure that these changes would in no way impact the overall benefits of the project.”

The project, steeped in years of controversy, litigation and now a dried-up credit market, has evolved into a scaled-down version of what was originally sold to public officials and city residents. More evidence of a project facing challenges arrived on June 5, when despite being the recipient of millions of city and state taxpayer-dollar subsidies, Forest City Ratner admitted the shedding of star architect Frank Gehry. Soon after, renderings surfaced that showed less than dynamic designs for the centerpiece arena portion of the project. On June 8, New York Times architecture critic Nicolai Ourousoff referred to the project renderings as a “monstrosity.”

When asked about the scathing Times critique that lambasted what it called more than a “betrayal of a particular community,” an ESDC spokesman tells GlobeSt.com that a final design and rendering of the project has not been released. The spokesman says that “an initial rendering was released, but that will look very different from the end product.”

In the few hours leading up to Wednesday’s vote, a familiar cast of supporters and opponents waited and chanted softly in a block-long line on Madison Avenue under the watch of armed security men and police dogs. Later, the crowd packed themselves into two large rooms on two separate floors of the MTA headquarters, where several signed up to spend yet another three minutes supporting or defending the project before a set of public agency board members, as many of them had done before the ESDC board a day earlier before it approved the new general project plan.

The MTA board as well as observers heard pro-project arguments that pitched Atlantic Yards as an economic engine of urban renewal, a ray of hope in an economically challenged community hungry for union jobs and affordable housing. Others pointed to the restoration of Brooklyn pride that the promised arrival of an NBA basketball team would bring and collective identity that some say disappeared after the exit of Walter O’Malley’s Dodgers to Los Angeles in 1957.

Project opponents, many of whom lectured board members on the definition of fiduciary duty, described the pending board action as a public giveaway, staged in a time when just a month earlier, the transit agency had been the recipient of a taxpayer-funded bailout. Straphangers Campaign chairman Gene Russianoff told the board it should try to structure a better deal. The group Develop Don’t Destroy Brooklyn even made a counter-offer, $120 million, which it said would place the property into a trust called “Unity.”

Another speaker, the Regional Plan Association’s Neysa Pranger, told board members that while the planning group opposed the deal as currently structured, it should be salvaged, but under stricter provisions. Calling Vanderbilt Yards a ‘major asset’ for the MTA and one of the most important transit oriented development sites in the region, RPA’s public affairs director said the “revised agreement appears simply too meager to sacrifice the long term potential of the site.”

Contacted after Wednesday’s meeting, an MTA spokesman defends the new deal, telling GlobeSt.com the agency “is pleased that we were able to reach an agreement with FCRC that acknowledges the current economic situation while still protecting the MTA’s transportation and financial interests.” Further endorsing the deal’s new terms, the spokesman points out that it means “the construction of a new rail yard sufficient to meet current and future LIRR needs, a new subway entrance at the arena and $100 million [net present value] to help fund MTA capital projects.”

The new GPP includes a scale-back of the original $455 million Vanderbilt Yards upgrade which at seven tracks with a 56 car capacity, is down two tracks from the original nine, which was set to contain capacity for 76 cars.

When asked about MTA’s comments, Pranger tells GlobeSt.com, “if you ask the ESDC or MTA, they say the net present value is the same as FCRC giving $100 million up front.”

She worries that the MTA’s pre-recession anticipation of revenue from Vanderbilt Yards and the West Side Rail Yards property sales blew holes in the MTA’s capital budget. And “that’s a problem, because they are relying on that money now,” she says. A major reason “why they should get more money up front, now,” she says. The deal for the West Side yards, a.k.a. Hudson Yards, has not yet closed as the MTA and the Related Cos. continue negotiating.

Pointing to the impact of nearly frozen credit markets, Pranger says “the MTA is renegotiating the deal with FCRC at a bad time. This negotiation period favors the developer. We thought there should be some caveats for realization of greater MTA revenues down the road if the market changes.”

At the MTA hearing, RPA also suggested that ESDC set up a subsidiary much like the city/state 42nd Street Development Corp. to guide future phases of the development at Atlantic Yards. RPA says that authority should include city, state and community representation that has the authority and professional capacity to evaluate and approve proposed changes in project design.

But an ESDC spokesman defends current efforts at community involvement telling GlobeSt.com, “we have been working with our partners at the city, MTA and FCRC over the past several months to create a modified GPP.”

RPA counters, “we recommend the subsidiary include not just agencies from the MTA and government, but from the community as well.” Pranger says that in the rush to secure the project before the end of the year, this element should not be overlooked.

Responding to the perception that the Atlantic Yards plan is being forced upon the public, ESDC says “one detail that seems to be missing from the majority of the press coverage is that the amended GPP presented on Tuesday was created by ESDC,” and that the new GPP will entail another public hearing, two public forums and a period to submit public written testimony.

Charging that the 22-acre Atlantic Yards site is important, Pranger says a 42nd Street Development Corp.-like subsidiary “could parcel the site out over time, which we think is an important point.” She adds “when you get these major mega projects, you can’t just fork the keys over to the developer.” RPA says “none of our recommendations preclude or eliminate the jobs aspect; they would still be created.”

“Maybe the project takes more time to develop, but at least it gets developed right” says Pranger.

When GlobeSt.com requested comments from City Hall on what’s become the constantly unfolding story of Atlantic Yards and RPA's suggestions, the mayor’s office “respectfully” declined.

Meanwhile, despite years of delay and national economic recovery still a term of speculation ESDC says it is looking forward to bringing “this important project to completion for the benefits of the city and state.” And with more hearings on the horizon, more testimony to be heard, it appears that at least for now, the Atlantic Yards story will only continue to unfold.