Before I share the few stories I reported on Atlantic Yards, below find the latest from "The New York Post" along with blog entries from "The New York Times" and Huffington Post and Atlantic Yards report. For the real estate, political and urban planning junkies among you, pay attention to details offered in some of the latest reporting including references to what some saw as "sweetheart deals" that on the surface, appears to short change New York State public agency coffers including a cash starved MTA. If the latest reports hold true, it would appear some of the fears project opponents expressed over these few past years are being realized, mainly a lack of much needed affordable and for that matter, market rate housing, which is unfortunate for Brooklyn. Then again, some might say, it was the public opposition itself, the drama of holdouts, eminent domain and the subsequent delays in courtrooms that spoiled chances for developer Ratner to secure necessary financing for completing his mega project. In any case, despite one's opinions of the Atlantic Yards saga, in general, some might say there's a greater need in these challenged times for more scrupulous examination of how massive transformative projects like this get sold or forced onto the public; then co-financed through quasi private/public coffers and whether or not, its wise to sell valuable public land or air space at bargain basement prices based on promises that can easily be broken, especially when state budgets/public agency budgets are basically breathing on debt.
"New York Post"
"New York Times"
But the most meticulous and thorough comes from >Norman Older's Atlantic Yards Report
Here were my stories from back 08 and 09 for a bit of perspective on how this all got to this point. There was plenty of in-depth coverage from other mainstream sources like the New York Observer but also those with vested interests in their community's direction but clear opposition to the project, including Norman Older in Brooklyn as well as the No Land Grab report.
globest.com's reports from Cody Lyon
Last Updated: April 1, 2009 06:05am ET
Despite Lawsuits, Atlantic Yards Sees '11 Opening
By Cody Lyon
NEW YORK CITY-Hoping to challenge an Environmental Impact Statement that further paves the way for Forest City Ratner Cos.’ proposed Atlantic Yards project in downtown Brooklyn, a community activist group has filed a motion in the appellate division of New York State’s Court of Appeals.
The motion from Develop Don’t Destroy Brooklyn challenges a Feb. 26 ruling that upheld the state Supreme Court’s dismissal of DDDB’s suit in January, saying the state had met its environmental review obligations regarding Atlantic Yards. The appeal is one of two pending legal actions that challenge the project that involve DDDB, the community group founded a few months after FCRC first unveiled its plans for the site.
Despite the legal actions, an FCRC spokesman tells GlobeSt that the developer hopes to see Barclays Center Coliseum open by 2011. Although FRCC expects to encounter further delays because of litigation, the developers expect to close on its deal with the Metropolitan Transportation Authority and break ground on the 22-acre project.
“We’ve gone about as far as we can go at this point with the preliminary work, including sewer, track, infrastructure and utility work, along with demolition,” the FCRC spokesman tells GlobeSt.com.
Separate from the current appeal is what DDDB currently calls its main lawsuit. The group charges that New York State violated its own eminent domain laws when it approved the Atlantic Yards project in 2006. “All sides are awaiting a decision,” a DDDB spokesperson tells GlobeSt.com. “If we win, the project is dead; if we don’t win, we will appeal.”
Five of the eight blocks making up the future project’s footprint are within the 1968 Atlantic Terminal Urban Renewal Area, making the area ripe for future economic revitalization efforts. Within those five blocks are eight acres owned by the MTA for use as a below-grade rail yard. But adjoining that, three privately owned contiguous blocks located on the south side of Pacific Street that are privately owned. Critics say that over the past few years, FCRC bought large portions of property within those blocks, making it easier for the Empire State Development Corp. to label the entire area as blighted and enabling the taking of lots through eminent domain.
“FRDC doesn’t own the railyards, they haven’t paid anything to the MTA,” the DDDB spokeman tells GlobeSt.com. “If the MTA wants to pull out of its $100-million agreement, it could.” An MTA spokesman tells GlobeSt.com that the $100 million was due when the deal closes.
In ’06, then-Gov. George Pataki called ESDC’s approval of the project “another important milestone in the creation of tens of thousands of construction jobs, thousands of permanent jobs, and critically-needed housing, including affordable housing.” As part of its efforts to bring the project fruition, both the city and state agreed to provide the project with $100 million each. That same year, mortgage recording tax exemptions were provided on the residential component of the project.
Public speculation has increased over the project’s future as reports surfaced about its design, size and scale as well as the impact of the recession on financing. In February, GlobeSt.com reported that FCRC refinanced a $161.9-million bridge loan on Atlantic Yards, extending its due date to February 2011.
Originally, phase one of Atlantic Yards, including the new rail yard, the arena, housing and other developments on the western portion of the site, were scheduled for completion in 2010. According to a December 2006 ESDC memo, at least 30% of the housing developed in the arena block of phase one was set to be considered affordable housing.
DDDB believes the only component of Atlantic Yards Brooklyn will likely see in the next few years will be the Barclays Center arena, which is to house the Nets basketball team. “Bruce Ratner has every intention to take control of that land and build an arena and build the rest of the project once the economy picks back up, if it does,” says a spokesman for the group.
But an ESDC spokesman says the project has always been planned in phases. He tells GlobeSt that around 20 lawsuits have been brought attempting to kill the project and almost all have been subsequently dismissed. He says that ESDC looks forward to having resolution on the issue. “Atlantic Yards’ construction timeline is totally dependent on the litigation and once the litigation has been resolved, the project will continue right away,” the ESDC spokesman tells GlobeSt.com
The DDDB spokesman says it is not litigation that’s stopping FCRC from going forward with the project. He says that since the project was approved in December ’06, all FCRC has done to forward the project is demolish half the necessary buildings and complete some infrastructure work.
The opposition group’s spokesman says FCRC’s goal is to get control of the land, by getting past the lawsuits and perusading the state to take the properties so that FCRC “controls the 22 acres” whereby FCRC builds what it wants, when it wants. “There’s a misperception out there that the project's dead because of the economy and it just simply is not true,” he says.
ESDC Stands by Atlantic Yards - Daily News Article
Last Updated: May 20, 2009 12:04pm ET
ESDC Stands by Atlantic Yards
By Cody Lyon
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NEW YORK CITY-Debate surrounding Brooklyn’s long-delayed Atlantic Yards project continues as a group of residents and business owners--who last week saw their challenge to the Empire State Development Corp.’s use of eminent domain dismissed by a state Appeals Court--vow to press on to the higher New York State Court of Appeals. Meanwhile, ESDC--the state’s quasi-governmental agency that partnered with FCRC to develop the 22 acres near downtown Brooklyn--defends the rationale behind public "support" of the project, telling GlobeSt.com that Atlantic Yards "will result in the revitalization of an underutilized and blighted area."
Regardless, beyond a widely reported statement expressing Forest City Ratner Cos. CEO chair Bruce Ratner’s "thrilled" reaction to the court dismissal, when asked about the very timely issues of financing and star architects, an FCRC spokeswoman tells GlobeSt.com the company has "no other comment" at this time. However, in April, a spokeswoman did tell Globest.com that FCRC hopes to see the Barclay’s Center Coliseum portion of the project open by 2011.
According to the ESDC, the agency will "own the arena" where the Nets plan to play basketball in Brooklyn. "However, pursuant to various lease agreements, all operational obligations will be borne by an FCRC affiliate," says the ESDC spokeswoman.
But not giving up just yet, Matthew Brinckerhoff, the lead attorney representing the residents and owners in the court, case tells Globest.com that if the Court of Appeals agrees to hear the case, "we’re going to be litigating this for the next year and a half." The three issues he’s arguing are whether the state constitution provides greater protection to individual property rights than the US Constitution; whether the project violates article 18, section 6 of the state’s constitution restricting use of eminent domain and use of state funds to low income housing; and finally, whether the public benefits outweigh the private benefits Ratner will accrue.
Of the ESDC’s assessment of the public vs. private benefits, Brinckerhoff says nobody knows for certain which benefit outweighs the other, and that the ESDC has never made a record of it public. Still, speaking to critics who see his clients as spoilers who are simply more opposed to Ratner’s potential largesse than the project itself, he says "we don’t have a problem with a private person benefiting from the taking of property. But if the benefits to that private person outweigh the public benefit, that’s when it violates the constitution."
Disputing doubts of a public benefit, ESDC’s spokeswoman cites the additional housing that includes not less than 2,250 affordable units, an upgraded Vanderbilt Yards, a professional NBA franchise in Brooklyn, significant construction and permanent full-time jobs as well as substantial tax revenues for both the city and state. ESDC says "the project will receive $100 million in aid from the state, which was earmarked by the Legislature." She adds, "It is not expected that the state will provide any further assistance other than what is set forth in the general project plan."
Back in 2006, what was then known as the New York State Urban Development Corp.--today’s ESDC--adopted a modified GPP. That plan says that "additional fundings shall be made taking into account monies expended by FCRC, provided that (1) at no time will (i) the costs reimbursed to FCRC by the city and state, in the aggregate, exceed 50% of the total costs incurred and paid by FCRC, and (ii) the amounts funded by the state exceed the amounts funded by the city, and (2) such additional fundings shall be made upon other terms and conditions to be agreed upon by the parties." The document also says that on a present-day (2006) basis, a completed Atlantic Yards will generate $652.3 million of city tax revenue and $745 million of state tax revenues in its first 30 years of operation.
On May 16, the New York Times reported that over the last six months, Ratner has sought additional subsidies beyond the $300 million in cash and tens of millions in tax breaks already approved for the project. The article discusses the increasingly common difficulties that developers face in achieving financing in the current economy.
While FCRC did not respond to questions regarding its ability to finance Atlantic Yards, ESDC’s spokeswoman says the agency "believes financing is viable at this point in time ESDC regularly meets with FCRC and its various financial advisors to discuss financing issues. Obviously, FCRC is counting on accessing financial markets at the time of closing." Of the arena’s final design, size and scope, the ESDC spokeswoman says "clearly the design of the arena will impact costs and have an affect on financing requirements."
In response to GlobeSt.com’s question as to whether FCRC would use the original Frank Gehry design for the arena or perhaps another architect altogether, ESDC says GlobeSt.com that was a question best answered by FCRC. Told that FCRC had not provided an answer, the ESDC spokeswoman says "regardless of Gehry’s involvement, ESDC’s design guidelines must be met."
Categories: Northeast, Development, Legal, Industrial, Office, Retail, New York
ast Updated: June 2, 2009 08:42am ET
ESDC: Atlantic Yards Project Will Shrink
By Cody Lyon
Perkins, Montgomery, et al
NEW YORK CITY-Whistles, shouts and the big inflatable rat used by construction unions to mark non-union work-sites greeted attendees of a New York State Senate "fact finding" hearing that attempted to have a look at the controversy-laden Atlantic Yards project this past Friday at Pratt Institute in Brooklyn. One fact did emerge: the project will be smaller in scope, specifically the centerpiece Barclays Center Coliseum. Like the day itself, the hearing in the basement auditorium of Higgins Hall turned hot, as job-hungry hecklers dressed in hard hats and orange vests--reportedly union construction workers--tried to drown out critical questions and answers from state and city officials, activists and politicians.
Convened by Harlem state Sen. Bill Perkins--chair of the Senate’s committee on Authorities and Commissions--and Brooklyn State Sen. Velmanette Montgomery, the panel sought answers from representatives of the Independent Budget Office, Empire State Development Corp., the Metropolitan Transportation Authority, the New York City Economic Development Corp. and the New York City Housing Development Corp. No one testified from project developer Forest City Ratner Cos., although a Perkins spokesman tells GlobeSt.com that FCRC was invited.
Acknowledging economic reality of "now" and the challenges it presents, ESDC CEO Marisa Lago said "there is not one of us who works in economic development who isn’t aware of the impact the economy is having on economic development projects."
That said, she added the project would be going through a value engineering process. Lago compared the project’s current budgeting for the project’s centerpiece arena--around 10% of the original plan--to a wish list one makes when planning the renovation of a 45-year-old kitchen. Suddenly faced with the sobering realization that the wish list is too expensive, Lago says of the centerpiece stove, the planned "six- burner stove becomes a four-burner."
That may explain why last month, developer Bruce Ratner said he was scaling back costs for the $950-million arena to $800 million. Lago told the hearing that the trimming would be in amenities like luxury boxes and the project’s finishes. Albeit a less exciting vision, Lago said "it will be an arena for a national sports franchise." In January 2007, it was announced that British Bank Barclays had purchased the naming rights to the arena. Reportedly, the bank would pay $400 million over 20 years.
Despite the "basic-ness" of the scaled-down arena, Lago stressed the overall long-term project’s footprint remains the same as it did when first proposed. As a spokesperson for ESDC told GlobeSt.com, last month, "clearly the design of the arena will impact costs and have an impact on financing requirements." So far, there’s been no confirmation on when construction will begin, despite the fact that as recently as April, an ESDC spokeswoman was telling GlobeSt.com that FCRC hoped to see Barclays Center Coliseum open by 2011.
Also partaking in the quizzing was State Assemblyman Hakeem Jeffries, who asked Lago if it was more economically feasible to construct the arena or housing. Lago responded that the economics of the arena “will be borne by the folks who buy the bonds.”
At Friday’s hearing, MTA interim executive director Helena Williams said FCRC had “proposed a smaller upfront cash payment for the land,” where the Vanderbilt Yards now sit. She said that FCRC was negotiating a smaller amount, plus “additional payments over time.” In 2004, the 8.5-acre railyard was appraised at $214 million. FCRC’s bid of $100 million was $50 million less than a similar bid by competing developer Extell Corp.
After pointing out that the Long Island Rail Road started operations in Brooklyn back in 1836, the interim MTA head told the hearing that FCRC sought to reduce the $100 million it had promised for the MTA land’s air rights. When Perkins said he’d heard a rumor that the $100 million had actually shrunk down to $50 million, Williams pointed to ongoing "intense negations" between the agency and Ratner, joking with Perkins that "between what you heard and what was in the paper, I like your number better."
Williams said MTA anticipates a "restructuring" of the deal in June if the outcome of negotiations between the MTA and Ratner are approved by the MTA board at its meeting on June 24. She promised to let the panel know what happens.
Williams also confirmed that the MTA would allow Ratner to scale back $445 million in improvements at the LIRR’s new Vanderbilt Yards. "The new yard will have seven tracks plus an eight-car drill track," she said. The original plan had called for nine tracks.
When George Sweeting, deputy director of the city’s Independent Budget Office spoke before the panel, he cited a 2005 report that said the arena would generate "a modest positive fiscal impact for the city of about $25 million net present value over 30 years." In prepared testimony, he noted a few changes that include an increase from $100 million to $205 million in the city’s capital contribution, although some of that will go to infrastructure.
He said those changes "alone therefore eclipse the $25 million in net positive benefit to the city that we previously estimated for the arena." Addressing the use of tax-exempt bonds for financing, Sweeting said that at "the price and the current interest rate environment, IBO estimates that the public-sector cost in foregone tax revenue from the bondholders would be $200 million," with $193 million of that borne by federal taxpayers. The city cost, he said, would be about $1.5 million. "FCRC’s savings would amount to $191 million," Sweeting testified.
Sweeting noted that current plans call for the Atlantic Yards arena, much like Yankee Stadium and Citi Field, to be financed through an "aggressive interpretation of Internal Revenue Service regulations that will make it possible to use tax exempt bonds for most, if not all, of the arena’s construction costs"--provided they break ground by the end of the year. However, he said, in the previous stadiums’ cases, the city finance department indicated what the property tax assessments would be prior to the start of construction. In the case of Atlantic Yards, he said no similar announcement had been made. But he did say it was notable that the land assessments for the parcels under the arena have more than “tripled in the last three years.”
One of the more drama laden moments at Friday’s hearing came when, in a surprising turn, State Sen. Marty Golden showed up midway through the hearing, announced by two men who shouted, "Marty Golden’s here." Golden was scolded by Perkins for making such a loud and grand entrance. Golden responded that he couldn’t help who follows him around.
Regardless, Golden makes no secret of his support for the construction of Atlantic Yards noting the thousands of jobs it is projected to create. Bringing the crowd to its feet, Golden led a pep rally moment saying the project would bring millions in tax revenue and jobs. Golden asked if there was any federal stimulus money allocated for the project. When told by Lago that ESDC would request federal money if asked, Golden told her he’d make the request, the crowd rose and the chaos began.
Controversy and questions surrounding Atlantic Yards’ design, size and scale details go back years. Perhaps the biggest setbacks to the project’s groundbreaking have been lawsuits that sought to stop the ESDC from using eminent domain to clear the project’s footprint of current residents and business owners. But more recently, as the economy went bad and credit markets froze, obstacles to developer financing added to doubts about the $4-billion project’s fruition.
Further fostering public skepticism and controversy is a series of vague answers to questions concerning simple project details over size and scope, questions that remain unanswered. For example, neither ESDC nor FCRC will say if the arena’s architect is still Frank Gehry, despite FCRC’s receipt of an estimated $300 million in taxpayer funded subsidies.
However, reports have circulated that Architectural firm Elllerbe Becket would replace Gehry as architect at the arena. In a Tuesday call to GlobeSt.com, Bill Crocket, AIA, principal at the firm said, "We are working with Forest City Ratner, doing some analysis, and as far as any decision is going to be reached, I can¹t tell you." He added that he didn't think any decisions about timing, or anything else, had been made at this point.
For its part, FCRC said in a statement passed around at the hearing that “after five years of public debate and countless hearings, it is time to get to work. The arena and an NBA team in Brooklyn will create jobs and excitement and the affordable housing is sorely needed in the borough. Opponents have significantly delayed this project, including the jobs, housing and tax benefits. Now is not the time for re-debating the project. It is time to get to work.”
Categories: Northeast, Development, Capital Markets, Industrial, Multifamily, Retail, New York
Activists Vow Appeal of Atlantic Yards Ruling
By Cody Lyon
NEW YORK CITY-A four-judge New York Appeals Court panel dismissed a challenge to Forest City Ratner Cos.’ Atlantic Yards project this past Friday, saying the use of eminent domain to take private property to build housing--and in this case--a new basketball arena, does not violate the state’s constitution. The plaintiffs vow to appeal to the state’s highest court.
In one section of its decision, the court wrote "the condemnation does not violate the Public Use Clause of the New York state constitution because it cannot be said that the public benefits which the Atlantic Yards project is expected to yield are incidental or pretextual in comparison to the benefit that will be bestowed upon the project’s private developer."
Specifically, the challenge was brought by nine tenants and owners of property inside the 22-acre proposed project’s footprint against the New York State Urban Development Corp., a unit of the quasi-governmental agency Empire State Development Corp. ESDC would then condemn the nine properties and transfer ownership to Forest City Ratner, the sole developer of the project.
According to the court documents, the judges said much of the land to be acquired is "substandard, and that the taking [of it] is rationally related to the purpose of remedying these substandard conditions." They added, "any incidental profit that may inure to Forest City from the remediation of the blighted project site does not undercut the public purpose of the condemnation of the substandard land."
The dismissal removes yet another legal obstacle in the way of the long-delayed project that has been shrouded by a cloud of controversy. Calling it the development’s 23rd favorable ruling, in a statement, FCRC chair and CEO Bruce Ratner says in a statement that he is thrilled with the decision. He added that he was confident the project will break ground this year, with the intent that the Nets will play ball in the Barclays Center in the 2011-2012 season.
Despite the developer’s optimism, hurdles remain before the project’s initial construction sees fruition. In fact, a lawyer for the plaintiffs says the group will be appealing to the state’s Court of Appeals. And, if that court agrees to hear the case, Atlantic Yards could be in store for many more months of litigation.
Drawing a line in the sand, Matthew Brinckerhoff, lead attorney for the plaintiffs, tells GlobeSt.com that Ratner has not acquired his client’s property yet, and until he does, he cannot build the arena. Anticipating a Court of Appeals decision on whether or not to hear the case by late fall or by the end of the year, Brinckerhoff is optimistic the court will be open to hearing his client’s arguments. GlobeSt.com will have further insight and information on the case and its implications later today.
UPDATE JUNE 5
Gehry Off the Job at Atlantic Yards
By Cody Lyon
NEW YORK CITY-Forest City Ratner Cos. and achitect Frank Gehry’s Gehry Partners released a joint statement Thursday afternoon saying that the architect is off the job at Brooklyn’s Atlantic Yards arena. FCRC said it had retained architectural firm Ellerbe Becket to serve as architect for the Barclays Center Coliseum, intended as the future home for the Nets and the mega-project’s centerpiece.
As recently as last Tuesday, Ellerbe Becket principal Bill Crocket told GlobeSt.com, "we are working with Forest City Ratner, doing analysis, and as far as when any decision is going to be reached, I can’t tell you." He added that he didn’t think any decisions about timing, or anything else, had been made at that point. But that was Tuesday, and as has been the case at Atlantic Yards, events change almost daily.
In today’s statement, which calls the end of Gehry’s involvement a FCRC chair and CEO Bruce Ratner says that "throughout this process--as litigation produced delay; as rising construction costs impacted the budgets of all developers; and a slowing economy altered expectations--Frank and his team have shown incredible flexibility and professionalism, making cost-effective revisions as needed. The current economic climate is not right for this design, and with Frank’s understanding, the arena is undergoing a redesign that will make it more limited in scope." For his part, Gehry says in the statement that "while there are always regrets at designs not realized, we greatly appreciate our ongoing relationship with Bruce and his team."
FCRC says it hopes to unveil new images of Barclays Center in late June and says it intends to break ground later this year in anticipation of a completed arena in time for the Nets to play the 2011-2012 NBA season in Brooklyn.
Last month, in response to questions from GlobeSt.com as to whether or not FCRC would use Gehry’s design for the arena, an Empire State Development Corp. spokesperson said that "regardless of Gehry’s involvement, ESDC guidelines must be met."
Ellerbee Becket has designed several sports facilities across the country including Conseco Fieldhouse in Indianapolis and Qwest Field in Seattle, as well as the Guandong Olympic Stadium in China. NBA commissioner David Stern says in the statement that he is "excited for Ellerbe Becket to design a world-class arena for Brooklyn and I look forward to opening night at the Barclays Center."
Categories: Northeast, Development, Industrial, Multifamily, New York
Categories: Northeast, Development, Legal, New York
Last Updated: June 24, 2009 08:10pm ET
ESDC Approves Modified Atlantic Yards Plan
By Cody Lyon
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NEW YORK CITY-As was expected, the Empire State Development Corp.’s board of directors approved an amended General Project Plan for Brooklyn’s proposed Atlantic Yards project at a Tuesday morning meeting at its Manhattan offices. The move comes a day after the Metropolitan Transportation Authority agreed to give developer Forest City Ratner Cos. a break on financial terms for a parcel of MTA property FCRC needs to move forward with the arena portion of the project.
The cash-challenged MTA, which got a bailout from the State Legislature in May, says in a finance department staff summary that "in recognition of the impact that the financial and real estate downturn has had upon the economics of the original FCRC proposal, MTA staff and FCRC have negotiated other changes to this transaction."
MTA finance department documents show that FCRC will now pay $20 million up front for the arena property, and $80 million in deferred payments for air rights. The annual payments will extend through 2031. That compares to 2006, when the negotiated price had been set at $100 million.
In 2004, the 8.5-acre railyard was appraised at $214 million. FCRC’s 2005 bid of $100 million was $50 million less than a similar bid by competing developer Extell Corp. that same year.
The new plan also scales down the Vanderbilt Yards upgrade. Originally, FCRC was required to build a nine-track rail yard that could hold 76 cars. In the modified GPP that appears to be fast tracking its way through the approval process, only seven tracks will be built, for a capacity of 56 cars.
Unlike a raucous public hearing on Atlantic Yards earlier this month, at which ESDC representatives warned of cuts to the project, order and procedure permeated Tuesday’s ESDC meeting. Board members listened to 40 speakers. The majority were project supporters, some wearing red ACORN shirts, while others sported blue "Build Atlantic Yards" buttons, all mixed with a smattering of hard hats and orange vests. Project supporter talking points included union job creation, minority participation, praise of FCRC’s track record in downtown Brooklyn and the eventual arrival of the Brooklyn Nets at the project’s arena.
Although outnumbered in the speaker roster, project opponents articulated concerns that included peppering the board with questions of transparency, oversight and taxpayer financed developments. There was even a moment of public policy theatre, when an Atlantic Yards opponent sporting a "Develop Don’t Destroy Brooklyn" T-shirt used his entire allotted three minutes as a silent protest.
Later, board members assured the audience that they were indeed listening, that they did not speak or engage speakers because it was "never their intent to engage the witnesses."
UPDATE JUNE 26, 2009
Despite MTA Nod, Atlantic Yards Saga Still Unfolds
By Cody Lyon
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.
Court Okays Eviction of FCRC, Boymelgreen
By Cody Lyon
NEW YORK CITY-Lawyers representing developer Henry Weinstein won two legal actions in the New York State Appeals Court that will give Weinstein the right to go ahead with eviction proceedings of another Brooklyn developer, Jeshayahu Boymelgreen, and Forest City Ratner Cos.
The unanimous decision reverses a March 2007 ruling from Brooklyn Supreme Court Justice Ira Harkavy that allowed Boymelgreen to remain as an occupant, despite the termination of his lease. The decision also gives Weinstein the right to sue Boymelgreen and FCRC for monetary judgments. The decision says FCRC was given an illegal assignment to two properties by the lessee Boymelgreen in violation of the lease terms, which required the landlord’s legal approval to assign.
Regardless of this latest legal challenge, a spokeswoman for Empire State Development Corp., which is involved with FCRC’s Atlantic Yards project, tells Globest.com that the decision did not impact its plans at the site at all. In fact, she says the organization hopes to acquire all the Weinstein property in 2009.
Court documents say that the subject properties are within the area proposed to be developed as the Atlantic Yards Arena and Redevelopment Project.
The lead attorney for Weinstein, David Brody, of Borah, Goldstein, Altschuler, Nahins & Godel, PC, tells GlobeSt.com that FCRC’s Bruce Ratner "recorded his option for the assignment of the buildings, then he recorded certain other things and all for purposes of allowing him to represent to the ESDC that he controlled the property in terms of the Atlantic Yards project."
Standing firm, the ESDC spokesperson tells GlobeSt.com that in fact, FCRC "did not misrepresent its position to ESDC, as it believed it had a valid assignment of Boymelgreen’s lease hold interest in the premises. The courts, however, disagreed."
Regardless, the ruling is the latest in a volley of legal and financial obstacles creating roadblocks in the development and construction of Brooklyn’s Atlantic Yards project.
While FCRC didn’t return calls for comment by press time, a spokesperson from Boymelgreen’s law firm, Herrick Feinstein, tells Globe St.com "the decision and all options are being reviewed."
Brody tells GlobeSt.com that while his client may not win in the end, the ruling at least provides an opportunity for discovery to see how far up the ladder they can go. "Boymelgreen illegally assigned the lease to Ratner," he says.
Brody says he and his client are now pushing for an eviction. Next, he says, they will ask for a hearing to establish the difference between the properties’ present-day value and its former value when the lease was terminated in July 2006.
"The lower court had said [the original lease assignment] was wrong and it terminated the lease, but, it wouldn’t give us a judgment of eviction," Brody says. "Further, it wouldn’t give us a hearing of damages under the lease."
Brody says that under the lease, Weinstein "has the right to go in and inspect his property." But he adds Weinstein has even encountered difficulties when he visited his properties.
He says that Weinstein’s desire has been to be left alone and to be allowed to own his property and develop it as he sees fit. "That’s what this is really about for him," Brody says.
Nonetheless, over the past few years, some observers have questioned Weinstein’s motives in the Atlantic Yards saga, including Boymelgreen. In March ’07, after Weinstein had won the initial lawsuit, Boymelgreen told the Brooklyn Paper that "Weinstein is just pure business. Most people on the block just want to see how much they can take from Ratner." The Brooklyn Paper also quoted Boymelgreen as saying "if you ask Weinstein face to face, he’ll say it, unless he has a good poker face."
To which Brody responds, "I find it amusing when billionaires are poking at millionaires." He adds that Weinstein’s view through all this is that "he simply wants to own his buildings. He wants to own and operate his properties; that’s what this is all about for him."
Categories: Northeast, Development, Legal, Industrial, Multifamily, Office, Retail, New York
High Court Says Atlantic Yards Can Proceed
By Cody Lyon
NEW YORK CITY-By a 6-1 margin, New York State’s highest court put its stamp of approval on Bruce Ratner’s proposed 22-acre Atlantic Yards project Tuesday morning, approving the Empire State Development Corp.’s use of eminent domain to clear the project’s footprint of resident holdouts. Despite the latest green light, opponents pledge more roadblocks to the project that has evoked the sort of passion and division not seen in Brooklyn since Walter O’Malley took the Dodgers to Los Angeles.
The ruling upholds the state’s right to use eminent domain, given the public benefits associated with the Atlantic Yards development in Brooklyn. It also paves the way for the Brooklyn Arena Local Development Corp. issuance of bonds to assist Forest City Ratner Cos. in financing the design, development and construction of the Barclays Center, an arena intended to house the Nets basketball franchise.
ESDC says while it has secured investment grade ratings, the agency is in ongoing discussions with ratings agencies and bond issuers. An ESDC spokesman says in a statement that "in addition to the investment grade rating, we anticipate there will be taxable bonds as well. Details will be released once documents are finalized." He adds "there will be a formal mid-December closing" and "we anticipate marketing the bonds prior to that time."
FCRC says in a statement that construction activity on the yards will continue, with the intent that the Nets will play ball in the Barclays Center in the 2011-2012 season.
Still, in its opening remarks almost immediately after the court ruling, the BALDC acknowledged that on Nov. 19, several Brooklyn community groups, along with state and local officials and individuals claiming to live near the proposed project, commenced further legal action against ESDC and FCRC. The BALDC said in its statement that while the ESDC and FCRC had prevailed in court over the course of several lawsuits, "there can be no assurance, however, as to the outcome of this action." An ESDC spokesman tells GlobeSt.com that the agency doesn't anticipate that this or any forthcoming lawsuits "will delay the project, including the master real estate closing and the condemnation proceeding."
In his statement, FCRC CEO Bruce Ratner touted the fact that to date, the project has overcome almost all its legal challenges. Ratner says, "Once again the courts have made it clear that this project represents a significant public benefit for the people of Brooklyn and the entire city. Our commitment to the entire project is as strong today as when we started six years ago."
Atlantic Yards, first proposed in 2003, has been promoted as an economic engine that will bring thousands of new jobs, housing units and with the 18,000-seat arena, bring the NBA’s New Jersey Nets to Downtown Brooklyn. Opponents and critics say the project--which in recent months has changed in appearance, size and financing since it was first revealed--eliminates a thriving low-density neighborhood, is poorly planned and short changes the region’s cash strapped mass transit system. But, perhaps the greatest source of controversy, and the focus of Tuesday’s court decision, is the use of eminent domain.
"We lost the battle," says Matthew Brickenhoff of Emery, Celli, Brinckerhoff and Abady, the lead attorney for plaintiff Daniel Goldstein. Saying this is a multiple round fight, he tells GlobeSt.com that "if we’d have won, we’d have won the war."
Agreeing with its partner in development, the ESDC says in its statement that it is committed as ever to seeing the completion of the project. "With this major hurdle overcome, we can now move forward with development which will accomplish its goals of eliminating blight, and bringing transportation improvements, an arena, open space, affordable housing and thousands of jobs to the people of Brooklyn and the State of New York."
But as dissenting Judge Robert Smith, said in his official court- issued soliloquy, while the northern part of the project’s footprint can be fairly described as blighted, the southern portion, where the petitioners live, appears to be "a normal and pleasant residential community."
As the dissenter notes, the area around the Atlantic Avenue terminal, home to the Vanderbilt Yards, has long been included in the Atlantic Terminal Urban Renewal footprint. The Metropolitan Transportation Authority’s Vanderbilt Yards takes up nine acres of the project’s footprint.
And that’s one apect of the project where Brickenhoff says his group is now focused in its efforts to continue fighting. Originally appraised at $214 million in 2004, the MTA agreed to sell the Vanderbilt Yards site to FCRC for $100 million. But then in June, the MTA board granted a more flexible spending plan that would instead pay the MTA $20 million this year, and pay the remaining amount off at 6.5% interest over 20 years starting in 2012.
Among other changes, Brickenhoff says the court made it very clear that it considered itself to be bound by the record that was created in December 2006, which is three years ago, and it seems pretty clear, it would not consider, and did not consider all the changes that have occurred in the last few months, starting with the revelation that the new MTA railyard will be a downgrade from its current capacity instead of an upgrade.
Also in June, the Regional Planning Commission said the benefits to the MTA and public have been greatly diminished in a project that has been redesigned significantly since its revelation in 2006. RPA says those changes include a scaled-back rail yard that would accommodate fewer rail cars with less efficiency, a replacement of Frank Gehry’s signature architecture, and an indefinite delay in the affordable housing, office space and open space that were to provide most of the economic and community benefits.
But, once again, FCRC disagrees with such diminished sentiments. Instead, in its official statement, it says the arena and larger development are expected to create 16,924 union construction jobs and over 8,000 permanent jobs. The tax revenues that will be generated for the city and state during the construction period are expected to exceed $240 million and after construction, reach approximately $70 million a year.
New Suit Could Sidetrack Atlantic Yards
By Cody Lyon
NEW YORK CITY-Opponents of Brooklyn’s planned Atlantic Yards project say their plan has never been to delay the Forest City Ratner Cos. development. Instead, they say the idea is to stop it.
At least that’s what petitioning lead attorney Jeffrey Baker tells GlobeSt.com about this fourth of a series of pending lawsuits facing Empire State Development Corp., the quasi-governmental agency, and FCRC, developer of the 22-acre downtown Brooklyn site that includes a large sports arena meant to house the NBA’s Nets, currently based in New Jersey. This latest legal volley was filed Monday in New York State Supreme Court in Manhattan.
But, by holding things up in court, the group may put the brakes on the project, since there’s a Dec. 31 groundbreaking deadline for Forest City Ratner to obtain tax-exempt bond status and its $400-million branding deal with Barclays Bank on the new arena, Barclays Center. The arena has been touted as the potential new home for the Nets; the team has a deal with Russian billionaire Mikhail D. Prokhorov, who will own 80% of the team contingent upon the Nets' possible move to Brooklyn.
But in this legal go-round, the 20 co-petitioners charge ESDC with contradicting the Modified General Project Plan with a separate “development agreement” that would make the project’s affordable housing component conditioned on the availability of public subsidies.
The opponents say the ESDC’s conclusion that a new Supplemental Environmental Impact Statement is not required for FCRC’s changed development proposal is flawed.
In a statement, an ESDC spokeswoman says the agency “carefully considered whether a SEIS would be required,” but determined in the end that it “was not required.”
An updated June 2009 ESDC technical memorandum described proposed modifications to the General Project Plan. According to the document, a schedule change to 2019 would not change the Final Environmental Impact Statement’s conclusion that the project would not result in significant adverse environmental impacts with respect to socioeconomic conditions. The memorandum also said a delay in the project’s build year to 2019 would postpone the full realization of the social and economic benefits of the completed project.
The ESDC says they expected this latest lawsuit. But, the spokeswoman says, “we will vigorously defend the lawsuit and we expect to prevail on the merits. Further, she says, “we do not expect that this lawsuit will delay the project.
Baker says that in the current suit, opponents are not arguing whether or not the project’s proposed site is blighted. However, he says the ESDC “ignored the fact that the deal has been changed so that blight will not be eliminated and this project won’t be completed til the 2030s at the earliest.”
Arguing that the Atlantic Yards project is bad for a whole host of reasons, Baker says, “we will use the courts to protect our rights when these quasi governmental agencies like ESDC are ignoring our rights.”
And to those who charge the project’s opponents are using the courts to delay, thus deter, perhaps even destroy plans for the development, Baker says, “that’s their problem. We’ve never gotten an injunction. The fact that our litigation over the years has raised significant issues, and that they’ve not been able to get financing, to the extent they [FCRC] use the political process and their connections get favored status, we’re not going to apologize for using the courts for our means.”
A spokesman for FCRC said the company had no comment at this time.
Categories: Northeast, Development, Leasing, Sales, Hotels, Multifamily, Office, Retail, New York
Pinsky Stays Upbeat Despite Construction Slump
By Cody Lyon
NEW YORK CITY-Citing a new Construction Outlook report for 2009-2011, New York Building Congress president Richard Anderson said Wednesday that overall construction spending in New York City was expected to drop by 20% in 2009. However, he did say the situation appears to be stabilizing, and the city could get through the current downturn without further deterioration in annual spending. Also taking the podium later that morning was the current president of the New York City Economic Development Corp., Seth Pinsky, who was upbeat despite the slump.
"This is still a strong construction market, this is not a market that’s collapsing," Anderson told the audience. Still, he said, "the coming year is going to be challenging." With the help of widescreen projected charts, graphs and bullet points, Anderson offered up details of the forecast Wednesday at the Building Congress’ breakfast event at the Hilton New York.
The report shows that spending on city construction will probably reach around $25.8 billion in ’09, a 20% decline from the all-time high of $32.4 billion the year prior. It says over the next few years, spending will probably remain steady, reaching $25 billion in 2010 and $25.6 billion in 2011, adding up to a three-year total of $76.4 billion.
Before Pinsky arrived at the breakfast from his early morning meeting with the mayor at Gracie Mansion, Anderson praised Bloomberg as a "construction mayor," noting that one of the most dramatic increases in capital spending under his administration had been an ongoing overhaul of public schools.
Overall the report shows the importance of government spending in the industry, much of it on public projects like schools, roads, subways a total the NYBC says will reach $15.5 billion in 2009, up from $15 billion in 2008. Slightly sobering, the report predicts a slight drop to $14.7 billion 2010 and $14.3 billion in 2011.
Anderson told the builder-filled room that "the best jobs program in the city is an investment in the capital program." He also said that despite the downturn, the city’s capital program was holding up.
Despite the initial 20% spending dip, employment in the sector will probably only decline around 8.3% to around 119,000 this year. Anderson attributed that to cost-saving measures on work sites across the city. The same report predicted around 116,000 jobs in 2010 and 120,000 jobs in 2011. Pointing out that around 46% of the building industry’s spending came from government in ‘08, he said the figure would be closer to 60% this year. Hoping to foster the city’s economic diversity cred, Pinsky said the department’s goal included cultivation of the industrial sector, as well as bio-tech and an emerging green sector.
Looking forward, Pinsky urged the group to look back to the Great Depression of the 1930s. "Forward-thinking projects like Rockefeller Center, and the Empire State Building, were all constructed during the Great Depression," he said.
He said a large portion of today’s office space was out of date. And when the times do improve, modern companies will be seeking modern, in most cases, green office space.
More fundamentally, he spoke to the city’s backbone, its infrastructure. While speaking to reporters, Pinsky said, "the bottom line is we’re competing with cities around the world, many of which have brand new infrastructure that’s been built in the last few years. Not only do we have to build new infrastructure, we also have to make sure the infrastructure we already have is kept up."
Of another delayed, transformative, but controversy-laden project, the World Trade Center, Pinsky told reporters, "we are concerned that if Silverstein Properties and the Port Authority don’t reach an agreement in the near term, there’s the possibility that development at the site could grind to a halt." With that sobering warning, he added, "this is an incredibly important project for Lower Manhattan and New York City, not just for development, but, for obvious reasons related to 9/11."
Then, onto Brooklyn and another case of stalling at the lawsuit-laden Atlantic Yards standoff. In response to a question from GlobeSt.com, Pinsky said, "another lawsuit is easy to file, but less easy to win." He says his agency is working very hard with the developers and the state to get the project’s details in order.
"We remain hopeful they’ll be able to make it to the financing market before the end of the year, but, this is a tricky project," he told GlobeSt.com Wednesday. "And, until everything is in place, you don’t know that it will be in place, but we remain optimistic and we hope the project will in fact move forward."
When pressed with what happens if the lawsuits do work, and there is a successful delay of the project’s successful trip to the financing markets, Pinsky stood pat, saying "we think this project is going to move forward, and that’s what we’re planning for."
Categories: Northeast, New York