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Showing posts from July, 2007

Would FCR's development fee match its investment? A few clues

How much money would developer Forest City Ratner put up to build Atlantic Yards? We don't know, but there are hints, not previously reported, that suggest that a good portion of the developer's investment might be covered by its developer fee alone.

The 7/1/07 New York Times article on Atlantic Yards financials reported:
Forest City itself would earn a development fee of 5 percent of the project’s total cost: roughly $200 million if the entire project is built as planned. Most of that, company executives said, would go toward recovering the company’s internal costs. They also said that Forest City owns a significant share of the project, in addition to being the developer.

That leaves a lot of slack, since "much" of that $200 million could still go to recoup any investment and, once that's recouped, the "significant share" could generate gravy.

Private equity

FCR's contribution would come under the category of "private equity," which would a…

The not-so-natural process of Williamsburg gentrification

So, how well did the Greenpoint-Williamsburg rezoning work in terms of providing affordable housing? How far along is gentrification? Some sobering observations, if not a full statistical analysis, emerge from an analysis by graduate students at the Bloustein School of Planning and Public Policy at Rutgers University. The report, Gentrification and Rezoning, Williamsburg-Greenpoint, was produced in conjunction with The New York City Community Council. (Link to full 18MB report.)

For example, the study concludes that inclusionary zoning—which provides increased development rights in exchange for including affordable housing—has worked well on waterfront parcels, where there is both public land to be used and sufficient space to build back.

However, on smaller upland parcels where there’s less room to build bigger overall, “the inclusionary program does not appear to be enough of an incentive to encourage the development of affordable housing.” Instead, developers have taken advantage of …

Some AY echoes in Williamsburg's New Domino plan (& hype)

The next megaproject plan has arrived, this time at the former Domino Sugar factory site in Williamsburg, and, just as Atlantic Yards has evolved, the focus is on affordable housing.

The press release (not online) issued last week sure sounded good:
Plans for the New Domino Set Goal of 30% of Units for Affordable Housing in Mixed-Income Community on the Brooklyn Waterfront
Former Industrial Site Will Mirror the City’s Economic and Cultural Diversity and Preserve Historic Architecture in Williamsburg


An equally skewed, though likely not inaccurate, press release might have stated:
Plans for the New Domino Include 1540 Million-Dollar Condos on Brooklyn’s Waterfront
Four Tall Towers, Minimal Historic Preservation Needed To Achieve Profits for Much-Criticized Silent Partner; Significant Government Subsidies and Rezoning Sought


So, as with Atlantic Yards, it all depends on how you frame it. The New Domino would contain 2200 residential units, 660 of them affordable, 1540 of them market-rate, in u…

The Times’s continued blind spots in its eminent domain coverage

Today, the New York Times takes a long look at eminent domain in New York, New Jersey, and Connecticut. The article’s a competent round-up, portraying some victims of eminent domain abuse sympathetically while giving advocates, who consider it an important tool in the redevelopment toolbox, their due.

If you live in New York City, however, the article doesn't come in your print edition. Rather, it's appears only in the Times's Sunday regional sections (Westchester, Long Island, New Jersey, Connecticut), headlined Now You Own It, Soon You Don’t?. The cover story in the City section, available to purchasers in New York City, concerns explorers of abandoned places like tunnels.

A way out?

Maybe the placement of the article made it easier for the Times to fail to acknowledge that its parent company is a beneficiary of eminent domain, for the new Times Tower in Manhattan. Or to mention the eminent domain donnybrook concerning Atlantic Yards in Brooklyn and developer Forest City R…

A window on the Times-Ratner relationship, from the top? Not til 2050

The New York Times Company announced last week that it will donate its vast archives, which date back to 1851, to The New York Public Library, but the key elements for Atlantic Yards watchers probably won't be available until 2050.

The library announced that the collection contains more than 700,000 pages:
The archives contain the correspondence of each publisher of The New York Times, including the letters they exchanged with United States Presidents and other heads of state. Other highlights include select papers of Henry J. Raymond and George Jones, founders of The Times; documents relating to the critical news stories from around the world for the last century and a half; and files from both the business and editorial departments of the paper that provide a window into the day-to-day workings of The New York Times.

However, as the Times reported on Wednesday, in an article headlined For Public Library, a Trove of New York Times Records, only the papers of the earlier publishers …

On complex land-use choices and "land monopoly"

Sociologist Robert Fitch's bracing 1993 book (updated 2002), The Assassination of New York, considers Robert Moses far less responsible for urban outcomes in the city than the FIRE (Finance Insurance Real Estate) elite, notably the Rockefeller family, expressing its wishes through the work of the Regional Plan Association.

Fitch's single-focus analysis meant critics in even the left-wing Nation and Monthly Review found the book's explanations--for example, of the decline in manufacturing or the city's struggles--incomplete. But they also found the book valuable, and there are some passages of particular resonance today.

Beyond Jane Jacobs

Hence this pointed observation, which substitutes a Rockefeller for the usual culprit, Moses, and raises a larger point about current land-use battles in Brooklyn and beyond:
When David Rockefeller tried to run the Lower Manhattan Expressway through Washington Square Park, you didn't have to have a degree in planning from MIT to know …

IBO official confirms (sort of) that the city would lose $ on arena

The Brooklyn Paper picked up my article estimating that the city's new commitment to Atlantic Yards seemingly upends the Independent Budget Office's (IBO) prediction that the Atlantic Yards arena would be a net gain in terms of the city revenues.

And the Paper got an IBO official to agree, sort of.

The Paper article suggests that I conducted a "study" even though all I did was something obvious: plug new numbers into an old chart.

The Paper reports:
The city rift with Ratner comes after a new financial analysis of Atlantic Yards revealed that the Frank Gehry-designed basketball arena at its center will actually be a money-loser for the city.

But the new study by the Atlantic Yards Report, a Web site, reveals that the arena will instead cost taxpayers $77 million over 30 years, according to the analysis.

The amount of direct subsidy that the city will give Ratner to build the arena has more than doubled — jumping from $100 million to $205 million — in the two years since t…

Real Deal on Prospect Heights: new condos, fluctuating prices

An article in the July issue of The Real Deal, headlined Mixed prospects for Prospect Heights' new developments: Atlantic Yards plan attracted new condos, but sales at some falter, offers a mixed report on the "Atlantic Yards effect."

There may not be enough demand as of now for all the condos and a landmark designation in the neighborhood may "limit future projects."

Over the 17 months ending May 31 of this year, the magazine report, developers annouced plans for 230 new condo units in 11 Prospect Heights projects. Prices have been steadily rising, but may have peaked.

Then again, as with other neighborhoods, boundaries stretch. The magazine reports:
"I noticed restaurants opening on Vanderbilt, and I began working with more buyers in the neighborhood," said Florence Clutch, a sales associate with Halstead who lives on the border of Crown Heights and Prospect Heights. "Addresses now being called Prospect Heights until last year were called Crown Hei…

Behind closed doors, a "compromise" on the Ratner clause

A Daily News article today headlined Pols slash tax-break on Atlantic Yards could just as easily have said "Ratner keeps two-thirds of Atlantic Yards tax break" or "Atlantic Yards still gets special tax break."

Because the gist of the exclusive, published unaccountably in the newspaper's Brooklyn section--is this not of citywide interest?--is that the "Atlantic Yards carve-out" would be reduced from $300 million to $200 million because the 1930 condos would get tax exemptions for 15 years rather than 25 years.

But that still means special treatment, since any other condos in the same neighborhood would be required to provide 20% on-site affordable housing in exchange for the 421-a tax break.

So it would still be "economic segregation," in the words of Assemblyman Hakeem Jeffries, who was not quoted in the story. Rather, we hear from the unelected developer:
"As far as we're concerned, the issue has been resolved," said Forest City…

Crain's: suites at new NYC-area sports facilities should sell well

Though sports teams around the country are ripping out luxury suites, the New York-area market is an anomaly, and an article in this week's Crain's New York Business, headlined New arenas' suite deals, suggests that the planned suite-intensive Barclays Center at Atlantic Yards might do pretty well, even if it arrives later in the cycle.

Sports marketing executive Todd Parker told Crain's that the New York area has only 250 or so luxury boxes in all of its sports facilities combined, but with six new facilities expected to be completed in the three years, the total would leap to 900.

While "the competition for buyers could get intense" among the Devils, Nets, Mets, Jets, Giants, Yankees and Red Bulls, Crain's observes:
However, experts believe that the luxury-box market is in a unique position, since the city has been "starved" for corporate entertainment options but flush with cash from banks, hedge funds and law firms.

Too many events?

Crain's …

Jeffries calls AY carve-out "offensive"--and his base agrees

As a candidate last year, Hakeem Jeffries was a qualified supporter of Atlantic Yards. And as a freshman member of the State Assembly, he still welcomes the project’s affordable housing.

But Jeffries' posture has gotten tougher lately, and last night he delivered an eloquent criticism of the project, declaring that promised affordable housing was easily matched by government support for developer Forest City Ratner and that the “Atlantic Yards carve-out,” a tax break available only to the developer, was “offensive” because it promoted “economic segregation.” And his audience, responding to the notion of special treatment, seemed to agree.

(While the "carve-out" would treat the project differently, it also would preserve the project configuration as approved last year before revision of the tax break. So it’s a matter of perspective.)

Jeffries’ Town Hall meeting last night, "My First Six Months Serving You," was actually less about Atlantic Yards than about bread-a…

ESDC: AKRF's work for Ratner was disclosed

The Empire State Development Corporation (ESDC) has offered a statement to the Brooklyn Daily Eagle about the role of environmental consultant AKRF, which, as I reported last week, worked for Atlantic Yards developer Forest City Ratner before beginning an environmental review that has cost nearly $5 million (paid for by the developer via the state).

The ESDC's statement: “AKRF’s limited work for Forest City Ratner was disclosed to the board at the Sept. 2005 board meeting at which AKRF was hired. Once AKRF was hired by ESDC, its work for Forest City Ratner stopped.”

What's the policy?

It remains in question, however, whether the disclosure is sufficient to have confidence that AKRF's work would be in the public interest or in the interest of its former client.

I had asked the ESDC what its policy is; in other words, how "limited" must work be and what's a sufficient time gap? After all, Philip Habib & Associates was a subcontractor for AKRF on the environm…

Last month, Bloomy was offering a boilerplate defense of AY

Mayor Mike Bloomberg seems to be coming to the realization that the Atlantic Yards project shouldn't get a special tax break and is apparently threatening to withdraw some pledged subsidies.

Is that a belated recognition that Atlantic Yards might be a drain on the public coffers or should not get special benefits? Is it part of a larger tactic to resist the state's revision of the 421-a tax break? Or is it something else altogether?

It is clear, however, that until recently, Bloomberg was offering a boilerplate defense of the project. A month ago, after Brooklyn resident Michael D.D. White wrote a thoughtful and pointed letter of complaint to the mayor, he received the following canned response, which he forwarded to me. (The original letter is at bottom.) I've interpolated some commentary.

A token reduction

Dear Mr. White:Thank you for your recent letter about the Atlantic Yards project. Many Brooklyn residents, and especially those who live in the neighborhoods that directl…