Atlantic Yards still stalled, while Prudential Center is Rock Solid
Ratner is showing his true colors. Atlantic Yards is gasping for air. So umm Ratner how about the Prudential Center all you gotta pay is rent wadda ya say? lol :)
Atlantic Yards: The Suspense Builds
by Matthew Schuerman
Published: September 4, 2007
Tags: Real Estate, Atlantic Yards, Bruce Ratner
This article was published in the September 10, 2007, edition of The New York Observer.
The Atlantic Yards site in central Brooklyn.
Forest City Ratner had once imagined that, by now, the Atlantic Yards site in central Brooklyn would be humming with construction activity. Contractors would be tearing up streets to upgrade utilities, moving train tracks for the Long Island Rail Road and digging the foundations for the basketball arena and nearby buildings. Some 588 workers would show up each day and 410 trucks would carry debris and material back and forth, according to the final environmental impact statement published last November.
But lawsuits, a construction accident, and other factors have delayed the pace of construction by two to nine months. The delays are having a number of contradictory repercussions, potentially costing the developer millions of dollars a month and also bolstering the argument that the area is blighted and in need of the dire intervention that the Atlantic Yards project—with its 16 high rises, basketball arena, 6,430 apartments and retail and office space—represents.
While never the image of manicured suburbia, the rectangular site emanating east and south from the intersection of Atlantic and Flatbush avenues had been slowly gentrifying before Atlantic Yards was announced four years ago. Three industrial buildings had been converted into condominiums, giving the impression of a half-finished landscape.
Now, the area looks half-begun. Trees grow in the middle of vacant lots where functioning businesses once stood—and, in other cases, long-abandoned warehouses were falling apart. Sidewalk sheds have gone up and equipment has been hauled into place, only to be abandoned when construction is suddenly halted.
Occasionally, an occupant of Newswalk, a former printing plant for the Daily News that has been converted into condominiums, walks by with a dog. It is one of a handful of buildings that will be spared.
“I’m not looking forward to being in a construction zone, but at this point, I just want them to get on with it,” said Cathy Felgar. “I don’t think any of the lawsuits will have any effect.”
Ms. Felgar, 41, moved into Newswalk almost five years ago, just before rumors of Atlantic Yards first surfaced. “I think it’s a total scam, but it’s nothing new in terms of New York real estate,” she said.
The population in the footprint has decreased from about 400 to about 50 since the project was announced, according to Daniel Goldstein, spokesman for the opposition group Develop Don’t Destroy Brooklyn. Still, most of that exodus occurred early on, as Forest City began to buy people out. Newswalk has actually seen a population increase as units get finished and sold. One resident who supports Atlantic Yards can’t tell much of a difference from when he moved in three years ago.
“What are we saving?” asked Tom McKay, 47, gesturing with his arm at the three-block trench of a rail yard and a couple of boarded-up warehouses behind it. “Take a hard look around.”
Forest City Ratner states that it still intends to complete the Frank Gehry–designed arena in time for the opening of the 2009-2010 basketball season, which was the plan when the state’s Public Authorities Control Board approved the development last December. When first announced in 2003, Forest City Ratner said that the Nets, which the company would eventually purchase, would begin playing in Brooklyn in 2006.
“Work has been ongoing on the site since we first announced in April,” spokesman Joe De Plasco said in an e-mail. “We anticipate opening the arena in time for the 09-10 season … not much else we can say.”
Mr. De Plasco did not respond to follow-up questions. A spokesman for the Empire State Development Corporation, the state agency overseeing the project, said that it was not worried about the schedule. “We’re working with Forest City Ratner to achieve the goal of opening the arena by the 2009 season,” the spokesman, Errol Cockfield, said in an e-mail.
IT IS CLEAR, HOWEVER, THAT delays are a sensitive topic. In February, Laurie Olin, the landscape architect who is working on the project’s design with Frank Gehry, told The Observer that it will take 15 to 20 years to complete Atlantic Yards rather than 10 years as Forest City had proclaimed.
After that comment was used by plaintiffs in a lawsuit, James P. Stuckey, the Forest City executive who was in charge of the project (he has since left the company), curtly said in an affidavit, “Mr. Olin is not privy to the relevant information regarding construction of the project and does not have authority to speak on behalf of [Forest City].”
Forest City CEO Bruce Ratner has good reason to insist that he will stick to his schedule. Each month of delay postpones the delivery of the various benefits—jobs, affordable housing and a professional basketball team to restore the borough’s supposedly injured pride—that helped bring the project political support from former Governor George Pataki, Mayor Michael Bloomberg and a raft of others.
At the same time, Mr. Ratner’s financial backers cannot like the idea of foregone profits. Mr. Stuckey, in another affidavit, said that each month of delay would cost the company $4.15 million in construction inflation and carrying costs, while the Nets, which are largely owned by Forest City, would incur $35 million in operating losses if its move to Brooklyn was delayed another year. (The Nets expect to make much more money than they do now in New Jersey.)
Mr. Stuckey called the construction schedule “intricate” and said that “even a short delay could jeopardize the arena’s availability for an entire season.” He went on to assert that a delay “could even jeopardize the project.” Journalist Norman Oder first reported on the affidavit in his blog, Atlantic Yards Report, last April, and has repeatedly questioned Forest City’s ability to complete all phases of the work by 2016.
It is hard to accept Mr. Stuckey’s affidavit on face value (he gave it to counter a motion to freeze demolitions entirely). In the big scheme of things, $4 million a month, or even $35 million a year, must seem like pinpricks. Forest City is planning to spend $4.2 billion on Atlantic Yards, with some $305 million pledged from the city and state so far. A little noticed clause in the project plan approved by the state last year states that “additional fundings shall be made … provided that at no time will the costs reimbursed to [Forest City] by the city and state, in the aggregate, exceed 50 percent of the total costs. …”
The state and city would, however, have to agree to increase their contributions to the project. Mr. Cockfield, the spokesman for ESDC, said, “As far as the state goes we don’t contemplate reimbursing any more than $100 million for infrastructure.”
One cause for the delays is a lawsuit, filed by 13 tenants, homeowners and businesses in the footprint who are resisting the state’s use of eminent domain. A federal judge rejected the case in June but an appeals court will give it a hearing Oct. 9. Another lawsuit is challenging the process by which the state approved the project.
But even outside of those properties, Forest City has proceeded more slowly than planned. The company has not closed on a $100 million deal to lease the 8-acre Long Island Rail Yard from the Metropolitan Transportation Authority, but has been working instead under a license agreement. (M.T.A. spokesman Jeremy Soffin said the deal should close at the end of this year or in the beginning of 2008.) While contractors have taken the first step to construct a temporary rail yard on the eastern end of the site—a precondition for work on the arena, where trains are currently stored—that work was supposed to be completed by the middle of August, according to the schedule from last year.
On Aug. 30, the city’s Department of Buildings imposed a stop-work order on an adjacent parcel after finding that there were no approved plans for the work and there was no permit posted, according to online records.
Forest City had also, according to last year’s schedule, planned to have closed the Carlton Avenue bridge last fall for nine months, but it has yet to do so. Nor has the developer vacated a pair of buildings on the western edge of the site that houses P.C. Richard & Son and Modell’s Sporting Goods, which Forest City was supposed to have demolished a month or two ago.
In April, the parapet of a former bakery collapsed onto the sidewalk while workers were preparing the building for demolition. While no one was injured, cars on the street were damaged and work was temporarily halted. The Department of Buildings said it would subject Forest City to more rigorous scrutiny.
Forest City has even fallen behind a schedule it put out as recently as last April, which anticipated that demolition on 15 buildings it owned would have begun by mid- to late June. Of those named, only six have been leveled, according to Mr. Goldstein, and demolition work has begun on just two others.
“Why they won’t follow their own schedule is a mystery,” said Mr. Goldstein, who is active in both lawsuits and also lives in the footprint. “There may be some buildings they may feel that they want to wait on in case they lose the lawsuits, so they would like to have the buildings standing. Who knows? I would think they would want to bring everything down as fast as they can.”
Mr. Goldstein says that should his side lose the appeals court case, it will appeal to the U.S. Supreme Court, and that all in all, the legal battles will tie up the project for years. The group’s war chest, he said is “strong,” although he would not give a precise amount. Develop Don’t Destroy is holding another walk-a-thon next month. While it is not releasing targets, last year’s event raised about $96,000, Mr. Goldstein said.
The delays, while creating a less pleasant place to live, are also giving opponents more time to make their case and develop alternatives, one of which they plan to unveil later this month.
“I think it is good for the opponents to have these delays,” said Ron Shiffman, a former city planning commissioner and a member of Develop Don’t Destroy’s advisory board. “We have time to raise consciousness for people in decision-making positions. It gives us time to work on a proper way of developing the rail yards.
“This is a project that will be there for a century or more. For us to have rushed into that with a plan that was totally inappropriate in terms of scale and architecture would be a serious mistake.”
Redesign of Barclays Center and new Madison Square Gardeb
Redesign of Nets' Brooklyn Arena Due Soon
The New York Times reports that architect Frank Gehry will soon release his redesign of the first phase of Bruce Ratner's Atlantic Yards, including the Nets' new arena. The redesign has been awaited by Ratner's critics who criticize the scale of the $4 billion project. The Nets won't be alone. Developers are also about to release a design for a new Madison Square Garden at Penn Station. And a conservative writer claims New York is unlikely to ever recoup its investment in the Nets' arena.
Architectural Shifts, Global and Local - Nicolai Ouroussoff - New York Times
Stadium Sustenance - Duncan Currie - Weekly Standard
No good news for Ratner and New Jersey Nets
From Brooklyn Daily Eagle on 9-12-07:
Forest City Ratner Enterprises, the parent company of Atlantic Yards developer Forest City Ratner Companies, said Monday its fiscal second quarter profit rose to $67.8 million, or 63 cents per share, compared to $7.5 million, or 7 cents per share, during the second quarter last year, the Associated Press reports. Revenue rose to $287.6 million from $250.8 million, but FCRE president and CEO Charles Ratner said he doesn’t expect the good times to last forever.
“The downturn in the for-sale housing business and the related impacts on the subprime mortgage business lead us to believe that we will see no signs of improvement in the near term and, in fact, we expect to see continued softening,” said Ratner (a cousin of FCRC CEO/President Bruce Ratner).
If former FCRC executive James Stuckey were correct, delays to the company’s Atlantic Yards project due to lawsuits could contribute to further losses. In an affidavit to prevent the court from halting demolitions until the lawsuits are decided, Stuckey said, “Each month of delay would cost the company $4.15 million in construction inflation and carrying costs, while the Nets, which are largely owned by Forest City, would incur $35 million in operating losses if its move to Brooklyn was delayed another year.”
Project opponent Daniel Goldstein estimates that the lawsuits, including one that involves the use of eminent domain to seize his co-op, could delay the project for years (unless they win).
Ratner needs a reality check
From Atlantic Yards Report.com
Forest City executive: AY lawsuits cleared by mid-2008
Could the planned Atlantic Yards arena (aka Barclays Center) open for the 2009-10 basketball season, as Forest City Ratner officially insists, even though the project is way behind schedule?
Well, officials from parent Forest City Enterprises (FCE) didn't assert an arena timeline yesterday during a conference call with investment analysts. However, when one executive predicted that legal cases challenging the project likely would persist through the midpoint of 2008, he again provided evidence that contradicts the company's stated timeline, which assumed that arena block would be flattened by now.
Without resolution of the Atlantic Yards legal cases--a pending challenge to the environmental review in state court, and a federal eminent domain appeal to be heard on October 9--certain buildings can't be demolished and/or construction can't go forward.
Could the cases be closed in less then ten months? That's not implausible, but it's not a lock, either. It implies success at the appeals court level for the defendants in both cases and (likely) no final appeals to the U.S. Supreme Court or the New York State Court of Appeals. So further legal delays could push the timeline back even more.
Yesterday FCE's Bob O’Brien (right), Executive Vice President, Strategy and Investment Management, provided an overview of several projects, and got to Atlantic Yards at about 22:00 of the webcast:
We continue to move forward with our most visible and perhaps most ambitious project, Atlantic Yards. As we’ve indicated previously, we’ve acquired or controlled the vast majority of the land in Brooklyn necessary for this development. We’ve obtained all of the public approvals needed to proceed with this development. However, those approvals have been challenged in the courts. We are working with the support of the city and state and other interested public parties to defend and clear those lawsuits. We remain confident in our positions in all legal challenges and we are targeting resolution by the first half of fiscal year 2008.
Our long-term objective there is to build the Nets basketball team into a great franchise, relocate them to Brooklyn, a city of more than two-and-a-half million people, and develop a large-scale mixed-use project with the Nets and a Frank Gehry-designed arena as catalysts for the project and the further revitalization of downtown Brooklyn. Our commitment to build not only market-rate but also affordable housing as part of this development is one of the largest of its kind and addresses a significant housing shortfall for the people of New York.
Forest City CEO Chuck Ratner (right), at about 32:00, again spoke about how the developer's long-term commitment to projects ultimately pays off. He cited MetroTech in Brooklyn as among several "ten to 20-year projects, and all had significant uncertainty in a time of significant risks," but worked out well for the company and investors.
He was not quite so candid as he was last March, when he acknowledged:
We are terrible, and we’ve been a developer for 50 years, on these big multi-use, public private urban developments, to be able to predict when it will go from idea to reality.
However, the timeline flexibility he mentioned again suggested that Atlantic Yards likely would not take ten years, as planned.
One investment analyst pointed out that Forest City seemed to be putting more emphasis on retail and housing. What's the outlook for office space?
The New York portion of that answer was turned over to Joanne Minieri (right), the Executive Vice President and Chief Operating Officer of Forest City Ratner in New York. Her answer, at about 43:45, contained enthusiastic words but was delivered in a less authoritative tone, perhaps given the current slowdown in the Brooklyn office market, and the cut in projected Atlantic Yards office space.
We think it’s still a very strong office market, we continue to look for opportunities where they exist and as part of—some of the development in the Atlantic Yards project, there will also be some office opportunity there. Y’know, we’re very committed to the office development.
We believe New York is a strong market. We’re committed to the office business in the New York area. We’ll continue to look for opportunities to the extent they’re available. Land is difficult to find, but we keep our options open, and we’ll continue to produce that product here in the city.
Forest City Ratner has a considerable amount of land at Atlantic Yards for its office business. It just chose (for now) not to build office space, likely because housing is more lucrative and a switch from office space placated Assembly Speaker Sheldon Silver, who was concerned about competition with his Lower Manhattan district.
At about 47:50, Chuck Ratner talked about moving cautiously, and placed a special emphasis on Atlantic Yards:
As we’ve told you guys often, as a large developer, perhaps the more risky part of the real estate business, as opposed to acquisition, but the part where we think we can add more value, clearly you have to look to ways to moderate and manage your risks. And one of the ways we’ve learned that you manage and moderate your cost risks is by making sure you don’t start before you have complete plans and prices.
Particularly in a market with the kind of cost pressure that New York has and building a building with a signature architect like Frank Gehry, we’re being very cautious and careful that we know where we are before we start, and Joanne and her team have done a great job of managing this process.
Investor conference in NYC
On October 9, the same day the eminent domain appeal will be heard in federal court in New York, FCE will hold an "investor conference" during which analysts will get a closer look at the New York portfolio, including the site of the conference, the new Times Tower developed by Forest City Ratner along with the New York Times Company.
"It'll be a great day, an exciting day; you'll get to meet our New York team," said Chuck Ratner in closing the conference call yesterday.
# posted by Norman Oder @ 6:51 AM
If Nets do move, they will always stay connected to New Jersey
Nets host a party for city kids
Team says it will stay involved after move to Brooklyn
Wednesday, September 26, 2007
BY BARRY CARTER
There was music, food, games, Sly the mascot and the Nets Dancers.
Nets small forward Bostjan Nachbar was also there as kids at the West Side unit of the Boys and Girls clubs of Newark did popular dances like the "Cha-Cha" Slide and "Crank dat Dance."
It was part of a "Fun for Fall," back to school celebration Monday sponsored by the Nets Foundation.
About 100 kids ate hot dogs and popcorn, wore their Nets T-shirts and danced. They did fitness exer cises, following along with an instructor who had them doing jumping jacks and other calisthenics.
Cynthia Banks, director of operations for the Boys & Girls clubs, said events like yesterday's show the kids that people care for them.
"It's about the kids," Banks said. "It's allowing them to be kids again."
Though the Nets are planning to move to a new arena in Brooklyn in two years, the team said it in tends to maintain its ties to the Garden State.
"It is our responsibility to give back to the fans that have mattered most to us and the ones who have been with us for the longest period of time ," said Brett Yor mark, chief executive officer of Nets.
"New Jersey will always be dear to our hearts. When we move to Brooklyn, we'll be very heavily engaged with the community there, but I can see us always having a presence in New Jersey."
Felix Rouse, chief executive officer of the Boys and Girls Clubs of Newark, said he was disappointed at first that the Nets were leaving the state, but pleased they are trying to keep the fans close.
"They pleasantly surprised me that they are maintaining a level of community involvement," Rouse said. "They have always been good to the Boys & Girls clubs."
The Nets, which considers itself a regional team, has been involved in a number of community outreach programs over the past year to demonstrate its commitment to the residents in the state.
Jason Kidd treated 25 underprivileged kids to a holiday shopping spree. Players served Thanksgiving meals to the homeless at the Montclair Salvation Army and visited pediatric patients at the Hack ensack University Medical Center and St. Peter's Hospital. The team also held a coat drive with New Jersey Cares and worked with Habitat for Humanity to build a home.
"I think it's fair to say we'll always be involved in New Jersey one way, shape or form," Yormark said.
Barry Carter covers Newark. He can be reached at bcarter@starled ger.com or (973) 392-1827.
This was in my e-mail from DDDB...
A victory for activists: City withdraws eminent domain findings in Downtown Brooklyn
This is important breaking news that has not yet been covered by the blogs or the press.
The City is withdrawing its controversial eminent domain findings in Downtown Brooklyn. The Downtown Brooklyn site includes the Duffield Abolitionist homes, as well as over 40 rent stabilized apartments and several other businesses. The City has not abandoned its plans to build an underground parking garage on Duffield, and will hold a new public hearing.
The withdrawal is in response to several law suits on behalf of a variety of stakeholders - Joy Chatel, rent-stabilized tenants of three apartment buildings at Albee Square, the community organization FUREE and neighborhood artists who had spent the past three years developing a 30,000 square foot recording studio, local nightclub, and community artists space.
The City will probably try to go forward with its plan, but this is a major victory in that the local activists. It gives a chance for new community input in which properties the City will confiscate through eminent domain.