Does AY delay cost $6M a month? $12M?
Forest City Ratner's fuzzy math
Atlantic Yards Report
posted by Norman Oder
February 4, 2008
How much money is Forest City Ratner losing each month because of delays in the Atlantic Yards Project. In an effort to convince an appellate court to expedite the appeal in the suit challenging the AY environmental impact, a top executive and top lawyer both offer some very fuzzy math.
While last April executive Jim Stuckey estimated $4.15 million a month -- a little more than .1% of the projected cost of the project -- in an affidavit filed 1/17/08, his successor MaryAnne Gilmartin now claims $6 million a month.
However, the text of the affidavit offers no explanation of why that cost has escalated, and in fact cautions in more than one place that the developer can't predict cost escalations.
Compounding that, FCR attorney Jeffrey Braun, in his legal affirmation unaccountably doubles down, claiming that Gilmartin's affidavit indicates that The expenses that FCRC would continue to incur while a stay was in effect and that are relatively easy to calculate would exceed $12 million per month, and that does not include the operating losses that the New Jersey Nets basketball team incurs while it continues to use an antiquated arena as its home venue.
Let's look at the relevant section of Gilmartin's affidavit, reproduced in full, with some interpolation.
C. The Financial Impact of Delay
11. Delay in the progress of construction work for the Project not only would defer the Project's important public benefits, but it would expose FCRC to severe irreparable harm, resulting from, among other things, (a) the prolongation of the time in which FCRC must carry the real property and the Project's overhead without generating income, (b) costs incurred in connection with equity invested in the Project, and (c) the prolongation of the Nets basketball team's operating losses arising from its use of the current inadequate arena in New Jersey.Last April, Stuckey claimed that construction costs escalated $1.75 million per month.
12. At this time, it costs FCRC about $2,400,000 per month to carry the real property that it has acquired for the Project and the overhead that is in place to work on the Project — a figure that does not include FCRC's legal fees and also does not take into account the operating losses that the Nets basketball team, which has been owned by an FCRC affiliate since 2004, continues to incur while it is based at its current venue in New Jersey.
13. Delay on a construction project such as this one probably would subject FCRC to significant escalations in its eventual construction costs. FCRC cannot accurately predict the amount of these cost escalations. However, given that the costs of materials historically have increased over time and also given the magnitude of the Project, it is reasonable to assume that a delay would cause a significant adverse financial impact. A delay also would subject FCRC to penalties and claims from construction contractors that would be forced to stop work, demobilize and subsequently start up again. FCRC cannot accurately quantify these penalties, but they would be significant.
14. In addition, during the construction of the temporary rail yard described in Mr. Sanna's accompanying affidavit, the Long Island Railroad ("LIRR") must modify its operations to allow trains displaced from the MTA's Vanderbilt Yard facility to be serviced elsewhere. As a result, FCRC is now paying approximately $300,000 per month to cover the increase in the LIRR's operating costs. A stay pending appeal would increase the period of time during which FCRC must make these payments.The total of known costs would thus be $2.7 million a month, plus a significant chunk for cost escalations. Yet Gilmartin then picks some numbers seemingly out of thin air.
15. Therefore, if construction work on the Project was stayed temporarily for even one month, the damages to which FCRC would be subjected would be about $6,000,000 per month, not including the escalation of construction costs. A delay of two months would thus expose FCRC to damages of at least $12,000,000.It just doesn't add up.
Rod Thorn, the NEW JERSEY Nets president, admits on WFAN with Mike and the Maddog that the team can still be bought and moved to Newark at the Prudential and acknowledges that the Brooklyn Arena is taking way too long and that there are NO I repeat NO shovels in the ground yet for the arena!!!!!
New Jersey Devils owner James Vanderbeek has said publicly he would like to buy the team and move it to Newark!! The Prudental also has an NBA Ready lockeroom and offices. The Nets very well could stay in New Jersey!!!!!!!!
The Nets could also very well move to the moon, calm down.
Alonzo I'm a die-hard Nets fan and from New Jersey, I would love nothing more than for them to stay. I have even marched and donated money to the lawsuits of the residents!
jc - time to start devoting your energy to seton hall b-ball. sorry.
Brooklyn this aint done yet and SPC is a very big basketball progream as well and we play Seton Hall so no thanks. Time for you to devote your energy to the hapless Knicks!!!
Until this is a done deal I will not stop fighting. Nobody can stop me, I mean nobody!!!
I won't stop rooting for the team because unless they change the name "Nets" they will never be completely your team doesn't matter if you have Brooklyn in front of it or not!!! They will always have ties to New Jersey. If they change the Nets name then I'm out!
jc - i like your spirit. truthfully i'm not much of a basketball fan at all - but bringing a primary league pro franchise back to brooklyn would make me one immediately.
That's the difference between you and me. I have been a New Jersey Nets fan since 92/93 season when my father first took me to my first game when I was 6. Chuck Daly was coaching the team had Drazen Petrovic, Kenny Anderson, Derrick Coleman, etc.. I still have my old Nets jersey Kenny Anderson #7 from when I was 6 years old. I love this team, my ftahers favorite picture of me is with his Nets cap on when I was a kid and also a former NBA star from my highschool Jim Spanarkel is one of the broadcasters and hes from Jersey City and my family is very friendly with his, how can I not be a fan.
I know the whole tragic twisted history of the team from their inception as the New Jersey Americans in 1967 playing at the Teaneck Armory all the way to the J-Kidd trade, who was my guy and he will be missed and nobdy will ever wear #5 for the Nets, his number will be retired.
The Nets since being in the NBA in 1976 had won one playoff series and never won a divsion title or Eastern Conference title. Then J-Kidd came to the team in 2001 and that all changed. He enginered one of the greatest franchise turn arounds in NBA history. The year before he came we had 26 wins; he came and we won 52 games and went all the way to NBA Finals for the first time ever. Since then the Nets have 4 Atlantic Division titles 2 Eastern Conference Titles, two consecutive trips to the NBA Finals, and a 6 playoff apperance consecutive streak, the second longest currently in the NBA all because of Jason Kidd. He promised he would make the Knicks the #2 team in the area and he did!!!
I am a greenhorn and love this team, have met the players, have many autographs including Kenny Anderson, Vince Carter, Jason Kidd, Richard Jefferson, Lawrence Frank, Sean Williams, etc...
So I will keep fighting until that arena is finished or even started for that matter. With the team president admitting that Newark is an option is enough hope for me.
well, i do remember watching those guys play like it was only a few years ago. wasn't jayson williams on those teams as well ...?
anyway, my dad and his dad were long time dodger fans so i think that i'm entitled to jump on the first team that gets back here (whatever sport that may be) like a transfer hottie in junior year of high school.
New York lost two football teams to Jersey. Manhattan has the Knicks, the bronx has the Yankees, so I don't see anything wrong with the Nets going to brooklyn. Would it be any better if the nets were bought by California like the NY giants and Brooklyn Dodgers?
So what are we going to get stuck with, one extremely good hockey team bearing New Jersey in the name, while two football teams and soccer team play and are headquartered in New Jersey but call themselves New York is hardly fair for New Jersey. we give you the Nets and you give us the Jets!!! That's fair, an eye for an eye.
The Jersey team talk is boring can we stick to Atlantic Yards.
Atlantic Yards quietly scaled back?
Watchdog blog Atlantic Yards Report posted what it called previously-undisclosed portions of a Forest City Ratner transcript outlining amendments to the project.
February 26. 2008 3:13PM By: Kira Bindrim and Erik Engquist
http://cnimg.sv.publicus.com/apps/pb...w=319&border=0 Bloomberg News
Forest City Ratner’s enormous Atlantic Yards project may have become a little less enormous. Or not.
On Tuesday, watchdog blog Atlantic Yards Report posted portions of a previously undisclosed transcript of an Forest City meeting with investors in early October at the New York Times Building. During the meeting, Forest City executives said the Brooklyn project would span “21 acres in downtown Brooklyn, with 6.5 million square feet of residential and commercial development.” That’s smaller than the 8-million-square-foot, 22-acre project publicly outlined by the company.
But a company spokesman says the 6.5 million figure does not include the Barclays Center, a basketball arena for the Nets, which will be owned separately by Nets Sports and Entertainment, which is 21.5% owned by Forest City. Nor does it include Site 5, current home of P.C. Richard and Modell’s, which will be developed separately. Including the arena and Site 5, the square footage adds up to what was previously projected, he said.
During the meeting, Forest City also referred to the Frank Gehry-designed Miss Brooklyn tower as having 528,000 square foot of zoning rights. Earlier, it had been pegged at over 900,000 square feet. Forest City has nixed plans to include condominiums, instead offering additional office space, which is now seen as more profitable. A company spokesman says the smaller square footage reflects the concession announced last fall to reduce Miss Brooklyn’s height to 511 feet, one fewer than the borough’s tallest building, One Hanson Place.
Among other disclosures, Forest City executives said it will take up to five years to rebuild the Metropolitan Transportation Authority rail yard, instead of the three-and-a-half year estimate in an initial environmental review. The developer is even reducing the number of planned hospitality suites (from 170 to 130) it will rent out in the Nets’ new 18,000-seat arena.
During the October meeting, Forest City executive vice president MaryAnne Gilmartin said the firm had signed and completed funding agreements with both the city and the state, allowing Forest City to “be reimbursed for investments made in infrastructure and land to date on the project.” Yet company sources suggested to Crain’s last month that said no such funding agreements had been completed because litigation against the development was still pending.
A source familiar with the agreements says they were indeed signed by Forest City Ratner last fall but are still waiting for approval by the city and state comptrollers.
Separately Tuesday, the Brooklyn Eagle reported that Forest City has yet to apply for the $177 million in affordable housing bonds it is seeking for the project this year. The city Department of Housing Preservation and Development told the Eagle that Ratner’s application, when it comes through, won’t be given special treatment.
Earlier this month, the 2nd U.S. Circuit Court of Appeals upheld a Brooklyn judge’s rejection of a lawsuit against the use of eminent domain at the site. The suit, filed in October 2006 by property owners and tenants facing eviction, had sought to block the property’s seizure, as well as unspecified damages.