AY Financial Projections: We Got ‘Em

ay1873_bc719e46c5.jpg
Well, it looks like the ESDC has in fact coughed up the financial projections for the Atlantic Yards project. We haven’t had time to go through them too closely, but at first glance they do not paint as profitable a picture as many opponents suspect, generating a mediocre IRR of 9.6 percent. The biggest thing that jumps out at us is that they show that FRC is planning to sell off most of the pieces of the project in 2015. Either that, or they just needed to estimate a terminal value and that seemed as good a year as any. We’re sure others far more qualified to analyze this stuff will be able to offer more insightful analysis. We’ve provided links to the three documents below. Have fun.
1) AY Cash Flows Returns
2) Combined IRR
3) Nets Arena Cash Flows

Earlier coverage and discussion:
ESDC Forced to Cough Up Financial Docs on AY [Brownstoner]

And Norman Oder’s response…
ESDC-released Documents Lack Vital Information [AY Report]

Photo by threecee

0 Comment

  • That makes sense. FCR will be out of this project by 2015 and the affordable housing part will never be built. Nice.

  • Would anyone really go through all of this trouble for a measly 9.6 IRR? Look at the last page, they are making a total of $1 billion dollars on the deal the last three years. It’s all about how you do your accounting.

    What is their investment? $27m for the office financing, $236m down on the condos before the condos start kicking him back a couple of hundred million dollars, and $229m down on the residential portion. Almost all of that equity is being contributed by the City, State and MTA as equity towards the bank and bond financing that covers the rest. They are using what looks like construction losses to offset their actual gains in those years. It’s all carried forward.

  • What does all of this mean?

  • I don’t know, but three pages of numbers with no information about the underlying assumptions does seem like enough information to do a thorough analysis to me.

  • It means that your tax dollars are being used to make someone rich rather than for the benefit of you and your community.

  • 2 yrs to create this report? i wonder who was the ghost writer.

  • I’m sure that Norman “OCD” Oder will have a 50,000 word analysis within the next 20 minutes.

  • I agree with Shahn above. It’s most likely that Ratner, as well as other business and political concerns, will make a bundle on the AY. If it was just 9.6 IRR, then why bother? They could just invest passively in stocks and do better.

    The money and the political will are going to push the AY project through. It’s almost a “fait accomplie.” But my hope is that concerned citizens and residents can demand more transparency, and use the information to push for a development that not only makes businessmen and politicians richer in the short term, but also serves the best interests on the public in the long-term.

  • I see: Just hand the cash over to the crooks. That was easy!

  • Anyone who states that there will be no affordable housing, or even that there will be one less than promised is just trying to distort the debate for their own selfish purposes. Believe me, I’d take the word of ACORN, Markowitz, DeBlasio and countless other long time advocates of affordable housing and tenants rights over Norm Oder and Goldstein et. al. any day of the week.

  • i want a refund from Bloomberg. i also want him to promise me millions in taxpayer dollars, i’ll build some stuff if he gives it to me. maybe i can get a brooklyn NHL team over here to sweaten the pot. also, i paid a lot of taxes last year and the city still hasn’t fixed the road on my block which is caving in, do you think they should fix that before they sign my money over to Ratner? i seriously doubt it will be properly fixed before the Nets stadium is built although i bet it will be fixed before the “low-income” AY housing is built. SO GIVE ME MY TAXPAYER REFUND. tell Bloomberg for me will you? it’s clearly a taxpayer free-for-all here in Brooklyn and i want mine.

  • Am I smoking something or are they underwriting this thing at $65 buildable sq/ft? Thats insane. They’re going to make out like bandits.

  • To the earlier comment about it not being good for the community…we the people declare…keep it to yourself!

    Why would it be bad for the community? We are you so assured of gloom and doom. What if you are acutally wrong?

  • I have a voice the same way you do Anon 4:05. No one should listen to me more or less than anyone else, the key here is how many voices are not being listened to. No public official that was elected to represent the neighborhoods directly affected by this project could have listened to our voices because it was done on the state level.

    I think it’s disgusting how freely our tax dollars are given away in a closed door deal that will take peoples homes away from them in the name of a public benefit that was really just a ruse to get the condos built.

  • “Anyone who states that there will be no affordable housing, or even that there will be one less than promised is just trying to distort the debate for their own selfish purposes. Believe me, I’d take the word of ACORN, Markowitz, DeBlasio and countless other long time advocates of affordable housing and tenants rights over Norm Oder and Goldstein et. al. any day of the week.”

    What a joke you’ll be marching and singing with picket signs in 15 years. Accorn may even be phased out who knows… and the people you mention wont even be around to honor a documnet written in 2006. They’ll all be retired in thier plush homes by the time this thing is finally done in 2021.

    Keep watching you’ll see more surprise.

  • There are undoubtedly 50 pages of backup numbers that add up to the totals on these summary pages, without which its really impossible to tell what’s going on.

  • 4:56
    1-Is Ratner building new public housing projects for the city or skyscrapers with some affordable units?
    2- What is considered affordable in 2021?

  • What is seriously lacking is public good. A small amount of subsidized housing (for people with low incomes that is) , a few low wage jobs, balanced against the damage in terms of pollution, choking traffic, and squandering of city money. It is a choice no one would make unless the person proposing the deal was buying your support in some way. This is what happened with this project. If you want a good alternative, look at the Extell plan which has more community benefits, more subsidized housing and paid the MTA far more for the Vanderbilt Yards. So please don’t say this is for the public good.

  • You can’t have it both ways guys – either 9% is small change or somebody is robbing the bank – but not both. So which is it?

    I certainly think that a 9% return (all in) is nothing to sneeze at – beats stock markets for sure and is probably less volatile, especially on such a huge amount

    I support using my tax dollars for this project. I hate the way the area looks now. It will be a pain while it lasts, but so was the Time Warner Center at Columbus circle. The whole mentality of “not in my backyard” is not suited for city living – especially NYC. Yes, please – everything in my backyard, that is why I live here and not in North Dakota.

  • Shahn – I grant you you cant tell much from these 3 pages but your dismissal of 500M investment (your interpretation) is amusing – that is far from NYC,MTA,and NYS putting up all the $.

    Again I must ask are you going to be getting 421a tax abatements at your Broken Angel project??

  • As for the choking of traffic – meaning car traffic – isn’t it clear to everybody that cars are not the way to go in New York? If you want to get where you are going – take public transport, the rest is just… NJ or LA

  • Why is the mole so interested in Shahn’s tax Abatement? I’m interested now.

    Shahn come clean did you secretly use “eminent domain” in order to “steal” oops I meant “seize” double oops, I meant “take” the building from the previous owner?

  • I think what galls many people most about this project is the use of eminent domain. In July 05, the Supreme court voted to expand the use of eminent domain to the right to seize property not just for roads, bridges, other infrastructure or public institutions etc but for commercial use as well. Sandra Day O’Connor was a dissenter saying that this could lead to an abuse of government power, giving more power to already powerful, rich interests over the middle-class. I really think so too. It really means that any one of our homes is fair game to be appropriated by anyone that our elected officials deem to have a better money generating scheme than our living in that house. If it is constitutional to do so, then we better damn well have political power to resist it. The reality of the matter is that the power and money is so skewed, so disproportionate that the game is stacked. Whatever anyone thinks about the architecture and the projects effect on Brooklyn and whether they will enjoy the arena, I really think the use of eminent domain in this way outrages people in a profound and visceral way. That you can be forced to sell your home against your will so that a commercial enterprise can make money — it is natural that people are howling. What Judith Egan said in her article in the NY Times on Saturday was interesting. There was no major corporate entity which opposed the project – there was no entity equal in power to the Ratner organization to provide equal pushback. It’s an amazing story really and this process was an abuse — it happened in New London a year and a half ago and it can keep happening.

  • David, I think that Shahn’s refusal to answer your question is ample proof that he will be getting the tax abatement. Do as I say and not…

  • To the people who think that the low income housing wont be built-that’s a silly statement that has no basis reality. The city and state have significant infrastructures (HFA, HDP, etc) that monitor these items quite closely. Ratner wont be able to get his plans approved or permits issued without simultaneously providing the low and moderate income housing that he is required to.

  • Wally so Ratner will rent or sell at 2006 or 2021 rates?

  • donatella

    gov can’t take your property via eminent domain without “just compensation”.

    in the New Haven case you reference, the owner who lost that case was offered and eventually paid more than the value of her property.

    I know there is something to be said for not being removed from someplace you consider to be your “home”, but if you are getting market value and up, and the project will increase the public good, it’s hardly a huge injustice….

  • Donatella – your interpretation of Kelo is frightening, the SCt didnt vote to “expand” anything, they ruled that the ED used in New London fit within the previous precedents – in short – they ruled that there was a reasonable basis for the ‘public benefit’ claim of the New London officials –
    ED was never strictly limited to roads, bridges, other infrastructure or public institutions and in fact has been used for economic development virtually forever. The one nuance in Kelo that the SCt hadnt ruled on, was that the development corporation was a private company.

  • Folks – everyone who pays mortgage interest gets a subsidy on their mortgage via the mortgage interest deduction. The original point of it was to encourage home ownership which is thought to strengthen communities and promote other social goods. I don’t want to start a debate about the mortgage interest deduction, the point is that the subsidy is supposed to be to promote a public good.

    The question here is does Ratner’s Atlantic Yards project provide a public good? I happen to think that it does provide a small public benefit, but a disproportinate amount of the benefits go towards one person at too high of a price for the rest of the community. Emminent domain and public subsidies for private development are not always bad, but they are being misused in this case.

    4:56 – the idea that the rules are the rules and we must just deal with it is crazy. Sometimes the rules need to be changed when they don’t protect the people.

  • Am I missing something? Isn’t the real point of AY to build a basketball arena for Ratner’s Nets?

    Modern arenas are enormous cash cows, what with all their corporate boxes, luxury seating, and advertising deals. And don’t forget the rise in the value of the franchise that will invariably result from the move.

    It wouldn’t really matter *what* Ratner does with the rest of AY. If he holds onto the team he’ll make a fortune every year on the club seats and skyboxes and the media rights, regardless of what does or does not get built or how long his company’s invoved. And if he sells, he’ll most likely see a substantial return on the $300 million he paid for the team.

    Please correct me if I’m off about any of this. I haven’t been following things as close as most of you seem to have been. And I suck at math.

  • Why is it relevant what FRC is earning on this project? All that matters is what the project will do for the community There is room for legitimate debate about that. But the project should be judged on its own merits, regardless of whether FRC makes one dollar or a billion.

  • 421a benefits for the broken angel site are as-of-right. Shahn would have to pay taxes that he wasn’t being assessed if he wanted to “not take” the abatement. That is, he would have to conjure up some number and send an unsolicited check to the city. That’s absurd.

  • @6:37 nice try but you have to APPLY for 421a tax abatement.

  • What bothers me is the unchecked scale and height of the project. Miss Brooklyn is flat out ugly, and her 16 backup towers are even worse. This project is being foisted onto Brooklyn, and I don’t think people realize what we’re in for.

    The arena is the lynchpin as they say, but if you take a drive down Atlantic from Vanderbilt to Flatbush, that is a LONG stretch. The arena is small in the larger scale of the project. The main experience of this thing is not going to be the arena (and this despite the Times Square style lights and billboards). It’s going to be several blocks of massive and bland towers in a largely low-rise neighborhood. What bothers me is the lack of checks and balances when it comes to design in Brooklyn and New York. Developers don’t care what their projects look like for the most part. Ratner has hired Gehry because people like him, not because he cares about design. Look at Ratner’s previous projects – ugly! And totally inappropriate for their context. Have you seen his Atlantic Terminal mall, right by the future site of his Arena? Where did that come from? A strip mall in middle America?

    I understand if someone has the money, resources and political prowess to get something like this to happen, that it is impressive. But it’s also important for a project of unprecedented urban scale to be well designed! That means sensitivity to the existing environment, and a true dialog with the fabric there – not creating a massive bland wall of development.

  • Yes, there should be profit to FRC, no question about it. But if it is inordinately large, then it is highly questionable if the project is truly benefiting the public to the degree that it should. Especially in view of the amount of public funds dedicated to this project.

    Different interests will argue for the appropriateness of different degrees of profit to the developers.

    I would like to see what people think on this subject. What do you think is the right amount of profit that Ratner should get? To me there has to be a reasonable limit.

    Besides, if eminent domain can take property from an individual (for reasonable value) for the sake of the common good, then profits should also be limited for the sake of the common good. Let the people of Brooklyn profit.

  • It would seem these documents put the affordable housing component of AY in question since, if FCR is gone by 2015, their commitment to affordable housing goes with them. That’s because the Community Benefits Agreement does not automatically transfer to a new owner. Everything included in it would have to be renegotiated. Also, given that most of the residential component of AY is in the “eastern block” and won’t be begun before the 2nd phase, ie. starting in approx 2011, there appears to be the potential for the affordable housing to have disappeared BEFORE the construction has even been completed. Of course, if FCR does NOT sell, within the terms of the CBA, they can still renege on the affordable housing by paying a “penalty” of a measly $500,000 to Acorn — yup, 2,250 affordable housing units down the drain for the cost of a one-bedroom coop in the Slope. This story gets stranger by the day.

  • Wow, I guess a lot of people are just against this project regarless of anything. Too bad.

    IRR (internal rate of return) is a financing, not accounting concept. It assumes huge borrowing (and huge interest) now and hopefully huge income in later years. Then it takes into account time value of money – it takes more that a $100 in 20 years to cover a loan of $100 taken now – a lot more. And then you will be just beaking even. To get 10% on an annual basis – every year – that means that huge inflows are really being forecast in the distant future. IRR is really the gold standard when you compare different projects with uneven cash flows over many years. And 10% is really good!

    Now the rest of the arguments we have heard all along. DDDB is not authorized to represent me and in genereal – abstractly speaking Brooklyn and NYC belongs to everybody, specifically speaking – to the State. So in neither case does it belong to DDDB to decide what can be built there. Only in the case of human rights must everybody be satisfied, otherwise no one is. In the case of economic development rights, someone will always benefit instead of (note, not at the expense of) someone else. This development company was not created for the benefit of anyone else than its shareholders or owners. The State authorities, elected by all of us, do the rest.
    Thank you.

  • Shahn, I’d really like a chance to discuss this further with you in person. What say we grab a bite to eat somewhere this Saturday? Please email me at XOTigre@yahoo.com and we can decide where to go.

  • Ed, seriously..can ya give it a rest?

  • Probably the better discussion is what constitutes public good and who decides.

  • what’s of real interest here is that the AY project is not considered a
    “public benefit” but is very clearly a private developer using eminent domain for a private use project.

  • David, of the 400m+ in equity that FCR is required to put into the AY project, at least 300m is being contributed by the City, State and MTA. It could also end up being more than that, since Bloomberg has admitted to giving FCR the equivalent of a blank check for the project.

    The Broken Angel was formerly a nine unit multi-family building, which means that rather than using the 421a program, we will be applying for a J51 tax abatement. 4/6 and 8 Downing Street currently pay under $3,000 a year in taxes. Even with a J51 tax abatement in place, the completed property will generate more than ten times that in property taxes for the city.

    Guess what the kicker is David? I won’t have to displace any residents from property that they own, and I won’t have to circumvent established public process to create a PUBLIC BENEFIT by increasing the tax rolls of the propery significantly while also making a profit.

  • Totally agree with “aesthetics and scale” above. How much more does it cost to build something that is in keeping with the rest of the neighborhood’s aesthetic. Lately I’ve spent some time in D.C. , which is going through a condo boom and new construction in and around their historic districts look great and add tremendous visual appeal. Why add insult to injury?

    BTW, the book club at Brownstone Books is discussing The Power Broker on March 21st. Anyone who hasn’t read the book should go to the store (in Bed-Stuy) and pick it up. Can anyone say “urban removal?”

  • To the people who say the government, representing the people, have the power to allow the project, then how about follow the city’s law with regard to land use and go through the ULURP and zoning processes. If this were the case I would feel much more comfortable with the government representing my interests and spending my money. That is what is so horrific about this process, is the total failure of government to impose any standards on the developer.

  • I’d be more for the project if the Dallas Mavericks were moving in

  • Has anyone seen DDDB’s press release? Using posts from an anonymous message board seems pretty desperate to me.

    Why not use all of that money yielded from DDDB fundraisers to hire a genuine analyst?

  • The part where wrong = right Anon 8:17.

    “All that is necessary for the triumph of evil is that good men do nothing.” (Edmund Burke)

  • Anon at 4:56:

    “However, the MAJORITY doesn’t have problem with the sacrifices that must be made (albiet with just compensation) for the benefit of the public good. Same thing happened when ED was employed to get the Empire State Building, the World Trade Center, Rockefeller Center and Lincoln Center built. People lost their homes and local NIMBY activist protested and eventually lost because the “big picture” dictated that these projects get built despite the seizing of personal property.”

    You’ve made this claim before, I think, that the Empire State Building was built using eminent domain. This is absolutely untrue. I’m pretty sure Lincoln Center used eminent domain, but are you sure about the World Trade Center? And in any case, I don’t think the WTC is a particularly good example for your cause, since that complex was reviled for many years and failed to achieve full occupancy without the government stepping in and renting offices. And now that it’s gone, the street grid is being restored, whereas AY is going backward in this respect by demapping streets. Street demapping was also done for Metrotech, with predictably terrible results — ie the complete absence of vibrant streetlife around that complex.

    As for the “MAJORITY” being in favor of AY, there’s simply no way to know that. Given that all of the locally elected officials representing the vicinity have asked for major changes in the project, I’d say that it appears that those who represent the MAJORITY are not in favor of AY as currently designed.

  • Why are government offices cited as “proof” that a development is flagging. The govt. needs office space just as much as private enterprises, so why should it be viewed as inferior or a last resort? “The govt. stepped in” smacks of the conspiracy theories beloved in the anti-development camp.

  • “”The govt. stepped in” smacks of the conspiracy theories beloved in the anti-development camp.”
    Ratner claimed metrotech would bring new jobs and attract companies when none came – except ones given huge tax breaks thus taxing infrastructure and not brining in new revenue, the government stepped in to fill the empty office space
    same at ratner’s failed atlantic mall – the retailers moved out and he was left with empty space so he called in some favors and had government offices move to….a shopping mall.
    Ratner is a horrible, incompetent developer – he’s got friends in high places that’s his only ‘asset’

  • Metrotech is filled with quality private Cos such as Bear Sterns, Morgan Stanley, Chase, SIAC and others

  • Shahn nice ‘bait and switch’ reply – whatever the value of the documents provided – we both know that the 500M investment shown would have to represent real cash (not loans or subsidies) otherwise the return would be infinitely higher than the 9% shown and no false attribution to Bloomberg is going to it ischange that.

    As for Broken Angel, as far as I’m concerned you should take advantage of any tax benefits your entitled, but your argument that the properties will be paying far more in taxes after construction then now is somewhat hypocritical of you considering the same argument could be made in favor of virtually all 421-a developments as well as AY.
    Finally considering that you say the site of your future condos was a 9 family building the fact that YOU dont have to displace anyone to build is also sort of meaningless because one way or another, because obviously someone previously cleared out the building.

  • Nice response, 10:45, but you still haven’t answered my question about why govt. tenants are considered inferior or last resort. You simply repeated “the govt. stepped in”. Unless someone comes up with a cogent argument otherwise, I will consider govt. tenants = to any other tenants.

  • Ratner promised that MetroTech would employ the residents of the Fort Greene houses, which until recently had an unemployment rate of 70%. There are some decent companies at MetroTech, but it has not been the source of Brooklyn’s renaissance. Walking around Brooklyn, it seems obvious to me that the real entrepreneurial heroes are the residents of Brooklyn who made the economy boom room by room, store by store. It is the same people who have created this boom who know that the newest Ratner proposal is not in keeping with what has made Brooklyn successful.

    In my opinion, it’s a stretch to say the MetroTech is successful, but it’s impossible to say that it lived up to its promises.

    . . . . .

    When you buy anything, you want to know what you’re paying for, and what you’re getting. These financial projections show that after three years, we still don’t know what the costs are, and what the final project will look like.

    Some people may not like Ratner’s opponents, but that doesn’t mean that Ratner’s supporters are any more credible. How can the disinterested New Yorker support this project when the details are so sketchy?

  • “govt. tenants = to any other tenants”

    Assuming their lease is at market rates, gov’t tenants are actually better than average due to their high credit rating (meaning high reliability of rent payments). There’s a reason why T-bills are used as a risk-free rate…

  • Even though its smoke and mirrors, a little forensic accounting fills in some of the missing pieces.

    According to the doc’s, Ratner will develop ~ 2 million sq ft of Condos. In the footnotes, it says that the net equity reflects $1,041 million of condominium construction loans @ 70% LTV. This works out to $743.5/sq ft for construction.

    $1,041/.7 => $1,487. $1,487 million contruction costs/2 million ft sq =>> $743.5/sq ft.

    That seems like a high figure for construction costs. How much are the planing on selling these? @ $750/sq ft cost and a 20% profit margin, thats $900/sq ft.

    On a separate note, the city stands to reap a financial windfall. 2 million sq ft of property priced at $900/sq ft is approx $1.8 billion of taxable property via property sales tax, transfer fees, recording fees, etc.

  • Except that all of those taxes that should go to the city from AY are abated for 20 years.

  • David writes:

    “Metrotech is filled with quality private Cos such as Bear Sterns, Morgan Stanley, Chase, SIAC and others.”

    And what exactly does this have to do with whether or not Downtown Brooklyn was enhanced by the decision to build Metrotech on demapped streets? Are you saying these companies would not be renting in Metrotech if the development had enhanced rather than diminished street life?

    This is your constant strawman, David. You cannot grasp that those of us who oppose AY do not oppose development. We want good development. You seem completely oblivious to the difference.

    If this project had been developed with appropriate community involvement, and in the context of comprehensive urban planning as to transit, traffic, schools, parks, etc., it could have gone forward with strong community support.

    As I stated on another thread, I would be quite open to a sports arena if there were an absolute commitment to use every possible incentive and disincentive to make sure people didn’t arrive via cars, and generally to reduce traffic at that choke point. That would mean: no on-site parking, zoning to bar the development of parking garages in the vicinity, residential parking permits for the immediate neighborhoods, congestion pricing for cars in Manhattan’s business districts, and the elimination of free or low-cost parking for municipal employees.

    It’s no good to say that stuff like this will be taken care of sometime in the future. That’s a lot like invading Iraq and acting like the post-invasion phase will somehow take care of itself.

  • wait, ratner’s not going to pay transfer fees?

  • Anon at 1:27am writes:

    “Urban planning experts believe that an arena in Coney Island with even a higher percentage of affordable housing would provide too low of an economic incentive for a developer and thus require much more subsidies from the government to get the deal done. So let me understand this. There’s a problem with the use of public subsidies in PH/FG but not in Coney Island? Smells like bullshit to me….. ”

    You completely miss the point. It’s not a matter of the use of public subsidy. It’s the lack of transparency as to the return on that investment. Is the public getting a good deal on those “affordable” units or not? Or could we get a better deal (ie more affordable units at a lower cost) if we simply upzoned the area, offered affordable housing incentives, and then let market forces take over — ie, competitive bidding, which never happened.

  • Maybe you don’t know this because you aren’t a developer David, but the equity required for a bank to reach a comfortable loan to value on a loan can come from a number of different sources. The 300m and counting from the City, State and MTA will absolutely be counted as equity towards those loans, making the real ROI for FCR much higher than the numbers shown on that sheet. Also, IRR is not ROI, there are a lot of details missing from their IRR caluclations that they obviously don’t want to show or they would.

    You have proven my point for me David. There are many development being built in Brooklyn right now that utilize the 421a program. It is this organic development that is increasing the city’s tax rolls without eminent domain or hundreds of millions in direct funding from the City, State and MTA with little benefit to show for it.

    A fire emptied Broken Angel of its former inhabitants in 1975 and it was never fully repaired.

  • Organic development? I love that term. Displace poor people with sushi restaurants and wine bars rather than McDonald’s and Dunkin Donuts. Gee, thanks.

    Ratner is not responsible for solving the high unemployment rate of the area. Only individual initiative, more schooling, staying out of jail, and having children at older ages will accomplish that.

  • Organic development = individual initiative.

    It also means that many small developers do many small projects and the quality of life in a neighborhood goes up. Duh.

  • SP’er – YES I am saying that these extremely high quality tenants would NOT have moved to Brooklyn if not for Metrotech – proof – well how about that virtually no class A office space has been built outside of Metrotech since, and despite the city pushing and pushing similar companies appear to have little interest in moving to Brooklyn along the rezoned Flatbush Ave corrider.

    Recent surveys show that approx 30% of Metrotech employees are Brooklyn residents. Further it is very nice of people to say now in the years of the $1000 sqft Brooklyn apartment that development would have happened anyway – but projects such as Metrotech were instrumental in raising the boro’s profile amongst the people that make decsions in terms of lending and investment. Not to mention the word of mouth of the tens of thousands of workers who otherwise never would have come to Brooklyn in the 1st place. Metrotech is an unqualified success and anyone who says otherwise doesnt know sh!t about economic development or real estate. Would it be great NOW if it wasnt setup as an isolated campus – sure – but when it was concieved that was a non-starter, do you remember what Brooklyn was like in the 80’s????

  • Shahn – I cant interpret those financials any better then anyone else but all I am saying is that in your 1st post you belittle a $500M CASH investment and then when I say that 500M is significant you then say it actually isnt a cash investment it is loans and subsidies (A claim for which you or I have any basis)

    As for all that “organic development”, 421(a) or J-51 doesnt sound all that organic to me and either way those projects dont require a $200million dollar railyard platform to be built prior to putting a shovel in the ground. NYC has

  • You don’t get it David. There is no 500m cash investment from FCR. They are getting 300m that counts as equity towards their loans. I keep saying it and you keep ignoring it.

    421a and J51 abatements are one way the city has helped spur organic development. The difference is that those programs are open to anyone who wants to apply for them. They aren’t handed out exclusively to political cronies of the mayor and governor. That’s also why they produce a real return on the cities investment in the way of tax increases. That can’t be said of the AY project because it produces such a small net tax benefit.

  • Actually I do get it Shahn – I get that you (or I) have no f’ing idea how much cash Ratner is investing-which is why your comments, suppositions and conclusions are just silly.

    I also get that 421-a and J51 spur development (sorry but ‘organic’ is such a B.S. term that I can’t bring myself to use it) but those programs are just not going to be enough to ‘spur’ development of a site that needs hundreds of millions of dollars of infrastructure just to get started. You are trying to compare your development of some nutter’s 9 family art project to a project that (even if it was 1/4 the size) requires engineering and infrastructure expertise beyond virtually 99% of the developers out there. Which is exactly the reason the project cant be open to ‘anyone'; the amount of $ that could be lost by the MTA,City & State if a developer gets in over his head is staggering. Just look at the simple development of the Brooklyn Bridge Park Warehouses that Boylemegreen was suppossed to do – he is stretched so far beyond his capabilites and capacity that the State is now pulling it back – costing everyone time and money.
    Shahn I know you are proud of yourself (and the publicity you are getting) for Broken Angel but trying to compare your level of development to what is going on at AY is like thinking you know something about landing a man on the moon because you once flew a kite. – no offense.

  • David, I know what it takes to finance development, and I know how much money FCR is being given by the City and State. Maybe you can’t do simple arithmetic, but I can.

    Every site needs foundation work and infrastructure before development can happen. A developer I know built a large development in Hells Kitchen over railroad tracks, and he didn’t require a dollar from the city to cover his infrastructure costs. The gifts from the City, State and MTA that FCR has been able to get to finance their private for-profit development is pretty astounding.

    You seem to forget that you brought Broken Angel into this argument when you were trying to bait me into saying something about 421a abatements as part of your argument.

    “Again I must ask are you going to be getting 421a tax abatements at your Broken Angel project??
    Posted by: David at February 28, 2007 5:21 PM”

    You keep comparing Broken Angel to AY because it is a much smaller development, but by continually doing so, you undermine your own arguement. Sure AY is a big site, but if evey piece of that property (including those taken by ED) were developed organically without huge gifts of cash from the city, they would produce far more of a tax benefit than AY ever will.