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March 1, 2007
AY Financial Docs: The Morning After
The lack of coverage and analysis of the Atlantic Yards financial documents released yesterday is pretty astounding. Radio silence from the Times and the Daily News, Metro mentioned it at the end of an article about a different aspect of Yards, and The Post wrote a reasonably in-depth article about what the docs revealed but held off from weighing in on their usefulness or credibility. The Sun was the only paper that delved a bit into the response of critics of the project, even editorializing that "there does not seem to be enough information to make an accurate estimate of Forest City Ratner's return." This is the same conclusion that David Smith, an affordable housing expert in Boston, came to when Norman Oder presented him with the documents. "These cash flow schedules are like a Japanese landscape watercolor; fascinating and evocative in their own right but only lightly drawn,” he wrote in response. “They make one hungry for more detail, without which it is impossible to have a properly informed opinion about either the expected profit the developer may make relative to the risk, or whether the public is receiving fair public benefit for the public resources contributed." Oder also noticed that the projections include more affordable units in Phase 1 than initially indicated by the City Planning Commission but qualifies that by pointing to the footnote that says, "“For discussion purposes only. Actual results may vary.”
Three Pages of Mystery [Atlantic Yards Report]
Critics Deem Atlantic Yards Documents Insufficient [NY Sun]
Ratner Nets Brooklyn Bonus [NY Post]
The Jackhammers Begin [Metro]
Photo by lachance
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Comments
I hope the Times etc. are simply taking their time to report the story: pore through the documents, consult experts, etc. The AY financials are not simple stuff! As consumers of news we've become accustomed to insta-stories, but real reporting often takes a while to pull together.
Posted by: Anonymous at March 1, 2007 9:10 AM
Mr. B - more pictures of the footprint like this and the courts may not understand what isn't "blighted" about this area...
Posted by: Anonymous at March 1, 2007 9:11 AM
The absolute bottom line for me is this: If this project were so beneficial for anyone except Mr. Ratner, then everything regarding it would be TRANSPARENT. Instead, it's all smoke and mirrors and lie after lie.
It's so obviously a sad, sad scam perpetuated on the residents of Brooklyn by ultra-rich men for their own tremendous gain.
Posted by: enid at March 1, 2007 10:17 AM
I agree, enid. Famine, war, genocide...lack of transparency. Boy, is that high on the list of world problems. Armageddon is just around the corner.
Posted by: Anonymous at March 1, 2007 10:35 AM
Actually the shot shows how much of a hog he is. There's more than enough space for him to build his crap without Eminent Domain.
Posted by: Jack at March 1, 2007 10:38 AM
Man, how high was David Smith when he gave that comment?
Posted by: JP at March 1, 2007 11:28 AM
10:35 AM - Can we be horrified by genocide, war, etc AND be unhappy that our tax dollars are being used to make one person very rich while potentially destroying a community? Don't you think the human mind has the capacity to think that this development is being done all wrong and, at the same time, agree that the world has bigger problems to worry about.
Posted by: Jamzer at March 1, 2007 11:52 AM
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.
Posted by: Herlock Sholmes at March 1, 2007 12:16 PM
Interesting Sherlock, although costs are typically on gross sqaure feet, whereas sales are on net square feet (you can't sell the hallways and lobbys). $750 a sf on costs is a bit on the high side, especially with the land costs that he has.
Posted by: Bob the Builder at March 1, 2007 12:39 PM
Bob, lets say net sq ft is 70% of gross. Thats makes the construction cost, $1.041 billion. divided by 2 million square feet is $520/ sq ft cost. Is that more in-line?
Posted by: Herlock Sholmes at March 1, 2007 12:47 PM
Typical development IRRs for a project like this are in the 18 to 20% ballpark, not 9%. Something not right here.
Posted by: Anonymous at March 1, 2007 12:51 PM
Let's see - do I want a multibillion dollar investment in my neighborhood, especially in a location that looks, as the picture shows, like Iraq right now?
Choke points, arenas, buildings, landscaping, lights, people... all sounds good to me. Much better than the open trench there now.
Is this developer qualified? Well, he is building the Times building with another prominent architect and has had worked on big projects in Brooklyn before. The City is supporting him and the state agreed to sell the land. So I guess he is qualified.
There probably will be some rumbling by opponents in the neighborhood, but there always is - for decades people in Brooklyn Heights have been against the building of a park on the old piers, so it's only to be expected. Regardless of what anyone wants to build, there is always a committee with an agenda that excludes that particular kind of development. There will be demands for "broad community involvement", but really that is only a way for the most vocal people in the committee with the agenda to make sure that THEIR opinion is heard. In any case, you can't build buildings designed by a committee - look at the new WTC.
Posted by: Anonymous at March 1, 2007 3:20 PM
Agreed, 3:20PM. "Community input" is euphemistic for a bunch of rich NIMBYs intolerant of any vision deviating from their own.
Posted by: Anonymous at March 1, 2007 4:30 PM
Hi,. I own a house in the area. I am happy that the Atlantic yards is coming,
Thank you.
Posted by: anon at March 1, 2007 4:41 PM
"Choke points, arenas, buildings, landscaping, lights, people... all sounds good to me. Much better than the open trench there now"
Shhhhhhh mums the word on Eminent Domain.
Posted by: Anonymous at March 1, 2007 4:43 PM
3:20PM here- sorry can't opine on Eminent Domain - please refer that to the courts.
Posted by: Anonymous at March 1, 2007 4:51 PM
Guilt has never and will never work towards changing the minds of pro-AY people. Give it up.
D-O-N-E-D-E-A-L!!!
Posted by: Anonymous at March 1, 2007 4:52 PM
LOL.
I cant belive i'm being forced to pay for a crack team of PR commandos.
Posted by: Anonymous at March 1, 2007 5:08 PM
I own a house in the area and I am now going to sell it. Congrats Bruce, you won, I'm outta here.
Posted by: Anonymous at March 1, 2007 5:19 PM
get a grip pro-AY forces. this is a
D-U-M-B-D-E-A-L!!!
Posted by: Anonymous at March 1, 2007 6:49 PM
Try to imagine the following scenario, and see if you think your opinion of the project would change:
1. The AY project managed to build new buildings around privately owned properties without demolishing them through eminent domain.
2. Rather than override all city zoning laws with 60 story towers, the buildings were limited to the 8-12 story height limit and required open space of zoning laws for nearby neighborhoods. The City Planning Commission would have some approval authority over it, rather than none.
3. The MTA sold the site to FCR for its real value rather than undervaluing it and selling it for a 65% discount, giving away 100's of millions of dollars.
4. The so called "affordable housing" took into account actual median incomes of Brooklynites, rather than an inflated fictional median income that includes that of surrounding suburbs; and thereby made the rents actually affordable to average Brooklynites (in reality they will be close to Park Slope market rate).
5. The project did not close off existing city streets, creating a huge dividing barrier between neighborhoods like 1960's urban renewal housing projects.
6. FCR picked up the cost of utility and infrastructure improvements, rather than you and me subsidizing them with our tax dollars to the tune of $200 million.
If all this were true, I bet FCR could still make a mint. Would you project proponents be opposed to these ideas?
Posted by: Anonymous at March 2, 2007 1:23 PM
8:28-
In case you haven't gotten the clue, I ain't giving up. This is my neighborhood, my home, the community I have committed to. If it bothers you so much, why are you posting? If it's not worth posting about, you're not setting a very good example.
In reality, federal judges are influenced by public opinion, as Magistrate Levy implied at the federal hearing on eminent domain. The national outcry against eminent domain abuse was even brought up by the ECDS/Forest City.
The current cash flow documents show that there simply are not enough facts to support the Atlantic Yards project. How can the average New Yorker support this when they don't know what the fiscal and impacts will be?
Posted by: harriet at March 2, 2007 2:27 PM
National outrage? Give me a break! Other than the handful of NIMBY's living in the footprint, NO ONE cares about alleged eminent domain abuse. Get a life!
Posted by: Anonymous at March 3, 2007 6:20 PM
the term "nimby" is a smoke screen
Posted by: Anonymous at March 6, 2007 4:39 PM
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