Big Week for Atlantic Yards Sweetheart Deal-Making
The MTA will present a new deal for Atlantic Yards today to its board’s finance committee in advance of a possible vote on Wednesday by the authority’s board to green-light the revamped plan, according to Daily Intel. The revised plan is poised to be breathtaking in its concessions to Forest City Ratner. Rather than the…
The MTA will present a new deal for Atlantic Yards today to its board’s finance committee in advance of a possible vote on Wednesday by the authority’s board to green-light the revamped plan, according to Daily Intel. The revised plan is poised to be breathtaking in its concessions to Forest City Ratner. Rather than the developer forking over $100 million upfront to the MTA for the right to build on state land, “the MTA appears willing to settle for a drastically reduced price in order to salvage some kind of short-term development at Atlantic Yards: Sources say the new price tag is likely to be either $20 million upfront or $10 million per year for ten years.” But wait, there’s more! Ratner’s pledge to build a new LIRR rail yard may result in a facility with 25 percent less capacity than the existing one. And, as Crain’s reports, tomorrow the Empire State Development Corp. board is scheduled to vote on a new timetable for the project that would push the completion date for the mega-project way past the original 2014 target year. (No big surprise there.) AY Report posits that the negotiations are rooted in Forest City’s need to start building this year or risk losing out on tax-exempt bonds for the arena, as well as to stop losing money on the Nets. Seven elected officials who have long been opposed to the project—including Councilwoman Letitia James and State Senator Velmanette Montgomery—shot off a letter last week urging the MTA to disclose changes to its deal with FCR to the public before voting on them: “We respectfully suggest that a hasty decision to modify the obligations of the developer could be detrimental to the needs of the mass transit system and that any decision should only be made after the public and elected officials have had a fair opportunity to present their views.”
Ratner Close to Railroading MTA on Atlantic Yards [Daily Intel]
Electeds Want Delay on M.T.A. Atlantic Yards Vote [Observer]
Atlantic Yards Won’t Be Derailed [Crain’s]
AY: “Out of the Barn” or Driven by FCR’s Tightening Timetable? [AY Report]
I just want to point out that there are hundres of thousands of projects that ran over budget, rubbed people the wrong way, etc. – but the ultimate result were marvelous, and persited to be iconic of the cities where they were bilt.
That could have been the case with AY had it not been for NIMBYs who stalled, stalled, stalled – and the end result – they are still getting an arena, now just with a heaping side of ugly.
Maybe we should have run this like the co-op… (where friends who belong ask me for notes to excuse them from their shifts – LAME! you are not in 3rd grade anymore, is my answer).
According to Crain’s, the offer to Ratner is to pay the $100 million over TWENTY YEARS, with the bulk of the payment to come after 2016, when the “second half” of the plan gets started. Maybe.
DDDB wouldn’t have been able to organize and get the traction it did if Ratner had not conspired with local officials to sideline true community residents with a sham “Community Benefits Agreement” that paid off several organizations, most of which were created explicitly to agree in a pleasantly financially beneficial way. Yes, there are always cranks and naysayers. But they wouldn’t have gotten support if the true stakeholders in this project had been invited to the table in the first place.
havelc- I take your point but the issue with ratner is
1. this is not and was never meant to be an affordable housing project. Ratner only added “affordable” housing under duress and in an effort oto get community support.
2. Some of this subsidized housing will be for people with incomes up to 125,000. Now I am sorry but there are loads of people making far less than that and making it. I make far far less- why should I subsidize someone who is making a decent salary just because they decided to have too many kids? I could say that same for those making far less, but you can have a pretty nice life on 125,000 a year and you do not need public subsidies.
3. Ratner gave himself an out as to when and where the affordable housing would be built. It does not have to be on site at AY, and it can be done at the tail end of construction. In other words, if he runs out of money it most likely will never get built at all.
Basically in return for public funding and subsidies, sweetheart deals and rules bending, ratner really promised the city not much, if anything. (25 mil over 20 years? He must think the city is pretty stupid to settle for that- and if our elected officials do, they are pretty stupid.)
“Neither the city, nor developers have the ability to build affordable housing completely by themselves. ”
Not entirely true. The private market used to build unsubsidized affordable housing on Staten Island, until it was outlawed by mapping the entire island with exclusionary zoning districts.
Sorry for making that overly complicated.
Put more simply:
Neither the city, nor developers have the ability to build affordable housing completely by themselves.
Bxgirl,
‘” The city can’t afford to do it, and no private developer will attempt it due to the insane building costs in this city. ”
So how does this make sense? The only way for ratner to be able to build AY is with the same public financing you say the city can’t afford.”‘
The point is that the city can’t afford to build affordable housing on its own because it doesn’t have the cash on hand. It can offer tax incentives and breaks which never commits cash on hand.
On the flip side, because building costs are so high in NYC– higher than anywhere in the country with the possible exception of SF– the fixed costs associated with a project mean that in a fully privately funded situation, developers will only pursue luxury projects because they have higher profit margins and the gross profits necessary to clear costs. It is not profitable, without public subsidy (given costs) to build affordable housing– the cap rates are WAY too low.
And since the city can’t afford to do it on their own (they have no cash) the best they can do is offer incentives, which are essentially future discounts on unrealized and currently non-existent cash flow streams to pay for it. The city won’t give Ratner billions, they’ll give him the equivalent of billions which is a huge difference.
Criminals
DDDB only delayed this if your business model assumed no lawsuits. Given that, even before approval, there were lots of folks complaining about the subsidies, the scale of the project, the lack of a public planning process, and the lack of justification for eminent domain, “no litigation” would have been a horrible assumption for a business plan, whether you agree with the lawsuits or not. Anyone could have foreseen the litigation. If FCR’s business plan had room for an upfront payment of $100m and Gehry as archtiect only if there was no litigation, then it was a faulty business plan.
Actually tax cuts for millionaires and billionaires is the least efficient job creation tool possible. Ratner’s welfare plan is essentially Bush tax cuts for one particular multi-millionaire. We all get our taxes raised. Ratner gets our money. Quite simple.
One, we’re renting an asset (Nets) for many times what it’s worth to buy.
Two, economic benefit is largely localized to the owner(s) of the Nets. Ratner.
Three, nothing wrong with public-private partnerships. But this aint a partnership, it’s a mugging. Ask yourself what do we get for the money. A crappy stadium and debt. Lots and lots of lovely debt.
Long after the Nets have moved back to Jersey we’ll still be paying for this.