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March 8, 2007
Follow the Money, and Don't Lose Count!
Brooklyn Downtown Star
By Norman Oder
This article recapping the lack of info provided by last week's financial disclosures has a really good explanation of what's missing from the three-page document:
For months, Brooklyn assemblyman Jim Brennan has been pushing the Empire State Development Corporation (ESDC) to release the Atlantic Yards business plan provided by developer Forest City Ratner, but so far kept under wraps. His goal: to help evaluate whether the $4 billion project, which at 6,430 apartments over 22 acres would be the densest in the city, could be downsized without harming its financial viability.
The result last week, however, frustrated Brennan. First, he and State Senator Velmanette Montgomery filed suit in state court challenging the ESDC's denial of a Freedom of Information Law request. In response, the ESDC did release some documents - but only three pages that offered only partial fiscal details, with no explanation for the assumptions behind the numbers.
...
Analyst [David] Smith commented: "The schedules omit nearly all of the financing and operating assumptions. They omit any sketch as to how the equity will be raised from five different legal and financial entities (team/arena, condo, rental, hotel, and office), without which one cannot tell what is the cost of external capital versus developer capital. They omit sources and uses of funds, without which it is impossible to tell what fees (however proper they might be!) the developer and its affiliates may be charging the venture ('off the top', as it were). They do not tell us where the $230 million (and counting) of equity that has already been contributed came from, nor at what current or future cost."Smith said fees were important: "Knowing the net cash flows without knowing the fees is like learning that the Nets scored 89 points last night, without knowing who they were playing, what the other team's score was, and whether they won or lost."
Posted by lumi at March 8, 2007 8:15 AM