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April 30, 2008

City agreement allows FCR to build 44% smaller Phase 1; what about NYC's extra $105M?

BREAKING STORY from Atlantic Yards Report

After filing a Freedom of Infomation request, Norman Oder finally got his hot hands on the NY City Atlantic Yards Funding Agreement.

Here's the scoop:

Despite assertions by Forest City Ratner officials that “all of Atlantic Yards... will be built," the State Funding Agreement, which the Empire State Development Corporation (ESDC) quietly released last month, gives the developer 6+ years to build the arena, 12+ years to build the five towers in Phase 1, and an unspecified amount of time to build the 11 towers in Phase 2.

A look at the previously-unreleased City Funding Agreement signed last September shows the developer has an even gentler deal: modest penalties for delay, plus allowance for a much smaller Phase 1 than that outlined in the General Project Plan passed by the ESDC in December 2006.

(I obtained the City Funding Agreement from the New York City Economic Development Corporation, or NYCEDC, via a Freedom of Information Law request. Warning: 13+ MB; ads before download.)

The City Funding Agreement involves NYCEDC and ESDC, while the state agreement involves ESDC and the developer. (Click on all graphics to enlarge.)

  • The city agreement casts further doubt on the schedule for affordable housing units, perhaps the main generator of political support for the project.

  • It includes no penalties as long as the developer builds, within 12+ years, 1.5 million square feet in Phase 1--some 44% smaller than promised less than a year earlier.

  • It permits a scenario of only 300 affordable housing units by 2020

  • With such a smaller Phase 1, it further reduces expected tax revenues.

  • It does not address the city's $105 million contribution for infrastructure, raising the possibility that, upon the project's demise, the city could recover only its initial $100 million outlay.

  • It confirms that the initial $100 million--once intended at least in part for infrastructure--will be used to reimburse Forest City Ratner for the seemingly generous checks the developer wrote to owners of properties destined for the arena footprint.

  • It requires larger penalties for a delayed arena than a delayed Phase 1, suggesting that the arena is more of a priority.

  • It sets a schedule for relatively modest penalties; an arena three years late (given the grace period), delayed to 2018, likely would cost the developer little more than $10 million in damages to the city.

  • Such relatively modest penalties also apply to Phase 1 delays; should the Phase 1 site lie fallow until 2027--nearly two decades from now--the six-year delay (given the grace period) likely would cost the developer only $17 million in damages to the city.

  • It also poses relatively small penalties if FCR abandons the project within three years; that suggests that a decision to pull the plug, should it be made, would come sooner rather than later.

Click here for the rest of this must-read article.

Posted by lumi at April 30, 2008 6:36 AM