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December 27, 2008

Three From Atlantic Yards Report

Atlantic Yards Report

With $5B in NYC development on hold or dead, could union accord with contractors jump-start projects?

In light of the increasing financial impossibility of starting large development like the proposed Atlantic Yards project, New York's construction unions are looking to assist funding projects and are also negotiating with developers to lower labor costs by as much as 25%.

Included in this entry is an excerpt of an interview of Ed Malloy, President of the Building and Construction Trades Council and Louis Coletti, chief executive of the Building Trades Employers’ Association, on the Brian Lehrer show.

Interviewed on WNYC's Brian Lehrer Show on Wednesday, Malloy and Coletti were optimistic when asked to predict the situation with construction jobs in a year.

Coletti said, "There's two scenarios. If we're unable to reach an agreement, I think this could be the deepest recession bordering on depression that we've ever seen in this industry. With an agreement, I think that we can minimize the unemployment. We have to keep in mind, what Ed said before, is we're coming off the best five years that this industry has ever seen."

Malloy was unequivocal: "Recovery under way."

Neither discussed Atlantic Yards specifically; it's likely that even a $300 million fund would be parceled out to many projects. But the labor concessions would benefit many more projects, including AY, lowering the overall cost and speeding the construction timetable.

In other words, if the money were available--and that's hardly a given--maybe the arena could be built in less than 32 months.

Ex-commercial banker: Don't bail out America's "credit-drunk" commercial landlords and real-estate bankers

An expert on commercial property lending, in a letter published in yesterday's Wall Street Journal, suggests that commercial-property developers should be ashamed at asking for a federal bailout. Mike Offitt wrote, in part:

Unlike residential borrowers, most commercial landlords don't live in their buildings, and unless they are pleading stupidity, they understood perfectly, as did the lenders themselves, that the loans they were seeking from overeager conduit and securitization lenders were too generous. They decided to roll the dice and got rich with these cheap and easy funds. Now they are asking their formerly rich Uncle Sam to bail them out as their loans come due.

As the founder and former head of Deutsche Bank's commercial lending unit, and former senior trader of CMBS and commercial loans for Goldman, I am well aware of the perils of letting commercial-property borrowers fail: Either their lenders will have to extend them new terms, or they will face bankruptcies and tax recapture issues. Their bankers or securities holders will have to take losses and new investors will get to buy their holdings at deep discounts. Any other solution would be a travesty. The only thing more startling about the suggestion that the Treasury bail out the likes of William Rudin, Stephen Ross and Steven Roth is that they had the nerve to raise it. Washington should focus on making REMIC and securitization laws more flexible to allow extensions of loans or collateral substitution, not giving America's credit-drunk landlords and real-estate bankers a mulligan on the taxpayer dime.

Did Gehry lay off staff working on AY or just move (most of) them?

Exactly what is the status of Frank Gehry's design team for the proposed Atlantic Yards project?

Did architect Frank Gehry lay off two dozen staffers working on Atlantic Yards, as reported by the Wall Street Journal and the Daily News?

A commenter on the Brooklyn Paper's web site had a slightly different take: El Sonrisas from Los Angeles says: The layoffs were not exclusively of the team, most people from the Brooklyn team remain working for Gehry Partners. The layoffs were across all projects and all ranks. Most people from the Brooklyn project, whom still work at Gehry's, were simply relocated to other projects.

If that's true, it would be much easier for Gehry to reconstitute the team should the project get back on track (and he gets paid).

Posted by steve at December 27, 2008 9:20 AM