December 24, 2008
Who's in control? Forest City and the indirect subsidy value of its "entitlements"
Atlantic Yards Report
After that, Forest City Ratner gained its "entitlement," a word favored by Forest City Enterprises CEO Chuck Ratner, a word that indicates that the developer controls the pace, a phrase used last month at a real estate industry conference.
Chuck Ratner, speaking to investment analysts on December 10, said, "Despite the slow-down, we retain our core development capacity, as well as a reservoir of entitled opportunities where we can re-start additional vertical development, largely on our schedule, with modest carrying costs. When conditions improve, we will be able to take advantage of these opportunities."
As I wrote, the obligations, as so far expressed in the City and State Funding Agreements, give Forest City Ratner a long leash. The developer has 6 years after the delivery of property via eminent domain to build the arena and 12 years to build Phase 1--and can get away with building 44% less square footage than approved.
The penalties for a delayed arena for Phase 1 are quite modest. There's no timetable for Phase 2.
So the City and State Funding Agreements might be considered another form of indirect subsidy--a benefit to the developer without an actual outlay of government funds.
NoLandGrab: Back in the day, someone living off a bevy of entitlements was known as a "welfare queen."
Posted by eric at December 24, 2008 9:37 AM