Atlantic Yards and the Culture of Cheating (links)

I offer a framework to analyze and evaluate Atlantic Yards and the Barclays Center: Atlantic Yards and the Culture of Cheating.

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Crain's analyzes Lewis's support for opponents of waste transfer station after period of neutrality

In  Mayor's ally being paid to fight him, Crain's New York Business reports on the curious situation in which Bertha Lewis, head of the Black Institute and longtime friend/supporter of Mayor Bill de Blasio, is opposing mayoral efforts--which began under Mike Bloomberg and which de Blasio supports--to build a waste transfer station on the Upper East Side.

Lewis says thousands of people of color in low-income housing near the proposed station would face increased pollution, though she's being paid by a coalition apparently funded by real estate interests. And she was against it at first, given that ACORN was the lead plaintiff in a lawsuit then the transfer station was first proposed.

But here's where the episode recalls Lewis's seeming willingness to cut a deal, as recounted--for example--by Neil deMause regarding a baseball field in Prospect Park.

Writes Chris Bragg:

Still, one leading proponent of the transfer station, New York City Environmental Justice Alliance Executive Director Eddie Bautista, says Ms. Lewis later evolved on the issue—only to now again oppose the transfer station.
According to Mr. Bautista, he met with Ms. Lewis at Acorn's offices in Brooklyn some nine years ago, and made the case that the impact of waste-transfer stations in poor South Bronx and Brooklyn neighborhoods far outweighed any impact on the Upper East Side. At the meeting, according to Mr. Bautista, Ms. Lewis was won over to that position, and said that while Acorn's name would remain on the lawsuit, the group would stop actively opposing the Upper East Side station.
Acorn and Ms. Lewis kept their promise, according to Mr. Bautista, before the nonprofit shuttered in 2010. Ms. Lewis returned that year with the much smaller Black Institute. In 2012, the nonprofit took in $341,000 and spent $330,000, according to its tax filing, including more than $78,000 on Ms. Lewis' salary. The board of directors includes several people who worked with Acorn, including its former attorney, Arthur Schwartz.
The Black Institute was also paid $23,000 for polling last October by then-state Sen. Eric Adams' campaign for Brooklyn borough president. Mr. Adams faced token opposition for the seat and won handily.
Ms. Lewis, who declined to be interviewed, said in a statement, "Joining Pledge 2 Protect is consistent with my history of fighting for environmental justice. While some have vocally proclaimed that the [waste-transfer plan] will help correct a century or more of environmental injustice, the blatantly obvious reality is that it attempts to shift the burden to another large population of black and brown people."
She declined to address Mr. Bautista's recollection of their meeting.

I wrote about that $23,000 to Adams as well as Forest City Ratner's payments to ACORN, also cited in the article.

Common Cause, Citizens Union call for Borough Presidents to follow Stringer's reforms in selecting Community Board members; Markowitz's AY purge cited

Last Monday, 3/3/14, the City Council Committee on Governmental Operations held a hearing on the makeup of community boards, and good government groups weighed in with reformist recommendations. One suggested that an Atlantic Yards episode should be spur to reforms.

Brian Paul, the Research and Policy Manager for Common Cause/New York recommended best Practices and included a history lesson:

New York's community boards originated in the 1950's as "community planning boards." They were institutionalized in the 1963 charter revision with the intent to increase the role for local communities in the planning process. Their creation was in large part a reaction to the overreaches of urban planning "czar" Robert Moses, who from the 1930's to the 1960's oversaw numerous highway, park, and urban renewal construction plans that often ran roughshod over local neighborhoods. In 1968, Mayor John Lindsay led the passage of Local Law 39 which expanded the function of the community boards . The boards acquired their present structure in the charter revision of 1975, which established the Uniform Land Use Review Procedure (ULURP) and expanded the number of boards to the present 59.
The establishment of the community boards represented a triumph for advocates of local democracy and community planning. In the decades since their creation, however, it has become clear that the community boards have not lived up to their intended goals. Barriers to the community boards' mission of empowering local communities and increasing civic participation include lack of adequate resources, an over-politicized appointment process, and a lack of appropriate representational diversity.
With annual budgets of only $200,000 to $300,000 per board, community boards have far fewer staff and resources than other governmental bodies in New York City . The entire budget of all 59 community boards combined amounts to less than 0.02% of the total city budget. Most community boards have no more than two full time staff persons, the District Manager and an administrative assistant, who spend most of their time on administrative tasks and responding to urgent issues. It is abundantly clear that Community Boards have not been provided with the resources needed to adequately fulfill their charter-mandated responsibilities, including their role in the ULURP and annual statement of community district needs. Many community board members and civic governance experts testified to this fact during the 2010 City Charter Commission hearings .

Borough presidents in charge

BPs, Paul said, had too much power:

Community board members are chosen by the Borough Presidents from a pool of applicants. Half of the applicant pool for each community district is nominated by the local City Council Members, but the Borough President has final discretion over the selection of all members. All members serve staggered two-year terms. According to the City's official explanation, qualified board members are selected "from among active, involved people of each community and must reside, work, or have some other significant interest in the community."
This extremely vague description of a board member's qualifications allows the Borough Presidents nearly complete discretion over community board appointments. Each Borough President is free to establish his or her own procedures, and as a result, each of the five boroughs has a different set of rules and procedures for appointing and reappointing members. Briefly reviewing the current application forms of Brooklyn, the Bronx, Manhattan and Queens reveals wide ranging discrepancies in the level of detail required on important aspects such as the applicant's race/ethnicity, type of housing, motivation behind seeking board appointment, and potential for conflicts of interest. The current Manhattan application is the most detailed at six pages while the Bronx and Brooklyn are four pages each and Queens' application is only one page with no written questions required at all .
Without a standardized citywide process to recruit and appoint a qualified and diverse body of members, New York's community boards can at times degenerate into mere proxies for more powerful governmental actors and special interests, and fail to adequately represent our neighborhoods.

The AY example

He testified:

Recent years have seen at least two examples of Borough Presidents overtly playing politics with community boards by conducting high-profile "purges" of members who dared to vote their conscience. In 2006, Bronx Borough President Adolfo Carrion refused to reappoint the Chair of Bronx Community Board 4 and several other members who voted against the Yankee Stadium redevelopment plan he supported. And in 2007, Brooklyn Borough President Marty Markowitz removed five longtime members of Community Board 6 who opposed the Atlantic Yards project. According to one allegedly purged member, Celia Cacace, Markowitz threatened her months in advance of the appointment decision that he was going to "get rid of everyone on the board that voted for this...Remember you are my appointee." Such direct political intimidation and misuse of the powers of appointment to coerce community board members is anathema to the boards' purpose of providing an authentic local community voice in city government.

Getting to a more diverse board

Newer residents are often underrepresented, and thus the boards "do not reflect the district's ethnic, age, and gender diversity and there is an imbalance in representation between tenants and homeowners, car owners and public transit commuters, and other important diversity factors."

Common Cause/New York endorsed the steps taken by then-Manhattan Borough President Scott Stringer, now Comptroller, to recruit a more wide-ranging board, to require identification of potential conflicts of interest, and to establish an independent panel to review applications.

It also suggested term-limits for community board members, perhaps five terms of two years each, or for the chair and committee chairs. Noting that some boards have no websites or minimal ones, Common Cause recommends "a centralized website providing information for all of the boards in one location, as well as offering tools like interactive forums, maps, and webcasting."

For example, the "Empower LA" website in Los Angeles acts as the hub for the city's 95 neighborhood councils.

From the Citizens Union

Alex Camarda of the Citizens Union testified, citing the group's 2010 report:

We took positions in the report supporting fixed budgeting for community boards, believing community boards should receive a budget in the aggregate that is 30 percent of the  Council’s budget (or about 65 percent of all the borough presidents’ total funding), with rent, heat,  electricity and other variable expenses part of the regular budget process. We also support  providing urban planners to boards independent of the borough presidents’ offices to provide  assistance on technical land use issues. This will provide community boards with needed resources to ensure they have a distinct voice in the land use approval process.

It recommends a more professionalized, standardized, and transparent process for selection, that borough presidents issue an annual report detailing their outreach efforts, and a limit of five terms.

It helped Stringer create a standardized formal application process, and recommended this. The newly elected borough presidents Gale Brewer (Manhattan), Eric Adams (Brooklyn), James Oddo (Staten Island) and Melinda Katz (Queens), during the campaign, indicated support for at least some of the reforms.

Citizens Union has drafted a bill to reform the process of community board recruitment and appointment consistent with its positions, though it did not include term limits.

In SEC filing, Forest City admits Greenland is already steering some Atlantic Yards decision-making; joint venture may have to use recourse financing

It's always tough to know how much to read into boilerplate disclosures of risks in securities filings.

But Forest City Enterprises' recent annual filing with the Securities and Exchange Commission mentions some risks and possibilities not previously disclosed regarding the pending deal with Chinese government-owned Greenland Group to buy 70% of the project going forward, as well as the B2 modular tower Forest City is building on its own:

• Greenland is already steering some decision-making during this interim period 
• Greenland and Forest City may have to buy each other out
• The joint venture may have to use recourse financing, which puts the assets of the project sponsor at risk
• B2's delays are coupled with increased costs 

Permanent rail yard

The Form 10-KT annual report for the 11 Months Ended December 31, 2013, filed 2/27/14, acknowledges an "upcoming June 30, 2014 deadline to commence construction on the permanent rail yard and to post the completion guaranty for such work."

The railyard must be substantially completed by September 1, 2016, and if its not built, the MTA declare default and pursue a draw down of the firm's $86 million letter of credit, causing the loss of 3.3 million square feet of development rights for Phase II. 

That said, Forest City has twice extended the official start date, and assuming the Greenland deal goes through, should have the funds to do so.

Contract and decision-making questions

The document also notes:

There is also the potential for increased costs and further delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies, (iii) the unavailability of additional needed financing, (iv) our or our partners’ inability or failure to meet required equity contributions, (v) increasing rates for financing, (vi) our inability to meet certain agreed upon deadlines for the development of the project, (vii) other potential litigation seeking to enjoin or prevent the project or litigation for which there may not be insurance coverage and (viii) our or our partners' inability to fulfill contractual obligations. In addition, as applicable contractual and other deadlines and decision points approach, we could have less time and flexibility to plan and implement our responses to these or other risks to the extent that any of them may actually arise.

(Emphases added throughout)

Note that the bolded text was not in the previous document, and likely refers to the joint venture with the Greenland Group.

The document goes on to explain:

On December 16, 2013, we entered into an agreement with Greenland Group Co. (“Greenland”), a Chinese state-owned enterprise, to create a joint venture whereby Greenland would acquire a 70% interest in the Brooklyn Atlantic Yards project (excluding the Barclays Center and B2 BKLYN, a modular apartment community currently under construction). The joint venture is subject to meeting various conditions, which include obtaining the approvals by governmental agencies in China as well as the Committee on Foreign Investment in the United States (“CFIUS”). There is no assurance that all conditions for effectuating the joint venture will be met, including obtaining such governmental approvals. We have the right to terminate the agreements by April 15, 2014 and attempt to find another partner, if certain conditions are not met, including obtaining the CFIUS approval. In addition, if all approvals are not obtained by June 16, 2014, both parties have the right to terminate. In the event the joint venture is terminated, we may be unable to find another partner for the Brooklyn Atlantic Yardsproject. Greenland also has approval rights over a certain number of decisions made during such interim period which may delay or jeopardize the development. Greenland also has the right to have up to five individuals in our offices to share in the decision making during such interim period.

(Emphases added)

So, while Forest City CEO David LaRue estimated a 90% chance the joint venture would go through, the next few months will be crucial, since Forest City can end the deal by April 15, and Greenland can by June 16, if all approvals are not obtained. 

Note that Greenland is already steering some decision-making. 

Greenland in control

The document explains that Greenland will be in control:

If and when the joint venture becomes effective, the Brooklyn Atlantic Yards project will be managed by a board composed of three representatives from Greenland and two representatives from the Company. While decisions would require a majority vote, many decisions labeled “Special Major Decisions” would require a vote by us for approval. There is the risk that many of the decisions made by the joint venture would not be in our best interests and, further, that an inability to agree on certain of the Special Major Decisions would trigger buy-sell rights and obligations between us and Greenland. The exercise of the buy-sell rights could result in our having to fund the purchase of Greenland’s interest in the entire joint venture, or in one or more individual parcels. It could also result in having our interests be purchased and the loss of ownership of the Brooklyn Atlantic Yards project or of one or more parcels thereof.

In other words, if Forest City and Greenland disagree, they may have to buy each other out.

I reported in January that a 12/13/13 Empire State Development memo outlined this board arrangement, which provided for a possible buy-out in the event of a deadlock among the members of the Board of Managers. It did not explain, however, that the buyout could go in either direction.

Non-recourse loans

The annual report reveals the joint venture may have to use recourse financing, while Forest City strongly prefers to non-recourse loans, which--to quote Wikipedia-- are secured by the project assets and paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project sponsors. 

Recourse financing is less costly, but more risky, since it can put the joint venture's overall assets at risk. In this case, the financing would come from Greeland.

The document states:

Greenland also required that the joint venture have the ability to obtain recourse financing to the extent nonrecourse financing was not available at a commercially reasonable rate or only available at an interest rate which equals or exceeds 200 basis points more than available recourse financing. However, no more than $300 million of recourse financing could be outstanding at any time project-wide, including parcels under development. Such recourse financing would be available based on a loan guarantee provided solely by Greenland and Greenland would receive compensation from the joint venture for lending its credit for such recourse financing in the amount of the interest rate savings up to 300 basis points. However, to the extent a recourse loan becomes due and cannot be refinanced, we will be obligated to pay Greenland for our share of the loan on a capital call or, if we elect to have Greenland advance our share, within one year of such advance and out of available cash flow from the project.

B2 tower delays and increased costs

The recent annual report also acknowledges delays in the B2 tower:

High rise modular construction has not previously been done at the heights of B2 BKLYN. As a result, the project has encountered, and may continue to encounter, delays and increased costs in the fabrication and assembly of the modular units. If the project continues to experience such delays, we may fail to satisfy completion deadlines set forth under the lending arrangements for the project and the lenders may not be willing to extend such deadlines. Failure to meet the completion deadlines could result in a default under such lending arrangements with a resulting acceleration of the debt and foreclosure of the project, as well as reputational damage.

Last September, Forest City Ratner executive Jane Marshall acknowledged that the first modular residential tower, B2, was delayed six months until the end of 2014, as indicated in SEC filings, but suggested there were "all good reasons" for the delay, saying "we identified ways of making the modular factory work better, by purchasing different equipment."

She did not, however, acknowledge increased costs.

I wrote this week that only 45 of 930 modules had been delivered, which is well behind the planned pace. If the issue is weather, more temperate weather should make it easier for the mods to be delivered and installed to meet the end-of-2014. We'll see whether they start delivering eight mods a day.

Also, I wrote that LaRue had sounded more tentative regarding a groundbreaking this year than a local Forest City Ratner executive.

While the annual report last year mentioned the potential challenge by a plumbers' organization to the city's approval of factory work without licensed plumbers, the report this year notes that a claim was filed and dismissed, but an appeal is pending.

Comparison between 2013 and 2014 disclosures regarding B2

2013 report 2014 report

Just as Bertha Lewis is back, so is the resurrected ACORN, now New York Communities for Change (and that could nudge de Blasio on Atlantic Yards)

Just as former New York ACORN head Bertha Lewis, the key partner/cheerleader for Forest City Ratner's affordable housing plan within the Atlantic Yards project, has become a key player in Mayor Bill de Blasio's circle of power, so too has the resurrected ACORN, now known as New York Communities for Change.

And that gives Forest City a key contingent of supporters--and, perhaps, mild critics--as the affordable housing rolls out. And that contingent may help lobby de Blasio for tweaks in the program.

The Observer's Ross Barkan, in NYCC, Reincarnated Acorn, Rises in de Blasio’s New York, writes:

“I am so appreciative of not just the support I received and my campaign received, I’m appreciative of all the people who were given hope by New York Communities for Change, who were shown their own power,” said Mayor Bill de Blasio at a recent fund-raiser for the group, which endorsed him during the primary, long before his electoral surge.
Unwelcome during former Mayor Michael Bloomberg’s reign, NYCC has been reborn in Mr. de Blasio’s orbit. Ex-Acorners helped elect Mr. de Blasio and his ally, Council Speaker Melissa Mark-Viverito, lending ground troops and organizational firepower to both the mayoral race and the backroom speakership contest.
NYCC, which is battling to raise the wages of low-income workers and eventually unionize them, increase affordable housing and beat back the charter school movement, is also entwined with the influential Working Families Party.

NYCC launched in early 2010, as I reported. Barkan identifies the dues-paying membership at 20,000 in the city and Long Island--which is less than the 35,000 reported by author John Atlas late in the previous decade--and a budget that's grown from $200,000 to more than $2 million.

NYCC's role

NYCC  helped get the vote out "in predominantly black areas in central Brooklyn and southeast Queens" and gave de Blasio a boost at campaign events.

NYCC and the Working Families Party are deeply intertwined, occupying offices one floor apart and with NYCC leader Jonathan Westin, who succeeded the late Jon Kest, serving on the WFP’s executive board, according to the article. 

NYCC assigned top staffer Amelia Adams to the campaign to get Mark-Viverito elected, and she was later hired the the speaker as a senior adviser.

Role of MHANY

From Forest City presentation re B2 tower

I'd add that Mutual Housing Association of New York, or MHANY, led by former ACORN housing head Ismene Speliotis, is in the same building. While I've written that NYCC is Forest City's formal partner on the affordable housing, I believe instead it's MHANY, as indicated at right.

At the groundbreaking in December 2012 for the B2 tower, Bruce Ratner offered effusive thanks to ACORN, Mutual Housing of New York, New York Communities for Change, and members of the Atlantic Yards Community Benefits Agreement (CBA).

At a 2/27/13 hearing on the draft scope for a Supplemental Environmental Impact Statement, Adams, then of NYCC, said "we really need to push the tiered income and mix of apartments. We cannot get a whole bunch of one-bedrooms and studios. We really need to push for two- and three bedrooms so that actual families can call Downtown Brooklyn their neighborhood.”

As I wrote, it wasn't clear who she was pushing: Forest City Ratner, which failed to follow its promise of 50% larger units (in square footage), or city funders who allocate subsidies on a per-unit, rather than per-bedroom, basis. 

If NYCC has some clout, we may see some tweaks in city funding so the next Atlantic Yards towers fit that promise.

 

Lewis' role

Lewis was an early backer of de Blasio. The article notes that, while Lewis, who runs The Black Institute, has no official role with the NYCC, she discusses the group using the pronoun “we.”

Indeed, she remains the face of the affordable housing program.

Gilmartin: Forest City "besieged" with interest from other developers considering modular construction

Real Estate Weekly reported yesterday, in Developers lining up to do business with module makers:

FCS Modular, The joint venture-child of Forest City Ratner and Skanska Construction, is up and running in the Brooklyn Navy Yard, producing pre-fabricated building modules for the first residential tower at the Atlantic Yards site in Downtown Brooklyn.
But the new company has already attracted interest from other developers considering modular construction for their own projects, MaryAnne Gilmartin, president and CEO of Forest City Ratner, told a luncheon meeting of the Association of Real Estate Women Tuesday.
“Besieged isn’t an overstatement,” she said.
...And while FCS Modular is intended to support more buildings than the 15 towers planned for Atlantic Yards, Gilmartin said, B2 gets priority and will serve as an advertisement for the new building technology.
“We will take competitor business into the factory … but right now the quest is to get this building up,” Gilmartin said. Forest City estimates that the construction-cost saving of modular construction is between 15 and 20 percent of the cost of traditional construction.

I don't doubt they're besieged with interest, given the potential for savings, though signing deals is another question. I suspect potential new customers want to see how the new B2 tower shakes out.

Also, given the challenges in delivering modules from the Navy Yard to the Atlantic Yards site in Prospect Heights, I suspect that developers who find modular more attractive have projects in a reasonably close orbit of the Navy Yard.

Last year, Forest City Ratner Chairman Bruce Ratner told Engineering News-Record that "his plan is to sell turnkey modular high-rises to other developers and landowners."

Nets say season ticket prices for next season "remain the same" and "start at $45 per seat." Except this year they were $25.

In their inaugural season, the Brooklyn Nets started season tickets at $15/seat, part of a longstanding--if short-lived--plan to offer 2,000 seats at $15.

In this season, their second, the cost of the least expensive season tickets rose to $25/seat.

Yesterday, the Nets issued a press release, Brooklyn Nets 2014-15 Season Tickets on Sale Now:

Brooklyn Nets 2014-15 season tickets are now on sale. Season ticket prices remain the same from the 2013-14 season and start at $45 per seat. All season tickets come with priority access to purchase seats for the Playoffs...

(Emphasis added)

Indeed, as noted in the graphic below, the cheapest seats, in light blue, orange, and aqua, start at $45.

2014-15 season tickets, 3/3/14

2012-13 prices

Looking more closely

This does not compute.

On the right is a screenshot I took 7/5/12, preceding the inaugural season.

Note that the cheapest seats, again in light blue, orange, and aqua, started at $15.

Below left is a screenshot I took 3/12/13, preceding the current season.

Again, the cheapest seats, in light blue, orange, and aqua, started at $25.

So far, the team's press release was picked up by NetsDaily and The Brooklyn Game, and tweeted by a beat reporter or two.

2013-14 prices

On NetsDaily, some fans expressed scorn about buying season tickets, because cheaper seats are often available on the resale market, and they lose money if they try to re-sell tickets.

(I've written about how the Nets practice dynamic pricing, changing the price for certain games.)

And some scorned Nets CEO Brett Yormark for saying they "fully anticipate being in the Playoffs," after previously expressing championship aspirations.

But there's a more fundamental criticism.

The Nets aren't telling the truth.

From the latest Atlantic Yards Construction Alert: backfilling suspended for weather; 45 modules (of 930) delivered in 2+ months

According to the latest two-week Atlantic Yards Construction Alert (below), prepared by developer Forest City Ratner and distributed yesterday by Empire State Development, approximately 45 modules--of the 930 needed to build the B2 residential tower--have been delivered and installed at the site.

That's fewer than six mods a week since the beginning of the year, when deliveries were supposed to begin in earnest (after a media event in December, when the deliveries were said to begin). A maximum of eight mods a day--four during the day and four at night--can be delivered.

That means that, if all eight get delivered, they could finish deliveries of the 885 remaining mods in 111 work days, or fewer than 23 weeks, assuming no weekend work.  At the rate of six a day, the 885 remaining mods would be delivered in 148 work days, or  about 30 weeks, again assuming no weekend work.

At the rate of four a day, it would be 221 work days, or 45 weeks, which would push the completion of B2 into 2015. This opens the possibility that they might need weekend work to finish the tower so it can open by December 2014 as announced.

Also note that backfilling has been suspended due to the weather.

Below are verbatim excerpts from the alert.

B-2 Tower, Modular Residential
• Backfilling will be suspended until the weather breaks. Work is projected to recommence in March.
• Rough in for the MEP trades in the basement and ground floor will continue during this reporting period.
• Block work in the cellar will continue during this reporting period, weather permitting.
• Brace frame erection will continue during this reporting period.
• Approximately 45 modules have been delivered and installed to date.
• Installation of temporary power and lights will be maintained throughout the project. This is an on-going activity.
• Daily cleanup activities of sidewalks and streets are ongoing as required.

Deliveries are scheduled to take place during this reporting period weather permitting.

LIRR Yard Activities Block 1120 & 1121
• Stage 2C work has commenced and will consist of Support of Excavation (SOE) work along Pacific Street between Carlton Ave and Vanderbilt Ave. SOE installation will include drilling of 106 24” diameter soldier piles, installation of lagging, installation of tiebacks, excavation/disposal of soil and demolition and removal of the existing concrete retaining wall. Work is anticipated to be completed in June 2014.
• Contractor will continue drilling the 24” diameter soldier piles along Pacific Street from the inside of the LIRR yard during this reporting period. The drilling equipment will be located within the rail yard. Sound – dampening blankets have been installed along the length of fence on Pacific Street, between Carlton and Vanderbilt Avenues.
• 78 piles have been installed to date.
• Contractor will continue installation of lagging, excavation of soil and demolition of the lower portion of the concrete retaining wall along Pacific Street during this reporting period.
• Contractor will begin installation of tiebacks during this reporting period.

Atlantic Yards Construction Alert, March 3, 2014

Barclays Center, a little late, releases March 2014 event calendar for neighbors

Here it is, after I wrote about the lapse this morning. Note that the largest crowds are expected to be for Nets games:

Forest City Enterprises: one Atlantic Yards tower "hopefully" will start by end of year; exec in Brooklyn had promoted multiple groundbreakings

Forest City Enterprises executives were cautious in speaking about Atlantic Yards plans during a conference call last Friday with investment analysts, indicating that one more building might start this year.

That contrasts with the optimism expressed by Forest City Ratner executive Melissa Burch, who in a 2/19/14 interview with BisNow, was said to be hoping to announce multiple groundbreakings later this year.

Forest City's deal with the Chinese government-owned Greenland Group is expected to close in the second quarter of this year. "We believe bringing a strong global partner to Atlantic Yards will help accelerate this important project and lead to meaningful value creation, " CEO David LaRue said during the conference call. 

Greenland will own 70% of the 15 remaining towers beyond the under-construction B2 and also invest in infrastructure. "The definitive agreement between us and Greenland, this great company, this great development group, is signed and being held in escrow, so that’s not a risk at this point," LaRue said.

One building this year?

"That will allow us, just based upon our own objectives, to get the infrastructure under way, and allow us to move forward with the planning, which we’re already doing, of additional buildings, beyond B2," LaRue continued. "We’re planning additional residential buildings, whether they’re rental or condo. We have that opportunity, as you know, because we have parcels not only on arena block but on [Block] 1129, which allow us to execute before that infrastructure goes in, for the Long Island Rail Road, for the permanent yard and the deck."

Indeed, Forest City since October 2012 has indicated plans to build on Block 1129, site of the above-ground parking lot, before building on the railyard. Overall, Forest City plans 4500 rental units, half of them subsdized, and 1930 condos, with perhaps 200 of them subsidized. 

"Again, they [Greenland] and us are anxious to get this going," LaRue said. "And that affordable housing component, which we remain focused on and committed to, is part of that acceleration. So we’re on track to get hopefully by the end of the year one of those starts that I mentioned, there’ll be another building at the project."

Analyzing the "impairment"

Forest City, which in December warned of an "impairment" to the bottom line of $250-$350 million, announced last week that the sum, at the firm's pro rata share of Atlantic Yards, is $242.4 million, or $148.4 million after taxes.

Asked why it was below the low end of previous guidance, CFO Bob O'Brien said, "We were finalizing agreements with Greenland when we made our announcement." He also said Forest City had been thinking about the entire impairment, without accounting for their partners--the identity and percentage ownership of which remains murky.

"When we net out the interest of our existing partner, it lowered it below 250 [million dollars]," he said.

The arena

On the call, Forest City executives stressed the prominent of the Barclays Center, but downplayed the cash flow, which, as I reported, meant a net operating income (NOI) of approximately $34.4 million, far below the $65 million figure expected in 2016 and not that much above the $27.8 million needed for debt service this year.

"We’re pleased with the acceptance of this fabulous facility, in the heart of Brooklyn, by the entire market," La Rue said. "So the revenue, again, as we’ve stated, is on track. We do have plans in place, I don’t want to get into the specific areas that we’re targeting, for a better investment of those dollars."

Actually, arena/team CEO Brett Yormark has already said the arena was overstaffed and they planned to cut down.

Asked for details, LaRue offered a "broad picture," suggesting that, upon opening, "we had a significant number of hosts" to help people find their way around the arena, but aren't needed now.

"We’ve targeted that $65 million as a stabilized number," he said. "That number does include the hockey operations coming in from Long Island. Right now, based on our view, we can achieve that in that time frame."

Looking at the balance sheet

One analyst referenced one SEC document and asked what would happen regarding $367 million of the "development project held for sale"and the $168 million of debt. "Should I think about that as realizing $200 million in cash?"

"Yes, replied O'Brien. Greenland is "coming to the table with approximately that amount of dollars," which will be used to help fund the permanent railyard and deck. (It's surely not enough.)

"That will go back in over time," he said. "So, we will receive gross $200 million." And while there are "some expenses related to the transaction" and some "other pullbacks," he said, "much of that cash will come to us."

Forest City also will get a 5% development fee for the entire project, so, if the rest of Atlantic Yards costs $3.8 billion--a ballpark figure that likely will rise--and Greenland puts up $2.66 billion, Forest City would earn $133 million.

That's relatively close to the impairment, though, given that the fee would be delivered over time,  a good deal less than the present value. Then again, the joint venture seems poised to save another $100 million or so from EB-5 investor funds.

Barclays Center March 2014 calendar: 32 events, nine days dark, Jason Collins debut; Black Sabbath a test (and where's the calendar for neighbors?)

The Barclays Center's March calendar includes six circus performances (already completed this weekend), nine Nets home games, four concerts including, one WWE event, and the five-day Atlantic 10 college basketball tournament, which includes 12 games

That's a total of 32 events, with nine days dark; that still leaves room for hockey, when it comes.

Notably, tonight will be the first Nets home game since they signed Jason Collins, the first openly gay player in the NBA. Expect larger crowds than usual for a Monday night and a lot more TV trucks.

From a neighborhood perspective, one test will be the Black Sabbath on Monday, March 31, since presumably the band likes to turn it up to 11. Will the arena's newly implemented acoustical controls dampen escaping bass?

(Then again, hip-hop and electronic dance music concerts have been more problematic than hard rock.)

No calendar for neighbors, with crowd estimates

Note that the arena has not yet released, as it promised and has done fairly consistently, an event calendar for neighbors that estimates the expected attendance.

That also might have alerted neighbors that the circus load-out last night might bring some improper congestion.

In the photo at right, note the circus trailers parked in front of residences on the south side of Dean Street (at left in photo), prompting a city bus to thread its way through, after having been pushed to its right by the closure of the piece of the street flanking the B2 construction site.

See below for the March 2013 calendar, which also had nine dark days but many circus shows.