Saturday, June 20, 2009

The four ways FCR could "railroad" (as per New York magazine) the MTA on the value of the Vanderbilt Yard

New York magazine political reporter Chris Smith, who wrote the only tough mainstream piece on Atlantic Yards, way back in August 2006, takes a look at the upcoming negotiations with the Metropolitan Transportation Authority (MTA) and concludes Smith: Ratner Close to Railroading MTA on Atlantic Yards.

Smith cites two examples of such railroading--the cash payment and the quality of the replacement railyard--and they're worth pointing out. However, as I note below, I think there are two more examples.

Paterson is key

The key piece is the closing paragraph, in which Smith suggests that the public commentary at the MTA meetings next week will be irrelevant, and implies that efforts by elected officials to have the MTA delay the vote would come to naught.

Why? Forest City Ratner doesn't lobby the MTA but, according to a government insider, "just try to do business right through the governor, and expect that the governor will tell the MTA what to do.”

So it's up to Governor David Paterson, who's been AWOL on AY, with many other things on his plate.

Little coverage yet

The request by Assemblyman Jim Brennan and colleagues for the MTA to delay its vote got coverage in the New York Observer, Bergen Record, and the online NJ.com (home of the Star-Ledger) but not in any of the three New York City dailies, nor (yet) in any Brooklyn weekly.

That would seem odd, but we've gotten used to neglect of the AY story, right? (The news did make WINS radio.)

Discussion moved up?

Smith writes that the MTA at its finance committee meeting Monday will be “presenting a revised agreement” for the Vanderbilt Yard, and suggests that Monday reveal--rather than at the full board meeting Wednesday--is a response to calls for more transparency.

Maybe, but it was long my understanding that the issue would be raised Monday.

The big picture

Smith sketches the picture:
The MTA needs all the goodwill it can get, because it’s likely to give Ratner an enormous discount from the original $100 million he agreed to pay to build on state land. The developer is arguing that he deserves the price cut because Atlantic Yards has been hobbled by recession and by pesky lawsuits. Yet Ratner was campaigning for increased taxpayer subsidies from the city and state even before the economic downturn. Now his project has dwindled severely. Gone is the glossy Frank Gehry design; the other great selling point, below-market-rate housing, won’t arrive anytime soon, if ever. What’s left is a drab, bargain-basement basketball arena at the corner of Flatbush and Atlantic Avenues. Ratner is desperate to get shovels in the ground by the end of 2009 or he’ll risk losing his existing tax breaks and sponsorship arrangements.

Smith can read and "call bullshit": Ratner began renegotiating the deal in 2007 and continued in early 2008.

Reduced price: railroad #1

Smith writes:
But the MTA appears willing to settle for a drastically reduced price in order to salvage some kind of short-term development at Atlantic Yards: Sources say the new price tag is likely to be either $20 million upfront or $10 million per year for ten years.

Only the former had been reported. While $10 million a year would mean a lower down payment, it might mean a steadier delivery of the entire $100 million. But why, the MTA must explain, does it think that the segment Forest City Ratner wants is worth only $20 million?

Cheaper permanent yard: railroad #2

Smith writes:
As disappointing as the cash may turn out to be, there’s another significant change in the works. “The thing to watch is whether the MTA gets screwed on the rail yards,” one party to the negotiations says. Ratner had agreed to build a new and improved rail yard for the LIRR. But he’s trying to cut back there, too, possibly delivering a new yard with 25 percent less capacity than the existing facility. “That would be a real loss,” the official says. “Ratner is supposed to build a rail yard that’s worth $200 to 300 million.”

Well, it's already been reported that the permanent railyard would have seven tracks rather than the promised nine tracks. The new railyard was said by FCR to be worth $182 million, but maybe inflation would take it over $200 million. The MTA has not provided a figure on the value of the replacement railyard. Nor has it revealed whether the new permanent railyard would have lesser capacity.

The other two examples: original cost and temporary yard

One of the other examples of "railroading" is simply the deal the MTA originally cut: accepting $100 million in cash for a site appraised at $214.5 million, and not questioning FCR's dubious math on the value of the extras.

The other involves the quality and persistence of the interim temporary railyard at the site. Once, this railyard, with space for 30 fewer cars, was supposed to operate for 32 months before being replaced by the higher-capacity permanent yard.

Now, there are hints--though we can't be sure--that the temporary yard might be delayed much longer and might not ever be replaced.

3 comments:

  1. As George Sweeting testified on May 29th, and as you have reported, land values on the site on which the arena would be built have tripled in the past three years.

    If that's the case, doesn't that make the MTA's original assessment of the railyard, at $214.5 million, now equivalent to $643.5 million? Shouldn't Ratner be paying a lot more for the railyard, rather than less?

    The cash-strapped MTA and Governor Paterson will commit a serious transgression against the people of New York if they consummate this deal with Forest City. And if one thinks Paterson's approval rating is in the tank now, just wait.

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  2. is it worth contacting patterson about this? i have a feeling he doesn't care much and will just rubber stamp what he's told to. i doubt he has any serious hope of being re-elected anymore.

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  3. Yes, it is worth contacting Paterson.

    Contact the Governor at:
    518-474-8390

    Write:
    David A. Paterson
    State Capitol
    Albany, NY 12224

    Email form:
    http://161.11.121.121/govemail

    ReplyDelete