Monday, June 08, 2009

What should $20 million buy? What's the Block 1119, Lot 7--the western railyard segment--worth? (First in a series)

Forest City Ratner reportedly wants to pay just $20 million to the Metropolitan Transportation Authority for the portion of the Vanderbilt Yard it needs to build the Atlantic Yards arena. It initially promised to pay $100 million for the whole railyard. This series attempts to add some context.

Let's put aside, for the moment, the bait-and-switch aspects of pledging to pay for the whole railyard, then offering to pay for it in segments. (After all, if that were preferred public policy, then parcels could have been bid out, as with the UNITY Plan.)

One strange aspect about FCR's apparent plan to pay $20 million for Block 1119, Lot 7, is that it doesn't even represent a pro rata payment.

According to city Finance Department records, the segment is approximately 495 feet x 200 feet. That 99,000 square feet represents 2.27 acres, or 26.7% of the 8.5-acre railyard. So a pro rata payment of 26.7% would be $26.7 million.

(The arena block is above. The full AY footprint Block and Lot map is here; the yellow indicates properties owned by either the MTA or the city.)

What the appraisal said

Remember, however, that the MTA's own appraiser valued the railyard at $75 per buildable square foot, with a Floor Area Ratio (FAR) of 10. Multiply 99,000 x 10 x $75 and the result is $74.25 million.

A little adjustment is necessary, because the appraiser valued the railyard at $271.2 million before subtracting $56.7 million to account for track relocation and platform construction. To reach a value for Lot 5, let's subtract $15.3 million--27% of $56.7 million--and reach a value of $59.95 million.

What does the city say?

So, is the lot worth $60 million? City Finance Department records, as shown at the right, don't place a value on the railyard.

In the next few days, I hope to point to other properties worth $20 million. Reader contributions are welcome.

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