Forest City

When the city's Economic Development Corporation earlier this month explained how it planned to spend the $205 million in taxpayer money that it had earmarked for Atlantic Yards, one purpose it did not mention was lobbying expenses. But opponents are now making hay of a report that shows that Forest City Ratner spent $2.11 million for lobbying in 2006, the third highest amount of any company in the state.

Develop Don't Destroy Brooklyn calls this a "shell game," considering how the money that Forest City is saving on EDC-approved uses like land acquisition can be spent lobbying state and city officials (and because a lot of the city money is going to the state because the railyards will cost $100 million).

The Real Estate thinks the big winner in all of this is lobbying firm Fried, Frank, Harris, Shriver & Jacobson, which received $656,520 for its efforts. Among other targets listed in its lobbying report are "acquisition of Altantic Avenue railyards from MTA" and "acquisition of city-owned property at Atlantic Yards."

Apparently, Mr. Fried and Mr. Frank persuaded Forest City that it needed their help persuading the state and the city to do things that they pledged when they signed a memorandum of understanding (PDF) back in 2005, and for a sweet price.

In its registration letter filed with the state lobbying commission, Forest City agreed to pay up to $995 an hour for Fried Frank's services.

- Matthew Schuerman

Even Chuck Ratner, Bruce's cousin and chief executive of parent company Forest City Enterprises, thinks Atlantic Yards will take 15 years. Then he told an audience at a business conference, according to Norman Oder, "I'm not at all confident of how long it will take us to finish." - Matthew Schuerman

The Brooklyn Paper got a hold of an audit conducted for the state that reveals that Forest City Ratner was planning on charging outside organizations $100,000 to rent the Nets arena for graduation ceremonies and other non-sporting events--while the company had once promised to make it available to community groups for "a reasonable rate." A Nets official said the actual rate may vary.

The audit also says that Forest City expects to clear $400 million a year in "pure profit," according to the community weekly.

- Matthew Schuerman Update: Norman Oder had this first.

Our claim from July that Atlantic Yards would be the densest census tract in the country seems to be sowing some confusion, which is just as well, because we never really said that.

What we said was that Atlantic Yards would be twice as dense as the densest census tract in the country, but nothing about it being its own census tract. The 22-acre project spans four census tracts, as you can see from the map above, which we have borrowed from NoLandGrab, an opposition blog. The red parts are where Frank Gehry's skyscrapers and arena will go.  read more »

Because all of this confusion made us curious, we went ahead and calculated what effect the new population would have on the densities of those four census tracts. No, none of those tracts will become the densest in the nation, but one of them, 129.02, which will host the basketball arena and three skyscrapers, would apparently leap into the ranks of the 100 densest tracts.

• If Times Square "destination" penthouses aren't your thing, perhaps you'll be happy to know that Hilton is building a branch of its Grand Vacations Club on 57th Street. The company says it's "the first ground-up timeshare development in N.Y.C."--to which The Post appropriately replies: "Ooookay." (NY Post)
• Hilariously, Forest City has unanimously approved the City Planning Commission's suggestion to reduce the Atlantic Yards development by 8%. Earlier this week we were under the impression that an 8% cutback in size--try and follow the logic here--meant an 8% cutback in size. But apparently the newly "reduced" plan is exactly what the developer had in mind way back in 2003. (Check the bottom comment here for some wise foresight). (NY1)
• If all these numbers confuse you because you're under 21, why not head to your local watering hole to wash your headache away? Or maybe not: the elderly sticklers of the New York Nightlife Association are proposing to outlaw sub-21 revelers from Manhattan bars and nightclubs. Chelsea, Williamsberg, and the entire Lower East Side will all be so over in one fell swoop. (Crain's)
• It only took 18 years for The Museum of the City of New York to break ground on its big expansion. Congrats, kiddos. (New York Times)
• On a similar note, it turns out that the city's long-tweaked Hudson Yards deal with the MTA "could bankrupt the authority and endanger other transit projects." Oops. So don't hold your breath for that expansion of the No. 7 line, or that nice new development with pleasant river views, or that big shiny stadium. NYC Olympics 2012, anyone? (New York Times)
- Max Abelson
• 3 comments

"A woman just called me up from Queens.  read more »

"A woman just called me up from Queens.  read more »

Norman Oder reported yesterday that Forest City Ratner had given out another $350,000 to an ally in its fight to bring the Atlantic Yards complex to Brooklyn.

Well, Forest City spokesman Joe DePlasco tells us that figure is the total amount budgeted to be given the group, the Downtown Brooklyn Educational Consortium, but that the developer has written checks for only about half of that so far.

In November, Forest City announced an $87,000 grant, and another $87,000 installment was given out since then--but never announced.

Which is funny, because the last time Forest City tried to give out money but didn't let anybody know, it caused a big headache, and they resolved to announce future gifts in the future . This headache is admittedly smaller, but it still must smart a little.

So why didn't they announce this one ahead of time?

"We hoped you would catch us," DePlasco said. "What can I tell you? We've said repeatedly that we would support groups in the community and this is an example of doing that."

He would not specify whether other signatories to the community benefits agreement had received grants since the last official announcement in November.

-Matthew Schuerman

Charles Gargano, chairman of The Empire State Development Corporation, downplayed complaints yesterday about a possible conflict of interest because the agency, which is supposed to review the proposal for the Atlantic Yards complex in Brooklyn, relied on the same law firm that had advised the project’s developer, Forest City Ratner. "I don't know whether we are using the same lawyer,” he told the Daily News. "I don't know of any conflict."

It turns out, according to a document The Real Estate obtained through a Freedom of Information request, that Forest City actually recommended the law firm to the E.S.D.C. A letter, dated Feb. 18, 2004, states that “[Forest City] has requested that [E.S.D.C] authorize and/or oversee the following services to be performed with the project” including “legal services to be provided by Sive, Paget & Riesel in connection with the environmental analysis of the project.” One of the services that attorney David Paget performed for E.S.D.C., according to the lawsuit filed Wednesday by Atlantic Yards opponents, was approving the developer’s application to demolish six buildings it owns on the project site, near Atlantic and Flatbush avenues.

The opponents' attempt to get a temporary injunction forestalling the demolition failed in court Thursday, according to Candace Carponter, a spokeswoman for the plaintiffs. However, the case will come back to court Feb. 14, which would be almost a week before Forest City said it would be able to begin work anyway.

The letter, which was “agreed and accepted” on Feb. 25, 2004, by the E.S.D.C., goes on to guarantee that Forest City will pay for the legal and consulting costs that the state incurs from the project, particularly costs relating to eminent domain. This much is standard: developers regularly pay government for the trouble of reviewing their applications for rezoning, and should logically reimburse taxpayers for the cost of land that is seized. To guard against bias, the state rather than the developer interacts with the consultants as the project works its way through the approval process. The question is, do developers regularly get to select—or even recommend--the consultants? And should they?

Sive, Paget stopped working for Forest City in September, which was about the time when the E.S.D.C. review process got started.

The 2004 letter also names A.K.R.F. as Forest City’s recommendation for environmental consultant, which undertakes the environmental impact statement. A.K.R.F. has also worked for Forest City before.

A Forest City spokesman referred questions to the E.S.D.C., which said that it contracted directly with Paget. However, the agency did not explain whether the developer usually gets to influence the choice of counsel. David Paget did not return messages.

It should be noted that David Paget, in addition to working for Forest City, has also worked for the E.S.D.C. before. His web page mentions the 42nd Street Redevelopment Project, the downtown Brooklyn rezoning, the convention center, and that Gargano may well have chosen him even without Forest City’s recommendation.  read more »

Apparently, this town is not big enough for environmental lawyers to stay on one side of the regulatory fence.

-Matthew Schuerman

Defenders of the Atlantic Yards community benefits agreement have long whispered that it is vastly superior to the much ballyhooed minority hiring plan hatched last February by the New York Jets for the football team’s ill-fated West Side stadium. The Real Estate just got a copy of the plan, which was widely believed to have been kept secret from the press when it was released. (Jets spokeswoman Marissa Shorenstein said this week it was given to anyone reporter who asked for it.) But it isn’t so much a plan as it is a plan for a plan. In it, the consultants promise to “[establish] parameters for firm participation” and “implement an outreach strategy to target areas of high unemployment.” Jets President Jay Cross was widely quoted at the time as saying the stadium would give “up to $100 million” worth of work to minority-led firms (about 5 percent of the total project cost), but the plan doesn’t even mention that figure as a goal, let alone guarantee it. By contrast, developer Forest City Ratner promises in the Atlantic Yards agreement at least to try to hire 35 percent minority construction workers and to steer 20 percent of the construction spending to minority-owned firms for the 22-acre project in Brooklyn, which will include a new basketball arena for the Nets and 16 apartment and office towers.

Yet one element that the Jets included that Forest City did not was a conflict-of-interest clause: the politicians, association heads and consultants who were on the minority advisory board for the stadium and were to continue on as supervisors of the agreement “will be precluded from entering into any service contract work with the NY Jets and its consultants on the [New York Sports and Convention Center] project.”

Earle Walker, executive director of the Regional Alliance for Small Contractors, which devised the Jets agreement, told the Real Estate that the conflict-of-interest clause came about largely for a practical reason. “We would have a meeting that would go on for two or three hours and we would spend at least an hour on who was going to get what contract,” he told the Real Estate.

Just imagine what went on in that Forest City board room!  read more »

Without such a conflict-of-interest clause, three of the eight signatories of the Atlantic Yards agreement have already received money from Ratner. BUILD, which had received $138,000 as of mid-October, is drafting its jobs program right now. The big question is whether BUILD will actually do the training itself (and take much of the money), or subcontract it out to other certified, and experienced, job-training programs (and simply take an administrative fee).

-Matthew Schuerman

Sometime in late 2003, a Brooklyn activist asked State Assemblyman Roger Green what he thought about  read more »

Since Sunday, the Cleveland Plain Dealer has been running an all-out series on Forest City Enterprises, the nation’s largest publicly traded real estate company of which our own little Forest City Ratner (MetroTech, the new Times tower, Atlantic Yards) is just a small part.

They spend a few paragraphs on Forest City’s ability to take public subsidies and use them to make a profit by developing in run-down city neighborhoods that other companies wouldn’t touch. Another worthwhile read examines the company’s tortoise image on Wall Street. We’re still waiting for that big overview that tells us what the company is all about—and of course we can't wait to hear them talk about New York City!  read more »

-Matthew Schuerman

A Nets arena opponent writes:

go to the New York Times and in the search, search 'Atlantic Yards' or 'Ratner'

and look what you get up top, an ad for BUILD.

Apparently this is where at least a few thousand of Forest City's $138,000 contribution to BUILD is going: on your computer screen.  read more »

Hey, it works on Google too!

-Matthew Schuerman

Forest City Ratner just issued a press release coming clean with just how much the developer has given to community groups supporting its Atlantic Yards project: $138,000 to BUILD, which is supposed to run job training programs, and $50,000 to the Downtown Brooklyn Neighborhood Association, which is supposed to set up a community center and a health center. That’s it. No more—or no more until the developer makes more payments.

The press release is a tacit acknowledgment of how much Forest City’s public relations strategy had veered off course. Instead of doing stories about how much good these community organizations were going to do for the community, the media was doing stories about how BUILD couldn't get its story straight .

“When we provide funding for programs that are good then we should let the public know about that, and when we gave these organizations money after we signed the community benefits agreement, we should have put out a press release at that time,” Forest City spokesman Joe DePlasco told the Real Estate. “If you are trying to operate in an open enough way as possible, when you miss one thing, people will say, ‘Oh you missed one thing.’”

Jim Stuckey, the project director, said outside a hearing last night that DePlasco, who is an outside public relations rep, didn’t know, when he first denied money changed hands , that BUILD had received money.

That doesn’t explain why BUILD President James Caldwell didn’t know it had received money, or that he was getting paid. Cheryl Duncan, a spokeswoman for BUILD, said that the organization’s members had been working for so long without pay, and that it had just received its first general operating support in August, and paid payroll for the first time Sept. 5. Reporters started asking about the payments in late September.

“Quite frankly, they got caught off guard by the question,” she told the Real Estate. “It’s been so long that they have been doing work voluntarily, that it was a relatively new change.”  read more »

(Of course, BUILD got money before that--in June or July--to hire people to hand out copies of the Forest City newspaper, the Brooklyn Standard. But it was $10,000, only about a tenth of which BUILD kept for administrative purposes, Duncan said.)

-Matthew Schuerman

The MTA board will vote Wednesday on whether to sell air rights over one of its rail yards in Brooklyn to Forest City Ratner for its Atlantic Yards project. A memo to board members makes it official: the MTA managed to wheedle $100 million out of the developer. That's twice what Forest City originally wanted to part with, though still lower than the other bidder, Extell Development, was offering and what the appraiser thought the parcel was worth.

We are taking bets from anybody who thinks the board will say no.  read more »

--Matthew Schuerman

The Times reports that Forest City Ratner has doubled its offer for the MTA rail yard on which it wants to build part of its Atlantic Yards complex in Brooklyn--basketball arena, offices, retail and housing. The story cites unnamed transportation officials who doubted whether Ratner's rival, Extell Development Company, included a new rail yard as part of its bid. The funny thing is that Extell's July 6 bid clearly did. Though the company would not spend as much as Forest City, Extell President Gary Barnett wrote at the time that his proposal "fully respects" the requirements "concerning MTA and LIRR transportation uses, which must be maintained during construction and permanently thereafter." As we reported before, the bid estimates that up to $42 million would be needed for relocating the tracks.

The MTA board could vote as early as next Tuesday.  read more »

-Matthew Schuerman

What does the "secret" memo, circulated among the city, state and Forest City Ratner and uncovered by anti-Ratner Brooklyn group Develop Don't Destroy Brooklyn on Aug. 17, really mean?

The Real Estate is less surprised than The Sun and the Brooklyn Papers (pdf) that the city didn't give this deal much publicity, even though it was reached the same day as an agreement endorsing Atlantic Yards (the Frank Gehry one with the Nets basketball arena).

After luxuriating a fortnight in the memorandum's elegant prose, we think the most important bit is that Bruce Ratner may end up razing the dreaded Atlantic Center mall--don't worry, not the one with Target, but the weird one next door--and replacing it with an office and apartment complex five times as large. Or he might just stick the added bulk on top.

A Forest City spokesman, Joe DePlasco, emphasizes that Forest City has not developed alternative plans, but even Ratner's right hand man, James Stuckey, has said publicly that he dislikes the Atlantic Center, designed to lure chain stores to the Big Bad Brooklyn of the mid-1990's. The place does look a bit like a prison diagram from Michel Foucault's Discipline and Punish.

The "secret" memorandum explains that if the Atlantic Yards plan goes through, Forest City would, in addition to building about 7.5 million square feet under the Gehry project, add 1,257,728 square feet to the Atlantic Center site. If the Nets arena plan fails, Forest City would get to develop even more on Atlantic Center—1,586,000 square feet, on top of the roughly 400,000 square feet of retail already there. Forest City would have to pay the city for the extra development rights, and also have to get zoning approval to change the use from commercial to partially residential.  read more »

Good thing we finally got this figured out because this afternoon, Develop Don't Destroy Brooklyn has got another story for journalists, who are particularly news hungry at this time of year: a report that alleges The New York Times, which just happens to be developing a new headquarters with Forest City on Eighth Avenue in Manhattan, has been "inadequate, misleading, and mostly uncritical" in its coverage of the Brooklyn arena. Stay tuned.

- Matthew Schuerman

So the foregone conclusion in downtown Brooklyn is almost concluded: developer Bruce Ratner is sort-of guaranteed to be the buyer of the Vanderbilt Yards in Downtown Brooklyn.

That is: the M.T.A. voted yesterday to negotiate exclusively with Ratner, though it plans to seek more money from him in the deal.

But if they can't come to terms in 45 days, Extell is back in the running.

Newsday quoted M.T.A. chairman Bob Kalikow thusly:

"I think the bid that we did get from Forest City, while complete and well thought-out, frankly was not as high as I expected."

Community activists like Develop, Don't Destroy Brooklyn, are decrying the M.T.A.'s willingness to negotiate with a low bidder.

The Real Estate wonders how far community activists should push this point, though. We surely are not sorry that the Port Authority has banished mall-moguls Westfield America from the World Trade Center site, right? Though they'd probably bring in more dough than--what is it again, The Drawing Center? Right.

Meanwhile, the picture above, via the more design-erudite real-estate blog, Curbed, comes from blogger Aaron Naparstek, who, rightly, we think, is reminded of the "New York, New York" fiasco in Las Vegas when he sees the models for the Ratner project.  read more »

- Tom McGeveran

So, there's been some time now to evaluate the competing bids to develop the Atlantic Yards in downtown Brooklyn. Here's how it looks to The Real Estate: Cash up front FOREST CITY RATNER: $50 million EXTELL: $150 million Estimated cost of covering yards FOREST CITY RATNER: $99 million EXTELL: $108 million Estimated cost of other site prep FOREST CITY RATNER: $70 million EXTELL: NA Estimated cost of moving yards FOREST CITY RATNER: $182 million EXTELL: $42 million Payments to MTA to offset increased costs of operating underground FOREST CITY RATNER: $1 million a year for 50 years EXTELL: NA Public Subsidy FOREST CITY RATNER: $200 million* EXTELL: $150 million Cost of mass transit improvements FOREST CITY RATNER: $29 million EXTELL: NA No. affordable rentals FOREST CITY RATNER: 2,250* EXTELL: 573 Cost of condos FOREST CITY RATNER: NA EXTELL: $1.05 million Maximum height FOREST CITY RATNER: 620 feet* EXTELL: 287 feet Eminent Domain FOREST CITY RATNER: Yes* EXTELL: No Completion Date FOREST CITY RATNER: 2013 EXTELL: 2010 *For entire Forest City project, which extends onto neighboring property. We wonder:

--Is Extell realistic about how much site prep work will cost? Forest City's is partially explained by what a big deal it makes about how much better and nicer the new rail yards will be, and hey, the same people making the decision about the sale are going to be using those yards.

--Will a 1,500-foot condo in Prospect Heights really be worth $1 million? Even in the year 2010?

--Are MTA board members going to read both bids over the weekend? Are they going to read them ever?  read more »

- Matthew Schuerman

On a January day last year, about 30 activists walked into a windowless boardroom, high over downtow  read more »

This is getting interesting. The MTA released the bids for the Vanderbilt Yard (a.k.a. Atlantic Yards) over in Brooklyn and it looks like the maverick Extell Development Co., run by Gary Barnett, outbid the Mayor's favored player, Forest City Ratner. Extell is offering $150 million in cash, compared to $50 million offered by Forest City.

Forest City is using the number $329.4 million, though, in a press release, which includes money for environmental clean-up, construction of a new train yard to which the MTA would move its operations, and the sales tax that the development will bring to the MTA over the long haul. (A portion of your sales tax goes to the transit authority, but Ratner may be exempted from sales tax on construction materials, per a deal with the city and state reached in February.)

Forest City would also use $200 million in public subsidies for its sprawling residential-commercial-retail-basketball complex, about half of which would be used for the blocks surrounding the rail yard, versus $150 million for Extell's more modest residential and retail set-up, which would be confined to the area over the yard itself.

Both bids low-ball the official MTA appraisal of the property, also released today, which comes in at $214.5 million, which takes into the account the $56 million or so the appraiser expects would have to be spent to make that rail yard, which is really just a trench in the ground right now, worthy of development.

"We submit this proposal with full awareness that the city of New York has conditionally, and to our mind, prematurely, designated another developer for construction of a massive arena on a portion of this site," Barnett wrote in his cover letter to the MTA.

Forest City's bid opens with quotes from Pataki, Bloomberg, and Marty Markowitz, and letters from Chuck Schumer and many others.  read more »

More on this coming...

- Matthew Schuerman

Assemblyman Roger Green held a press conference this morning to endorse the Atlantic Yards proposal in Brooklyn, but it wasn't just the fact that Green had pled guilty to padding his travel expenses last year which made this thinly attended event odd. (Oh, plenty of other electeds and community leaders stood beside him—it was the press that was lacking.) Rather, he upstaged himself by announcing that Rev. Al Sharpton would come out for the Forest City Ratner project—the one with the Nets arena and 17 high rise towers—tomorrow night at the Duryea Presbyterian Church in Prospect Heights. This isn't the first time the Reverend Al has gotten into the development game—he endorsed the Jets stadium for many of the same reasons, including jobs and contracts for minorities.

As much as Forest City must value Reverend Al's support, it surely cannot like the comparisons that journalists will doubtlessly draw with the failed Jets' campaign.  read more »

- Matthew Schuerman

Despite entreaties from the Daily News, the M.T.A. is not going to make anything about the bids for the Atlantic Yards (formally known as the Vanderbilt Yard) public very soon.

A spokesman told The Real Estate today that the M.T.A. sent back the proposals to both developers--Extell and Forest City--for "clarifications," due next week. Add another week for M.T.A. staff to digest the volumes and brief board members and it could be the end of July before we know anything at all. As a result, the spokesman doubts the board will vote July 27 as originally envisioned. Pencil it in for the next meeting, Sept. 29.  read more »

- Matthew Schuerman