Waiting for a New Plan. Lots of Big Questions.
The project is moving ahead, but we don't know the proposed scale, scope, affordability, and design, nor what public concessions the new development team will seek. A new deadline in the 2040s?
With Atlantic Yards/Pacific Park barely half complete, and some complicated work remaining to build eight towers, I reported the main news from the Oct. 9 meeting of the advisory Atlantic Yards Community Development Corporation in my overview article for City Limits, New Development Team Promises Atlantic Yards Progress, But Housing Penalties Called ‘Insufficient’.
I also noted what’s next in my Substack post, As Project Reboots, a Tight--but Augmented--Schedule for Community Engagement, Starting Next Month.
Here I’ll amplify issues raised in that AY CDC meeting, using a FAQ format.
What are the big pending questions?
Well, what will the project look like? How big will it be? How many new affordable units? Though about half of the 6,430 approved apartments have been built, it’s likely new development team, led by a Cirrus-LCOR joint venture, will ask for more buildable square footage to build more apartments and this make their project “pencil out.”
Will the new development team pay for that additional bulk, especially at the six railyard development sites (B5-B10)? After all, the original developer had to bid for development rights in response to a (belated) sale by the Metropolitan Transportation Authority.
Will the new development team pay for the two-block platform over the MTA’s Vanderbilt Yard, used to store and service MTA trains, or will it seek direct or indirect government assistance? While the original developer was supposed to pay for the platform, costs have risen, and the developers of Hudson Yards have been able to gain government assistance, with surprisingly little public discussion or pushback, for the second half of their railyard project.
What will be the new timetable, and what kind of accountability mechanisms will be built in? Atlantic Yards/Pacific Park has a credibility problem, in part because state officials refused to enforce the $2,000/month penalties for each of the 876 affordable housing units not delivered by May 2025, instead reaching a compromise requiring limited payments.
Is it different this time?
Well, maybe. The new development team say yes, citing several advantages, including:
“mission-driven equity” not needing as high returns as others
a public-private partnership resting especially on a deal with Mayor Eric Adams
a promise of housing at “all income levels”
notably, the ability to leverage some $950 million of previous investment by developer Greenland USA, which lost six railyard development sites in foreclosure
Thanks to a restructuring in which debt holders have agreed to accept a deferred interest, Atlantic Yards/Pacific Park is no longer saddled with debt.
Still, that all deserves a couple of caveats and amplifications. Another key advantage, as Joseph McDonnell, managing partner of Cirrus Real Estate Partners and Cirrus Workforce Housing, said, was an agreement with construction unions—who’ve pledged some of their pension funds—for a PLA, or project labor agreement, guaranteeing labor harmony.
Unmentioned: the labor unions will supply, as they did nearly 20 years ago, loud public support at public rallies and hearings. Moreover, the rising rhetoric of “Abundance” surely will draw supporters who will say bigger buildings are ever necessary. (Will they ask for the MTA to be paid for increased development rights?)
The public-private partnership aspect likely needs some refining, with a new mayor coming in, though Andrew Cuomo, should he win, is surely in Cirrus’s camp and Democratic socialist Zohran Mamdani, however aspirational about publicly controlled real estate, may conclude that he too wants to cut some ribbons.
The key decisionmaker, Gov. Kathy Hochul, is running for re-election next year and wants to count a win. Everything points to her moving this along.
So they have momentum.
How does mission balance with profit?
Well, time will tell. To quote Cirrus, the firm’s proprietary framework is designed to generate consistent, attractive returns through identifying investments that offer asymmetric risk-return profiles and significant downside protection.”
Translation: they’re looking for deals, and it looks like they got one. Indeed, at one point, McDonnell said the project “was too good of an opportunity to pass up.” It’s worth noting that the joint venture hasn’t built anything yet, though it has been awarded the Flushing Airport site.
I asked McDonnell if they bought Greenland’s debt to enter the project or just because it was a good opportunity? He said it was a combination of reasons. Asked to characterize the deal to acquire Greenland’s debt, he (unsurprisingly) said he couldn’t comment. Could they have paid pennies on the dollar?
I asked LCOR’s Co-Chief Investment Officer Anthony Tortora about the partnership deal between Cirrus and LCOR. “We’re partners, co-developers,” he said. He wouldn’t delineate the arrangement. Could Cirrus have put up more money upfront?
Cirrus Real Estate Partners recently acquired a $130 million construction loan “from a major overseas lender… secured by a 300,000-square-foot hotel, office, and hospitality project in Upper Manhattan.”
Why? Surely because it was a bargain. I’m reminded of a quote from the founder of Madison International Realty, the private equity firm that bought Forest City’s major Brooklyn malls, who said it specializes in properties suffering from the “fatigue of the underlying investor.”
Is a new, larger project designed?
Well, it’s probably pretty close. “We’ve spent a lot of time today and continue to spend time both with LCOR and the trades to make sure that we can deliver the platforms as efficiently as possible and as quickly as possible,” McDonnell said, “which ultimately makes more room in the development for affordability and community benefits.”
As ESD Senior VP Joel Kolkmann stated, “We will consider a modification of the current project approvals of the General Project Plan that would allow for additional residential development. But this would always be informed by the community engagement process.”
Well, “informed” does not necessarily get to the bottom line for the joint venture and the request for concessions, such as increased bulk, direct subsidy, and low-cost financing.
One question is whether they will seek the same extra bulk that Greenland USA sought in 2023, aiming to rescue the project financially.
Is there an alternative to “only much more bulk can deliver affordability”?
Well, sure, at least if the state authority were willing to exercise power in the public interest.
Why exactly should Greenland profit from its stake in the Site 5 parcel catercorner to the arena, to which developers have long sought to move the bulk of the unbuilt B1 tower, once slated to loom over the arena.
After all, it couldn’t deliver on the platform sites and avoided paying the $2,000/month penalties for the 876 missing affordable units.
Why should the investors in B1 and Site 5—initially Greenland, now including LCOR and Cirrus—get to put the combined bulk in one place, just to avoid the complications of building over the arena as was approved in the extant project plan? Didn’t they invest knowing there was a risk that might not be approved?
Or, as I’ve suggested, why can’t one of the big winners in the project, arena operator (and Brooklyn Nets/New York Liberty owner) BSE Global, be required to pay for the privilege of a permanent public plaza that both serves arena crowds and serves as a canvas for promotion and advertising? After all, were that B1 tower built, both its construction and operation would interfere with the arena.
Will there be a new deadline? Can they meet it?
“This is something we want to work with you on,”said ESD Senior VP Arden Sokolow. “There’s a lot of things in the existing project documents that you’ve expressed frustration with, we’ve expressed frustration with, that we want to revisit in sort of the next phase of the project. And so what a series of deadlines and penalties and enforcements look like is something we haven’t made any decisions on.”
Though the project had faced a May 2025 deadline for the affordable housing, the “outside date,” by which the developer would lose control, was May 2035.
Given the time needed for public approvals and platform construction, it seems unlikely that eight large towers—even if one is a two-tower project on one site—could be build in less than 15 years. So I’d assume a new deadline in the 2040s.
What might be built first, and when?
As I reported, AY CDC Director Gib Veconi suggested that, after a two-year project review starting in July 2026, each block of the platform would take three years. That would mean a platform by 2031, and the first building up to 2033.
ESD staff would not endorse that timetable. As I wrote, the B5 site might rely on a faster platform section. Alternatively, construction at Site 5, catercorner to the arena, could start before the platform was finished. So that would be 2028 at the earliest.
What’s the cost of delay?
In 2022, I called it “Atlantic Yards and the problem of time.” The rise in (regional) Area Median Income (AMI), the baseline for affordability calculations, meant “low-income” two-bedroom apartment could then rent for $1,500.
At that point, I cited a two-bedroom apartment at 50% of AMI (though “low-income” goes up to 80% of AMI).
Today, a two-bedroom apartment at 50% of AMI could rent for $1,822, according to the city’s Department of Housing Preservation and Development.
So delay is costly, something that the developers and state officials seem to recognize.
What went wrong?
McDonnell described “the constraints of what I would call the legacy ownership group. So you had Greenland, who purchased this from Brookfield.” Not quite. Greenland bought 70% of the project from Forest City, and later acquired 25% at, apparently, virtually no cost. Only later was Forest City absorbed by Brookfield.
He also cited “very significant construction cost increases, especially on things like the platform” and said “the combination of inflation, tariffs, and supply chains has made everything tougher in a period where [interest] rates have gone up.”
Though McDonnell and Tortora projected confidence, as I wrote, the fine print on Cirrus’ slides, offered a standard disclaimer aimed at investors, noting that “no assurance can be given that such targets, intentions or expectations will be met.” After all, “Atlantic Yards is a never-say-never project,” and unanticipated external factors can intervene.
Also in small type, at the top of the slides was a request for confidential treatment, which presumably applied to their use of the presentation before the public meeting.
What will they build?
“We are not condo-focused,” McDonnell said. “This is not supposed to be a bunch of condos on top of railways like some other places in New York City.” That seemed an implicit dig at Hudson Yards.
But the mix of unit types, he and Tortora indicated, would depend on the mix of affordability. Deeper affordability, perhaps in one building, may mean another building with more valuable condos.
“We have multiple different development programs we’ve looked at,” McDonnell said. “We develop across the spectrum, so everything from market rate housing to workforce [housing], one of our focuses, and what I would call truly affordable housing. Those have different requirements for level of public investment. They also have kind of different pro formas [economic models] with respect to the costs of the platforms.”
Indeed, Cirrus Workforce Housing, as its name suggests, has professed to focus on income-targeted housing at 80% to 140% of AMI, which is moderate- and middle-income, not the low-income housing that might better be thought of as “truly affordable.”
How will design be updated?
McDonnell said they also aimed to update the design to be“more contextual to the contours of what this community wants and needs today, I don’t think we need 40 Starbucks along Atlantic Avenue.”
As I wrote, that seemed a stretch. The design guidelines, at street level, limit use to community facilities, retail and personal service, health clubs, and residential building spaces. The real changes may be less at street level than in the scale and context of the buildings.
We don’t know the new architect or architects envisioned. (I’m expecting to update the graphic above.)
They might, as Greenland explored in 2023, ask for more open space to serve the larger population. Translation: part of Pacific Street, a public street. If so, will they pay for it?
Will there be local hiring?
AY CDC Director Drew Gabriel asked about local hiring, a key promise that was only partially fulfilled.
McDonnell said yes, in both construction and operation. “For example, in our PLA, we have local apprenticeship programs.” That presumably is for construction.
Will the new projections be realistic?
“I don’t want to leave anybody in this room thinking we’re purely idealists who are not realists,” McDonnell said.
”I’m certainly personally looking forward to some realism on this project,” commented Veconi, who as a leader of BrooklynSpeaks has advocated to improve the project. He noted that previous project sponsors had apparently not done analyses of feasibility. (Maybe they had but didn’t share, or maybe they were unrealistic?)
He asked McDonnell to share their analysis. The developer demurred, saying they would share their plans with ESD shortly, and the density would influence the mix of affordability, as well as overall viability.
“One of the challenges with this site historically was that ownership had a little bit of a different calculator,” he suggested. “They were not using the right numbers when they went into it and that kind of was stymied by inflation on the back of it.”
I’m not sure if that meant both Greenland and Forest City, but the inflation reference pointed to a particular vulnerability of megaprojects: they are built over multiple political and economic cycles, so things like a pandemic can upend plans.
“This project quite frankly could use a couple shots of credibility,” Veconi observed. BrooklynSpeaks has argued that third-party experts should vet financial feasibility, so let’s see if that recurs.
After all, ESD had previously hired KPMG to produce two reports claiming the project was viable as approved, and that didn’t work. In fact, KPMG completely missed the impending impact of new competing apartments unlocked by the Downtown Brooklyn rezoning.
The performance of ESD’s consultants might merit third-party review of a lot more.
Does ESD work for the governor, or the public?
At the end of the Oct. 9 meeting, Director Ron Shiffman suggested that the public gain better advance notice of meetings, since this was announced only three days earlier.
Chair Daniel Kummer agreed it was “something to strive for.” He did not, however, admonish ESD staffers, and none of them commented. So it looks like a deliberate tactic.
Sure, they’ll announce the public engagement sessions next month with better publicity. But will the next AY CDC meeting have sufficient lead time?
Are there hard feelings?
Though only a few members of the public attended the meeting, they gave the AY CDC Directors, and ESD staff a piece of their mind.
Prospect Heights resident Robert Puca, who lives in a building across from the railyard observed, acidly, “I haven’t heard any financial plan. I’ve heard nothing. I’ve heard just like We can do it and and we’ll do it. So that’s really hard to believe. “
He cited comments by Michelle de la Uz of the Fifth Avenue Committee, who as a leader of BrooklynSpeaks negotiated the 2014 agreement that set the 2025 deadline, about a loss of trust, given ESD’s willingness to mostly wave away the pending affordable housing penalties.”
(Note: though BrooklynSpeaks launched a petition to ask Hochul to collect the affordable housing penalties, it has not threatened legal action.)
Puca noted how the developer “were supposed to hire a compliance monitor. They never hired a compliance monitor. So when the lights were on in the rail yards 24 hours a day, 7 days a week, there was no one to complain to.”
That’s a bit confusing, because the developer failed to hire the Independent Compliance Monitor seemingly required by the Community Benefits Agreement. It was not required to hire—but should have—a person to answer after-hours community complaints.
”There was no one we can go to,” Puca recalled, saying they needed someone to respond to a query like, “Hey, the lights are on for 24 hours. There’s no work going on… Can we please get them off”?
Diane Foster, who’d been displaced from the area, was a potential plaintiff in the discrimination suit that BrooklynSpeaks threatened in 2014. “I was born in Community Board 8 69 years ago and I’ve been pushed out of my community,” she said. “Gib, Michelle, Puca, you still live in the neighborhood. [She knows them, hence the familiarity.] I don’t. It would have been great to have aged out out in my community and I’m not allowed to do that.”
“I sat on CB 8 when Tish [Letitia James] was a Councilwoman,” Foster said, adding that she’d seen Crystal Hudson, the current Council Member, graduate from college, got married, and start a family. “And you’re still sitting here with this property that no one is doing anything about, and there’s a bunch of homeless people and it’s totally outrageous.”
Well, the meeting aimed to show that the state and the new developers are finally doing something. It’s just too late for people like Foster who once had high hopes for the project.
norman, thanks for this. alan
I was a young man when all this started, and it is clear I'll be an old man before it concludes. For some people it was the Wright Brothers to Neil Armstrong in one life. For me it will be site B1 to site B10 lol.