Weekly Digest #15: A Definitive Stall
No plan, no developer. What concessions and renegotiations might be requested? What about Site 5?
This digest offers a way for people to keep up with my Atlantic Yards/Pacific Park Report blog, as well as my other coverage in this newsletter.
The meeting of the advisory Atlantic Yards Community Development Corporation (AY CDC) last Tuesday was anti-climactic, as there was no significant news to impart. Nor was it official, given the lack of a quorum.
But officials from the parent Empire State Development (ESD), the state authority that oversees/shepherds the project, acknowledged, more definitively than before, that the project was stalled.
They’ve been presented with no specific plans regarding the project's future, nor any possible developer interested in bidding on the six development sites in foreclosure.
That foreclosure was created by master developer Greenland USA’s inability to pay back some $286 million outstanding in debt under the EB-5 investor visa program.
That, apparently, has been why the foreclosure auction has already been postponed twice.
What next?
And that means, observed AY CDC Director Gib Veconi, the state doesn't know what it must offer to get a developer.
"You framed our issues very well," said ESD Senior VP, Real Estate, Joel Kolkmann. "When we get into very high level conversations with the lender, they do say they're going to present us with somebody. So that is something that we are waiting for."
(The “lender” is actually the middleman, an affiliate of the U.S. Immigration Fund, the “regional center” which recruited the investors.)
The six railyard sites, to be developed, required an expensive platform. Also, Greenland faces $2,000/month in liquidated damages, starting in May 2025, for each of the 876 affordable housing units not built.
Will the state be asked to renegotiate those penalties?
A housing solution?
The meeting didn’t attract coverage beyond my blog and the Real Deal, a real estate publication. From the Real Deal:
It is bananas how little this project gets talked about publicly (especially now that everyone seems focused on housing) and how difficult it is to figure out what the heck is going on. Here are six sites, plus the former “Miss Brooklyn” tower site, where housing could be built.
Note that the “Miss Brooklyn” site (aka B1) won’t get built, whether for housing or, as approved, for commercial use, because it would efface the arena plaza.
So the developer has long aimed to transfer the unbuilt bulk from B1 across Flatbush Avenue to Site 5, longtime home of two big-box stores, and approved for a 250-foot commercial builoding.
The developer, as of 2016, envisioned a two-tower project nearly 800 feet. That would require a new public approval process.
But AY CDC Chair Daniel Kummer asked Veconi if he envisioned a tradeoff with deeper affordability in exchange for allowing the density to be transferred.
"So I think people who’ve been watching the project, perhaps might expect that, if there was to be a modification to the project plan, the density that has been previously approved for those buildings," he said, "could be could be reprogrammed for residential... and potentially offer the ability to address relative lack of affordable apartments. It's certainly possible."
That's not just an idle thought. That was a key subtext, in my assessment, of the early 2022 Crossroads sessions held by BrooklynSpeaks, a coalition Veconi helps lead, aiming to shape the project's future.
If that's contemplated, it deserves a lot more discussion. Does the need for housing justify a building (or complex) with nearly twice the density as approved in the Downtown Brooklyn rezoning?
Does it justify a building three or four times taller than the new, 17-story 375 Dean (above) two blocks away?
In other words, if and when the project proceeds, it should prompt further discussion.
From: Learning from Atlantic Yards/Pacific Park (Substack)
March 25: The Big Atlantic Yards Winners? Billionaire Team Owners Mikhail Prokhorov and (likely, soon) Joe Tsai.
Yes, the developers of the tower project have both failed financially. Meanwhile, the National Basketball Association’s Brooklyn Nets have been a financial supernova. Some may see them as Brooklyn’s “hometown team,” as propagandized by ownership.
But they’re an astoundingly—if somewhat belatedly— successful sports entertainment corporation. Why can’t the public can some of the upside, especially since the team owner and arena operator gets such benefit from not having “Miss Brooklyn” built and effacing the plaza.
From: Atlantic Yards/Pacific Park Report
March 26: With the future of Atlantic Yards/Pacific Park in question, it all may depend on "abiding by the Project documents" (which might change). Previewing the meeting of the Atlantic Yards Community Development Corporation.
March 27: Columnist John Hollinger: "Have Knicks, Nets swapped destinies?" Answer: yes. While the Knicks once made impulsive front-office moves, they’ve built a solid team incrementally. The Nets, which once did that, have regressed.
March 28: At Atlantic Yards meeting, state officials acknowledge project is stalled, with neither new plans nor developer proposed. Will foreclosure auction happen next month?
March 29: At AY CDC meeting, state officials finally provide more information on the project's affordable housing record. But it didn’t stress the middle-income skew. And they didn’t talk about enforcing the affordable housing penalties.
March 30: To advisory group, ESD says (mystery) documents confirm that EB-5 funds were spent appropriately. Other evidence I gathered separately raises doubts.