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tel/fax: 718.362.4784
Please note our new postal address when sending
contributions to the legal fund:
121 5th Avenue, PMB #150
Brooklyn, New York 11217
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We've Got Some Questions
First, a question we know the answer to:
Did you know that the public is paying entirely for the construction of
the arena?
Yes. Instead of paying property taxes, Forest City Ratner (FCR) will pay for the
arena construction bond with Payments in Lieu of Taxes (PILOTS). How will
FCR cover the costs of those PILOTS? Simple: with things like luxury
box suites, concessions, arena advertising and arena naming rights. The developer
puts up NO money for the arena construction.
This is called a shell game.
1. HOUSING
It is estimated (by local housing groups that FCR has applied with NYCHDC
for $402,000 in bonding for each of the rental units (50/30/20 program: 4,500
proposed, totaling $1.809 billion). We do not know if the HDC has approved this
amount, or if the parties are still negotiating.
QUESTIONS:
What is the total amount of tax-free bonding sought by FCR?
- How does that translate into a per unit subsidy?
- How does this compare to other affordable housing packages?
What percentage of the city’s total funding pool for affordable housing would
be allocated to the “Atlantic Yards” project?
What guarantees are there that the proposed “affordable” housing will be built
in both the smaller first phase and larger second phase of the project?
- Are there legally binding commitments with severe penalties to ensure that
all 2,250 “affordable” housing units are constructed?
- What commitment is there to a project completion timeline?
The proposed rezoning of the Lower East Side and East Village of Manhattan
defines affordable housing with a income band cap at 80% of Area Median Income
(AMI), or $56,000 for a household of four. Atlantic Yards has a cap of 160% of
AMI, or $113,000 for a household of four. 51% of the “affordable” units in Atlantic
Yards would be for households earning above 80% of AMI.
- Why is the income cap so high in Brooklyn and so relatively low in Manhattan?
2. PUBLIC COST and PUBLIC RETURN
FCR claimed in the Spring of 2005 that the cumulative public cost of the project
would be $1.1 billion. We have found that the project could cost the public, cumulatively,
at least $2 billion.
Neither of these numbers account for:
- The substantial housing bonds described above.
- The “extraordinary infrastructure costs” which the city and state agreed to
“consider making additional contributions for” in a 2005 Memorandum of Understanding
(MOU). This commitment was made in addition to the $100 million capital funding
that the city and state have each committed to the project. Forest City Ratner
identified the “extraordinary infrastructure costs” as $163 million in their
bid to the MTA, to cover the cost of the platform over the rail yard.
- The relocation of utilities such as water, sewage, electric, gas and telephone,
which the city and state agreed to pay in the same 2005 MOU. This commitment
was made in addition to the $100 million capital funding that the city and state
have each committed.
QUESTIONS:- What is the total public cost of the project including both as-of-right and
extraordinary costs?
The ESDC memo summarizing the economic impact analysis of the project is
incomplete and lacks a full accounting of the public costs. Without accounting
for numerous, significant public costs, the net revenue projection is significantly
overstated.- What is the net revenue return for the city and state of New York (just this week
it was disclosed that revenues have been cut
by nearly 33% and still doesn't include substantial public costs)?
The public has yet to see the developer’s 20-year pro forma financial projections,
as required by the MTA’s RFP for the Vanderbilt Rail Yard (the competing bidder,
Extell, submitted detailed projections. FCR’s submission to the MTA is here: www.dddb.net/php/press/budget/proForma.gif
Assemblyman Jim Brennan said in a recent NY Times article:
“We don’t know how much money the arena’s going to make. We don’t know how much
the private rental housing is going to make. We don’t know how much the luxury
housing and commercial property will make. Therefore, we do not know whether
the arena or the affordable housing are independently economically viable. If
they are, or if they only need minimal subsidy, then there is no rationale for
the size [of the project].”
- What is the profit projection for Forest City Ratner?
There will be two PILOTS (Payments in Lieu of Taxes) paid for the project. One
is for the arena, intended to repay the bond debt service. The other is for the
non-arena portion of the project.
- Has the payment amount for each PILOT been set?
- If so, how much is it and how was it determined?
- If not, how will this be determined and when?
- Will the arena PILOTS be enough to pay the debt service on the arena bonds?
- If the bonds are defaulted, who is responsible for repayment?
- Who are the non-arena PILOTs paid to?
Posted: 12.17.06
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