Offer is More Money, Less Risk Than Forest City Ratner’s
New York, New York — On Wednesday a Brooklyn community organization, Develop Don’t Destroy Brooklyn, Inc. (DDDB), made a firm offer of $120 million to the Metropolitan Transportation Authority (MTA) to purchase the development rights for the 8-acre Vanderbilt Yard in Prospect Heights, Brooklyn. The group proposes a mixed-use development plan over the rail yards based on the UNITY Plan framework. (See: www.unityplan.org and download the full PDF.)
To complete their offer, the Vanderbilt Yard would be placed into a trust (modeled after the successful Hudson River Trust), for the purposes of financing and managing the development over the yards. It will be called the UNITY Trust.
The UNITY Trust would be administered by local community organizations, a subsidiary of the Empire State Development Corporation, and local elected officials. The Trust would be mandated to bid the yards out in smaller, manageable parcels (6-8), for development and payment over a far shorter timeline than developer Forest City Ratner’s proposed 22-year Atlantic Yards timeline. The UNITY Trust will seek out both for-profit and not-for-profit development teams.
The group estimates—based upon comparable efforts elsewhere and extrapolating the 2005 MTA appraisal and rail yard construction cost projections—that the project can be completed in approximately 12 years.
Benefits to the MTA
• The offer is secured by the land; there is no risk of default.
• The amount paid to the MTA for this valuable asset will exceed the amount promised to the MTA in a proposed agreement between the MTA and Forest City Ratner. It will be paid over an accelerated timeframe (about 12 years vs. 22 years by Forest City Ratner).
• The MTA will directly control the newly built, permanent rail yard under the development and will be able to construct it to their capacity needs. There will be no need to waste money on a temporary solution, since Forest City Ratner’s urgency to build its proposed arena—the only reason for a temporary rail yard—will not be an issue. The MTA will be reimbursed for the rail yard construction costs.
• The UNITY Trust will not be forced into an immediate disposition of development rights into an uncertain economy (which undervalues them); it will be able to coordinate the sales and construction over time in order to obtain the best value for the UNITY Trust.
• In aggregate the payments to the MTA will be over $200 million, and the net present value of the payments will be nearly $120 million. Both amounts exceed MTA’s renegotiated proposal with Forest City Ratner’s.
The project will result in true public benefits (affordable housing skewed towards lower income levels, union labor, open public space designed for public use, a community center, a school, small retail space for local businesses, light industry and new roads connecting neighborhoods):
• Eminent domain will not be used;
• Streets will not be removed, new neighborhood connecting streets will be constructed;
• There will be true affordable housing for low and moderate incomes delivered in the early phases of the project;
• 10,000 construction job years;
• A legally binding, city and state guaranteed Community Benefits Agreement will be negotiated, involving all community stakeholders in the project’s impact radius;
• It will be a less risky project than Atlantic Yards by including multiple developers and the financial resources that each would bring to the UNITY framework;
• The project will be financed, in part, with tax-free municipal funding in a legitimate fashion (rather than the murky use of PILOTS contemplated by Forest City Ratner), reducing overall costs;
• Community organizations in Central Brooklyn have signed on to the UNITY framework and strongly support it. They would not challenge it or litigate against it.
The group has secured working capital in excess of $5 million towards this effort.
DDDB’s proposal will provide the MTA with a more attractive financial return than the Forest City Ratner offer, and on the basis that DDDB’s proposal will likely engender widespread community and civic support, DDDB hopes and expects that the MTA will provide the opportunity through discussion and negotiation for further refinement of the UNITY proposal.
“DDDB is certain that our offer would receive stiff competition if the Vanderbilt Yard were put out to bid with a Request for Proposal and underwent a competitive, fair bidding process. But we feel fortunate that we can make such a discounted offer, for such a great piece of real estate, due to the absence of a competitive bidding process,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “The MTA Board must table any decisions on the Vanderbilt Rail Yards sale until it has time to review our offer along side its renegotiated agreement with Forest City Ratner. The Board has a fiduciary duty to do this.”