The wheels on the bus go round and round.

The Atlantic Yards certainly knows how to get someone else to pick up the tab. It's like a friend who always manages to forget his wallet when going out to dinner, or the pal who neglects to pony up her share of the group gift you all went in on together.

First, the project scored $305 million in state and city subsidies via the Empire State Development Corporation, then the arena protested a tax assessment for taxes it didn't even have to pay (an oversight, it claimed), and now it's literally getting a free ride on the existing transportation infrastructure—an infrastructure that is ferrying a lot of visitors and cash to Barclays, but that Ratner doesn't want to help finance.

Making Barclays and future developments pay their share for increased transportation needs is among the recommendations of the Tri-State Transportation Campaign's latest report "Brooklyn gateway transportation vision. " As Capital New York notes, the report is basically a wish list of policy changes and funding proposals for a borough with a rapidly growing population. A rapidly growing population that is putting an increasing amount strain on aging transportation infrastructure will, inevitably, require more and more repairs and overhauls as time goes by.

So what is main problem with implementing the transportation vision? Money. The problem is always money. Which is where innovations like congestion pricing and residential parking permits might come in handy. Or getting the developer of a huge, money-hauling arena that is putting a significant strain on the local transportation infrastructure to help shoulder the costs.

Among the report's other suggestions (you can read the entire report here) is that Forest City Ratner pay for the subway fares for Barclays Center patrons, like it promised to. And fund a New Jersey to Fulton Ferry ferry service.

We won't hold our breath for those initiatives (we're still waiting on the housing), but maybe some of the other recommendations will actually materialize, like more secure bike parking at Barclays Center or a transit impact fee that developments will be required to pay in support of mass transit.
kvelsey@observer.com

Chris Ward. (Photo by Daniel Neuner)

Mr. Ward, credited with helping to devise and implement plans that put the rebuilding of the World Trade Center site back on track, will be involved in helping the company identify and compete for major construction and infrastructure projects he said.

In an exclusive conversation with The Commercial Observer, Mr. Ward identified several high profile bids that he will likely be involved in helping the company make, including the expansion of Boston’s Green Line street car system, the replacement of Calaveras Dam in California and the replacement of the Tappen Zee Bridge in Westchester.

“There’s probably $36 billion of projects out there and we could honestly compete for probably $15 billion of that,” Mr. Ward said.

The company is a major construction firm that has handled complex projects in the city. It is currently building the East Side Access tunnel that will connect the Long Island Rail Road from Penn Station to Grand Central Terminal.

Public private partnerships will likely figure into the Dragados’s pipeline of business in the future, arrangements where private investors contribute funds to public infrastructure in return for a slice of the revenues that the infrastructure generates. Mr. Ward said the company had billions of dollars it could invest into such ventures and that the partnerships would be the way of the future for infrastructure development in the U.S.

“It’s the way governments do infrastructure in Europe,” said Mr. Ward. “It’s about selling creative solutions to government to get projects done. We need to be able to build roads and bridges and infastructure in a way that guarantees a reliable schedule and saves money. There’s not enough government resournces anymore to get projects done any other way.”

Mr. Ward’s first day at Dragados was yesterday, he said. Although his tenure as the Port Authority’s executive director was widely viewed as successful, Mr. Ward was replaced late last year by Governor Andrew Cuomo. Gov. Cuomo placed former Empire State Development Corporation head Patrick Foye in the executive director slot in what was viewed as a bid by the governor to put his own stamp on the agency and exert control by using his own appointee.

Daniel Geiger can be reached at DGeiger@Observer.com

The acquisitions are for much of the 22-acre site, as the state's development agency, the Empire State Development Corporation, is seeking to take title to the private property in the footprint and the city streets that currently run through it (they are slated to be shut down to create "superblocks," making way for the housing and arena).

The filing is a major step in the acquisition process, and now that the lawsuits challenging the use of eminent domain have been dismissed, the state needs a judge to grant it the title to the properties in the footprint. (The state would then turn over the properties to the developer, Forest City Ratner, which is reimbursing the state for the property it acquires, though it is also receiving significant subsidies for acquisitions and other purposes.)

There are a handful of holdouts left in the footprint who are refusing to leave, including Develop Don't Destroy Brooklyn spokesman Daniel Goldstein, who told me Wednesday afternoon he would continue to fight (i.e., litigate).

"There's going to be numerous challenges to that filing," he said.

Should the court decisions keep going the state's way--and, at this point, there's little reason to think the acquisitions would be stopped--it seems it would be at least a couple of months before Mr. Goldstein and others would be forced out of their properties (Mr. Goldstein owns a condo in the footprint). The court date listed on the filing is Jan. 29, and then the judge would need to issue a decision on the issue. Then there is an eviction process that would presumably follow. Atlantic Yards Petition

The report—which was not expected to be negative given that it was commissioned by the agency sponsoring the project—looked at Forest City’s planned numbers on rental rates, sales prices and absorption for the 14 apartment towers planned for the 22-acre site. The report assumed that the project would be built over 10 years, a schedule that even Forest City has said is aggressive, but is the official timeline of the project.

The verdict: Based on current trends, Forest City’s assumptions are “moderately aggressive,” “towards the high end of the range” that the consultant looked at, but “not unreasonable.”

The consultant, accounting giant KPMG, which also did a 2006 analysis on the project for the state’s development agency, said its conclusions were based on a couple of key assumptions made by Forest City:

1) the current real estate market will have recovered by the time the apartment units come online and 2) the Subject Property will be sold at a premium compared to the market place, given the Subject Property’s location, amenities, and newly developed status.

The average market rent assumed for the initial buildings is $45 a square foot per year, which comes out to about $3,000 a month for an 800-square-foot apartment.

The assumed price of the development’s condos was redacted. The report, the existence of which was announced by the Empire State Development Corporation last month just before it re-approved the $4.9 billion project, was retrieved via the Freedom of Information Law. 

Update 4:11 p.m.

As the Atlantic Yards Report found out, the redacted sales prices were not all that well redacted. According to the report, Forest City assumed its sales prices of the condos were going to start at more than $1,200 a foot in 2015, when the first condo building would be done, based on the schedule. Currently, that would fetch a pretty decent apartment in Manhattan. 

Atlantic Yards Market Study

Mr. Davidson, who founded a media group that runs numerous Spanish language radio stations, will come in as the No. 2 to the (nominated) chairman of the agency, Dennis Mullen. The ESDC oversees such large-scale projects as Atlantic Yards and Brooklyn Bridge Park.

Mr. Davidson comes from a business background—he never has held a job in government, though he's worked with it through the Kaplan Fund, according to a copy of his résumé—and would seem to bring a downstate voice to an agency that is run by an upstater (Mr. Mullen used to run a Rochester business group).

The ESDC has had a bumpy past few years: it was rocked by infighting—both between upstate and downstate factions, and among downstate leaders—during the Spitzer administration, and more internal fighting during the Paterson administration under different leadership. Since Mr. Spitzer resigned in March 2008, five of ESDC’s top officials have left, including two who came in under Governor Paterson.

The agency has been looking for someone to oversee the major projects for more than a year. 

ebrown@observer.com

Marisa Lago, the CEO of the state’s economic development agency, who quit amid frustrations, has been nominated for a high position in the Treasury Department, as the assistant secretary for International Markets and Development.

The move, which was announced by the Obama administration Thursday, came three months after Ms. Lago quit her state job, a move that itself came just eight months after she took it. (More on the infighting and systemic problems within the state development agency, the Empire State Development Corporation, in a feature story written back in May.) 

Prior to the job at ESDC, Ms. Lago was an executive at Citigroup and before that, she led the international affairs office at the Securities and Exchanges Commission.

ebrown@observer.com

The state’s development agency Thursday morning approved Mr. Ratner’s revised plan for his $4.9 billion Brooklyn project, giving New York's assent to the planned Nets arena as well as the surrounding 15 apartment towers nearly three years after the state's initial approval. (Changes were made to plans for phasing and the size of the arena amid the economic crisis.)

The O.K. now leaves one less loose end as Mr. Ratner scrambles to get financing before a Dec. 31 deadline imposed by the IRS. Still, opponents threatened more litigation as the agency, the Empire State Development Corporation, re-approved the project, and perhaps even more lawsuits loom as the state plans to approve about $700 million in tax-free financing for the arena. (A Reuters story from this afternoon, with a dateline of Moscow, reported that Russia's richest man, Mikhail Prokhorov, is "preparing an offer" to help the financing of the Nets arena.)

Mr. Ratner’s Forest City Ratner appears to be rounding up as much cash as it can as the year closes, as the ESDC said it would speed up an outstanding $25 million in subsidy, loosening the restrictions on the money.

The city, which has another $15 million in subsidy not yet given to Forest City, would be allowed to do the same, according to the ESDC document, speeding up its payments by loosening restrictions. Further, in a footnote in a state document, it was revealed that the Bloomberg administration may simply pay Forest City Ratner to do infrastructure work that it had been planning to do itself, giving the developer the cash upfront in the coming weeks or months, an additional subsidy of sorts. (The project is already heavily subsidized; a recent analysis by the Independent Budget Office found the arena was a net-loss for the city if the subsidies are counted specifically for the arena and not the broader project, though the city and state attacked the methodology.)

From the document, a memo to ESDC board members:

The City has also agreed to make available additional funds for neighborhood related infrastructure improvements typically funded by City agencies. A portion of these additional funds may be made available by the City directly to ESDC, in which case, the City Funding Agreement will be amended to reflect the same. Subject to the submission of satisfactory documentation, it is anticipated that remaining City funds, plus any additional funds, if any, will be disbursed from the City to ESDC at closing and ESDC shall simultaneously disburse the same to Forest City.

The city has another $105 million in infrastructure subsidies related to the project that were meant to be carried out by city agencies, though it was not clear exactly how much the city would give. (A spokesman for the city’s Economic Development Corporation said there is not yet a final agreement.)

A series of project opponents and critics focused on Atlantic Yards' environmental requirements, saying the ESDC should have done a supplemental environmental review, suggesting this will be the source of more litigation. Among other points, the critics focused on the fact that ESDC documents held that the project is intended to take 10 years, which seems a bit of quixotic thinking given the state of the economy (and the Council of Brooklyn Neighborhoods recently released a report suggesting such a fast build-out would be financially infeasible). The ESDC countered that its consultant, KPMG, had found that it was a “not unreasonable” assumption that the market could absorb that much new development at once—presumably a phrasing intentionally chosen over the less awkward “reasonable assumption.”

ebrown@observer.com