More than 21 years after it was announced, the Atlantic Yards/Pacific Park project has delivered the Barclays Center and eight towers, but remains about half-finished. With foreclosure pending and an affordable housing deadline looming, will a “Lone Ranger” new developer appear, or will the state impose penalties?
The rest of the project’s future, including plans to build a platform and construct six apartment towers on top of the MTA’s Vanderbilt Yard, is uncertain. Photo by Adi Talwar.
The ever-unsettled Atlantic Yards (aka Pacific Park) mega-project in Brooklyn faces another crossroads. More than 21 years after it was announced, with a projected 10-year buildout, the project has delivered the Barclays Center and eight towers, but remains about half-finished—and stalled since November 2023.
That’s when a foreclosure was announced of developer Greenland USA’s right to build six towers over the Metropolitan Transportation Authority’s (MTA) two-block Vanderbilt Yard, used to store and service Long Island Rail Road trains.
The foreclosure auction has been steadily postponed, as activating those rights—collateral for loans under the federal EB-5 investor visa program—requires not just an expensive platform over the railyard but likely negotiations over the project’s timelines, obligations, and, perhaps, expansion.
With a May 31 deadline looming for Greenland to deliver the remaining 876 affordable housing units, Empire State Development (ESD), the gubernatorially controlled authority that oversees/shepherds the project, says it might enforce the $2,000 a month penalties for each unbuilt apartment, though that process may be fraught.
But it also expects a new developer to emerge, forming a joint venture with those controlling the collateral.
Joel Kolkmann, ESD’s senior vice president of real estate and planning, said at a March 25 meeting of the advisory Atlantic Yards Community Development Corporation (AYCDC) that ESD would consider delaying the liquidated damages, “If we were to receive something in the very near term,” involving “very clear milestones of what would have to happen.”
Risky business
AYCDC Director Gib Veconi, who in 2014 as a member of the BrooklynSpeaks coalition helped negotiate the new deadline to deliver the project’s 2,250 affordable units, warned that again relying on a single developer “just seems like an extraordinary risk.”
He cited a litany of business failures: original developer Forest City Ratner, which, after building the arena and launching one tower, started selling its stake to Greenland; Greenland’s failure to repay the EB-5 loans, leading to foreclosure; and the pullout of Hudson Yards developer Related Companies, which last year seemed ready to lead a joint venture developing the six sites (B5-B10 in the graphic below) over the railyard.
“So the idea that somebody would appear here now, literally at the eleventh hour, and sort of solve all the problems has a little bit of a Lone Ranger vibe to it,” Veconi said. “It’s possible, but it seems extremely unlikely.”
A look at current progress versus approved plans for the project. Graphic by Ben Keel / editing by Norman Oder.
The project faces something of a chicken-and-egg issue: ESD previously had suggested that a new plan—which presumably would involve new deadlines and requests for concessions—couldn’t be negotiated with a new developer before the foreclosure transfer was completed.
“Can you explain what you mean by a new plan?” asked Veconi.
“Not a fully signed-off plan,” responded Arden Sokolow, ESD’s executive vice president of real estate and planning, but a package confirming that the joint venture includes a permitted developer—with at least a decade of experience in large-scale projects—plus a “plan for engaging with stakeholders and contours of what their requests would be.”
While Sokolow didn’t elaborate on “contours,” it seems doubtful that Related would have lobbied ESD last year without discussing, for example, an extended timeline and concessions, such as increased square footage, that would make the finances work.
Pursuing damages
Kolkmann pointed to a response from ESD CEO Hope Knight, queried at a hearing last month in Albany by Brooklyn Assemblymember Jo Anne Simon, that, “to the extent [a new developer] does not come forward, we’ll have to enforce, y’know, what we have with respect to our contract.” Knight didn’t sound too enthusiastic.
AYCDC Chair Daniel Kummer suggested that Greenland might try to stave off penalties by invoking “unavoidable delay,” a term in the project’s Development Agreement.
“If we end up having to pursue damages,” Veconi said, Greenland might default. If so, ESD could terminate the development leases, then “market those leases to other developers,” reducing the project’s risk.
AYCDC Director Ron Shiffman, a veteran advocacy planner and former City Planning commissioner, asked, “Is ESD working on that alternative?”
The answer seemed: not quite. “Our goal would be to have a community engagement process right now,” said Kolkmann. “We are waiting for a development entity to come forward to be a permitted developer, present a proposal and then do engagement with…those broad contours in mind.”
“In a world where we collect the damages,” Sokolow asked, “what do you think happens to the sites? … You wouldn’t be getting any housing there.”
“You may not get it anyhow,” Shiffman said, suggesting that strictures from Washington limit potential public aid for the project. Other constraints include rising construction costs and relatively high interest rates. “Building on those platform sites may now be impractical for the near future,” Shiffman added.
The penalties, should ESD act to collect them, would fund affordable housing in neighborhoods near the project site. The city, suggested Veconi, would be happy to get $1.752 million a month to help “neighborhoods that are experiencing some of the highest displacement rates in New York City.”
Before that May 31 deadline, the AYCDC is expected to meet to get an update from the parent ESD.
A history of gyrations
The megaproject has endured enormous gyrations—changes in ownership and oversight—during several economic and political cycles, facing both bad luck and the consequences of over-optimistic plans.
To some, the delivery of an arena that has helped redefine Brooklyn, as well as eight towers with 3,212 apartments, 1,374 of them below-market, represents significant, albeit delayed progress. Others point to the delays in affordable housing, jobs, and open space (with 5.3 acres to go) promised by Forest City, plus failure curing the purported “blight” presented by a below-grade railyard, which was used to justify eminent domain in a gentrifying area.
Atlantic Yards was announced in December 2003 and, after much controversy, approved three years later. Lawsuits over both eminent domain and the project’s environmental review, compounded by the recession, prompted delays. Forest City renegotiated concessions from both the ESD and the MTA before a 2009 re-approval of the project. The arena began construction in 2010 and opened in September 2012.
The Barclays Center arena, pictured here in 2022. Photo by Adi Talwar.
Developer Bruce Ratner, who bought the New Jersey Nets to leverage the project, in 2009 sold most of the team and a minority share in the arena operating company to Russian oligarch Mikhail Prokhorov. By 2016, Prokhorov would buy the rest.
Forest City, aiming to lower costs while retaining its commitment to union labor, said it would build the project’s towers via innovative, risky modular construction. But it also looked to hedge its risks.
In 2013, it agreed to sell, at a loss, 70 percent of the remaining project, excepting the arena company and the troubled modular tower, to Greenland USA, an arm of a Shanghai-based conglomerate looking to expand abroad.
By then, the Atlantic Yards project’s original opponents, a group called Develop Don’t Destroy Brooklyn, was defunct. But before the Greenland deal was formalized, BrooklynSpeaks, a coalition of neighborhood and advocacy groups aiming to improve the project, prepared a potential legal challenge, claiming delays would constitute a fair housing violation.
That got New York State to set the new affordable housing timeline, with penalties, and to establish the AYCDC to provide a measure of oversight, though with less power than requested. The city also agreed on two “100 percent affordable” towers, albeit skewed to middle-income households.
Going abroad for funds, and new challenges
That same year, Greenland Forest City Partners sought immigrant investors from China under the EB-5 program, which trades green cards for purportedly job-creating investments. The low-cost funding—the investors accept little or no interest—became an elixir to real-estate firms.
The developer raised $249 million, and then $100 million, via the U.S. Immigration Fund (USIF), a “regional center” that recruits investors and packages their loans. New majority owner Greenland also changed the project’s name to Pacific Park Brooklyn, supposedly to focus on the future open space but likely to distance it from past controversy. Many still use the original name.
In 2014, when the affordable housing deadline was set, the goals seemed achievable. However, after the joint venture built—via conventional construction—two fully affordable towers and one condo building, Forest City announced a unilateral stall, as construction costs rose. Competition had also emerged from the Downtown Brooklyn rezoning, which offered opportunities to other developers but with less commitment to affordability, no platform requirement, and no obligation to move the MTA’s railyard functions.
Graphic by Ben Keel / editing by Norman Oder.
By 2018, Greenland had assumed nearly all of Forest City’s share. The latter’s parent Forest City Realty Trust was absorbed by Brookfield Asset Management. Greenland then sold two development leases to TF Cornerstone and another to The Brodsky Organization. As a joint venture with Brodsky, Greenland built the project’s largest tower, 18 Sixth Ave.
All rose on terra firma. In late 2019, Greenland said it would start the rail yard platform in 2020. Then came the COVID-19 pandemic. Facing struggles in China, Greenland’s ambitions receded, though the four new buildings in Brooklyn continued to rise.
Each tower contains 30 percent below-market units, but—thanks to provisions in the 421-a tax break—all geared to middle-income households, most earning six figures.
A look at units by size and income range. Graphic by Ben Keel / editing by Norman Oder.
In total, the project contains just 254 low-income units and 1,044 middle-income ones, far from the goal of parity set in a 2005 Affordable Housing Memorandum of Understanding Forest City signed with advocacy group ACORN and incorporated into a much-hyped Community Benefits Agreement.
In 2022, Greenland again suggested it was ready to start the platform. That didn’t happen. In early 2023, its Atlantic Yards point man, Scott Solish, left to work for Brodsky. Not long after, ESD’s Atlantic Yards project director also departed, later joining Kasirer, the lobbying powerhouse that still works on the project.
Feint at progress
Nonetheless, in August 2023, as City Limits reported, ESD expected Atlantic Yards to proceed, weighing a potential substitute for 421-a and a “community engagement” plan to address, among other things, desired affordable housing.
At that time, Veconi argued that the AYCDC board should see a financial analysis of the project’s future, including funds needed to pay the damages. Though the advisory group asked the parent ESD to produce such a report, that didn’t happen.
An answer of sorts regarding the project’s finances did surface Nov. 15, 2023, when an advertisement for two foreclosure auctions surfaced, prompting coverage first in The Real Deal.
Since then, BrooklynSpeaks, backed by legislators such as Assemblymember Simon, has insisted that the fines for the unbuilt units be paid, and that the project contain more deeply affordable housing. (Interestingly enough, former Deputy Mayor Alicia Glen, who helped negotiate the 2014 agreement, told The Real Deal she believed the fines should be upheld.)
New players
Today, there are key players in the project’s future that, unlike Forest City or Greenland, have never faced public questions.
The collateral is controlled by the “lender,” a shorthand for an entity created by the EB-5 middleman, the Florida-based U.S. Immigration Fund (USIF). While the funds were contributed by the immigrant investors, the USIF as manager controls the funds’ business.
The USIF is led by Nicholas Mastroianni II, who in October 2014 was subject to a harsh Fortune article about his “tangled past.” It hasn’t stopped him from becoming the hottest fund-raiser in the Wild West world of EB-5.
In 2020, Fortress Investment Group, a firm now owned mainly by the government of Abu Dhabi, apparently acquired some of the EB-5 debt, as the USIF encouraged original investors to move their money to a project in Times Square. It’s unclear whether Fortress, as of now, controls those funds or owns a majority. (Queries to the USIF, Fortress, and Greenland did not get a response.)
Either way, ESD requires a “permitted developer,” one with at least a decade’s worth of experience in large projects.
At the March 25 meeting, Shiffman questioned whether the USIF as manager has any incentive, if it didn’t put the money up. That’s unclear. Then again, a USIF affiliate in 2024, rather than Greenland, paid the $11 million annual fee for railyard development rights. (How they could do that pre-foreclosure is unclear.)
Also, when the USIF managed the EB-5 loan to another arena, Nassau Coliseum, it was able to form a new company to operate the Coliseum, after Prokhorov shuttered the venue without paying the money back. Mastroianni’s new company then cut a deal with casino operator Sands worth $241 million for a 99-year lease on the Long Island site.
Behind the scenes
Beyond the public discussion, some of the project’s backstory emerged last year, thanks to Freedom of Information Law requests.
In early 2023, Greenland proposed to rescue the project by adding more than 1 million square feet on the six railyard sites, thus making development more financially feasible. Unlike with the current railyard development rights, for which Forest City bid $100 million, including the block needed for part of the arena, no compensation for the MTA was proposed.
That extra square footage could add nearly 2,700 more apartments, and was to come with extended deadlines and additional affordable units. That proposal, which ran aground as Greenland wrangled with the ESD and MTA, may be the template for a future plan.
Earlier, in 2021, Greenland got ESD support for a huge project at the parcel known as Site 5, catercorner to the Barclays arena and the longtime home of the big-box stores P.C. Richard and the now-closed Modell’s.
A view of Modell’s and P.C. Richard & Son, which sit on Site 5. Photo by Adi Talwar.
Site 5 was previously approved in 2006 for a 250-foot tower with nearly 440,000 square feet. However, without an anchor tenant for B1, the tower slated to loom over the Barclays Center (which original architect Frank Gehry dubbed “Miss Brooklyn”), Forest City instead built a plaza in front of the arena.
No real estate developer discards buildable square footage, so in 2016, as City Limits reported, the Greenland-Forest City joint venture aimed to move most of B1’s bulk across Flatbush Avenue to create a two-tower project, the taller tower rising 785 feet.
In 2021, after Forest City’s exit, ESD quietly agreed to an even taller, bulkier project, signing an interim lease supporting a tower 910 feet tall, the borough’s second tallest. It could contain housing, retail, a 550-room hotel, plus new LED signage presumably valuable for advertising.
Greenland proposed that the area context has changed, given the Brooklyn Tower supertall and another tower planned for the nearby Alloy Block (formerly 80 Flatbush). Still, the Site 5 project’s scale would make it an outlier.
It would have a Floor Area Ratio (FAR), a standard measure of bulk compared to the underlying footprint, exceeding 25, more than twice that of the Downtown Brooklyn rezoning and far more than the 15.75 at the Alloy Block. At the March 25 meeting, Shiffman called it “untenable” and said ESD should’ve consulted with the advisory board.
Big winners
Despite the stall, some big Atlantic Yards winners have emerged: owners of BSE Global, the holding company that includes the Nets and the arena company. In 2017, Prokhorov began selling his assets to Alibaba billionaire Joe Tsai, who took full ownership in 2019. The purchase price: $3 billion-plus, earning Prokhorov a profit estimated at at least $600 million.
Last year, after Tsai acquired the WNBA’s New York Liberty, he sold a 15 percent stake to the family of Julia Koch, widow of the notorious right-wing financier David Koch, in a deal valuing the company at $5.8 billion.
The $688 million received has helped pay down debt and also to build what Tsai’s lieutenants call a Brooklyn “ecosystem” involving media (acquiring Brooklyn Magazine, renamed BK MAG), buying the retail condo at the base of the Williamsburgh Savings Bank near the arena, and investing in a slice of the revamped Brooklyn Paramount theater. Just last week, BSE Global announced it would build an $80 million practice facility for the New York Liberty in Greenpoint.
If the Site 5 plan proceeds, Tsai, though not a party to it, would further gain by avoiding construction of a giant tower which would obviate the Barclays plaza, now sponsored by Ticketmaster; make arena access more difficult; and block valuable screens for advertising and promotion.
In exchange for making the plaza permanent, BrooklynSpeaks has suggested that Tsai be required to fund a quality of life enforcement unit in the arena vicinity. That was raised in a public comment March 25, which generated no response from ESD.
A view of the remaining Pacific Park / Atlantic Yards project area from Vanderbilt Avenue. Photo by Adi Talwar.
Lowered attention
The salience of Atlantic Yards, once a big issue in Brooklyn and even mayoral politics, has declined. Only one mayoral candidate, Brooklyn-based Comptroller (and former Councilmember) Brad Lander, has mentioned the project while campaigning, wrongly suggesting it was a “privately owned” site but also pledging to enforce the affordable housing agreement.
In 2018, during another lull in the project, former New York City Economic Development Corporation head Seth Pinsky, then a real-estate executive, told The Real Deal he was confident Atlantic Yards would be completed, and would be “a financial success for somebody.”
Today, there’s clearly demand for housing in the general area. After all, spot rezonings just east of the project site sparked the broader Atlantic Avenue Mixed-Use Plan, which was recently approved by the City Planning Commission and now faces City Council review.
For now, though, the Atlantic Yards plan—promising removal of blight, knitting together of neighborhoods, and new affordable units, via a single developer—has not proven viable. “Whatever outcome we get from this,” Veconi said at the March 25 meeting, “we want the public to have confidence in it.”
To reach the editor, contact Jeanmarie@citylimits.org
Want to republish this story? Find City Limits’ reprint policy here.
The post Brooklyn’s Stalled Atlantic Yards Plan Faces More Questions Than Answers appeared first on City Limits.
