http://www.observer.com/2009/real-es...estion-funding
City Closes on Willets Point Land as Opponents Question Funding
By Eliot Brown
October 5, 2009
In the past month there’s been a fair amount of deals closing at Willets Point, with the Bloomberg administration finishing up the acquisitions that it negotiated with some of the property owners on the industrial site by Citi Field that’s slated for a major redevelopment.
In the run-up to a City Council approval of the redevelopment plan last year, the Bloomberg administration made deals with more than a dozen property owners, most of the major owners, shelling out undisclosed sums in order to gain control of much of the land.
By our tally, more than $78 million in nine separate transactions have closed—though far more have previously been negotiated and yet to show up in city records.
There’s a number of things that aren’t told in that number, particularly what the city is spending in terms of relocation costs. There’s been $424 million allocated for both acquisitions and off-site infrastructure, an amount that would seem to be too small to do everything the administration has discussed.
The city has said the off-site infrastructure will cost about $150 million, for one.
And then there are land costs, which are substantial. Here’s the most recent closed deal: $11,993,825 for a lot that is 57,000 square feet (on the less valuable northern end of the site), according to the real estate tracking firm PropertyShark. That comes out to $210 a square foot, which, if extrapolated across the full 45 or so acres that are privately held on the site, would come out to $412 million.
The city’s Economic Development Corporation, which runs the Willets Point project, contends it would be misleading to apply these early deals' costs outward for the whole project, as the city paid more to find early sellers, and different sites have different values.
“We’ve paid a premium for early acquisitions,” David Lombino, an EDC spokesman, said.
The city also seemed to be responding to the pressure put on it by the City Council just before it approved the project, as Council members urged the city to control a large portion of the land in an apparent attempt to avoid a “land grabber” label.
According to an EDC document from December 2008, there was language written into some of the larger land purchases that would seem to give the landowners a pretty good deal.
For both businesses, House of Spices and Fodera Foods, two of the larger property owners on the site, an EDC board action said that EDC “must use its best efforts” to “promptly purchase replacement property,” then sell the property to those businesses for $1. Given that EDC would be condemning their land, then buying them new land (though “best efforts” seems a loose term), this could get expensive as well.
THE NEXT MAJOR STEP in the Willets Point plan is the eminent domain process, which the city expects to begin with hearings in the next few months. As that process readies, the business owners—the bulk of them automotive repair—are trying to apply new pressure on a number of legal and political fronts.
The businesses, which have formed a group named Willets Point United, are pursuing an environmental lawsuit with the firm Arnold and Porter, have hired Michael Rikon as an eminent domain attorney—who submitted a brief in support of the property owners in a lawsuit over Brooklyn’s Atlantic Yards project—and have brought on the rabble-rousing lobbyist Richard Lipsky, who has been beating the drum over allegedly improper/illegal uses of local development corporations. (The city, in effect, funded a firm to lobby the City Council and community boards to win approval at Willets Point. The state attorney general’s office is said to be investigating the use of local development corporations.)
Mr. Lipsky said that the efforts of the businesses—which organized a cohesive opposition after the project was approved by the Council—are aimed at raising questions about the broader viability of the project, the unrealistic budget, fighting the use of eminent domain, and raising concerns about the business relocation plan.
“There is no strategic plan in place that would pay for this,” he said. “There is no relocation plan that will enable these jobs to be safe.”
GOING FORWARD, THE Bloomberg administration has taken a phased approach to the project, attempting to develop the southwest corner first, likely to be followed by two other phases. This would seem to suggest the city is learning from some of the turbulence experienced at other major development sites—Brooklyn’s Atlantic Yards project, for instance, has one developer controlling all 22-acres, but few or no assurances that everything will be built out in full.
Still, the prospect of a phased development directly contradicts statements made by the city in the run-up to Council approval: officials insisted that everything had to be developed at once, lest the pollution in existing properties seep into the rest of the development (the city even had an environmental consultant emphasize this point). This was a major justification for the use of eminent domain.
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