Industry Roundup - November 2005

MTA Chooses Arena Plan for Atlantic Yards

The authority chooses Forest City's $3.5 billion mixed-use proposal for its Brooklyn rail hub. Also, three major projects are getting under way near the World Trade Center site in Lower Manhattan.

Gehry Design for Atlantic Yards

Following month-long exclusive negotiations, the Metropolitan Transportation Authority decided in September to offer development rights over its Atlantic Yards rail facility to Brooklyn-based Forest City Ratner, which is planning to build a $3.5 billion complex that includes a new 18,000-seat arena.

Forest City had originally bid $50 million for development rights on the 8.3-acre property near Brooklyn's downtown district, but faced a rival development bid that initially offered $150 million - and did not include an arena - from New York-based Extell Corp. The MTA decided in early summer to negotiate exclusively with Forest City before considering Extell's offer. During the negotiations, Forest City doubled its bid to $100 million.

Forest City's plans call for a Frank Gehry-designed complex that includes the arena planned to be the home of the National Basketball Association's Nets franchise, as well as several office towers, some as high as 60 stories, and 6,000 new residences, including 2,000 set aside for affordable units.

Extell had proposed constructing 12 towers up to 28 stories high. It would have added 1,373 new residences, among them 570 affordable housing units.

Local opponents of the arena, such as a group named Develop Don't Destroy Brooklyn, have criticized the decision to choose Forest City, in part because the MTA itself appraised the development rights at $214 million. The group has threatened to sue to stop the development.

In a memorandum of understanding with Forest City signed earlier this year, the city and state governments agreed to provide $100 million each toward capital infrastructure improvements to the site. The development plan still needs to secure environmental approvals. It also has to gain the endorsement of the Empire State Development Corp., and the state Public Authorities Control Board.

Forest City hopes to get a green light to break ground by spring 2006.

130 Liberty Deconstruction Starts

The Lower Manhattan Development Corp. has begun the deconstruction of the 40-story former Deutsche Bank building at 130 Liberty St., which was vacant and shrouded for four years to cover extensive damage caused by debris from the collapse of the Twin Towers during the attacks of Sept. 11, 2001.

The deconstruction project began only after the settlement of a two-year dispute between Deutsche Bank and its insurers, mediated to an agreement in 2004. Under the deal, LMDC paid $90 million for the site and will cap its costs of cleanup at $45 million, with the insurers covering the rest.

The dispute hung up an initial plan that had Gilbane Development Group of Providence, R.I., serving as deconstruction contractor. The LMDC shelved its earlier plans and bid for a new team over the summer, selecting New York-based Bovis Lend Lease to oversee the project.

Under the first phase begun in September, the team is putting up scaffolding and hoists, erecting sidewalk sheds, cleaning the exterior, and removing non-structural elements.

In addition, following guidelines from the U.S. Environmental Protection Agency, the Lower Manhattan Construction Command Center, which began operations earlier this year, is setting up an air-monitoring program throughout the area to ensure safe dust levels around the site.

Early next year, the project team will begin floor-by-floor deconstruction. That will involve removal of the curtain wall, concrete masonry unit shafts, concrete deck, large mechanical components, and structural steel.

The site will eventually house the fifth office tower envisioned in the World Trade Center redevelopment plan as well as an additional 30,000 sq. ft. of open space. The land will also open the option of putting bus parking and vehicle security checkpoints below ground and away from the planned World Trade Center memorial nearby. The deconstruction is scheduled for completion by early 2007.

Construction Work on Transit Hubs

The Port Authority of New York and New Jersey broke ground on its $2.2 billion World Trade Center Transportation Hub in September, joining the resumption of work on the nearby $750 million Fulton Street Transit Center by the Metropolitan Transportation Authority.

Designed by Spanish architect Santiago Calatrava to look like a bird taking flight, the World Trade Center hub is scheduled to open in 2009. It will reconnect existing subway lines and the Port Authority's PATH train system as well as provide underground access to a nearby ferry terminal.

The Fulton Street center, where New York-based Parsons Brinckerhoff and Bovis Lend Lease are managing construction, is expected to be complete in 2008. The project will link 10 separate downtown subway stations, which currently have a confusing layout and in several cases do not allow free transfers.

MTA Pushes for Bond Passage

The Metropolitan Transportation Authority is aggressively promoting passage of the state's $2.9 billion transportation bond referendum, which is on the ballot before voters this month, through an ad campaign targeting New York metropolitan area commuters.

In late September, the MTA started putting posters in New York City Transit's 5,000 buses as well as in nearly half of the city's subway cars, using money it had previously allocated to a security education campaign on reporting suspicious behavior and packages. According to an MTA spokeswoman, the agency is redirecting $15,000 of funds budgeted for the security education effort to the bond campaign.

The proceeds of the bond issue would be evenly split between projects for the MTA and the state's Department of Transportation, including $450 million each toward the Second Avenue subway in Manhattan and the East Side Access project to bring Long Island Rail Road trains into Grand Central Terminal. Voters rejected a $3.8 billion bond issue in 2000.

Housing Lots up For Grabs

The New York City Department of Housing Preservation and Development is offering its last available lots for the development of affordable housing projects. The agency issued a request for proposals in late summer.

The agency plans to spur construction of more than 3,200 units on 248 sites citywide. Developers proposing more affordable housing than required, as well as those that emphasize environmentally friendly construction, are eligible for preferential consideration.