COMMITTEES

Housing, Banks, Codes,

Correction and Education!
CAUCUSES!
Black, Puerto Rican, Hispanic and!
Asian Legislative Caucus
Puerto Rican/Hispanic Task Force!
New York State Caucus of
Environmental Legislators!
State Legislators Against!
Illegal Guns!
Leaders Eradicating All Poverty

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! June 14 , 2016

DISTRICT OFFICE!
Shirley A. Chisholm State Office Building!
55 Hanson Place, Room 328!
Brooklyn, New York 11217!
Phone: 718-596-0100!
Fax: 718-596-4992!

OFFICE OF!

NEW YORK STATE ASSEMBLYMAN!

WALTER T. MOSLEY!

ALBANY OFFICE!
Room 528
Legislative Office Building!
Albany, New York 12248!
Phone: 518-455-5325!
Fax: 518-455-3684

57TH DISTRICT

th

Howard Zemsky
President and CEO
New York State Department of Economic Development
633 Third Avenue
New York, N.Y. 10017

Re: Pacific Park Development Project

Dear President Howard Zemsky:
As State representatives of the various neighborhoods of central Brooklyn, including the large public/
private development site of the Barclays Arena and Pacific Park housing complex, we write to you with
several grave concerns regarding the above referenced project agreements. Events have taken place over
the past several months in combination with the history of this project that demonstrate to our
constituency and us a serious breach of public trust.
Public Oversight of Public/Private Partnerships
In early December of last year, several community members and my fellow elected officials in the area
were informed of the transfer of majority shares of ownership in the Barclays Arena would be passed
from the majority owner Forest City Ratner (FCR), to a smaller owning entity, Onexim.
After contacting Empire State Development Corporation (ESD), the state agency overseeing the
development, my colleagues in the state legislature and I were informed that this transaction was legal
under the original Development Agreement, memorialized in 2010. In that agreement there was no
need or process by which a public review of the new arrangement between the new majority
shareholders of the arena and FCR (please see the letter we have enclosed) was possible.
In the past few years the community and our offices have pushed for more transparency and openness
throughout the construction phase and an ongoing dialogue with residents directly impacted by the
project. It took the community to threaten a legal suit under the Fair Housing Act in the summer of 2014
in order to force the developer to deliver on the promised affordable housing to be developed. The
affordable units will be constructed in proportion to the market rate housing and subject to specific
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timetables with penalties for non-performance. Specifically, affordable apartments started must meet a
threshold of 35% of the total units started until the construction of 1,050 affordable apartment units has
been started; thereafter, the ratio of affordable apartments to total apartments started may fall to 25%.
This agreement also led to the creation of the Atlantic Yards Community Development Council as the
state agency to oversee the projects process, though strictly in an advisory capacity.
Most recently, Greenland Forest City Partners (GFCP)1 has announced its intention to seek a
modification, yet again, to the Pacific Park Modified General Project Plan. The proposed modification
would allow GFCP to shift density approved for the building known as B1 on the arena block across
Flatbush Avenue to Site 5. GFCP also seeks to reprogram the use of the building known as B4 from
residential to commercial use.
The construction phase plan that was published by GFCP in 2014 complies with the agreement entered
into in June 2014. However, compliance with that plan depends on B4 containing approximately 275
affordable apartments. It is not clear how the project can meet its obligation to develop affordable
housing in parallel with market rate its MGPP is modified such that B4 does not include these
apartments. GFCP has consistently stated that they will hit the ratio commitments, but has refused to
produce to the public a plan by which they will meet this goal given the construction phase shift.
Additionally, the MGPP provided for 200 units of affordable condominiums which are supposed to be
located off-site of the Pacific Park project. These units are vital for working class and middle class New
Yorkers to actually be able to own property in a city where land costs are constantly rising. There has
been no plan established for these units to be built and no discussion regarding them since my
predecessor Congressman Hakeem Jeffries held my Assembly seat in 2012.
This project could not have begun, let alone be completed without significant subsidies from the State
and City. Because such public monies were used, it is the right of all New Yorkers to know what new
arrangements have been made, and to know that the legally required public benefits going forward are
memorialized and will be enforced. Simply put, MWBE contracting and local hiring from our historically
underserved communities were paramount concerns and the developers agreement to those terms
constituted the consideration without which the CBA signatories would not have supported the project.
We must know that these agreements are still in place and enforceable.
Foreign Government Backed Companies Investing in State Subsidized Project
The addition of a Chinese government controlled development entity, Greenland Holdings, buying 70%
percent of the shares in the Pacific Park development project nearly two years ago raises more concerns.
The current status of the Chinese market coupled with ongoing anti-corruption investigation by Chinese
government officials into top real estate developers in the United States puts the life and sustainability of
the project in question.
The volatility in Chinas markets and continued downward pressure on its currency have forced Chinese
government officials to further tighten capital controls to stop the massive currency outflow
1

In 2014, FCR sold 70% of its equity interest in the residential portion of the Atlantic Yards to Greenland Holdings (hereinafter
Greenland), a Chinese government owned holding company forming Greenland Forest City Partners.

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internationally. According to recent news article in The Epoch Times, there is nearly $15.7 Billion in
Chinese real estate investment in the U.S., in 2015, which was up nearly 30% for the year prior. The Wall
Street Journal reports that Chinese investors have poured an additional $9.3 billion into U.S real estate in
the first few months of 2016.2
The risks associated with free market capitalism are always with us, nevertheless nearly $300 million in
combined New York State and New York City subsidies were poured into this project and the taxpayers
of New York should have a say where their money goes and with whom they partner.
Accountability to Minority Shareholders
In 2004 as this project was in its conceptual phase, FCR approached members of our community to invest
their money in a neighborhood project that will create thousands of job opportunities for local
residents. Roughly 22-24 class A investors invested between $1 million - $1.5 million and became
minority shareholders in the housing and arena projects. Many of these original investors had been
skeptical of such large scale development projects which are inherently risky. However, these normally
cautious and responsible individuals were persuaded because of the involvement of New York State
government and relationships they had within the public sector. The backing of ESD reassured investors
that this project would be openly monitored with government oversight and on-going dialogue with
shareholders as the project decisions would be made.
Unfortunately, this has not been the case. As the financial crisis of 2007-2008 came about, shareholders
were informed that in order to sustain the project a third party would have to be brought into the project
to cover the downturn in capital investment. Shareholders were not informed through a formal board
meeting, nor given an opportunity to raise questions or receive satisfactory answers, but instead they
received a brief letter stating that investors could sell back their shares at a fraction of the purchase price
or, lose the majority of their investment.
This process repeated itself again in 2014 when FCR sold 70 percent of its equity interest in the
residential portion of the project to Greenland. The misrepresentation of this project to minority
shareholders through FCR (who partnered with ESD on this project and is a de facto agent of the state) is
at the least deeply concerning and potential grounds for fraud.
Independent Environmental Monitor
Originally anticipated to take ten years, the construction of Pacific Park will now unfold over twenty
years or more. Because it is located immediately within an existing community, the compounded impacts
of the project's operation and implementation are deeply felt. Unfortunately, there does not appear to be
any incentive for ESD to hold the developers accountable or for it to sincerely track the benefits and costs
of the project, most especially the multiple adverse environmental impacts.

For years, community groups have described the failure of New York State and the developer to comply
with their own stated protocols and commitments. ESD's oversight of the mitigations of adverse
2

Grant, Peter. Chinese Investors Pour Money Into U.S. Property. Wall Street Journal. May 25, 2016
http://www.wsj.com/articles/chinese-investors-pour-money-into-u-s-property-1464110682

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environmental impacts, as well as the management of environmental review processes are both perceived
by the community as driven by the imperatives of the developer instead of the public interest. At its best
known low point, in 2009 ESD and FCR sped up changes to the project without following proper
procedures and sought to cover that up to enable the developer to meet a deadline necessary to keep
Barclays Center bonds federally tax-exempt, saving the developer hundreds of millions of dollars. In July
of 2013, the New York State Supreme Court agreed with the community plaintiffs that the ESD had
violated the law by modifying the MGPP without the required process. Now, on a day-to-day basis the
State repeats the prioritization of the developer's interest over the publics through bureaucratic
maneuvering that elevate the risks to the adversely impacted communities health, safety, and well-being.

Over the long history of the Atlantic Yards/Pacific Park project, ESD executives have detailed oversight
regimes to the public of one form or the other, and then either failed to implement the regimes
meaningfully or worked to undermine what in theory could work if it were engaged in good faith.
Consistently the lack of transparency neuters the ability of the public to monitor and scrutinize ESDs
activities, while in turn overstating the job it performs. In reality the State relies on the developer, GFCP,
for most information, and what information it does collect independently it often channels through the
developer with the result that the developer is given the agency to maximize its flexibility and its interests
while minimizing those of the public.

Eleven years since construction started, not one unit of housing has been fully built let alone occupied
and the State still knows less about the project than is acceptable; while representatives of the State are
on-site, their scope of work is narrowed, their protocols confused and prone to delay. This behavior is
routine, entrenched, counterproductive, and undermines the public interest. As such, it is difficult to
believe ESD has either the ability or the interest to responsibly oversee the economic development
projects in its portfolio.

As a result of these developments, the undersigned legislative members ask that your office launch a full
review of these contracts and documents. We as a state cannot allow private entities using public
subsidies to operate without being held to the same standards as our public agencies. It is our duty as
stewards of the public good to be ever vigilant against public spending waste or worse. Should you have
any questions or concerns, please do not hesitate to contact in my office at 718-596-0100.

Sincerely,

Walter T Mosley
Member
Member
New York State Assembly
57th Assembly District

James Brennan

Jo Anne Simon

Velmanette Montgomery

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New York State Assembly

44th Assembly District

Member
New York State Assembly
52nd Assembly District

Member
New York State Senate
25th Sate

cc: Thomas P. DiNapoli, New York State Comptroller

Eric Schneiderman, New York State Attorney General

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