Tuesday, December 15, 2009

Brooklyn or Brinkmanship?

Location of Brooklyn shown in yellow.Image via Wikipedia
The whispers about Brooklyn are growing louder as the Lighthouse and Town of Hempstead appear to be at an impasse.  As previously reported, the sides are far apart on a reduction in size and scope, with sources (and bloggers) close to Charles Wang floating 10% as a number, and the Town of Hempstead speaking in terms of a 30-35% reduction in size and scope.

Interestingly, the whispers about Brooklyn have grown even as the city crossed a hurdle in its process of re-developing Willets Point in Queens.  A week ago, the deadline for the city's request for qualifications passed, and some have wondered why there has not been any indication whether Messrs. Wang and Rechler submitted a bid.  As I have said before, I have worked as a management consultant, and this process closely mirrors the sales cycle in consulting.


The New York Economic Development Corporation (EDC), while not releasing the specific names, has confirmed that 29 developers have responded the initial bidding process.  It's important to know that Queens has not submitted an RFP (Request for Proposals); it has submitted a Request for Qualifications (RFQ).

RFQ is usually the first step in the bidding process, in which the city requests developers who are interested in developing on the site to explain what qualifies them for the specific job.  It was the same way in consulting - clients want to deal with firms that have a proven track record of success in the desired field.

We will likely not see movement for 3-6 months (I'm guessing the higher end, but I'm not sure), in which the city will review the submissions from the 29 developers, ask follow-up questions, and winnow the group down to a short list of potential developers.  These developers will then be asked to participate in a Request for Proposals (RFP).

Moving Forward

The process will then switch to RFP, in which developers submit their proposals for the site based on the city's parameters.  This process would likely take another 3-6 months, in which the developers would interact with the city and submit their formal bids.

Even if a theoretical Wang/Rechler bid succeeded, the issue of environmental review still hangs in the air.  The city completed a Generic Environmental Impact Statement (EIS) for Willets Point, according to many reports, but that would not help an arena situation.  The structure included in that plan was a convention center a fraction of the size as any new arena would be, so the process would need to repeat itself.  You would have to give at least 6-12 months for that to be completed.

Two Options

It is clear that any good negotiator needs leverage in order to compel the other side to act according to his/her wishes.  At this point, given the time horizon seen for Queens, it is not a surprise that Brooklyn is the hot Islanders rumor du jour (remember when the far-fetched Kansas City scenario was hot?).  You do not gain leverage or motivate the Town of Hempstead to increase the speed of review by responding to an RFQ - in fact, I would be shocked it they did not give a submission as a matter of due diligence.

At this point, we have heard some troubling news about the Lighthouse, but we have also not seen Charles Wang publicly entertain other offers for his team, despite his deadline, at which point he would "seek other options," having passed 10 weeks ago.  To me, this can mean one of two options:
  1. Charles Wang is Serious about the Lighthouse: Some have wondered whether a game of brinkmanship would be needed to motivate all sides to come to a deal.  Some sources believe that the lack of public posturing from Mr. Wang himself shows that he is serious about getting a deal done and is trying to force a solution all sides can live with.
  2. There is Fire Behind the Brooklyn Smoke: if the Brooklyn arena breaks ground, and all goes according to plan (I have not heard pleasant things about Mr. Ratner from people in the construction trades, but that's a story for another day), it becomes the number one relocation option for the New York Islanders.  If things do not change in Nassau County, and that arena proceeds, we could very well see an option.  It's far from a done deal - and that's always been my issue with people talking about it like it was easy - but it's a possibility.

Bottom Line

The Lighthouse process is currently at a critical point.  With Queens facing a longer time horizon, and a Brooklyn ground-breaking reportedly imminent (I still caution against assuming this is a slam dunk), it makes sense that the Brooklyn rumors would be picking up.  Charles Wang may be truly committed to using the Brooklyn project as a ploy to gain leverage, or it could be the way this saga ends.  We will likely know more once Ed Mangano takes office in January.

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  1. l am getting so sick of this whole thing! I have followed this project since day one.. and my usual word for this lack of cooperation and backdoor games would be disgust.. but I am way past that at this point! I don't think there is a word in the dictionary that could describe how i feel about this whole process! It's so sad that I feel this way about my home!

  2. Willet's Point might not have even needed Wang/rechler to submit a RFQ as they're aware of Rechler's qualifications. The RFP is the important part not the RFQ.

    Your timeline for the completed gEIS and Queens approval seems too long and based on slow TOH speeds not fast NYC ones. Plus an arena isn't so much more than a convention center to the point of massive delays but most importantly you didn't mention that Bloomberg wants this done. Things will move fast in Queens.

    5000 people at the game last night. Time for NYI to leave LI and go to Brooklyn/Queens. Even if the LH ever happened weeknight crowds would still be embarrassing.

    Build a modified LH project WITHOUT the Isles. Might happen anyway with developers besides Wang/Rechler. Never understood why anyone would be desperate enough to want Wang developing real estate with his record of failure with NYI.

    LI is too small for a pro hockey team now especially without mass transit but does need development on the NVMC site and surrounding area.

    But TOH is correct here, it shouldn't be a 6th borough and be as big as Wang wants. Either way, the Islanders need to leave LI and soon.

  3. ...also, nobody said Brooklyn or Queens would be done easily. More likely, Bklyn/Queens will be done easier than the Lighthouse will done in Hempstead. That's not a far stretch.

    Something smaller should be developed where the proposed area is for the LH and NOT the big project that's being shopped not even at 35% less.

  4. Anon - it's funny that you're here questioning my timelines and premise when you're using the most simplistic (and incorrect) analysis here, and you're even recycling the same arguments we've been hearing for years.

    First of all, I worked in a well-known consulting firm, and we had to respond to every RFQ or RFI (Request For Information) in order to be considered for a project. It's a part of the process, and a way for the city to avoid lawsuit down the road. In addition, the city can do things faster, but it can't break the law. Environmental review takes time, and it's painful, so even if you take the lower bounds I stand behind everything I have said.

    I also love how so many people who oppose this project (seems that you do based on your statements here) always try to keep it on hockey when it's about a lot more than hockey. Crowds at a weekday game have NOTHING to do with the sorry state our Island is in, and it doesn't change the fact that we need things the Lighthouse is proposing. To build on that, you're also ignoring (deliberately or otherwise) the fact that Nassau County, the land-owner, wants this project built, and a majority of your neighbors want it as well. This isn't Wang having a whim, and all the support that's been shown for this project doesn't go away just because you say so. He submitted a bid, and it was accepted based on the parameters set forth by Nassau County, and every poll has consistently shown twice as much support as opposition (usually 50% in favor, 25% against, 25% not sure or no opinion).

    Mass transit is an interesting argument, because there will never be adequate mass transit to alleviate traffic and bring more people to the site unless there is investment to spur it.

    Finally, there's a question about the "Sixth Borough." I've asked this to every single person using this argument, and nobody has ever given me a straight answer, so I'll try with you...Nassau County is around 400 square miles, give or take a few. The proposed Lighthouse Project covers 150 acres. How would building this one project - which I believe is a good idea - suddenly destroy the entire rest of the county? I think it's intellectually dishonest to push the theory that building one project that is a good idea will suddenly throw good sense out the window and lead to buildings being built from here to Montauk.

    Ultimately, what do you want to see on that land? I want the project the land-owner picked, and the one I (and most of your neighbors) think is the best for our future. As a hockey fan, I would be fine with going to games in Brooklyn, but as a Long Islander, I fear for our collective future if this doesn't get done.

  5. respectfully, that we have not seen charles wang "publicly" entertain offers is no indication of anything. through all of this the only public comments from his side or TOH's have been posturing or sniping. also, ratner's own feasibility study of 10 days ago refers to "retrofitting" the brooklyn arena for hockey and actually mentions the islanders by name. does this indicate ratner is somehow taking up the fight for wang to pressure TOH/etc. to close a LH deal? i think not. i think it means that despite obligatory denials to the contrary, the possibility of the islanders in brooklyn has always been on the table and ratner and wang (and now possibly mikhail prokhorov) have been engaged on the subject at least to some degree all along. why would they not be? i agree that AY may still not a COMPLETELY done deal. even in the last few days a motion was filed with the NYS court of appeals asking it to consider re-hearing last month's eminent domain argument, based on last week's columbia university case involving similar issues. but - at this point AY certainly seems more likely to get done than LH and when a final decision comes forth it won't be a result of what is out there for general public consumption.

  6. Day1 - should've mentioned the analysis in the post. I've done scenario analysis in my day, and you have to account for every possible angle, so the Islanders moving had to be a scenario. That's either nothing - or very very something.

    Good point on the Columbia case - I remember reading about it. At this point, we're all in flux.

  7. One thing about the eminent domain cases - ever since Kelo v. City of New London, it's been established precedent that taking land through eminent domain to benefit private enterprise is constitutional. Given that, and barring a re-hearing on the Supreme Court (which would probably re-affirm the decision by the same 5-4 vote), the Columbia case has a better chance of being overturned than Atlantic Yards.

    The NYS Court of Appeals is bound by established Supreme Court precedent at this point.

  8. Furthermore, the New York Court of Appeals is not going to reconsider Atlantic Yards. The court ruled against Columbia because they felt that the university contributed to the blight that they were trying to take advantage of. As much consternation anyone has against Ratner, there is no way to say that he contributed to the current state of the area. Therefore, the NYCA precedents are completely consistent and barring a complete change in the makeup of the Court of Appeals, the opinions are pretty much set in stone.

  9. Thanks, Law Student - glad to have a legal perspective here.

  10. yeah, thanks for the clarification 'law student.' not being a lawyer i don't know enough to tell how much of a long shot the re-hearing request is, but i do know the anti-AY people are still seeking any way possible to delay the project. regardless of how one feels about their position, the AY opposition is definitely relentless and tireless. and from the latest available info i read, the bonds are not moving yet as their price still isn't settled.

  11. I'm glad you pointed out the fact that nothing will get done until the new County Exec takes over. Currently we have a lame duck county executive and with a Republican Kate Murray as TOH Supervisor and a Republican Mangano waiting to become the County Executive the republicans will not do anything that could help Suozzi look good as he leaves office. Wait until Jan and I bet all of a sudden there will be a lot more news on the Lighthouse again. The rumors about Brooklyn are just warming up the seat for Mangano, to make sure this a top priority when he takes office.

  12. Things are looking bleak when Nicks finally entertaining the Brooklyn possibility...

  13. I heard today on Joe's and Evan's show that the bonds were being bought today for the Atlantic Yards

  14. Nick - I've worked for hedge funds, NYC and the 2nd largest bank in the country dealing with RFQs/RFIs/RFP's much longer than you. RFQs are not a required pre-requisite if the entity is previously known. Plus Bloomberg is the law and gave himself a 3rd term. You're naive if you think he can't speed up the Queens process. (NYI is tied to NVMC until 2015 - that timeline would work fine for Queens.)

    Excluding hockey for now, I said 3 times I'd like to see the project albeit much smaller even than 35% reduced.

    Nassau County under Suozzi wanted the LH done. (Now that he's gone maybe they don't so much) TOH doesn't want it done to the big scope proposed and they're correct. It seems most neighbors who count don't want it as Murray won the election. Suozzi, who wanted it most lost. Nobody associated with the LH won. Previous polls that you state don't matter much when TOH has the ultimate say.

    Mass transit is a key argument. How can you build a project of this size without infrastructure or getting people there and out. Back to hockey, how can an arena be reconditioned if there's not an adequate way to get to it? Or back?

    You're not finding the answer you seek regarding the 6th borough because it's subjective. You don't want to see it or hear it. And yours isn't the only opinion that matters. IMO, LI was meant to be suburbs NOT
    the project scope that Wang won the bid on and proposed. It's a good idea TO YOU. Not necessarily to others.

    I've mentioned numerous times that I'd like to see development reduced of a little more than 35% proposed.

    Good to hear you'd go to Brooklyn to see NYI.


  15. Let's talk timelines - and I'm glad you have different experiences than I do because it helps the conversation out. I've been in situations where contracts were awarded no-bid, but it seems that a project of this magnitude would require the approvals up front. Also, and this is where the misunderstanding of the point comes in, you've chosen to focus on the timeline and ignore the point. The point is that Brooklyn has to happen within the next few weeks, based on my understanding of the financing, and you don't get leverage from responding to an RFQ. That to me explains the volume of Brooklyn chatter we've recently heard.

    Now we have to talk about 6th Borough, where I've never said my opinion is the only one that matters. You are one of very very few opponents who hasn't run away when asked to explain their position. If you read through my history here, I constantly talk about how the definition of suburbia doesn't mean any one thing - it just means a community that is outside of a major city. Therefore, to counter your point, there is nothing inherently suburban, just like there is nothing inherently urban, and to say Long Island isn't "meant" for something is your opinion, one that is not shared by your neighbors, regardless of election results (in addition to the Lighthouse polls, a 2007 study by the Long Island Index showed 61% of respondents favored higher-density apartment housing in downtown areas). This is the new name of the game, and I genuinely don't buy the 6th Borough argument when it comes to the Lighthouse Project, but I've said why many times. The proposed project is on 150 acres of a County that is almost 400 square miles, and building it would not change the environmental review laws (which Bloomberg also can't change) or the requirement that every development make sense for the area. Building this project, if it makes sense for the area, won't suddenly justify every crackpot proposal to put skyscrapers everywhere.

    The election is relevant, and if you've noticed I was highly critical of people who didn't show up, but to say Kate Murray winning the election and Suozzi losing show people don't want the Lighthouse is a major stretch. Kate ran against a weak opponent who campaigned for about 3 weeks in the overall process, and Suozzi never campaigned at all, completely underestimating how upset people were with taxes. Since many people, Wang and Rechler included, did not do a good-enough job of framing the issue in the context of the economy, and did not do more to combat the misinformation, it wasn't a galvanizing issue. That doesn't mean people don't want it, and it surely doesn't mean there wouldn't be a backlash. The fact remains that many (including myself) favor this as proposed, and whether or not you agree you're in the minority on that. I'm fine with a reasonable reduction, though the fact also remains that the Town hasn't been a good partner through all of this. You can talk about policies and protocol all you want, but it's ridiculous that we've gotten to this point, after all these years, and they have not been clear about what they want to see on the site.

    Mass transit is a problem, though it's also a little unfair to hang this developer for problems caused by decades of government neglect. Unfortunately, the kind of money you need to actually build that infrastructure (remember, they're talking about a 10-year build-out on the overall project) can only be obtained through a catalyst like a large project. I've also linked to studies here that show the multiplier effect had by infrastructure spending.

    We can have a respectful conversation here - you're one of very few opponents that didn't come here just to troll, and that's a credit. We don't both have to think it's the right move as long as this stays in the realm of fact-based thinking.

  16. We were talking Queens timeline primarily but since you want to talk Brooklyn I'll show how you're misinformed and wrong about the financing having to happenen in the next few weeks. It's basically done already.

    The Brooklyn project sold $511 million in tax-free bonds for the arena's financing yesterday. The bonds were sold out in 2 hours.
    Ratner beat the clock to sell the bonds because the IRS has barred using such tax-free financing for sports stadiums starting Jan. 1. Ratner is expected to complete the "master closing" for the project this week or next.

    Wang has no leverage. As time moves on the TOH position gets stronger & stronger. The LHP's enemies won the election. Wang can't say he'll pull out and leave LI with nothing because replacement developers are lining up around the block.

    Here's where you miss the point big time. It doesn't matter why Murray won and Suozzi lost, the fact is they did. Just as it doesn't matter much what many neighbors say they want as the elected officials will determine that. And they'll choose the smaller version for various reasons. (You're pretty fuzzy about what's inherently urban and suburban. Those lines are pretty clearly defined.) TOH should've clearly stated what they wanted years ago. Wang should've initially proposed smaller, much smaller.

    Mass transit is a sticking point and sure government neglect for 10 years caused it but to build per the proposal without it is just compounding the problem. I see that as the difference maker.

    Good to hear you'd be fine with a reasonable reduction. Now let's see if Wang is.

  17. $500 million in bonds sold to build the home for the NY Nets today. They were sold in like 20 minutes. Nets will be in Brooklyn by November 2012. NYC can save the Islanders. Anyone following the story knows this was the case for the last year. Everytime a remedy for the Islanders situation comes up, we always hear from the LHP groupie's how that remedy can't work. Well, Brooklyn works. Brooklyn works just fine. The Nets will be there in November 2012.

    We can over analyze numbers, timelines & all the rest. Kill your readers with statistics & obsuure nonsense that doesn't amount to a hill of beans. Here's the only stat that matters. Nassau is dead. Brooklyn is alive.

  18. OK - I'm done with you. You don't want to have a conversation, you're just regurgitating points and accusing me of being misinformed when everything you cite backs up things I've said. It's ridiculous to say Wang should have proposed a smaller project when his project is the one the county selected after a bidding process. In addition, citing my interview with Ed Mangano and my intel that the project would pass if they can reach an agreement, you're also not correct to say that the enemies of the project won the election. When it comes to Brooklyn, I said the financing needed to be done within the next few weeks - and then you cited the law that is the exact REASON that I said that. It's really amazing to me.

    The urban/suburban thing is not fuzzy at all from my perspective. A suburb is a community that lies outside a major city and is not as large as the city itself (citing dictionary definitions). That doesn't set any guidelines of the kinds of construction or neighborhoods that could exist there, and to hide behind some phony ideal of suburbia to justify opposition is a cop-out.

    You seem to not want to accept that the fact that you don't like the project doesn't mean it should immediately go away. If they come to an agreement, I believe it's in the community's best interest to move forward. However, since I can basically predict your response, I think I'll direct all future comments to the nearest brick wall.

  19. Obscure nonsense? Nice to know that's how you view what people want. I've consistently said that people who assume it's just a slam dunk are deluding themselves, and I've seen nothing to disprove that. I have no problem with the Brooklyn idea, I have a problem with people who assume these things just happen.

    Check out this blog post from an urban planner looking at the potential problems, since everyone is now fixated on the belief that there would be no problem "retrofitting" the arena. They'd probably require new plans.


    Also - why not have the guts to actually sign names to what you write?

  20. This arguement became JUST about the Isles. A major impact on the project to be sure. But the Island needs a big splash. They need the attention a convention center and such will bring to the Island. They need the jobs the project will provide. Any of the other "Strip Mall" plans will barely have an effect on the Island. If this thing does not go through, even though there are "developers lining up around the block for this property" move out of Nassau because the great tax burden will only get worse.

  21. Does anyone else feel like they just gave birth but nothing came out? I feel like I fought a huge battle supporting the Lighthouse, hopelessly clinging to the computer looking for news, signing petitions, sending emails and letters...and now I think it is dead and was all for naught. I hope we can muster the support to keep this team in NY.

  22. The County selected Wang's project NOT Hempstead town. Big difference as they have the ultimate say.

    Mangano's interview doesn't mean much until he officially committs to the LH which he hasn't. You're in denial that LH's primary supporters lost the election. Where was Mangano months before the election?

    This project is so ass backwards it's not funny. It's trying to put the cart before the horse. You don't build a project of this size without infrastructure....or even a direct train stop including mass transit. Look at the following 3 mini urban areas within suburbs - White Plains, New Rochelle, Stamford. They all have train stops in the heart of the mini city. Plus better bus systems. Now look at the proposed LHP. It makes no sense.

    That you're relying on dictionary definitions of suburbs seems desperate. The kind of construction or neighborhoods that could exist there are based on the infrastructure. As pointed out, the LHP lacks this.

    You're so tunnel visioned to get the initial LHP size done that you're making things up in assuming I want it to immediately go away. I've already mentioned the size desirable from my perspective, based on the lack of infrastructure. So let's see what Murray/Wang etc. decide.

    Do you always get so defensive when people disagree with you?

  23. That urban planner blog post means NOTHING. The shovels aren't in the ground yet so plans can change. Especially when Ratner's report said the potential for a hockey rink is there.
    Brooklyn is well on it's way. Ratner's spokesman mentioned the arena can be retrofitted for hockey. From a financial perspective it makes sense.

    So while not exactly "easy" or a slam dunk it got a whole lot EASIER in Brooklyn!

    While the LH project lies in limbo.

  24. ...Also, you need to calm down Nick. You said the Brooklyn financing needed to be done in 2 weeks. I pointed out that it's done already because of the bonds sale.

    Bloomberg's Admin and state and city subsidies plus private investment will pay for the rest. It's done. EASY. (The Russian has agreed to buy, just waiting for NBA approval.)

    Now to settle this hockey thing........

  25. the AY arena design has changed 3 times already. it would be no great feat to change it again to accomodate hockey. after all, they sold half a billion dollars in shaky bonds in 2 hours. i seriously doubt that the isles-to-brooklyn prospect was raised in that AY statement ONLY as way to move the bonds. given that they moved so fast, there must have been no question their sale would not be a problem. financing is no longer an issue in the AY deal. we've never seen any plan for the LH financing. only a statment from wang/reck that they would get it. i think my feeling from the outset of the TOH deadlock that wang and ratner must have talked about the brooklyn option is now born out. i also think if negotiations are going on at this time, they are between wang, ratner and now prokhorov. there is no reason a partnership in brooklyn could not be worked out to include wang. selfishly, i hope it is. and i suppose there is some chance it still may work out for the LH in some form. given the heart and soul put into this whole affair by nick (and some others), i would empathize with their dread if it doesn't. it would be another blow to LI - but one that was avoidable at the least, brought about BY DESIGN by some very nefarious forces, at the most.

  26. Day1 - I wasn't questioning financing for Brooklyn at all. I was pointing out that we're hearing Brooklyn rumors because it's much closer to happening than Queens is - and somehow that turned into a big thing. I was also pointing out that Goldman Sachs' inclusion of the Islanders as a possible scenario didn't necessarily mean anything because any responsible scenario analysis would include things that could happen - and nobody could ever say the team relocating to Brooklyn is out of the question. I've only ever had an issue with people assuming every bump in the road means the Lighthouse is dead and they're obviously going somewhere else. The only bit of news that has genuinely concerned me is the report that the Lighthouse has again stopped paying the environmental consultant.

    Also, per the infrastructure argument: I've been very consistent on this. The Lighthouse shouldn't be blamed for decades of neglect, and I believe the only opportunity to attract the necessary funds is to have a catalyst such as a project of this size. I'm not some stubborn naval captain going down with his ship because I refuse to face reality; I think this project is the right one for Long Island and all the facts and figures I've studied back up that need.

  27. And also - you can absolutely blame the Town of Hempstead for its asinine policy against meeting with developers, considering the stakes here. I fail to see how it makes more sense or benefits more people that, 5 years after this thing was unveiled, they have done nothing to show they are acting like good partners. If they had been willing to take the seat offered to them years ago (have that from many people who were there), there would've been a deal or an end to this years ago.

  28. i agree that brooklyn is much closer to reality than queens. for obvious reasons. and your points about infrastructure and the "6th borough" and all the various issues seem logical and well reasoned, but my point all along has been that this is not really about what is best for LI and its citizens, or politics. it's about one side trying to forge a deal - a huge project involving billions of dollars in contracts, leases, etc. - independent of the other side, comprised of forces and interests that have controlled and run all such deals and projects for 50 years and refuse to abdicate their piece of the pie.

  29. And I will willingly acknowledge that you're right and those things are in play as we try to do this. At heart, it's a business deal - just happens to be a business deal that I think is in the best interest of the community.

  30. i think you're right. it is in the best interest of the community. it would be a great thing for the area, even a scaled down version that makes sense. the problem is the best interest of a certain few diverges from that of the rest. that's the root of greed and corruption that pollutes so much of politics and commerce.