A Curve Ball In
Willets Plan
Wall Street Journal By ELIOT BROWN May 16, 2012
New York City officials are shaking up one of Mayor Michael
Bloomberg's key development priorities, putting off for years the creation of a
new neighborhood in Queens' Willets Point and calling first for a large retail
center next to Citi Field, said people familiar with
the matter.
The
tentative deal between the city and the developers—the principal owners of the
New York Mets and the developer Related Cos.—upends the original vision for
Willets Point, a project for which the city has committed $400 million and
cleared the use of eminent domain.
Instead of
housing and retail, parking lots for Mets fans would initially replace dozens
of businesses in an area known as the Iron Triangle to the east of Citi Field. The new neighborhood is still intended to be
built on that 61-acre swath of land, but years later and only after a new
shopping center is built on a parking lot to the west of the stadium.
The city had
sought bids for the project, initially conceived in 2007 as another in a line
of Bloomberg-backed housing developments on which construction would begin
before the mayor left office. But people familiar with the matter said the
housing and retail project has become unfeasible as once envisioned, as
developers have been unwilling to fully commit given the site's challenges.
The site—an
industrial area full of car-repair shops that officials have sought to develop
for decades—would cost tens of millions of dollars to clean up, and developers
were concerned about being able to quickly lure residents and retailers to the
unproven area.
Now, Related
and Sterling Equities—controlled by Mets
owners Fred Wilpon and Saul Katz—will take a shot
with a revamped plan that delays the housing aspect and introduces a larger
retail component next to a world-famous professional sports complex. The USTA
National Tennis is also nearby.
The first
step for the developers would be to take on a costly 20-acre environmental
cleanup and build the new parking lots for the stadium, the people said. They
would also be required to build a hotel and a small amount of retail just to
the east of Citi Field.
Then they
would be able to build more than 800,000 square feet of retail on the parking
lots to the west of the stadium. Only then would construction begin of the new
neighborhood first envisioned by the Bloomberg administration, with the
construction of the 400 apartments and 680,000 square feet of retail. That
aspect of the project could grow, the people said.
But the deal
injects new uncertainty into the development of the area, for which the city
has cleared the use of eminent domain to remove holdout landowners. The
agreement calls for the developers to make a $35 million payment to the city if
they don't begin construction of the final housing piece by 2025—a relatively
large penalty for a development deal, the people said. The developers would also
be in danger of being removed from the project if they didn't come through by
then, the people said.
The city
believed the plan was the best of its options. The other three bids it received
each called for greater levels of additional subsidy or a smaller amount of
development, along with other risks, according to people briefed on the
proposals. None fit the guidelines of what the city was seeking, and the
Related-Sterling plan lays the ground for a larger overall
development—sandwiching Citi Field—if completed.
The new
details are sure to embolden critics of the project and existing landowners in
Willets Point, many of whom have long said the city's project wasn't feasible.
"The small businesses don't want to leave and will continue to fight any
efforts to take their property," said Michael Gerrard,
an attorney representing remaining business owners in Willets Point.
The changes
also open it up to the potential for more alterations: part of the new plan
must be approved by the City Council given that the extent of the proposed
changes would trigger a new environmental review.
The plan was
first approved by the City Council in 2008, after a hard-fought process in
which the city committed to doing large amounts of low-income housing and made
costly deals with landowners.
Many giant
development plans have been wounded or stalled by the downturn, such as the
Atlantic Yards basketball arena and housing development in Brooklyn.
In a report released on Wednesday, the Regional Plan Association, a nonprofit
urban research group, said many of the city's largest projects, from Battery
Park City to the revamping of Columbus Circle, have dragged on for years longer
than initially projected.
"Most
had several false starts and went through multiple plans before development was
approved and construction started," the report said. "Complete
build-out of approved projects generally stretched over several years, even
decades, and multiple business cycles."
Write to Eliot Brown at eliot.brown@wsj.com
http://online.wsj.com/article/SB10001424052702303360504577408760413111818.html?mod=googlenews_wsj