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Auction of Atlantic Yards Sites Endangers Hard-Fought Housing Promises

With a Feb. 12 sale scheduled for unpaid loans, local leaders press for action and answers on the future of a controversial state-led construction plan.

February 2, 2024 Gabriel Poblete, THE CITY
Atlantic Yards
New buildings sit along the Atlantic Yards development area near the Barclays Center, Jan. 31, 2024. Credit: Ben Fractenberg/THE CITY
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Two decades since New York State launched the 22-acre Atlantic Yards project, the rights to develop its six high-rise sites near Barclays Center in Brooklyn will be up for grabs if a lending group’s auction goes through as scheduled later this month.

Local leaders are pressing state officials for a game plan but getting few answers so far about what will happen to the state-owned sites, most of which require building platforms above a Long Island Rail Road yard — or the hundreds of affordable apartments pledged in a community pact after a years-long battle with local residents.

Last fall, the Shanghai-based developer that took over the project in 2018, Greenland USA, defaulted on loans totaling nearly $350 million. Greenland subsidiaries are slated to go to a private auction Feb. 12 over the two EB-5 pool loans, which provide a pathway to a U.S. visa for investors willing to stake $500,000 and up.

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At a meeting last week of the Atlantic Yards Development Corporation (AYDC), an advisory body to Empire State Development (ESD) — the state agency that controls the sites — members sought details about who, if anyone, is in line to take on the substantial cost of the construction project, including penalties tied to strict deadlines for building affordable housing.

Greenland’s agreement with the state obligates it to complete a total of 2,250 affordable apartments as part of the larger development by May 2025. Of that, 876 have yet to be constructed. All in all, 3,212 apartments have already been built at Atlantic Yards, redubbed Pacific Park in 2014 after Greenland took over.

The developer is due to pay $2,000 in fines each month for every apartment incomplete by the deadline under a decade-old community agreement, journalist Norman Oder has reported — a liability amounting to $1.75 million a month.

That agreement stems in part from 2014 when a pending lawsuit from local leaders argued that affordable housing should be built at Atlantic Yards before market pressures pushed out Black people. Advocates commissioned a study estimating that the Black population in the area impacted by the project would shrink from 59% to 15% between 1990 and 2035.

The Atlantic Yards development across from the Barclays Center in Brooklyn, July 26, 2019.

Joel Kolkmann, a senior vice president with ESD, told the AYDC board ESD is in talks with Greenland “about how they can best move things forward under the current approvals,” and that any other developer would need the state’s green light in order to take over Atlantic Yards development rights.

Board member Ron Shiffman, a veteran of collaborative community planning efforts, urged immediate attention by ESD to the affordable housing obligations.

“I think you’ll need to know what path you’re going to take as an agency that represents the people of the state of New York in delivering what was an obligation to the community,” said Shiffman at the meeting.

In an interview with THE CITY, Shiffman elaborated. “I’m very concerned that the state might very well waive that in order to attract a developer, which means that we’re not going to get the affordable units we were supposed to get at the time we’re supposed to get,” he said. “I would rather see that money go directly into a trust fund for low-income and moderate-income housing.”

Gib Veconi, a board member and chair of the Prospect Heights Neighborhood Development Council, described the state as too passive, a position he said is becoming less and less tenable.

“They’re still treating Greenland as the developer of record for the project, and they’re expecting them to work things out,” Veconi told THE CITY. “I just don’t know how reasonable that expectation is. Greenland is in a fairly distressed financial condition right now.”

‘We Are Waiting’

At a state budget hearing this week, local Assemblymember Jo Anne Simon (D-Brooklyn) pressed ESD president Hope Knight for answers about how the state will ensure that whoever leads development fulfills community pledges.

“We’ve been working with the developer of Atlantic Yards and its developer to figure out a way forward,” said Knight. “There is a default on the debt and we’re working with the lender to figure out who will step in as a designated developer. ESD has to approve that person or entity as a designated developer and we are waiting to have those folks step forward.”

Knight also said that ESD will pursue the collection of the financial penalties if the affordable housing is not completed by next year’s deadline — dollars to be directed to the New York City Housing Trust Fund.

The Assembly member said to THE CITY that ESD ought to rework the project plan, saying that there’s a need to factor in deeper affordability as well as climate considerations.

Simon, who before being elected co-founded BrooklynSpeaks, the group whose work led in part to the affordable housing settlement, said it remains unclear what can be done to move the project forward.

“The dynamics of this are very, very complicated — it’s hard to find the silver lining here,” she said. “I’m not an engineer. I’m not a builder. But we’ve talked to developers who are not interested in taking on that burden.”

The financial penalty for unbuilt affordable housing isn’t the only liability a developer has to take on. Greenland is already facing $10 million in penalties over a, unbuilt “Urban Room,” a glass-enclosed public space that was due to be built next to the Barclays Center by May 2022.

ESD has not yet moved to collect damages for the Urban Room, according to minutes from a May meeting.

Empty Lots, Expired Deal? 

In a statement to THE CITY, ESD spokesperson Emily Mijatovic said the authority is committed to the project’s construction.

“ESD’s goals for Atlantic Yards/Pacific Park are to complete full construction of the project and to keep community interests at the forefront. We recognize the tremendous need for housing, and affordable housing, and will continue to work to deliver on the full potential of this project to meet that need.”

Veconi said the project that was conceived 20 years ago is no longer viable or it would have been built already. He expressed concern that developers may seek to build larger buildings — or that nothing happens between now and 2035, when the development agreement with the state expires.

He warned against a sense of complacency in a neighborhood where residents once sued in an attempt to stop the state from using eminent domain to seize private property for the project, and urged Gov. Kathy Hochul to be proactive in finding community-friendly solutions.

“People have been looking at those two blocks where the Vanderbilt Yards are for years, so not seeing anything happen there doesn’t seem weird to them,” he said. “There’s not this kind of foreboding that people feel when a major development project is just announced, and they all know something’s going to change.”

If the state solves the project’s financial problems by supersizing towers, he predicts —    “People are going to get very excited very quickly about that.”

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