NY lets Brooklyn's Atlantic Yards owner skirt huge penalties for affordable housing failure

The owners of the stalled Atlantic Yards megaproject surrounding the Barclays Center in Brooklyn reached a deal back in 2014: Build hundreds of affordable apartments by May 31, 2025, or face millions of dollars in monthly penalties.

But while the housing hasn’t materialized, the fines won’t either — at least not anytime soon. New York’s economic development arm is letting the owners off the hook for now.

Officials from New York’s Empire State Development told Gothamist they will waive the monthly penalties despite failure to complete, or even break ground on, 876 units of affordable housing by the upcoming deadline and instead turn to a new timeline for transferring development rights and kicking off a new community engagement process — 22 years after the first plan.

The owner, Greenland USA, was set to face $2,000-a-month penalties for each missing apartment under a deal struck with the state and community groups in 2014. The state would have then invested the total — about $1.75 million a month — into a trust to fund affordable housing development elsewhere in North and Central Brooklyn.

Empire State Development spokesperson Emily Mijatovic said the state would instead hold Greenland and its debt holders to an “updated schedule” for selling or transferring development rights by August and restarting a community engagement process by December. The project has gone through multiple iterations over the past two decades, including a name change to “Pacific Park.”

“Empire State Development is working to advance the Atlantic Yards/Pacific Park project and deliver on the long-promised benefits to the surrounding communities,” Mijatovic said in a written statement.

She said the agency has received a new application from the development team, which now includes the firm Cirrus Real Estate Partners, to deck over the platform of the Atlantic rail yard and build the required housing. Cirrus is partnering with the U.S. Immigration Fund, an entity that sold visas through the EB-5 program to wealthy foreign nationals to raise funds needed for the project and loaned the cash to Greenland. Greenland failed to repay the money it borrowed, leading to a likely foreclosure.

Greenland USA did not respond to a request for comment submitted through its website. The phone numbers listed for Greenland’s New York City offices were disconnected when Gothamist called on Wednesday.

Cirrus Real Estate Managing Partner Joseph McDonnell declined to comment and referred questions to Empire State Development.

This is what makes people cynical about government.

Michelle de la Uz, director of Brooklyn’s Fifth Avenue Committee

As the May 31 deadline approached, and with the affordable housing nowhere near breaking ground, community groups and local elected officials pressed Empire State Development for answers about the monthly penalties at legislative hearings and task force meetings.

Empire State Development CEO Hope Knight said the agency would consider imposing the penalties in response to questions from Assemblymember Jo Anne Simon at a budget hearing in February, journalist Norman Oder reported at the time.

But a month later, Empire State Development Senior Vice President Joel Kolkmann said the agency would suspend the penalties if they could establish “very clear milestones” with a new developer, Oder later reported for City Limits.

The latest twist in the decadeslong Atlantic Yards saga has infuriated members of the coalition that demanded affordable housing on the site, and secured the deadline to complete the apartments.

Michelle de la Uz, director of Brooklyn’s Fifth Avenue Committee, called the reprieve “unacceptable.” Her organization was among the members of the coalition BrooklynSpeaks, which helped secure the May 31 deadline 11 years ago.

Empire State Development, she said, “can’t unilaterally make that decision” to lift the penalties, known as “liquidated damages.”

“Collecting liquidated damages is part of their obligation to protect the public interest,” said de la Uz, a former member of the City Planning Commission. “This is what makes people cynical about government.”

She said the city could have used the money collected from the property owners to help fund or finance new affordable housing made possible by a rezoning of nearby Atlantic Avenue. The City Council approved the rezoning on Wednesday.

Empire State Development’s decision not to impose the monthly penalties and revise the timeline for planning and development may mark yet another a new chapter for the Atlantic Yards development. The project was initially supposed to include an arena and 16 additional buildings, but has reached only partial completion in the decades since it was announced.

Eminent domain was used to seize some of the property for the project, which faced opposition from many members of the community at the time. Previous owner Bruce Ratner and his company Forest City Ratner then built the Barclays Center, home of the Brooklyn Nets, with the promise of adding affordable housing to the neighborhood.

Ratner and Greenland have completed nine of the proposed buildings. But the plan to erect a platform over the adjacent railyard and then construct six new residential and mixed-use towers on the site has stalled.

The project was supposed to include 2,250 affordable apartments. So far only 1,374 affordable units have been built.

Simon, the assemblymember and a co-founder of BrooklynSpeaks, said the suspended fines didn’t come as a surprise after decades of delay.

“We have never suspected they would collect,” Simon said. “But it’s a complicated deal.”

She said the project’s complicated ownership structure, financing and broken promises have been “aggravating.”

“It’s like peeling an onion back. There’s always something else going on. All of these layers will drive a person mad,” Simon said. “I never would have thought 22 years later we’d still be worried about 40% of the freaking housing not being built.”