Tuesday, October 6, 2009

And that's a conservative estimate...

People are starting to question the cost of the Willets Point redevelopment plan and whether it's worth it. From the NY Observer:

By our tally, more than $78 million in nine separate transactions have closed—though far more have previously been negotiated and yet to show up in city records.

There’s a number of things that aren’t told in that number, particularly what the city is spending in terms of relocation costs. There’s been $424 million allocated for both acquisitions and off-site infrastructure, an amount that would seem to be too small to do everything the administration has discussed.

The city has said the off-site infrastructure will cost about $150 million, for one.

And then there are land costs, which are substantial. Here’s the most recent closed deal: $11,993,825 for a lot that is 57,000 square feet (on the less valuable northern end of the site), according to the real estate tracking firm PropertyShark. That comes out to $210 a square foot, which, if extrapolated across the full 45 or so acres that are privately held on the site, would come out to $412 million.

According to an EDC document from December 2008, there was language written into some of the larger land purchases that would seem to give the landowners a pretty good deal.

For both businesses, House of Spices and Fodera Foods, two of the larger property owners on the site, an EDC board action said that EDC “must use its best efforts” to “promptly purchase replacement property,” then sell the property to those businesses for $1. Given that EDC would be condemning their land, then buying them new land (though “best efforts” seems a loose term), this could get expensive as well.

Does the City of New York have this kind of money, especially with the economy expected to get worse instead of better? As Neighborhood Retail Alliance puts it:

EDC has established an off set price here-and if the numbers are added up they probably would exceed $700 million. Where does the city expect to come up with this cash from-at a time when it is evicting the businesses and putting thousands of workers on the unemployment line?