Monday, July 30, 2018

VIDEO: de Blasio Administration Must Take Back Two Acres from Queens Development Group

A new video released by Willets Point United demands that the de Blasio administration act before a December 2018 contractual deadline, to protect taxpayers’ interests by reclaiming two acres of Willets Point property which the Bloomberg administration gave to Queens Development Group.

In the video (below), Willets Point property owner Irene Prestigiacomo explains the give-away of the two acres to Queens Development Group; the comprehensive development project which the property was supposed to facilitate; the court decision that effectively prevents that project from proceeding; the contractual provision that allows the City to take back the property under present circumstances; the lack of action by the de Blasio administration thus far to reclaim the property; and City officials’ fiduciary responsibility to taxpayers to do so before the deadline lapses.

Ms. Prestigiacomo asks (06:38): "As corrupt as this City sometimes can be, have we really reached the point where a developer can keep public property worth tens of millions, without delivering any of the project that was the basis for it to receive the property in the first place?"

The Basic Premise

A developer that receives public property worth tens of millions of dollars to facilitate a project, should not be allowed to keep that property when the developer is unable to proceed with its project. That is especially so, when the City’s contract with the developer allows the City to take back the property under the circumstances.

And yet, that is exactly what is occurring right now at Willets Point. As of this writing, Queens Development Group is keeping approximately two acres (90,500 square feet) of what used to be taxpayers’ property, even though Queens Development Group cannot implement the project that was the basis for it to be awarded that property.

To stop this, City officials must act before a contractual deadline of December 20, 2018 – presuming that the de Blasio administration hasn’t already somehow squandered the opportunity.

Below are supplemental details, not mentioned in the video.

Significant Taxpayer Costs to Originally Obtain the Two Acres

Before the two acres were given to Queens Development Group, they were City property – and before that, they were owned by a private party who operated a business on the site.

To acquire the two acres from the previous private owner, the City paid taxpayer funds of nearly $14 million, plus sweetened the deal by giving the prior owner other City-owned College Point Corporate Park property estimated to be worth between approximately $1.8 and $7.2 million, meaning that it cost the City as much as $21 million dollars to acquire the two acres of Willets Point land. Viewed differently, other Willets Point properties in the vicinity of the two acres have sold for a typical price of $400 per square foot – which if applied to the two acres, means they are worth $36,200,000.

Rather than recouping the cost of acquiring the property as it had said it would, the Bloomberg administration gave the two acres to Queens Development Group for $1 (one dollar).

Willets Point "Iron Triangle," with the two acres owned
by Queens Development Group shown in red, and the
Bloomberg-era "Phase One" portions shown in white.

The City is able to rescind that sale during a limited timeframe, under special circumstances such as those in the aftermath of the NYS Court of Appeals decision in Avella v. City of New York, which effectively prevents Queens Development Group's comprehensive development project from proceeding.

No Overlap Between the Two Acres and the New Six Acre Willets Point Project

Recently, the de Blasio administration announced a new plan to lease six acres of Willets Point Phase One property to Queens Development Group, to become an affordable housing development with a school. Those six acres to be leased to Queens Development Group are physically separate from the two acres previously sold to Queens Development Group by the Bloomberg administration.

Revoking the sale of the two acres to Queens Development Group does not prevent the separate, new, six acre affordable housing project from proceeding.

Deadline to Act

Unless the de Blasio administration has somehow squandered it, there is a window of opportunity to reclaim the two acres from Queens Development Group: The City must act before December 20, 2018, which is five years after the original date of sale.

Per the First Amendment to Amended and Restated Purchase and Sale Agreement between the New York City Economic Development Corporation and Queens Development Group dated December 20, 2013:

“§ 17.3  Terms of Options.
In order to exercise the … Call Option …, the party or parties entitled to exercise the Option shall deliver a notice to the other party or parties prior to the … Call Option Outside Date”.

The “Call Option Outside Date” is defined as five years after the date of the original sale, which in this case will be December 20, 2018.

(Disclaimer: Willets Point United shall not be responsible if a different deadline date applies for any reason, and encourages the accountable City attorneys to independently calculate the correct Call Option deadline date pursuant to all applicable contract provisions.)