Why nothing ever gets built on this Pacific Park site

Future tower opposite Barclays Center delayed by dispute over P.C. Richard space

TRD New York /
Mar.March 17, 2020 08:00 AM
Former Forest City CEO MaryAnne Gilmartin and P.C. Richard executive Thomas Pohmer with Site 5 at Flatbush and Atlantic Avenues (Credit: Getty Images, IMA Long Island, and Google Maps)

Former Forest City CEO MaryAnne Gilmartin and P.C. Richard executive Thomas Pohmer with Site 5 at Flatbush and Atlantic Avenues (Credit: Getty Images, IMA Long Island, and Google Maps)

It looked like the long-stalled effort to build Pacific Park’s largest structure finally had momentum when the Cuomo administration announced in November that it would condemn the final properties needed.

But the project, catercorner to the Barclays Center in Brooklyn, continues to go nowhere.

Instead, its intended home — the parcel known as Site 5, which has long housed retailers P.C. Richard and Modell’s — remains entangled in a legal dispute.

Approved in 2006 for a building 250 feet tall and 440,000 square feet, the site was targeted in 2016 for a two-tower project three times taller and far bulkier. It has since been pitched as a home for Amazon’s new campus and for a building like the Time Warner Center.

That larger structure would require the state — which oversees Pacific Park, originally named Atlantic Yards — to approve a transfer of bulk from a never-built tower once planned for what is now the Barclays Center plaza. (Original architect Frank Gehry dubbed that tower “Miss Brooklyn,” though the developer called it B1.)

It also would require resolution of P.C. Richard’s claim — affirmed by a court decision now being appealed — that original developer Forest City Ratner reneged on a promise to deliver the retailer 30,000 square feet of replacement space in the new building at Site 5.

And it would require eminent domain, which P.C. Richard argues cannot happen until its claim for new space is resolved.

The saga shows how changes in economic cycles and development teams can throw a project into disarray.

Eminent domain deadline

Empire State Development — the state authority shepherding the project — announced Nov. 19 that it would pursue condemnation to allow “an important part of the Atlantic Yards/Pacific Park project to move forward.”

P.C. Richard’s lawsuit against Forest City (which now owns a minority share of the project) remained in the way, but Tobi Jaiyesimi, ESD’s Atlantic Yards project director, said at a meeting that day, “We understand that the developer is working with P.C. Richard to reach some type of agreement.”

Jaiyesimi later acknowledged that the condemnation action was driven by a pressing deadline: the 10-year expiration of the final approval for eminent domain in the project.

The Cuomo administration had started condemnation proceedings more than four years ago, at Forest City’s instruction, but paused when P.C. Richard sued the developer, which is now owned by Brookfield Asset Management.

“Now, in an apparent effort to prevent its deadline from expiring, ESD has reversed course,” P.C. Richard noted in a court filing.

The matter also involves Greenland USA, which since June 2014 has owned the majority of the Pacific Park project. The next court appearance is scheduled for April 30.

A spokesperson for the joint venture Greenland Forest City Partners, the project developer, had no comment on the stalemate.

Long history

The dispute goes back to a letter of intent regarding replacement space that Forest City and P.C. Richard signed in December 2006, when the developer was eager to neutralize a deep-pocketed potential adversary.

As the project had percolated in 2005, Forest City offered the retailer several alternative sites, but P.C. Richard preferred its current location at the busy intersection of Flatbush, Atlantic and Fourth avenues. So in early 2006, the developer offered replacement property there, according to an affidavit from P.C. Richard executive Thomas Pohmer.

A sticking point regarded how much Forest City would pay for the retailer’s lost profits during construction. In 2008, P.C. Richard eventually agreed to accept less than the previously promised $3.8 million a year.

Then the project stalled as the Great Recession took hold. In 2009 Forest City told the retailer it was delaying Site 5 and there was a “great chance” the project would never be built, according to Pohmer. That bought P.C. Richard some time.

But in 2015, when it learned the state was beginning to pursue condemnation, the retailer went to court.

The legal wrangling since then has kept attorneys for all sides busy. In its recent condemnation petition, Empire State Development said because it was not a party to the letter, it is not bound by a court order enforcing it. Forest City argues that the letter “merely required the parties to negotiate in good faith.” P.C. Richard insists it is binding and has called for a stay on condemnation until the replacement-space issue is resolved.

Changes in the development team have complicated the dispute. According to P.C. Richard’s court filings, Forest City has asserted “for the first time, after more than four years of litigation” that Greenland controls Site 5, and therefore Forest City can’t deliver the required documents. Greenland, for its part, told P.C. Richard that it’s not party to that case.

But it seems clear that the matter cannot be resolved without Greenland. Forest City attorney Harold Weinberger wrote that “it is Greenland, and not my clients, who controls Site 5” and thus Forest City cannot unilaterally deliver the new retail space.

In late January, P.C. Richard invited both parties to meet. Forest City, after agreeing, demanded that the discussion not be admissible in court, but P.C. Richard balked, according to the retailer. The meeting never happened and no talks are scheduled.

Affordable housing concerns

The thorny politics of housing in New York City also loom over the project.

Former Forest City CEO MaryAnne Gilmartin said in a February 2017 deposition that Forest City intended to build on Site 5 whether or not the transfer of development rights from the un-built B1 was approved, but had not made a decision.

“We just had certain things we weren’t a hundred percent clear on, not the least of which is, you know, leverage from the government in exchange for their support to do it,” said Gilmartin, who left the company less than a year later.

She explained, “I was concerned that there would be a requirement to put affordable housing in Site 5 if, in fact, we were to get the [government’s] support to move the air rights.”

Affordable housing had been crucial to Forest City getting the blessing of the Pataki and Bloomberg administrations to build Atlantic Yards — a controversial undertaking because it needed the state to threaten the use of eminent domain to clear the site. The developer in 2006 agreed to make half of the project’s 4,500 rental units affordable and got permission to build 1,930 condos.

But if affordable apartments were also required at Site 5, that project would be far less profitable. Housing advocates and local elected officials, however, will surely pressure the Cuomo administration to require affordability in exchange for the air-rights transfer. They would get that chance because Empire State Development would have to modify the general project plan, a process that includes public hearings and can take a year or more.

In her deposition, Gilmartin asserted that Forest City should not have to give another pound of flesh to build where Modell’s and P.C. Richard stand. “We, in my view, had bargained for the rights to Site 5 as part of the original transaction,” she said. “They were obligated to give us Site 5 through a condemnation because we had met all of the conditions.”

That, for now, seems in question.

Norman Oder, a Brooklyn journalist, writes the daily Atlantic Yards/Pacific Park Report.


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