Forest City Build NYC Application for Atlantic Terminal

8/10/2019 Forest City Build NYC Application for Atlantic Terminal

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BUILD NYC RESOURCE CORPORATION

PROJECT COST/BENEFIT ANALYSIS

January 8th, 2015

APPLICANT

FC Hanson Office Associates, LLC

1 MetroTech Center, 23rdFloor,

Brooklyn, 11201

PROJECT LOCATION

139 Flatbush Avenue

Brooklyn, NY 11217

A. Project Description:

FC Hanson Office Associates, LLC (the Company), an entity that is affiliated with and

controlled by Forest City Ratner Companies, LLC. The Company is the owner and operator of

an approximately 397,000 square foot ten-story office building (plus a mechanical penthouse)

above a four-story retail shopping center, plus a basement the (Facility).

The Company is seeking approval for the issuance of approximately $105,000,000 in tax-

exempt and taxable bonds to: (i) refunding the outstanding New York City Industrial

Development Agency (the NYCIDA) Liberty Revenue Bonds, Series 2004 (FC Hanson

Office Associates, LLC Project) issued in the original aggregate principal amount of

$90,800,000 (the NYCIDA Series 2004 Bonds), the proceeds of which, together with other

funds of the Applicant, were used to refinance a portion of the cost of the construction of a

commercial office building comprising a condominium unit for lease to office tenants,

(ii) refinancing a taxable loan to the Applicant in the approximate amount of $11,031,077, the

proceeds of which were used to fund a portion of the additional construction costs of the

Facility; and (iii) paying certain costs associated with the issuance of the bonds.

B.Costs to City(New York City taxes to be exempted):Mortgage Recording Tax Benefit: $ 0

Estimated NYC Forgone Income Tax on Bond Interest:

(estimated NPV 25 years @ 6.25%)*$ 911,561

Total Cost to NYC $ 911,561

*The exact amount of personal income tax revenue that will be lost as a result of this transaction depends on factors

including (but not limited to) the percentage of bond bought by entities subject to New York City personal income

taxes, the interest income generated from the bonds and the tax rate applied to bond purchasers.

C.Benefit to City(Estimated NYC direct and indirect taxes to begenerated by Company) (estimated NPV 25 years @ 6.25%): $1,519,637


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Foreclosure Disclosure

F.C. Member, Inc., a Beneficial Owner of the Applicant, was involved in a foreclosure in August2010 on a retail power center called Woodbridge Crossing located adjacent to the WoodbridgeMall in New Jersey. After $18 million in permanent financing was obtained, the center lost 80%

of its tenants as Sears closed all Great Outdoors stores, Circuit City and Linens & Things filingbankruptcy, and co-tenancy clauses kicked in. Woodbridge Crossings ownersoffered a deed inlieu but due to the complicated ownership structure including land leases and easements, thespecial servicer (LNR) chose to foreclose in order to obtain clean title. The foreclosure was notcontested by the owner.


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Benefits from Public Entities Disclosure

In order to help facilitate development of the property, FC Hanson Office Associates, LLCentered into a lease agreement with the New York City Industrial Development Agency inFebruary 2003 to secure certain benefits including a deferral of the payment of mortgage

recording tax. Construction of Atlantic Terminal Office began in 2002 and was completed in2004. Debt financing for the construction of Atlantic Terminal Office was provided by GMACCommercial Mortgage Corporation.

In 2004, Atlantic Terminal Office was refinanced and the construction financing provided byGMAC Commercial Mortgage Corporation was replaced by $90,800,000.00 of Liberty RevenueBonds issued by the New York City Industrial Development Agency and a $19,200,000.00taxable note provided by ING Real Estate Finance (USA) LLC.


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Forest City Build NYC Application for Atlantic Terminal

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