Officials from New York state’s economic development authority say there’s a reason they’re not collecting millions of dollars in penalties from the real estate firm behind the failed Atlantic Yards affordable housing project: The company threatened to sue them if they tried.
The Chinese development firm Greenland USA would have been on the hook for more than $1.75 million in monthly fines for failing to complete nearly 900 units of affordable housing by the end of May, if the state honored the terms of a 2014 legal agreement. But executives from New York’s Empire State Development said the state let them slide after Greenland, which has defaulted on hundreds of millions of dollars in loans to its investors, threatened to sue. The company cited “unavoidable delays” that prevented it from even breaking ground on the project 11 years later, according to Joel Kolkmann, senior vice president of Empire State Development.
“They have expressed that there’s unavoidable delays that prevented them from meeting the affordable housing deadline,” Kolkmann told members of a community task force on Aug. 6. “They have more or less expressed that, should we seek the collection, there would be litigation and that would stall the project.”
The Atlantic Yards redevelopment was first conceived in 2003 and was supposed to create 2,250 affordable apartments in buildings surrounding the centerpiece Barclays Center. The project included property seized through eminent domain. More than two decades later, only 1,374 affordable units have been completed and developers have yet to begin construction of a platform atop the railyard east of the arena where additional affordable units were planned.
The Atlantic Yards development contract, published online by journalist Norman Oder, defines “unavoidable delay” as natural disasters, war and other extreme events, as well as “governmental action or restriction.” Kolkmann and other officials did not detail what claims Greenland had made but said the state disagreed with their arguments. The company has pointed to a lack of housing subsidies and slow MTA approvals as reasons for the delay in past correspondence with state officials, according to Oder’s Atlantic Yards/Pacific Park Report blog.
Spokespeople for Empire State Development declined to comment further on the developer’s threatened lawsuit and instructed Gothamist to submit a records request for any correspondence about the litigation warning.
Gothamist attempted to reach Greenland by phone and at two offices listed on its website. One office, once located at an address on Flatbush Avenue, no longer exists. The other, located in Downtown Brooklyn, was empty when Gothamist visited last week, according to a front desk worker. The company’s chief financial officer, Hu Gang, did not respond to emailed questions about the project and the threatened lawsuit.
At the community task force meeting earlier this month, Kolkmann and other Empire State Development officials also said the $2,000-per-unit penalties that the state was supposed to begin collecting from Greenland after May 31 will not accrue and that officials will not try to collect them if the project again fails. The fines were earmarked for an affordable housing trust fund managed by the city’s housing agency that would by now top $5.25 million.
Empire State Development officials say they expect to approve the transfer of development rights at the project to a new venture involving companies Cirrus Real Estate Partners and LCOR, as well as Greenland, sometime next month. The revised plan, rebranded as Pacific Park, will also include the current site of a P.C. Richard and Son and a shuttered Modell’s across from Barclays Center on Flatbush Avenue.
Kolkmann said the approval process was “trending positively.”
But the revelation that Greenland will avoid penalties, while retaining partial control of the development rights, sparked anger among some members of the community task force, who called it a “bailout.” Empire State Development leaders disputed that characterization.
Assemblymember Jo Ann Simon, a Brooklyn Democrat, called the threat of a lawsuit “outrageous” and questioned what grounds Greenland, which defaulted on a $350 million loan from investors in 2023, would have to sue the state.
“They were completely and utterly unable to perform,” Simon said. “If you consider defaulting on your debt as an unavoidable delay, that’s an argument, but it’s a stretch to hang it on ESD.”
Simon, a member of a Brooklyn community coalition that reached an affordable housing deal with the state in 2014, has joined other local elected officials, including three members of Congress, in urging the state to impose the fines.
Other housing experts say they understand the state’s position and the threat of litigation, especially when it comes to a deal made under far different financial circumstances over a decade ago.
“It is not surprising that a developer is threatening to sue,” said real estate consultant Jordan Barowitz, a former city housing official. “But the problem with that project is it’s not economical. Collecting more fines just makes it less likely the project gets built.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
