Professional Documents
Culture Documents
page 2
Based on the limited financial information the BBPC has permitted us to see, as well as
abundant available public information about land values and actual rents, we have asserted
that the revenue projections from the already existing development in the Park contained in the
conclusory financial summary presented by the BBPC are significantly understated. In this
same period the BBPC significantly increased its near term projected expenses, announcing
that it had decided to alter the approach to maintenance of the timber piles that support the
piers that it had embraced since 2005/06. BBPC managements new preventative approach requires a cash infusion of 90 million dollars upfront, which would drive an immediate though ultimately temporary cash shortfall. This combination of understated revenues and increased
immediate expenses is the foundation for BBPC managements position that housing must be
built on Pier 6 now. Our independent analysts reports refute this contention and course of action.
The New Reports
We have recently obtained and enclose for your review three reports. In the first, an expert
appraiser, Rosin &Associates (Rosin) examines the BBPC revenue projections; in the second,
a marine engineering expert, Goldenrod Blue Associates (Goldenrod), examines the newly
selected pile maintenance approach; in the third, Ren Richmond, a financial analyst and Director
of People for Green Space Foundation (PFGSF) explores the implications of the Rosin analysis
on the Park financial model. These three analyses confirm our skepticism about the reasonableness
of BBPC managements revenue projections and raise significant questions as to the wisdom
and necessity of the new preventative pile maintenance approach. The good news of course
is that these reports strongly suggest that the Park is in an excellent financial position to
achieve all needed maintenance without any Pier 6 development at all.
We will permit these documents to speak for themselves; however, the key findings are:
Future Revenue
By following the New York City Department of Finance standard methodology to detemine
property taxes, Rosin found that the annual PILOT revenue from existing development in the Park
after the expiration of all tax abatements will be approximately $22.5 million rather than
the $13.5 million assumed by the BBPC.
Pier Maintenance
Goldenrod found that (a) BBPC managements new preventative maintenance approach
is not a sensible technical choice because it needlessly accelerates repairs to timber
piles before they require repair, and consequently front-loads expense unnecessarily
and shortens the time before the next repair cycle will be required; (b) an inspection-driven,
phased epoxy repair program (combining aspects of BBPs preventative and
reactive approaches) would be preferable and likely cost less than either of the two
approaches considered to date by BBPC; and (c) the recent CH2M consultants report
endorsing the preventative program is flawed in several material respects.
page 3
In a nutshell, this report shows that it could not possibly be economically wise to spend
large sums of money this year to fix something that is not yet broken and also begin
the clock running now on the useful life of the fixed piles.
Application of the Findings of the Rosin Report In the Tax Abated Period
Ren Richmond has determined that even without any development on Pier 6 whatsoever
the existing developments in the Park will generate on a cumulative basis over the
forecast period approximately 800 million dollars in excess cash if the reliable estimates
for Park tax revenue from the Rosin report are utilized. Consequently, development at
Pier 6 is not needed today, and we question whether other Park development could
have been reduced or eliminated, too. Ren also demonstrates why the Denham report,
which made no attempt whatsoever to apply Department of Finance Methodology to
determine potential PILOT revenue, is flawed.
Conclusion
Unfortunately, we believe that decision-making to date concerning Pier 6 has sought to preserve
all of the development thought necessary in 2005/06 rather than to reflect the continuing commitment to reduce development as much as possible if economic circumstances changed. BBPC
managements choices i) to decline to share underlying financial data, ii) to hire a consultant
(Ms. Denham) to validate managements estimate of future PILOT revenue without asking her
to apply Department of Finance methodology, and iii) changing a perfectly acceptable method
of pier repair to one that requires a huge immediate expenditure, all contribute to our sense
that a decision has been made and is now simply being defended in any way possible.
We respectfully request that you use the enclosed reports to spur a conscientious process to
address the significant questions that they raise. We hope that you will conclude that it is premature
to move forward with development on Pier 6 at this time. No one need decide today whether
the Rosin reports measured application of DOF methodology or Ms. Denhams seemingly
skeptical outlook on Brooklyns future is correct since it is anticipated that the projects already
under development will be completed and assessed by DOF in 2017. It seems most sensible
to consider the need for Pier 6 development once real-world DOF assessments have become
available. If there is any chance that development is not necessary on Pier 6 and even
BBPC management would acknowledge that development of the scale currently proposed is
not necessary even under its own financial model surely a reasonable delay in an otherwise
irretrievable decision is sensible.
page 4
None of us, especially those who live in and near the Park, want the Park to struggle financially.
But we do not believe that the BBPC has done its utmost to minimize development as had
been promised. There is simply no conceivable reason why the Brooklyn Bridge Park should
become an 800 million dollar profit center for the City of New York because the BBPC refuses to
select a perfectly acceptable pile repair alternative that does not require Pier 6 development,
refuses to apply Department of Finance methodology in assessing future revenue, and refuses
to borrow to cover any temporary cash shortages created by its planning process.
All of us want the best possible Park that we can have, with as little development as possible,
and a welcoming entrance at Atlantic Avenue. We ask that the BBPC live up to its public
commitment to minimize development.
We look forward to your constructive response.
Sincerely yours,
FEBRUARY 9, 2016
FOR
MR. MARTIN HALE
PEOPLE FOR GREEN SPACE FOUNDATION INC.
271 CADMAN PLAZA EAST STE 1
PO BOX 22537
BROOKLYN, NY 11201
BY
February 9, 2016
Marco Fulgoni
Financial Analyst
Contents
Executive Summary....................................................................................................................................... 5
Conclusions ............................................................................................................................................... 5
Background ................................................................................................................................................... 6
Brooklyn Bridge Park Development Space Analysis ................................................................................. 6
Rosin & Associates Methodology ............................................................................................................. 7
Brooklyn Bridge Park Real Estate Gross Revenues ....................................................................................... 9
Residential Real Estate Market Analysis ................................................................................................... 9
One Brooklyn Bridge Park ....................................................................................................................... 10
Brooklyn Office Real Estate Market Analysis.......................................................................................... 13
Brooklyn Office Rental Rate Comparables.............................................................................................. 15
Brooklyn Retail Market Analysis ............................................................................................................. 17
Brooklyn Retail Rental Rate Comparables Analysis ................................................................................ 17
Brooklyn Hotel Market Analysis.............................................................................................................. 20
Projected Gross Income.............................................................................................................................. 21
Pier1 (Pierhouse & Hotel) ................................................................................................................... 21
John Street .......................................................................................................................................... 21
Empire Stores...................................................................................................................................... 22
One Brooklyn Bridge Park ................................................................................................................... 22
Net Operating Income ................................................................................................................................ 23
Estimated Expenses ................................................................................................................................ 23
Brooklyn Bridge Park Expense Estimate Calculations............................................................................. 24
Final Net Operating Income Calculations ............................................................................................... 24
Capitalization Rates..................................................................................................................................... 25
Assessor Capitalization Rates.................................................................................................................. 25
Tax-Loaded Capitalization Rates............................................................................................................. 26
Market Value of Brooklyn Bridge Park Corporations Income-Generating Sites.................................... 27
Implemented Assessor Methodology ......................................................................................................... 28
Revenue Comparison.................................................................................................................................. 29
Conclusion: Park Real Estate Under-Assessed............................................................................................ 31
Appendix A.................................................................................................................................................. 32
Appendix A (Contd).................................................................................................................................... 33
Appendix A (Contd).................................................................................................................................... 34
Appendix A (Contd).................................................................................................................................... 35
Appendix A (Contd).................................................................................................................................... 36
Appendix A-1............................................................................................................................................... 37
Appendix A-1 (Contd)................................................................................................................................. 38
Appendix A-2............................................................................................................................................... 39
Appendix A-2 (Contd)................................................................................................................................. 40
Appendix B .................................................................................................................................................. 41
Appendix C .................................................................................................................................................. 43
Executive Summary
Rosin & Associates has estimated the unabated PILOT incomes at Brooklyn Bridge Park and compared
them with those estimated by Brooklyn Bridge Park Corporation. The comparison shows that it is highly
likely that BBPCs estimates for park revenue are significantly understated. Rosin & Associates has
based its estimates on market variables and DOF Assessor methodology, i.e., the methodology that is
applied by assessors employed by the New York City Department of Finance (DOF) and that DOF uses
to determine real estate taxes.
Brookly n Bridge Park Income A naly sis Done By BBPC
Source
$2,300,000
$3,200,000
$1,000,000
$2,700,000
Ground Rent
A mt.
$1,400,000
$800,000
$200,000
$1,600,000
Rosin Estimates
Ex is ting De ve lo p m e nt T o tals
Pier 6
TOTA LS (w / Pier 6)
$5,600,000
$4,100,000
$800,000
$3,000,000
13,500,000
2,500,000
600,000
11,700,000
4,600,000
$0
$6,350,415*
$7,668,330
$1,677,563
$6,774,687
$22,470,995
1,900,000
15,400,000
12%
Conclusions
As a result of the analysis included in this report, R&A found that unabated gross revenues (based
primarily on PILOT income) based on market data, are highly likely to significantly exceed the estimates
laid out in both BBPCs Financial Model Presentation and Barbara Denhams Analysis of said model.
Conclusions
Background
Brooklyn Bridge Park is located on the western coast of Brooklyn along the East River. It stretches for
1.3 miles and consists of 85 acres (including 10 acres of water and 8 acres of development) of reclaimed
industrial waterfront, readapted into various public green spaces, residential and commercial uses.1 The
parks planning, construction, maintenance and operation is managed by the Brooklyn Bridge Park
Corporation (BBPC), a not-for-profit entity set up by the City of New York, controlled by the Mayor of
the City of New York. According to the General Project Plan, commercial revenue producing activities
would be located within the Project to support its annual maintenance and operations, with the
intention being to build only what is necessary to support annual maintenance and operations.2
According to an MOU between the City and State of New York regarding Brooklyn Bridge Park, All
revenues, including rent and payments in lieu of taxes (PILOTs) derived from commercial development
or existing commercial uses within the Project Area shall be dedicated to the maintenance and on-going
operational needs of the Project. PILOTs in the park are based upon NYC Real Estate Tax Assessments
done by the Department of Finance.3
In July of 2015, Brooklyn Bridge Park Corporation released to the public a Financial Model Update that
outlines 50-year revenue and cost projections. 4
In July 2015, just after the BBPC released its report, the BBPC released a report by Barbara Byrne
Denham, an economist that it had hired to review its long-term financial model. This report was an
analysis of BBPCs model titled Report on Brooklyn Bridge Parks Financial Model to provide an
independent third-party objective review of BBPs long term financial model, according to the cover
letter for the same report.5
As it is impossible to properly assess the BBPCs financial model without access to the financial model
and the raw data behind it, Rosin & Associates was hired to analyze some of the key assumptions
underlying the parks financial model, namely the tax revenue that will be generated by the
development undertaken by Brooklyn Bridge Park Corporation. This tax revenue goes to the park
corporation to pay for the parks maintenance, operating and other expenses.
348,120 SF
108,000 SF
Hotel
68,000 SF
628,669 SF*
258,906 SF
Non- Residential
Retail
Office
106,261 SF
84,134 SF
5,000 SF
Misc.
Garage/Parking
(25,500 SF)
Total (- Parking)
(115,684 SF)
(10,800 SF)
416,120 SF
108,000 SF
343,784 SF
712,803 SF
263,906 SF
T o tal De v e lo p m e nt Space :
1,844,613 SF
237,523 SF
*Estimate of One Brookly n Bridge Park based on DOF estimates, **Pier 6 is a proposed dev elopment as of the date of this
report, NOTE: Only One Brookly n Bridge Park is currently occupied w ith tenants and ow ners
Note that the Assessors values and BBPCs values for size estimates vary; Rosin & Associates has utilized
DOF estimates where appropriate.
BBPC will be reduced by certain tax breaks on three properties (One Brooklyn Bridge Park, Empire Stores
and the hotel portion of Pier 1) until they fully expire. As the J-51 and ICIP tax breaks on OBBP have
already been set, any increase in assessed value will go into effect immediately (subject to caps on the
growth rate of assessed value). For the hotel (only) on Pier 1 and Empire Stores, the increase in tax
revenue to BBPC from proper assessment will be reduced during the period while the properties receive
a tax break (15 years + 10 year phase out). Therefore, any reference to unabated PILOT revenue or tax
revenue is referring to this fact about Brooklyn Bridge Park. Additional information about the tax breaks
can be found on page 20 of the BBPC financial presentation dated 7/9/15.
This is not an appraisal but a consulting engagement performed by appraisers in the context of the
Uniform Standards of Professional Appraisal Practice (USPAP) using appraisal techniques. However, our
work cannot be considered an appraisal - as we do not have sufficient specific property information,
however, given that some of the property involved in this study is on the drawing board and new, Rosin
& Associates believes that our analysis is supported by detailed market information. For the specific
development locations under the purview of Brooklyn Bridge Park Corporation with their nuanced mix
of residential, hotel, retail and office properties, a local, more micro-analysis is likely more
representative than using more macro-centered trends as the primary basis for conclusions, as was the
case with the Denham Analysis.
Brooklyn Bridge Park consists of numerous income-generating development sites, a number of which
include residential condominiums. According to state law, DOF assesses condominium buildings as if
they were rental buildings by looking at the income and expense statements of rental buildings that
have similar characteristics.6 Rosin & Associates has incorporated this state law into the assessment
analysis at Brooklyn Bridge Park where appropriate. See Appendix C for full text on condominium
assessment law.
Please note, USPAP 2015-16 retired requirements for Appraisal Consulting engagements, however,
certain techniques and methodologies still apply.
http://www1.nyc.gov/site/finance/taxes/property-cooperative-and-condominium-comparables.page
Rosin & Associates Methodology
U nit
99 Gold S treet
220 W ater S treet
9 C ollege P lace
9 C ollege P lace
72 P oplar S treet
60 W ater S treet
#1P
#318
#2H
#3A
#4B
#1712
S ize
618 S F S T UDIO
790 S F
1,905 S F
3BR
1,433 S F
2BR
2,455 S F
4BR
848 S F
2BR
Monthly Rent
1/11/2016
11/22/2015
11/2/2015
11/4/2015
8/28/2015
10/14/2015
$2,650
$3,990
$10,950
$7,000
$15,000
$5,958
$/S F/Yr.
51
61
69
59
73
84
/S F/Yr.
/S F/Yr.
/S F/Yr.
/S F/Yr.
/S F/Yr.
/S F/Yr.
This R&A survey shows rental rates (from closed deals) ranging from $51/SF/Yr. to $84/SF/Yr. The
average rate is $66/SF/Yr with the median coming in at $65/SF/Yr. Rosin & Associates, based on the
strength of the market in Brooklyn, and the quality expected in Brooklyn Bridge Park (including
amenities and location within a cultural anchor space) believes rates within $55-$75 /SF/Yr. to be
appropriate for the development sites under the purview of Brooklyn Bridge Park Corporation.
10
11
Unit
Rent ($/Mo.)
Beds
12/11/2015
#1041
$4,200 1 bed
12/3/2015
11/16/2015
11/13/2015
11/7/2015
10/29/2015
10/27/2015
#731
#7FL
#406
#2FL
#422
#3FL
$4,975 2 beds
$3,500 studio
$2,999 studio
$10,500 3 beds
$7,500 2 beds
$9,500 2 beds
10/23/2015
#501
10/21/2015
Unit Area
R ent ($/SF)
920 SF
1,020
842
742
1,798
1,466
1,470
$54.78
SF
SF
SF
SF
SF
SF
$58.53
$49.88
$48.50
$70.08
$61.39
$77.55
$3,990 1 bed
1,085 SF
$44.13
#719
$14,000 4 beds
2,295 SF
$73.20
10/9/2015
9/22/2015
9/21/2015
#641
#438
#920
$7,500 2 beds
$5,250 2 beds
$2,750 studio
1,536 SF
1,020 SF
588 SF
$58.59
$61.76
$56.12
9/4/2015
#212
$10,500 2 beds
1,916 SF
$65.76
8/19/2015
7/29/2015
7/23/2015
7/20/2015
7/16/2015
7/11/2015
6/27/2015
6/22/2015
6/20/2015
6/8/2015
6/3/2015
5/31/2015
5/30/2015
5/29/2015
5/26/2015
5/21/2015
5/13/2015
5/5/2015
4/28/2015
4/20/2015
4/9/2015
3/25/2015
#1116
#903
#522
#841
#514
#443
#1120
#823
#907
#926
#534
#1210
#432
#406
#714
#312
#503
#911
#435
#1021
#517
#435
$2,750 studio
$3,700 1 bed
$7,000 2 beds
$7,000 2 beds
$3,700 studio
$6,600 2 beds
$5,500 1 bed
$3,400 studio
$3,700 studio
$2,725 studio
$4,700 1 bed
$5,300 1 bed
$3,900 1 bed
$2,950 studio
$4,000 studio
$3,750 studio
$3,700 1 bed
$4,500 1 bed
$4,350 1 bed
$5,500 2 beds
$3,999 1 bed
$4,350 1 bed
588
828
1,466
1,536
899
1,394
1,285
815
842
589
1,080
1,201
901
742
899
1,100
830
1,080
1,082
1,205
862
1,082
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
SF
$56.12
$53.62
$57.30
$54.69
$49.39
$56.81
$51.36
$50.06
$52.73
$55.52
$52.22
$52.96
$51.94
$47.71
$53.39
$40.91
$53.49
$50.00
$48.24
$54.77
$55.67
$48.24
3/10/2015
#337
$8,900 3 beds
1,709 SF
$62.49
3/8/2015
#312
$4,000 studio
1,100 SF
$43.64
Source: StreetEasy
12
The rental rates for the One Brooklyn Bridge Park development ranged from $40.91/SF/Yr. to
$77.55/SF/Yr. The average was approximately $55/SF/Yr while the median was approximately $54.
These rental rates will be used to inform other residential rental rate data for the other residential sites
under Brooklyn Bridge Park Corporations purview (John St. and Pier1).
13
As this table clearly shows, office space is clearly in demand, and is in the highest demand closest to
Brooklyn Bridge Park based on the level of asking rents in DUMBO and Downtown Brooklyn (the highest
in Brooklyn). Even though DUMBO is one of the smallest markets in Brooklyn, it is growing at an
incredible rate. Coupled with Downtown Brooklyn, DUMBO is set to attract a lot of office attention in
the coming years. Brooklyn Bridge Parks proximity to these neighborhoods will also play a big role in
the development and growth of this market.
Asking rates are one thing, actual leasing activity is another. In the same report, a table showing leasing
transactions in 4Q15 shows that 6 out of the 7 larger transactions to happen in this quarter happened in
either DUMBO or Downtown Brooklyn.
A new report by the Downtown Brooklyn Partnership puts office-sector vacancy in that neighborhood at
about 3.4%, much lower than Manhattans major submarkets.8 Deputy Mayor Alicia Glen supports this
with her claim that Office vacancy rates are now around 3%, which is functionally zero (Alicias
7 http://www.bloomberg.com/news/articles/2015-11-09/brooklyn-s-tallest-building-planned-as-office-space-demand-rises
8 http://downtownbrooklyn.com/posts/learn/downtown-brooklyn-real-estate-report-goes-online
14
statement is a rounded value, and is assumed to be based on this report).9 A vacancy rate this low
indicates that there is, and will continue to be, a high demand, a demand that will drive prices up.
Indeed, there have already been numerous retail and office development/projects that show how this
demand is playing out and how it will play out in the months and years to come.
These office trends have early roots in Brooklyn, though the bulk of the activity has happened in the last
few years and will continue happening well into the future. In 2012, Kickstarter purchased their 29,000
square foot Greenpoint office located @ 58 Kent Street for $3.6M.10
In August of 2014, WeWork (an office-space provider) signed a lease for 90,000 square feet at 81
Prospect Street (DUMBO, a few blocks from Brooklyn Bridge Park) for more than $50 /SF, according to
numerous sources.11, 12 According to a CBRE Marketview Report reported on by many news outlets,
DUMBO had the highest average asking rent in Brooklyn at $64.47 / SF during the third quarter of 2015.
The rising rents in the area caused the developer of 10 Jay Street in DUMBO to reconsider their 46
condo residential development. They are now in favor of keeping the warehouse a commercial
property.13 Just east of DUMBO, at the Brooklyn Navy Yard, WeWork will be the anchor tenant of a new
development, reportedly asking $60 /SF.14
Etsy, an e-commerce home goods site, in 2014 signed a 200,000 square foot, 10-year lease to anchor the
DUMBO Heights development @ 117 Adams Street and 55 Prospect Street. Etsy has also been offered
up to $5M in performance-based excelsior tax credits by Empire State Development Corporation (the
parent organization to the Brooklyn Bridge Park Development Corporation). 15
VICE Media, as Denham has also pointed out in her analysis of Brooklyn Bridge Park finances, signed a
lease in 2014 for 60,000 square feet of space at South 2nd Street @ Kent Avenue. On top of some of
these corporate and cultural behemoths, Hillary Clinton in April of 2015, signed a lease for 2 floors
totaling 80,000 square feet of space at 1 Pierrepont Plaza on the border between Brooklyn Heights and
Downtown Brooklyn.16
Brooklyn is growing at an unprecedented rate. It has been doing so for years and shows no sign of
letting up. The New York Times May article Priced Out of Brooklyn? Try Manhattan reports on the
fact that not only is Brooklyn no longer seen as just an alternative for Manhattan, often times,
Manhattan is the alternative for Brooklyn.17 Morris Bailey, Chairman of JEMB Realty, the developer for
the new 600 foot office tower to be erected at 420 Albee Square in Brooklyn, estimates space in this
9 http://www.bloomberg.com/news/articles/2015-11-09/brooklyn-s-tallest-building-planned-as-office-space-demand-rises
10 http://therealdeal.com/blog/2012/08/09/start-up-uses-financing-to-purchase-greenpoint-office/, http://therealdeal.com/issues_articles/hillarys-not-alone-more-officetenants-seek-to-locate-in-brooklyn/
11 WeWork inks lease at Kushners Dumbo Heights The Real Deal 8/5/2014, <http://therealdeal.com/blog/2014/08/05/wework-inks-lease-at-kushners-dumbo-heights>
12 NY Daily News, 8/5/2014, http://www.nydailynews.com/life-style/real-estate/wework-inks-deal-jared-kushner-dumbo-heights-article-1.1892760
13 http://therealdeal.com/blog/2015/10/15/developer-drops-plans-for-condo-conversion-at-10-jay-street/
14 http://newyorkyimby.com/2015/07/revealed-weworks-16-story-office-building-in-the-brooklyn-navy-yard.html
15 https://commercialobserver.com/2014/05/etsy-dumbo-lease/, https://commercialobserver.com/2014/06/etsy-takes-brooklyn-2/
16 http://therealdeal.com/blog/2015/04/03/hillary-is-officially-coming-to-brooklyn-heights/
17 http://www.nytimes.com/2015/05/10/realestate/priced-out-of-brooklyn-try-manhattan.html?_r=0
15
new building would command about $55 /SF at ground level and upwards of $75 /SF above grade.18
These estimates are of course subject to review closer to completion date, however, just the fact that
estimates are this high and new towers are being built for office instead of residential (as per the
requirement of the city 19) shows just how strong demand is for office space.
18 http://www.bloomberg.com/news/articles/2015-11-09/brooklyn-s-tallest-building-planned-as-office-space-demand-rises
19 http://www.capitalnewyork.com/article/city-hall/2015/11/8582297/brooklyn-getting-new-office-building-long-last
16
Building Size
New or
Renewal
Neighborhood
Address
Genius
Williamsburg
40,135 SF
347,255 SF
N/A
July-15
July-25
$41.50 / SF / Yr.
Frog Design
DUMBO
55 Prospect Street
27,000 SF
206,000 SF
New
June-15
June-22
$55.00 / SF / Yr.
Eriksen Translations
Brooklyn Heights
50 Court Street
3,253 SF
N/A
December-14
April-22
$43.00 / SF / Yr.
Etsy
DUMBO
55 Prospect Street
26,500 SF
New
October-14
July-25
$54.00 / SF / Yr.
Etsy
DUMBO
168,545 SF
New
October-14
July-25
Vice Media
Williamsburg
65,000 SF
New
October-14
June-23
$55.00 / SF / Yr.
WeWork
DUMBO
81 Prospect Street
92,000 SF
New
August-14
December-24
$44.00 / SF / Yr.
Williamsburg
15,000 SF
New
September-13
May-20
$48.00 / SF / Yr.
206,000 SF
Lease Start
Lease End
$/SF/Yr (Starting
Rent)
Tenant
Notes
6 Months free rent; Renovate
2007
Industrial property converted to
office; 1 Year free rent
Industrial property converted to
office; 9 Months Free Rent
Industrial property converted to
Months free rent
17
$190.00 /SF
$52.00 /SF
$106.00 /SF
$117.52 /SF
/Y r.
/Y r.
/Y r.
/Y r.
Rosin & Associates notes that the retail rents presented in the following table represent at-grade retail
rents, Below Grade space was not incorporated into our analysis, however, for the sake of
completeness, R&A has included Below Grade space in the comparable table. Overall, R&A is looking
18
at an entire space at Empire Stores, and the aggregate rate for this space will naturally blend because of
the different spaces within, and therefore the blended retail rental rate will be lower.
Even though retail rental rates are slightly lower in One Brooklyn Bridge Park, one must consider the
location of One Brooklyn Bridge Park compared to Empire Stores, the other primary retail locations for
Brooklyn Bridge Park Corporation. Rosin & Associates believes, based on experience and the market,
that rental rates will more closely reflect the DUMBO/Downtown Brooklyn/Brooklyn Heights submarket
than those found at One Brooklyn Bridge Park due to location, the increasing strength of the office
market and Brooklyn Bridge Parks status as a Cultural Anchor and tourist destination. Therefore, retail
rental rates in Brooklyn Bridge Park will likely be between $100/SF/Yr. and $125/SF/Yr. Indeed, David
Breare, an executive at Midtown Equities, the real estate investment firm that is developing Empire
Stores, stated We started with asking rents of $150 per square foot but have since bumped that to
$200 per square foot because of the activity and interest. The rates were getting are much higher
than we expected.21
21 http://www.crainsnewyork.com/article/20150326/REAL_ESTATE/150329889/watchmaker-shinola-to-open-first-brooklyn-store-in-old-coffee-warehouse
19
N eighborhood
Sugar Cane
DUMBO
Feed
DUMBO
UMD Urgent
Care
Brookly n Heights
TD Bank
It'Sugar
Sephora
J. Crew
Brookly n
Heights/Dow ntow n
Brookly n
Brookly n
Heights/Dow ntow n
Brookly n
Addres s
55 Water St,
Empire Stores
55 Water St,
Empire Stores
109 Montague
Street
Space
Leas ed
Space Info
Leas e T erm
December- 15
$150.00 /SF /Y r.
971 SF
December- 15
$150.00 /SF /Y r.
1,350 SF
September- 15
$106.00 /SF /Y r.
NNN Lease
4,054 SF
A t Grade
December- 15
20 Y ears
$99.71 /SF /Y r.
Net of Tax es
210 Joralemon St
1,200 SF
A t Grade
November- 15
10 Y ears
$136.46 /SF /Y r.
NNN Lease
210 Joralemon St
7,057 SF
A t Grade
A ugust- 13
10 Y ears
$99.50 /SF /Y r.
NNN Lease
3,188 SF
A t Grade
10 Y ears
Brookly n Heights
N otes
10,000 SF
2Q 2013
Restaurant
$/SF/Yr (Starting
R ent)
144 A tlantic
A v enue
1,500 SF
A t Grade
July - 15
Blended R ate:
$74.00 /SF /Y r.
NNN Lease
N/A
$52.00 /SF /Y r.
Mod. Gross
950 SF
October- 14
$45.00 /SF /Y r.
Net Lease
4,637 SF
May - 15
$30.00 /SF /Y r.
1,760 SF
A pril- 11
$45.00 /SF /Y r.
Net Lease
1,170 SF
A pril- 11
$44.03 /SF /Y r.
Net Lease
20
21
348,120 SF
# Hotel Rooms
200 Rooms
$54.96
RevPar
$19,132,863
Rev enue (A nnualiz ed)
$169.94
$12,405,620
$31,538,483
Revenue /SF
$75.79
23
Source: BBPC
John Street
John Street is being developed into residential condominiums.
John Street PGI
Residential
Residential
Rev enue
A rea
Market Rate
108,000 SF
$54.96
$5,935,738
Total Rev enue
Total Rev enue /
SF
$5,935,738
$54.96
23 Number of hotel rooms based on Brooklyn Bridge Park Board Presentation Notes:
http://brooklynbridgepark.s3.amazonaws.com/s/498/Pier%201%20Board%20Presentation.pdf
22
Empire Stores
Empire Stores will be a mix of Retail and Office Space and various public spaces as per the development
plans.
Empire Stores PGI
Retail Market
Retail A rea
Rev enue
Rate ($/SF/Y r.)
106,261 SF
$120
$12,751,320
Office Market
Office A rea
Rev enue
Rate ($/SF/Y r.)
237,523 SF
$49
$11,712,853
Total Rev enue
Revenue /SF
$24,464,173
$71.16
$38,297,213
$53.73
23
Estimated Expenses
In order to estimate expenses, Rosin & Associates has utilized expense ratio information found in the FY
2015 Tax Assessors Guidelines. Even though assessor capitalization rates and other values fall on the
more conservative side when compared to market levels, utilizing the ratio helps to circumvent this
problem as the ratios are based on a set methodology and can therefore be applied to market levels, as
in this report. This expense ratio coupled with R&As years of experience valuing real estate throughout
Brooklyn and New York City produces a fair market estimate of expenses of the income-generating sites
under the purview of Brooklyn Bridge Park Corporation.
Assessor Ratios are based on pre-tax estimates. Dept. of Finance expense ratios are based on gross
square feet estimates whereas BBPC figures are based on net square feet estimates. This will result in
slightly different expense estimates.
A ssessor Ex pense Ratios (2015)
Ex pense Ratio
Low
Median
"Dow ntow n Brookly n Class 'A ' Offices"
22%
27%
One- Story and Multi- Story Retail in
Manhattan N. of 125th St and Boroughs
16%
18%
Outside Manhattan
Post- 1973 Elev ator Condo- Coops/Condo35%
38%
Rental Buildings in Outer Boroughs
Lux ury & Super Lux ury Hotels w /Rooms
52%
Less Than 109
Lux ury & Super Lux ury Hotels w /Rooms
56%
betw een 109 and 409
Class
High
42%
23%
43%
61%
65%
24
Expense Ratio
Pier 1 (PierHouse)
John Street
Empire Stores
Expens es
40%
35%
23%
$30 /SF
$19 /SF
$16 /SF
Size
416,120 SF
108,000 SF
343,784 SF
Incom e
$/SF
$76 /SF
$55 /SF
$71 /SF
G ros s Rent
(Revenue)
$31,538,483
$5,935,738
$24,464,173
Expens es
$/SF
$30
$19
$16
Total E xpens es
$12,615,393
$2,077,508
$5,626,760
NOI
$18,923,090
$3,858,230
$18,837,413
25
Capitalization Rates
According to Korpacz/PwCs 4Q2015 analysis of overall capitalization rates (PWC Real Estate Investor
Survey ), the National Apartment market had an average of 5.35%, the same as the Mid-Atlantic
Region during the same period. This was a 4bps decrease from the previous quarter for the National
Apartment market. The Central Business District (CBD) Office market was at 5.68 % nationally, a 2 bps
increase from the previous quarter. Manhattans office market, the closest market to Brooklyn, had an
office market capitalization rate of 5.15%.
The DOF Assessors put Downtown Brooklyn Class A Offices capitalization rates at 10.07% (p.15).
Manhattan North of 125th Street and Boroughs Outside of Manhattan retail capitalization rates high
average is 11.79%.
Post-1973 Elevator Condo-Coops/Condo-Rental Buildings (what the majority of sites at Brooklyn
Bridge Park will be, post-development) have capitalization rates of 7.20% - 9.41% in boroughs outside of
Manhattan. As shown in Appendix A, DOF has recently applied capitalization rates of about 12.5% in
assessing condominium properties within the vicinity of Brooklyn Bridge Park.
Luxury & Super Luxury hotels w/ rooms fewer than 109 have base capitalization rates of 8.55% while
those w/ between 109 and 409 rooms have a capitalization rate of 8.80%. See appendix for full Assessor
Capitalization Rate tables.
As explained in the following section, this reports estimates of PILOTs uses a capitalization rate of
13.33% for each building type.
Capitalization Rates
26
24 The median DOF market value per square foot is calculated based on the 21 buildings found in the DOF data for both FY 2013/14 and FY 2016/17. This sample excludes 384
Bridge Street, 75 Clinton Street, 150 Clermont Avenue and 291 Union as DOF data was not available for these properties in FY 2013/14.
Capitalization Rates
27
Size
NOI
416,120 SF
108,000 SF
343,784 SF
$18,923,090
$3,858,230
$18,837,413
C apitalization
Market Value
Rate
6.00%
6.00%
6.00%
Market Value
E s timate $/SF
$315,384,834
$64,303,832
$313,956,886
$758 /SF
$595 /SF
$913 /SF
Capitalization Rates
28
Size
416,120 SF
108,000 SF
343,784 SF
NOI
$18,923,090
$3,858,230
$18,837,413
As s es s or Value
As s es s or Value (w/
(w/45%
45% Equalization
Equalization Rate)
Rate)
$/SF
Market Value
$315,384,834
$64,303,832
$313,956,886
$141,923,175
$28,936,725
$141,280,599
$341 /SF
$268 /SF
$411 /SF
Implied
As s es s or
C apitalization
Rates
13.33%
13.33%
13.33%
R&A then calculated the Projected Assessor Market Value based on the Implied Assessors ~13% taxloaded capitalization rates, which were measured against DOF Condo Assessments in the area, located
in Appendix A. R&A notes that local DOF Condo Assessments from 2016 elicit a capitalization rate
slightly below the implied capitalization rates calculated above, ~12.50% versus ~13.33%. Note: R&A
utilized the higher capitalization rate (~13.33%) which decreases the projected DOF market value and is
therefore, conservative.
Projected Assessor Market Values Utiliz ing Implied Assessor C apitaliz ation Rates
Nam e
Pier 1
John Street
Empire Stores
Size
416,120 SF
108,000 SF
343,784 SF
NO I
$18,923,090
$3,858,230
$18,837,413
Implied
As s es s or
C apitalization
Rates
13.33%
13.33%
13.33%
Projected As s es s or
Market Value (w/
implied 13% C ap
rate)
$141,923,175.18
$28,936,724.59
$141,280,598.71
R es ulting projected
Res ulting projected
as s es s ed value
as s es s ed value
(Us ing 45%
(U s ing 45%
E qualization R ate)
Equalization Rate)
$/SF
$63,865,429
$13,021,526
$63,576,269
$153 /SF
$121 /SF
$185 /SF
R&A then applied the 45% equalization ratio to the Projected Assessor Market Value to get to the
projected assessed value. This resulting value is what taxes are based on and therefore what PILOT
revenues are based on.
29
Revenue Comparison
The following table outlines the potential PILOT income for each of the income-generating sites in
Brooklyn Bridge Park, unabated. Rosin & Associates analysis is based on recurring tax revenue and not
one-time revenues.
Estimated PILO T Incomes
N ame
Size
Pier 1
John Street
Empire Stores
1 Brooklyn Bridge Park*
As s es s or Value (w/45%
Res ulting projected
Equalization Rate)based on as s es s ed value (U s ing
market value
45% Equalization Rate)
416,120 SF
108,000 SF
343,784 SF
712,803 SF
$141,923,175
$28,936,725
$141,280,599
$113,582,234**
$63,865,429
$13,021,526
$63,576,269
$51,112,005***
Total Taxes
(PILOT Income)
12.007% ****
12.883%
10.656%
12.425% ****
$7,668,330
$1,677,563
$6,774,687
$6,350,415
T OT A L T A X INC OME
$22,470,995
Source: NY C Dept of Finance; *V alues in this table based on DOF A ssessments FY 2016/17; **Combined tax v alues from commercial and residential
units; ***45% Equaliz ation rate applied; ****Blended tax rate derived from commercial and residential unit tax es
Because R&A utilized DOF Assessment values, below is a table outlining how blended tax rate
conclusions were reached for One Brooklyn Bridge Park.
Equalization
Rate
Tax Rate
Unabated
Taxes
OBBP Residential
$90,198,029
45%
12.883%
$5,229,095
OBBP Commercial
$23,384,205
45%
10.656%
$1,121,319
$113,582,234
45%
12.425% *
$6,350,415
TOTA L
*Blended Tax Rate
Sources:
http://w w w 1.ny c.gov/assets/finance/dow nloads/ex cel/condo_coop_comps/b3_condo_comp012816
.x lsx ; DOF (January 2016 Notice of Property V alue)
R&A has also incorporated an analysis of Pier1 to determine the blended tax rate given the expected
residential/hotel split upon completion of development.
% of T otal
Revenue
Portion of
As s es s ment
Equalization
Rate
T ax Rate
U nabated T axes
Pier1 Residential
19,132,863 SF
61%
$38,744,048
45%
12.883%
$2,246,128
Pier1 Hotel
12,405,620 SF
39%
$25,121,381
45%
10.656%
$1,204,620
$63,865,429
45%
12.007% *
$3,450,749
TO TA L
31,538,483 SF
*Blended Tax Rate for Pier1
Revenue Comparison
30
The following table shows BBPCs July 2015 Financial model public presentation revenue estimates.
These are key components of the financial model and there is little evidence backing up the assessments
made by the Brooklyn Bridge Park Corporation underlying their projections. Rosin & Associates does not
intend to argue with the robustness or validity of the BBPC financial model set forth in these reports, as
there is not enough data with which to do so. The only analysis R&A has performed is that of the
revenue base. Unlike the BBPCs projections, R&As analysis herein is based on market comparables and
DOF Assessor methodology.
Brookly n Bridge Park Income A naly sis Done By BBPC
Source
$2,300,000
$3,200,000
$1,000,000
$2,700,000
Ground Rent
A mt.
$1,400,000
$800,000
$200,000
$1,600,000
Rosin Estimates
Ex is ting De ve lo p m e nt T o tals
Pier 6
TOTA LS (w / Pier 6)
$5,600,000
$4,100,000
$800,000
$3,000,000
13,500,000
2,500,000
600,000
11,700,000
4,600,000
$0
1,900,000
15,400,000
12%
$6,350,415*
$7,668,330
$1,677,563
$6,774,687
$22,470,995
31
32
Appendix A
DOF Assessment of Condominiums within the vicinity of Brooklyn Bridge Park for FY 2016/17 as of
1/28/2016.
C ondom inium P roperties in the A rea (F Y 2016/17 as of 1/28/16)
Total
Units
Address
360 F U RM A N ST REET
70 W A SHINGTON STREET
306 GOLD STREET
101 W ILLO UGHBY STREET
110 LIV INGSTON STREET
700 PA CIFIC STREET
1 HA NSON PLA CE
150 MY RTLE A V ENUE
384 BRIDGE STREET
53 PIERREPONT STREET
505 COURT STREET
130 FLUSHING A V ENUE
230 A SHLA ND PLA CE
343 4 A V ENUE
205 W A TER STREET
Year
Built
Im plied Cap
Net
Rate (TaxMarket
Gross
Pre-Tax
Operating
Gross SF
Loaded) Value per
Incom e / SF Expense / SF Incom e /
Calculated by
SqFt
SF
R&A
628,669
$29.61
$11.68
$17.93
12.50%
$143.47
378,050
$26.40
$13.73
$12.67
12.50%
$101.39
342,807
$36.58
$16.46
$20.12
12.50%
$161.00
332,324
$28.38
$9.93
$18.45
12.50%
$147.61
324,465
$21.67
$7.20
$14.47
12.80%
$113.01
230,680
$17.66
$7.72
$9.94
13.41%
$74.11
206,022
$25.30
$10.59
$14.71
12.51%
$117.56
202,727
$29.67
$9.50
$20.17
12.50%
$161.40
170,809
$43.93
$13.18
$30.75
12.50%
$246.06
138,587
$17.94
$6.30
$11.64
13.33%
$87.32
133,465
$24.12
$8.68
$15.44
12.58%
$122.71
126,942
$25.35
$9.37
$15.98
12.51%
$127.76
118,153
$23.94
$7.18
$16.76
12.60%
$133.06
115,310
$27.73
$10.65
$17.08
12.50%
$136.68
111,522
$34.96
$12.71
$22.25
12.50%
$178.05
432
259
302
251
299
168
190
240
234
189
124
112
108
113
65
2008
1916
2005
1918
1926
2002
1927
2007
2012
1920
2006
2012
2006
2006
2010
80
2009
110,828
$21.26
$8.04
$13.22
12.85%
$102.89
85 A DA MS STREET
75 CLINTON STREET
150 CLERMONT A V ENUE
291 UNION STREET
37 BRIDGE STREET
75 POPLA R STREET
53 BOERUM PLA CE
35 UNDERHILL A V ENUE
9 COLLEGE PLA CE
79
74
52
32
45
56
99
39
37
2006
1910
2010
2013
1916
1910
2003
2005
1923
87,554
78,023
77,467
74,575
74,189
74,131
73,232
72,356
68,573
$29.01
$28.85
$41.99
$35.85
$15.54
$28.19
$32.05
$19.85
$34.46
$9.69
$8.99
$10.65
$14.10
$5.21
$12.69
$7.99
$5.22
$4.63
$19.32
$19.86
$31.34
$21.75
$10.33
$15.50
$24.06
$14.63
$29.83
12.50%
12.50%
12.50%
12.50%
13.86%
12.50%
12.50%
13.03%
12.50%
$154.60
$158.91
$250.78
$174.04
$74.53
$124.02
$192.53
$112.26
$238.69
$15.54
$43.93
$28.01
$28.19
Im plied Cap
Net
Rate (TaxMarket
Pre-Tax
Operating
Loaded) Value per
Expense / SF Incom e /
Calculated by
SqFt
SF
R&A
$4.63
$9.94
12.50%
$74.11
$16.46
$31.34
13.86%
$250.78
$9.68
$18.33
12.68%
$145.38
$9.50
$17.08
12.50%
$136.68
Appendix A
33
Appendix A (Contd)
DOF Assessment of Condominiums within the vicinity of Brooklyn Bridge Park for FY 2015/16 as of
2/3/2015.
C ondo m inium P rope rtie s in the A re a (F Y 2015/16 as o f 2/3/15)
438
2008
628,669
$25.71
$8.35
Im plied Cap
Rate (TaxMarket
Loaded) Value per
Calculated
SqFt
by R&A
$17.36
12.91%
$134.42
302
251
2005
1918
342,807
332,324
$27.23
$26.17
$8.17
$9.11
$19.06
$17.06
12.84%
12.89%
$148.45
$132.31
168
190
240
2002
1927
2007
230,680
206,022
202,727
$17.91
$20.84
$25.15
$9.21
$6.40
$6.53
$8.70
$14.44
$18.62
13.72%
13.31%
12.95%
$63.42
$108.49
$143.75
189
1920
138,587
$15.73
$5.84
$9.89
14.13%
$69.99
112
108
113
65
2012
2006
2006
2010
223,184
118,153
115,310
111,522
$19.14
$30.41
$22.70
$32.52
$7.66
$13.58
$6.41
$12.92
$11.48
$16.83
$16.29
$19.60
13.52%
12.71%
13.13%
12.65%
$84.93
$132.38
$124.05
$154.98
80
2009
110,828
$22.17
$8.56
$13.61
13.18%
$103.30
52
2010
77,467
$36.40
$6.46
$29.94
12.57%
$238.15
45
1916
74,189
$15.45
$6.16
$9.29
14.19%
$65.47
99
39
37
2003
2005
1923
73,232
72,356
68,573
$31.19
$17.66
$30.34
$9.89
$4.41
$6.70
$21.30
$13.25
$23.64
12.68%
13.74%
12.71%
$167.92
$96.43
$185.96
Total
Units
Address
360 F U R M A N ST REET
70 WA SHINGTON STREET*
306 GO LD STREET
101 WILLO UGHBY STREET
110 LIV INGSTO N STREET*
700 PA CIFIC STREET
1 HA NSON PLA CE
150 MY RTLE A V ENUE
384 BRIDGE STREET
53 PIERREPONT STREET
505 CO URT STREET*
130 FLUSHING A V ENUE
230 A SHLA ND PLA CE
343 4 A V ENUE
205 WA TER STREET
212 SO UTH OX FO RD
STREET
85 A DA MS STREET*
75 CLINTON STREET*
150 CLERMONT A V ENUE
291 UNION STREET*
37 BRIDGE STREET
75 POPLA R STREET*
53 BO ERUM PLA CE
35 UNDERHILL A V ENUE
9 COLLEGE PLA CE
Year
Built
Gross SF
Gross
Incom e / SF
Pre-Tax
Expense /
SF
Net
Operating
Incom e / SF
$15.45
$36.40
$24.51
$25.15
Pre-Tax
Expense /
SF
$4.41
$13.58
$8.02
$7.66
Net
Operating
Incom e / SF
$8.70
$29.94
$16.49
$16.83
Im plied Cap
Rate (TaxMarket
Loaded) Value per
Calculated
SqFt
by R&A
12.57%
$63.42
14.19%
$238.15
13.17%
$126.73
12.95%
$132.31
Appendix A (Contd)
34
Appendix A (Contd)
DOF Assessment of Condominiums within the vicinity of Brooklyn Bridge Park for FY 2014/15 as of
1/21/2014.
C ondom inium P roperties in the A rea (FY 2014/15 as of 1/21/14)
Total
Units
Address
360 F U RM A N ST REET *
70 WA SHINGTON STREET*
306 GOLD STREET*
101 WILLOUGHBY STREET*
110 LIV INGSTON STREET
700 PA CIFIC STREET*
1 HA NSON PLA CE
150 MY RTLE A V ENUE
384 BRIDGE STREET*
53 PIERREPONT STREET*
505 COURT STREET*
130 FLUSHING A V ENUE
230 A SHLA ND PLA CE*
343 4 A V ENUE
205 WA TER STREET*
Gross
Gross SF Incom e /
SF
Year
Built
Im plied Cap
Pre-Tax
Net
Rate (TaxMarket
Expense / Operating
Loaded) Value
SF
Incom e / SF Calculated per SqFt
by R&A
299
1926
324,465
$18.86
$5.69
$13.17
13.89%
$94.81
190
240
1927
2007
206,022
202,727
$20.46
$24.05
$6.65
$7.49
$13.81
$16.56
13.65%
13.25%
$101.16
$125.00
112
2012
254,869
$19.55
$9.39
$10.16
13.78%
$73.71
113
2006
115,310
$20.56
$5.66
$14.91
13.63%
$109.32
80
2009
110,828
$21.06
$8.95
$12.11
13.57%
$89.26
85 A DA MS STREET
75 CLINTON STREET*
150 CLERMONT A V ENUE
291 UNION STREET*
37 BRIDGE STREET
75 POPLA R STREET
53 BOERUM PLA CE
35 UNDERHILL A V ENUE
9 COLLEGE PLA CE*
79
2006
87,554
$22.46
$7.26
$15.20
13.41%
$113.36
52
2010
77,467
$37.23
$10.41
$26.82
13.11%
$204.50
45
56
99
39
1916
1910
2003
2005
74,189
74,131
73,232
72,356
$14.29
$25.18
$29.16
$16.51
$5.56
$9.92
$9.44
$4.81
$8.73
$15.26
$19.71
$11.70
15.01%
13.16%
13.12%
14.37%
$58.19
$115.94
$150.32
$81.38
$14.29
$37.23
$22.45
$20.81
Im plied Cap
Pre-Tax
Net
Rate (TaxMarket
Expense / Operating
Loaded) Value
SF
Incom e / SF Calculated per SqFt
by R&A
$4.81
$8.73
13.11%
$58.19
$10.41
$26.82
15.01%
$204.50
$7.60
$14.85
13.66%
$109.75
$7.38
$14.36
13.60%
$105.24
Appendix A (Contd)
35
Appendix A (Contd)
DOF Assessment of Condominiums within the vicinity of Brooklyn Bridge Park for FY 2013/14 as of
1/23/2013.
C ondom inium P roperties in the A rea (F Y 2013/14 as of 1/23/13)
438
259
306
251
299
168
190
240
2008
1916
2005
1918
1926
2002
1927
2007
628,669
375,000
271,963
332,324
324,465
230,680
206,022
202,727
$24.41
$20.42
$25.53
$24.47
$21.43
$15.23
$20.55
$23.41
$8.07
$8.53
$7.72
$8.56
$7.25
$7.64
$6.40
$7.45
$16.34
$11.89
$17.81
$15.91
$14.18
$7.59
$14.15
$15.96
Im plied Cap
Rate (TaxLoaded) Calculated
by R&A
13.24%
13.68%
13.15%
13.24%
13.55%
14.73%
13.66%
13.34%
189
124
112
108
113
65
1920
2006
2012
2006
2006
2010
138,587
133,465
254,869
118,153
115,310
111,522
$14.68
$19.31
$18.57
$23.09
$22.10
$22.46
$6.36
$6.06
$8.69
$8.03
$5.56
$11.02
$8.32
$13.25
$9.88
$15.06
$16.54
$11.44
14.89%
13.83%
13.96%
13.36%
13.47%
13.42%
$55.86
$95.79
$70.76
$112.71
$122.83
$85.23
80
2009
110,828
$21.34
$8.89
$12.45
13.55%
$91.90
85 A DA MS STREET
75 CLINTON STREET*
150 CLERMONT A V ENUE*
291 UNION STREET*
37 BRIDGE STREET
75 POPLA R STREET
53 BOERUM PLA CE
35 UNDERHILL A V ENUE
9 COLLEGE PLA CE
79
2006
87,554
$23.69
$7.40
$16.29
13.30%
$122.47
45
56
99
39
38
1916
1910
2003
2005
1923
74,189
74,131
73,232
72,356
57,303
$13.78
$26.52
$26.94
$16.52
$18.84
$5.62
$10.51
$8.48
$3.96
$6.62
$8.16
$16.01
$18.46
$12.56
$12.22
15.20%
13.13%
13.13%
14.39%
13.92%
$53.67
$121.92
$140.57
$87.30
$87.81
Total
Units
Address
360 F U RM A N ST REET
70 WA SHINGTON STREET
306 GOLD STREET
101 WILLOUGHBY STREET
110 LIV INGSTON STREET
700 PA CIFIC STREET
1 HA NSON PLA CE
150 MY RTLE A V ENUE
384 BRIDGE STREET*
53 PIERREPONT STREET
505 COURT STREET
130 FLUSHING A V ENUE
230 A SHLA ND PLA CE
343 4 A V ENUE
205 WA TER STREET
Year
Built
Gross SF
Pre-Tax
Expense
/ SF
Gross
Incom e / SF
Net
Operating
Incom e /
SF
Market
Value per
SqFt
$123.41
$86.94
$135.39
$120.21
$104.68
$51.53
$103.59
$119.65
$13.78
$26.94
$21.11
$21.43
Pre-Tax
Expense
/ SF
$3.96
$11.02
$7.56
$7.64
Net
Operating
Incom e /
SF
$7.59
$18.46
$13.55
$14.15
Im plied Cap
Rate (TaxLoaded) Calculated
by R&A
13.13%
15.20%
13.72%
13.55%
Market
Value per
SqFt
$51.53
$140.57
$99.72
$103.59
Appendix A (Contd)
36
Appendix A (Contd)
Rosin & Associates has calculated the percentage change from FY 2013/14 to 2016/17 in the following
table. A table of statistics follows outlining the minimum, maximum, average and median percentage
changes for this data set.
% C hange in Assessm ent
Address
360 FURMAN STREET
70 WASHINGTON STREET
Overall %
FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 change (2013/14
- 2016/17)
$123.41
($134.42)
$86.94
$143.47
16. 25%
$101.39
16. 62%
$135.39
($148.45)
$161.00
18. 92%
$120.21
($132.31)
$147.61
22. 79%
$104.68
($94.81)
$51.53
$113.01
7. 96%
($63.42)
$74.11
43. 82%
1 HANSON PLACE
$103.59
($101.16)
($108.49)
$117.56
13. 49%
$119.65
($125.00)
($143.75)
$161.40
34. 89%
$55.86
$95.79
$70.76
$112.71
343 4 AVENUE
$122.83
($69.99)
($73.71)
($109.32)
$85.23
$91.90
($89.26)
$122.47
($113.36)
($204.50)
$53.67
($58.19)
75 POPLAR STREET
$121.92
($115.94)
53 BOERUM PLACE
$140.57
($150.32)
35 UNDERHILL AVENUE
$87.30
($81.38)
9 COLLEGE PLACE
$87.81
56. 32%
$122.71
28. 10%
$127.76
80. 55%
($132.38)
$133.06
18. 06%
($124.05)
$136.68
11. 28%
($154.98)
$178.05
108. 91%
($103.30)
$102.89
11. 96%
$154.60
26. 23%
$158.91
N/A
$250.78
N/A
($238.15)
N/A
$87.32
($84.93)
75 CLINTON STREET
150 CLERMONT AVENUE
$246.06
($65.47)
$174.04
N/A
$74.53
38. 87%
$124.02
1. 72%
($167.92)
$192.53
36. 96%
($96.43)
$112.26
28. 59%
($185.96)
$238.69
171. 83%
S tatistics
Min
Max
A verage
Median
1.72%
171.83%
37.82%
26.23%
Appendix A (Contd)
37
Appendix A-1
The following hotels were used by R&A in a custom sample for this analysis which is appropriate given
the target market for Brooklyn Bridge Park.
STR Tr av e l Ho te l Su r v e y
Hotel Name
Location
Class
Upscale Class
# of Rooms
88
Upscale Class
160
Upscale Class
Upscale Class
176
Hilton Garden Inn New York Long Island City Manhattan View
Upscale Class
183
Brooklyn, NY
666
Brooklyn, NY
Upscale Class
128
Brooklyn, NY
Upscale Class
176
Brooklyn, NY
321
Dazzler Brooklyn
Brooklyn, NY
Upscale Class
174
Nu Hotel
Brooklyn, NY
Upscale Class
93
Condor Hotel
Brooklyn, NY
35
Brooklyn, NY
49
McCarren Hotel
Brooklyn, NY
64
Hotel Le Bleu
Brooklyn, NY
48
Brooklyn, NY
115
Brooklyn, NY
Upscale Class
204
Brooklyn, NY
Upscale Class
48
Brooklyn, NY
Upscale Class
52
Brooklyn, NY
Upscale Class
55
Brooklyn, NY
Upscale Class
183
Appendix A-1
38
ADR ($)
2011
2012
2013
2014
2015
Avg
January
February
March
April
May
154.86
170.27
168.60
156.52
163.08
153.79
171.12
167.78
162.85
164.24
170.24
194.79
186.66
185.52
184.71
198.81
216.38
218.06
198.50
208.01
205.23
223.46
229.68
224.36
221.20
January
February
March
April
May
96.01
123.13
124.44
107.65
113.09
109.81
131.56
128.95
119.69
122.71
138.41
168.69
155.59
149.34
153.25
172.17
187.23
197.22
169.44
181.39
176.57
198.59
209.40
196.29
195.54
January
February
March
April
May
57,195
61,163
61,163
61,163
60,171
51,660
55,244
55,244
55,244
54,348
57,195
61,163
61,163
61,163
60,171
55,350
59,190
59,190
64,680
59,603
57,195
61,163
61,163
68,448
61,992
January
February
March
April
May
35,459
44,230
45,143
42,067
41,725
36,887
42,473
42,459
40,602
40,605
46,502
52,968
50,983
49,237
49,923
47,935
51,216
53,532
55,210
51,973
49,207
54,358
55,763
59,883
54,803
June
186.41
205.54
216.45
221.22
220.65
211.10
July
167.18
186.49
194.53
197.92
197.23
189.49
August
171.90
183.62
202.16
204.92
199.35
193.04
September
203.30
218.98
239.41
249.02
240.33
231.07
October
202.18
233.42
244.50
240.89
245.94
234.11
November
199.20
254.65
221.76
212.61
200.13
218.71
December
189.13
236.14
215.79
205.79
194.46
208.84
Total Year
June
156.25
179.98
191.52
198.61
194.88
185.11
July
143.43
162.16
169.52
178.94
175.69
166.67
August
150.29
159.71
182.08
181.74
159.90
166.78
September
182.96
191.60
212.66
219.95
212.46
204.67
October
182.81
211.42
215.87
208.84
216.64
207.81
November
155.04
238.41
182.83
164.57
159.53
179.74
December
142.68
210.03
171.23
166.47
155.88
169.17
Total Year
June
53,430
55,350
59,190
59,190
66,240
58,680
July
55,211
57,195
61,163
61,163
68,448
60,636
August
55,211
61,163
61,163
61,163
73,842
62,508
September
53,430
59,190
59,190
59,190
71,460
60,492
October
57,195
61,163
61,163
61,163
73,842
62,905
November
55,350
59,190
59,190
59,190
68,850
60,354
December
57,195
61,163
61,163
61,163
71,145
62,366
Total Year
June
44,785
48,468
52,373
53,139
58,506
51,454
July
47,370
49,731
53,298
55,297
60,974
53,334
August
48,272
53,198
55,086
54,244
59,228
54,006
September
48,085
51,788
52,576
52,279
63,173
53,580
October
51,715
55,399
54,001
53,027
65,043
55,837
November
43,080
55,415
48,800
45,815
54,882
49,598
December
43,147
54,400
48,535
49,477
57,029
50,518
Total Year
203.53
210.31
209.87
205.34
207.26
Dec YTD
203.53
210.31
209.87
205.34
207.26
RevPAR ($)
2011
2012
2013
2014
2015
Avg
171.63
178.12
178.11
169.94
174.35
Dec YTD
171.63
178.12
178.11
169.94
174.35
Supply
2011
2012
2013
2014
2015
Avg
693,009
720,145
720,145
804,525
734,456
Dec YTD
693,009
720,145
720,145
804,525
734,456
Demand
2011
2012
2013
2014
2015
Avg
584,389
609,914
611,158
665,834
617,824
Dec YTD
584,389
609,914
611,158
665,834
617,824
39
Appendix A-2
DOF Assessors Tables
Appendix A-2
40
41
Appendix B
Brooklyn Bridge Park Corporation: Financial Model Update, Public Presentation, July 9, 2015.
Page 19
Page 19 Inset #2
Appendix B
42
Page 19 Inset #3
Page 20
Appendix B
43
Appendix C
Special Considerations, Qualifications and Disclaimers
Special Considerations
Residential condominium properties are subject to both sections 339y of the New York Real Property
Tax Law Act (RPTL) and refers to Section 581: of the RPTL 581 (2003). The appraisers will apply the
appropriate market analysis so as to provide the proper assessment analysis of Brooklyn Bridge Park in
accordance with this law.
Section 339y. Separate taxation
Basis: Real Property Tax Law (RPTL)
RPTL 339-y.
(b) In no event shall the aggregate of the assessment of the units plus their common interests exceed the total
valuation of the property were the property assessed as a parcel.
Section 581. Assessment of residential cooperative, condominium and rental property
Basis: Real Property Tax Law (RPTL)
RPTL 581 (2003)
581. Assessment of residential cooperative, condominium and rental property
1. (a) Notwithstanding any other provision of law, real property owned or leased by a cooperative corporation or
on a condominium basis shall be assessed for purposes of this chapter at a sum not exceeding the assessment
which would be placed upon such parcel were the parcel not owned or leased by a cooperative.
Appendix C
44
Qualifications
Max Rosin has extensive experience testifying in New York City on real estate assessments and tax
certiorari matters. He was appointed by New York Citys Law Department to assist them on more than
10 certiorari tax assessment cases and trials including Trump Tower among others.
Professional Experience
Since 1991, Mr. Rosin has been principal of the New York full service appraisal firm of Max Rosin and
Associates, Inc. (aka Rosin & Associates). Mr. Rosin has been involved in all phases of real estate and
financial appraisals in the greater New York area and across the country. His engagements have included
valuations of multifamily, commercial, retail, industrial, undeveloped land and lodging facilities. Mr.
Rosins appraisal experience runs through a wide spectrum of properties, from trophy office buildings
such as the Empire State Building to some single family units and vacant land. Mr. Rosin has successfully
served as an expert witness on real estate valuation issues on many occasions and brings a strong track
record to his clients service.
He has assisted in several due diligence projects and real estate consulting assignments. During the past
year Mr. Rosin through this firm has appraised or been critically involved in the appraisal of more than
sixty commercial properties in the New York and New Jersey area. In the past, he has supervised several
multi-site appraisals, both for the Resolution Trust Corporation (RTC) and private clients.
Prior to establishing Rosin and Associates, Mr. Rosin was a senior appraiser in the Appraisal and
Valuations Department of the Tax Division at Arthur Andersen & Co. There he was involved in the
Valuation of Businesses, Real Estate, Machinery and Equipment. Rosin & Associates Valuation clients
include Rialto Mortgage Capital, Ladder Finance, Investors Bank, Northfield Bank, Bank of America,
Lehman Brothers, Credit Suisse First Boston, Aries Capital, Summit Bank, Fleet, HSBC, Hudson United
Bank, CreditVest, Brown Harris Stevens, FDIC/Resolution Trust Corporation, Estate of Sol Goldman, ZAR
Realty, Bank of America, and GRP Financial Services.
Appendix C
45
Disclaimers
We have conducted all services and prepared all opinions and reports with respect to the Property, in
accordance with Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the
Appraisal Standards Board of the Appraisal Foundation and Title XI of the Federal Financial Institutions
Reform, Recovery, and Enforcement Act (FIRREA). We make no other warranties, either expressed or
implied, as to the character and nature of such services and product.
Appendix C
46
This assessment analysis report has been made with the following general assumptions:
1.
No responsibility is assumed for the legal description or for matters including legal or title
considerations. Title to the property is assumed to be good and marketable unless otherwise stated.
2.
The sites are considered to be free and clear of any or all liens or encumbrances except those
specifically set forth in the report.
3.
4.
The information furnished by others is believed to be reliable and has been verified to the extent
feasible. However, no warranty is given for its accuracy.
5.
All engineering is assumed to be correct except as otherwise noted. The plot plans and illustrative
material in this report are included only to assist the reader in visualizing the property.
6.
It is assumed that there are no hidden or unapparent conditions of the property subsoil or structures
that render it more or less valuable. No responsibility is assumed for such conditions or for arranging
for engineering studies that may be required to discover them.
7.
It is assumed that there is full compliance with all applicable federal, state, and local environmental
regulations and laws unless noncompliance is stated, defined, and considered in the assessment
analysis report.
8.
It is assumed that all applicable zoning and use regulations and restrictions have been complied with,
unless a nonconformity or noncompliance has been stated, defined, and considered in the
assessment analysis report.
9.
It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or
administrative authority from any local, state, or national government or private entity or
organization have been or can be obtained or renewed for any use on which the value estimate
contained in this report is based.
10.
It is assumed that the utilization of the land and improvements is within the boundaries of the
property lines of the property described and that there is no encroachment or trespass unless noted
in the report.
11.
An investigation makes it reasonable to assume, for assessment analysis purposes that no insulation
or other product banned by the Consumer Product Safety Commission has been introduced into the
premises. The heating, electrical, plumbing and other mechanical systems have not been tested
specifically, but are assumed to be in good working order unless otherwise specified.
12.
The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made
specific compliance surveys and analysis of this property to determine whether or not it is in
conformity with the various detailed requirements of the ADA. It is possible that a compliance survey
of the subject, together with a detailed analysis of the requirements of the ADA, could reveal that the
subject is not in compliance with one or more of the requirements of the Act.
Appendix C
47
This assessment analysis is made subject to the following general limiting conditions:
1.
Any estimates provided in the report apply to the entire property, and any proration or division of the
total into fractional interests will invalidate the estimate, unless such proration or division of interests
has been set forth in the report. Similarly, any estimate provided for a fractional interest shall not be
construed as applying to the property in its entirety, unless such application is set forth in the report.
2.
Possession of this report, or a copy thereof, does not carry with it the right of publication.
3.
The consultant, by reason of this assessment analysis, is not required to give further consultation,
testimony, or attend court with reference to the property in question unless arrangements have been
previously made thereof.
4.
It is agreed that the liability of the consultant to the client is limited to the amount of the fee paid as
liquidated damages. The consultants' responsibility is limited to the client, and use of this assessment
analysis by third parties shall be solely at the risk of the client and/or third parties.
5.
This assessment analysis is to be used in whole and not in part. No part of it shall be used in
conjunction with any other assessment analysis.
6.
Neither all nor any part of the contents of this report shall be conveyed to the public through
advertising, public relations, news, sales or other media without the written consent and approval of
the consultants, particularly as to estimate conclusions, the identity of the consultants or the firm
with which the consultants are connected.
This assessment analysis is made subject to the following specific limiting conditions:
1.
Any descriptions of building components are solely for descriptive purposes. An engineers or
architect's report is necessary if a rigorous analysis of building systems is required.
2.
Building areas were calculated on the basis of public records or available site and floor plans for the
building, and measurements estimated during our site inspection. While we believe our estimates to
be reasonable, we take no responsibility for their accuracy.
3.
We did not receive a Phase I environmental study on the subject property. Although the consultants
noticed no evidence of environmental problems on the subject site, we take no responsibility for
environmental concerns which were not evident to us at the time of this report.
Goldenrod Blue
On Course; Building Value
Page 1 of 31
Contents
Executive Summary....................................................................................................................................... 3
About Goldenrod Blue Associates and the Author ....................................................................................... 8
Technical Issues............................................................................................................................................. 9
The Report is Deficient in Not Examining All Legitimate Alternatives .................................................. 9
The Report is Misleading as to the Lake Pontchartrain Causeway Piling Encapsulation Program ..... 10
The Report is Arguably Misleading as to the True Scope of What is Recommended ........................ 11
The Basis of the Timber Piling Deterioration Modeling is Unclear ..................................................... 12
An Alternate Deterioration Model suggests a Different Maintenance Strategy for Brooklyn Bridge
Parks Marine Structures..................................................................................................................... 13
Other Technical Observations Regarding the Report ......................................................................... 20
Cost Modeling Issues .................................................................................................................................. 23
The Relevant Economic Factors Associated with the Reports Cost Modeling Appear to Be Ignored in
the Report ........................................................................................................................................... 23
Reflecting the Economic Factors Necessarily Changes the Financial Analysis Result......................... 25
Comparing the Financial Projections with and without considering Economic Factors..................... 28
The Cost of the Third Option is Highly Likely to be the Lowest Cost Plan .......................................... 29
Organizational Conflict of Interest Issues ................................................................................................... 30
What is Organizational Conflict of Interest? ....................................................................................... 30
Conflict of Interest Regulations Affecting Brooklyn Bridge Park ........................................................ 30
The Appearance of Impropriety Impaired Consultant Objectivity................................................... 31
Page 2 of 31
Executive Summary
This document provides technical and program review comments on the preventative
maintenance plan dated November 3, 2015 and prepared by CH2M for the Brooklyn Bridge
Park Corporation (BBP). Unless otherwise cited, all references and footnotes refer to the
CH2M plan document. Also, in this Review document any reference to Report means the
same CH2M plan document.
BBP operates on the east bank of the East River on 6 piers that were built during the late
1950s and early 1960s for industrial use. These piers, supported by 13,000 timber piles and
11,000 concrete pile extensions, provide 830,000 square feet of concrete pier deck. Like any
marine structure, these piers and their supporting structures are subject to degradation over
time. As such, periodic maintenance is required to maintain the full design load-bearing and
operational capabilities of the piers.
The Report has significant deficiencies. The only two maintenance alternatives
considered in the Report are the recommended preventative maintenance alternative and
the other reactive maintenance alternative. This is an inappropriate, overly narrow selection
of the maintenance alternatives to be studied. A third option, suggested implicitly by the
Report, appears to be technically superior and is likely the lowest cost option for BBP in present
value terms.
Even with the inappropriately limited selection of maintenance strategy alternatives
examined in the Report, the data, information and analysis provided in the Report fail to
support the recommended preventative maintenance conclusion. Based upon the
information presented in the Report and other supporting information cited in this Review:
The proposed option is NOT the best technical choice for BBP to maintain its marine
structures. The Report offers a false dichotomy of choice; the actual best choice, based
upon the technical merits, is a third choice. This third choice was actually suggested,
but not considered, in the Report. In several places the Report claims that the
recommended preventative maintenance system has been used in other installations
Page 3 of 31
around the United States. For example, Section 6 of the Report discusses the Lake
Pontchartrain Causeway in Louisiana. The data presented in the Report has been
formatted into the table below for discussion purposes:1
Lake Pontchartrain Causeway
Year
Work
Done
Bridge
Age
(Years)
# Piles
Done
1988
1996
2002
2004
2010
32
40
46
48
54
21
414
174
174
586
Page 4 of 31
the Report, there are a total of approximately 8,500 unrepaired piles and associated
concrete extensions that are without significant deterioration.4 This reality that
there is no immediate requirement for any extraordinary action to maintain the pilings
and concrete extensions is also represented in Figure 5-3 of the Report.5 As shown in
Report Figure 5-3, no significant spending is planned in the reactive maintenance plan
for another 15 years or so.
Given this relatively long time until significant spending is projected to be required on
the reactive maintenance approach, it is reasonable to conclude that a fully-effective
installation plan for epoxy grout encasements of all unrepaired piers could be developed
with a significantly lower cost (considering the economic factors of time value of money
and inflation adjustments) by using a 20 or 25 year phased approach to the installation.
4
5
Page 5 of 31
Since these 8,500 unrepaired pilings have no significant deterioration, and since both the
reactive maintenance approach and the preventative maintenance approach have 50
year useful lives according to the Report,6 failing to take advantage of the remaining
unrepaired life of these pilings in the preventative approach instead of installing the epoxy
grout encasement in a phased approach will shortchange future generations by 20 to 25
years in the timing of the need for future maintenance.
CH2M, and the Brooklyn Bridge Park with regard to the proposed preventative maintenance
Page 6 of 31
plan (i.e. the subject of the Report). This is made clear in Section 8 of the Report, where the
authors state We look forward to the opportunity to work with you on this landmark project. 8
This suggests the possibility of impaired objectivity on the part of CH2M. With the apparent
expectation on the part of CH2M to gain significant future contracted work on this landmark
project, it is legitimate to question the validity of the selection of data/information included in,
the analyses conducted for, and the conclusions and recommendation provided by this Report.
Page 7 of 31
Page 8 of 31
Technical Issues
The Report is Deficient in Not Examining All Legitimate Alternatives
The Report examines only two alternative plans for the long-term maintenance of the marine
structures at Brooklyn Bridge Park. These options are labeled the reactive maintenance strategy and
the preventative maintenance strategy. The suggestion, for a cursory non-technical reviewer, is that
the only options are to let the marine structures decay to the point where they lose their functional
capability or to act immediately to prevent future decay through the implementation of a
comprehensive preventative maintenance program. This, in fact, is both a false dichotomy of choice
and is misleading.
Please consider that the Report itself offers examples of legitimate alternative maintenance
strategies. The Report offers multiple case studies discussing other facilities that have employed/are
employing the suggested epoxy grout encasement preventative maintenance approach for piling
maintenance. In each of these 7 case studies9 the implementation plan used a phased approach. In
the case of the Lake Pontchartrain Causeway, both the worlds longest bridge and one of the first
facilities to employ the suggested epoxy grout encasement maintenance approach, this inspectionbased phased reactive
implementation approach began in 1988.
Year
Work
Done
Bridge
Age
(Years)
# Piles
Done
1988
1996
2002
2004
2010
32
40
46
48
54
21
414
174
174
586
Page 9 of 31
10
Page 10 of 31
16
Page 11 of 31
Base Rate
0.57%
1.18%
Flow
Acenaphthene
Leach Rate
5
20
35
0
0
0
27.3
39.9
55.4
Average
Leaching
Rate
Change/
Degree C
Water
Temperature
Degrees C
Average
Leaching
Rate
Change/
Degree C
Flow
Acenaphthene
Leach Rate
Base Rate
0.92%
6.53%
5
20
35
4
4
4
149.7
145.6
236.8
Leaching
Leaching
Leaching
Leaching
Leaching
Dibenzofuran
Flouranthene
Flourene
Phenanthrene
Rate
Rate
Rate
Rate
Rate
Leach Rate
Leach Rate
Leach Rate
Leach Rate
Change/
Change/
-1
-1 Change/
-1-1
-1-1
-1
-1 Change/
-1
-1 Change/
(ug-cm -day )
(ug-cm day )
(ug-cm day )
(ug-cm -day )
(ug-cm -day )
Degree C
Degree C
Degree C
Degree C
Degree C
3.08%
2.59%
17.1
17.2
12.7
0.04%
-1.74%
26
13.6
16.2
-3.18%
1.27%
8
8.3
7.1
0.25%
-0.96%
14.7
20.8
34
2.77%
4.23%
Leaching
Leaching
Leaching
Leaching
Leaching
Dibenzofuran
Flouranthene
Flourene
Phenanthrene
Rate
Rate
Rate
Rate
Rate
Leach Rate
Leach Rate
Leach Rate
Leach Rate
Change/
Change/
-1
-1 Change/
-1-1
-1-1
-1
-1 Change/
-1
-1 Change/
(ug-cm -day )
(ug-cm day )
(ug-cm day )
(ug-cm -day )
(ug-cm -day )
Degree C
Degree C
Degree C
Degree C
Degree C
-0.18%
4.18%
150.3
178.8
584.2
1.26%
15.12%
72.5
57.7
35
-1.36%
-2.62%
59.8
77.5
110.2
1.97%
2.81%
140.6
182.7
529.8
2.00%
12.67%
USDA Research Note FPL-RN-0286, November 2002; Y. Xiao, J. Simonsen, J.J. Morell
22
23
Page 12 of 31
Lake
Pontchartrain
(degrees F)
deterioration rates.
Given this uncertainty and apparent lack of a quantitative modeling tool, the Report provides,
without reference, their modeling assumption for the deterioration of the pilings at Brooklyn Bridge
Park. These assumptions offer a constant deterioration rate for the first 6 years, double that rate for the
next 6 years and then double that rate again for the following 38 years.25 Despite an extensive review of
the relevant literature, Goldenrod Blue Associates was unable to correlate this projected deterioration
rate, or even the shape of such a deterioration rate curve, to any published studies. As a result,
Goldenrod Blue Associates would welcome additional information from CH2M in order to duplicate the
model used in the development of the Report.
An Alternate Deterioration Model suggests a Different Maintenance Strategy for Brooklyn
Bridge Parks Marine Structures
As discussed above, a variety of factors impact the rate at which creosote-protected wood
marine pilings deteriorate. The Report does provide adequate data to construct an alternative model as
24
US Department of Agriculture Forrest Service Research Note FPL-RN-0286, dated November, 2002, Effects of
Water Flow and Temperature on Leaching from Creosote-Treated Wood, Y. Xiao, J. Simonsen, J.J. Morrell
25
Report, Section 4, page 10
Page 13 of 31
The table above establishes the condition of the piers as of 2010, when the analysis was
conducted. This data, along with other data which may be inferred from the Report, supports the
development of a deterioration model. This derivation of this alternative model, shown immediately
below in six versions (low, mid, high creosote initial loading, with each creosote case analyzed for both
1960 and 1940 piling installation), will be discussed in detail further below.
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (Low Creosote 50 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1960 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
50
12
31.1
3.93
13.7
2024
3
5.03
50
12
36.1
3.93
24.0
2034
5
6.4
50
12
57.1
3.93
67.2
2077
6
4.49
50
12
29.9
3.93
11.3
2021
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
26
Page 14 of 31
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (Mid Creosote 50 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1960 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
50
16
20.2
3.78
15.1
2025
3
5.03
50
16
22.9
3.78
24.0
2034
5
6.4
50
16
33.3
3.78
57.6
2068
6
4.49
50
16
19.5
3.78
13.0
2023
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (High Creosote 50 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1960 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
50
20
14.9
3.70
15.8
2026
3
5.03
50
20
16.8
3.70
24.0
2034
5
6.4
50
20
23.5
3.70
53.6
2064
6
4.49
50
20
14.5
3.70
13.8
2024
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (Low Creosote 70 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1940 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
70
12
43.5
4.19
11.0
2021
3
5.03
70
12
50.5
4.19
24.0
2034
5
6.4
70
12
80.0
4.19
78.9
2089
6
4.49
70
12
41.9
4.19
7.9
2018
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (Mid Creosote 70 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1940 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
70
16
28.2
4.07
12.7
2023
3
5.03
70
16
32.1
4.07
24.0
2034
5
6.4
70
16
46.7
4.07
66.7
2077
6
4.49
70
16
27.3
4.07
10.0
2020
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
Page 15 of 31
Remaining Pier Life Model Based Upon 2010 Wood Testing Results (High Creosote 70 Years)
Assumed Minimum
Piling Age
Assumed Initial
Observed
Model Years Predicted
Acceptable Creosote Loading
(Based on
Creosote Loading
Creosote
from 2010 Year When
BBP Pier
Based upon CH2M Report
Assumed 1940 Based Upon AWPA Initial Half Life
Until
the Pier is
(Pier 3 Degraded in 2034)
Build)
Requirements (PCF)
in Years
Degraded
Degraded
(PCF)
2
4.6
70
20
20.9
4.00
13.6
2024
3
5.03
70
20
23.5
4.00
24.0
2034
5
6.4
70
20
32.9
4.00
61.7
2072
6
4.49
70
20
20.3
4.00
11.0
2021
Calculated using an Inverse Rectangular Hyperbolic Model: Loading = Initial Loading x (1-(Elapsed Time/(Elapsed Time + Initial Half Life)))
Average Creosote
Loading as
Measured in 2010
(PCF)
Average Creosote Loading as Measured in 2010 (PCF). This data is copied from Table 4-1 in the
Report. It represents how much creosote still remained in the pilings, as measured in pounds
per cubic foot of wood, as of 2010 testing. This is a model input.
Piling Age Based on Assumed 1960 or 1940 Build. This column provides an estimate, based
upon the information provided in the Report, of how old the piers were in 2010, when the
testing was completed. This is a model input. This column is used in determining the initial halflife of the creosote in each pier. Two build dates are considered in the sensitivity analyses
above. While the Report indicates pier construction/piling installation in 1960, it is Goldenrod
Blues understanding that this site was actually in use as an industrial shipping port for many
years prior to 1960. Because of this uncertainty in installation date, a second run of the entire
model was conducted to demonstrate the sensitivity of the model results to an installation date
prior to World War II (1940).
Assumed Initial Creosote Loading Based Upon AWPA Requirements (PCF). This is the second
element of assumed data, and is a model input. The American Wood Protection Association
(AWPA) is referenced in the Report, and is the industry standard for wood protection
specifications. Since 1999 Marine Pilings have been classified by AWPA as Use Category 5.
AWPA further breaks down Use Category 5 by latitude, as the temperature and other factors are
different based upon latitude. On the east coast of the United States, Use Category 5A applies
to the Northern Waters, defined as any salt and brackish water which includes Long Island, NY
and northward. For UC5A, marine pilings in saltwater installed since 1999 must have a
minimum creosote retention of 16 pounds per cubic foot. The requirements were different in
Page 16 of 31
Observed Creosote Initial Half Life in Years. This is an output of the model. The formula used
to calculate this value is based upon applying an inverse rectangular hyperbolic model to the
input data, as suggested by Xiao, et. al.28 This model was used by them to evaluate the flow and
temperature sensitivity data shown and discussed above, and correlated well with their
observed data regarding creosote leaching rate. Further, as they note, this hyperbolic
degradation model compares well with prior quantitative studies. Note, however, that unlike
radioactive decay, which follows a natural log (ln, or ex)-based decay pattern (making half-lives
repeatable over the complete course of isotope decay) the hyperbolic degradation model slows
with elapsed time. As a result, the output value represents only the slope of the degradation
curve at T=0. The half-lives become longer as the treatment continues to degrade. Finally,
note that this is the very best way to establish the degradation rate of the pilings at each
individual pier at BBP, since the tested pilings at each pier have been exposed to the exact
27
Email Series between E. Bartlett, Goldenrod Blue Associates and Colin McCown, Executive Vice President,
American Wood Preservers Association, dated December 1 and December 2, 2015
28
US Department of Agriculture Forrest Service Research Note FPL-RN-0286, dated November, 2002, Effects of
Water Flow and Temperature on Leaching from Creosote-Treated Wood, Y. Xiao, J. Simonsen, J.J. Morrell
Page 17 of 31
Assumed Minimum Acceptable Creosote Loading Based upon CH2M Report (Pier 3 Degraded
in 2034) (PCF). Using the model, and the initial half-life established for pier 3 (see above), the
model can be advanced until 2034. The Report states that an undetermined number, but
assumed as being the majority, of the remaining unrepaired piers on Pier 3 will not be degraded,
if not treated with the epoxy grout encasement process, until 2034 or beyond.29 By advancing
the model to 2034, it is then established (derived from data in the Report) that this is the level
of creosote retention at which marine borers are able to fully degrade the piers at BBP. This
value is then applied to the other piers. This is a model output. Note that this assumed
minimum acceptable creosote loading value varies from a low of 3.70 PCF to a high of 4.19 PCF.
This plus or minus 6% from the mean variation is a weakness in this model. This was
unavoidable because of the minimal available data from which to construct a model. This is
precisely why 6 variations of the model have been run and included here to provide a
sensitivity analysis that should capture the range of possible outcomes. Further, because the
other three piers are tied to the Reports projected condition of pier 3 in 2034, it would be
accurate to state that this models most definitive output is to provide a precise relative
comparison of projected condition of the other 3 piers to the projected condition of pier 3 in
2034. As with all math models, the precision of this model can be improved with the provision
of additional definitive input data and a definitive final value requirement.
Model Years from 2010 Until Degraded. This is a simple application of the model to the 2010
half-life data to establish the years remaining until the pier will be degraded. This is a model
output. For the purposes of this model (as discussed immediately above), degraded is defined
as the projected 2034 creosote loading value derived from the model for the pilings on pier 3.
Predicted Year when the Pier is Degraded. Using the model years from 2010 model output, this
is a simple math exercise to establish what year the pier will be degraded. When considering
the results of the various model variations, it is important to understand that absent the
detailed data from prior inspections and individual piling classifications the six runs of the
29
Page 18 of 31
There is no Functional Difference in Model Results - The Phased Maintenance Approach is Apprpriate in Any Case
The Model Results Do Not Support the Proposed Immediate Large Investment in the "Preventative" Maintenance Option
Putting cost questions aside, it would be more technically reasonable to develop a phased epoxy
grout installation program planning to prioritize installation on the pilings that are at earliest risk of
degradation, and delaying installation on pilings that have many years left until degradation becomes a
significant risk. Reviewing the model output, for instance, shows that the pilings on pier 5 have an
average predicted degradation time-frame of 2075. There is no technical reason to install the epoxy
grout encasement treatment on these pilings in 2016.
Finally, there is the question of useful life. Many sources have established that marine pilings in
seawater environments can have useful lives of over 100 years sometimes much longer than that.31
30
Page 19 of 31
Pier 3 Planned Disruptions. In each place that the Report discusses the advantages of the
recommended plan it cites the advantage of not requiring disruption of public access on the pier
during structural piling repairs.35 What is the plan for public access to pier 3 when every 3 years
structural piling repairs are installed as planned in the so-called preventative (proposed) plan?36
Steel and Concrete Maintenance. The Report includes significant content on the degradation
processes for both steel and concrete in this type of marine structure installation.37 The
recommended plan does not include any preventative maintenance for the steel (primarily the
sheet pile bulkheads) or concrete (primarily the concrete piling extensions).38 If no preventative
32
Page 20 of 31
Concrete vs. Wood Pilings. The first two case studies offered for comparison in the Report
involve concrete pilings.39 These are the longest serving installations of this protection system.
In other case studies on the same page the Report discusses New York Harbor. While not noted,
it is assumed that these are wood piling structures. Less detail is provided on the New York
Harbor installations, including how long this system has been in use on wood pilings. Prior to
making an unprecedented scale landmark investment it would be helpful to have more
information on truly comparable installations. What was the condition of the wood pilings prior
to installation? What problems, if any, have been encountered? How long have these
installations been in service, etc.?
Service Life (Durability). In comparing the two options, the Report notes that the service life
and durability of both maintenance options is established at 50 years.40 The Report, in this
discussion, suggests that due to corrosion of the embedded reinforcing steel in the structural
repair (reactive) that it can lead to accelerated deterioration. The Report then goes on to note
that the principal (as now known) degradation mechanism for the epoxy grout encasement
system is the chemical breakdown (i.e. breakdown of the chemical bonds) of the epoxy due to
exposure to the ultraviolet light contained in sunlight. The mitigation treatment to prevent the
chemical breakdown of the epoxy is then discussed, closing with preventative epoxy repairs
can have service lives of 50 years. In both cases there are, as there always are, long-term
degradation mechanisms for each maintenance system, and both systems are rated, according
to the Report, at 50 year lives.41 With this all in mind, why does the Report then suggest that
the structural repair process has risks to reaching its designed 50-year life but that the epoxy
grout installation can reach its designed 50-year life? This presentation appears to be slanted
toward the recommended system, but without supporting technical data.
39
Page 21 of 31
Availability of Warranty. While this comment is more programmatic than strictly technical, it
seems odd that almost a full page of the Report is dedicated to what is, in reality, a straw man.42
The Contracting Authority for any work establishes the required warranty provisions and
requirements (including performance bonding, as appropriate) for all contracted work. Since
BBP is the Contracting Authority on this work, whichever method is chosen, it can establish
equivalent warranty requirements on whatever work is contracted for. If warranty issues are
such a significant problem with the structural repair process, there are two obvious questions.
First, what is the specific warranty problem with the 4,907 pilings that have been repaired to
date using the structural repair process? Note that this represents 37% of all of the pilings at
BBP. Second, if warranty with the structural repair process is such a big issue, why does the
Report recommend this process for the unrepaired pilings at pier 3 which require nearest term
maintenance?
Structural Capacity of Pilings After Treatment. The Report notes that the added deadweight of
the structural repair process is greater than the added deadweight of the epoxy grout
encasement process, and that this reduces the useful loading of the affected pilings more for
the structural repair process than it does for the epoxy grout encasement process.43 This,
however, has not been quantified in terms of real impact on the load capacity of the pier deck.
Note that 37% of all pilings have already had the structural repair process completed on them,
and that the pier decks have not been de-rated. It is also noted that many wood pilings have
been tested after installation in many locations around the United States to 250% of their design
loading without failure.44 Additionally, the Report characterizes this as potential problem that
may result in a reduction of the load rating of the piers later in time.45 Given that this is only a
potential problem, that the Report provides no useful data concerning current or projected load
margins, and that these pilings have substantial (more than a 150% loading safety factor), is this
a real concern for piling maintenance process selection?
42
Page 22 of 31
e.g., Introduction to Financial Management, by O. Maurice Joy, published by Richard D Irwin, Inc.
Report, Section 1, page 3 states approximately $85 million; Report Section 8, page 30 states greater than $84
million; the mathematical difference between the cost charts shown in Report Figures 5-3 and 6-2 is $84 million
47
Page 23 of 31
48
Page 24 of 31
Reflecting the Economic Factors Necessarily Changes the Financial Analysis Result
In order to consider the true cost of the two plans, it is necessary to prepare an analysis of the
net present values of their respective costs. An analysis of the proposed spending in each plan has been
conducted using the standard NPV analysis formula, both with and without price adjustments. The
Goldenrod Blue Associates
Goldenrod Blue
On Course; Building Value
Page 25 of 31
49
Upon inquiry, PNC Financial Services Reported that an existing New York City bond with a 2046 maturity was
traded in the financial markets on November 24, 2015 at a yield to maturity of 3.41%. It was also reported that
this bond had an issued coupon rate (initial interest rate) of 4.0%
50
Consumer Price Index information, including the detailed monthly database, are posted the Bureau of Labor
Statistics website at: http://www.bls.gov/cpi/
51
CPI-U for October, 2015 and for the preceding 12 months can be found on page 1 of the October, 2015 CPI
report at http://www.bls.gov/cpi/cpid1510.pdf
Page 26 of 31
Year
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Spending
$5.67
$5.67
$6.00
$6.00
$6.00
$7.00
$7.00
$7.00
$8.67
$8.67
$8.67
$11.67
$11.67
$11.67
$15.00
Year
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Spending
$15.00
$15.00
$16.67
$16.67
$16.67
$12.33
$12.33
$12.33
$8.67
$8.67
$8.67
$3.33
$3.33
$3.33
$1.33
Year
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
Spending
$1.33
$1.33
$1.00
$1.00
$1.00
$0.67
$0.67
$0.67
$0.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.00
Year
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Spending
$5.33
$5.33
$5.33
$5.33
$5.33
$5.67
$5.67
$5.67
$6.33
$6.33
$6.33
$6.50
$6.50
$6.50
$2.67
Year
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Spending
$2.67
$2.67
$2.67
$2.67
$2.67
$2.00
$2.00
$2.00
$2.33
$2.33
$2.33
$1.67
$1.67
$1.67
$2.00
Year
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
Spending
$2.00
$2.00
$1.17
$1.17
$1.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.17
$0.50
Page 27 of 31
Simplistic Model
from the Report
Unadjusted for any
Economic Factors
Plan Option
($M)
($M)
($M)
$334.0
$160.9
167.3
172.6
$250.0
$163.2
166.7
169.7
$0.6
$2.9
($M)
$2.3
$84.0
Failing to Consider Economic Factors Inserts Significant (>$81 Million) Analysis Error
As shown in the table above, based on the illustrative example presented above, there is
actually not any real cost advantage, in present value terms, to the proposed preventative program plan
in contrast to the reactive plan.52 In fact, when considering the economic factors (i.e. the time value of
money and CPI price adjustments) there is no significant difference in the price between the options
the variation is most likely within the estimating margin of error for the underlying cost estimates.
The net present value of a future payment stream is sensitive to the selection of both discount
rate and inflation rate. It is believed that the relatively low discount rate applied in the illustrative
example in this Review is a conservative assumption (since a higher discount rate would reduce the net
present value of the reactive program relative to the preventative program); a higher discount rate
could be supported, and that would result in an even lower cost for the reactive program relative to the
preventative one. However, one could also support applying a higher inflation factor than the recent
value of the CPI applied in the illustrative example, and a higher inflation rate would increase the
relative present value of the reactive program. In view of the lack of predictability of marine
construction costs decades from now, however, there is little apparent basis to depart from use of the
CPI, which is traditionally applied for such purposes. Moreover, the higher the inflation rate one selects
52
Page 28 of 31
Page 29 of 31
Page 30 of 31
55
56
Page 31 of 31
Implications of the
Brooklyn Bridge Park Assessment Analysis
Produced By
Rosin & Associations (February 2016)
Table of Contents
I.
Executive Summary
II.
Purpose
III.
IV.
V.
Rosin Assessment
VI.
X.
XI.
Conclusion
Appendix A.
Appendix B.
Appendix C.
Appendix D.
I. Executive
E
Su
ummary
Local ressidential rentts and comm
mercial lease rates have rrisen dramatiically in receent years without
a corresp
ponding increease in the projected
p
pro
operty tax revvenue that thhe Brooklynn Bridge Parkk
Corporattion (BBPC
C or the Paark Corporatiion) will reeceive from tthe developm
ment sites unnder
constructtion within th
he Brooklyn
n Bridge Park
k (the Parkk). This inccremental prooperty tax
revenue is
i fundamen
ntal to the deb
bate over thee need to devvelop Pier 6 given the B
BBPCs
longstand
ding committment to builld only as much
m
developpment as neccessary to fuund the Park..
That the BBPC is nott relying on accurate rev
venue projecctions is obviious. For insstance, whilee the
BBPC haas refused to
o disclose its financial mo
odel, it appaarently basedd its tax reveenue projectiions1
on an asssessment of $120
$
per squ
uare foot forr all residentiial propertiees within the Park. Yet, the
2
current DOF
D
assessm
ment on the one actually
y assessed re sidential sitee in the Parkk is $143.47 per
square fo
oot.
Since ourr community
y had many unanswered
u
questions ass to how thee BBPC arrivved at its revvenue
projections, People for
fo Green Space Foundattion Inc. (PF
FGSF) hired Max Rosin, a well-know
wn,
professio
onal appraiseer who, in th
he past year alone,
a
has apppraised or bbeen criticallly involved iin the
appraisall of more thaan sixty com
mmercial prop
perties in thee New Yorkk and New Jeersey area. M
Max
Rosin alsso has extenssive experien
nce testifyin
ng in New Yoork City on real estate assessments aand
tax certio
orari matters. He was ap
ppointed by New
N York C
Citys Law D
Department tto assist them
m on
more than ten certiorrari assessmeent cases and
d trials, incluuding Trumpp Tower.
The Rosiin report3 pro
ovides reliab
ble evidence, based on loocal market data, detaileed comparable
analysis information
i
and the apprropriate NYC Departmeent of Financce (DOF) meethodology, that
the BBPC
C materially
y under-estim
mated its unaabated tax revvenue by appproximatelyy 66%, or $99
million per
p year.
Applying
g the Rosin tax
t revenue estimates,
e
th
he Park Corpporation willl generate appproximatelyy
$800 milllion in excess cash (nom
minal dollarss) over the 500-year forecast period4 oon just the
existing Park
P
develop
pment and without
w
any development
d
t on Pier 6. T
This forecastt accounts foor all
tax abateements, uses BBPC's assu
umed 3% an
nnual growthh in assessedd property vaalue, and
assumes the current reactive
ap
pproach to maintaining
m
tthe waterfronnt piers. Thee adjusted
5
a assumess a 5% borro
owing cost for
f a temporrary period oof relatively minor deficiits
forecast also
from 203
37 to 2047, when
w
in realiity these tem
mporary deficcits are unlikkely to occurr given the
conservaatism in the assumptions
a
herein.
The follo
owing graph compares th
he corrected cash balancce forecast w
with the BBP
PC deficit
forecast presented
p
on
n July 9, 2015 in its "Fin
nancial Modeel Update for Communitty (page 23).
The data behind the table
t
is preseented in appendix D.
BBPC presented cash balance on a beginning of periiod basis in its July 2015 anaalysis. Consequuently, BBPC did
not providee a cash deficitt for the last yeear (FY2065). Chart assumess that the deficcit projected byy BBPC for FY
Y2065
is equal to FY2064 (whicch is conservative as BBPC iss generating poositive income at the end of fforecast periodd).
5
Borrowin
ng cost of 5% assumed
a
uniforrmly throughou
ut this white paaper (all years and all cases) for simplicity.
Near-term borrowing cossts would likely
y be lower giveen the twenty yyear 3.41% ratte for NYC genneral obligationn
hlighted in appendix B of the July 2015 repo
ort by Barbara Denham, the cconsultant hireed by BBPC to
bonds high
evaluate itss model.
conservatism in this corrected forecast (including the upside to the Rosin estimates, the assumed
3% growth rate in property taxes and the large, recent increase in Park expenses), the actual
BBPC cash surplus over time is likely to be much greater than shown in the chart above, without
ever getting close to running a temporary deficit (in the early 2040s or ever).
The Park Corporation should correct the gross error in its financial model by adopting the
reliable estimatescalculated using the appropriate DOF methodology and local market data
found in the Rosin report. With a clear view of the enormous surplus that will be generated by
the existing development sites, BBPCs longstanding commitment to build only as much as
necessary to fund the Park thus dictates no development on Pier 6.
At a minimum, it is clearly premature to decide on the necessity of developing Pier 6 before the
upcoming Department of Finance assessments in early 2017 (Park development under
construction is now expected to be completed in 2016, with assessment to follow in early 2017),
especially as the Park Corporation has no need for additional cash under its own, unsupported
projections for more than a decade.6
Moreover, the Rosin estimates are arrived at using conservative assumptions, as described in that
report and this white paper, and it seems likely that Department of Finance assessments will
ultimately drive tax revenues higher still, above the conservative estimate by Rosin &
Associates. In the years ahead, once the Department of Finance appropriately incorporates
current residential rent and commercial lease data into its assessment, the true magnitude of the
Park Corporations real estate riches will become clear.
Lastly, in addition to highlighting a gross error in the BBPC financial model, the Rosin report
also highlights and confirms critical errors and shortcomings in the report7 by Barbara Denham,
the consultant paid by the Park Corporation to review its financial model. In her report, Ms.
Denham did not make any attempt to apply Department of Finance methodology in reaching her
conclusion that the tax revenue projected by the BBPC seemed reasonable. The Denham report
was then used by BBPC to justify the construction of Pier 6 in its testimony in the ongoing
public process to modify the General Project Plan (GPP). In light of the Rosin analysis and the
findings herein, I believe that the Park Corporation should reconsider its position and remove the
demonstrably unreliable Denham report from its official testimony in the ongoing GPP
modification process.
BBPC projects that, without Pier 6, it will run out of money in FY2029. See page 23 of BBPC presentation dated
7/9/15.
7
Report by Barbara Denham dated July 2015, available online:
https://brooklynbridgepark.s3.amazonaws.com/p/3008/BBD%20Final%20Report%20withcoverletter730.pdf
II. Purpose
The Rosin report provides estimates for the BBPCs incremental tax revenue on an unabated
basis (before certain property tax abatements that temporarily reduce Park revenue). The
purpose of this white paper is to evaluate the impacts of tax abatements on the Rosin estimates
and to consider the implications of the incremental revenue (after tax breaks) on the Park
financial model.
Regina Myer, president of the Brooklyn Bridge Park Corporation, a city-controlled entity that operates the park,
said it reported only one year of recurring revenue because that is what the corporations board asked the staff to
do. She said that the staffs longer-term financial planning showed that revenue would rise a few years later,
as the critics noted. But even so, she said, the park would run out of cash by 2027 because of the future cost of
refurbishing rotting piers at the park. She declined to provide a copy of the longer-term financial plan.
[emphasis added] Source: Josh Barbanel, Wall Street Journal, 9/16/14.
10
See page 12 of General Project Plan for the Brooklyn Bridge Park, available online:
https://brooklynbridgepark.s3.amazonaws.com/p/2854/BBPDC%20Modified%20GPP.pdf
11
See responses to comments 35, 79, 80, 116, 117 and 123 in chapter 24 of the 2005 Final Environmental Impact
Statement, available online:
http://brooklynbridgepark.s3.amazonaws.com/s/815/FEIS_Chapter%2024.%20Responses%20to%20Comments%20
on%20the%20DEIS.pdf
12
See, for instance, appendix C of the 2005 Final Environmental Impact Statement (FEIS), available online:
http://brooklynbridgepark.s3.amazonaws.com/s/818/FEIS_Appendix%20C.%20Brooklyn%20Bridge%20Park%20D
evelopment%20Analysis.pdf
the Park and to be able to develop Pier 6 without regard to Project finances,13 among other
things. That request seeks to fundamentally change the Park structure and goes beyond what was
contemplated in the PFGSF settlement.
Finally, it is important to note that two of the existing development sites have increased in size
from the plans that were originally presented to the public in the 2005 Final Environmental
Impact Statement (FEIS) and thus will generate significantly more revenue than could have been
projected then. For instance, Pier 1 was 325,000 square feet in the 2005 planning documents,14
while the project was announced at 550,000 square feet15 and recent plans from the Department
of Buildings indicate that the development now contains over 600,000 gross square feet.
Similarly, Empire Stores was increased in size by approximately 100,000 square feet from what
was described to the public in chapter 1 of the FEIS and lost 128,000 square feet of educational
or research and development uses.16 Just these two sites have added almost 400,000 gross
square feet in additional Park development. The additional revenue producing square feet at
these two sites alone is roughly comparable to the square footage of what the BBPC now seeks
to build at Pier 6 (258,906 net square feet of residential, 5,000 of retail and 36 parking spaces17).
13
V. Rosin
R
Assesssment
Rosin & Associates was
w hired to perform a market
m
analyysis of Brookklyn Bridge P
Park and thee
ding areas in order to deteermine if thee market suppports the BB
BPC estimattes of anticippated
surround
PILOT reevenue from
m existing dev
velopments in the Park.
The follo
owing slide from
f
the Rossin report su
ummarizes itss results andd compares tthem to the
unabated
d tax revenuee in the BBP
PC financial model:
m
The Park
k Corporation
n assumes th
hat the Park developmennt will generaate ~$13.5 m
million18 perr year
in unabatted tax reven
nue. On an apples-to-ap
a
pples basis, R
Rosin & Associates consservatively
estimatess that this fig
gure will increase by app
proximately 66% to $22.5 million peer year (rounnded)
when this developmeent is properly assessed based
b
on loccal market daata and the aappropriate D
DOF
methodology.
18
As the BBPC
B
continues to refuse to release
r
the dataa and model unnderlying its coonclusory finanncial presentatiions, I
was forced
d to estimate th
his figure from the summary information
i
proovided by the P
Park Corporatiion. See appenndix A
for calculaation.
($ in millions)
Incremental Revenue Driven by Proper Assessment (Rosin Estimates)
Incremental Tax Breaks
Incremental Net Interest Income
Additional Cash Generated from Rosin Estimates
BBPC Projected Defict at End of Forecast Period (Approx.)*
Cash Surplus at End of Forecast Period
(FY16-65)
995
(107)
139
1,027
(235)
792
The drivers of the incremental cash generated from applying the Rosin estimates include:
Incremental Revenue (Plus ~$1.0 billion). Simplistically, the incremental $9.0 million
per year in revenue from the Rosin report can be thought of as an incremental revenue
stream that grows at 3% per year based on the BBPCs annual revenue growth
assumption (3% growth in DOF assessed value19). On a cumulative basis, this
incremental revenue stream generates approximately one billion dollars in incremental
revenue over the Parks forecast period (FY16-FY65). The revenue model can be found
in appendix C.
Incremental Tax Breaks (Minus ~$100 million). Certain tax breaks on the new
construction in the Park depend on the level of assessment post completion. I estimate
that the higher Rosin assessment will create larger tax breaks, which partially offset some
of the additional Park revenue until they expire. For the sake of argument (as it
maximizes the value of the tax abatement and thereby minimizes BBPC tax receipts), all
19
The Rosin estimates imply an increase of approximately $173 million in assessed value. Assuming the BBPCs
revenue growth rate assumption (3% annual growth in DOF assessed value as found on page 19 of BBPC
presentation dated 7/9/15).
10
of the increase in assessed value is assumed to apply to the buildings under construction
(with none applied to the underlying land). This topic is further discussed in appendix B.
Incremental Net Interest Income (Plus ~$100 million), composed of cumulative interest
income of ~$152 million, partially offset by ~$13 million in interest expense for the
temporary shortfalls starting in FY2037.
o The incremental revenue from the Rosin estimates creates incremental cash
balances that earn interest. Interest income was only applied to the remaining
cash after deducting cash to pay the deficits projected by the BBPC. For the sake
of argument, the interest assumption (1% interest starting in FY2016, growing at
3%) matches the assumption on page 22 of the July report by Barbara Denham,
the consultant hired to evaluate the BBPC financial model, and for additional
conservatism (noting that the excess balances in later years will be swept to the
City General Fund anyway), I then capped the interest rate at a maximum of
2.6%, the 20-year average for the one-year T-Bill (mentioned on page 32 of the
Denham report), which is below the 45-year average of 5.2% (highlighted on the
same page). Most of the interest income is generated by the large cash balances
towards the end of the forecast period (with only ~$9 million in interest generated
over the first 20 years).
o As a partial offset to the interest income, a uniform borrowing cost of 5% was
applied to the few remaining, temporary deficits starting in the FY2037 (noting
that the BBPC did not include any borrowing cost in its analysis). In reality, these
temporary deficits are unlikely to occur (given the conservatism in the
assumptions herein).
THE RESULT: Adjusted Cash Surplus = ~$800 Million (FY2016 to FY2065). The
cash flow model can be found in appendix D.
20
BBPC presented cash balance on a beginning of period basis in its July 2015 analysis. Consequently, BBPC did
not provide a cash deficit for the last year (FY2065). Calculation assumes that the deficit projected by BBPC for
FY2065 is equal to FY2064 (which is conservative as BBPC is forecast to generate positive income at the end of
forecast period).
11
VII. Implication
ns for Park Financial Model
M
Applying
g the Rosin tax
t revenue estimates,
e
th
he Park Corpporation willl generate appproximatelyy
$800 milllion in excess cash (nom
minal dollarss) over the 500-year forecast period21 on just the
existing Park
P
develop
pment and without
w
any development
d
t on Pier 6. T
This forecastt accounts foor all
tax abateements, uses BBPC's assu
umed 3% an
nnual growthh in assessedd property vaalue, and
assumes the current reactive
ap
pproach to maintaining
m
tthe waterfronnt piers. Thee adjusted
forecast also
a assumess a 5% borro
owing cost for
fo a temporaary period off relatively m
minor deficitts
from 203
37 to 2047, when
w
in realiity these tem
mporary deficcits are unlikkely to occurr given the
conservaatism in the assumptions
a
herein.
The follo
owing graph compares th
he corrected cash balancce forecast w
with the BBP
PC deficit
forecast presented
p
on
n July 9, 2015 in its "Fin
nancial Modeel Update for Communitty (page 23).
The data behind the table
t
is preseented in appendix D.
To put th
he corrected forecast in perspective,
p
the
t Park Corrporations $$800 millionn surplus witthout
Pier 6 is twice the su
urplus they cu
urrently, and
d erroneouslyy, forecast w
with the incluusion of Pierr 6
21
12
(~$400 million),
m
as presented
p
in the
t July 9, 2015
2
presentaation (page 330). And, given the
conservaatism in this corrected
c
forrecast (inclu
uding the upsside to the R
Rosin estimattes, the assum
med
3% grow
wth rate in property taxess and the larg
ge, recent inccrease in Parrk expenses)), the actual
BBPC caash surplus over
o
time is likely
l
to be much
m
greate r than shownn in the charrt above, witthout
ever gettiing close to running a teemporary defficit (in the eearly 2040s oor ever).
The expeert report pro
oduced for th
he Brooklyn Heights Asssociation byy Goldenrod Blue Associiates
casts dou
ubt on the wiisdom of purrsuing the BBPCs prevventative m
maritime apprroach. How
wever,
for the saake of complleteness, thee chart below
w shows the eeffect of including the additional cassh
implied by
b the Rosin
n estimates to
o the BBPC projections uutilizing thee preventativve maritime
approach
h.22 Utilizing
g this approaach generatees even greatter excess prrofits, more tthan a billionn
dollars beeyond what the Park plaans to spend, that can eveentually be sswept into thhe City Geneeral
Fund by law.
22
13
14
Interest Income (1% interest starting in FY2016, growing at 3%) matches the
assumption on page 22 of the July report by Barbara Denham and for additional
conservatism (noting that the excess balances in later years will be swept to the City
General Fund anyway), is further assumed to be capped at a maximum of 2.6% based
on the 20-year average for the one-year T-Bill (page 32);
No incremental revenue from under-utilized assets (like the upstairs of park office at
334 Furman Street), corporate sponsorship/events, private fundraising and other
alternative revenue sources;
No incremental profit sharing (even though, for instance, park staff recently admitted
that Pier 1 is now in the money while the timing of collection, if ever, remains
unsure); and
Entire BBPC expense forecast, including, without reduction, the sudden and large
projected increases to capital replacement and pier repair projections since the
announcement of the Pier 6 RFP.
For the sake of argument, the analysis in this report also made very conservative assumptions
with respect to the incremental tax abatements. These tax breaks could be significantly lower
(and thereby park tax receipts could be significantly higher) when the relevant properties are
assessed after construction is completed. See appendix B.
Given the conservatism in the corrected projections in this white paper, the actual BBPC cash
surplus over time is likely to be much, much greater than projected herein, without ever getting
close to running a temporary deficit (in the early 2040s or ever).
15
And, there is no need for the Park Corporation to develop Pier 6 today as there is no need for
additional cash under its own, unsupported projections for more than a decade.23 At a minimum,
why not wait for the better information that soon will be available? Any irreversible decision on
Pier 6 development can be based on actual tax receipts (instead of on estimates).
23
BBPC projects that, without Pier 6, it will run out of money in FY2029. See page 23 of BBPC presentation dated
7/9/15.
16
Furthermore, as a comprehensive critique of the revenue analysis in the Denham report was
beyond the scope of the Rosin report, I highlight some additional issues in this letterthat I have,
separately, found.
The BBPC assumed the same assessed value (~$120 per square foot) for Pier 1 residential, One
John ST and OBBP.24 This assumption is not realistic and is not supported. As described in
section VIII of this white paper, this unrealistic assessment must assume residential rent rates
that are half of the current market.
Due to state law, DOF assesses condominium buildings as if they were rental buildings by
looking at the income and expense statements of rental buildings that have similar
characteristics.25 However, in her report, Barbara Denham made no attempt to follow DOF
methodology, and included no estimate of rental income and expense for the Park development
sites.
Instead, Barbara Denham calculated residential taxes per square foot for a sample of
comparable and high-end properties on page 14-15 of her report. Under DOF
methodology, there is no basis to calculate assessments on this basis, without adjusting for
specific building characteristics (like age and size). Notably and among other issues, her sample
included hundred year old buildings with tiny DOF market values. I highlight 10 Montague
Terrace (a hundred year old brownstone with DOF market value of less than one million) and 25
Joralemon ST (small building pictured below that was built in 1907 and which has a current
DOF market value of $1.8 million). In her November letter to PFGSF, Barbara Denham
defended her selection of 25 Joralemon ST by noting that individual units in this building have
24
25
17
sold for north of $1.8 million, nearly $1,000 per square foot. Of course, residential units in
Pierhouse and One John ST are now selling for roughly twice this amount (ignoring for the
moment that condominiums by law must be assessed as rentals). And, it is worth noting that
Barbara Denham presented this data on a hundred year old building without following DOF
methodology (for instance, forecasting income and expenses) and without making any
adjustments to account for the large differences in age, size, and other characteristics relative to
the Park development.
25 Joralemon ST
Barbara Denham later explained on page 3 of her November letter26 that she did not use her
sample of comparable properties in her assessment of the BBPC model assumptions.
Consequently, it remains unclear how exactly she justified the BBPCs dubious assumption.
Further, while not apparently used in her nonpublic analysis, her November letter exposed more
issues with her sample of comparable properties:
Barbara Denham noted in her November letter that her comparable properties have
differing amounts of commercial space (the denominator for other calculations in the
chart include a few retail and/or garage spaces as well). Obviously, picking buildings
with differing mixes of commercial and residential space creates comparability issues
with the development sites, which have their own differing amounts of residential and
commercial space.
26
Letter from Barbara Denham dated 11/24/15 written in response to November PFGSF letter (which is available on
savepier6.org).
18
Barbara Denham noted on page 3 of her November letter that, in calculating property tax
per square foot in her table on page 15, she used gross square feet in the denominator.
Using gross square feet makes it difficult to calculate taxes using the net taxable square
feet found in her report. It also creates comparability issues across the sample (as
buildings have differing amounts of gross and net areas). In her November letter, she
highlighted the comparability issue by writing that Because 360 Furman Street is a
conversion of an industrial building, the difference between net and gross area is very
large.
While presenting the net figures for the other development sites, I note that Barbara Denham
erroneously listed 851,853 square feet as the residential area of One Brooklyn Bridge Park
(OBBP) on page 5 of her report. Rosin & Associates correctly used the correct taxable square
feet of 628,66927 from the DOF for the residential condos at OBBP. The public is unable to
check the taxable square feet for the remaining development sites under construction as they
have not yet been assessed and instead must rely on figures in the Denham report.
Switching to the commercial side, the BBPC staff is apparently28 assuming approximately $38
per square foot (/SF) in rent for Empire Stores. This blended assumption is far below ask
prices of $65/SF to $85/SF29 for office and north of $100/SF for retail,30 and it is far below any
reasonable estimate based upon the local market data in the Rosin report. In our meeting in
December, Barbara Denham tried to justify the BBPCs assumption by referencing proprietary
and nonpublic REIS data that tracks the average rent for most31 of Brooklyn. It seems obvious
that the detailed analysis based on the local market comparables provided in the Rosin report is
far more likely to be reliable. And, once again, the reality is that this development site will
generate far more tax revenue than projected by the Park Corporation.
27
See One Brooklyn Bridge Park (360 Furman ST) in DOF spreadsheet of comparable condos, available online:
http://www1.nyc.gov/assets/finance/downloads/excel/condo_coop_comps/b3_condo_comp012816.xlsx
28
Exact figure is unknown as BBPC unreasonably refuses to provide its financial model and the raw data underlying
it. When I suggested that BBPC must be assuming approximately $38 per square foot for Empire Stores, BBPC
staff agreed that it was in that neighborhood.
29
Bisnow article dated 8/17/15: www.bisnow.com/new-york/news/office/bisnow-exclusive-first-look-at-empirestores-rooftop-addition-49192
30
Crains article dated 3/26/15:
http://www.crainsnewyork.com/article/20150326/REAL_ESTATE/150329889/watchmaker-shinola-to-open-firstbrooklyn-store-in-old-coffee-warehouse
31
Divided Brooklyn in two parts: Central Business District and Non-Central Business District in Brooklyn.
19
XI. Conclusion
It is clear that incorporating the findings of the Rosin report into the BBPCs model results in a
conclusion that Pier 6 development is unnecessary. It was never the intention of the planners of
this Park to have so much development that it would become a revenue source for the general
coffers of the City of New York. Development was always intended to be carefully controlled so
that only that needed to support the Park would be built. Given the significant doubts raised by
the Rosin report and the Goldenrod Blue report as to whether any development at all is needed
on Pier 6, at a minimum, the Park Corporation should defer making any decision until the
already existing projects in the Park are assessed next year.
The life span of a great park is measured in centuries; the cost of rushing to develop Pier 6 today
is that we would lose forever the opportunity to create a welcoming entrance for everybody at
Atlantic Avenue and instead saddle the Park with two huge towers in its place.
And, given the conservatism in the Rosin report, the actual tax receipts of the Park Corporation
could easily be millions of dollars per year higher than the Rosin estimate. When all of the
development under construction is assessed and the resulting cash flows into the Park coffers, it
may soon become undeniable that not only was the development of Pier 6 unnecessary but so too
is some of the other Park development under construction (like, for instance, One John ST).
20
As shown in the table below, I estimate that BBPC is assuming at most $13.5 million in unabated
tax revenue from its existing development. The unabated tax revenue in Park figures may
contain non-tax revenue (like profit sharing on One John ST and Park Transfer Fee on Pier 6).
Without access to the BBPC financial model, I am unable to fully adjust their data.
Less:
Lease
Maximum
PILOT
Revenue
After
Tax Breaks (a)
Plus:
Tax Breaks
Maximum
Unabated
PILOT
Revenue
OBBP
Pier 1
John ST
Empire Stores
2.3
3.2
1.0
2.7
1.4
0.8
0.2
1.6
0.9
2.4
0.8
1.1
4.7
1.7
1.9
5.6
4.1
0.8
3.0
Existing Development
9.2
4.0
5.2
8.3
13.5
Pier 6
2.5
0.6
1.9
11.7
4.6
7.1
8.3
1.9
15.4
Note: (a) May include other non-tax revenue. For instance, Pier 6 includes 0.3m/yr in "Park Transfer Fee"
Source: pages 19-20 and 29 of BBPC presentation dated 7/9/15.
21
Appendiix B: Increm
mental Tax Abatementts on Park D
Developmen
nt
The Park
k Corporation
n describes322 the tax abaatements on tthe developm
ment sites ass follows:
There is no
n tax abatement on One John ST, so
s the increm
mental revennue implied bby the Rosinn
estimatess will flow directly
d
into the
t BBPC co
offers when assessed.
Similarly
y, as the tax breaks
b
on One Brooklyn
n Bridge Parrk have alreaady been set,, there are noo
incremen
ntal tax break
ks to reduce the incremeental revenuee implied byy the Rosin eestimates.
For the IC
CAP tax breeaks on Empire Stores an
nd the hotel on Pier 1, thhe building rreceives an
abatemen
nt based on post
p complettion assessm
ment less 1155% of pre-coonstruction, iinitial assesssment
33
for the bu
uilding (exclluding land value).
v
Th
his tax breakk clearly depeends on the assessment aafter
constructtion is completed, imply
ying the potential for incrremental taxx breaks baseed on the higgher
assessmeent estimatess provided by
y Rosin & Associates.
A
F
For the sakee of argumeent (as it
maximizzes the valuee of the tax abatement and therebyy minimizess BBPC tax receipts), aall of
the increease in assesssed value iss assumed to
t apply to tthe buildinggs under con
nstruction (with
none app
plied to the underlying land).
32
33
22
2
On Empire Stores, I conservatively assumed that the longer duration (15yrs + 10yr phase out)
applied to the entire building rather than to just the office space and the first 10% of the
buildings retail (as noted in the footnote to the BBPC table above). And, I conservatively offset
the entire increase in unabated tax revenue ($4.0 million in FY2018) by increasing the ICAP tax
break by the same amount.
On the hotel on Pier 1, the Rosin estimates imply a $3.8 million increase in unabated taxes. I
offset the hotels share of the increase in abated taxes by increasing the size of the ICAP tax
break. I determined the hotels share based on revenue share (~39%) from the Rosin report
(which is larger and thus, more conservative than an allocation it by area), resulting in an
incremental increase in the tax abatement of $1.5 million.
There is no phase in of the increase in assessed value for new sites under construction. For the
existing One Brooklyn Bridge Park, the Rosin report assumed the current DOF market value.
No additional phase in was assumed as the Rosin estimate is already being used by the DOF.
These assumptions resulted in a $5.5 million increase in ICAP tax abatements, yielding
cumulative tax savings of approximately $107.1 million over the life of the abatements and
thereby, reducing park PILOT receipts by this amount. These tax savings (which reduce BBPC
revenue) can be seen in the cash flow model in appendix D.
23
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
FY39
FY40
12.883%
12.425%
12.007%
10.656%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
AssessedValue(3%Growth)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
Total(Rosin)
Growth
28.9
113.6
141.9
141.3
425.7
28.9
113.6
141.9
141.3
425.7
29.8
117.0
146.2
145.5
438.5
3.0%
30.7
120.5
150.6
149.9
451.6
3.0%
31.6
124.1
155.1
154.4
465.2
3.0%
32.6
127.8
159.7
159.0
479.1
3.0%
33.5
131.7
164.5
163.8
493.5
3.0%
34.5
135.6
169.5
168.7
508.3
3.0%
35.6
139.7
174.5
173.8
523.6
3.0%
36.6
143.9
179.8
179.0
539.3
3.0%
37.7
148.2
185.2
184.3
555.5
3.0%
38.9
152.6
190.7
189.9
572.1
3.0%
40.0
157.2
196.5
195.6
589.3
3.0%
41.2
161.9
202.3
201.4
607.0
3.0%
42.5
166.8
208.4
207.5
625.2
3.0%
43.7
171.8
214.7
213.7
643.9
3.0%
45.1
177.0
221.1
220.1
663.2
3.0%
46.4
182.3
227.7
226.7
683.1
3.0%
47.8
187.7
234.6
233.5
703.6
3.0%
49.2
193.4
241.6
240.5
724.7
3.0%
50.7
199.2
248.9
247.7
746.5
3.0%
52.2
205.1
256.3
255.2
768.9
3.0%
53.8
211.3
264.0
262.8
791.9
3.0%
55.4
217.6
271.9
270.7
815.7
3.0%
57.1
224.2
280.1
278.8
840.2
3.0%
58.8
230.9
288.5
287.2
865.4
3.0%
UnabatedTaxes(After45%EquilizationRate)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
TotalUnabatedTaxes(Rosin)
Growth
1.68
6.35
7.67
6.77
22.47
1.8
6.4 6.5 6.7
8.1
7.2
6.4 6.5 23.8
3.0% #####
1.8
6.9
8.4
7.4
24.6
3.0%
1.9
7.1
8.6
7.6
25.3
3.0%
1.9
7.4
8.9
7.9
26.0
3.0%
2.0
7.6
9.2
8.1
26.8
3.0%
2.1
7.8
9.4
8.3
27.6
3.0%
2.1
8.0
9.7
8.6
28.5
3.0%
2.2
8.3
10.0
8.8
29.3
3.0%
2.3
8.5
10.3
9.1
30.2
3.0%
2.3
8.8
10.6
9.4
31.1
3.0%
2.4
9.1
10.9
9.7
32.0
3.0%
2.5
9.3
11.3
9.9
33.0
3.0%
2.5
9.6
11.6
10.2
34.0
3.0%
2.6
9.9
11.9
10.6
35.0
3.0%
2.7
10.2
12.3
10.9
36.1
3.0%
2.8
10.5
12.7
11.2
37.1
3.0%
2.9
10.8
13.1
11.5
38.3
3.0%
2.9
11.1
13.4
11.9
39.4
3.0%
3.0
11.5
13.8
12.2
40.6
3.0%
3.1
11.8
14.3
12.6
41.8
3.0%
3.2
12.2
14.7
13.0
43.1
3.0%
3.3
12.5
15.1
13.4
44.3
3.0%
3.4
12.9
15.6
13.8
45.7
3.0%
ImpliedAssessedValue(3%Growth)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
Total(BBPC)
Growth
13.8
100.2
75.9
62.6
252.4
13.8
100.2
75.9
62.6
252.4
14.6
106.3
80.5
66.4
267.8
3.0%
15.1
109.4
82.9
68.4
275.8
3.0%
15.5
112.7
85.4
70.4
284.1
3.0%
16.0
116.1
88.0
72.5
292.6
3.0%
16.5
119.6
90.6
74.7
301.4
3.0%
17.0
123.2
93.3
76.9
310.4
3.0%
17.5
126.9
96.1
79.3
319.7
3.0%
18.0
130.7
99.0
81.6
329.3
3.0%
18.5
134.6
102.0
84.1
339.2
3.0%
19.1
138.6
105.0
86.6
349.4
3.0%
19.7
142.8
108.2
89.2
359.9
3.0%
20.3
147.1
111.4
91.9
370.7
3.0%
20.9
151.5
114.8
94.6
381.8
3.0%
21.5
156.0
118.2
97.5
393.2
3.0%
22.1
160.7
121.8
100.4
405.0
3.0%
22.8
165.5
125.4
103.4
417.2
3.0%
23.5
170.5
129.2
106.5
429.7
3.0%
24.2
175.6
133.1
109.7
442.6
3.0%
24.9
180.9
137.1
113.0
455.9
3.0%
25.7
186.3
141.2
116.4
469.5
3.0%
26.4
191.9
145.4
119.9
483.6
3.0%
27.2
197.7
149.8
123.5
498.1
3.0%
28.1
203.6
154.3
127.2
513.1
3.0%
BBPCUnabatedTaxes(After45%EquilizationRate)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
TotalUnabatedTaxes(BBPC)
Growth
0.80
5.60
4.10
3.00
13.50
0.8
5.6 5.8 5.9
4.3
3.2
5.6 5.8 14.3
3.0% #####
0.9
6.1
4.5
3.3
14.8
3.0%
0.9
6.3
4.6
3.4
15.2
3.0%
0.9
6.5
4.8
3.5
15.7
3.0%
1.0
6.7
4.9
3.6
16.1
3.0%
1.0
6.9
5.0
3.7
16.6
3.0%
1.0
7.1
5.2
3.8
17.1
3.0%
1.0
7.3
5.3
3.9
17.6
3.0%
1.1
7.5
5.5
4.0
18.1
3.0%
1.1
7.8
5.7
4.2
18.7
3.0%
1.1
8.0
5.8
4.3
19.2
3.0%
1.2
8.2
6.0
4.4
19.8
3.0%
1.2
8.5
6.2
4.5
20.4
3.0%
1.2
8.7
6.4
4.7
21.0
3.0%
1.3
9.0
6.6
4.8
21.7
3.0%
1.3
9.3
6.8
5.0
22.3
3.0%
1.4
9.5
7.0
5.1
23.0
3.0%
1.4
9.8
7.2
5.3
23.7
3.0%
1.4
10.1
7.4
5.4
24.4
3.0%
1.5
10.4
7.6
5.6
25.1
3.0%
1.5
10.7
7.9
5.7
25.9
3.0%
1.6
11.1
8.1
5.9
26.6
3.0%
1.6
11.4
8.3
6.1
27.4
3.0%
0.80
5.60
4.10
3.00
13.50
0.8
0.8
1.0
0.8
3.9
4.1
9.8
3.0%
1.0
0.8
4.0
4.2
10.1
3.0%
1.0
0.9
4.1
4.4
10.4
3.0%
1.0
0.9
4.3
4.5
10.7
3.0%
1.1
0.9
4.4
4.6
11.0
3.0%
1.1
1.0
4.5
4.8
11.4
3.0%
1.1
1.0
4.7
4.9
11.7
3.0%
1.2
1.0
4.8
5.1
12.1
3.0%
1.2
1.0
4.9
5.2
12.4
3.0%
1.3
1.1
5.1
5.4
12.8
3.0%
1.3
1.1
5.2
5.5
13.2
3.0%
1.3
1.1
5.4
5.7
13.6
3.0%
1.4
1.2
5.6
5.9
14.0
3.0%
1.4
1.2
5.7
6.1
14.4
3.0%
1.4
1.2
5.9
6.2
14.8
3.0%
1.5
1.3
6.1
6.4
15.3
3.0%
1.5
1.3
6.3
6.6
15.7
3.0%
1.6
1.4
6.4
6.8
16.2
3.0%
1.6
1.4
6.6
7.0
16.7
3.0%
1.7
1.4
6.8
7.2
17.2
3.0%
1.7
1.5
7.0
7.4
17.7
3.0%
1.8
1.5
7.3
7.7
18.2
3.0%
TaxRate
JohnST
OneBrooklynBridgePark
Pier1
EmpireStores
RosinUnabated
BBPCUnabated
14.2
103.2
78.2
64.4
260.0
3.0%
DifferenceinUnabatedTaxRevenue
IncrementalUnabatedTaxRevenue
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
IncrementalUnabatedTaxes
Growth
CumulativeIncrementalTaxRevenue(Unabated)
0.8
0.8
3.0%
0.9
0.8
3.8
4.0
9.5
#####
0.8 1.5 11.0 20.8 30.9 41.3 52.0 63.1 74.4 86.2 98.2 110.6
123.4
136.6
150.2
164.1
178.5
193.4
208.6
224.4
240.6
257.2
274.4
292.1
310.4
24
SummaryofUnabatedTaxes
($inmillions)
FY41
FY42
FY43
FY44
FY45
FY46
FY47
FY48
FY49
FY50
FY51
FY52
FY53
FY54
FY55
FY56
FY57
FY58
FY59
FY60
FY61
FY62
FY63
FY64
FY65
12.883%
12.425%
12.007%
10.656%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
12.9%
12.4%
12.0%
10.7%
AssessedValue(3%Growth)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
Total(Rosin)
Growth
28.9
113.6
141.9
141.3
425.7
60.6
237.8
297.2
295.8
891.3
3.0%
62.4
245.0
306.1
304.7
918.1
3.0%
64.2
252.3
315.3
313.8
945.6
3.0%
66.2
259.9
324.7
323.2
974.0
3.0%
68.2
267.7
334.5
332.9
1,003
3.0%
70.2
275.7
344.5
342.9
1,033
3.0%
72.3
284.0
354.8
353.2
1,064
3.0%
74.5
292.5
365.5
363.8
1,096
3.0%
76.7
301.3
376.4
374.7
1,129
3.0%
79.0
310.3
387.7
386.0
1,163
3.0%
81.4
319.6
399.4
397.5
1,198
3.0%
83.8
329.2
411.3
409.5
1,234
3.0%
86.3
339.1
423.7
421.8
1,271
3.0%
88.9
349.2
436.4
434.4
1,309
3.0%
91.6
359.7
449.5
447.4
1,348
3.0%
94.3
370.5
463.0
460.9
1,389
3.0%
97.2
381.6
476.8
474.7
1,430
3.0%
100.1
393.1
491.2
488.9
1,473
3.0%
103.1
404.9
505.9
503.6
1,517
3.0%
106.2
417.0
521.1
518.7
1,563
3.0%
109.4
429.5
536.7
534.3
1,610
3.0%
112.7
442.4
552.8
550.3
1,658
3.0%
116.0
455.7
569.4
566.8
1,708
3.0%
119.5
469.4
586.5
583.8
1,759
3.0%
123.1
483.4
604.1
601.3
1,812
3.0%
UnabatedTaxes(After45%EquilizationRate)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
TotalUnabatedTaxes(Rosin)
Growth
1.68
6.35
7.67
6.77
22.47
3.5
13.3
16.1
14.2
47.0
3.0%
3.6
13.7
16.5
14.6
48.5
3.0%
3.7
14.1
17.0
15.0
49.9
3.0%
3.8
14.5
17.5
15.5
51.4
3.0%
4.0
15.0
18.1
16.0
53.0
3.0%
4.1
15.4
18.6
16.4
54.5
3.0%
4.2
15.9
19.2
16.9
56.2
3.0%
4.3
16.4
19.7
17.4
57.9
3.0%
4.4
16.8
20.3
18.0
59.6
3.0%
4.6
17.3
20.9
18.5
61.4
3.0%
4.7
17.9
21.6
19.1
63.2
3.0%
4.9
18.4
22.2
19.6
65.1
3.0%
5.0
19.0
22.9
20.2
67.1
3.0%
5.2
19.5
23.6
20.8
69.1
3.0%
5.3
20.1
24.3
21.5
71.2
3.0%
5.5
20.7
25.0
22.1
73.3
3.0%
5.6
21.3
25.8
22.8
75.5
3.0%
5.8
22.0
26.5
23.4
77.8
3.0%
6.0
22.6
27.3
24.1
80.1
3.0%
6.2
23.3
28.2
24.9
82.5
3.0%
6.3
24.0
29.0
25.6
85.0
3.0%
6.5
24.7
29.9
26.4
87.5
3.0%
6.7
25.5
30.8
27.2
90.1
3.0%
6.9
26.2
31.7
28.0
92.9
3.0%
7.1
27.0
32.6
28.8
95.6
3.0%
ImpliedAssessedValue(3%Growth)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
Total(BBPC)
Growth
13.8
100.2
75.9
62.6
252.4
28.9
209.7
158.9
131.0
528.5
3.0%
29.8
216.0
163.6
134.9
544.3
3.0%
30.7
222.5
168.6
139.0
560.7
3.0%
31.6
229.2
173.6
143.1
577.5
3.0%
32.5
236.0
178.8
147.4
594.8
3.0%
33.5
243.1
184.2
151.9
612.6
3.0%
34.5
250.4
189.7
156.4
631.0
3.0%
35.5
257.9
195.4
161.1
650.0
3.0%
36.6
265.6
201.3
165.9
669.4
3.0%
37.7
273.6
207.3
170.9
689.5
3.0%
38.8
281.8
213.5
176.0
710.2
3.0%
40.0
290.3
219.9
181.3
731.5
3.0%
41.2
299.0
226.5
186.8
753.5
3.0%
42.4
308.0
233.3
192.4
776.1
3.0%
43.7
317.2
240.3
198.1
799.4
3.0%
45.0
326.7
247.5
204.1
823.3
3.0%
46.4
336.5
255.0
210.2
848.0
3.0%
47.8
346.6
262.6
216.5
873.5
3.0%
49.2
357.0
270.5
223.0
899.7
3.0%
50.7
367.7
278.6
229.7
926.7
3.0%
52.2
378.8
287.0
236.6
954.5
3.0%
53.7
390.1
295.6
243.7
983.1
3.0%
55.4
401.8
304.4
251.0
1,013
3.0%
57.0
413.9
313.6
258.5
1,043
3.0%
58.7
426.3
323.0
266.3
1,074
3.0%
BBPCUnabatedTaxes(After45%EquilizationRate)
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
TotalUnabatedTaxes(BBPC)
Growth
0.80
5.60
4.10
3.00
13.50
1.7
11.7
8.6
6.3
28.3
3.0%
1.7
12.1
8.8
6.5
29.1
3.0%
1.8
12.4
9.1
6.7
30.0
3.0%
1.8
12.8
9.4
6.9
30.9
3.0%
1.9
13.2
9.7
7.1
31.8
3.0%
1.9
13.6
10.0
7.3
32.8
3.0%
2.0
14.0
10.3
7.5
33.8
3.0%
2.1
14.4
10.6
7.7
34.8
3.0%
2.1
14.9
10.9
8.0
35.8
3.0%
2.2
15.3
11.2
8.2
36.9
3.0%
2.3
15.8
11.5
8.4
38.0
3.0%
2.3
16.2
11.9
8.7
39.1
3.0%
2.4
16.7
12.2
9.0
40.3
3.0%
2.5
17.2
12.6
9.2
41.5
3.0%
2.5
17.7
13.0
9.5
42.8
3.0%
2.6
18.3
13.4
9.8
44.0
3.0%
2.7
18.8
13.8
10.1
45.4
3.0%
2.8
19.4
14.2
10.4
46.7
3.0%
2.9
20.0
14.6
10.7
48.1
3.0%
2.9
20.6
15.1
11.0
49.6
3.0%
3.0
21.2
15.5
11.3
51.1
3.0%
3.1
21.8
16.0
11.7
52.6
3.0%
3.2
22.5
16.4
12.0
54.2
3.0%
3.3
23.1
16.9
12.4
55.8
3.0%
3.4
23.8
17.5
12.8
57.5
3.0%
0.80
5.60
4.10
3.00
13.50
1.8
1.6
7.5
7.9
18.8
3.0%
1.9
1.6
7.7
8.1
19.3
3.0%
1.9
1.7
7.9
8.4
19.9
3.0%
2.0
1.7
8.2
8.6
20.5
3.0%
2.1
1.8
8.4
8.9
21.1
3.0%
2.1
1.8
8.7
9.2
21.8
3.0%
2.2
1.9
8.9
9.4
22.4
3.0%
2.3
1.9
9.2
9.7
23.1
3.0%
2.3
2.0
9.5
10.0
23.8
3.0%
2.4
2.1
9.7
10.3
24.5
3.0%
2.5
2.1
10.0
10.6
25.2
3.0%
2.5
2.2
10.3
10.9
26.0
3.0%
2.6
2.2
10.7
11.3
26.8
3.0%
2.7
2.3
11.0
11.6
27.6
3.0%
2.8
2.4
11.3
12.0
28.4
3.0%
2.9
2.4
11.6
12.3
29.3
3.0%
2.9
2.5
12.0
12.7
30.1
3.0%
3.0
2.6
12.3
13.1
31.0
3.0%
3.1
2.7
12.7
13.5
32.0
3.0%
3.2
2.8
13.1
13.9
32.9
3.0%
3.3
2.8
13.5
14.3
33.9
3.0%
3.4
2.9
13.9
14.7
34.9
3.0%
3.5
3.0
14.3
15.1
36.0
3.0%
3.6
3.1
14.7
15.6
37.1
3.0%
3.7
3.2
15.2
16.1
38.2
3.0%
TaxRate
JohnST
OneBrooklynBridgePark
Pier1
EmpireStores
RosinUnabated
BBPCUnabated
DifferenceinUnabatedTaxRevenue
IncrementalUnabatedTaxRevenue
OneJohnST
OneBrooklynBridgePark
Pier1
EmpireStores
IncrementalUnabatedTaxes
Growth
CumulativeIncrementalTaxRevenue(Unabated)
329.2
348.5
368.4
388.9
410.1
431.9
454.3
477.4
501.2
525.7
550.9
576.9
603.7
631.3
659.7
689.0
719.1
750.1
782.1
815.1
849.0
883.9
919.9
957.0
995.2
25
Appendix D: BBP Cumulative Cash Flow Projections (Adjusted for Rosin Estimates)
Summary
($inmillions)
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
FY37
FY38
FY39
FY40
9.8
(1.5)
(4.0)
4.3
10.1
(1.5)
(4.0)
4.6
10.4
(1.5)
(4.0)
4.9
10.7
(1.5)
(4.0)
5.2
11.0
(1.5)
(4.0)
5.5
11.4
(1.5)
(4.0)
5.9
11.7
(1.5)
(4.0)
6.2
12.1
(1.5)
(4.0)
6.6
12.4
(1.5)
(4.0)
6.9
12.8
(1.5)
(4.0)
7.3
13.2
(1.5)
(4.0)
7.7
13.6
(1.5)
(4.0)
8.1
14.0
(1.5)
(4.0)
8.5
14.4
(1.5)
(4.0)
8.9
14.8
(1.3)
(3.6)
9.9
15.3
(1.2)
(3.2)
10.9
15.7
(1.0)
(2.8)
11.9
16.2
(0.9)
(2.4)
12.9
16.7
(0.7)
(2.0)
13.9
17.2
(0.6)
(1.6)
15.0
17.7
(0.4)
(1.2)
16.1
18.2
(0.3)
(0.8)
17.1
AbatementAssumptions
IncreaseinUnabatedTaxesonPier1(FY2018)
HotelShareofRevenue(p21ofRosinReport)
HotelShareinIncreaseinTaxAbatement
3.8
39.3%
1.5
IncreaseinUnabatedTaxesonEmpireStores(FY2018)
4.0
IncrementalRevenueUnabatedfromUtilizingRosinEstimates
Less:IncrementalTaxAbatementsonPier1
Less:IncrementalTaxAbatementsonEmpireStores
IncrementalNetRevenue
CUMULATIVEIncrementalNetRevenueEOP
0.8 1.5 5.5 9.9 14.5 19.4 24.6 30.1 36.0 42.2 48.8 55.7 63.0 70.7 78.7 87.2 96.1 106.0
116.9
128.8
141.7
155.6
170.6
186.7
203.8
ReactiveApproachtoPierRepair
Approx.BBPCCashSurplus(Deficit)fromP23ofBBPCPres.(7/9/15) 55 45 60 60 50 45 47 30 35 35 8 11 11 (16) (15) (20) (55) (60) (55) (120) (115) (110) (185) (175) (160) (260)
CUMULATIVEincrementalCashFlow
0.8 1.5 5.6 9.9 14.7 19.7 25.2 31.0 37.3 44.0 51.1 58.8 66.9 75.3 84.3 93.8 103.3
113.9
125.8
137.8
151.1
165.8
179.9
196.0
213.9
AdjustedCashSurplus(Deficit)
55.0 45.8 61.5 65.6 59.9 59.7 66.7 55.2 66.0 72.3 52.0 62.1 69.8 50.9 60.3 64.3 38.8 43.3 58.9 5.8 22.8 41.1 (19.2) 4.9 36.0 (46.1)
IncrementalInterestRateonBOPCashSurplus(Cappedat2.6%)
IncrementalInterestRate(5%)onanyBOPDeficit
IncrementalCashSurplus(Deficit)forInterestIncome(Expense)
IncrementalNetRevenuefromUtilizingRosinEstimates
InterestIncome(Exp.)onIncrementalCashSurplus(Deficit)atBOP
IncrementalCashFlow
CUMULATIVEincrementalCashFlow
1.00% 1.03% 1.06% 1.09% 1.13% 1.16% 1.19% 1.23% 1.27% 1.30% 1.34% 1.38% 1.43% 1.47% 1.51% 1.56% 1.60% 1.65% 1.70% 1.75% 1.81% 1.86% 1.92% 1.97% 2.03%
5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
0.8 1.5 5.6 9.9 14.7 19.7 25.2 31.0 37.3 44.0 51.1 58.8 50.9 60.3 64.3 38.8 43.3 58.9 5.8 22.8 41.1 (19.2) 4.9 36.0 (46.1)
0.8
0.8
0.8
0.8
0.0
0.8
1.5
4.0
0.0
4.0
5.6
4.3
0.1
4.4
9.9
4.6
0.1
4.7
14.7
4.9
0.2
5.1
19.7
5.2
0.2
5.5
25.2
5.5
0.3
5.8
31.0
5.9
0.4
6.3
37.3
6.2
0.5
6.7
44.0
6.6
0.6
7.2
51.1
6.9
0.7
7.6
58.8
7.3
0.8
8.1
66.9
7.7
0.7
8.4
75.3
8.1
0.9
9.0
84.3
8.5
1.0
9.5
93.8
8.9
0.6
9.5
103.3
9.9
0.7
10.6
113.9
10.9
1.0
11.9
125.8
11.9
0.1
12.0
137.8
12.9
0.4
13.3
151.1
13.9
0.8
14.7
165.8
15.0
(1.0)
14.0
179.9
16.1
0.1
16.2
196.0
17.1
0.7
17.9
213.9
PreventativeApproachtoPierRepair
Approx.BBPCCashSurplus(Deficit)fromP25ofBBPCPres.(7/9/15) 55 (35) (20) (20) (30) (37) (37) (53) (50) (50) (70) (70) (70) (85) (85) (90) (115) (115) (112) (145) (145) (145) (150) (140) (125) (145)
120.0
133.5
149.2
166.9
CUMULATIVEincrementalCashFlow
0.8 (0.2) 2.8 6.3 9.7 13.2 17.3 21.0 25.4 30.4 35.0 40.2 46.0 51.7 58.1 65.0 71.4 79.1 88.3 97.4 107.9
AdjustedCashSurplus(Deficit)
55.0 (34.2) (20.2) (17.2) (23.7) (27.3) (23.8) (35.7) (29.0) (24.6) (39.6) (35.0) (29.8) (39.0) (33.3) (31.9) (50.0) (43.6) (32.9) (56.7) (47.6) (37.1) (30.0) (6.5) 24.2 21.9
IncrementalInterestRateonBOPCashSurplus(Cappedat2.6%)
IncrementalInterestRate(5%)onanyBOPDeficit
IncrementalCashSurplus(Deficit)forInterestIncome(Expense)
IncrementalNetRevenuefromUtilizingRosinEstimates
InterestIncome(Exp.)onIncrementalCashSurplus(Deficit)atBOP
IncrementalCashFlow
CUMULATIVEincrementalCashFlow
1.00% 1.03% 1.06% 1.09% 1.13% 1.16% 1.19% 1.23% 1.27% 1.30% 1.34% 1.38% 1.43% 1.47% 1.51% 1.56% 1.60% 1.65% 1.70% 1.75% 1.81% 1.86% 1.92% 1.97% 2.03%
5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
(34.2) (20.2) (17.2) (23.7) (27.3) (23.8) (35.7) (29.0) (24.6) (39.6) (35.0) (29.8) (39.0) (33.3) (31.9) (50.0) (43.6) (32.9) (56.7) (47.6) (37.1) (30.0) (6.5) 24.2 21.9
0.8
0.8
0.8
0.8
(1.7)
(0.9)
(0.2)
4.0
(1.0)
3.0
2.8
4.3
(0.9)
3.4
6.3
4.6
(1.2)
3.4
9.7
4.9
(1.4)
3.5
13.2
5.2
(1.2)
4.0
17.3
5.5
(1.8)
3.8
21.0
5.9
(1.4)
4.4
25.4
6.2
(1.2)
5.0
30.4
6.6
(2.0)
4.6
35.0
6.9
(1.8)
5.2
40.2
7.3
(1.5)
5.8
46.0
7.7
(2.0)
5.7
51.7
8.1
(1.7)
6.4
58.1
8.5
(1.6)
6.9
65.0
8.9
(2.5)
6.4
71.4
9.9
(2.2)
7.7
79.1
10.9
(1.6)
9.2
88.3
11.9
(2.8)
9.1
97.4
12.9
(2.4)
10.5
107.9
13.9
(1.9)
12.1
120.0
15.0
(1.5)
13.5
133.5
16.1
(0.3)
15.7
149.2
17.1
0.5
17.6
166.9
26
Summary
($inmillions)
FY41
FY42
FY43
FY44
FY45
FY46
FY47
FY48
FY49
FY50
FY51
FY52
FY53
FY54
FY55
FY56
FY57
FY58
FY59
FY60
FY61
FY62
FY63
FY64
FY65
AbatementAssumptions
IncreaseinUnabatedTaxesonPier1(FY2018)
HotelShareofRevenue(p21ofRosinReport)
HotelShareinIncreaseinTaxAbatement
3.8
39.3%
1.5
IncreaseinUnabatedTaxesonEmpireStores(FY2018)
4.0
IncrementalRevenueUnabatedfromUtilizingRosinEstimates
Less:IncrementalTaxAbatementsonPier1
Less:IncrementalTaxAbatementsonEmpireStores
IncrementalNetRevenue
18.8 19.3 19.9 20.5 21.1 21.8 22.4 23.1 23.8 24.5 25.2 26.0 26.8 27.6 28.4 29.3 30.1 31.0 32.0 32.9 33.9 34.9 36.0 37.1 38.2
(0.1)
(0.4)
18.2 19.3 19.9 20.5 21.1 21.8 22.4 23.1 23.8 24.5 25.2 26.0 26.8 27.6 28.4 29.3 30.1 31.0 32.0 32.9 33.9 34.9 36.0 37.1 38.2
CUMULATIVEIncrementalNetRevenueEOP
222.0
241.4
261.3
281.8
303.0
324.7
347.2
370.3
394.1
418.6
443.8
469.8
496.6
524.2
552.6
581.8
612.0
643.0
675.0
707.9
741.8
776.8
812.8
849.8
888.0
ReactiveApproachtoPierRepair
Approx.BBPCCashSurplus(Deficit)fromP23ofBBPCPres.(7/9/15) 55 (250) (250) (325) (325) (320) (370) (355) (350) (355) (360) (345) (350) (330) (330) (330) (325) (315) (300) (285) (290) (280) (260) (245) (235) (235)
CUMULATIVEincrementalCashFlow
229.8
248.1
268.0
285.6
304.8
325.8
346.0
368.7
393.0
418.5
445.2
473.8
503.8
535.9
569.7
605.2
642.6
682.2
724.1
768.4
814.8
863.7
915.3
969.8
1,027
478.4
534.8
603.7
670.3
734.8
792.1
AdjustedCashSurplus(Deficit)
55.0 (20.2) (1.9) (57.0) (39.4) (15.2) (44.2) (9.0) 18.7 38.0 58.5 100.2
123.8
173.8
205.9
239.7
280.2
327.6
382.2
439.1
IncrementalInterestRateonBOPCashSurplus(Cappedat2.6%)
IncrementalInterestRate(5%)onanyBOPDeficit
IncrementalCashSurplus(Deficit)forInterestIncome(Expense)
IncrementalNetRevenuefromUtilizingRosinEstimates
InterestIncome(Exp.)onIncrementalCashSurplus(Deficit)atBOP
IncrementalCashFlow
CUMULATIVEincrementalCashFlow
2.09% 2.16% 2.22% 2.29% 2.36% 2.43% 2.50% 2.58% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60%
5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
(20.2) (1.9) (57.0) (39.4) (15.2) (44.2) (9.0) 18.7 38.0 58.5 100.2 123.8
173.8 205.9 239.7 280.2 327.6 382.2 439.1 478.4 534.8 603.7 670.3 734.8 792.1
18.2
(2.3)
15.9
229.8
19.3
(1.0)
18.3
248.1
19.9
(0.1)
19.8
268.0
20.5
(2.9)
17.7
285.6
21.1
(2.0)
19.2
304.8
21.8
(0.8)
21.0
325.8
22.4
(2.2)
20.2
346.0
23.1
(0.4)
22.7
368.7
23.8
0.5
24.3
393.0
24.5
1.0
25.5
418.5
25.2
1.5
26.8
445.2
26.0
2.6
28.6
473.8
26.8
3.2
30.0
503.8
27.6
4.5
32.1
535.9
28.4
5.4
33.8
569.7
29.3
6.2
35.5
605.2
30.1
7.3
37.4
642.6
31.0
8.5
39.6
682.2
32.0
9.9
41.9
724.1
32.9
11.4
44.4
768.4
33.9
12.4
46.4
814.8
34.9
13.9
48.8
863.7
36.0
15.7
51.7
915.3
37.1
17.4
54.5
969.8
38.2
19.1
57.3
1,027
PreventativeApproachtoPierRepair
Approx.BBPCCashSurplus(Deficit)fromP25ofBBPCPres.(7/9/15) 55 (138) (139) (140) (140) (135) (140) (130) (125) (115) (115) (100) (105) (80) (80) (80) (75) (65) (40) (30) (35) (25) (5) 5 20 20
CUMULATIVEincrementalCashFlow
185.5
205.9
227.3
249.8
273.6
298.7
325.1
353.2
383.0
414.4
447.5
482.5
519.1
558.1
598.9
641.7
686.6
733.8
783.8
836.3
891.1
949 1,009
1,072
1,138
377.5
439.1
478.1
518.9
566.7
621.6
693.8
753.8
801.3
866.1
944 1,014
1,092
1,158
AdjustedCashSurplus(Deficit)
55.0 47.5 66.9 87.3 109.8
138.6
158.7
195.1
228.2
268.0
299.4
347.5
IncrementalInterestRateonBOPCashSurplus(Cappedat2.6%)
IncrementalInterestRate(5%)onanyBOPDeficit
IncrementalCashSurplus(Deficit)forInterestIncome(Expense)
IncrementalNetRevenuefromUtilizingRosinEstimates
InterestIncome(Exp.)onIncrementalCashSurplus(Deficit)atBOP
IncrementalCashFlow
CUMULATIVEincrementalCashFlow
2.09% 2.16% 2.22% 2.29% 2.36% 2.43% 2.50% 2.58% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60% 2.60%
5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
47.5 66.9 87.3 109.8 138.6 158.7 195.1 228.2 268.0 299.4 347.5 377.5
439.1 478.1 518.9 566.7 621.6 693.8 753.8 801.3 866.1 944 1,009 1,072 1,138
18.2
0.5
18.7
185.5
19.3
1.0
20.4
205.9
19.9
1.5
21.4
227.3
20.5
2.0
22.5
249.8
21.1
2.6
23.7
273.6
21.8
3.4
25.1
298.7
22.4
4.0
26.4
325.1
23.1
5.0
28.1
353.2
23.8
5.9
29.7
383.0
24.5
7.0
31.5
414.4
25.2
7.8
33.0
447.5
26.0
9.0
35.0
482.5
26.8
9.8
36.6
519.1
27.6
11.4
39.0
558.1
28.4
12.4
40.8
598.9
29.3
13.5
42.8
641.7
30.1
14.7
44.9
686.6
31.0
16.2
47.2
733.8
32.0
18.0
50.0
783.8
32.9
19.6
52.5
836.3
33.9
20.8
54.8
891.1
34.9
22.5
57.5
948.5
36.0
24.5
60.5
1,009
37.1
26.2
63.3
1,072
38.2
27.9
66.1
1,138
27