Cost of Willets Point: Priceless?

In a follow up to her main edition story on Willets Point, reporter Fernanda Santos looks at the prices garnered by those property owners who have already sold to the city-and the situation is quite murky indeed. Some owners seemed to have scored big time, while others-perhaps less connected?-didn't do as well. But the larger lesson here is that the city is trying to keep all of this underwraps in order to do two things; (1) Low ball as many landholders as possible; and (2) Keep the over all cost of all of the acquisitions secret so that NY's tax payers don't go into sticker shock.

As City Room points out: "Whenever the city pursues a development project that involves buying land from private parties, it usually keeps details of the negotiations with property owners under wraps. Sale prices are rarely disclosed to avoid influencing other owners into asking more for their property."

So the numbers range all over the place-with EDC scrambling to try to correct a record it did all it could to keep secret:; all of which demands a full and open investigation of the entire process "After reviewing our post, David Lombino, spokesman for the Economic Development Corporation, called to set the record straight. He explained that the $3.54 million price tag for the parcel at 126-27 36th Avenue was in fact the price paid for all three adjoining parcels owned by the family trust, which altogether amount to roughly 22,000 square feet, bringing the price per square foot down to $161...Mr. Lombino still declined to disclose how much the city paid per square foot of land — or building — it has acquired in Willets Point."

If in fact the state senate and the city council are going to do hearings on Willets Point-as well they should-than the issue of cost of acquisition, and the overall price to the taxpayers, needs to be fully examined. This is, of course, in addition to the question of the integrity of the traffic evaluation on the proposed Van Wyck ramps.

In our table napkin calculations, there is a possibility that the acquisition cost could range as high as $2 billion-and, as more of the sweetheart deals are disclosed, the greater will be the prices negotiated by any holdouts-assuming that this project doesn't simply experience euthanasia before than. Here's what City Room found: "The highest price paid per square foot was $885 – a 4,000-square-foot piece of land at 126-27 36th Avenue, sold for $3.54 million. It was the same amount paid for two adjacent – and larger – properties owned by the same family trust."

The total square footage for the 62 acre site is 2,604,000. And if an average price for square foot ranges from 400-800 dollars than, well, you do the math. (A range from 1 billion to 2 billion dollars) And the mavens who first opposed the city, but than fairly quickly settled did quite well: "One interesting thing: some of the land owners who originally opposed the project and later reached deals with the city sold their land for significant amounts. One of them, whose parcel is at the corner of 126th Street and Northern Boulevard, got $18.15 million, or $750 per square foot. Another, who owns an oddly shaped lot on Willets Point Boulevard, near Roosevelt Avenue, got $27.5 million, or almost $500 a square foot."

One other thing we'd like to bring up. The City Room blog post did receive a comment from one seemingly knowledgeable observer of how land values are determined-but the observations he makes underscores what we like to call crackpot realism: "It’s erroneous to say that no lot is worth more than another — not the least of all because a fundamental principal of real property law is that all real estate is unique. Within the targeted purchase area, the value of the remaining unsold properties will tend to rise somewhat over time as the City acquires more and more of what it is seeking. At the same time — while a total holdout strategy might then seem to be the wisest course for a seller to take — the ultimate possibility of a taking by eminent domain acts as a counter-balance on the selling price. This is because any price set by ED will ultimately be based on the prices at which surrounding parcels are sold for (i.e. a comparable sales approach). So every time the City acquires a parcel voluntarily — it is establishing and confirming the general market price for surrounding property. In a sense – the system is self-correcting."

All very logical, no? But what's missing is the irrationality that this logic is subsumed under. When the city has a gun to your head, this is no longer a normal real estate transaction; or a self correcting system-and our commenter takes this power of condemnation as part of a normal natural order of things. But, as DDD's Danie Goldstein demonstrated, sometimes the gun can switch hands; with the holdouts wielding the weapon against a clock watching city or developer.

But the smugness of the commenter elides all of this in his effort to patronize the reporter with his rather limited erudition-and exposes his ideological pretensions for all to see: "Overall, the valuation of real property is much more complex than your rather simple price/sq.ft. analysis showed. Now — let’s abandon rational property valuation analysis here and turn the blog over to the ranters against eminent domain, generally, and Mayor Bloomberg, particularly. I’m sure they’re just chomping at the bit to start blasting away…."

"Honest John's" comments that follow are more to the point; and expose what has happened so far at Willets Point: "Good article but only half done Ms Santos. What is important is WHO got those deals. Look at the ownership records and then check lists of political donors to local politicians. I'm sure the results would be quite fascinating."

But we digress. This entire process-from illegal lobbying, fraudulent traffic studies, to secretive land purchase negotiations-has been corrupt and tainted by a total lack of transparency. It's high time for the disinfecting sunlight to be utilized on the Willets Point debacle, and we encourage our legislative bodies to do just that.