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Brooklyn Bridge Park reports

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Letter on new analyses about Brooklyn Bridge Park Pier 6 development.

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Content

February 22, 2016
Members of the Board
Brooklyn Bridge Park
334 Furman Street
Brooklyn, New York 11201
Members of the Board
Empire State Development Corporation
633 3rd Avenue, 34th Floor
New York, NY 10017
Re: New Analyses Concerning Brooklyn Bridge Park Pier 6 Development
Dear Board Members:
We are pleased to enclose for your review and consideration three new reports that bear on
the question of whether any new residential development is needed on Pier 6 at Brooklyn
Bridge Park (“Park”). Two of the enclosed reports address the Park’s financial circumstances,
and one discusses the technical and economic aspects of the new “preventative” maintenance
plan recently announced by management of Brooklyn Bridge Park Corporation (“BBPC”).
As you will see, the enclosed reports raise serious questions about the reasonableness of
BBPC’s financial model and the appropriateness of its newly-proposed maintenance program.
Taken together, these reports cast significant doubt on whether any development at Pier 6 is
necessary for BBPC to achieve its financial objectives.
As the representatives of the many community groups who are aligned in their opposition to
unnecessary development at Pier 6, we view the past dialogue between BBPC management
and the community as unproductive. It is our hope that with the independent analyses provided
here, the Park and its Board will take the opportunity for serious review of these findings and
the conclusions drawn.
Background
As you all know, housing inside the Park was a concession made by some of the communities
near the Park in order to enable the development of the Park given the political and economic
realities leading up to the original plan. This concession was made with the clear understanding,
explicitly incorporated in the Final Environmental Impact Statement and General Project Plan,
that commercial and residential development would be strictly limited to only that necessary to
support the Park. Community groups surrounding the Park and our elected officials have been
working together for more than 18 months to ensure that this fundamental commitment is kept
and that the BBPC consider the huge increases in real estate values in the Park’s neighborhood
since 2003/04 when the Pier 6 development was originally planned.

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 management’s 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 management’s 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 management’s 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 management’s 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 BBP’s “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 consultant’s 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
management’s choices i) to decline to share underlying financial data, ii) to hire a consultant
(Ms. Denham) to validate management’s 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 report’s measured application of DOF methodology or Ms. Denham’s seemingly
skeptical outlook on Brooklyn’s 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,

Judith Francis, President
Brooklyn Bridge Park
Defense Fund

Patrick Killackey, President
Brooklyn Heights Association

cc: BBP President Regina Myer
BBP CAC Chair Lucy Koteen
Congresswoman Nydia Velázquez
NYS UDC Chair Howard Zemsky
NYS ComptrollerThomas DiNapoli
NYC Public Advocate Leticia James
NYC Comptroller Scott Stringer
NYS Senator Daniel Squadron
NYS Assemblyperson Jo Anne Simon
NYC Councilman Steve Levin
NYC Councilman Brad Lander
Members of the Board, BHA
Presidents, 11 Member Community Coalition, BBPDF

Martin Hale, Trustee
People for Green Space
Foundation

BROOKLYN BRIDGE PARK ASSESSMENT ANALYSIS
AS OF

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

ROSIN & ASSOCIATES
29 WEST 17TH STREET, 2ND FLOOR
NEW YORK, NY 10011
DATE OF REPORT: FEBRUARY 9, 2016
© ROSIN & ASSOCIATES 2016

ROSIN & ASSOCIATES

29 West 17th Street, 2nd Floor
New York, New York 10011
Tel: (212) 726-9090

Valuation & Advisory Services

February 9, 2016

Mr. Martin Hale
People For Green Space Foundation Inc.
271 Cadman Plaza East Ste 1
PO Box 22537
Brooklyn, NY 11201

Re: Brooklyn Bridge Park Assessment Analysis
Dear Mr. Hale,
As requested, we have reviewed the following in order to determine the plausibility of the parameters
set forth therein:
1. “Financial Model Update: Public Presentation” presented to the public by Brooklyn Bridge Park
Corporation (BBPC) report for Brooklyn Bridge on dated July 9, 2015.
2. Analysis of Brooklyn Bridge Park completed by Barbara Byrne Denham, titled “Report on
Brooklyn Bridge Park’s Financial Model” dated July 2015.
Rosin & Associates was hired to perform a market analysis of Brooklyn Bridge Park and the surrounding
areas in order to determine if the market supports the BBPC model’s assessment base, which features in
the Denham Analysis as well as Denham’s own research set forth in her report.
It has been a pleasure to assist you in the assignment. If you have any questions concerning the analysis,
or if Rosin & Associates can be of further service, please contact us at (212) 726-9090.
Respectfully submitted,

Max Rosin, MRICS
Certified General Real Estate
Appraiser, NYS: #4600000 8639

Marco Fulgoni
Financial Analyst

ROSIN & ASSOCIATES

3

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 Corporation’s Income-Generating Sites.................................... 27
Implemented Assessor Methodology ......................................................................................................... 28
Revenue Comparison.................................................................................................................................. 29
Conclusion: Park Real Estate Under-Assessed............................................................................................ 31

ROSIN & ASSOCIATES

4

Appendix A.................................................................................................................................................. 32
Appendix A (Cont’d).................................................................................................................................... 33
Appendix A (Cont’d).................................................................................................................................... 34
Appendix A (Cont’d).................................................................................................................................... 35
Appendix A (Cont’d).................................................................................................................................... 36
Appendix A-1............................................................................................................................................... 37
Appendix A-1 (Cont’d)................................................................................................................................. 38
Appendix A-2............................................................................................................................................... 39
Appendix A-2 (Cont’d)................................................................................................................................. 40
Appendix B .................................................................................................................................................. 41
Appendix C .................................................................................................................................................. 43

ROSIN & ASSOCIATES

5

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 BBPC’s 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

Rev. Per y ear

One Brookly n Bridge Park
Pier 1
John St.
Empire Stores

$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

A dditional Rev enue Estimated PILOT Rosin PILOT Income
Post- Ex piration
Income
Estimates
$4,700,000
$1,700,000
$0
$1,900,000

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

% Pier 6 Recurring T ax Revenue

$6,350,415*
$7,668,330
$1,677,563
$6,774,687
$22,470,995

1,900,000
15,400,000
12%

Source: BBPC, NY C DOF
*PILOT income value based on actual DOF A ssessments for FY 2016/17

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 BBPC’s Financial Model Presentation and Barbara Denham’s Analysis of said model.

Conclusions

ROSIN & ASSOCIATES

6

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
park’s 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 BBPC’s model titled “Report on Brooklyn Bridge Park’s Financial Model” “to provide an
independent third-party objective review of BBP’s long term financial model,” according to the cover
letter for the same report.5
As it is impossible to properly assess the BBPC’s 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 park’s 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 park’s maintenance, operating and other expenses.

Brooklyn Bridge Park Development Space Analysis
Brooklyn Bridge Park, as of the date of this report, has (or will have in the near future according to BBPC)
5 primary, income-generating sites under the purview of its management group: Brooklyn Bridge Park
Corporation. One of these sites, Pier 6, is currently in the approval process and does not have finalized
plans. The only site currently generating revenue is One Brooklyn Bridge Park, the other sites (Pier1,
John Street and Empire Stores are undergoing development and are expected to open soon). These
sites and their sizes are outlined in the following table.
1 BBP Financial Model Update, Board of Directors, October 21, 2013, P. 5
2 General Project Plan for Brooklyn Bridge Park, P. 12
3 http://law.justia.com/codes/new-york/2012/uda
4 BBPC Financial Model Update: Public Presentation July 9, 2015
5 Denham, Barbara Byrne, July 2015, Report on Brooklyn Bridge Park’s Financial Model (Cover Letter)

Brooklyn Bridge Park Development Space Analysis

ROSIN & ASSOCIATES

7

Br o o k ly n Br id g e Par k De ve lo p m e nt Sp ace A naly s is Es tim ate *
Residential
Pier 1 (Pierhouse & Hotel)
John Street
Empire Stores
One Brookly n Bridge Park
Pier 6**

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 Assessor’s values and BBPC’s values for size estimates vary; Rosin & Associates has utilized
DOF estimates where appropriate.

Rosin & Associates Methodology
R&A followed standard income approach valuation procedure and DOF Assessor guidelines and
methodology in order to obtain estimates for the income generated in Brooklyn Bridge Park.
1. Market Research
a. Comparable Analysis to determine appropriate rental rates (income) based on the
market
2. Projected Gross Income
a. Evaluation of space breakdowns within sites
b. Utilization of market data for rental rates
3. Net Operating Income
a. Income
b. Expenses
4. Market Value
a. NOI and Capitalization Rates
5. Assessor Values
a. Equalization Rate (45%)
6. Tax Rates
a. Standard NYC Tax Rates and DOF Assessor values
Wherever possible and appropriate, R&A applied estimates on the more conservative side. Whether
that be higher capitalization rates (due to higher risk factors) or the more conservative size estimates.
This was to ensure that fluctuations and unknown circumstances present in any market, especially in
future-oriented projections, would be accounted for in some capacity.
The scope of this initial assignment was to consider the long-term earnings power of the BBPC (not the
near term that includes tax breaks of up to 15 years + phase-out) by assessing the development in the
Brooklyn Bridge Park before tax breaks. The actual PILOT (payment in lieu of taxes) received by the
Rosin & Associates Methodology

ROSIN & ASSOCIATES

8

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.

6

http://www1.nyc.gov/site/finance/taxes/property-cooperative-and-condominium-comparables.page
Rosin & Associates Methodology

ROSIN & ASSOCIATES

9

Brooklyn Bridge Park Real Estate Gross Revenues
Through a thorough investigation of the real estate market in Brooklyn, and more specifically the
DUMBO, Downtown Brooklyn, Brooklyn Heights neighborhoods and other comparable neighborhoods
based on location and market trends, Rosin & Associates has determined market-level income levels for
the various income-generating sites under the purview of Brooklyn Bridge Park Corporation. This
analysis will focus on the 4 sites currently generating income or already under development: Pier1, John
Street, Empire Stores and One Brooklyn Bridge Park. For each site, R&A found comparable rental rates
and income levels for each site’s various commercial and residential types (outlined in the above table).

Residential Real Estate Market Analysis
Brooklyn has a very strong residential real estate market, even throughout the economic downturn in
2008/09, Brooklyn remained a desirable place for developers and tenants. Below is a survey of rental
apartment units in close proximity to Brooklyn Bridge Park. The survey includes a wide range of
apartment types as the sites in Brooklyn Bridge Park will have a wide range of apartment types. R&A
made sure that apartments and buildings were of a similar quality as those that are currently in/will be
developed in Brooklyn Bridge Park. However, given the extremely high quality of the units in Brooklyn
Bridge Park, based on One Brooklyn Bridge Park and asking prices/marketing content for Pier1 and John
Street, this survey of the surrounding market is likely to find lower rental rates than those that can be
expected at Brooklyn Bridge Park. Therefore, our concluded rates will reflect this as will be shown.
Residential C omparable Lease Rates
Addres s

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

U nit T ype D ate Signed

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.

Source: StreetEasy .com, January 12, 2016

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.

Residential Real Estate Market Analysis

ROSIN & ASSOCIATES

10

One Brooklyn Bridge Park
One Brooklyn Bridge Park, AKA 360 Furman Street, is currently occupied and generating both rental and
sales income. Therefore, R&A has also included a survey of rental rates in One Brooklyn Bridge Park to
supplement the more general rental survey of the surrounding neighborhoods to give a better idea of
what is actually happening within the park. Typically rental income is less than sales income and both
exist at One Brooklyn Bridge Park. The DOF determines assessments for condominium buildings as
rental buildings (as described in the section titled Rosin and Associates’ Methodology). Further
assessments are based on analyzing the property as a rental.

One Brooklyn Bridge Park

ROSIN & ASSOCIATES

11

O ne Brooklyn Bridge Park (360 Furman St.) Rental Rates - StreetEasy
D ate

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

One Brooklyn Bridge Park

ROSIN & ASSOCIATES

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 Corporation’s purview (John St. and Pier1).

One Brooklyn Bridge Park

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13

Brooklyn Office Real Estate Market Analysis
Brooklyn’s office market is getting stronger every day. “About 60 million square feet of new office space
will be needed throughout the city by 2025, mostly in outer-borough commercial hubs such as
downtown Brooklyn, according to a New York City Economic Development Corp. estimate.”7
According to the Brooklyn Q42015 MarketView Office Report done by CBRE, one of the largest and
most-trusted real estate companies in the world, DUMBO had average asking rents of $65.68 /SF/Yr.

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 Park’s 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 Manhattan’s major submarkets.8 Deputy Mayor Alicia Glen supports this
with her claim that “Office vacancy rates are now around 3%, which is functionally zero” (Alicia’s
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

Brooklyn Office Real Estate Market Analysis

ROSIN & ASSOCIATES

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 Kushner’s 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

Brooklyn Office Real Estate Market Analysis

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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.

Brooklyn Office Rental Rate Comparables
Rosin & Associates, in order to more clearly show how strong the Brooklyn office market is in the vicinity
of Brooklyn Bridge Park (DUMBO, Downtown Brooklyn, Brooklyn Heights), conducted its own survey of
office rental rates. R&A found comparables within these markets and also in similar markets
(Williamsburg/Greenpoint) that have seen similar development processes of converting industrial space
into office close to the waterfront. The below table outlines R&A’s findings.
The office rental rates based on recently signed leases range from $41 /SF/Yr to $55/SF/Yr. in the
appropriate markets. The average was approximately $49.31/SF/Yr and the median was slightly higher
at $51 /SF/Yr.
Empire Stores in Brooklyn Bridge Park is set to have approximately 237,523 SF of office space according
to BBPC and Barbara Denham. These comparables will serve as a basis for income estimates at Empire
Stores for its 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

Brooklyn Office Rental Rate Comparables

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16

OFFICE LEASE COMPARABLES
Space Leased

Building Size

New or
Renewal

Neighborhood

Address

Genius

Williamsburg

184 Kent Avenue

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

117 Adams Street

168,545 SF

New

October-14

July-25

$54.00 / SF / Yr. office; Modified Gross Lease; 9

Vice Media

Williamsburg

285 Kent Avenue

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.

Genius Media Group

Williamsburg

285 Kent Avenue

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

Source: CBRE, Compstak.com

Brooklyn Office Rental Rate Comparables

ROSIN & ASSOCIATES

17

Brooklyn Retail Market Analysis
According to CPEX’s 2015 Brooklyn Retail Report that shows significant retail “corridors” throughout the
borough, there are many prominent corridors in close proximity to Brooklyn Bridge Park. The closest
(#72: Front/Water/Plymouth/Jay St.) had a $/SF/Yr range of $80 - $99 /SF/Yr. Corridor #82: Henry St
between Middagh St and Clark St had a range of $65 - &79 /SF/Yr. Corridor #90: Montague St between
Hicks St and Court St, close to the southern region of Brooklyn Bridge Park had a range of $100 - $149
/SF/Yr. No matter how one slices it, Brooklyn Bridge Park is in an area with significant retail demand.
With more office space coming in and the ever-growing Brooklyn residential market, retail in Brooklyn
Bridge Park and the surrounding area will likely see even higher rates in the coming years. According to
the same report, Brooklyn has had almost double the number of new residential development permits
than Manhattan. Brooklyn is home to the Brooklyn Nets, the Barclays Center, Brooklyn Arts and Music
(BAM) and many more. Barclays center alone hosts 220+ events per year. The same report also
includes Brooklyn Bridge Park as one of the main attractions of Brooklyn, stating that more than 10
million people per year visit which is second only to Central Park.20
Brooklyn Bridge Park is already a cultural anchor for Brooklyn and the rest of New York City. It only gets
stronger the more time it is given. Retail in Brooklyn Bridge Park will benefit from an incredible amount
of foot traffic due to peoples’ perception of it as a Cultural Anchor, a place where people want to be,
where people want to live and where people want to work.

Brooklyn Retail Rental Rate Comparables Analysis
Rosin & Associates has conducted a survey of comparable retail leases signed in areas within close
proximity of Brooklyn Bridge Park to show more concretely just how strong this area’s retail real estate
market is.
There is also a small section of retail leases in One Brooklyn Bridge Park at 360 Furman Street. As one
can see, these retail rents are already quite high, even considering the distance of One Brooklyn Bridge
Park from the main area (below Brooklyn Bridge) of Brooklyn Bridge Park. Only one of the spaces
reviewed in One Brooklyn Bridge Park is below $44/SF/Yr, and that space is not a true retail space, it is
more of a creative/community/office space meant for yoga practice and instruction.

Retail Rental Rates w/o O ne
Brooklyn Bridge Park
Max .
Min.
Median
A v erage

$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

20 CPEX Real Estate: 2015 Brooklyn Retail Report

Brooklyn Retail Market Analysis

ROSIN & ASSOCIATES

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 Park’s 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 we’re 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

Brooklyn Retail Rental Rate Comparables Analysis

ROSIN & ASSOCIATES

19

RET AIL LE ASE C O MPARABLES
Tenant

N eighborhood

Sugar Cane

DUMBO

Feed

DUMBO

UMD Urgent
Care

Brookly n Heights

TD Bank

Dow ntow n Brookly n 252 A tlantic A v e

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 Start Leas e E nd

Leas e T erm

December- 15

$150.00 /SF /Y r.

Tax es ov er Base Y ear

971 SF

December- 15

$150.00 /SF /Y r.

Tax es ov er Base Y ear

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

($190.00 /SF /Y r.)

Dow ntow n Brookly n 151 Court Street

Brookly n Heights

N otes

10,000 SF

2Q 2013

(3,188 SF ) (Below Grade)

Restaurant

$/SF/Yr (Starting
R ent)

144 A tlantic
A v enue

1,500 SF

A t Grade

($65.00 /SF /Y r.)

July - 15

Blended R ate:

$74.00 /SF /Y r.

NNN Lease

N/A

$52.00 /SF /Y r.

Mod. Gross

Retail Rents @ O ne Brooklyn
Bridge Park (360 Furman St.
Bakery /Café
Y oga Studio
Pet Boutique
Wine & Spirits

360 Furman St.
(Unit A 1)
360 Furman St.
Brookly n Bridge Park
(Unit A 2)
360 Furman St.
Brookly n Bridge Park
(Unit G)
360 Furman St.
Brookly n Bridge Park
(Unit I)
Brookly n Bridge Park

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

Source: CBRE, CompStak, CoStar

Brooklyn Retail Rental Rate Comparables Analysis

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20

Brooklyn Hotel Market Analysis
The Brooklyn hotel market is gaining in strength. According to Massey Knakal (now part of Cushman
Wakefield) in 2014, “As prices in Manhattan and other gateway cities climb to new record highs,
alternative markets offering slightly better yield with strong underlying fundamentals, specifically
Brooklyn, provide yield oriented investors with a desirable alternative without straying too far from the
security of New York’s core hospitality market.”22 This trend has continued throughout 2015 and is a big
factor that will drive hotel commercial space at Pier1, part of Brooklyn Bridge Park Corporation.
According to the same report, the Brooklyn submarket consisting of Downtown Brooklyn, Brooklyn
Heights, DUMBO, Boerum Hill, Clinton Hill and Fort Greene had the largest number of hotels at 12, 5
more than the 2nd biggest submarket of hotels in southeast Brooklyn (this report included only hotels of
10,000 SF or more). RevPAR (Revenue Per Available Room) for Brooklyn hotels in 2014 was $143.61
with an occupancy rate of 80% and an ADR (Average Daily Rate) of $179.52.
According to STR Inc., an authoritative hotel industry research group, through a survey of comparable
hotel properties (upscale+) in Western Brooklyn and Long Island City, the average RevPAR was $169.94
in 2015. The average RevPAR from 2011 to 2015 was $174.35. The ADR in 2015 was $205.34 with
supply coming in at 804,525 rooms. Given its unique location in Brooklyn Bridge Park and proximity to
public transport, R&A anticipates that the hotel at Pier1 will achieve higher revenues, however, for the
sake of this report, the RevPar values determined by STR Inc. will be the values utilized in R&A’s
assessment analysis. See Appendix A-1 for full list of surveyed hotels.

22 Massey Knakal Brooklyn Hotel Market: 2014 Outlook

Brooklyn Hotel Market Analysis

ROSIN & ASSOCIATES

21

Projected Gross Income
Based on market analysis and appropriate market rate comparables, Rosin & Associates has determined
the Projected Gross Incomes for each income-generating site discussed above.
Pier1 (Pierhouse & Hotel)
Pier1 will be a residential condo/hotel building when development is complete, with other smaller
commercial entities within. Pier1 Hotel will contain 68,000 SF, which translates into 200 rooms,
according to p. 8 of Institutional Investor’s Real Estate Finance Intelligence Vol. XVII, No. 47 / November
26, 2012. The hotel is anticipated to be a full-service operation which will include banquet space, bar
space and other amenities standard for a hotel of the quality expected at Pier1.
Residential
A rea

Pier 1 (Pierhouse & Hotel) PGI
Residential
Rev enue
Market Rate

348,120 SF
# Hotel Rooms
200 Rooms

$54.96
RevPar

$19,132,863
Rev enue (A nnualiz ed)

$169.94

$12,405,620

Total Rev enue

$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

Projected Gross Income

ROSIN & ASSOCIATES

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

One Brooklyn Bridge Park
One Brooklyn Bridge Park is a residential condominium building with a small amount of retail. Since DOF
has issued its actual assessments for One Brooklyn Bridge Park for the 2016/17 fiscal year, R&A has
applied the tax rates to DOF’s actual assessments to determine the updated PILOT income that BBPC will
receive for One Brooklyn Bridge Park. As a result, this report need not estimate revenues, NOI or an
assessment for this property.
One Brookly n Bridge Park PGI
Residential
Residential
Rev enue
A rea
Market Rate
628,669 SF
$55
$34,551,988
Retail Market
Retail A rea
Rev enue
Rate
84,134 SF
$45
$3,745,225
Total Rev enue
Revenue /SF

$38,297,213
$53.73

Projected Gross Income

ROSIN & ASSOCIATES

23

Net Operating Income
Value is derived from the Net Operating Income (NOI) through the equation NOI/Capitalization Rate =
Market Value where the capitalization rate represents the strength of a market through evaluating the
risk. Based on a simplified capitalization rate analysis, Rosin & Associates has determined market values
for each of the income-generating sites for Brooklyn Bridge Park Corporation being analyzed in this
report so as to be able to determine the assessment levels and thus the tax levels/PILOT values. The
NOI for each of the sites was calculated using the average revenue /SF as calculated in the previous
section and the estimated expenses.
(Net Operating Income (NOI) = Revenue – Expenses)
Rosin & Associates has not included a detailed NOI analysis of One Brooklyn Bridge Park due to the fact
that actual DOF Assessments from FY 2016/17 were utilized.

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&A’s 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%

Source: NY C Department of Finance, 2015; Note: A ssessor ex pense ratios are
ordered based on income levels in A ssessor Guidebook

Net Operating Income

ROSIN & ASSOCIATES

24

Brooklyn Bridge Park Expense Estimate Calculations
Utilizing the expense ratio data found in the assessor’s guidelines handbook for NYC, R&A has evaluated
the appropriate range of expense ratio values to determine fair estimates for the expenses at each of
the income-generating sites in Brooklyn Bridge Park. See the following table. Chosen expense ratios
featured are based not only on assessor ratios but also on years of experience valuing real estate in
Brooklyn and New York City.

Expense Estimate C alculations
Name

Expense Ratio

Pier 1 (PierHouse)
John Street
Empire Stores

Expens es
40%
35%
23%

$30 /SF
$19 /SF
$16 /SF

Source: NYC DOF: FY 2015 Assessor’s Guidelines

Final Net Operating Income Calculations
Net O perating Incomes for Revenue-Generating Buildings in Brooklyn Bridge Park
N ame
Pier 1
John Street
Empire Stores

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

Net Operating Income

ROSIN & ASSOCIATES

25

Capitalization Rates
According to Korpacz/PwC’s 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. Manhattan’s office market, the closest market to Brooklyn, had an
office market capitalization rate of 5.15%.

Assessor Capitalization Rates
DOF Assessor capitalization rates are typically more conservative than market level capitalization rates,
i.e., DOF Assessor rates are typically higher which produces a lower valuation given the same NOI. They
are tax-loaded capitalization rates, meaning that they are applied to pre-tax NOI estimates. R&A have
also analyzed assessor capitalization rates in preparation for using assessor methodology to determine
assessment and tax levels.
A ssessor Capitaliz ation Rates (2015)
Capitaliz ation Rate
Low
Median
High
"Dow ntow n Brookly n Class 'A ' O ffices"
10.07%
10.07%
10.07%
One- Story and Multi- Story Retail in
Manhattan N. of 125th St and Boroughs
11.79%
11.79%
11.95%
Outside Manhattan
Post- 1973 Elevator Condo- Coops/Condo7.20%
8.16%
9.41%
Rental Buildings in Outer Boroughs
Lux ury & Super Lux ury Hotels w /Rooms
Bas e C ap Rate :
8.55%
Less Than 109
Lux ury & Super Lux ury Hotels w /Rooms
Bas e C ap Rate :
8.80%
betw een 109 and 409
Source: NY C Department of Finance, 2015; Note: A ssessor capitaliz ation rates are
ordered based on income levels in A ssessor Guidebook, in this table, R&A has
ordered them based on their standalone value
Class

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 report’s estimates of PILOTs uses a capitalization rate of
13.33% for each building type.
Capitalization Rates

ROSIN & ASSOCIATES

26

Tax-Loaded Capitalization Rates
There are two methods of calculating the market value and hence the assessed value of any property in
New York City. One can 1) calculate the market value by estimating the PGI and subtracting all the
expenses including estimated real estate taxes in order to get the NOI and then applying a standard
market level capitalization rate to get the market value, then apply the equalization ratio (45%) to this
value to get the assessed value, the resulting real estate taxes are calculated by applying the tax rate for
the relevant property class to the assessed value. Another method is 2) calculate the pre-tax NOI by
subtracting the operating expenses excluding real estate taxes from the PGI and then finding the market
value by applying a tax-loaded capitalization rate. These methods should be equivalent, since it can be
shown algebraically that applying the tax-loaded capitalization rate to pre-tax NOI is the same as
applying the market capitalization rate to a post-tax NOI. By definition, the tax loaded capitalization rate
is calculated as follows: The tax-loaded capitalization rate = the market capitalization rate + (the
equalization ratio X the tax rate).
One should note that the “real world” market value estimates significantly exceed those that are
presented by the DOF Assessor market values. Based on the review of DOF condominium assessments
in the area (Appendix A), this would be due to the fact that the assessors’ estimate of potential gross
income (effective gross income) is significantly below what is indicated by rent and lease data for
comparable property in the local market. In our experience, there can be a time-lag in raising the
assessment of existing property to the current market, especially in a rising rental and commercial
property market. That said, existing property assessments should ultimately converge with market rates
from comparable rental and lease data over time. Our review of DOF condo assessment in the area
indicated that the median percent increase in DOF assessment per square foot is approximately 26.2%24
over the last three years (FY 2013/14 to FY 2016/17), driven by an increase in net operating
incomes. The market data in this report indicates that this trend of rising DOF assessment is likely to
continue.
As new construction comes on the market, DOF Assessors are likely to incorporate current market data
into their assessments. This is especially true in markets with rapidly rising residential and commercial
lease rental rates.
Accordingly, while R&A has relied on the assessor’s capitalization rates and expense ratios to ultimately
develop PILOT revenues, the sites under BBPC’s purview are significantly more valuable than R&A’s
assessment herein shows and the tax-payers have exposure to taxation levels that are in excess of R&A
estimates presented in this report.

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

ROSIN & ASSOCIATES

27

Market Value of Brooklyn Bridge Park Corporation’s Income-Generating Sites
Rosin & Associates has implemented the appropriate market capitalization rates, as featured in the
following table, to calculate the appropriate market values for those sites. These capitalization rates
and the market values they elicit are used here to show hypothetical values reflective of market
conditions. There are nuances between types of buildings and location; however, for the purposes of
this report, a flat market-level capitalization rate of 6.00% is appropriate as these market values are not
utilized to determine assessment levels. Instead, DOF Assessor capitalization rates are utilized for this
purpose, as will be shown.
Market Values for Brooklyn Bridge Park C orporation Development Sites
N ame
Pier 1
John Street
Empire Stores

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

ROSIN & ASSOCIATES

28

Implemented Assessor Methodology
This was done to come up with an assessed value against R&A market estimates. Assessments are what
taxes are based on and therefore the basis for PILOT revenue estimates. DOF Assessors use an
equalization rate of 45% to determine assessed values based on market values. R&A utilized this
equalization rate to arrive at “market-level assessment values.”
Equalization rates are implemented to bring assessed value to market values. However, oftentimes one
will find that assessor derived market - values are lower than actual market values. Notwithstanding
this fact, a tax-payer still has potential exposure to higher rates utilizing this methodology. Assessors
can use higher rates if they so choose.
R&A applied this rate to market value to arrive at assessed value (as per DOF Assessor methodology).
Assessor Values & C apitalization Rates
N ame
Pier 1
John Street
Empire Stores

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 Assessor’s ~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.

Implemented Assessor Methodology

ROSIN & ASSOCIATES

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**

Tax Rate (C las s II
& IV)

$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.

Additional O ne Brooklyn Bridge Park Assessment Analysis
DO F Value

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.

Additional Pierhouse Assessment Analysis
Revenue

% 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

ROSIN & ASSOCIATES

30

The following table shows BBPC’s 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 BBPC’s projections, R&A’s analysis herein is based on market comparables and
DOF Assessor methodology.
Brookly n Bridge Park Income A naly sis Done By BBPC
Source

Rev. Per y ear

One Brookly n Bridge Park
Pier 1
John St.
Empire Stores

$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

A dditional Rev enue Estimated PILOT Rosin PILOT Income
Post- Ex piration
Income
Estimates
$4,700,000
$1,700,000
$0
$1,900,000

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

% Pier 6 Recurring T ax Revenue
Source: BBPC, NY C DOF
*PILOT income value based on actual DOF A ssessments for FY 2016/17

(See Appendix B for full data tables presented by BBPC)

12%

$6,350,415*
$7,668,330
$1,677,563
$6,774,687
$22,470,995

ROSIN & ASSOCIATES

31

Conclusion: Park Real Estate Under-Assessed
Brooklyn Bridge Park’s income-generating capabilities have been under-assessed by both BBPC and
Barbara Denham. Based on market levels and unabated PILOT incomes, Brooklyn Bridge Park income
will be much higher than projected by BBPC.

Conclusion: Park Real Estate Under-Assessed

ROSIN & ASSOCIATES

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

212 SOUTH OX FORD STREET

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

Source: NY C Department of Finance 2016
http://w w w 1.ny c.gov/site/finance/tax es/property - cooperative- and- condominium- comparables.page

C omparable C ondom inium P roperties S tatistiscs (F Y 2016/17)
Gross
Incom e / SF
Minimum
Max imum
A verage
Median

$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

ROSIN & ASSOCIATES

33

Appendix A (Cont’d)
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

Source: NY C Department of Finance 2016
http://w w w 1.ny c.gov/site/finance/tax es/property - cooperative- and- condominium- comparables- archives.page
*Data Not A vailable

C om parable C ondom inium P roperties S tatistiscs (F Y 2015/16)
Gross
Incom e / SF
Minimum
Max imum
A verage
Median

$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 (Cont’d)

ROSIN & ASSOCIATES

34

Appendix A (Cont’d)
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

212 SOUTH OX FORD STREET

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

Source: NY C Department of Finance 2016
http://w w w 1.ny c.gov/site/finance/tax es/property - cooperative- and- condominium- comparables- archives.page
*Data Not A vailable

C omparable C ondom inium P roperties S tatistiscs (F Y 2014/15)
Gross
Incom e /
SF
Minimum
Max imum
A verage
Median

$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 (Cont’d)

ROSIN & ASSOCIATES

35

Appendix A (Cont’d)
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

212 SOUTH OX FORD STREET

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

Source: NY C Department of Finance 2014
http://w w w 1.ny c.gov /site/finance/tax es/property - cooperativ e- and- condominium- comparables- archiv es.page
*Data Not A vailable

C om parable C ondom inium P roperties S tatistiscs (F Y 2013/14)
Gross
Incom e / SF
Minimum
Max imum
A verage
Median

$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 (Cont’d)

ROSIN & ASSOCIATES

36

Appendix A (Cont’d)
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%

306 GOLD STREET

$135.39

($148.45)

$161.00

18. 92%

101 WILLOUGHBY STREET

$120.21

($132.31)

$147.61

22. 79%

110 LIVINGSTON STREET

$104.68

700 PACIFIC STREET

($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%

150 MYRTLE AVENUE

$119.65

($125.00)

($143.75)

$161.40

34. 89%

384 BRIDGE STREET
53 PIERREPONT STREET

$55.86

505 COURT STREET

$95.79

130 FLUSHING AVENUE

$70.76

230 ASHLAND PLACE

$112.71

343 4 AVENUE

$122.83

205 WATER STREET
212 SOUTH OXFORD STREET
85 ADAMS STREET

($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)

291 UNION STREET
37 BRIDGE STREET

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 (Cont’d)

ROSIN & ASSOCIATES

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

Four Points by Sheraton Long Island City Queensboro Bridge

Long Island City, NY

Upscale Class

# of Rooms
88

Courtyard New York Queens Long Island City

Long Island City, NY

Upscale Class

160

Closed - Ascend Collection Verve Hotel

Long Island City, NY

Upscale Class

0

aloft Hotel Long Island City

Long Island City, NY

Upscale Class

176

Hilton Garden Inn New York Long Island City Manhattan View

Long Island City, NY

Upscale Class

183

Marriott New York @ The Brooklyn Bridge

Brooklyn, NY

Upper Upscale Class

666

Hotel Indigo Brooklyn

Brooklyn, NY

Upscale Class

128

aloft Hotel New York Brooklyn

Brooklyn, NY

Upscale Class

176

Sheraton Hotel Brooklyn New York

Brooklyn, NY

Upper Upscale Class

321

Dazzler Brooklyn

Brooklyn, NY

Upscale Class

174

Nu Hotel

Brooklyn, NY

Upscale Class

93

Condor Hotel

Brooklyn, NY

Upper Midscale Class

35

Lexington Inn Brooklyn

Brooklyn, NY

Upper Midscale Class

49

McCarren Hotel

Brooklyn, NY

Upper Upscale Class

64

Hotel Le Bleu

Brooklyn, NY

Upper Midscale Class

48

Holiday Inn Express New York Brooklyn

Brooklyn, NY

Upper Midscale Class

115

EVEN Hotels Nevins Street

Brooklyn, NY

Upscale Class

204

Ascend Collection Union Hotel

Brooklyn, NY

Upscale Class

48

Henry Norman Hotel

Brooklyn, NY

Upscale Class

52

The Box House Hotel

Brooklyn, NY

Upscale Class

55

The William Vale

Brooklyn, NY

Upscale Class

183

Source: STR Inc.

Appendix A-1

ROSIN & ASSOCIATES

38

Appendix A-1 (Cont’d)
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.

Tab 2 - Data by Measure
Brooklyn, NY Area Selected Properties
Job Number: 741365_SADIM Staff: KD

Created: January 21, 2016

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

Source: STR Inc.

Appendix A-1 (Cont’d)

ROSIN & ASSOCIATES

39

Appendix A-2
DOF Assessor’s Tables

Appendix A-2

ROSIN & ASSOCIATES

40

Appendix A-2 (Cont’d)

Appendix A-2 (Cont’d)

ROSIN & ASSOCIATES

41

Appendix B
Brooklyn Bridge Park Corporation: Financial Model Update, Public Presentation, July 9, 2015.

Page 19

Page 19 Inset #2

Appendix B

ROSIN & ASSOCIATES

42

Page 19 Inset #3

Page 20
Appendix B

ROSIN & ASSOCIATES

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

ROSIN & ASSOCIATES

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 City’s 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.
Rosin’s 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 client’s 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

ROSIN & ASSOCIATES

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

ROSIN & ASSOCIATES

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.

Responsible ownership and competent property management are assumed.

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

ROSIN & ASSOCIATES

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 engineer’s 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.

Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments
January 19, 2015

Goldenrod Blue Associates
1008 Orchard Lane
Broadview Heights, OH 44147
(216) 456-5285
[email protected]

Goldenrod Blue
On Course; Building Value

Page 1 of 31

Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments

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
Park’s Marine Structures..................................................................................................................... 13
Other Technical Observations Regarding the Report ......................................................................... 20
Cost Modeling Issues .................................................................................................................................. 23
The Relevant Economic Factors Associated with the Report’s 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

Goldenrod Blue Associates
Goldenrod Blue
On Course; Building Value

Page 2 of 31

Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments

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
1950’s and early 1960’s 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

Goldenrod Blue Associates
Goldenrod Blue
On Course; Building Value

Page 3 of 31

Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments

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

Year Built 1956
# Piles
9,000
% of
Total
Total % of
Piles
Done to
Piles
Done this
Date
Done
Action
21
0.2%
0.2%
435
4.6%
4.8%
609
1.9%
6.8%
783
1.9%
8.7%
1369
6.5%
15.2%

It is unreasonable that the inspection-based phased maintenance approach actually
taken to maintain this now-59-year-old causeway was not formally considered in the
Report. In fact, according to causeway personnel,2 the epoxy grout piling encasements
done on the causeway, which only represent about 15% of the pilings, were all done in
response to evidence of degradation. This was, in fact, a phased, inspection-based,
“reactive” maintenance strategy. It is highly likely that a phased installation of the
epoxy grout encasements at BBP which takes advantage of the remaining life of the
unrepaired existing pilings, would end up being the lowest cost long-term solution. This
approach would feature establishing an installation plan that would take advantage of
the remaining life of each particular piling prior to it becoming inadequate to bear its
design loading. This action, to plan for the phased installation of the epoxy grout
encasements prior to functional degradation (based upon both projections and periodic
inspections), is a much more reasonable approach than to not perform any maintenance
until after “significant deterioration had taken place.”3 Finally, as stated in Section 7 of
1

Data taken and/or developed from Report Section 6, page 22
As reported in a detailed telephone conversation between E. Bartlett, Goldenrod Blue Associates and C.
Bourgeois, Vice President of Gulf Engineers & Consultants (who acts as the Causeway Chief Engineer) on December
3, 2015
3
Report, Section 2, page 4
2

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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.


The Report fails to acknowledge that the “preventative” approach Involves an
acceleration of unnecessary repairs that inevitably short-changes future generations. By
rushing to implement the proposed “preventative maintenance” strategy, BBP will require
future significant maintenance to be performed (after the useful life of the proposed repairs
has expired) considerably sooner than would be required if a phased approach is applied.

4
5

Report Section 7, page 26
Report Section 5, page 19

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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.


There is no demonstrated cost advantage for the Report’s recommended “preventative
maintenance” alternative. The Report claims that the recommended “preventative
maintenance” option is $84 million less expensive over 50 years than the “reactive
maintenance” option7 – the other alternative which was examined. But the Report’s
analysis is overly simplistic because its reliance on “2015 dollars” appears to ignore the
fundamental economic factors of (a) the time value of money, and (b) inflation.
Consideration of those basic economic factors is an essential element for any reliable
comparison of the costs of different plans for any long-term capital project such as this,
where one approach calls for payment of the bulk of the expense in the near term and the
other defers much of the expense to decades later. In actuality, based upon the data
presented in the Report, the current return of long-term bonds issued by New York City,
and applying a generally accepted estimate for inflation, the cost of the recommended
“preventative” alternative and the “reactive” alternative are essentially the same when the
cost is expressed – as it must be -- in present value terms. And, as noted above, the
reactive approach provides a significantly longer useful life for the repaired piles. The
Report’s obvious conceptual analytical error could call into question the validity of the other
data and analysis presented in the Report.
Finally, there appears to be a clear conflict of interest between the authors of the Report,

CH2M, and the Brooklyn Bridge Park with regard to the proposed preventative maintenance

6

Report, Section 4, page 8
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.
7

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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.

8

Report, Section 8, page 30

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About Goldenrod Blue Associates and the Author
Goldenrod Blue Associates provides technically-oriented subject matter experts (SMEs) and
other support services in a broad variety of marine, aerospace, defense, human factors and other
industry areas. Goldenrod Blue’s SMEs have industry-recognized expertise in areas ranging from
submarines to satellites – and many, many areas in-between. Goldenrod Blue’s client list includes
market-leading technology companies, law firms and others.
The Author of this Review is Capt. Edward L. Bartlett, Jr., US Merchant Marine. Capt. Bartlett’s
undergraduate education was in marine engineering and naval architecture, leading to a Bachelor of
Science degree; his post-graduate education was in business administration (finance), leading to a
Master of Business Administration degree. He was also a member of the initial class of the Global
Business Leadership Program conducted cooperatively by the Tuck School of Business at Dartmouth and
Templeton College at Oxford. He is licensed both as a Master (Captain) and Engineer Officer in the US
Merchant Marine. A former submariner and instructor in the US Navy’s Nuclear Power Training
Program, while employed by General Dynamics Electric Boat he both led a global technology
development program and served as Engineering Manager for the design of the VIRGINIA Class nuclear
powered attack submarine. As a business executive he turned around a failing ship controls equipment
business and then, through a series of divestitures/acquisitions which he led, he built DRS Power
Systems (now a unit of Finmeccanica, S.p.A.). DRS Power Systems is America’s leading shipboard
controls and propulsion systems provider. Capt. Bartlett’s core expertise is in all aspects of ship and
related marine equipment design, construction, operation and maintenance. His individual innovations
include the development of a radically new electrical power distribution system for submarines. This
new system simultaneously reduced ship size and cost while improving stealth. He also developed a
radically new process for the assembly of shipboard nuclear reactors/powerplants – saving hundreds of
millions of dollars in design and construction cost. This process was then adapted and applied to the
design and assembly of the whole ship, saving even more cost. He was among the first who realized and
demonstrated how power electronics technology could be uniquely applied to solve difficult problems.
Capt. Bartlett is not an expert in wood piling design/maintenance, but has applied his more than
30 years of engineering and business leadership experience to this Pro Bono assignment for Jenner &
Block.
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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 studies”9 the implementation plan used a “phased” approach. In
the case of the Lake Pontchartrain Causeway, both the world’s 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.

Lake Pontchartrain Causeway

9

Year
Work
Done

Bridge
Age
(Years)

# Piles
Done

1988
1996
2002
2004
2010

32
40
46
48
54

21
414
174
174
586

Year Built 1956
# Piles
9,000
% of
Total
Total % of
Piles
Done to
Piles
Done this
Date
Done
Action
21
0.2%
0.2%
435
4.6%
4.8%
609
1.9%
6.8%
783
1.9%
8.7%
1369
6.5%
15.2%

Report, Section 6, page 22

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Further, in its discussion of the New York Battery Park City Authority installation epoxy grout
encasement installation program, the Report discusses the current program there as “Phase IV”.10 The
examples cited in the Report therefore suggest that the typical installation process for epoxy grout piling
encasements is in a phased manner – whether it is done proactively or reactively. This, then, is both a
legitimate alternative maintenance strategy and it should have been considered in the Report as an
alternative maintenance approach.
A phased inspection-based installation approach is, in fact, a legitimate maintenance strategy –
and, as discussed further below, it appears to be a superior technical solution for Brooklyn Bridge Park.
Not only that, the Brooklyn Bridge Park’s own 2009 Financial Plan discusses their piling encapsulation
plan and states that the plan “must be performed over the next 15 years.”11 This, installing these
encapsulation systems over the next 15 years, is the essence of a phased implementation plan. So, until
only recently, Brooklyn Bridge Park’s own plan was to do exactly as is suggested in this Review (though
perhaps with concrete rather than epoxy). This additional alternative, at a minimum, should also have
been fully examined in the Report.
The Report is Misleading as to the Lake Pontchartrain Causeway Piling Encapsulation
Program
The data presented above is a reproduction of the information provided in the Report.12 In fact,
this data is presented in the Report in a misleading way. In discussions with the Causeway General
Manager13 and the Causeway Chief Engineer14 the inspection-based phased program to implement
epoxy grout encasements on causeway pilings was discussed. Instead of being a “proactive”
maintenance program, the Causeway program listed in the Report as a “case study”15 was clearly a
reactive maintenance strategy. The approximately 15% of the pilings that received the epoxy grout

10

Report, Section 6, page 22
Brooklyn Bridge Park Financial Plan presentation dated January 29, 2009, Slide 26, as posted at
http://brooklynbridgepark.s3.amazonaws.com/s/520/Financial%20Plan%20Presentation.pdf
12
Report, Section 6, page 22
13
As reported in a telephone conversation between E. Bartlett, Goldenrod Blue Associates and C. Dufrechou,
General Manager of the Greater New Orleans Expressway Commission (colloquially known as “the Causeway
Commission”) on December 2, 2015
14
As reported in a telephone conversation between E. Bartlett, Goldenrod Blue Associates and C. Bourgeois, Vice
President of Gulf Engineers & Consultants (who acts as the Causeway Chief Engineer) on December 3, 2015
15
Report, Section 6, page 22
11

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encasement all had demonstrated evidence of deterioration in annual inspections. The damage had
been caused by one of three issues (listed in order of prevalence):
1. Allisions by various vessels (vessels striking the pilings)
2. Overdriving when the pilings were originally installed (installation damage)
3. Grout failures between piling sections
Other than to repair any pilings which may be identified in future inspections as starting to
degrade, there is no plan to use the epoxy grout encasement on any additional pilings.
The Report is Arguably Misleading as to the True Scope of What is Recommended
The Report, in its Summary presentations, could mislead the casual, or non-technical, reader
into thinking that the recommended “preventative approach” is proactive with regard to all of the
marine structures at Brooklyn Bridge Park – in fact, this is not correct. In the Report’s Executive
Summary16 the two reviewed maintenance approaches are described and discussed, and the reader is
led to believe that “Proactive, or preventative repairs. . . consist of epoxy (non-structural) encasements
of timber piles to arrest deterioration.”17 The Report’s Conclusion section also fails to indicate that the
recommended maintenance plan does anything other than install these epoxy grout encasements on all
pilings that have not already been structurally repaired.18 At the start of Section 6, where the
preventative maintenance strategy (proposed option) is described, the Report is technically accurate but
arguably misleading in stating “This repair typically consists of installing. . .”19. This paragraph then goes
on to describe how pilings are encased in the epoxy grout encasement system. Only at the very end of
this Section does the true detail emerge – that there is not enough funding in the “preventative model”
to include all of the pilings on Pier 3 in the epoxy grout encasement program.20 The approximately 1,300
pier 3 pilings that are not included in the epoxy grout encasement program are, in fact, relegated to the
“reactive” maintenance program.21 Finally, the so-called proactive preventative approach does not
include any proactive or preventative actions regarding either the concrete piling extensions or the pier

16

Report, Section 1, pages 1-3
Report, Section 1, page 1
18
Report, Section 8, page 30
19
Report, Section 6, page 20
20
Report, Section 6, page 23
21
Report, Section 6, page 23
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bulkheads.22 Given these facts, buried deep within the Report, the non-technical or casual reader may
not without careful study obtain a clear understanding of what is actually being proposed.
The Basis of the Timber Piling Deterioration Modeling is Unclear
The Report provides an overview of the modeling process used to prepare the two life cycle
maintenance plans. Without providing any context, the Report states that “deterioration rates are
dependent on many variables such as temperature, salinity, current, pollution levels, and remaining
concentration of preventative treatment.”23 This, of course, is all true – but is seemingly unquantified in
the Report.
For example, water temperature and flow rate does, in fact, have a dramatic impact on the
leaching rate of the chemical constituents of the creosote piling treatment used at Brooklyn Bridge Park.

Effects of Water Temperature and Flow Rate on Creosote Leaching
Water
Temperature
Degrees C

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

Report, Section 6, page 20
Report, Section 4, page 10

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The data above24 clearly demonstrates that changes in both water temperature and flow rate
significantly impact the creosote
leaching rate. It is, however, not
directly helpful in modeling the
deterioration of the pilings at Brooklyn
Bridge Park. Even with detailed
temperature data (the table to the
right compares the annual East River
temperature variation with the annual
temperature variation at the Lake
Pontchartrain Causeway in Louisiana)
there is inadequate data to model

Average Annual Water Temperature Comparison
East River (average
of Battery Point and East River is East River is
Kings Point
Cooler by x Cooler by x
Measurements)
degrees F
degrees C
(degrees F)
January
56.84
37.50
19.34
10.74
February
57.74
36.00
21.74
12.08
March
62.24
40.50
21.74
12.08
April
68.54
47.25
21.29
11.83
May
76.46
57.00
19.46
10.81
June
82.22
65.25
16.97
9.43
July
84.38
70.50
13.88
7.71
August
84.74
73.50
11.24
6.24
September
82.22
70.50
11.72
6.51
October
75.02
61.75
13.27
7.37
November
67.28
53.50
13.78
7.66
December
60.80
43.00
17.80
9.89
Annual Average
71.54
54.69
16.85
9.36
Lake Pontchartrain - American Wood Preservers Association Classification UC5C/20 PCF
East River - American Wood Preservers Association Classification
UC5A/16 PCF
Lake Pontchartrain
Data: USGS
NYC Data: NOAA

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 Park’s 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

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to remaining life of the pilings that support the piers at BBP. This data is provided in Table 4-1 of the
Report, copied for information below.26

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

Report, Section 4, page 10

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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)

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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)

Each of the entries in the above models are discussed below:


BBP Pier. This is the individual pier at Brooklyn Bridge Park



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
Blue’s 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

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1960, however. The Use Category system was not yet in effect and the applicable standard then
was AWPA Standard C3. For Southern Pine pilings used in coastal waters the C3 standard
required an average creosote retention of 20 pounds per cubic foot (PCF). For Douglas Fir
pilings in the same application the standard allowed the use of pilings with 12, 14 or 16 (for
severe conditions) PCF creosote retention.27 As noted in Report Table 4-1, both species were
used at BBP. For the purposes of the analysis models shown above, this is the other input value
(along with build date) that was changed between models to develop a sensitivity analysis. As
can be seen above, because we have a fixed value in 2010 in the model for each pier, the higher
the initial creosote retention, the shorter the creosote initial half-life. This is because the
leaching rate had to be faster to get down to the 2010 as-tested creosote retention value for the
pilings on each pier when starting from a higher initial value. This creosote initial half-life value
impacts the model result, so to provide a broad sensitivity analysis we have run the model for
each pier with three different initial creosote loading values. The “high creosote” case is set at
20 PCF, the “mid creosote” case is set at 16 PCF and the “low creosote” case is set at 12 PCF.
These values were used as the starting point for the models in both 1960 and 1940.


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

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conditions of that location since installation (either 1960 or 1940). This initial half-life
determination can then be used to predict the remaining life of each pier’s pilings prior to
degradation past the usable point.


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 Report’s projected condition of pier 3 in 2034, it would be
accurate to state that this model’s 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

Report, Section 6, page 23

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model were all constrained (as discussed in more detail above) to reflect pier 3 being
deteriorated in 2034, as indicated in the Report. Should this factor change due to additional
data being provided, the models would then be recalculated with the updated data. Because of
this, the best way to consider the model output is that it produces predicted degradation dates
for the other 3 piers based upon pier 3 being degraded in 2034.
The Report recommends that all pilings, except for those on Pier 3, which have not already been
structurally repaired, should have the epoxy grout encasement treatment applied starting in 2016.
When reviewing the results of the alternative degradation model, as discussed above, it becomes clear
that there is absolutely no technical reason to rush into this “unprecedented” scale “landmark
project”30 in 2016.
The results of the six model variations are summarized below:
Remaining Pier Life Comparison - Sensitivity Analysis for Initial Creosote Loading and Piling Installation Date
Date Range - Predicted Year When the Predicted Year When the Predicted Year When the Predicted Year When the Predicted Year When the Predicted Year When the
Predicted
Pier is Degraded Pier is Degraded Pier is Degraded Pier is Degraded Pier is Degraded Pier is Degraded BBP Pier
Pier
High Creosote - 50 Years Mid Creosote - 50 Years Low Creosote - 50 Years High Creosote - 70 Years Mid Creosote - 70 Years Low Creosote - 70 Years
Degradtion (20 PCF Initial Creosote
(16 PCF Initial Creosote
(12 PCF Initial Creosote
(20 PCF Initial Creosote
(16 PCF Initial Creosote
(12 PCF Initial Creosote
Year
Retention)
Retention)
Retention)
Retention)
Retention)
Retention)
2
2021-2026
2026
2025
2024
2024
2023
2021
3
2034
2034
2034
2034
2034
2034
2034
5
2064-2089
2064
2068
2077
2072
2077
2089
6
2018-2024
2024
2023
2021
2021
2020
2018

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

Report, Section 8, page 30
e.g. The Timber Piling Council (www.timberpilingcouncil.org) and the Wood Products Council
(www.woodworks.org/wp-content/uploads/Rollins-Timber-Piling.pdf)
31

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The Report establishes the useful life of the epoxy grout encasement as 50 years.32 While epoxy grout
encasements may well have useful lives of 50 years, the system has only been in service for
“approximately 30 years.”33 So, given the assumptions presented in the Report and the model output
above, why would anyone install a 50 year preservation treatment to a piling that has an unprotected
calculated remaining useful life of between 48-73 years (pier 5)? This would, in effect, be spending
money now for no useful benefit over the next 50 years – and would cheat future generations of the
public from enjoying this pier’s facilities without future additional maintenance. It would be far more
reasonable, from a strictly technical perspective, to delay installing the epoxy grout encasement
treatment to these pilings until a point in time when they are still structurally sound (not degraded) but
are much closer to the time when they will become degraded without additional action. This is the
essence of a phased installation plan – an installation plan that all 7 of the cases cited in the Report are
utilizing.34
Other Technical Observations Regarding the Report
The technical observations discussed above are the major items noted during this Review.
Other technical points were noted and are listed below in summary fashion:


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

Report, Section 4, page 8
Report, Section 6, page 22
34
Report, Section 6, page 22
35
e.g. Report, Section 1, page 2
36
Report, Section 6, page 23
37
Report, Section 4, pages 11, 12, 13 & 14
38
Report, Section 6, page 20
33

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treatment is recommended on these areas, why was so much content (> 13%) devoted to these
areas in the Report?


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

Report, Section 6, page 22
Report, Section 7, page 27
41
Report, Section 4, page 8
40

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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

Report, Section 7, page 28
Report, Section 7, page 29
44
Testing conducted in accordance with ASTM Procedure D1143, as Reported in Timber Piling Design, Martin
Rollins, P.E., Copyright 2012, (www.woodworks.org/wp-content/uploads/Rollins-Timber-Piling.pdf)
45
Report, Section 7, page 29
43

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Cost Modeling Issues
The Relevant Economic Factors Associated with the Report’s Cost Modeling Appear to Be
Ignored in the Report
The very first new concept that is introduced in typical introductory texts in financial
management is the concept of time value of money.46 As outlined by Joy in his referenced text, “Most
people would prefer current consumption to future consumption; so investors of all sorts expect to be
rewarded for their patience by receiving a rate of return on their investment; for various investments,
this return may take the form of interest, dividends, or capital gains. All three represent the return for
waiting: the time value of money.”
Calculating the time value of money can be done to establish the ‘future value’ (FV) of an
investment made today, to determine the ‘present value’ (PV) of a future stream of capital flows, and to
establish the ‘net present value’ (NPV) of an irregular stream of future capital flows. What is required
for these calculations is to simply know the timing and the value of the capital flows (invested/returned
or spent/earned) at each point and to know the ‘discount rate’ for this investment. The ‘discount rate’
reflects both market conditions for the ‘cost of capital’ (including inflation) as well as the ‘risk premium’
to be assigned to any particular investment. The capital markets, with their worldwide nexus in New
York City, are extraordinarily proficient in establishing this ‘discount rate’ – or ‘required rate of return’ –
for the entire spectrum of possible investments.
In addition to the time value of money, the second relevant economic factor to be considered is
the inflation or other non-currency cost impacts on forward prices from data that is measured
retrospectively, typically by the consumer price index. The challenge, of course, is to forecast future
prices based upon recent backward-looking trends.
In reviewing the Report, the claim is made that the proposed preventative maintenance strategy
is $84 million less expensive than the current reactive maintenance strategy.47
The apparent 34% cost difference between these options provides an apparently compelling
reason for the “unprecedented” scale “landmark” project to be conducted as recommended.48 Yet the
46

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

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Report’s data is consistently expressed as “2015 Dollars,” which generally is understood to refer to the
amounts that would be charged if all payments were made in 2015; in other words, the Report describes
costs to be paid in, for example, 2034, as if they were being paid in 2015, without any adjustment for
either the time value of money -- the fact that BBP does not have to actually make the payment in 2015
– or for the inflation of the required costs at the time they will actually be incurred.
Report Figures 5-3 and 6-2 are copied below for information.

48

Report, Section 8, page 30

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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
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analysis that follows is intended to illustrate, with a reasonable example, the importance of applying the
required economic factors in any comparative assessment of future costs.
To perform the net present value analysis, the data represented in Report Figures 5-2 and 6-3
have been imputed into annual investments, as shown in the tables below. For the first analysis a basic
discount rate of 3.41% has been used. This value was assigned based upon the yield to maturity of a
recently traded existing New York City bond with a 2046 maturity.49 It should be noted that this bond,
when issued, had a 4.0% interest rate (coupon). This 4.0% discount rate was also used in one of the
analysis variations that includes CPI adjustments. Since Brooklyn Bridge Park derives its income stream,
at least in part, from real estate taxes and/or commercial property rents/lease payments and since
Brooklyn Bridge Park is a public entity under the cognizance of the Mayor of New York City and the
Governor of New York State, it is considered reasonable that the yield to maturity of the noted, recent
bond trade is an appropriate proxy for the current discount rate in this analysis. Further, that the
original bond coupon (interest) rate is a reasonable proxy for the discount rate over the last 24 months.
The consumer price index – urban (CPI-U), developed and published monthly by the Bureau of
Labor Statistics (BLS),50 has been used to establish a forward pricing adjustment factor. One factor,
0.2%, has been established for the most recent 12-month period (the latest published CPI report is for
October, 2015,51 so the 12 relevant months are November, 2014 through October, 2015). As published
by BLS, this trailing 12-month CPI adjustment is 0.2%. Similarly, for the trailing 24-month period the CPI
adjustment is 0.95% (the average of 0.2% for 2015 and 1.7% for 2014). Because current bond pricing,
and thus the current bond-derived discount rate, reflect the then-current economic conditions, the
bond rate for the 24-month analysis was set at 4% (the bond’s original issue interest rate). This is
consistent with the bond’s new, current, yield to maturity since the CPI (i.e. inflation) has significantly
dropped in 2015 vs. 2014. This is also consistent with the cost of capital for long-term New York City
debt (bonds) at between 300 and 325 basis points (i.e. 3.0% to 3.25%) above CPI. To simplify the math
(no change in result) the models were run with a 3.41% discount rate (no CPI adjustment), with a 3.21%

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

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net discount rate (3.41% bond rate with a 0.2% CPI adjustment) and with a net discount rate of 3.05%
(4.0% bond rate with a 0.95% CPI adjustment).
The results of this analysis are presented below. The first two presentations are the model for
each maintenance strategy, run without CPI adjustment. The following section provides a comparison of
the results of all variations.

Net Present Value - Reactive Maintenance Strategy (currenly in use)
NPV of the (all in $M)
Investment $160.92
Discount
Rate
3.41%
Annual Investment
Year
Spending
2013
$3.33
2014
$3.33
2015
$3.33
2016
$6.00
2017
$6.00
2018
$6.00
2019
$3.67
2020
$3.67
2021
$3.67
2022
$5.67

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

Net Present Value - Preventative Maintenance Strategy (proposed)
NPV of the (all in $M)
Investment $163.18
Discount
Rate
3.41%
Annual Investment
Year
Spending
2013
$3.67
2014
$3.67
2015
$3.67
2016
$31.67
2017
$31.67
2018
$31.67
2019
$3.67
2020
$3.67
2021
$3.67
2022
$5.33

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

Goldenrod Blue Associates
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Page 27 of 31

Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments
Comparing the Financial Projections with and without considering Economic Factors
In the table below the financial projections for the two plan options are compared with and
without considering the economic factors.

Understanding the Impact of Economic Factors over this 50 Year Plan
Analysis Variation
Explanation

Simplistic Model
from the Report
Unadjusted for any
Economic Factors

Adusted to Reflect 3.41%
Discount Rate & No Cost
Growth

Adusted to Reflect 3.41%
Discount Rate & 0.2% Twelve
Month CPI Growth
(per BLS)

Adusted to Reflect 4.0%
Discount Rate & 0.95% Twenty
Four Month CPI Growth
(per BLS)

Plan Option

Plan Option Cost
per Report

Present Value Adjusted
Plan Option Cost
Reflecting Discount Rate
@ 3.41%

Present Value Adjusted
Plan Option Cost
Reflecting Net Discount Rate
@ 3.21%

Present Value Adjusted
Plan Option Cost
Reflecting Net Discount Rate
@ 3.05%

($M)

($M)

($M)

$334.0

$160.9

167.3

172.6

$250.0

$163.2

166.7

169.7

$0.6

$2.9

(all analyses over 50 years)

Reactive Maintenance Strategy
(currently in use)
Preventative Maintenance
Strategy (proposed option)
Cost Advantage "Reactive"
Cost Advantage "Preventative"

($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

Report, Section 8, page 30

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Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments
for the net present value analysis the greater the support for applying a higher discount rate also, since
discount rates are typically increased as the perception of uncertainty of future conditions increases; a
higher discount rate would offset the effect of the higher inflation rate on the relative net present
values of the two approaches. It is therefore submitted that the example set out above fairly illustrates
the need to apply a present value analysis in the cost comparison, and suggests that the preventative
plan does not have a material, if any, cost advantage over the reactive plan.
The Cost of the Third Option is Highly Likely to be the Lowest Cost Plan
Based upon the results of the financial analysis discussed above, it is highly likely that the third
option, the phased installation of the epoxy grout encapsulation system, as described in the Technical
Section above, will be the lowest cost plan. This is because this plan will avoid the huge near-term spike
in spending that is the essential element of the proposed plan. At the same time, it will also avoid the
higher unit cost of repairing pilings using the structural repair method. By delaying the spending from
2016 until later (by appropriately using some of the remaining life of the pilings as they are now) the
cost, in present value terms is reduced. Determination of the exact savings that are possible under such
a phased approach requires access to additional data. Nonetheless, the savings offered by this third
option are expected to be significant.

Goldenrod Blue Associates
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Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments

Organizational Conflict of Interest Issues
What is Organizational Conflict of Interest?
Organizational conflict of interest (OCI) refers to a conflict of interest relating to the
government. It is similar to private sector conflict of interest in that it requires that parties be impartial
and trustworthy. If not, that would constitute conflict of interest. OCI exists when personal or
professional interests of a person affect the person's ability to put his interests aside. The types of
individuals or entities who are required to comply with OCI laws are government contractors, subcontractors and affiliates of contractors, any entities owned by the prime contractor and chief
executives and directors. Effectively practicing OCI rules helps to ensure that money will not be wasted.
OCI laws help to make sure that the best-qualified, rather than the best-connected contractor is used.
Eliminating OCI will create more trust in government endeavors. The public expects that preferential
treatment not be granted to anyone and that insider deals be stopped. Potential OCI problems are
unequal access to information, impaired objectivity and biased ground rules.53
Conflict of Interest Regulations Affecting Brooklyn Bridge Park
The Brooklyn Bridge Park, in accordance with applicable New York State Law for non-profit
corporations, has an ethics, conflict of interest and contracting policy. These are all published on the
park’s website.54 Of particular interest in this Review is the contracting policy. From a non-attorney
program manager point of view, this is one of the weakest contracting conflict of interest regulations
ever encountered. Essentially, it authorizes the park to do anything that is approved by the Chairman.
There is nothing in the Brooklyn Bridge Park contracting policy that attempts to preclude impaired
objectivity on the part of park contractors. This is a specific weakness of this policy, and this weakness
may have materially affected this program.

This paragraph was adapted from a discussion available at: www.ehow.com/facts_5964932_organizationalconflict-interest_.html
54
The Brooklyn Bridge Park website is: www.brooklynbridgepark.org
53

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Brooklyn Bridge Park
Preventative Maintenance Plan
Technical and Program Review Comments
The Appearance of Impropriety – Impaired Consultant Objectivity
It may be of interest to review the Federal Acquisition Regulations for the Organizational
Conflict of Interest regulations that apply to contractors.55 These regulations, applicable to all
contractors doing business with the Federal Government, prohibit a single contractor from defining
requirements for a specific program and then gaining a contract to execute such a program. This is a
very strong Organizational Conflict of Interest regulation, and is aggressively enforced. In short, the
federal OCI requirements are the antithesis of the Brooklyn Bridge Park contracting requirements.
In Section 8 of the Report, where the authors state “We look forward to the opportunity to work
with you on this landmark project”56 it seems that CH2M expects to be a contractor in some unspecified
capacity in connection with the execution of the proposed program. It also plausible that CH2M has
been aware that the preventative plan is favored by BBP management to justify their plan for immediate
revenue-generating development at Pier 6, and the Report has been influenced by that awareness. This
may be an area to be examined in determining the validity of the Report.

55
56

48 CFR Part 9, Subpart 9.5 – Organizational and Consultant Conflicts of Interest
Report, Section 8, page 30

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Page 31 of 31

Implications of the
“Brooklyn Bridge Park Assessment Analysis”
Produced By
Rosin & Associations (February 2016)

Henry “Ren” Richmond
February 16, 2016

 

Table of Contents

I.

Executive Summary

II.

Purpose

III.

About the Author

IV.

Background on Park Structure

V.

Rosin Assessment

VI.

Incremental Cash (After Tax Breaks) From Rosin Assessment

VII. Implications for Park Financial Model
VIII. Conservatism in Rosin Estimates
IX.

Conservatism in the Projections in this White Paper

X.

Errors and Shortcomings in the Denham Report

XI.

Conclusion

Appendix A.

BBPC Unabated Tax Revenue

Appendix B.

Incremental Tax Abatements on Park Development

Appendix C.

Unabated Revenue Model

Appendix D.

BBP Cumulative Cash Flow Projections (Adjusted for Rosin Estimates)

1
 

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
BBPC’s
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
City’s 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.

                                                            
1

See page 19 of BBPC presentation
p
datted 7/9/15, avaailable online:
oklynbridgeparrk.s3.amazonaw
ws.com/p/2925
5/BBP%20Finnancial%20moddel%20for%200July%20Publiic%20
https://broo
Presentatio
on%2007%200
09%2015b.pdf
2
See entry
y for One Brook
klyn Bridge Paark (360 Furmaan ST) in DOF
F spreadsheet oof comparable ccondos:
http://www
w1.nyc.gov/asssets/finance/dow
wnloads/excel//condo_coop_ccomps/b3_conndo_comp012816.xlsx
3
“Brookly
yn Bridge Park Assessment Analysis”,
A
Rosin
n & Associatess, February 2016.

2
 

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.

he corrected forecast in perspective,
p
the
t Park Corrporation’s $$800 millionn surplus witthout
To put th
Pier 6 is twice the su
urplus they cu
urrently, and
d erroneouslyy, forecast w
with the incluusion of Pierr 6
(~$400 million),
m
as presented
p
in the
t July 9, 2015
2
presentaation (page 330). And, given the
                                                            
4

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.   

3
 

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 estimates—calculated 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, BBPC’s 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 Corporation’s 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.

                                                            
6

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

4
 

II. Purpose
The Rosin report provides estimates for the BBPC’s 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.

5
 

III. About the Author
I am a financial analyst and have practiced in this field for approximately 18 years. I received a
Bachelor of Arts degree in Mathematics from Harvard University in 1997. I have been
employed at First Eagle Investment Management, LLC and related companies (“First Eagle”)
since September 2000. Since March 2005, I have been a financial analyst in a small group that
primarily invests in publicly-traded companies on behalf of institutional clients. I typically
analyze special situations (including mergers and acquisitions, spinoffs and corporate
restructurings) across a wide range of industries. From 2000 to 2005, I was a financial analyst in
the firm’s mergers and acquisitions advisory group. Prior to that, my experience includes several
years as an analyst at the Northbridge Group, an economic and strategic consulting firm to the
electric utility industry.
I am also one of the Directors of People for Green Space Foundation, Inc. I live within and am
on the condominium board of One Brooklyn Bridge Park (“OBBP”), the residential building next
to Pier 6. This white paper contains my analysis and represents my personal views.
In 2014, I discovered that the cursory analysis8 provided by the BBPC staff to the BBPC Board
and the public to justify the Pier 6 RFP was materially misleading due to expiring tax breaks that
dramatically increase BBPC revenue.9 This discovery led to major revisions to the BBPC
financial model, including a dramatic increase in projected expenses (both capital replacement
and waterfront pier repair), seemingly with the goal of creating an illusory financial need to
develop Pier 6. And, instead of publicly releasing its financial model as long requested by a long
list of community groups and elected officials, the revelation of issues in the Park financial
model led to the hiring of Barbara Denham, a consultant paid by the BBPC to review its financial
model.

                                                            
8

See BBPC Financial Presentation dated 8/6/14:
https://brooklynbridgepark.s3.amazonaws.com/p/1738/BBP%20Financial%20model%20for%20Aug%20%
20BOD%20meeting%20-%2008.06.14.pdf

9

“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 corporation’s board asked the staff to
do. She said that the staff’s 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. 

6
 

IV. Background on Park Structure
The Brooklyn Bridge Park is an 85 acre project (including 10 water acres and 8 acres of
development) on the western shore of Brooklyn. With iconic views of Manhattan, the New York
harbor and the Brooklyn Bridge, millions of New Yorkers and tourists alike come to the Park
seeking recreation, relaxation or just an escape from life in a fast-paced city.
The Park’s funding structure embodies a fundamental compromise that was reached with
the neighboring communities in 2005 during an extensive environmental review process.
Development (including private housing) was allowed in the Park, but with the “intention
being to build only what is necessary to support annual maintenance and operations.”10
That commitment to minimize development was to continue throughout the development process
of all projects in the Park. The park planners clearly promised11 to reduce development if
market conditions allowed as the Park evolved.
Financial analysis has always been at the heart of the Park structure. The Park’s planning
documents contained detailed financial projections with supporting analysis. Notably, the
original planners studied reduced density12 and other alternatives in order to minimize
development. Unfortunately, this type of analysis has not been publicly provided by the Park
Corporation in order to demonstrate that the proposed Pier 6 project is the minimum amount of
development necessary to fund the park.
By law, the BBPC receives the property taxes paid on commercial or residential development in
the Park (“PILOT”, or payment in lieu of taxes). To the extent needed to fund the Park, five sites
were set aside for possible development, including a mix of residential, office, retail and hotel
property. The first development site, the converted warehouse known as One Brooklyn Bridge
Park (OBBP), is the only completed site. One John ST, Pier 1 (Pierhouse and 1 Hotel) and
Empire Stores are all under construction and are expected to be completed in 2016. The Park
Corporation issued an RFP for the last site, Pier 6, in 2014. As part of the settlement of a lawsuit
with PFGSF, the BBPC sought the required approval from Empire State Development, a state
entity, to disregard the commitments made in 2005 to build only that housing needed to support

                                                            
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

7
 

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

See proposed GPP modification, available online:
https://brooklynbridgepark.s3.amazonaws.com/p/2853/BBPDC%20Proposed%20Mod%20to%20Modified%20GPP.
PDF
14
See appendix C of 2005 Final Environmental Impact Statement.
15
See June 2012 press release, available online: http://www.brooklynbridgepark.org/press/mayor-bloombergannounces-selection-of-toll-brothers-starwood-capital-group-joint-venture-to-develop-hotel-and-residentialcomplex-at-pier-1-in-bbp
16
Chapter 1 of 2005 FEIS notes: “Empire Stores warehouses would be restored as a mixed-use project and would
house approximately 50,000 square feet of restaurant uses, approximately 70,000 square feet of retail, 36,000 square
feet of office space, and 128,000 square feet of educational or research and development uses. Approximately 3,000
square feet of ground floor retail space would be included on this site.” Available online:
http://brooklynbridgepark.s3.amazonaws.com/s/792/FEIS_Chapter%201.%20Project%20Description.pdf
17
See page 5 of the July 2015 report by Barbara Denham.

8
 

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.

9
 

VI. Incremental Cash (After Tax Breaks) From Rosin Assessment
The BBPC forecast a deficit of more than $200 million without the planned Pier 6 development.
However, this deficit disappears, instead becoming a large surplus if the Park development is
properly assessed.
Assuming the current “reactive” approach to fixing the waterfront piers, I calculate that the
BBPC will generate approximately $800 million in excess cash if the Rosin estimates are
adopted (adjusted for tax abatements):

($ 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

* Source: Page 23 of BBPC presentation dated 7/9/15.

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 BBPC’s 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 Park’s 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 BBPC’s
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).



SUBTOTAL: Total Incremental Cash = ~$1.0 Billion.



LESS: Deficit Forecast by BBPC (Minus ~$200 million20) on page 23 of BBPC
presentation dated 7/9/15.



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 Corrporation’s $$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

BBPC prresented cash balance
b
on a beeginning of perriod basis in itss July 2015 analysis. Conseqquently, BBPC
C 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).

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 BBPC’s “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.

Note: For simplicity,
s
the chart above an
nd analysis herrein include a uuniform 5% boorrowing cost oon any deficits. Nearterm borro
owing cost maay be lower giv
ven the twenty year
y 3.41% ratte for NYC genneral obligationn bonds highligghted
in appen
ndix B of the Ju
uly 2015 reporrt by Barbara Denham,
D
the coonsultant hiredd by BBPC to eevaluate its moddel.

                                                            
22

See pagee 25 of BBPC presentation
p
daated 7/9/15.

13
 

VIII. Conservatism in Rosin Estimates
The estimates in the Rosin report imply a great deal of conservatism as described in that report.
As one example, consider the taxes paid by the existing building, One Brooklyn Bridge Park.
On page 26, the Rosin report notes: “In our experience there can be a time-lag in raising the
assessment of existing property to the current market, especially in a rising rental and
commercial property market. That said, existing property assessments should ultimately
converge with market rates from comparable rental and lease data over time.” For the residences
in OBBP (which by law are assessed as a rental), the Rosin report assumes the current DOF
assessment, which is based on rents of approximately $30 per square foot (as shown in appendix
A of the Rosin report). Closing the gap to current rental rates in the building and the local area
(north of $50 per square foot as shown in the Rosin report) implies millions of dollars per year in
additional property taxes paid to the Park from this building alone as its assessment converges to
the current rental market. This additional Park income is not in the Rosin estimates (which
assume the current DOF assessment). Consequently, the actual Park tax receipts could be
millions of dollars per year higher than the Rosin estimates, implying the potential for millions of
dollars per year of incremental revenue, beyond what is assumed in this white paper.
In contrast, the BBPC assumes an assessment of $120 per square foot for OBBP and the other
residential development in the Park, which is far below the current DOF assessment (based on
rent of ~$30 per square foot) of $143.47 per square foot for OBBP condos. Consequently, the
undisclosed rent assumption underlying the BBPC assessment must be half of the actual $50+
per square foot in residential rents in this building and in this local market. In effect, the BBPC
is assuming that taxes will always be based on recession-level rents rather than actual current
market conditions.

14
 

IX. Conservatism in the Projections in this White Paper
For the sake of argument, the analysis herein adopted BBPC assumptions:


3% annual growth in DOF assessment (which understates the historical growth in
NYC property taxes and does not include, for instance, any catch up for the DOF
assessment of OBBP that has lagged the current market as described in the previous
section of this white paper);



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
 

X. Errors and Shortcomings in the Denham Report
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 report by Barbara Denham, the
consultant paid by the Park Corporation to review its financial model. The Rosin report notes:




“Brooklyn Bridge Park’s income-generating capabilities have been under-assessed by
both BBPC and Barbara Denham.”
“Unlike the BBPC’s projections, R&A’s analysis is based on market comparables and
DOF Assessor methodology.”
For the specific development locations under the purview of the 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.”

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 letter that 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

Page 19 of BBPC presentation dated 7/9/15.
DOF website: http://www1.nyc.gov/site/finance/taxes/property-cooperative-and-condominium-comparables.page

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 BBPC’s 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 BBPC’s 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
Crain’s 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 BBPC’s 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
 

Appendix A: BBPC Unabated Tax Revenue

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.

Rev. per year
When Stabilized
($2015 in M)

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

Total Planned Development

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

See pagee 20 of BBPC presentation
p
daated 7/9/15.
See, for instance: http:///seidenschein..com/index.php
p/seidenscheinn/icap_benefits22/ 

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
building’s 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 hotel’s share of the increase in abated taxes by increasing the size of the ICAP tax
break. I determined the hotel’s 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
 

Appendix C: Unabated Revenue Model
Summary of Unabated Taxes
($ in millions)

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%

Assessed Value (3% Growth)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
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%

Unabated Taxes (After 45% Equilization Rate)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Total Unabated Taxes (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%

Implied Assessed Value (3% Growth)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
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%

BBPC Unabated Taxes (After 45% Equilization Rate)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Total Unabated Taxes (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%

Tax Rate
John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Rosin ‐‐ Unabated

BBPC ‐‐ Unabated

   14.2
 103.2
   78.2
   64.4
 
260.0
3.0%

Difference in Unabated Tax Revenue
Incremental Unabated Tax Revenue
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Incremental Unabated Taxes 
Growth
Cumulative Incremental Tax Revenue (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

Summary of Unabated Taxes
($ in millions)

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%

Assessed Value (3% Growth)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
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%

Unabated Taxes (After 45% Equilization Rate)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Total Unabated Taxes (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%

Implied Assessed Value (3% Growth)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
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%

BBPC Unabated Taxes (After 45% Equilization Rate)
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Total Unabated Taxes (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%

Tax Rate
John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Rosin ‐‐ Unabated

BBPC ‐‐ Unabated

Difference in Unabated Tax Revenue
Incremental Unabated Tax Revenue
One John ST
One Brooklyn Bridge Park
Pier 1 
Empire Stores
Incremental Unabated Taxes 
Growth
Cumulative Incremental Tax Revenue (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 
($ in millions)

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

Abatement Assumptions

Increase in Unabated Taxes on Pier 1 (FY2018)
Hotel Share of Revenue (p21 of Rosin Report)
Hotel Share in Increase in Tax Abatement 

     3.8
39.3%
     1.5

Increase in Unabated Taxes on Empire Stores (FY2018)

     4.0

Incremental Revenue Unabated from Utilizing Rosin Estimates
Less: Incremental Tax Abatements on Pier 1
Less: Incremental Tax Abatements on Empire Stores
Incremental Net Revenue

     0.8      0.8      9.5
    (1.5)
    (4.0)
     0.8      0.8      4.0

CUMULATIVE Incremental Net Revenue EOP

     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

Reactive Approach to Pier Repair

Approx. BBPC Cash Surplus (Deficit) from P23 of BBPC Pres. (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)
CUMULATIVE incremental Cash Flow 
     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
Adjusted Cash Surplus (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)

Incremental Interest Rate on BOP Cash Surplus (Capped at 2.6%)
Incremental Interest Rate (5%) on any BOP Deficit
Incremental Cash Surplus (Deficit) for Interest Income (Expense)

     ‐

Incremental Net Revenue from Utilizing Rosin Estimates
Interest Income (Exp.) on Incremental Cash Surplus (Deficit) at BOP
Incremental Cash Flow 
CUMULATIVE incremental Cash Flow 

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

Preventative Approach to Pier Repair

Approx. BBPC Cash Surplus (Deficit) from P25 of BBPC Pres. (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
CUMULATIVE incremental Cash Flow 
     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
Adjusted Cash Surplus (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

Incremental Interest Rate on BOP Cash Surplus (Capped at 2.6%)
Incremental Interest Rate (5%) on any BOP Deficit
Incremental Cash Surplus (Deficit) for Interest Income (Expense)

Incremental Net Revenue from Utilizing Rosin Estimates
Interest Income (Exp.) on Incremental Cash Surplus (Deficit) at BOP
Incremental Cash Flow 
CUMULATIVE incremental Cash Flow 

     ‐

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 
($ in millions)

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

Abatement Assumptions
Increase in Unabated Taxes on Pier 1 (FY2018)
Hotel Share of Revenue (p21 of Rosin Report)
Hotel Share in Increase in Tax Abatement 

     3.8
39.3%
     1.5

Increase in Unabated Taxes on Empire Stores (FY2018)

     4.0

Incremental Revenue Unabated from Utilizing Rosin Estimates
Less: Incremental Tax Abatements on Pier 1
Less: Incremental Tax Abatements on Empire Stores
Incremental Net Revenue

   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

CUMULATIVE Incremental Net Revenue EOP

 
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

Reactive Approach to Pier Repair
Approx. BBPC Cash Surplus (Deficit) from P23 of BBPC Pres. (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)
CUMULATIVE incremental Cash Flow 
 
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
Adjusted Cash Surplus (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

Incremental Interest Rate on BOP Cash Surplus (Capped at 2.6%)
Incremental Interest Rate (5%) on any BOP Deficit
Incremental Cash Surplus (Deficit) for Interest Income (Expense)

     ‐

Incremental Net Revenue from Utilizing Rosin Estimates
Interest Income (Exp.) on Incremental Cash Surplus (Deficit) at BOP
Incremental Cash Flow 
CUMULATIVE incremental Cash Flow 

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

Preventative Approach to Pier Repair
Approx. BBPC Cash Surplus (Deficit) from P25 of BBPC Pres. (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
CUMULATIVE incremental Cash Flow 
 
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
Adjusted Cash Surplus (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

Incremental Interest Rate on BOP Cash Surplus (Capped at 2.6%)
Incremental Interest Rate (5%) on any BOP Deficit
Incremental Cash Surplus (Deficit) for Interest Income (Expense)

Incremental Net Revenue from Utilizing Rosin Estimates
Interest Income (Exp.) on Incremental Cash Surplus (Deficit) at BOP
Incremental Cash Flow 
CUMULATIVE incremental Cash Flow 

     ‐

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

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