Memorandum

To: SteveMatlin
From: Kathr Kazanas, CecileFu
Subject: Atlantic YardsEconomiclmpactAnall sis-Modified GPP
Date: September 17.2009
Cc: DarrenBloch

The following tablespresenta summarvof the revisedresultsof an economicand fiscal

impactanalysisbasedon the modifiedGeneralProjectPlan1009.This setof results
supersedes thosecontainedin the memodatedSeptember8. 1009.Includedin the current
analysisis updatedinformationon arenarevenuesthat was not includedin the earlier
anall'sis.

I. Project Description

The Project,to be developedby ForestCity RatnerCompaniesandits affiliateI"FCRC") is

comprisedof the constructionof an 18.000-seatarenafor the New Jersel'Nets basketball
teamand for otherevents.an improvedLIRR train yard and subwal,improvementsand a
residentialmixed-usedevelopment. Table I providesPlandetail.

Table1: AtlanticYardsModifiedGPPPlan(Residential
Mixed-Use)

ModifiedGPP Plan
Uses dentialMixed-Use)
Residential qsf (6.430units
6.400.000
Hotel('180rooms)* 1650 0 0 ^>l5

Retail 247,000qsf
Commercial 336,000gsf
Arena(18,000seats) 850,000qsf
Parkinq(spaces) 3,670
PublicOoenSoace 8 acres
*The impactof the hotelcomponentof the projectis not includedin the analysis.However,the spaceallocation
was shiftedto commercialuse. Soaceallocations are as shownin the ElS. Of the totalresidential
unitsin either
plan,4,500will be rentalunits,50% of whichwill be low,moderateand middleincomehousing.The restof the
unitswill be marketrate rentaland condominiums.
residential
 Privilegedand Confidential

II. Summary of Impacts

Construction Impacts
Table2 presentsthe estimatedone-timeconstruction economicandfiscal impactsof the
overallProjectat full build-out.The orerall Projectconstruction
periodis assumedto be
2007-2019,during*'hich constructionuill proceedin tu'o phases.

Table2: One-Time
Construction and FiscalBenefitsat FullBuild-Out
lmpact:Economic

ModifiedGPP Plan
NYC NYS
Employment
Direct . A tr.E
16,427
Indirect& lnduced 8 706
Total 22.223 25 133

PersonalIncome(billions20095r
Total (direct,indirectand induced) 1.04 1.40

Tax Revenues(millions
2009$ 210.0 171 0

*Dollarvaluesare expressedas net presentvaluein 2009$usinga3o/orealdiscountrate overthe 13-year

constructionperiod.(Priceindexused is derivedfromthe resultsof REMIprojections.)
Constructionemploymentis the totalnumberof construction job yearsby full build-out,2007-2019.(A job year is
the totalnumberof workerswho are full-time,part-timeor contractworkersworkingin one year on the project.)
NYS employmentand personalincomeare inclusiveof NYC.
The New York City tax revenuetotal from constructionactivityis inclusiveof the MTA portionof tax revenues.

At full build-outin 2019.construction

spendingunderthe revisedGPPPlannill generate
emplol'mentimpactsof an estimated16,427direct job 1'earsandtotai ot'25.13i direct.
jobs in Neu'York State.The Ne* York Statetotal
indirect,and inducedconstruction-related
includes22,223construction-relatedjobs and secondary'jobs in New York City. Estimated
employmentreflectsthe total overthe entire13-yearperiodof construction. For NYS, this is
approximatelyan annuala\ eraqeof 1,264construction jobs.

Total personalincomeearnedb1 direct.indirect,and inducedconstruction-related uage

eamersis estimatedto be Si .04 billion in New York City and $1.4billion in New York State
(inclusiveof New York Citl). Tax revenuecollectedby New York City as a resultof
construction-relatedactivityand emplol'mentis estimatedto be $210,0million and $ l7l .0
million for Nerl York State.
 Privilegedand Confidential

Permanent Impacts
Permanenteconomicand fiscalimpactsriill resultfrom the operationsof the arenaand
mixed-usedevelopmentand the net neri'employmentgeneratedb1 suchactivity. Table 3
reportsaverageannualnet new emplorment over a 30-1'sa1period.

Economicand Fiscallmpactof TotalProjectat FullBuild-Out

Table3: Permanent

ModifiedGPP Plan NYC NYS

q 16n
Employment(direct,indirectand induced) 5 498

PersonalIncome(billron
20095) 77 10.0

Tax Revenues(million2009$) 6247 1 7389

'Dollarvaluesare expressedas net presentvaluein 2009$usinga30k realdiscountrateoverthe 3O-year

period.(Priceindexused is derivedfromthe resultsof REMIprojections.)
Permanentemploymentis the annualaverageoverthe 30-yearperiod. NYS employmentand personalincome
are inclusiveof NYC.
The NYC tax revenuetotalis inclusiveof the MTA oortionof tax revenues.

Underthe modifiedGPPPlan,an annualaverageof 5,498totaljobs (direct.indrrectand

induced)will be createdby Projectactivityin New York State.Of this total. 5.150net nen
jobs will be locatedin New York Citl'.

The total personalincomeof arenaand mixed-usedevelopment \\.ageearnersunderthe

modifiedGPPPlanis esrimated to be $7,7billion for NervYork City residents
and$10.0
billion in Nerv York State(inclusiveof New York City). Tax revenuescollectedb1'Neri
York City as a result of Projectpermanentactivity and employmentare estimatedto be
5624.7million and $738.9million by New York State.

Table 4 summarizesthe overall project benefitsand costs.Estimatedtotal fiscal benefit to

NYC from projectconstructionand permanentarenaoperationsis over $834.6million over
the 30-yearperiod.Total llscalbenefitsto NYS areestimatedto be over $909.5million.
Overallfiscal benefitsto NYC andNYS areapproximately$1.7billion over 30 \'ears.Fiscal
benefitsincludepersonalincometax, corporateand businessincometar, salestax, property
tax. and miscellaneousother taxes.
 Privilegedand Conf-rdential

Table 4 Overall Project Fiscal Benefits and Costs*

NY C NYS Total
Total FiscalBenefits s834.6 S ?-v 5 $1,t44 1

TotalFiscalCosts** ?eo o 175.8 565 7

FiscalBenefitto CostRatio z . t1 5.17 3.08

' Dollarv a r ie sa .e - .ri rl i o -s€ x g rs 5 r* 6a s n et presentval uei n 2l l 9S usi ngan approxra:e1y6% di scountra t e
ov er30 y ea rs
- - NY Cf is c a lc o s tsi n c i u d el v l T Fp c i ti o n sc ' s a :s 1axexempti ons

Estimated totalNYC fiscalcostis 5389.9million.51'$ lstal fiscaicrrstis over$175,8

'fhis includespublic
million.Overallpubliccostis approximarcly'$565.7 million
redevelopntent,
contributionsto infrastructure salestax e\cmptirrns.mortgagerecordingtax
exemptions.debtserviceon infrastructure bonds,andpers.,r:-,i:ncometaxesforegoneon
interestincom.-'earnedby holdersof taxableandtax-exempt bondsusedto llnanc.-the
project.Also includctlarc-\YC HDC housingsubsidies for altordaL'lch.rusing(second
mortgageof approxrntarc'lr Silrl.T millionatlo/ofixed interestratetbr a 3O-yearterm).Note:
rctlectsonlr thc subsi,1lfbr 1.677affordablerentalunitsat $72,000per unit.
This amor.rnt

The overallfiscalbenefitto costratio is a measureof returnon the commitmentof public

investmentand othertax revenuesto the Atlantic Yardsproject.The fiscalb'cn.'tlttt) cosl
r ati ofor NY C is 2.74,orareturnof a b o u t$ 2 . 1 4o f f is c a lb e n e f itt b r e re rr S l. (i0o 1 -\ \ . C ta r
r eve n u esupporting
s the project.The ra t iot o rNY S is 5 . 1 5 ,o r $ 5 . 1 5t b r r-rc r) S 1 . 0 0o f s t at e
revenuescommittedro the project.Or erali.thetotal fiscaibenellt10costratio showingthe
returnto the public contributionestimatedin this anallsis is approximately3 to l.

III. Summarl.of Assumptionsand Methodology

The economicand fiscal impact of the Atlantic Yards projectr.rasestimatedusing the REMI
model (RegionalEconomicModels.Inc.) of the Neu'York City region.The REMI model is
widely regardedas one of the more sophisticated regionaleconomicand demographic
modelsusedlbr economicimpactanalysis. It is a dynamicmodelthatfbrecasts project
impactson a regionaleconomr. The model takes into account the that
adiLtstments a regional
economymakesover time in response to the project.Suchdynamicntodelsareconsidered
more realisticover input-outputmodelssuchas RIMS II and Implan.u hich provide
estimatesof impactfor a shortperiod(approximately in the local
a year)with no adjustments
economy.Thesedit-ferences makea comparisonof estimatedimpactresultsusingthe
differentmodelsdiff rcult.

REMI tax revenueestimatesreporledherereflecta broadsetof stateand local tax collections

includingpersonalincometax, corporateandbusinessincometax, salestax. propertytax,
andmiscellaneousothertaxes.
 Privilesedand Confidential

Construction Impacts:

The estimatedhard and soft costsof constructionfor the arena,arenaparking,urbanroom,

residentialcomponents (includingsroundfloor retailand communin facilit-vspace),
infrastructure(includingthe LIRR platformandtransitconnections). commercialoffice
space,and soft costswereprovidedb1 FCRC in the .-\tlanticYardsSourcesand Uses(June
17,2009).The estimatedtotal Projectcostis $4.898billion (including$416.7million in land
acquisition).Constructioneconomicand fiscal impactswere estimatedover the 13-year
period of construction 2007-2019 (full buiId-out).

Arenu Operations and Mixed-Use DevelopmentImpacts:

The anall'sisusesprojectedestimatesof taxableticket,concessions, and noveltiessalesat the

arena.FCRC providedinformation on currentNets players' salaries,basketball
administrationand Nets staff salaries,and arenaworkers' payroll. The following assumptions
are usedin estimatingimpactsfrom Nets and arenaoperations:

o The a\erageannualsalaryfor an NBA playeris approximatell'56.0 million.basedon

informationobtainedfrom the NBA by FCRC.The analysisassumesthat 3Ooztr of
Nets playerslive in New York Citl'and pay both City and Statepersonalincometax.
The otherT}Yolive outsideof New York Citl- and pay Nen York Statepersonal
incometax onlv.

. is eamedin New York City andpa1'onl1'Neu'

25ohof visitingteamplal'ers'salaries
York Statepersonalincometax. All spendingfrom incomeeamedin \eu York Citl,
by visiting team playershappensoutsideof the City and State.

o Both economicand fiscal benefitsfrom arenaoperationsare basedon total ticket

revenues.saleofnoveltiesandconcessions, and advertising.Salestax
sponsorship,
. revenuesare basedon both basketballand non-basketballeventtaxableitems.

o Taxableconsumptionexpendituresare assumedto be 40Yoof disposableincome.

Salestax rate is 8.375%(both Stateand City SalesTax is 4o/oand an additional
0.375%collectedfor the MTA).

o Directjobs for mixed-usedevelopment

wereestimatedat full build-outusingthe
fol lowing assumptions
:
 Privilegedand Confidential

Table5: SpaceAllocationsby Use at Full Build-Out

RevisedGPP Plan GSF # Units OccuPancY DirectJobs

Office(250ssf/iob). :
sot,ooo 0.90 1,804
Retall(300ssfliob) 247.000 823
Parkinq(spaces) J ,O/U YZ
(20 units/iob)
Residential 6.363,000 6,430 JZZ

7,96'1,000 3,04U

'The Hotelallocationincludedin the estimationof directjoOi usedin the commercialspaceallocation

o Directcommercialotficejobs n'ereadjustedb1 7:% to accountfor Neri York Citl

residencyandto take into accountthat not all ncrr office spacewill bc occupiedb1'
new businessescomingfrom out of state..Directjobs in all othercategories of direct
employmentwere considered100%New York Citl resident'

. by net new
This analysisdoesnot includeanv economicor fiscal benefitgenerated
householdsthat are relatedto this proiect