Image via WikipediaThe whispers about Brooklyn are growing louder as the Lighthouse and Town of Hempstead appear to be at an impasse. As previously reported, the sides are far apart on a reduction in size and scope, with sources (and bloggers) close to Charles Wang floating 10% as a number, and the Town of Hempstead speaking in terms of a 30-35% reduction in size and scope.
Interestingly, the whispers about Brooklyn have grown even as the city crossed a hurdle in its process of re-developing Willets Point in Queens. A week ago, the deadline for the city's request for qualifications passed, and some have wondered why there has not been any indication whether Messrs. Wang and Rechler submitted a bid. As I have said before, I have worked as a management consultant, and this process closely mirrors the sales cycle in consulting.
RFP? No, RFQ
The New York Economic Development Corporation (EDC), while not releasing the specific names, has confirmed that 29 developers have responded the initial bidding process. It's important to know that Queens has not submitted an RFP (Request for Proposals); it has submitted a Request for Qualifications (RFQ).
RFQ is usually the first step in the bidding process, in which the city requests developers who are interested in developing on the site to explain what qualifies them for the specific job. It was the same way in consulting - clients want to deal with firms that have a proven track record of success in the desired field.
We will likely not see movement for 3-6 months (I'm guessing the higher end, but I'm not sure), in which the city will review the submissions from the 29 developers, ask follow-up questions, and winnow the group down to a short list of potential developers. These developers will then be asked to participate in a Request for Proposals (RFP).
The process will then switch to RFP, in which developers submit their proposals for the site based on the city's parameters. This process would likely take another 3-6 months, in which the developers would interact with the city and submit their formal bids.
Even if a theoretical Wang/Rechler bid succeeded, the issue of environmental review still hangs in the air. The city completed a Generic Environmental Impact Statement (EIS) for Willets Point, according to many reports, but that would not help an arena situation. The structure included in that plan was a convention center a fraction of the size as any new arena would be, so the process would need to repeat itself. You would have to give at least 6-12 months for that to be completed.
It is clear that any good negotiator needs leverage in order to compel the other side to act according to his/her wishes. At this point, given the time horizon seen for Queens, it is not a surprise that Brooklyn is the hot Islanders rumor du jour (remember when the far-fetched Kansas City scenario was hot?). You do not gain leverage or motivate the Town of Hempstead to increase the speed of review by responding to an RFQ - in fact, I would be shocked it they did not give a submission as a matter of due diligence.
At this point, we have heard some troubling news about the Lighthouse, but we have also not seen Charles Wang publicly entertain other offers for his team, despite his deadline, at which point he would "seek other options," having passed 10 weeks ago. To me, this can mean one of two options:
- Charles Wang is Serious about the Lighthouse: Some have wondered whether a game of brinkmanship would be needed to motivate all sides to come to a deal. Some sources believe that the lack of public posturing from Mr. Wang himself shows that he is serious about getting a deal done and is trying to force a solution all sides can live with.
- There is Fire Behind the Brooklyn Smoke: if the Brooklyn arena breaks ground, and all goes according to plan (I have not heard pleasant things about Mr. Ratner from people in the construction trades, but that's a story for another day), it becomes the number one relocation option for the New York Islanders. If things do not change in Nassau County, and that arena proceeds, we could very well see an option. It's far from a done deal - and that's always been my issue with people talking about it like it was easy - but it's a possibility.
The Lighthouse process is currently at a critical point. With Queens facing a longer time horizon, and a Brooklyn ground-breaking reportedly imminent (I still caution against assuming this is a slam dunk), it makes sense that the Brooklyn rumors would be picking up. Charles Wang may be truly committed to using the Brooklyn project as a ploy to gain leverage, or it could be the way this saga ends. We will likely know more once Ed Mangano takes office in January.
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