It’s official: A long-stalled megadevelopment in Brooklyn has a new development team that will take over seven sites and, in a new twist, pay $12 million toward an affordable housing fund.
A joint venture led by Cirrus Real Estate and LCOR has scooped up the remaining sites that make up Pacific Park, a massive project that was launched more than two decades ago. Through a foreclosure auction on Tuesday, the joint venture took over the development rights to six rail yard sites, after Greenland USA defaulted on nearly $350 million in loans tied to the properties.
Beyond Cirrus and LCOR, the joint venture taking over the sites includes U.S. Immigration Fund and Fortress, but those firms won’t have an active role in managing the development. Terms of the project restructuring were not immediately available. USIF confirmed the deal Tuesday afternoon.
Ahead of the auction, the state blessed Cirrus and LCOR as new developers of the sites, which include the rail yard properties — to be developed once platforms are built over the tracks between Pacific Street and Atlantic Avenue — and another located near the Barclays Center, known as site 5. Greenland is still part of the joint venture that will develop that site.
The latter was not included in Tuesday’s auction and is being transferred through a separate, private deal.
As part of an agreement with the state, the joint venture will pay $12 million toward an affordable housing fund, of which $4.5 million would be paid upfront, according to state officials. The money, which will be paid in installments, is intended to fill in for penalties that were supposed to kick in when the current developer, Greenland USA, failed to finish the project’s remaining 876 affordable apartments by May 2025. Under a 2014 agreement, failing to meet that construction deadline meant the developer must pay $2,000 per unfinished unit for every month that the apartments went without a temporary certificate of occupancy.
But Empire State Development, the state agency overseeing the project, halted those fines and tied them to new deadlines, the first of which was quickly missed.
Still, the agency once again declined to enforce the penalties, citing concerns that Greenland would sue over the fines and further delay the project.
The $12 million payment isn’t as much as would likely have been collected if the 2014 agreement were enforced (a two-year delay on all the units would result in a $42 million fine, for example). Elected officials and BrooklynSpeaks, an advocacy group that was party to the 2014 agreement, have railed against the state’s decision not to enforce the penalties, viewing it as a betrayal of the community’s trust.
In this next phase of the project, ESD plans to set new benchmarks for the project. If a memorandum of understanding outlining the project isn’t signed by July 31, 2026, the state agency could still collect the damages described in the 2014 agreement, dating back to June 1. Those damages would take the $12 million payment installments into account.
A decades-long project
The mixed-use development has been in limbo for several years. First proposed in 2003 with the name Atlantic Yards, Greenland began taking over the then-long-stalled project in 2014 and rebranded it Pacific Park. The rail yard — a key part of the “blight” that empowered the state to take over the sites through eminent domain and lease them out to developers — went untouched, and concerns over Greenland’s ability to finish the project mounted.
In 2022, Greenland defaulted on $350 million tied to the rail yard sites from Nick Mastroianni’s USIF, which raised the capital through the cash-for-visas EB-5 program. Fortress Investment Group also owns a stake in the debt.
The fact that ESD has approved the joint venture and that the development rights have been transferred for the six sites means that the project can enter the next phase — whatever that may look like. The Metropolitan Transportation Authority has also signed off on the team, which has agreed to make annual payments of $11 million related to air rights tied to the rail yards.
The new developers have indicated that they want to make changes to the earlier plans, which called for more than 6,400 apartments, 2,250 of which would be set aside as below market-rate. So far, nine buildings (including the Barclays Center) have been completed as part of the project, with more than 3,200 apartments built, by original developers Forest City Ratner, Greenland USA and other developers who, over the years, have taken over individual sites.
USIF’s Nick Mastroianni said he expects the plan to be reworked and finalized over the next year and half. The first phase, which involves building the first of two platforms over the rail yards, will cost an estimated $4 billion and take roughly five years to complete, he said. The second phase will cost another $2 billion. He said the development team has “ideas on how to bring the affordable housing to reality sooner rather than later,” but wouldn’t share details on what the team envisions for the site. He noted that some of the sites will qualify for the now-expired property tax break 421a.
Mastroianni described the transfer of the sites as a turning point for the project and its EB-5 investors.
“We’ve now advanced the project so that we can develop, and the development will be the trigger for the [loan] repayment on a unit by unit basis,” he said. “There is a light at the end of the tunnel for the return of their capital.”
What comes next
Changes to the plan will require amendments to the state’s general project plan, a method outside the city’s land use process that lays out the parameters of a project. ESD indicated that it will kick off a public engagement process to discuss the development team’s proposals in the coming months.
If the history of Pacific Park is any indication, that process will be tense: The project has been held up as an example of what happens when developers promise big, fail to deliver and then walk away unscathed. BrooklynSpeaks has called for deeper affordability levels than originally planned.
“My biggest question, at this point, is how do we make sure the future isn’t like the past?” said Gib Veconi, chair of the Prospect Heights Neighborhood Development Council, which is a member of BrooklynSpeaks. He also sits on the board of the Atlantic Yards Community Development Corporation, a subsidiary of ESD that reviews and makes recommendations on the project.
The subsidiary has a meeting slated for Thursday, and Veconi hopes ESD provides more information on how the agency arrived at $12 million. He also wants clarity on when the development team believes it will deliver the remaining affordable housing units.
“The timeline is important here. I really want to understand when the new team believes affordable apartments will come online,” he said. “The longer that timeline is, the riskier the project becomes.”
Other suitors circled Pacific Park, including Related Companies. Cirrus confirmed in January that it was pursuing the project, and LCOR emerged a few months later.
Cirrus has said that it will lead capitalization on the project, and LCOR comes in as an experienced multifamily developer. Cirrus’ website provides little information about the company’s development experience, but the firm’s principals collectively have overseen “$150 billion in real estate finance transactions, $10 billion in real estate equity investments and more than 10,000 multifamily units,” according to a company spokesperson.
Cirrus has seen its portfolio of projects in the city grow since reaching an agreement last year with the Building and Construction Trades Council and City Hall to invest $100 million in multifamily workforce housing and redevelopments by pooling pension funds from more than a dozen construction unions. The fund, which raised $300 million as of July, will help finance development at Pacific Park, as well as workforce housing at a defunct airport in Queens and tens of thousands of units of housing as part of an agreement with Resorts World Casino New York City.
LCOR, which is also working with Cirrus on the Queens project, oversees a portfolio of 10,000 multifamily units and 2.4 million square feet of commercial space, according to the firm’s website. Cirrus is led by Joseph McDonnell, who was formerly head of real estate at BlueMountain Capital, and Tony Tufariello, who served as head of real estate finance at Morgan Stanley and head of global real estate at Fortress, which is also part of the joint venture.
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