Tuesday, September 30, 2014

Atlantic Yards, Pacific Park, and the Culture of Cheating (links)

I offer a framework to analyze and evaluate Atlantic Yards (in August 2014 rebranded as Pacific Park) and the Barclays Center: Atlantic Yards, Pacific Park, and the Culture of Cheating.

Note: this post is post-dated to remain at the top of the page. Please send tips to the email address above, rather than posting a comment here.


Tuesday, September 16, 2014

State goes to court Thursday to pursue condemnation of properties needed for Phase 2A (?) of project

Three houses on Dean Street face condemnation, as
do properties directly behind them to Pacific Street
On Thursday at 2:30 pm, a state condemnation judge will hear a petition by Empire State Development (ESD), the state agency overseeing and shepherding Atlantic Yards, to condemn the remaining seven properties for the project, a relatively routine procedure, given that eminent domain has already been approved.

Those properties include three houses on Dean Street (right) and a lot behind them, and an industrial building behind them on Pacific Street.

According to attorney Michael Rikon, who represents two of the properties, a StorageMart facility at 718 Atlantic Avenue and a former museum fabrication company building at 700 Atlantic Avenue (and the site for a canceled rave), there is no opposition to the application to condemn, which means title should soon vest to ESD, even though the owners/occupants can remain.

Upon filing, ESD gets legal right of possession, though the occupants/residents need not leave. Within 30 days, they get a notice of acquisition, and then have 120 days to file a written claim for damages.

700 Atlantic Avenue
The parties then negotiate over just compensation and when they must vacate the buildings.

DNAinfo first reported on the filing of the condemnation petition, which includes a lot currently owned by Forest City Ratner's Atlantic Yards Development Company (and now, presumably, owned by Greenland Forest City Partners). Though that's already owned by the developer, eminent domain will clear title.

Some history

In 2010, some property owners faced with condemnation notices challenged the action in court, but it was rejected by a state judge.

When Atlantic Yards was first approved by ESD in 2006, all properties needed for the project were supposed to be condemned in one motion. After delays and the recession, Forest City renegotiated, and in a second approval in 2009, ESD agreed that the condemnation could occur in phases, thus saving the developer money.

Now that Forest City has a deep-pocketed partner, the Chinese government-owned Greenland Group, the new team, Greenland Forest City Partners, has the money to proceed faster on the project, and has committed to building the affordable housing by 2025, rather than the let the previous 2035 outside date stand.

Which part more crucial?

I suspect that the properties between Dean Street and Pacific Street are more crucial.

That's where Building 15, which includes a school, is planned (see below). The Atlantic Avenue properties are part of sites that require an expensive deck over the Vanderbilt Yard.

Needed for Phase 2A?

According to the petition, dated 8/13/14 but filed 8/20/14, the properties are "necessary for Phase 2A of the project."

Phase 2A, which is said to involve involves construction of three residential rental buildings and open space on Block 1120--the center block of the railyard, between Sixth Avenue and Carlton Avenue, and Atlantic Avenue and Pacific Street--and the construction of a market-rate residential building on Block 1128.

As I wrote in April, the school, once planned for Building 5 over the railyard, likely will be built in Building 15, on the site currently occupied by the houses, the lot, and the commercial building.


It's not clear why this is Phase 2A, given that the designation implies it's the first part of Phase 2. Actually, the first part of Phase 2 involves construction on the southeast block of the project, given that two towers will start in December.

Permit for third tower filed: condo building will have fewer, larger units than rental

Brownstoner reported yesterday that Forest City Ratner (acting on behalf of Greenland Forest City Partners) filed a new building application for the Atlantic third tower, a condo building at 540 Vanderbilt Avenue.

The building, which actually will be called 550 Vanderbilt, will be 17 stories and 202 feet, with 275 units, for a total of 330,778 square feet.

That compares with the recently-announced rental building, 535 Carlton, which will be 18 stories and 184 feet, with 298 units and a total of some 284,000 square feet.

That suggests the condo building will have higher ceilings and larger units.

According to Brownstoner, the condo building will also have a pool, locker rooms, a shared library, common roof terrace and 198 bike storage spots.

Building heights and square footage


Venerable Church of the Redeemer across from Site 5 sells for $20M, surely as development site

DNAinfo reported yesterday, Boerum Hill's Church of the Redeemer Sells for $20 Million:
Photo via Brownstoner
BOERUM HILL — The Church of the Redeemer in Boerum Hill sold for $20 million to a New York real estate investment firm earlier this month, officials announced Monday.
The decades-old church, located at Pacific Street and Fourth Avenue, was sold the week of Sept. 5 to the Jackson Group due to “mounting monthly expenses” that could not be covered, according to representatives of the Episcopal Diocese of Long Island, which owned the building.
It's highly unlikely that the building will be saved, since the lot, a source told Brownstoner, can support a building up to 70,000 square feet and ten stories. 

The 1866 Gothic Revival church, which was not landmarked, sits at the northwest corner of Pacific Street and Fourth Avenue, directly across from Site 5, currently home to P.C. Richard and Modell's but ultimately supposed to support an Atlantic Yards/Pacific Park tower rising 250 feet. 

It is catercorner to another venerable but threatened building, the Pacific Branch of the Brooklyn Public Library.

“We deeply regret the sale of this property without discussion of its future preservation,” Howard Kolins, president of the Boerum Hill Association, told DNAinfo. “The [Association] continues to seek protection for this historic church property which has been long neglected by the Episcopal Diocese."

In July 2012, it was reported that the structurally unsound building would be demolished.
It is "S/NR-eligible"--eligible for the State or National Register of Historic Places, listings that can make a property eligible for tax breakst hough with no restrictions, as with city landmarking, on the disposition of the building.

Monday, September 15, 2014

From the latest (on time) Atlantic Yards/Pacific Park Construction Update: overnight work on Atlantic Avenue starts Wednesday

After releasing the previous two-week Atlantic Yards/Pacific Park Construction Update more than two business days late, on 9/4/14, Forest City Ratner and Empire State Development did much better this week, releasing the latest alert, dated today, at 9:36 am.

The document reveals that on or about Wednesday night, September 17, 2014, "the contractor will work to extend the exploratory work for the LIRR tunnel wall across the intersection of 6th Avenue."

"A trench along the LIRR tunnel wall will be excavated and then plated over to maintain traffic over 6th Avenue," the document states. The work will take place over two to three nights form 10 pm to 6 am.

How much noise and who monitors it?

No mention is made regarding the steps taken to limit the noise. The Second Amended Memorandum of Environmental Commitments (MEC), signed this June, documents the developer's commitment to meeting noise levels set forth in the city's Noise Control Code or even lower levels stated in the Final Supplementary Environmental Impact Statement.

The MEC states that Forest City's OEM, or on-site environmental monitor, "staff shall check applicable equipment for compliance with the MEC Noise Requirements when the equipment is first
mobilized."

However, there's no OEM yet. The MEC states that Forest City shall "use commercially reasonable efforts to retain the engineering firm to serve as the OEM on or before September 15, 2014," meaning today.

At the Quality of Life meeting 9/4/14, Forest City rep Ashley Cotton said "it will be a little later than September 15," but that "the delay is going to be very short." She agreed to make an announcement to neighbors when the monitor is hired.

Demolition coming

On the southeast block of the project site, Block 1129, asbestos abatement of 752 Pacific Street, the one extant building, has been completed.

"Subject to receipt of permit, Demolition of 752 Pacific Street is expected to commence during this reporting period," the alert states.

B2 work stoppage recharacterized

While the previous alert stated that "Work at the B2 [modular] site has been halted by a wrongful work stoppage by construction manager Skanska," suggesting that ESD was taking Forest City's side, the new alert simply says that "Work at the B2 site and within the modular factory has been halted."
At B3 site

Not only have trailers to be used in connection with the Green Roof construction been installed onto the B3 site, near Dean Street and Sixth Avenue, and fencing reconfigured for the entire site, developers will start soil characterization borings "to facilitate soil disposal related to future B3 building construction.

LIRR Yard Activities - Block 1120 & 1121 (verbatim excerpts)
• Pile drilling along the north side of Pacific Street has been completed. SOE [support of excavation] work including the installation of lagging and tiebacks will continue in this area during this reporting period.
• Drilling of SOE minipiles under the east side of the 6th Avenue Bridge is scheduled to begin during this reporting period.
• During this reporting period, the Contractor will continue excavation and hauling of soil from Blocks 1120 and 1121. 
See the document for contact information for the ESD and the developer.

Atlantic Yards/Pacific Park Construction Alert September 15, 2014

Latest estimate halves cost-savings from (best-case) modular construction, but delays make it worse; platform cost mitigated by leap in land value

Even before we learned that Forest City Ratner's modular construction gambit was not working as planned, a revised New York State document estimated that the cut in costs/wages from a best-case modular buildout would be only 11%-12%, rather than the 22% previously estimated.

Why? The previous document had left out a key element in Phase 2 of the Atlantic Yards project: the platform over the railyard.

The revised estimate translates into a 12% cut in tax revenues--half the previous projection--compared to conventional construction. On this specific metric, it would be not as bad a deal for the public than previously estimated.

Overall, the revised estimate suggests that, in the best case, the savings from modular would be far less than the 25% Forest City was projecting only a year ago (or 15-20% less, in other projections).

Without more detail, we don't know exactly why the projection changed so much. Either the savings were overstated from the start, or two estimates, issued this year as part of the court-ordered Supplemental Environmental Impact Statement, were already acknowledging that the first tower was taking long than assumed.

Cost overruns/delays change the picture

For now, however, any cost estimate is suspect, since the best-case projection of the modular buildout is unlikely, given the news of extensive cost overruns for the first modular tower, B2, and the bitter legal dispute between Forest City and Skanska.

Forest City's new partner/overseer on Atlantic Yards/Pacific Park, the Chinese government-owned Greenland Group, has decided that the next towers will be built conventionally.

So we won't be hearing the much-promoted claims that modular construction, shifting most work to the factory at the Brooklyn Navy Yard, would mean fewer trucks, less waste, and safer working conditions.

Modular construction was supposed to save time, but hasn't. B2, which broke ground in December 2012, was originally said to take 20 months (though Forest City in one earlier interview hoped for 14 months!), The delivery date then became December 2014, a two-year buildout.

As of April 2014, it was slated to open in the fourth quarter of 2015, a three-year buildout. Now there's no projected opening date. Savings evaporate with delay, and clearly the cost projections are altered by increased, unanticipated costs.

Error in environmental review leads to recalculation

This article revises what I wrote on 3/31/14, Revealed: Atlantic Yards modular construction means 22% drop in costs/wages, 10% cut in jobs, 24% loss in tax revenues.

I didn't miscalculate. I was merely reporting on the data in the Draft Supplementary Environmental Impact Statement (Draft SEIS), released by Empire State Development after preparation by the ubiquitous consultant AKRF.

It  seemingly contrasted with the Forest City Ratner statement, as shown in the slide at right, that modular construction would require the same amount of person-hours as conventional construction (though with lower wages).

Yes, my doubt was unfounded, it turns out, but Forest City had not released detailed information to bolster its statement. (When it comes to statistics, well, the developer's record is less than stellar.)

When ESD accepted and approved the Final SEIS on 6/12/14, the Executive Summary indicated an error, though without a clear admission: "The numbers included in this FSEIS have been revised to reflect inclusion of the costs associated with the platform work, which were not included in the DSEIS."

That led to the recalculation: "the investment for construction of Phase II of the Project using modular construction methods is estimated to equal about $2.15 billion in 2013 dollars. This would represent about a 12 percent reduction from costs using conventional construction methods."

That also means an 11% cut in wages, and only a 1% cut in job-years.

The statistics, from Final SEIS

From Final SEIS
Direct employment would be about 9,051 job-years, a cut of 97 job-years. The use of modular would generate 7,538 job-years in the state, bringing the total direct and generated jobs from construction of the projected development to 16,589 job-years, a cut of about 176 job-years.

Direct wages and salaries would be $653.20 million, in 2013 dollars, an 11% reduction from conventional construction. In the broader New York State economy, total direct and generated wages and salaries from construction would be about $1.11 billion, again an 11% cut.

The total $153.41 million in tax revenues for New York City, MTA, and New York State, in 2013 dollars, is about 88% of the total estimated for conventional construction, or, a 12% cut.

The statistics, from the Draft SEIS

As I wrote, the Draft SEIS stated:
Based on the preliminary estimates, the investment for construction of Phase II of the Project using modular construction methods is estimated to equal about $1.90 billion ($1,895.66 million) in 2013 dollars. This would represent about a 22 percent reduction from costs using conventional construction methods.
From Draft SEIS
The cost of the platform, and who's paying

The Final SEIS estimates the total cost of Phase 2 at $2,145,650,000, while the Draft SEIS estimate was $1,895,000,000. The difference is just about $250 million, or $249,990,000.

That $250 million sum apparently represents "costs associated with the platform work," which may or may not include spinoff costs.

The cost of the platform has been estimated at between $200 million and 300 million. In March 2010, then-Daily News columnist Errol Louis wrote:
State agencies and the Ratner company haven't been blameless. We still don't know who will pay to create an expensive deck over the Vanderbuilt railyards, the section of the project area where thousands of units of housing are supposed to be built.

The expected cost - as much as $200 million to $300 million by some estimates - may get picked up by Ratner, or the bill may get handed to the city or state a decade from now, long after human and institutional memories of the original deal have faded.
May get picked up by Ratner? That's the developer's responsibility, and part of why the cash payment for the 8.5-acre railyard--$100 million, with a gentle interest rate--was so little.

Now Greenland Forest City Partners, the new joint venture, is responsible for the platform. They may use current or--I'd bet--future EB-5 funds to pay. If they get the city or state to pay, well, that would great for their shareholders, less so for the public.

The value of development rights: more than $1 billion?

As I wrote, development rights for the 8.5-acre Vanderbilt Yard, after a MTA-requested appraisal, were appraised in 2005 at $75/square foot, for 3,615,790 developable square feet.

That appraisal estimated the platform cost at between $54 million and $72 million and thus arrived at a value of $214.5 million.

But development sites in downtown Brooklyn are now valued at $350/square foot, a broker stated this past April. (The Junior's site got a bid of $450/sf, as noted by Noticing New York, which analyzed land values at some other development sites.)

If we calculate platform development rights at $300/square foot, the value would be $1,084,737,000. At $350/square foot, the value would be $1,265,526,500, and at $400/sf, the value would be $1,446,316,000. 

If Forest City and partner are paying some $500 million--a rough estimate if you add the cash, the (higher-cost estimate) platform, the cost of the new subway entrance and carrying costs--that looks like a very good deal.

How much will railyards support?

It's not clear, the development rights over the railyard may cover more than than 3,615,790 developable square feet. 

The six towers north of Pacific Street east of 6th Avenue--B5 through B10-- would total 3,487,392 square feet, though they would not be coterminous with the railyard. They would be built partly over what is now private property jutting south Atlantic Avenue, but they likely cannot be built without the platform. (See first graphic below.)

Add in part--40%--of the 670,000 square foot arena that sits over the railyard, as well as much of B4, which should have 824,629 square feet. It deserves a recalculation.
From Develop Don't Destroy Brooklyn

Two recent versions of  Atlantic Yards/Pacific Park 


Sunday, September 14, 2014

Behind a food service vendor switch at the Nassau Coliseum (and the switch that didn't happen at Barclays)

Advertisement for Coliseum pitch, featuring Legends,
as in the references to Yankee and Cowboys stadiums
It's worth tracing back some behind--the-scenes business in Forest City Ratner's arena operations, in which one food service vendor, Legends, was swapped for another, Levy Restaurants.

When Forest City Ratner assembled a team to renovate the Nassau Coliseum last year, the lunch for Nassau County's Business Advisory Council was prepared by "sports food service company Legends," one member of the team, Long Island Business News reported 5/2/13

What Ratner appeared on Bloomberg TV's Street Smart 6/28/13, he declared, "We have great partners. We have the Yankees providing the food, with the Dallas Cowboys, for a company called Legends." 

According to Ratner's proposal:
Legends is a pioneering sports and entertainment company owned by the New York  Yankees, the Dallas Cowboys, and Checketts Partners Investment Fund. Legends provides food service operations in its two first-class stadiums and partners with some of the most iconic properties in sports, including Manchester City FC, San Francisco 49ers, Churchill Downs, Rose Bowl, and the Cleveland Browns. Legends would oversee the building’s food and beverage program, and its experience would be augmented by Barclays Center’s success with its “Brooklyn Taste” program. This program, whereby  Brooklyn’s diverse eateries are brought into the arena, has proven tremendously popular  and is setting sales records.
The switch

Then came an 8/18/14 press release,  Barclays Center Extends Partnership with Levy Restaurants
Barclays Center and Levy Restaurants have extended their partnership with a multi-year deal, building on their acclaimed BrooklynTaste™ food program, which features selections from 55 popular Brooklyn restaurants and vendors. In addition to extending their partnership at the home of the Brooklyn Nets, Levy will become the food and beverage partner for the soon to be re-imagined Nassau Coliseum, scheduled to open at the end of 2016. The recreated venue will deliver a world-class sports, entertainment and retail center to Nassau County and its residents.
“We are thrilled to extend and expand our relationship with Levy Restaurants,” said Brett Yormark, CEO of Barclays Center and the Brooklyn Nets. “Levy has done an outstanding job at Barclays Center, co-authoring the renowned BrooklynTaste program, and we are looking forward to delivering the same level of service to guests at Nassau Coliseum. We want to thank Legends for being a part of the team that secured the winning bid for Nassau Coliseum. After further consideration, we felt that the synergy created by Levy being involved with both venues was the ultimate way to deliver best-in-class food and beverage programs.” Levy has been the food and beverage operator for Barclays Center since the venue opened in 2012.
The split

Newsday reported 8/19/14, in Nassau Coliseum makes food service vendor switch, that there was a little more conflict behind the scenes:
Yormark said Legends pitched itself as a "premium" player that would operate only in select venues. But he said it became a "volume player" that operates at Yankee Stadium, the Prudential Center in Newark and a host of universities and smaller venues.
Levy operates at only one arena in the New York region -- the Barclays Center -- and can provide the Coliseum greater attention, Yormark said. "It comes down to philosophically what's in the best interest of the Nassau Coliseum," he said.
Yankees president Randy Levine said Legends was an "integral" part of Ratner's winning bid to renovate the Coliseum.
Levine said Barclays officials provided "representation" during the Coliseum bidding process that Legends also would be in line to win the Barclays Center food and beverage contract. But he said Barclays officials ignored their calls for months. When the Barclays Center renewed its contract with Levy last week, Legends dropped out of the Coliseum deal, Levine said.
Sports Business Daily, in an 8/18/14 article headlined Legends Withdraws As Equity Partner In Nassau Coliseum Project,:
The split comes as the result of an apparent disagreement over whether Legends would take over the food service at Barclays Center.... Nets and Barclays Center CEO Brett Yormark confirmed that there were discussions over Legends potentially taking over at Barclays Center but there was no written contract regarding a potential switch in food vendors in Brooklyn.
In other words, Barclays may be "thrilled to extend and expand our relationship with Levy Restaurants,” as long as the deal is mutually advantageous.

Volume players?

As noted in a 6/23/14 Sports Business Daily article, Legends gets Devil of a deal, the New Jersey Devils signed a deal lasting at least five years with Legends Hospitality for food service at Prudential Center, part of the firm's "launch into the arena business."

But it's not like Levy is not a volume player. Consider this description of Levy, surely part of a press handout:
Founded 1985, Levy has pioneered premium sports and entertainment dining and remains one of America’s fastest growing and most critically acclaimed restaurant companies. Named one of the 10 most innovative companies in sports by Fast Company magazine, Levy’s diverse portfolio includes award-winning restaurants, Spiaggia and River Roast in Chicago, Fulton’s Crab House at Walt Disney World Resort Orlando, iconic venues like Wrigley Field in Chicago and STAPLES Center in Los Angeles, premier convention centers, including the Boston Exhibition and Convention Center, and many more. In 2014, the company acquired Professional Sports Catering, leaders in minor league baseball concessions.
So if there are two volume players, likely the decision is driven significantly by price.

Real estate broker grouses about limits on EB-5 freebies that provide cheap money for projects

Would you believe, as Massey Knakal head Robert Knakal told First Business News, that limits on EB-5 visas--which give green cards to immigrants and their family members if they invest $500,000 in a purportedly job-creating investment--are "causing some havoc in construction schedules"?

Interest in EB-5 has doubled every year since 2009, said Knakal, who suggested that a "significant" number of projects are on hold.

Why can't these projects go after other forms of financing, Knakal was asked innocently.

The answer: they can, "and other forms of financing have been readily available, but the EB-5 financing is relatively attractive, because of the low-cost nature."

In other words, real estate developers and other entrepreneurs have figured out how to leverage a sweet deal--getting a benefit by trading an asset (entry to the U.S.) that they shouldn't control--and are frustrated that there are limits. (The investment is supposed to create ten jobs, but the regulations are quite lax.)


If our major trading partners and investors are China and Mexico, why are 85% of those using the EB-5 program from China?

"They are more up to speed on the mechanics of the program and how to access it," suggests Knakal.

Or: it's not really an investment program, it's a green card program.

Chinese millionaires want to get their families out of the country and their kids into the American education system. They don't care about a fair interest rate--they just want the visas, and their money back.

Saturday, September 13, 2014

What's wrong with B2? At the very least, facade panels not secure, windows left open

Given the recent lawsuits and counter-charges between Forest City and its contractor/partner Skanska, it's clear there are delays, cost overruns, and problems with the B2 modular building for Atlantic Yards/Pacific Park.

What exactly has gone wrong? Until more information emerges, we won't fully know.

But some evidence is glaringly obvious when you walk around the building at Dean Street and Flatbush Avenue: various facade panels are not secure, and some windows are left open, as the photos taken yesterday show.

That's not new: in July, the panels were even less secure, flapping noisily in the breeze, as videos showed.

If the facade is not secure, that suggests the building is vulnerable to the elements. Could  rain be getting inside some modules or collecting in the facade? Remember, these apartments are supposed to be arrive quite close to finished, ready to plug-and-play.

What next?

Forest City has said it might have to complete the building using conventional construction if the modular factory doesn't re-start. That would make for an odd hybrid.

I wonder about a more dramatic path: if modules are damaged or defective, might they have to be re-built, or even un-built? Could we see the crane used to remove modules?

That's speculation, of course: no one has announced it as a possibility. But so much surprising has happened with Atlantic Yards--Chinese partner, name change, modular plan, among much more--that we shouldn't be surprised at any resolution.

Fighting a fellow heavyweight

Until more information emerges in the lawsuits between Forest City and Skanska, it's tough to tell which party is in the right, or more aggrieved.

But these lawsuits differ considerably from to the ones filed by citizens, property owners, and community groups challenging Forest City and/or its government partners, like Empire State Development and the Metropolitan Transportation Authority.

This is closer to a fair fight, given that Skanksa is a major company with deep pockets. It can spend a commensurate amount on litigation. And the rhetoric from both sides is already quite bitter.

Panels secured to facade with rope. apparently
Panels not secured to facade
Panels not secured to facade
An open window center-left

An open window center-right

Friday, September 12, 2014

If Forest City tries "to give information as soon as we have it," why was last week's Construction Alert released more than two days late?

Here's a thought experiment: let's say your boss requires you, every two weeks, to produce and distribute a report on Monday morning describing what's going to happen in your office or on your job site over the next two weeks.

You do it on Monday morning, because that's what's required, right?

Except when there's a holiday. You can't come to work on Labor Day. So you send it out Tuesday, first thing.

That's not what happened last week. The two-week Atlantic Yards/Pacific Park Construction Update, dated weeks of Sept. 1 and Sept. 8, came out late Thursday morning 9/4/14, more than than two days after the next business day began. (It is prepared by Forest City Ratner and distributed by Empire State Development, the state agency overseeing/shepherding the project.)

At the Atlantic Yards Quality of Life Meeting Thursday 9/4/14, Forest City External Affairs VP Ashley Cotton stressed that the firm is about "being transparent, trying to give information as soon as we have it." (You can hear her below.)



"Of course, the two-week look ahead was late because of Labor Day weekend," Cotton continued, not too contritely. "We never seek to be late, except for a holiday, so we apologize for that.”

The whisper in the background is me exclaiming that it was three days late--though, actually, just two business days late.

In some offices, such a casual approach to a promised commitment might be a firing offense. In this case, there was no sanction, and almost no public criticism. Forest City and the state are in lockstep.

Might there be some time lag in the state's distribution once it gets the alerts from Forest City?

So I asked the state agency, "When did ESD get the look ahead and how long did it take to distribute?" I got this not-so-informative response: "The holiday slightly delayed the release of the schedule."

A missed opportunity for criticism and oversight

Some who might have criticized Forest City and the state are trying to look on the bright side.

At the meeting, Gib Veconi of the Prospect Heights Neighborhood Development Council and BrooklynSpeaks, periodically a powerful critic of the project, chose not to address the delay but to look at the bigger picture, the agreement signed in June that moves the deadline for affordable housing up ten years, to 2025, and sets up a new Atlantic Yards Community Development Corporation to monitor compliance with the project’s public commitments.

"We think this is the best platform to move forward on, to try to make the project accountable and responsive," he said.

He got a thank-you from Empire State Development's Marion Phillips III.

[Update: Note that Veconi points out that he was reacting to criticism of the CDC. True, but Veconi's general posture suggests a more friendly relationship with Forest City and the state.]

The new Community Development Corporation, with board members appointed by local elected officials (but mostly by the governor), should be an improvement, but it won't be up and running until December. 

As Cotton's statement and the ESD's explanation about the delay glaringly show, the project needs oversight right now. It's not like Forest City is pausing construction activities until December.

Part of a pattern

It's not unusual for the alerts to come late. This past June, an alert was distributed by ESD at 2:30 pm on a Tuesday. Such Tuesday releases are common. Sometimes they've come on Wednesday, two business days late, as was the case last week.

And sometimes there are Supplemental Alerts, with some announcing work that has already begun.

Thursday, September 11, 2014

Consultant Melvin Lowe, one-time FCR lobbyist, convicted of conspiracy in unrelated case; prosecutors target Sampson connection

On Tuesday, state Sen. John Sampson, under indictment for embezzlement, obstruction of justice, and witness tampering, won his Democratic primary, tantamount to re-election.

A day later, his former associate Melvin Lowe--a former Forest City Ratner lobbyist--was found guilty of conspiracy, fraud, false tax returns, and more (in a case unrelated to FCR). Federal prosecutors made it very clear that Sampson, though not charged in this case, was part of it, having approved payment of a false invoice.

Among the astounding elements of the case is that Lowe "received more than $2.1 million in consulting income from 2007 to 2012," but wound up filing only three annual returns, reporting less than $25,000 in income each year.

The press release

A press release yesterday from the Department of Justice, U.S. Attorney for the Southern District of New York, Former Consultant To New York Democratic Senate Campaign Committee Found Guilty Of Tax And Fraud Charges, subtitled "Jury Found Melvin Lowe Guilty of Conspiring with New York State Senator John Sampson To Defraud the Democratic Senate Campaign Committee":
Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, the Acting Special Agent in Charge of the New York Office of the Internal Revenue Service – Criminal Investigation (“IRS”), announced that a former consultant to the New York State Democratic Senate Campaign Committee ("DSCC"), MELVIN LOWE, was found guilty today in White Plains federal court of conspiring with New York State Senator John Sampson to defraud the DSCC of $100,000. Lowe was also found guilty of one count of wire fraud arising out of his scheme to defraud the DSCC; three counts of subscribing to false tax returns; three counts of failing to file tax returns; and one count of causing a bank employee to make a false report of a federally insured bank. LOWE was found guilty after a one-week trial before U.S. District Judge Vincent L. Briccetti.
Manhattan U.S. Attorney Preet Bharara stated: "This conviction is another step in restoring the public's trust in New York State politics. As the jury found, Lowe participated in a series of backroom deals in which the bridge of corruption extended between the world of elected officials and their complicit consultants. Consultants, like elected officials, need to be held accountable in order to clean up our political system."
IRS-Criminal Investigation Acting Special Agent in Charge Shantelle P. Kitchen stated: “The public expects that politicians and those who work in the public arena be held to the same standards as they are, especially when it comes to matters of basic citizenship, like paying taxes, and applying for loans. This jury has held Mr. Lowe accountable to these standards.”
According to the Complaint and the Indictment filed in federal court and the evidence presented at trial:
LOWE was retained as a consultant by the DSCC after New York State Senator John Sampson was appointed as the Senate's Democratic Conference Leader following the June 2009 "coup" that temporarily shifted the balance of power in the New York Senate from the Democrats to the Republicans. In early June 2010, Sampson asked LOWE to arrange for a covert payment of $20,000 to Michael Nieves, a Queens-based political operative who had previously worked for former New York State Senator Hiram Monserrate and who had helped engineer the resolution of the Senate coup that had brought Sampson to power. LOWE then arranged for a New Jersey-based political consultant to submit a false invoice to the DSCC for $100,000 in printing services. Sampson approved payment of the invoice and the DSCC sent $100,000 to the New Jersey-based consultant. LOWE instructed the consultant to send $20,000 of the proceeds to Nieves, $75,000 of the proceeds to LOWE's consulting company and to keep $5,000 for himself. The jury heard evidence that LOWE and Senator Sampson had a close relationship of trust that included LOWE giving Sampson an envelope of cash.
LOWE received more than $2.1 million in consulting income from 2007 to 2012. He reported less than $25,000 in income in each of his returns for 2007 through 2009, which he did not file until late 2010. LOWE never filed returns for 2010 through 2012. He never made any payments toward his taxes for the years 2000 through 2012.
LOWE also caused an assistant manager of his bank to make a false statement to his mortgage lender regarding the balance in his checking account. When the mortgage lender sent his bank a Verification of Deposit form to verify LOWE's claim that he had $65,000 in his checking account, LOWE caused the assistant manager to claim that LOWE'S account had a balance of more than $80,000. At that time, the balance in LOWE'S checking account was $2,156.
* * *
LOWE, 53, of Manhattan, was found guilty of one count of conspiracy, which carries a maximum sentence of 20 years in prison; one counts of wire fraud, which carries a maximum sentence of 20 years in prison; three counts of subscribing to false tax returns, each of which carries a maximum sentence of 3 years in prison; three counts of failing to file tax returns, each of which carries a maximum sentence of 1 year in prison; and one count of causing a bank employee to make a false statement in a report and statement of a federally insured bank, which carries a maximum sentence of 30 years in prison. The conspiracy, wire fraud and tax charges each carry a maximum fine of $250,000, while the false statement charge carries a maximum fine of $1 million. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the Internal Revenue Service - Criminal Investigation and the investigators from the U.S. Attorney's Office for the Southern District of New York.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Perry A. Carbone and James McMahon are in charge of the prosecution.
(Emphases added)

Some coverage, but not much

Perhaps because the one-week trial was in White Plains, not Manhattan, the trial got pretty much no ongoing coverage.

But the conviction was followed up by a few articles. Crain's, in Democratic operative convicted on all counts, added some specifics:
Mr. Lowe was found guilty of steering the $100,000 to a New Jersey political consulting firm, Cornerstone Management Partners, which then kicked back much of the money to political consulting firms controlled by Mr. Lowe. Even before the crime, Mr. Lowe had been paid hundreds of thousands of dollars by the Democratic Senate Campaign Committee in 2010, which struggled for years to get out of debt caused by that election cycle's profligate spending. Democrats lost a briefly held majority in the Senate that year and are still fighting to regain it.
Twenty-thousand dollars also went to political consultant Michael Nieves, who has not been charged with any wrongdoing. Nor has political operative Elnatan Rudolph, a former Brooklynite who owned Cornerstone Management Partners and who received $5,000.
The Albany Times Union published Sen. Sampson’s political consultant found guilty of fraud, the New York Post published Former Sampson aide guilty of conspiring to defraud Dems, and Capital New York published Former Democratic consultant guilty of corruption.

Updated: I missed the Times article, Ex-Consultant Found Guilty of Fraud Tied to Lawmaker.

Nothing yet from the New York Daily News.