Thursday, September 21, 2006

Getting our money’s worth with Atlantic Yards? Few care, and here’s why

Who can oppose economic development, projects that bring--as Atlantic Yards proponents say--jobs, housing, and opportunity? But when major governmental subsidies are involved, the question gets more complicated. As former state Comptroller Carl McCall put it on Monday, “Somewhere along the way, someone has to say, ‘Are we getting our money’s worth?’”

The question hasn’t really been answered regarding the AY plan, but it’s not clear that anyone—besides a few civic groups and a journalist or two—is really asking. The panel discussion that McCall introduced, held at the Harvard Club by the Drum Major Institute, described a dysfunctional discourse in New York about such important civic issues. Reforms achieved in Minnesota, thanks to pressure from groups including unions, seem elusive here.

At the discussion, the most prolific journalistic defender of Atlantic Yards, Errol Louis of the Daily News, was chastised by Assemblyman Richard Brodsky for lacking a "principled response" to the general issue of subsidies.

Lessons from Minnesota

The session was titled Increasing Accountability for Economic Development Subsidies. The keynote speaker, State Sen. John Hottinger of Minnesota (right), described legislation that sets criteria for giving out subsidies (such as minimum wages) and requires subsidies in excess of $100,000 to be subject to public hearings. The law contains a “clawback” clause that requires businesses that fail to reach stated job creation goals to repay a portion of the subsidy.

(The direct subsidies for the Atlantic Yards project, in excess of $200 million, would ostensibly be for infrastructure and site preparation, not for “jobs.” Public spending--including tax breaks, subsidies for affordable housing, and public costs for education, sanitation, and public safety--would be much greater.)

In Minnesota, reformers initially met resistance from state leaders, including then-Gov. Arne Carlson. Hottinger was quoted famously as saying, “When the business community comes home at night and empties their pockets, they find loose change, lint, and Governor Carlson.”

However, a commission on subsidy reform, and some pragmatic deals among stakeholders—business and labor--led to a revision of the law in 1999. Hottinger noted that the state Chamber of Commerce opposed individually-directed subsidies rather than measures that helped the business community at large.

The legislation arose during the Clinton administration when there was a national debate about welfare, and, Hottinger said, “We framed it in terms of corporate welfare.”

The issue wasn’t whether the subsidies are good or bad, but how much they returned to the community. In Minnesota, as in several other states, local communities had competed against each other to attract business, but there was little sense of the overall pattern; the law required that the state department of economic development receive reports about each subsidy.

And in New York?

So, how does New York compare? “On paper, pretty well,” responded Assemblyman Richard Brodsky, a Democrat who represents a Westchester district and chairs the Corporations, Authorities and Commissions committee (right). “It just doesn’t work. It turns out that a fundamentally corrupt administration of the program undercuts whatever formal transparency exists.”

Though the state has reporting requirements regarding jobs created, Brodsky cited the example of a company that reincorporated under a new name to collect tax credits for jobs held by its predecessor.

“The power exercised in the political process by large corporations is so immense that the amount of subsidies is literally uncountable," Brodsky asserted. "Nobody loves the New York Times more than I love the New York Times. But the New York Times [company] is the recipient of enormous public power subsidies, of bonding and interest rate subsidies. Do they create jobs? Do they not create jobs? Is job retention as valid a reason for giving money as job creation? In the end, most states and most people in government will have to face the fundamental reality that resources are apportioned to the powerful in this state without regard to need. And if that’s going to change, it’s going to take a fundamental change in the political structures.”

Without subsidies, stasis?

Daily News columnist and editorial writer Louis (right) suggested that “part of the challenge of implementing a Minnesota-style subsidy accountability movement… is a lot of political energy kind of moves around from deal to deal." People focus on a project or two but not the broad problem.

Louis suggested that “very few” of the subsidy deals in New York are as outrageous as some mentioned earlier in the session. “Here we have a more mixed and nuanced set of deals.” He brought up the Yankee Stadium deal and then the West Harlem project pushed by Columbia University.

He highlighted the opportunity costs of not using subsidies. “I was born in the Manhattanville houses in Harlem. It’s across the street from where Columbia University’s talking about building its expansion. They gave us a tour… and I am not kidding. It looks pretty much the way it did in 1969… It seems to me, if you’re going to get any progress going, we probably need to spur this in some sense.”

“Ditto for the Atlantic Yards project, which is where I live now,” he continued. (Louis lives in Crown Heights, not Prospect Heights, but they're part of the same community board.) “There’s been too much written about it in the last four years. I know a lot of people in this room know a lot about the project. Suffice it to say that the railyards portion in particular and the area in general has been slated for urban development for decades. And there’s been a cost for not doing anything.”

(Well, was there an RFP? No. Does the urban redevelopment area, ATURA, extend to the entire project site? No. Have some former industrial buildings in and around the proposed project footprint been rehabilitated? Yes.)

Brodsky responded that “it’s just untrue” that New York state doesn’t get some outrageous deals. He cited a couple upstate, then added, “Any stadium deal provides enormous—literally billions—with no ability to understand what we’ve done. So I call on Errol for a little more intellectual rigor. Because his response, which is interesting, is ‘We really need to get something going.’ OK, he’s right. What does that have to do with the creation of massive giveaways?… We get tough with poor people. We don’t get tough with rich people. Let’s find out how much we’re spending. It’s literally billions. Let’s find out who’s getting it. And let’s figure out what they’ve done with it.”

You get yours, I get mine

Louis responded, “What we have here is not a case of jobs simply fleeing… we get something that is probably a good thing, but we paid too much for it.” On the other hand, he said, turning to Brodsky, if a project were in Westchester, “it’s not necessarily such a bad thing for the people in his district and even for you as their representative.”

Brodsky interjected, “Accusing me of insincerity is not a response.”

Louis continued, “The question for me is: What are we going to have? The cost of it is an entirely separate question.” The “local selfishness” regarding subsidies, he said, is something “I accept as the lay of the land… If they’re going to get a billion-dollar TIF [tax-increment financing] deal in Rensselaer County, I think where I live, in Kings County, if somebody wants to bring a billion-dollar deal there, with way too much paid per job, in my neighborhood, where there’s a lot of unemployment, personally, I would say, ‘You know what? I’ll take that.’”

(It sounds a lot like August Wilson’s line in Radio Golf: I don't care if somebody else makes some money 'cause of a tax break. I get mine and they get theirs. And it sounds a lot like Louis’s enthusiastic and unskeptical endorsements of the Atlantic Yards deal. Since May, the Daily News has published five editorials, likely written by Louis, and a Louis column on AY. Why do I think he writes the editorials? Because his latest Our Time Press column sounds much like the latest Daily News editorial.)

Brodsky was unimpressed. “That is a prescription for a bigger disaster. ‘My pork is good. Your pork is bad.’ is not a principled response to the pissing away of billions of dollars.”

State Sen. Liz Krueger, who represents Midtown and the Upper East Side, said she’s made the argument that her district doesn’t need subsidies. “When we don’t have tax revenue for good schools or public transit, the public suffers.”

What next?

“We don’t believe in the free market,” said Brodsky, criticizing large corporations’ reliance on subsidies. “We have perfected in New York state socialism for the rich and capitalism for the poor.”

Until there’s a political counterforce, nothing will change, said Brodsky, who said a public authority—common in the state, including the Empire State Development Corporation overseeing the AY plan—is “an executive agency unmonitored by a legislature.”

So, said moderator Andrea Batista Schlesinger, this challenges some of our notions about politics. Where, for example, is labor?

“Our experience is that labor has been where they should be in most instances,” commented Adrianne Shropshire, Executive Director, New York Jobs with Justice (right). She obviously wasn’t talking about Atlantic Yards, where the unions supporting the project have expressed little concern about environmental impacts, much less larger questions of pork.

Louis wasn’t optimistic. “Unless there’s a political force to change the way New York does business, I see nothing but bad news.”

He added some skepticism about agencies like the Empire State Development Corporation, and suggested most legislators wouldn’t act: “We also do have to look at the 733 public authorities… it’s not even so much that they do bad deals. They themselves are bad deals. In some of these cases it’s not even a matter of giving the subsidies to a corporation, it’s keeping the subsidy in house… Who is going to shine that light? Every year when we write editorials complaining about the member item that the legislature puts out are not publicized in any kind of systematic way that would enable anybody to figure out who did what. Those are not going to be the people who shine the light on corporations.”

Balance of power

To some degree, the discourse depends on “a big victim,” Brodsky said. The immediate example offered, by Richard Lipsky, lobbyist against big box stores (yet for AY) was Cablevision, which owns Madison Square Garden and poured thousands of dollars into the fight against the West Side Stadium.

It certainly makes you wonder whether a deep-pocketed business helping Brooklyn community groups might have counteracted some of Forest City Ratner’s publicity efforts.

News coverage & owners

Schlesinger asked if there was a relationship between news coverage and the vested interests of the corporate owners. Louis said of Daily News owner Mort Zuckerman, a real estate mogul, “As far as I know, he owns half of New York and wants to buy the other half. On any given project, I can tell you, we—the editorial board—we don’t know, or don’t ask to know and usually are not told what interest he may or may not have…. The operating instruction that I receive is: Just go ahead and do your job.”

(There was no time to discuss the New York Times and the parent Times Company’s relationship with Forest City Ratner, as partners in building the new Times Tower on Eighth Avenue. The possible effect of the relationship on Times news and editorial coverage is worth a symposium in itself.)

Louis blamed public indifference. “It’s very hard to report this stuff. It’s very hard to get this into the press. I have probably a little more flexibility than many, but it’s very hard to explain this,” he said, pointing to the example of a firm saving money on a subsidized bond issue, and costs to taxpayers. “It’s tough to make the public care about this stuff.

“If you’re talking about Atlantic Yards, if you’re talking about the West Side Stadium, people want to know what is going to happen in their backyard,” Louis said. “To say that their kids are going to pay more in taxes to pay back the bonds for rich people that they maybe should have. Again, it’s not even a debate about whether the project should happen in a lot of cases, it’s ‘Is there too much subsidy behind it?’ It gets to be very gray, it gets to be very nuanced… And if it’s about transparency, people’s eyes simply glaze over.”

Who sets the agenda?

That raises a question: to what extent do newspapers—on both editorial pages and in news coverage—lead or just react? Why can’t newspapers analyze the fiscal impact of Forest City Ratner’s plan or point out that the state has been unwilling to release its economic study?

Often it’s that news outlets don’t trust their reporters. As Ian Buruma wrote in the New York Times Book Review last Sunday:
A good reporter for an American paper must get sources who sound authoritative and quotes that show both sides of a story. His or her own expertise is almost irrelevant. If the opinions of columnists count for too much in the American press, the intelligence of reporters is institutionally underused.

Louis confirmed that point, as well. “I’ll say—hint, hint—it’s very much easier to say a respected think tank has put a report saying taxpayers are being ripped off, and there’s a press conference about it tomorrow.”

Brodsky didn’t have much hope for the press, calling it “no better than anyone else in society, and no worse.” Progress, he said, must come from “political activism with a coherent intelligible message that unites people around a common agenda.”

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