Sunday, December 31, 2006

Times suggests we know the costs of AY and "who will pay"

An article in the New York Times Week in Review section about the city's growth offers an uninformed and contradictory reference to Atlantic Yards. The article, headlined New York, Where the Dreamers Are Asleep, states in part:
But the bills came due, bankruptcy loomed, President Gerald R. Ford threatened to leave the city in the lurch and the place turned practical. Today’s New Yorkers want to know what something costs and who will pay. Turning landfill into a park, or building a new basketball arena and apartment-retail complex in Brooklyn if private dollars foot a healthy part of the bill — fine. Risking citywide gridlock to impress the world by playing host to the Olympics? Not so fine.
(Emphases added)

First, how many New Yorkers have endorsed the project? There's been no official vote. The recent poll touting 60% public support was deeply flawed. And the three local community boards closest to the project site have either opposed the project or raised serious questions about it.

More importantly, if we truly were practical, then we'd try to tote up what something costs and who will pay.

We don't have an accurate sense of the net new tax revenues. And we don't know how much Atlantic Yards would cost the public. That information has been elusive and hidden. But we do know we're risking costly gridlock in Brooklyn and beyond, as transportation engineer Brian Ketcham points out.

Cognitive dissonance from the tabs on Albany & AY

For a prime example of cognitive dissonance, consider the enthusiastic editorial support for Atlantic Yards (and the state machinations and opacity behind it) from the New York Post and New York Daily News and the contrast with their harsh other editorials on Albany.

In an editorial Friday headlined THE BIG GOV WHO WOULDN'T, the Post editorialized regarding the 12-year stint of Governor George Pataki:
To put it bluntly, Ol' George let New York down.
Ran off, in pursuit of his own interests.
Even as taxes across the state squeezed out residents and businesses.
And political corruption mushroomed.
…Pataki vowed reform - term limits, public debate of the budget, spending growth held to inflation, big tax cuts.
But, almost from the start, it became obvious that he had little interest in shaking things up. His chief goal: to promote himself and his friends.
Patronage became a priority. Contracts got steered to those with political ties. Back-room deals replaced sunlit debate.
…* Confidence in state politics has been shattered. The state's legislative process ranks as the nation's most dysfunctional. Pols seem to be indicted almost daily.
…Sleazy politics and corruption are at crisis levels in Albany - thanks in no small part to the example Pataki himself set.

Daily News

Today's Daily News, in an editorial assessing Pataki's mixed record, headlined By George, it's bye, George, offers these somewhat contradictory sentences:
Pataki's Empire State Development Corp. fostered the city's building boom, notably rejuvenating Times Square.
...Pataki succumbed to back-room dealmaking with legislative leaders and broke a promise to limit himself to two terms.

The Daily News, in 12/13/06 editorial headlined The good, the bad & the stinky, commented:
That rotten-egg whiff in the air this morning emanates from Albany, where the Legislature convenes for a special session, perhaps to be bribed into action with pay raises.
The pols were summoned by Gov. Pataki to consider a much-needed law to keep the worst sex predators confined in mental hospitals after their prison terms. Otherwise, Assembly Speaker Sheldon Silver and Senate Majority Leader Joe Bruno have refused to clue in the public about their agendas, which may or may not include okaying more charter schools (good), hiking their own salaries substantially (bad) and ratifying Pataki's last-minute list of crony appointments (ugly).
What the lawmakers definitely will not do is operate in an aboveboard fashion. They won't air their proposals in advance. They won't vet bills in committee or debate them on the floor. They won't wait the three days mandated in the state Constitution before voting on legislation. Instead, they'll do what they always do - let Pataki, Silver and Bruno cut a back-room deal, have the governor waive the three-day rule and rubber-stamp the good, the bad and the ugly before the ink dries. And these people want a hefty raise?

And the Times

Given the inconsistency expressed by the tabloids, maybe the New York Times's editorial silence on Atlantic Yards should be seen not as an abdication of public responsibility but rather as a recognition that it's better to be silent than to be inconsistent. Because the Times criticized Albany too, stating in a 12/16/06 editorial:
But we always need our legislators to take the time to do their work carefully — and, we hope, more openly.

Today, in an editorial, the Times offers a mixed verdict on Pataki's governorship, criticizing his record on governmental reform and budget issues. There's nothing, of course, about Atlantic Yards.

Forest City Ratner and the Courier-Life chain: payback time?

The two weekly chain newspapers in Brooklyn have distinct identities. The broadsheet Brooklyn Papers, family-owned, is based in DUMBO and focuses on the neighborhoods of Brownstone Brooklyn. The tabloid Courier-Life chain, based in Sheepshead Bay, is a major supporter of the Chamber of Commerce (its publisher chairs the group, and the chain publishes the Chamber's newspaper) and was recently purchased by the New York Post.

The Brooklyn Papers has editorialized against Forest City Ratner's Atlantic Yards plan and covered it critically, while the Courier-Life has endorsed it and covered it more gently. In fact, the December 15 issue contained the double-whammy of an editorial and an op-ed by Assemblyman Steven Cymbrowitz, which sounded like a press release from the developer.

Actually, it was a triple-whammy. That week's paper included another boost for the plan, a two-page centerfold of project renderings from architect Frank Gehry and landscape architect Laurie Olin. Given that there was no text other than "The Future of Atlantic Yards," it sure didn't look like a piece crafted by the editorial department. Then again, it wasn't labeled an advertisement.

Saying thanks

In this week's issues of the Courier-Life, we get an advertisement from the developer, labeled "Thank You New York." That's a bit odd, given that the project web site, which presumably reaches a broader constituency, banners "Thank You Brooklyn."

Notable is the citation of $1 billion in "net tax revenue." (Actually, the state now estimates $944 million, which omits many subsidies and public costs.) Two weeks ago, Cymbrowitz wrote $1.3 billion. And the Atlantic Yards web site still uses a misrepresentative cumulative total that ignores costs, $5.6 billion.

There's no ad in the Brooklyn Papers this week. But there is that revealing interview with Borough President Marty Markowitz.

The NY Observer features 29 power families, but not the Ratners

The December 18 issue of the New York Observer, the cheeky weekly that specializes in insider coverage of the city’s professions, featured 29 power families in a number of arenas, including sports, the arts, politics, journalism, and law.

Under the rubric of real estate, there were deft profiles of the Trump, Zeckendorf, Rose, and Walentas families. David Walentas, as we know, is the man who invested in DUMBO decades ago and now reaps the rewards of the revival he steered.

But Brooklyn's biggest real estate empire, Forest City Ratner, didn’t make the list of 29. Sure, it’s a judgment call. There’s no younger Ratner joining CEO Bruce as his designated heir, as Jed Walentas will succeed his father David.

And Forest City Ratner has been subsumed into its Cleveland-based parent, the family-controlled Forest City Enterprises. However, Bruce still runs the show in New York, and there’s a most intriguing relationship between him and his brother Michael, the eminent international human rights lawyer.

Michael and the Ratners

Michael Ratner has a little-used office at Forest City headquarters in Brooklyn’s MetroTech. He and his wife, both based in Greenwich Village, make political contributions from that office to Brooklyn machine pols. He’s an investor in the Nets. And he hasn’t said a word about eminent domain or gag orders associated with the Atlantic Yards plan.

The Observer’s editorial introduction suggested that the Bruce/Michael relationship could be rich fodder for scrutiny:
And New York is a town that is defined by families. We have chosen 29 of them, and the power of family defines each, a power that supersedes any other consideration, and that is at once the clearest thing in life, and the most mysterious.

Zone defense

The again, the Observer likely was hamstrung in any attempt to probe into Ratnerian mysteries. Matthew Schuerman, the paper’s commercial real estate reporter, has done a generally incisive job covering Forest City Ratner.

However, it would have been pushing it to ask an Observer staffer to profile the family that includes a colleague, the capable Observer reporter Lizzy Ratner, a daughter of Bruce Ratner and also an investor in the Nets.

Saturday, December 30, 2006

The Marty outtakes: AY & terrorism, density, and traffic

Borough President Marty Markowitz sat down for a year-end interview with Brooklyn Papers’ editor Gersh Kuntzman, and while the newspaper’s excerpts capture the major issues--Markowitz's criticism of the Papers and his forceful defense of AY--the unedited audio linked from the article is worth a listen, both for some tidbits unavailable in print as well as a flavor of our feisty Borough President.
(Photos: The Brooklyn Papers / Julie Rosenberg)

While the discussion ranged over Brooklyn issues from health to the Parachute Jump, it regularly returned to Atlantic Yards, about which Markowitz was sometimes pensive and prideful but more frequently combative and strident.

He dismissed opponents and critics by suggesting they should turn their attention to more important things, argued for greater density without defining limits, and flatly lied (or misspoke) about the traffic impacts of the project.

One word that came up several times was “hateful,” and Markowitz used it to describe the Papers’ coverage as well as some of the comments and emails directed toward him. He didn't mention that project supporters might be contributing to polarization, too.


Probably the most memorable passage that didn’t make it to print was this bizarre Markowitz slam at Atlantic Yards critics:
I’ve been the recipient, more than anyone else on this project, I think maybe even more than Bruce Ratner, but certainly as far as any elected official going, a reciptient of more [inaudible] and hate, from those that feel that Atlantic Yards is more important than the issue of Osama Bin Laden and terrorism. There’s no question that there’s an element of people that truly believe that the greatest challenge facing America is the Atlantic Yards Project rather than terrorism and Osama Bin Laden and Al-Qaeda.

Does he really believe that politically engaged people can’t keep local and national issues straight? Atlantic Yards is a local issue—probably the biggest local issue in Brooklyn—and Markowitz was elected to be Borough President. That’s why his office filed an extensive response to the AY Draft Environmental Impact Statement.

Markowitz has no role in fighting terrorism and searching for Osama Bin Laden (unless he’s conducting reconnaissance missions in Junior’s). Still, it turns out, terrorism is an Atlantic Yards issue. Despite calls from community groups for the state review of Atlantic Yards to include post-9/11 security considerations, the state took a pass—and Markowitz said nothing.

Dismissing opponents and critics

Markowitz, as noted in print, dismissed opponents thusly:
Listen to me, their arguments come down to the following: the heights of the building, the shadows they cast and the traffic issues. If you had to shake it down, that’s really what it all is.

Kuntzman didn’t raise the additional point: the core of the pending eminent domain lawsuit is one about democracy. Was there a planning process? Is this the right way to develop on publicly-owned land? What’s the role of the public here?

[That above passage was in print; those cited below are a mix of passages in the Brooklyn Papers article and in the unedited audio file. Addendum: Let's acknowledge that Kuntzman wasn't there to cross-examine Markowitz but to cover a broad set of questions; had he tried to do the former, the interview would've been two hours and/or Markowitz would've left the room.]

No morning traffic jams?

Markowitz minimized the traffic issue:
But, yes, it may take a minute or two minutes longer to transverse Atlantic my question is: what is the balance between the public good and our own private little tunnel? I say, listen, I’m on Atlantic Avenue as much as anybody, I think it’s going to take me, on game nights, if it’s going to take me a minute or two longer, to go up Flatbush Avenue, or go across Atlantic Avenue.

But Markowitz, who said at the August 23 Atlantic Yards public hearing that it was time to “get real on traffic and parking,” remains optimistic:
And I’m convinced that there will be enormous steps taken to mitigate the traffic issues. It’s important for the city and the developer for this project to work… We’re all pulling together to mitigate the traffic on game nights. You know, in the mornings, it’s not going to impact at all. During rush hours, if you’re driving, perhaps right before the games, perhaps there will be additional traffic issues.

Actually, Chapter 12 of the Final Environmental Impact Statement (p. 3) identifies 46 intersections (of 93 analyzed) that would have “significant adverse impacts” in the weekday morning peak hours by project completion in 2016; even after the recommended mitigation measures, 11 intersections with significant impacts would remain. And that’s from the Empire State Development Corporation; transportation analysts Brian Ketcham and Carolyn Konheim have blasted the state analysis.

Appropriate density?

Markowitz said that the site is certainly a prime area to be able to build housing of greater density… because it works here, because not everybody lives in a brownstone. Not everybody lives in a brownstone! There is large housing--there is a public housing in that neighborhood, high rise housing in that area.

Indeed, that’s been Forest City Ratner’s argument. Where do we take our cues? The 12- and 15-story subsidized buildings across Atlantic Avenue? The 512-foot Williamsburgh Savings Bank? The row houses that are being replaced? The single tall public housing tower across Atlantic? (Remember, each Atlantic Yards building would be more dense than that 31-story tower.) Shouldn’t the density issue be derived through some sort of planning process?

All newcomers?

Markowitz suggested that the opponents and critics are newcomers, even though many are not:
They’ve accelerated the renaissance of Brooklyn, by the very fact of their being here and investing in their community and growing their families, I don’t feel any hatred for them. But what they don’t see, in my opinion, is what I see, the transition of Brooklyn not being a backwater to Manhattan. “We’re not a backwater, we’re not. We’re not only single family homes, we’re not.

But the debate isn’t over row houses versus towers; it is what would be appropriately dense development at the site.

Affordable units

Markowitz also described the the project as containing “thousands of affordable units for people of very low income.”
(Emphasis added)

As a former tenant advocate, Markowitz knows the difference between “low-income” and “very low income;” one criticism of the Atlantic Yards project from some housing groups is that very low-income households, with the incomes of some who currently occupy rent-controlled apartments in the footprint, would not be part of the project.

Open space

Markowitz cited open space as a benefit:
The benefits — the creation of eight acres of open green space, parks, which will provide a tapestry that will knit together Prospect Heights and Fort Greene, as opposed to a moat that we’ve had for 100 years — overwhelm those who say the buildings are too high.

Kuntzman didn’t point it out, but the space would not be a park, since it would be privately-managed, and critics believe that it would serve more as backyards of enormous buildings rather than a tapestry.


When Kuntzman brought up “[b]illions of our money” in subsidies and public costs, Markowitz’s response was forceful:
The public subsidies are appropriate. Every project in this city, the government does provide infrastructure. That’s a given. [The Atlantic Yards subsidy] goes above that to assist the affordable housing component. If we didn’t have the affordable housing, this wouldn’t be necessary.

As I’ve pointed out, that's not the whole story. New York City's Independent Budget Office stated, in a September 2005 report:
Special Benefits for the Atlantic Yards Project. Under the MOU, Atlantic Yards would receive several special benefits not available as-of-right to development projects: capital contributions from the city and state, low-cost financing for the arena, extra property tax savings, a low-cost lease, and property obtained using the state’s power of eminent domain.

Downtown Brooklyn

Markowitz derided critics—and, implicitly, the New York Times, which published a mega-correction—for saying the project wouldn’t be in Downtown Brooklyn:
It’s all part of a vibrant, exciting downtown, which is what this is. The opponents even argue that Atlantic [Avenue] isn’t Downtown. I don’t know what they think is Downtown. DeKalb Avenue? What’s Downtown? Downtown is definitely Atlantic Avenue going north. It’s Downtown. There’s no question about it. I think they think the corner of Junior’s and the Manhattan Bridge is Downtown.

Except Atlantic Avenue is the northern border of the project. It’s safe to say that the western edge of the project borders or is part of Downtown Brooklyn, but most of the site would be in Prospect Heights.


Markowitz brought up, unprompted, the idea that it would be a nonstory for a journalist to write that Forest City Ratner put surveillance cameras up on his buildings. (The Papers’ didn’t write about this issue, raised by Develop Don’t Destroy Brooklyn, but the New York Post did.)

Markowitz has a point that a property owner has a right to protect his buildings, but is the number of cameras typical or excessive? That’s worth some context.


Markowitz echoed the state line about blight:
We’re taking a space that was blighted, no question! Blighted, deteriorated, ugly, in terms of Atlantic Yards itself. And some of the buildings that abut Atlantic Yards that have been vacant for years.

Well, it’s a little more complicated, as Develop Don’t Destroy Brooklyn would argue.

Prices rising

Markowitz makes a strong point that the real estate market backs up his optimism about Atlantic Yards:
Instead of prices going down, they’re going up. People are buying right around it, knowing! Anyone that bought, in the last year or two, certainly knows that an arena is going to built in this project…. They’re buying because this project is going to be a benefit…. You have to understand that land is at a premium.

Indeed, if buyers thought that Atlantic Yards would be a detriment, they’d be slower to buy. But that perhaps depends on how close people would be. How well is the conversion of the Williamsburgh Savings Bank into One Hanson going?

Miss Brooklyn

Markowitz cited the news last week, upon approval of the project by the Public Authorities Control Board, that the developer agreed to reduce Frank Gehry’s flagship tower to 511 feet, just below the iconic bank:
I’m delighted by the way, that my idea about reducing the height of Miss Brooklyn... It was something I suggested, publicly and privately. It’s a celebration of the Williamsburgh building. I don’t know what the days will bring to Downtown Brooklyn… but for the immediate future it appears the Williamsburgh building will remain the tallest building, it’s really a representation to me of the past, the best of the past.

Kuntzman didn’t point out that the developer reneged on a longstanding promise not to block the view corridor of the bank.


Markowitz declared great pride in his Brooklyn!! publication:
I’m able to share characters, character, and the development of Brooklyn in… a feature paper, sharing the story of Brooklyn together.

Still, it's notable that the topic which took up most of his year-end interview, Atlantic Yards, barely appears in Brooklyn!!, if at all.

What next?

When the term-limited Borough President was asked for what office he was busy fund-raising, Markowitz got quiet and, at least publicly, seemed noncommittal: “I don’t know. I’d like to stay in public service,” he said, indicating it was still under advisement. Many believe he’ll run for Mayor in 2009.

Final words

If you listen to the interview as it winds down informally, you’ll hear Markowitz says that he passes on all constructive Atlantic Yards suggestions to the developer and responsible officials:
The only ones that I dismiss are the ones that call me schmuck, garbage, traitor.

Then Markowitz and Kuntzman get into a discussion about whether rent-stabilized tenants in the footprint are adequately protected. Markowitz says they’ll get a place in the new development.

“If it’s built,” responds Kuntzman. The discussion trails off, but Markowitz seems to be saying that the tenants should trust Ratner. The legal agreements, at last report, still leave the developer an out.

Friday, December 29, 2006

Affordable housing, AY, & 421-a: the solution that came too late

A telling pairing of lead articles appeared on the front page of the 12/21/06 New York Times. The passage of the Atlantic Yards project was deemed the day's second most important story. The lead was the City Council's reform of 421-a legislation, which is expected to lead to some 20,000 affordable apartments over the next decade.

(Graphic from New York Magazine's Daily Intelligencer.)

Seen together, it's clear how much backers of the Atlantic Yards project benefited from the city's failure to reform 421-a any sooner, much less rezone the 22-acre site designated for the project.

Each action could have guaranteed a significant number of affordable low-income apartments, rather than leaving it to a private deal between developer Forest City Ratner and the advocacy group ACORN, which gave crucial cover to a development of unprecedented residential density.

In other words, in part because of the inclusion of affordable housing--which, it was infrequently mentioned, would be funded by taxpayers--the developer got the state to override zoning and build at a scale that otherwise would not be permitted.

It wasn't Atlantic Yards vs. nothing. It was Atlantic Yards vs. a smaller development that would yield somewhat less affordable housing but also fewer environmental impacts. And more affordable housing, thanks to the 421-a reform, would be created elsewhere.

Marty vs. zoning

In an interview in this week's Brooklyn Papers, Borough President Marty Markowitz suggests, contra previous statements about "neighborhood preservation in the face of unbounded, unplanned development," that in the case of Atlantic Yards, there should be no zoning, that if a project includes affordable housing it could be an unlimited size.

He tells Gersh Kuntzman:
Some, including some elected officials, said, “If he’d cut down the affordable housing, we could cut down the size of the buildings.” I don’t buy into that argument. Some people would rather see the affordable housing cut significantly [to] cut the size of the buildings. And I call that selfish!

Q: I think you’re putting words in the opponents’ mouths. I don’t think anyone called for less affordable housing.

A: If you spoke to them privately and said, “If we reduce the buildings size in half, but have to cut the affordable housing, how do you feel?” it would be interesting to see what they’d say. They won’t be honest! …

The subsidized housing would be a percentage of the project. The first question that should have been asked was this: what size project could this site, or some segment of it, support? Instead the planning has been backwards.

A closer look

Let's look at the numbers. Atlantic Yards, we're told, would bring 2250 affordable rentals and 600 to 1000 affordable homeowner units (200 of them onsite), over a decade, if it goes as planned. (Many think it would take 15-20 years.)

That sounds like a healthy chunk on top of the 20,000 total generated by reform. At best, one project would mean 2850 to 3250 additional units.

Except not all affordable housing is the same. Only a fraction of the affordable housing defined in the Atlantic Yards project would serve the same constituency as the affordable housing as defined in the City Council's bill. (Note that the Council bill is advisory rather than binding, because the state legislature must renew 421-a by the end of 2007.)

The 421-a program, launched to jump-start housing construction in slow-go 1971, has long been in need of renewal. In 1985, an "exclusion zone" areas in Manhattan was added. Developers who build there, in order to get the tax break, must build or fund affordable housing. They typically buy certificates used to build such housing in the low-cost Bronx--a practice that will be phased out in favor of a new trust fund.

Expanding the zone

Last year, during the rezoning of the Greenpoint-Williamsburg waterfront, the exclusion zone was extended to Brooklyn. This year, Mayor Michael Bloomberg advocated a marginal increase in the exclusion zone. More than a third of City Council wanted it to encompass the entire city.

The City Council achieved a compromise that included large chunks of gentrified West Central Brooklyn, including the blocks that would encompass the Atlantic Yards project. In these neighborhoods, taxpayers have subsidized market-rate construction with nothing in return. Advocates estimate $320 million this year in subsidies citywide. (Graphic from New York Times. Click to enlarge.)

The big outcry last week, after the bill passed 44-5, came from Queens, where the exclusion zone was extended to only a sliver of the waterfront rather than hot neighborhoods like Forest Hills and Flushing. (The bill also sensibly capped tax breaks only on the first $650,000 of an apartment, so as not to excessively benefit luxury units. For more detail see my Brooklyn Downtown Star article.)

It's all about AMI

The distinction between affordable housing as defined by the City Council versus that in the AY project comes down to Area Median Income, or AMI. Here's the definition:
Under current law, developers building within the Exclusion Zone must make 20% of total units affordable to families making less than 80% of the Area Median Income (AMI). This revised legislation sets a cap on the number of affordable units for families making between 60% and 80% of AMI ($42,540 to $56,720 for a family of four). All other affordable units would be for families earning less than 60% of the AMI.

The more aggressive City Council bill would've set the ceiling at 50% of AMI and required 30% of the development to be affordable. Still, Brad Lander of the Pratt Center for Community Development told me that, in practice, it's likely that most 80/20 projects built under the 421-a reform would be aimed at families earning 50% of AMI.

At Atlantic Yards, of the 2250 affordable rentals, some 1125 would go to households earning under 80% of AMI, including 900 that would go to those earning under 60% of AMI. There are no specifics yet on the homeowner units, but it's likely they would go to families earning over 100% of AMI. The May 2005 Housing Memorandum of Understanding states:
Developer and ACORN will work on a program to develop affordable for-sale units,which are intended to be in the range of 600 to 1000 units, over the course of ten (10) years and can be on or off site. It is currently contemplated that a majority of the affordable for-sale units will be sold to families in the upper affordable income tiers.

Let's speculate and say that 50 units might be available to households below 80% AMI. So that might make 1175 units resulting from the Atlantic Yards plan that would conform to the City Council's plan.

(At right, panels from an Atlantic Yards promotional flier sent out this fall.)

And without AY?

What if there were no Atlantic Yards project? How many affordable units might be built if the railyard--and even adjacent blocks--were rezoned? Well, Extell, which bid for the railyard alone, planned 1940 apartments in a rather dense project.

Under the 80/20 plan, that would generate 388 apartments affordable to those up to 80% AMI. But Extell's plan would occupy only about 40% of the Atlantic Yards site. Let's be conservative and estimate that, given a smaller scale development, only one-third as many affordable units (130) would be generated on the rest of the 22-acres. That would lead to about 520 units affordable to those earning under 60% of AMI.

If we take those rough numbers, it seems that Forest City Ratner put its public relations might, as shown in the accompanying brochure, behind fewer than 700 additional low-income affordable units--70/year over ten years, or 50/year over 14 years, or 35/year over 20 years.

Oh, but what about the other affordable rental units at Atlantic Yards? Those come out of the city's 50/30/20 program, which offers subsidies for middle- and moderate-income housing as well. Depending on a developer's plans, those could also be built into the blocks slated for Atlantic Yards, including the Extell plan.

Supporting affordable housing for those income groups may be good public policy. But ACORN, which signed the affordable housing agreement and whose members largely earn under 50% of AMI, wasn't negotiating for them, was it?

Atlantic Yards is supposed to be about affordable housing, but Forest City Ratner never inserted itself in the debate about reform of 421-a nor tried to inform those at its affordable housing information session in July or in its mailings.

Rather, affordable housing, along with the arena, were used to justify and get political support behind a development unhindered by zoning because it's a state project.

Alternate view

Separate from my estimates, I asked Lander to speculate on what might happen to the Atlantic Yards site, given the situation of emerging 421-a reform and no Forest City Ratner plan. He didn't put any numbers on it, but the results would be a significant fraction of affordable housing.

Lander noted that the vast majority of the affordable units would be for households earning under 50% of AMI. Partly that's because the reform would permit only a small fraction of units in the 60% to 80% band. But mostly that's because tax-exempt bonds and low-income housing tax credits make it more attractive to build units for people under 50% of AMI.

With no inclusionary zoning for the area, as at the Greenpoint/Williamsburg waterfront, Lander speculated that a developer in the current market seeking the highest profit would build all market-rate condos and forego the tax benefits. But that assumes a developer not encumbered by the political need to include affordable housing--not very likely.

However, he observed, as the condo market cools, a developer building rental units likely would choose the 80/20 mix on many or most of the buildings, yielding 20% of the units at or below 50% of AMI. For that, the developer would get 25 years of 421-a 25-year benefits, plus tax-exempt bonds, plus 4% low-income housing tax credits.

If, as at the waterfront, the site were to be rezoned through the city's Uniform Land Use Review Procedure, it "would almost certainly be mapped with inclusionary zoning," Lander said. That means a developer would get a 33% density bonus if the project included 20% affordable units below 80% of AMI.

"If this happened," Lander observed, "then the developer would have a stronger incentive than 421-a alone to include affordable housing. If there were to happen, then I suspect:
A. All rental buildings built on site would be 80/20s, with the 20% at/below 50% of AMI.
B. Condo buildings would likely be: (1) 80/20, but with the 20% at/below 80% of AMI; or (2) all-market, but paired with a new all-affordable rental building, with 20% of the market-rate condo units, probably at/below 60% of AMI."

That doesn't generate a total to compare with 1175 or 2250, nor does it encompass the possibility of a 50/30/20 program. What it does show is that the city moved faster in pushing Atlantic Yards than it did to reform housing subsidies or extend inclusionary zoning--both more wide-ranging and democratic solutions to our housing dilemma.

Thursday, December 28, 2006

At Gargano’s valedictory, transparency on AY still hard to find

As valedictories go, it was rather subdued, lasting less than 40 minutes, with only a bit of real news. But Charles Gargano, for 12 years the chairman of the Empire State Development Corporation (ESDC), the man who led fundraising for Governor George Pataki, is still canny after all these years.

With the advent of a new gubernatorial administration next week, Gargano has already left his job, but he visited the ESDC’s 633 Third Avenue office yesterday for a press conference his agency organized. Gargano neither tried to settle scores (remember, Assembly Speaker Sheldon Silver, no ethical paragon, called him “corrupt”) nor catalog his challenges and achievements, such as the struggle to rebuild Ground Zero.

Rather, Gargano made himself available to the media, as he has long done, declared his desire to continue to help “this great city and state,” and took the opportunity to urge his successors to move ahead with the expansion of the Javits Convention Center and especially Moynihan Station. (Most questions concerned the latter project, which the Pataki administration is still trying to push, as the Sun, Daily News, Post , and Metro reported.)

When asked some tough Atlantic Yards questions, Gargano, for the most part, deflected them. Perhaps a cross-examination might have drilled down farther, but his answers spoke for themselves, depicting an agency for which transparency has not been a high priority.

Cordial and dapper, Gargano sat calmly at the head of the boardroom table. (His hair is snowier than in this photo and he seems thinner--older but more fit.) The seats at the table, usually occupied by ESDC board members and staff, this time were taken by scruffier folk scribbling in notebooks. Four staffers sat quietly in chairs flanking a side wall. A battery of three cameras faced Gargano from the end of the long table.

“Great news” on AY

Gargano brought up Atlantic Yards in his opening remarks:
Recently, we had great news that Atlantic Yards was approved. I know there were many issues that we were dealing with. One thing we did know, that it was a great project for the city of New York. We tried to address all of the concerns of the public, and those living in the community. And I hope we did a good job with that. I think we did. You can’t satisfy everyone, but we try to satisfy most of the concerns—the people, I should say, and address the concerns that were brought to our attention.

The PACB vote

I cited the flurry of activity last week, as Assembly Speaker Sheldon Silver, according to the Times, was delivered numerous ESDC documents in the days before the December 20 approval by the Public Authorities Control Board (PACB).

Q. I know there were some documents delivered to Silver in the last couple of days before the PACB vote. Can you describe what those documents were, and when they will be made public?

A: Well, generally, what we do is, any questions that are asked by the Assembly staffers who are working with Mr. Silver, we provide answers to all of those questions—that’s an ongoing process. And that’s exactly what we want the process to be, so we can clear up any lack of understanding of the project, or problems with understanding the project. So I don’t know which docs you’re referring to specifically, there have been many.

Q: My understanding, from reading one press account, is that there is a more full account of the net new revenues. I know that there was a five or six page memo that was released in the week after the December 8 meeting, but I’m told that there’s a more full analysis of the net new revenues.

A: Well, we do provide full analysis of the financial part of the project—there’s no question about it. If there were was some additional information required, that’s what we forward—

Q: When would that be made public?

Eileen Mildenberger, the ESDC’s Chief Operating Officer, responded from the wings:
We gave that to them on the basis of a confidentiality agreement, so we’re not sure that it is going to be made public.

Gargano picked up the thread:
This is a confidentiality agreement that we have with the developer itself. Naturally, the members of the PACB need that information for them to make a decision, but we are under a confidentiality agreement with the developer.

Tax revenue drop

Later I brought up the curious twist in the Atlantic Yards review.

Q. I’m thinking back on the December 8 meeting when the ESDC board approved Atlantic Yards, and later we figured out that the net new tax revenue had gone down by about half a billion dollars. Why did the board not discuss that, as an issue, in terms of its deliberations? Or did it, and not do it in public?

A: Well, the board members receive all of this information in advance of our meeting. Usually, we try to give the information to them one week before to give them as much time as possible to review all of this information and call into the agency for clarification or any kind of information they need about it. So the board members don’t necessarily have to discuss it at the board meetings unless they have additional questions, because a lot of this goes on—I get many calls before our board meetings and many of our senior staff people and our general counsel and our finance people get questions from our board members about what’s going to be on the agenda.

Q: So can you characterize the discussion of that issue before the meeting?

Gargano stumbled a bit, though not as much as he had on the Brian Lehrer Show earlier this month when asked about eminent domain.

A: Uh, yes, there were—there were—there were questions, about it and obviously, it was explained that there was a reduction in the project size, there was a reduction, specifically in the commercial part of it, which yielded more revenue than residential. All of these things were explained to the, uh, those who might have had questions, members of the board.

Given that one board member had trouble identifying Pacific Street, it’s hard to imagine they drilled down to this issue, which was hardly flagged in ESDC documents. And no one at the ESDC has explained publicly how an 8% percent reduction in the size of the project leads to an 18% reduction in construction employment.

FEIS responses?

After the press conference had officially concluded, Gargano stood up to shake some hands and take a few more questions. I brought up one more Atlantic Yards issue, and Gargano played it well.

Q: So, on December 8, a bunch of press went back into your office and we asked you some questions. And I had asked about the nine letters that were received after the Final Environmental Impact Statement, that were apparently included in that package, and there was an internal response to those letters, and, I have on tape—I’m not playing it for you now—I said, “Can I get a copy of those letters” and you said, “Of course.” And I asked [spokeswoman] Jessica [Copen], and she said, file a Freedom of Information Law request.

A: That’s what I mean by “of course,” file the—

Q: I like that.

A: Sometimes things come out, y’know, we all make little mistakes here and there.

Q: The impression I got was, yeah, I’d get it, not I’d have to file--

A: As far I’m concerned, whatever is the legal way of doing it, do it.

Q: Thank you for your time. See you in Brooklyn.

(Gargano often mentions that he grew up in Park Slope and, of course, our colloquy concerned Brooklyn's biggest construction project.)

A: Okay, yes.

Reconfiguring the ESDC

Gargano has been careful about not offering many public comments about the incoming administration but, when prompted, did offer some observations about the agency.

Q: My understanding is that the governor-elect plans to reconfigure the ESDC, with a downstate/upstate directorship and perhaps other changes. Do you have any thoughts on how that would work, whether it’s a good idea, general advice for them?

A: I believe that, in any organization such as this, there has to be one chairman… Number two, we have regional offices in all parts of the state, and we strengthened those regional offices 12 years ago to give them greater autonomy…. It really is a decision by the new administration on how they want to handle upstate-downstate. I will say that, thanks to the Governor’s policies, upstate is doing quite well, as you move from downstate to upstate here on the east coast. But when you move west, there are some difficulties, in the western part of upstate, because of manufacturing jobs that were lost. But I think, with the new centers of excellence, it’s amazing to me no one’s focused on it, but you will, I guarantee you… The centers of excellence are attracting a lot of high-tech industries, not only in Buffalo, in bioinformatics, but in Rochester, in photonics, and of course in Schenectady/Albany with nanotechnology. So there is a lot of high-tech interest in upstate New York and hopefully that will create new jobs.

Wednesday, December 27, 2006

Ratner's profit likely would exceed IRR, but the public's still in the dark

So how much profit would Forest City Ratner make? Remember, a real estate expert consulted by New York Magazine estimated 25 percent, though he didn't have enough figures to be certain.

Two things are clear, however. First, the "internal rate of return" (or IRR) figures in the KPMG audit commissioned by the Empire State Development Corporation don't tell us anything about Ratner's profit.

Second, the public still doesn't know whether this is a good deal or not.

Overall rate of return?

In covering the approval last week of the Atlantic Yards plan, the Times reported:
The developer has yet to divulge precisely how much money it will make on the project. But Mr. Silver yesterday played down concerns that the developers were using public subsidies to generate excessive private profits, noting that the board’s official review powers were limited to vetting the state’s contribution to the infrastructure costs.
“Our role is not to measure the profits that the private investors will make,” Mr. Silver said yesterday. “Our role is to make sure that state liability on the project will be limited to what they say it will be. And we were satisfied about that, plain and simple.”
According to a KPMG audit commissioned by the Empire State Development Corporation, a copy of which was provided to The New York Times, Forest City estimated that the overall rate of return on the $4 billion project, excluding the arena, at about 10 percent over 30 years. The accounting firm estimated the return at about 7 percent.

That confused a technical term, IRR, with a more colloquial "overall rate of return." And Silver's quote dismissed the requirement, in a 2/18/05 Memorandum of Understanding, that the developer was required to provide a 30-year pro forma income and cash flow statement regarding the Atlantic Yards project. (Was that just for internal consumption?)

As I noted, somewhat more cautiously:
So what really would be the developer's profit? How do the tax breaks and grants factor in? A sentence in an earlier version of the Times article raised a question:
But because Forest City is using grants and tax-exempt bonds to finance the bulk of the project, critics cautioned, the project’s investors will likely earn a much higher rate of return on their direct investments.

(Why was that sentence eliminated? Possibly because the financing is still unclear.)

The missing context

Indeed, crucial context was absent. I ran the report past David A. Smith, founder of Recapitalization Advisors, Inc., a Boston-based affordable housing consulting firm.

IRR, Smith explained, is typically used as a way of harmonizing an estimated return from various kinds of investments, including equity (cash) and debt. But the transaction includes both outside investors and the developer, or sponsor. Sponsors like Forest City Ratner, Smith said, "use other people's money as much as you can. They are entitled to a development profit for their services in assembling the resources. So the sponsor is trying to minimize cash outflow and maximize development fee."

That development fee would cover overhead, supervision of construction, supervision of architects, and a profit allowance. And some of that is buried beneath the numbers of the document.

Unanswered questions

Simply assessing an IRR on the equity sources, not the debt, doesn’t answer two important questions, Smith noted:
1) What fees to the sponsor are included in uses of funds?
2) Among the equity sources, what percentage is coming from the sponsors and what percentage is coming from outside investors?

"I find it very surprising that a full 'sources and uses' on the transaction is not publicly available, given the significant amount of public resources going in," said Smith, who noted that affordable housing transactions typically offer a transparent document explaining where the money is coming from and where it will go.

"The goal is for the allocating agency to see that their contribution gets the absolute highest bang for buck," Smith said, because different projects compete for scarce subsidies. "In Atlantic Yards, it’s within the realm of possibility that the problem is they have a moving target, with sources and uses in flux even as the individual phases are also in flux."

"I don’t fundamentally have a problem with the idea that some aspects they might not choose to publish in the paper, but you’d like to have confidence that a review was being done of the public contribution, and whether the public contribution is getting an adequate return on its public investment," he said.

Does report give guidance?

What should legislators think about the KPMG document? "As far as I can tell, KPMG thinks it can work, but raises the related question of whether the state is getting the best value for the resources it is providing," he said.

How could one do that? "You could bid it," he said. "But if it’s not bid, you first obtain from the sponsor a complete 'sources and uses'. Secondly, you drill through it to understand the projected and anticipate profits to the sponsor. You quiz them on it."

Smith said that, with "a massive and highly complex undertaking" like Atlantic Yards, "your complications and volatility and risk go up, and then likewise the compensation for that risk goes up. I wouldn’t have problem defending a large development fee, because there’s a lot of exposure."

Still, he noted, the questions remain. "One, have public resources been adequately protected in the sense of public officials or administration officials getting good value for money going in? Two, even assuming they have relative to this transaction, is this a good use of money relative to other things those public resources could be used for?"

Tuesday, December 26, 2006

The Times defends the front-page scaleback story, but then practices "rowback"

A month ago, on 11/29/06, I wrote an open letter to New York Times Public Editor Byron Calame, contending that the Times had failed to report on new information that essentially demolished the premise of the lead story about a "six to eight percent" Atlantic Yards cutback published September 5.

Calame wrote back, saying I should first complain directly to the newspaper. I did so, and got a response the next day from Deputy Metro Editor Patrick LaForge. I challenged the response and sent it to the Public Editor. Calame, responding five days later, found LaForge's response sufficient.

That was no surprise. Calame practices his own version of judicial deference, seeming to reflexively back the newspaper when I've questioned Atlantic Yards coverage. Could it be because he spent his career at the Wall Street Journal, where there's no metro desk? Or that he's too busy covering national news?

The Times's own coverage, however, suggests that they acknowledge the criticisms I made. Unlike in that front-page article, they've been careful to explain that the scaleback would only bring the size of the Atlantic Yards project back to square one.

But the damage had long been done.

The criticism

As I wrote on September 29, on Sept. 5, the lead story—the most important piece of news in the world for a day—was headlined “Developer Is Said To Plan Cutback In Yards Project.” The deck said: “A Response To Criticism.”

The article, which suggested that developer Forest City Ratner would cut the proposed Atlantic Yards project by six to eight percent, was irresponsible in its execution and thus in its placement.

The article omitted a salient piece of information: the reduction contemplated would bring the project’s size, in square footage, back to the amount announced in December 2003. In other words, the developer increased the size of the project only to reduce it and to appear to be making concessions.

Had that context been included, editors and reporters might have thought twice about the news value of the article. And they might have been reluctant to suggest that the move was a “response to criticism.” An appropriately analytical deck might have read: “Response or Tactic?” [Update: I originally suggested "Criticism or Tactic?"]

Day-after context

Indeed, coverage in other media the next day demolished the premise, offering context for the cutback. The Times reported that the cutback might be considered a tactic, quoting planner Ron Shiffman, who said, “With practically every large development project, people ask for far more than they need.”

Other publications, such as Metro, pointed out that the cutback would only bring the project back to square one.

City Planning's "recommendations"

The story continued. On September 25, the City Planning Commission “recommended” that rumored eight percent scaleback; the next day, the dailies, including the Times, failed to explain that the reduction would restore the project to square one. The Times headlined its story "City Planners Recommend 8% Reduction in Atlantic Yards."

Only in coverage September 28, after the developer “accepted” the recommendation did the Times offer the crucial context: “Moreover, the new reduction only brings the project back to the original size proposed in 2003.”


The Times's September 26 coverage of the City Planning Commission suggested some of the tactics:
As one executive who works with Forest City put it, “A lot of this was precooked.” Critics and supporters had long anticipated that Forest City would make cuts in the project in order to make it more politically palatable.

But were those actual cuts? The fact that they would restore the project only to its original size was one red flag.

Damning evidence

I found another red flag. A document I obtained via a Freedom of Information Law request from the Department of City Planning shows that most of the proposed cuts had been on the table since January, in an option (20B) presented by the developer and architect Frank Gehry.

Now that we know the developer had already prepared for such cuts, the front-page story on September 5 could not have been describing a “response to criticism.” Nor did city planners, as the September 26 headline suggests, actually "recommend" much that the developer was not prepared to accept.

This new information deserves follow-up coverage. (The New York Observer and two Brooklyn weeklies have cited it.) The Times has failed, however, to offer it. As former Public Editor Daniel Okrent wrote (All the News That's Fit to Print? Or Just Our News? 2/1/04):
If the goal of newspapering is to inform the readers and create a historical record, shouldn't the editors be telling us about everything they think is important, no matter where they find it?

Enshrining myth

In the Final Environmental Impact Statement (FEIS) issued November 15 and reissued November 27, the Empire State Development Corporation told (p. 42) citizens who complained that the project was too big that “the project has been modified in response to recommendations by the City Planning Commission."

It’s the job of the press, including the Times, to tell the public that those recommendations were in large part preordained by Forest City Ratner rather than developed by the City Planning Commission in response to criticism.

The Times's response

I got a timely but evasive response from LaForge, which I reprint in italics, followed by my verbatim rebuttal in my follow-up to Calame.

The public editor has forwarded your complaints about the Sept. 5 article on the Atlantic Yards project, which cited various sources who said that Forest City Ratner intended to respond to critics by scaling back the plan on the table, including a reduction in the height of "Miss Brooklyn." Those were newsworthy developments.
You questioned the front-page lead placement of the article, suggesting that the editors viewed this as "the most important piece of news in the world for a day." Actually, while this was important news, the article was not on the front page in editions distributed outside the metropolitan region.

I question its placement on the front-page locally, as well. And I question its placement as the lead story locally. (Several other people I spoke to, including people strenuously independent on the issue, questioned it as well.)

Other local news organizations agreed about its importance and followed up the next day, as you note.

That doesn't justify its placement. And, as even the Times's own coverage showed, they collectively undermined it. But the lead story placement suggested to the public that the cut was significant, and the article included insufficient context and skepticism.

The phrase in the headline that concerns you -- "A Response to Criticism" -- was accurate and appropriately neutral. Your suggestion -- "Criticism or Tactic" -- seems to reflect an opinion and would not have passed muster for style reasons not worth discussing.

"A Response to Criticism" was conclusory. Had the context been included, an alternate deck might have been devised. My suggestion was "Criticism or Tactic?", with a question mark. I recognize on reflection that that would've been syntactically and stylistically inappropriate, so "Response or Tactic?" would have been better--and no more of an opinion than "A Response to Criticism." Rather, it would have left open two interpretations of the move.

As for the suggestion that the article needed more context, it is always a judgment call how much background to include, given space constraints and the interest level of the general reader. Even so, this article explicitly reported that critics felt the developer's response was inadequate and took note of speculation that this was part of a long-planned public relations strategy. The article also said that "the size of the project swelled" over two years before the developer moved to scale it back.

Still, the headline(s) and the absence of precise context combine to suggest that the cut was significant, rather than a tactic. The story deserved far more modest placement and additional context.

Regarding the document that you mention, the editors and reporters have reviewed it and disagree that it "essentially demolishes the premise"of the article. Indeed, the project then on the table was later scaled back, as reported.

It demolishes the premise that it was a "response to criticism." Rather, the document shows that the developer had put the option on the table in January. But the Times and other news outlets reported that it was "recommended" by City Planning and "accepted" by the developer. Rather, it was orchestrated.

Over on our political blog, The Empire Zone, I did invite Atlantic Yards critics to post links, and you posted one about your commentary on this document, which I am sure was of interest to some readers.

My commentary included reporting of information of importance to this story. The information belongs in Times print coverage. My original criticisms stand.

The Public Editor responds

Calame wrote to me on 12/5/06:
I have reviewed your complaint about the response provided to you by Patrick LaForge regarding The Times's coverage of Atlantic Yards. I believe his answers to the questions you raised were responsive and reflected a fair consideration of the points you had made.

Calame's use of the term "complaint"--I used "criticism"--suggests that he may be helping deflect agitated readers rather than respond thoughtfully to a reporter who may have studied this topic more than anyone at the Times.

A bias toward scoops

Had Calame and LaForge been more candid, they could have acknowledged some other factors. First, given the dearth of big news on the Labor Day weekend, the threshold for front page placement was much lower.

Second, that a bias toward scoops--and the scaleback plan was one thanks to a leak from someone in City Planning and/or, more likely, Forest City Ratner--might lead to an emphasis on the scoop rather than an acknowledgment of counter-evidence that could move the story off the front page.

Indeed, Calame's 12/3/06 column, headlined Scoops, Impact or Glory: What Motivates Reporters?, almost contained an explanation for the article that I'd criticized.

Calame concluded that, while reporters are not motivated by bias, they are competitive:
The drive to be first with the basic facts of a newsworthy development remains embedded in the culture of newsrooms and in the minds of reporters.

That might explain why the reporters seized on the news that a reduction might be coming.

But there's more. Calame continued:
But “intellectual scoops” — stories with new insights that are lauded on a regular basis by Bill Keller, the executive editor — are what reporters increasingly view as a more vital way to be first. As one editor told me in an interview, “When you can look at all the dots everyone can look at, and be the first to connect them in a meaningful and convincing way, that’s something.”

Had the reporters on that story, Charles V. Bagli and Diane Cardwell, actually connected all the dots, it wouldn't have been a front-page story. Indeed, Calame continued:
The dangers to readers of a rush to be first are obvious. Accuracy can suffer, and a fresh insight can be left without the convincing example that another day of reporting could have produced.

That second day of reporting is what Nicholas Confessore offered in the follow-up, buried inside the Metro section, not on the front page. Indeed, Bagli and Cardwell had covered the Atlantic Yards issue rarely since Confessore was assigned to the Brooklyn bureau in October 2005.

Near the end of his essay, Calame concluded:
While it’s no longer a dominant motivation, the hope of turning up a really big story that will make it to the front page never seems that far from the minds of many reporters.

So perhaps the drive to get on the front page, along with the slow news day and the absence of the reporter closest to the story, contributed to poor judgment by reporters and editors.

Judgment calls

So let's take another look. Regarding that 9/5/06 article, LaForge noted that it is always a judgment call how much background to include, given space constraints and the interest level of the general reader. Even so, this article explicitly reported that critics felt the developer's response was inadequate and took note of speculation that this was part of a long-planned public relations strategy. The article also said that "the size of the project swelled" over two years before the developer moved to scale it back.

However, the article never spelled out the size of the cutbacks. Here are the paragraphs:
Whatever happens, the planned cutbacks are unlikely to satisfy the most severe critics.
''I don't think the bottom-line community concern is really about aesthetics, which is what shaving a few stories off the heights of the buildings is about,'' said James F. Brennan, a Brooklyn assemblyman. ''I don't think this flies.''
Daniel Goldstein, a spokesman for Develop Don't Destroy Brooklyn... said he suspects that the developer has had this proposal ''in their closet for a long time.''

None of that addresses whether the planned cutbacks would satisfy even mild critics, as the follow-up story, which quoted some random Brooklynites, showed.

Six paragraphs later, after quoting some politicians and citing some history, the 9/5/06 article nudged toward specifics:
But over the following two years, the size of the project swelled to 7,300 apartments and the high-rise towers -- 19 to 58 stories -- took shape, looming over the four- to six-story buildings in the adjoining neighborhoods. In March, Forest City reduced the project by 475,000 square feet by cutting 440 market-rate condominiums, but that went largely unnoticed.

Here's where the Times could have added the context, such as "It remained larger than originally announced, and the newly hinted cutback would bring it back to square one."

The follow-up

Confessore's 9/6/06 follow-up undermined the lead placement of the previous story simply by its headline, Developer’s Plan for a Smaller Yards Project Matters Little, More or Less, in Brooklyn. The article hinted at, but did not specify that the project would return to square one. But most quoted were skeptical. This article, however, was on page B3.

Later in the month, he spelled it out, in a 9/29/06 article headlined Atlantic Yards Developer Accepts 8% Reduction in Project:
The company's agreement was to some extent preordained: yesterday's formal recommendations followed months of discussion. Moreover, the new reduction only brings the project back to the original size proposed in 2003.

This article also appeared on B3.

Front-page news, finally

Last week, in the 12/21/06 front-page Times article about approval of the project, headlined, State Approves Major Complex For Brooklyn, Confessore crafted a careful description:
On paper, the project grew to a peak of more than nine million square feet, before shrinking back to the roughly eight million square feet originally planned -- a decrease that did little to mollify those residents and officials who said that the project had been far too big and dense from the beginning.

That, again, is called "rowback"--a change without an official acknowledgement that previous coverage was wanting.

The Times has practiced "rowback" on several aspects of the Atlantic Yards story: the location of the project in "Downtown Brooklyn," the description of the state's actions as a rezoning, and the description of the project as being located "on the railyards."

I'm sure such a practice isn't limited to the Atlantic Yards story. But it's still disappointing and part of the pattern that led to New York Magazine's Chris Smith conclusion that "the Times screwed up."

Monday, December 25, 2006

Eminent domain attorney: look to federal court

Eminent domain attorney Michael Rikon, speaking on the Brian Lehrer Show last Thursday, offered both cautionary and encouraging words to those hoping to challenge the Atlantic Yards project in court.

On the one hand, Rikon said that eminent domain law offered a lot of leeway to government agencies making determinations of blight. "Our courts will allow the taking for anything that has the slightest incidental public benefit," said Rikon, who represents parties threatened with condemnation. "In this case, they allege the area is blighted and the project will clear the blight up. Blight is a standard that is in the eyes of the beholder. I’ve seen blighting studies that were totally absurd. If it wasn’t blighted, it will soon be blighted by the cloud of condemnation."

Chimed in Brooklyn Papers editor Gersh Kuntzman, "It’s funny to think of a area that’s blighted where brownstones neighboring this supposedly blighted area sell for $1.5 million."

Rikon again said that blight represented a difficult legal challenge. "When you try to attack that in court, judges will say, well, that’s a legislative determination which we won’t get involved in…. It’s a real problem," he said. "The most fruitful grounds for reversing a determination is on the environmental issue. That is the failure to comply with Article 8 of New York’s environmental conservation law.

Federal court option

Rikon added support for the eminent domain cases filed in federal court: "That, as well as the federal ligitation—federal judges are not that narrow in their review of these projects. And across the country, various federal judges have stopped projects which they thought were unfair and improper..."

Rikon said he didn't anticipate successful results in state court. (The main eminent domain challenge has been filed in federal court, while several renters have filed a case in state court.)

"The challenges I've made, which had really good merit as far as I'm concerned, have never been successful," Rikon said. "It's extremely difficult to stop a condemnation proceeding in New York State. In federal court, there's a much better chance. I think the judges who hear those cases are more open to the arguments being made by opponents of the project."

Sunday, December 24, 2006

Forest City press release emphasizes Nets, downplays subsidies

The press release from Forest City Enterprises, dated December 21, a day after the approval vote, and headlined Forest City’s Atlantic Yards Project Approved By State Board:
CLEVELAND--(BUSINESS WIRE)--Forest City Enterprises, Inc. (NYSE:FCEA) and (NYSE:FCEB) today announced that New York’s Public Authorities Control Board (PACB) unanimously approved the Company’s Atlantic Yards project, a mixed-use development in downtown Brooklyn whose main attraction is expected to be a new sports and entertainment arena for the Nets NBA basketball team.

Note the use of "downtown Brooklyn."

Special benefits

The three voting members of PACB, representing the governor, Senate and Assembly, unanimously authorized public financing for the project. Based on the Board’s vote, government agencies are expected to provide tax-exempt bonds and subsidies to help finance the project, thus completing the public review process for Atlantic Yards.

Note the acknowledgement of tax-exempt bonds along with subsidies. But that's not the whole story. The Atlantic Yards web site acknowledges subsidies for infrastructure development and "[c]ertain as-of-right tax benefits may also be available to FCRC as they would be for any other developer."

That's still not the whole story. New York City's Independent Budget Office stated, in a September 2005 report:
Special Benefits for the Atlantic Yards Project. Under the MOU, Atlantic Yards would receive several special benefits not available as-of-right to development projects: capital contributions from the city and state, low-cost financing for the arena, extra property tax savings, a low-cost lease, and property obtained using the state’s power of eminent domain.

What about the condos?

The Forest City press release continued:
Charles A. Ratner, president and chief executive officer of Forest City Enterprises, said, “The Public Authorities Control Board’s action enables the Atlantic Yards project to move forward in a mutually beneficial public/private partnership. Our goal is to create a dynamic commercial and recreational destination complementing vibrant residential neighborhoods. This project will create jobs and help make Brooklyn an even greater place to live, work and play.”

Atlantic Yards is a long-term development project that is expected to include an arena to be developed by Forest City and designed by world-renowned architect Frank Gehry. Other uses are anticipated to include retail, office, apartments, and parks and open space. The arena would become an integral part of the local community, hosting local sporting events, concerts, family entertainment, and corporate and special events, in addition to serving as a professional sports complex and an international entertainment destination. Forest City is the principal owner of the Nets.

Maybe this is reading too much into it, but isn't the developer downplaying Gehry's role in designing the rest of the project?

And how can there be both parks and open space--does the developer plan to turn over some open space to the city's Department of Parks and Recreation?

And why exactly does "apartments" come third in the list since the project would be, in terms of square footage, some 80% residential, and the market-rate units would be the main source of the corporation's revenues?

The Times Magazine correction comes too late

From today's New York Times Magazine:
An item in the Year in Ideas issue on Dec. 10 about the increasing size and scale of urban planning referred imprecisely to the Atlantic Yards project in Brooklyn. The New York City Planning Commission endorsed it but did not approve it; approval can be given only by state officials.

Now they tell us.

As I wrote the day the item was published, a correction was required in the daily paper, since it might be too late to correct it in the Magazine before the scheduled vote December 20 by the Public Authorities Control Board.

Senior editor Greg Brock wrote back and seemed to concur:
I have passed this query on to the magazine editors. As a rule, we run magazine corrections in the magazine, not in the daily newspaper. But the magazines have early closes, so if the magazine cannot print a correction before the vote, then a daily correction -- or more likely a correction next Sunday on Page A2, so magazine readers will see it -- would be an option.

Option avoided

There was no correction Sunday, December 17, so on the next day I wrote to Brock:
I'm following up on your 12/10 response. I recognize the appropriateness of correcting the error in the Magazine, but, as noted, the record also should be corrected *before* the vote of the Public Authorities Control Board, which is scheduled for Wednesday.
The Magazine has not published a correction. Time is running out. I trust your expeditious attention to this matter.

The board approved the project, but I never got a reply.

The answer came in today's Magazine.

Not the only way

In the past, the Sunday Times, on the usual A2 corrections page, has published corrections of articles appearing in the accompanying Magazine (which closes nearly a week earlier).

In other words, had anyone on Saturday December 9 noticed the error in that article early in the day--as opposed to my evening phone call to the Times--a correction would've appeared in the Sunday paper.

Instead, the Times fell back on following a procedure that, however internally consistent, shortchanged the readers.

It likely wouldn't have made a difference in the vote on December 20. However, it would've provided one more reminder to the Times's editorial writers about their silence on the Atlantic Yards issue.

Saturday, December 23, 2006

The Gehry contradiction

From an interview (reg. required) with architect Frank Gehry in today's Wall Street Journal:
Frank Gehry is 77, white haired, paunchy, and when we talked one afternoon in late autumn the topics of age and death never seemed far off. Mr. Gehry is, of course, one of the world's great architects, creator of the Guggenheim museum in Bilbao and enough of an icon to have been among the personalities featured in Apple's "Think Different" campaign.
Describing what it takes for him to accept a commission, Mr. Gehry says, "The determining factor is: Can I get it done while I am still alive?" Explaining why he doesn't build houses any more, Mr. Gehry says, "They involve a lot of personal hand holding. I guess at my age I don't have the patience."

(Emphasis added)

The Atlantic Yards project, unmentioned in the interview, would take ten years to build, at best, and even supporters and cordial critics believe it more likely would take 15-20 years.

Last January, I reported on a Gehry public appearance:
Gehry, who had previously said that he had asked Ratner to let other architects design parts of the project, didn’t complain yesterday but simply related that "there are some 20 buildings to be built, and the client insisted that I do them all. When he came to me, he said, 'I know you're going to try and bring all your friends in to do all the buildings, cause that's a cop-out.'... And he didn't want me to do that, he wanted me to really solve the problem, and put me on the hot seat."

Let's assume that Gehry most readily warmed to the challenge of building his first sports arena. If the project proceeds on or close to schedule (the arena's due in the fall of 2009, two years later than originally announced) and Gehry remains healthy, then he'll have gotten it done during his remaining years.

But the potential for delay combined with actuarial calculations suggests that it's highly unlikely that Gehry will oversee the entire project from start to finish. But having Gehry's name on the buildings would indeed be a selling point.

Is the Daily News in the tank when it comes to AY?

In my press criticism, I've focused much of my attention on the New York Times, because it's the city's most important newspaper and because the Times has a special obligation to exactingly cover Forest City Ratner, which is in business with the parent New York Times Company.

But the Daily News, owned by real estate mogul Mort Zuckerman, deserves scrutiny as well. Let's acknowledge that the newspaper has the right to run numerous masthead editorials and Errol Louis columns cheerleading for the Atlantic Yards project. (I've dissected them regularly.) Still, the rate of such editorials far outpaced any other daily.

Also, let's acknowledge that the paper has published a point-counterpoint and, of course, let sports columnist Mike Lupica challenge Bruce Ratner's plan.

Don't believe the hype

But the Daily News has a problem, and it goes way beyond the practice of a tabloid editorializing on its front page.

Inside the news pages, the newspaper has truly embarrassed itself, in both overhyping and underplaying stories. Take yesterday's slight and speculative story, following up on news announced Wednesday, headlined Nets go High Tech: Ratner throws in new home for elite Brooklyn HS in arena deal.

First, Ratner has made no such promises stated in the headline. As the article stated:
Ratner agreed in a statement to "work with the city, state and the United Federation of Teachers on the creation of a new, 21st century Brooklyn Tech High School, at a yet to be determined location in the borough."
Ratner spokeswoman Joyce Baumgarten said yesterday plans were "still in the formative stages."

What does "work with" mean? Contribute space in a new Ratner development? Sell space at a certain rate? I couldn't get any answers this week. There's no story beyond the vague statement.
If the developer had pledged to build a new school, we would've been told. Similarly, the developer has allocated space in one planned Atlantic Yards building for a school, but the city is paying.

That Brooklyn Tech story, hyping a phantom, appeared on page 2 of the main news section.

Only for Brooklynites?

Two days earlier, on Wednesday, the News ran an article headlined Price of Yards too high? State opens books before key vote. On the day of the Atlantic Yards vote by the Public Authorities Control Board, this article appeared in the center section of the edition that circulates only in Brooklyn.

In other words, Daily News readers from elsewhere in the city and state were not informed that:
The Empire State Development Corp. revealed recently that projected tax revenues from the project had dropped from about $1.4 billion to $944 million.
The number of jobs and personal income created by the project were also estimated to be dramatically lower than expected, according to the projections.

There's something wrong here.

Eminent domain distraction

The same thing happened when the Daily News covered the eminent domain lawsuit that could not only derail the Atlantic Yards plan but establish a new legal doctrine. The 10/27/06 article, headlined Ratner plan hit with suit: Eviction targets seek to stop Yards, appeared only in Brooklyn.

This leads to the question: is the Daily News in the tank? Are the editors deliberately underplaying stories of civic importance and hyping the ephemeral?

The evidence is troubling.