Wednesday, April 04, 2007

The ESDC leaves the Atlantic Center mall, after Gargano’s slush fund expires

Cleaning up in the wreckage of a political deal involving former Gov. George Pataki and former Empire State Development Corporation (ESDC) Chairman Charles Gargano, the ESDC has closed its underutilized Brooklyn office on the lightly-trafficked third floor of the Atlantic Center mall operated by Forest City Ratner.

Also, a look at the history of the Community Network Office (CNO) program offers evidence—in plain sight but not previously emphasized—that the choice of the mall for the ESDC Brooklyn office was meant as a favor to developer Forest City Ratner. The developer has had trouble filling space at the mall, which even the New York Times described in 2004 as having “dead corridors,” especially on the third floor.

The ESDC has now closed all six of its Community Network Offices around the city, as the $4 million used to fund them since 2002—money Pataki directed from the Port Authority of New York/New Jersey to the ESDC—has expired, and the offices did very little to fulfill their stated purpose.

A 3/25/07 Bergen Record article broke the news that the Port Authority had spent nearly $100 million since 2003 on projects ranging from cultural support to real estate development, straying far from its transportation mission. The money came from a fund controlled by Pataki and administered by Gargano, who had been Pataki’s chief fundraiser and was appointed vice chairman of the Port Authority as well as head of the ESDC.

Was it favoritism?

Was the mall site chosen out of favoritism, as some critics of the relationship between Forest City Ratner and the ESDC—which has since approved the developer’s Atlantic Yards plan across Atlantic Avenue from the mall—have charged?

That motivation can’t be proven, but it’s clear that the third-floor space should never have been under consideration by the ESDC, since it did not meet the guidelines announced in a 6/14/02 press release about the CNOs.

In the press release, state officials pledged, “Each office will operate from a street-level, retail storefront in a high traffic area of the neighborhood commercial district.” The third-floor site in the Atlantic Center mall—chosen more than a year later--is neither a street-level storefront nor situated in a high traffic area of the mall.

Why was the site selected? ESDC spokesman A.J. Carter, who joined the agency with the administration of new Gov. Eliot Spitzer, said, “That was a decision made by the previous administration.”

Empty CNOs

While the CNO program was announced in June 2002, offices were opened over the next year. Two closed last year, while the other four closed last month. The initial press release promised “more efficient access to business assistance resources available from New York State government,” but virtually nobody walked in the door.

“A decision was made to close the offices, because they basically weren’t being used for what their purposes were,” ESDC’s Carter said. “The theory was to provide storefronts for walk-ins to come in and get information about our services.” However, Brooklyn was the busiest office, and last year had just 305 walk-in visitors—barely more than one a day.

When the Brooklyn office opened in 2003, an ESDC press release stated, “The Brooklyn CNO is already involved in several major projects, including the redevelopment of the Lowes [sic] King Theatre and the celebration currently being held by the West Indian American Day Carnival Association.”

However, the Loews King Theatre is now a project of the New York City Economic Development Corporation. No public statements or news articles mention the ESDC's role beyond a 3/24/99 Newsday article that appeared four years before the CNO was established. In the article, headlined “A Magic Plan for Flatbush,” the ESDC was said to be ready to provide a $3 million low-interest loan for the redevelopment in 1999, at that point involving Magic Johnson Theaters, a company led by former basketball star Earvin “Magic” Johnson.

“Bad political deal”

Not long after he left office, former ESDC Chairman Gargano has begun to get some serious press attention—the Village Voice has reported on his apparent role in nudging an agency client to hire his nephew and, more recently, on Gargano’s lavish but poorly documented expense account meals.

Faced with the Record’s scoop, Gargano justified the $100 million in Port Authority spending as supporting the economy and tourism. However, Louis J. Gambaccini, a former assistant executive director of the Port Authority, told the newspaper that “a lot of the projects that have been funded should not have been funded” and authority spokesman Stephen Sigmund called the process “a product of a bad political deal.”

The Record editorialized about the failure of Port Authority to disclose the spending and the apparent violation of the agency's mandate. The Albany Times-Union blog called it "Gargano’s Slush Fund." The news, however, has gotten little traction in New York City; the only publication to pick it up was the Staten Island Advance, which offered an editorial, headlined They spent $$ on what?

The Record’s scoop deserves more attention.

The Brooklyn political deal

The political deal likely extends to the staffing of the Brooklyn office. The initial CNO director hired in 2003 was former New York City Council Member Una Clarke, who is also the mother of new 11th District Congressional representative Yvette Clarke.

Una Clarke was term-limited out of Council and, though a Democrat, she in 2002 “spearheaded Pataki’s re-election campaign among New Yorkers of Caribbean descent,” as the Albany Times-Union blog recently reminded us.

Una Clarke resigned from her ESDC job last summer to work on her daughter’s election campaign. (In 2000, Una Clarke unsuccessfully challenged long-serving Congressman Major Owens; she was succeeded by her daughter. In 2004, Yvette Clarke unsuccessfully ran against Owens. Last year, the latter’s son Chris Owens unsuccessfuly ran for the open seat. The Owenses oppose Atlantic Yards; the Clarkes support the project.)

$60K in operating expenses

The ESDC’s Carter said that, at full staffing last year, the CNO program employed 12 people, two each in the five extant offices and two at ESDC headquarters. When the decision was made to close the program, only seven people found their positions eliminated.

In Brooklyn, the 1500-square-foot office occupied a little-used hallway in the east side of the third floor. Next to it, some retail space had languished empty for years. Forest City Ratner turned that space into the Atlantic Yards Information Center, a mostly-closed room used to house models and drawings regarding the Atlantic Yards project and to host invitation-only meetings. (Click on photo to see schematic for third floor.)

Carter said the ESDC paid the developer $30,000 a year in rent, or $2500 a month. However, the total operating cost, outside of salaries, was about $60,000 a year. While utilities and taxes contributed to that total, Carter said that ESDC staffers were still looking into the components of the overall bill. Did the ESDC have to pay a penalty to end the lease? He said he didn’t think so.

Empty space

A visit to the mall’s third floor last Sunday showed an empty office, with a notice taped to a window indicating that a meeting for Workshop in Business Opportunities (WIBO) had been moved to St. Francis College in Brooklyn Heights. (The WIBO web site still lists the ESDC space.)

The various functions of the community offices, Carter said, "could be met elsewhere.”

Other parts of the mall remain vacant: four stores and a kiosk, according to the Forest City Ratner web site, though it may not be up to date.

A much larger retail space has been occupied by the Department of Motor Vehicles, which, as the Manhattan Institute’s Julia Vitullo-Martin wrote in 2004, “took space vacated by the Sports Authority chain [and] is paying $1.6 million a year for its 44,000 square feet, or about $39 per square foot.”

Critics like State Senator Velmanette Montgomery have pointed out that the presence of government agencies in a mall where tenants should be open on evenings and weekends suggests a taxpayer bailout. As the New York Post reported in 2003, the developer had already received significant help: The city chipped in $18.55 million and gave the developer, Forest City Ratner Companies, a 23-year property-tax abatement. City taxpayers also covered the tab for $4 million in street improvements outside the mall.

Even though the mall has been redesigned, there's not much to do about the blank walls that occupy at least half its perimeter.
Urban planner Ron Shiffman (now on the Develop Don't Destroy Brooklyn advisory board) has described the mall as the "only pre-existing blighting influence" in the area around the Atlantic Yards project. Architectural historian and critic Francis Morrone (also now on the DDDB board), writing in the New York Sun (ABROAD IN NEW YORK, 2/23/04), called it "the ugliest building in Brooklyn."

Now there's another space left to let.

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