Saturday, March 31, 2007

Eminent domain case gets serious consideration in court (but the press mostly passes)

Apparently most of the press missed another doozy of an oral argument yesterday in federal court regarding the Atlantic Yards eminent domain case. U.S. District Judge Nicholas Garaufis considered some defense arguments skeptically, as he devoted more than three hours (including break) to the hearing.

Also, though there were no additional briefs on the issue, Garaufis spent a significant amount of time hearing arguments about the substance of the case, as he considered the defense motion that the case should be dismissed because of a failure to state a valid claim. He also expressed some skepticism about the political process that led to project approval--though that may not have significant bearing on the plaintiffs' charges.

(I'm out of town, and my secondhand and thus highly incomplete account is based on messages from or conversations with four courtroom observers, all project opponents. I hope to have a more thorough account when the hearing transcript becomes available. Observers identified reporters present from the weekly Brooklyn Paper and Brooklyn Downtown Star and the New York Law Journal. They said a New York Post reporter stopped in, but there's no article in today's paper, nor in any other daily.)

It was significant, as I wrote Thursday, that Garaufis would hold a hearing rather than simply rely on briefs from the parties challenging the report and recommendations made by U.S. Magistrate Judge Robert M. Levy and also significant that Garaufis devoted as much time as he did--a point he himself made in court.

Ripeness & state court

While the defendants--the Empire State Development Corporation (ESDC), the city, and developer Forest City Ratner--had challenged Levy's recommendation that the case is ripe for review, Garaufis did not seem sympathetic. The plaintiffs--13 property owners and renters organized by Develop Don't Destroy Brooklyn--had pointed out that demolitions for the project have already begun, and Garaufis also cited those ongoing demolitions.

At one point during this phase, as ESDC lawyer Preeta Bansal argued that the case should be consolidated with a separate case in state court, Garaufis became angry, interrupting her for lecturing him about doctrine he already knew. This isn't a law school class, he told her.

Garaufis also did not entertain the ESDC's argument based on a case known as Younger, which states that federal courts should not interfere with ongoing state proceedings. Levy had said the defense's argument for dismissal wasn't sound.

About Burford

A good portion of the hearing concerned the plaintiffs' challenge to Levy's recommendation that the case be dismissed and sent to state court based on a case known as Burford, which requires federal courts to stand clear when they might disrupt “state efforts to establish a coherent policy with respect to a matter of substantial public concern."

Garaufis seemed willing to at least consider the plaintiffs' contention that, if the case remains in federal court, it would not ride roughshod over the eminent domain process in New York State. The defense has argued that, should the Atlantic Yards plaintiffs succeed, future plaintiffs would all go to federal court, which is more friendly to eminent domain challenges, and thus delay projects that relied in part on eminent domain.

Settlement and discovery

Garaufis seemed interested in easing the case to some kind of resolution. He raised the possibility of settlement, asking plaintiffs' attorney Matthew Brinckerhoff if there was any way an accommodation could be reached short of adjudication. Brinckerhoff said no, that it was an issue of constitutional rights.

The judge also raised the possibility of permitting discovery--the request for background documents--key leverage for plaintiffs in federal court but not permitted when eminent domain is reviewed in New York state court. (The review in the latter is limited to the established record.) Garaufis mused about permitting some kind of limited discovery and having the case moved to state court.

On the merits

As at the first hearing 2/7/07, a good portion of the discussion involved the merits of the case.--the plaintiffs' charge that Atlantic Yards arose from a sweetheart deal and the benefits are pretextual.

Brinckerhoff contended that the project arose from a deal between Mayor Mike Bloomberg and developer Bruce Ratner. ESDC attorney Douglas Kraus pointed out that there had been charges of favoritism in previous cases, such as the Times Square redevelopment, and they were irrelevant.

Brinckerhoff, who noted that there were 26 respondents to a Times Square RFP, again contended that the sequence violates the guidelines suggested in the Supreme Court's 2005 Kelo v. New London decision, where the city had identified the properties at issue before a developer had stepped forward. The ESDC says Kelo doesn't apply, because it was about economic development, not blight removal and other public purposes, as with Atlantic Yards. And Kraus again reminded the court, the act establishing the ESDC aims to maximize the participation of the private sector.

Kraus also pointed out that case law states that it's not up to the courts to second-guess the boundary of a project site that includes eminent domain. The plaintiffs, however, contend that the boundary was drawn by the developer, and that violates Kelo. The case law Kraus cited is pre-Kelo. Whether Kelo is controlling, however, is unclear.

Kraus also pointed to the open space, jobs, and housing arising from the project. The ESDC has said it's not the job of a judge to draw the line as to what public benefits are sufficient once the the approving agency has found such benefits. The plaintiffs say that a closer look suggests the benefits are much smaller than claimed.

Three men in a room

ESDC lawyer Bansal pointed out that Atlantic Yards had been approved by the government, including elected officials. (Actually the project in December was approved by the unelected board of the ESDC; two weeks later, it was approved by the three-member Public Authorities Control Board, or PACB.) Garaufis responded to Bansal by holding up three fingers, noting that three people made the decision.

Whether that influences the judge's ruling, however, remains unknown. Garaufis did not indicate when he might issue an opinion or whether he might hold additional hearings.

Friday, March 30, 2007

Once again, KPMG report on IRR doesn't mean profit

Two published articles this week have inaccurately suggested that the KPMG audit the Empire State Development Corporation (ESDC) commissioned actually estimated Forest City Ratner's profit on the Atlantic Yards project.

First, the New York Sun reported, in an article noting that the state never saw a full business plan for the project:
Cash flow projections and interviews with executives were the basis for the report's conclusion that the developer would stand to make a total return on its investment of about 9.8% on the mixed-use portion of the project.

Then the Brooklyn Paper followed up:
The KPMG report projects that Ratner will walk away with a $400-million profit from his state-backed $4-billion Prospect Heights Xanadu.

So how do we square this with New York magazine's estimate of $1 billion profit? We don't.

IRR vs. profit

As I reported in December, quoting affordable housing expert David A. Smith, internal rate of return (IRR) doesn't mean profit:
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 includes overhead. As I wrote:
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?

Note that the KPMG report was delivered to the ESDC in late December. Forest City Ratner in early October provided its own sketchy three pages of cash-flow estimates, released on February 28. They left the same questions unanswered.

I interviewed Smith again, who said:
“The schedules omit nearly all of the financing and operating assumptions. They omit any sketch as to how the equity will be raised from five different legal and financial entities (team/arena, condo, rental, hotel, and office), without which one cannot tell what is the cost of external capital versus developer capital. They omit a sources and uses of funds, without which it is impossible to tell what fees (however proper they might be!) the developer and its affiliates may be charging the venture ('off the top', as it were). They do not tell us where the $230 million (and counting) of equity that has already been contributed came from, nor at what current or future cost."

So we're still in the dark, but the profit figure is likely well over ten percent.

Thursday, March 29, 2007

Procedural arguments return as eminent domain case hearing approaches

The Atlantic Yards eminent domain case gets another day in federal court Friday, as both the plaintiffs and the defendants will argue to U.S. District Judge Nicholas Garaufis that the report and recommendations made last month by U.S. Magistrate Judge Robert M. Levy were incorrect.

Remember, Levy recommended that the case be dismissed and more properly filed in state court. However, he did so based on only one argument by the defense; he agreed with two other arguments by the plaintiffs, 13 property owners and tenants organized by Develop Don’t Destroy Brooklyn (DDDB), that the case should remain in federal court.

Thus, while the DDDB plaintiffs are asking Garaufis to overturn Levy’s one argument for dismissal, the defendants—the city, the Empire State Development Corporation, and developer Forest City Ratner—are not only backing Levy’s dismissal argument, but contending that he was incorrect in not dismissing the case on other grounds.

It’s not automatic that a federal judge will hold a hearing on the responses to a magistrate’s recommendations; the judge could simply rely on legal briefs. But the decision to hold a hearing seems to indicate a recognition of the complexity of the legal arguments and even the importance of the case.

Legal memos are linked from DDDB's case web site.

Procedure, not merits

At issue are only procedural questions, not the issues of substance that actually occupied the majority of the argument in court on 2/7/07.

Levy wrote, "Plaintiffs’ Amended Complaint raises serious and difficult questions regarding the exercise of eminent domain under emerging Supreme Court jurisprudence, many of which were explored in some detail at oral argument. However, in light of my recommendation that this court abstain, it would be inappropriate to address plaintiffs’ claims on the merits."

Then again, should the case be moved to state court, it would be much harder for the plaintiffs to prevail. So procedure affects substance.

(I’m out of town and will miss the oral arguments tomorrow.)

Thinking about Burford

The hardest-fought issue regards Burford, or the 1943 case Burford v. Sun Oil Co. Though the parties in the case devoted just four of 220 pages of preliminary memoranda to Burford, Levy rested his decision on that case.

He cited three factors identified by the Second Circuit Court of Appeals, including "[1] the degree of specificity of the state regulatory scheme, [2] the necessity of discretionary interpretation of state statutes, and [3] whether the subject matter of the litigation is traditionally one of state concern.”

“Here, the first and third factors weigh in favor of abstention,” he wrote, citing the “highly specific and comprehensive mechanism for condemnees” to challenge condemnation “in a state-created system of administrative and judicial review” under the Eminent Domain Procedure Law, or EDPL.

Also, he wrote that “it is indisputable that eminent domain is traditionally a matter of local concern and that the state has a vital interest in establishing a coherent policy with respect to it.”

Plaintiffs disagree

The plaintiffs contend that Levy was wrong. They argue that the EDPL is procedural rather than substantive; not unusually specific; and that there’s no adequate alternative forum. Indeed, should the case go to state court, not only would the plaintiffs not have access to discovery, they wouldn’t be able to sue any entity beyond the ESDC, wouldn’t be able to collect damages, nor be able recover attorneys’ fees.

Moreover, they argue that the issue is not whether hearing the case in federal court would interfere with a state regulatory scheme, but whether that interference would be undue. While eminent domain, they acknowledge, is traditionally a state concern, the Supreme Court has held that eminent domain is not particularly susceptible to Burford abstention.

Nor is there a centralized review procedure in New York under the EDPL, unlike in the other two cases in which the Supreme Court had upheld Burford abstention. Also, because the claims in the case are federal claims, it would not entangle the federal court in state law.

Defense response

The ESDC, however, calls the case “a classic candidate for Burford abstention” and contends the plaintiffs’ argument misunderstands and mischaracterizes the doctrine. The defense memorandum points to a case that states that federal review “would be disruptive of state efforts to establish a coherent policy.”

The ESDC argues that the Supreme Court has in fact affirmed an abstention when federal claims were made. Moreover, the ESDC argues that the plaintiffs’ distinction between “procedural” and “substantive” is incorrect; rather, Burford calls for abstention in regard to “a matter of substantial public concern,” and that a process like the EDPL can be substantial.

The ESDC points out that the challenge to the “public use” clause of the Fifth Amendment aims at an area of law in which federal court mainly defer to state courts. And the ESDC points to a 2005 case, Brody v. Vill. of Port Chester, not cited by the plaintiffs, which upheld the EDPL as adequate, citing “the narrow role that courts play in ensuring that the condemnation is for a public use.”

Last word: plaintiffs

On the Burford issue, the plaintiffs get the last word. They argue that there's a significant difference between the EDPL's exclusive process for arriving at a condemnation decision and the "purportedly exclusive procedure" for judicial review. State policy regarding uniform pre-determination proceeding--the focus of the legislative revamp that led to the EDPL--would not be threatened.

Nor, they say, is the EDPL's state process particularly expeditious. The case in state court likely won't be decided until September.

The Brody case, they argue, isn't applicable because the claims were due process claims, with a much lower threshold regarding the adequacy of an alternative forum. "Here, there is no way Plaintiffs can meaningfully litigate their claims... without discovery and factfinding," the memo states.

AY & affordable housing

The other defendants let the ESDC take the lead in the defense, but in their own memos add some legal and policy arguments.

The city argues, “Allowing plaintiffs to side-step the comprehensive and uniform procedures set forth in the [EDPL] in favor of litigation in federal court would present a serious threat to the City’s ability to move forward with critical projects that depend on public-private partnerships for their success, including the construction of affordable housing and the creation of viable mixed-use developments in blighted urban areas.”

“For example, in a sample of 21 affordable housing projects undertaken by the New York City Housing and Preservation Department (“HPD”) in partnership with private developers between 1995 and 2005, approximately 5832 of 14,369 units required acquisition by eminent domain,” the memo states. “Under plaintiffs’ theory, the owners of those lots acquired by eminent domain and then transferred to private developers to facilitate the construction of the City’s plan for affordable housing would all be able to bring a challenge to the taking in federal court.”

"A copy of relevant documentation may be made available at the Court's request,” the memo says in a footnote, and it would be interesting to see how those projects compare to Atlantic Yards. The Atlantic Yards project would generate 90 units of low-income housing and 135 units of moderate- and middle-income housing a year over ten years, under a best-case scenario, though even landscape architect Laurie Olin suggests the project would take 20 years. That would mean 45 low-income units a year. Meanwhile, the project would include 1930 (or 1730, assuming 200 are subsidized) market-rate condominiums, with a market value of $1.6 to $2 billion.

The city’s memorandum includes a copy of the legislative history of the EDPL, explaining how its 1977 passage reflected a nearly seven-year effort to standardize an inconsistent and complex scheme around the state. “Discovery and trial, such as is sought by plaintiffs here would only increase the uncertainty of vital public projects moving forward,” the city argues.

Forest City argument

The Forest City Ratner memo also cites Brody, noting that this appellate case was decided after the Supreme Court’s 2005 decision in Kelo v. New London, which the plaintiffs have cited as barring sweetheart deals leading to eminent domain. The Brody decision stated that the “wisdom or advisability of a public project is not reasonably subject to the adversarial adjudicative process.”

The Forest City memo notes that, after the passage of the EDPL, “the decision to condemn private property no longer is made by a would-be condemnor in private, but must be considered at a public hearing that is designed to foster meaningful public participation and transparent decision making, and creates the record that forms the basis for subsequent judicial review.” (Did the 8/23/06 public hearing “foster meaningful public participation and transparent decision making”?)

Moreover, Forest City argues, the EDPL offers accelerated judicial review in state court “to offset the delay resulting from the requirement of extensive public participation in a condemnor’s decision.” In this case, “plaintiffs fully participated in the public process that was conducted by ESDC, and personally and by counsel made extensive oral and written contributions to the record. But having participated in the part of the process established by EDPL 207 that they found useful, they have elected not to participate in the second part.”

The Forest City memo cites Levy’s point that allowing this case to continue in federal court “would provide incentive for forum shopping” and send future cases to federal court. Argues Forest City, “Neither the present plaintiffs nor those in similar positions in other cases should be permitted to game the system in this way. Indeed, given the enormous sums of money that a major project puts at risk, opponents can view the mere complexity and prolonged pendency of a litigation as a tactic that may strangle a project prior to any final adjudication of the merits.”

Is the case ripe?

Levy had disagreed with the defense contention that the case should be dismissed because the plaintiffs’ injuries weren’t sufficiently concrete to be considered ripe for judicial review. The pertinent question, he wrote, “is whether the challenged condemnation is final, imminent, or inevitable,” but acknowledged that those concepts remain “amorphous, open to interpretation, and at any rate highly fact-specific.”

The ESDC, however, continues to maintain that the claims aren’t ripe “at least until ESDC commences a proceeding for transfer of title.” The question, according to the ESDC memo, “is whether the alleged future deprivation is imminent and ‘certainly impending.’” Levy's recommended ruling, argues the defense, “threatens… to open the floodgates to the federal courts” because plaintiffs should be in state court.

Alternative universe?

The ripeness argument drew a scathing response from the plaintiffs’ lawyers: “The upshot of Defendants’ argument is that this case is rendered unripe simply because an imaginative person could post an alternate universe in which Defendants will suddenly have an epiphany—recognizing that the Public Use Clause and fundamental notions of representative government are incompatible with their abuse of the power of eminent domain to consummate a private business deal—and decide to scotch the Project. Anything is possible, after all.”

As for whether the courts would be flooded, the plaintiffs respond, “It is plan that courts must give substantial deference to public use findings when made by true legislative bodies, motivated to achieve a public purpose by condemning land identified by the government (not the pre-selected developer) before any private beneficiaries are known.”

While the ESDC points out that the agency has “up to three years” to commence taking title, the plaintiffs respond, “Defendants are playing fast and loose with reality. The reality is that demolition for the Project began last month.”

The Younger abstention

The ESDC also argues that dismissal is appropriate because of a case known as Younger, which states that federal courts should not interfere with ongoing state proceedings. Levy had written that “there is no pending state court proceeding in which plaintiffs will have the opportunity to present the federal claims raised in the instant complaint.”

While other plaintiffs have filed a case in state court challenging the ESDC’s plans regarding two specific properties, “that proceeding will not necessarily address or resolve the claims plaintiffs assert in this matter.”

The defendants take issue with Levy’s description of the plaintiffs in the other case as non-condemnees, arguing that, as rental tenants, they are in fact condemnees—a disputed issue in that state case. The ESDC also suggests that the state case “in all likelihood will have to decide whether the Atlantic Yards project serves a public purpose” and thus would address the question at issue in federal court.

The plaintiffs respond that “nobody knows” whether the state court case “will or will not address public use issues.” Moreover, there’s no reason why that case, with different plaintiffs, would be binding on the federal court case.

Last word: defense

The defendants reiterate that the case is not ripe until the condemnation actually proceeds--a deadline established in other cases. Forest City Ratner "has every right to prepare itself for the Project by beginning demolition work on property it owns or has rights to, while bearing the risk that the Project will not proceed." (Emphasis in original)

As for the Younger argument about why the federal court should abstain, the defense contends that if the state court rejects the ESDC's eminent domain determination and findings, the state agency "cannot proceed with any condemnations pursuant to that decision." (Emphasis in the original)

Wednesday, March 28, 2007

Public park, indy ESDC, "derelict stretch"? Looking back at the eminent domain argument

As the Atlantic Yards eminent domain case gets another day in court Friday, it’s worth taking another look at a few questionable statements made by defense lawyers during the 2/7/07 hearing.

Would the project really bring public parks and public housing? Is the ESDC really independent? And was Forest City Ratner the only developer that might be interested in a "derelict stretch" near Brooklyn's busiest transit hub?

[The quotes are from an official transcript, which nonetheless contains flaws in transcription.]

AY: public parks, public housing?

Lawyers for the Empire State Development Corporation (ESDC) have challenged the plaintiffs’ efforts to invoke the 2005 Kelo v. New London case, in which the Supreme Court indicated it would look askance on what seemed to be a sweetheart deal. Kelo, noted ESDC attorney Douglas Kraus, was about eminent domain for economic development, while Atlantic Yards, he noted, is about the removal of blight—not an element in Kelo.

He added, “And neither were any of the other indisputably proper public purposes that were served by the Atlantic Yards project in this case, such as the construction of hundreds of millions of dollars worth of infrastructure improvements, the creation of public parks and recreational facilities, and the construction of public housing.”

Kraus, however, overstated the case. The subsidized housing within Atlantic Yards would not be part of the city’s public housing system, nor would the publicly-accessible open space be part of the city park system.

ESDC board independent?

Also at issue is whether the ESDC is an independent agency or an arm of the Governor’s office, especially given that former Governor George Pataki’s chief fund-raiser, Charles Gargano, was named to head the agency. Moreover, as I wrote in December, large donors to Pataki were named to the ESDC board.

According to state courts and the Second Circuit, declared Assistant Attorney General Peter Sistrom during the hearing, the ESDC “is not the state. It is independent of the state, and one of the reasons it is independent of the state is because it is not controlled by the Governor, even though he appoints some, not all, of its members. And even though some, not all, of the members serve at his pleasure, the courts have repeatedly held it is not the state. The whole purpose of it is to create independently [sic] of the state.”

Perhaps, but an information sheet from the State Comptroller’s Office indicates that all the members who served when the board voted on the Atlantic Yards project were gubernatorial appointees. (Click on Staff and scroll down.)

FCR attorney on “derelict” Brooklyn

Was Forest City Ratner taking a big risk by proposing this project? Yes, according to FCR attorney Jeffrey Braun--even though the Prospect Heights neighborhood was on a steady upswing, as noted in New York Times Real Estate section coverage.

“I don’t think the fact that, you know, Forest City Ratner allegedly initiated this has any relevance,” he said. “I mean, frankly, this is not the crossroads of the world, Times Square, where many developers would like to have an opportunity to build. I mean, this an extremely derelict stretch—no, we’re talking about the Vanderbilt Yards—which is an open trench that’s what we’re talking about.”
[Note: I previously reported the term “completely derelict” .]

However, Forest City Enterprises CEO Chuck Ratner three weeks ago called the Atlantic Yards site “a great piece of real estate.” Many developers might indeed covet such a site, or just the Metropolitan Transportation Authority's Vanderbilt Yard.

A private developer's plan

Braun continued, “We’re talking about a private developer allegedly, who came up with a plan for remediating and eliminating this scar on Brooklyn and that’s what happened here and I don’t think that the Court ought to be establishing or recognizing a rule that’s invented by plaintiff’s counsel that would discourage a developer and penalize a developer for coming to the public agencies with a good idea and here that was of a long process and the plan was approved by a public, a public officers, not by Forest City Ratner.”

Whether it's a constitutional violation is up to the court, but it's doubtful that other railyards--extremely valuable pieces of land, given the city's shortage of available land for construction--will be treated in the same way.

After all, urban planner Alexander Garvin, author of the definitive text The American City : What Works, What Doesn't, has recommended that the process for developing a platform for development over Sunnyside Yards in Queens requires a feasibility study with input from "engineers, traffic analysts, site planners, and real estate entrepreneurs.”

Tomorrow, I'll preview the arguments in the hearing Friday.

Relief at the ballot box? Housing expert says ESDC justification seems hollow

Is voting the rascals out sufficient redress for those who want courts to examine what they believe to be eminent domain abuse, as a lawyer representing the Empire State Development Corporation (ESDC) has suggested?

Not at all, says David A. Smith, an affordable housing expert in Boston who supports the targeted use of eminent domain and has been watching Atlantic Yards from afar. (He wrote 3/15/07 that he has "no past, current, or contemplated engagement or professional interest in Atlantic Yards.")

Insider deal?

That issue came up during the 2/7/07 oral argument in the Atlantic Yards eminent domain hearing, when U.S. Magistrate Judge Robert M. Levy posed a hypothetical question to Douglas Kraus, representing the defendant Empire State Development Corporation (ESDC).

Levy wondered that if a constitutional violation would occur in a case involving eminent domain that led to a clear public use--a result that historically justifies condemnations--but also benefited an insider, the governor's brother-in-law.

(The 13 plaintiffs challenging eminent domain in the Atlantic Yards case claim that developer Bruce Ratner got a sweetheart deal, which might violate the guidelines suggested in the U.S. Supreme Court's 2005 Kelo vs. New London decision.)

Kraus responded, "It might violate some state ethics rule or some other law that was indeded to deal with the public performance by the Public Officers Law that regulates our officers in New York State to perform their duty."

He continued, "That might be an issue for the prosecutor; it also might be an issue for the electorate, right. [Plaintiffs' attorney] Mr. [Matthew] Brinckerhoff told us they're all politicians and they're all elected. If his clients or if other members of the community think this was really a terrible project, they can express themselves in the next election when they vote for their City Council representatives, their State Senators, their State Assembly members, their Congresspersons, and their federal Senators."

Is that relief?

Smith, who has supported use of eminent domain for economic development but thinks it must be done with safeguards, was perturbed by Kraus's formulation. (Smith recently commented on the recent release of Atlantic Yards cash flow documents.)

He told me, "In my view, Mr. Kraus's flip comment ["terrible project"] tacitly concedes he has no legal case for his client. For if the project is terrible, and the sole remedy is electoral relief, then there is no check in law to a development agency run amok, and no limit on the powers agencies claiming eminent domain (for removal of blight, economic development, or otherwise) can wield."

Atlantic Yards is considered by the defense not to be an example of eminent domain for economic development, as in Kelo, but instead for other public purposes, including blight removal, below-market housing, open space, and transit improvements. Still, the defense has forcefully argued that the case in Brooklyn does not appear to be a sweetheart deal as outlined in Kelo.

Eminent domain and blight

Smith observed how the use of eminent domain has evolved: "As a general matter, eminent domain is a 'last resort' government action. It is to be used when literally nothing else will suffice; the classical case is a highway that must go straight (yet even Robert Moses's highways and Chicago's Kennedy expressway found ways to curve!)."

Now, however, its use has expanded. Smith said, "Blight, as defined in the landmark post-World War II cases, was a condition of urban economic death--neighborhoods that were entirely gone. In the 70s and 80s the definition of blight kept expanding and the criteria being diluted, so that the 'blight' finding morphed, at least in the minds of some local officials, into 'declining neighborhood that could be revitalized.' When that slippery-slope standard is coupled with an immediate transfer to a private developer, the potential for abuse is vast."

Rules for eminent domain

Smith in November 2005 summarized what he calls [urban planning professor] "Jerold Kayden's 8 Simple Rules For Taking My Urban Property." They are:
1. Be comprehensive. Make your redevelopment authority program comprehensive.
2. Follow due and open process. Adopt it deliberately, transparently, with thorough consideration that you carefully document.
3. Emphasize public-use benefits. Parks and waterfronts trump jobs, and jobs trump new revenues.
4. Compete the bid. Use an RFP (Request For Proposal) or other competitive process to select the plan and developer and to eliminate the presumption of a hard-wired sweetheart deal.
5. Get what you pay for. Use performance benchmarks -- cash flow participations, clawbacks, rescission, right of final refusal -- to make developer perform.
6. Give back what you reap. Earmark incremental benefits like real estate taxes for public-use projects.
7. Embrace public oversight. Have a special public oversight mechanism on the developer.
8. Use 'public-private' partnerships. Use new forms of public-private partnerships that "muddy the private waters." Long-term ground leases are not good enough.

[Emphasis added]

As applied to Atlantic Yards

In the Atlantic Yards eminent domain lawsuit organized by Develop Don't Destroy Brooklyn, the first four are at issue; notably, the Metropolitan Transportation Authority did not issue an RFP for the agency's Vanderbilt Yard--the key public property within the project site--until 18 months after the city and state publicly endorsed Forest City Ratner's project.

That case will be back in federal court on Friday, as lawyers for both sides argue whether U.S. District Judge Nicholas Garaufis should accept the recommendation from U.S. Magistrate Judge Robert M. Levy that the case be dismissed on procedural grounds and refiled in state court. Tomorrow, I'll preview the arguments in the hearing.

Tuesday, March 27, 2007

Planned demolition of 475 Dean means more "urban room" on crucial block

Though it hasn't been announced yet in a press release, Forest City Ratner "in the near future" intends to demolish 475 Dean Street (Lot 48 on the map at right), according to a 3/15/07 notice sent to Community Board 6 by the developer.

This demolition was not part of the developer's recent press release, nor has Forest City yet applied for a demolition permit. (For all the other demolitions announced to CB 6, permits are in process.) As I wrote last week, Lot 13 has been vacant for a while and lots 19, 20, 55, and 56 were made vacant after demolitions next year. Announced are demolitions of lots 10, 11, 12, 18, 22, 30, and 54--filling in the grey color in the map above. The largest plot, Lot 1, a gas station, is largely absent of structures.

Plaintiffs occupy lots 21, 27, 50, 46, 43, and the square above 43. Now 475 Dean, which is set back from the street in the center of the photo at right, will add to the "urban room." (The photo comes from a 7/25/06 New York Times article headlined Blight, Like Beauty, Can Be in the Eye of the Beholder.)

The former garment factory at 475 Dean was turned into artists' lofts; WNYC radio's Andrea Bernstein last year reported on some of the artists who were forced to relocate; those interviewed said that Forest City had given them a fair deal. Relocation contracts often require sellers to speak positively of the developer. (New York Voices also ran a story about the building.)

PLANYC2030: what might sustainability mean?

The battles over land use, including Atlantic Yards, have clearly pointed to the need for planning by the government and various stakeholders, beyond a process driven by real estate developers.

Now, it seems, the city government has recognized that, and more. On 12/12/06, Mayor Mike Bloomberg announced a major sustainability initiative, titled PLANYC 2030, offering ten goals for creating a sustainable city by 2030, by which the city's population is projected to increase from 8 million to 9 million people.

The plan grew out of the mayor’s request that Deputy Mayor for Economic Development Dan Doctoroff draft a long-term land-use plan for the city, which morphed into an attempt to address "the full range of challenges to our city's physical environment," in Bloomberg’s words--issues like energy, water, and climate change. (The land-use plan was likely the unreleased 2006 study by Alex Garvin, which I mentioned yesterday.)

A slick media campaign has involved outreach to community groups and the general public, trade associations, and governmental partners. As we await an announcement of implementation plans in the next few weeks, numerous questions have been raised, among them what goals have been downplayed, whose interests are being served, and how much democratic process will be involved.

The ten goals are grouped under the following color-coded rubrics, with further details in the graphics: OPENYC (housing, transit capacity, parks); MAINTAINYC (infrastructure for water, transit, energy); and GREENYC (carbon emissions, clean air, brownfields cleanup, waterway restoration).

Few specific policies have emerged yet, but congestion pricing must be on the table. Crain's New York Business reported last week that the city is considering "requiring property owners to improve energy efficiency before selling their homes and encouraging construction of modern power plants." In a speech nearly two weeks ago, Doctoroff "hinted that major, regional transportation policy plans were in the works," according to Streetsblog.

The Moses effect

There’s some reason, in this age of Robert Moses revisionism, to be skeptical. In a panel on planning held 3/20/07 at the Museum of the City of New York, urban historian Robert Fishman recalled Rexford Tugwell, who posited a fourth governmental power beyond executive, legislative, and judicial: the “planning power.” Tugwell, who tussled with Moses and was replaced by him on the City Planning Commission, in 1960, Tugwell wrote an article called “The Moses Effect,” a not uncomplimentary acknowledgement of the importance of big plans.

Now, said Fishman, “the Moses Effect” has migrated to the private sector, which has the wherewithal to propose and implement big plans. The city needs such energy, Fishman said, “but how can this energy be contained in a unifying, cohesive, constructive, and truly general force?”

Rohit Aggarwala, the historian and former management consultant tapped to head the mayor’s new sustainability office, declared, “We want a more thoughtful, comprehensive and hopefully benign Moses effect.” To plan, he stressed, is not to site, but to think ahead. (More on Aggarwala from Streetsblog.)

“We don’t want a top-down master plan, but we can’t muddle through,” said Aggarwala, who said the city seeks a middle ground that’s not necessarily consensus-based but involves some input and consensus.

Community input

He got a sharp response from community planner Ron Shiffman, founder of the Pratt Institute Center for Community and Environmental Development, who said, “I like to think of planning as the synthesis of reason and democracy.”

While historians and planners are good at examining past trends, local residents, Shiffman insisted, are the experts on their neighborhoods, the people who reclaimed housing during the 1970s and 1980s when the city was poised to withdraw services and banks refused loans.

(Indeed, just last week, the Municipal Art Society announced the annual Yolanda Garcia Community Planner award, sponsored by the Planning Center with funding from the Citigroup Foundation, honoring Elizabeth Yeampierre, the executive director of the oldest Latino community-based organization in Brooklyn—the United Puerto Rican Organization of Sunset Park, or UPROSE. Yeampierre is one of two community activists on the 18-member sustainability advisory board for PLANYC 2030.)

“There’s one thing missing in PLANYC,” Shiffman said. “You don’t talk about equity and about economic development.” The city needs to be conscious not just of office buildings but manufacturing jobs in new industries, including green ones, that immigrants will seek.

Aggarwala (right) said he generally agreed with Shiffman, but suggested the term “complementarity” rather than “dialectic” or “debate.”

The role of preservation

Urbanist Roberta Brandes Gratz brought up the example of Donovan Rypkema, who spoke at a recent Historic Districts Council conference, insisting that sustainability requires preservation. (Those comments, I noted last week, were pertinent to the debate about razing the Ward Bread Bakery.)

Aggarwala suggested that planners had taken that for granted, and thus not explicitly discussed it, given that some 85% of the buildings in 2030, in terms of square footage, should exist today. Buildings built before 1920 are inherently more energy efficient, he said, because they were built before energy was cheap, though they can be costly to retrofit.

Shiffman said that the Atlantic Yards plan generated a certain amount of skepticism about sustainability plans, given that recently renovated buildings are slated to be demolished, and the decisions on the project were shunted to the state. He’s also argued that the city needs the power of eminent domain, but that, if abused, as he contends it is in the Atlantic Yards and Columbia expansion plans, the backlash will be painful.

Criticism in the Voice

Wayne Barrett’s 3/20/07 Village Voice cover story, headlined All Wet: Bloomberg's man Dan Doctoroff has an answer for rising seas: more coastal condos! warned that the city was not addressing climate change and tied the challenge to the city’s pattern of growth:
There are many reasons why the city is adaptation-averse, and, of course, they start with real estate interests. If Doctoroff were to take adaptation seriously, he'd have to rethink his growth agenda, much of which is centered on the city's shoreline. His greatest development initiatives are coastal rezonings, from the West Side to Greenpoint/Williamsburg; at the same time that he can't get even "moderate" estimates of sea-level rise right, he's spurring development by the sea at an unprecedented pace.

Indeed, Barrett noted that insurance companies are raising rates or pulling out: The only private-sector advice this CEO-led administration appears to reject is the jittery modeling of the insurance industry.

What might be coming

In Matthew Schuerman’s 3/26/07 New York Observer article, headlined Mayor Has 1,000 Days To Go And Plenty To Do, raises the question of what the mayor can accomplish in the rest of his term and floats some possible tactics: congestion pricing, new upzoning, and an energy surcharge.

Some specifics:
The report, for example, is expected to call on city government to further reduce the pollution caused by its own fleet of vehicles by switching to cleaner fuels, according to members of an advisory panel, and to force power producers to retrofit their plants (a requirement that may or may not result in rate hikes).
Developers could be asked to set aside property to create small neighborhood parks in return for permission to build higher, not unlike the incentives for construction along the Williamsburg and Greenpoint waterfront. That step would help achieve the goal of making sure that every New Yorker lives within 10 minutes of a park. (We are already, it turns out, three-quarters of the way there.)

Congestion pricing?

Bloomberg has so far publicly opposed congestion pricing, deeming it a commuter tax, even though it’s been successfully adopted in cities like London and embraced by a range of business and environmental groups. Such a recommendation might emerge out of this plan—a reasonable cover for the mayor.

A meeting in Brooklyn

On 3/6/07, Aggarwala and staffers from the Office of Sustainability, along with representatives of numerous city agencies, held a Brooklyn Town Hall meeting in the Long Island University's Paramount Gymnasium. There were maybe 120 attendees in the cavernous auditorium, with at least 15 of them city officials.

When the city officials, sans microphones, introduced themselves, they couldn’t be heard. (Metaphor?) Assembled at tables, the attendees compiled lists of suggestions and reported to the larger group; both useful and obvious ideas emerged, but there was no process to rank them or assess the fiscal and political constraints.

We were given a sprightly booklet, featuring text in various fonts and colors, laying out the challenges and declaring “It’s up to you.” (Or, in Aggarwala's later explanation, "complementarity.")

Aggarwala read from a script with incomplete casualness, like a new political candidate still getting used to the hustings, less comfortable than at the museum panel of experts a few weeks later. Much of his spiel was in the booklet, for example pointing back to the creation of Central Park and the subways ahead of development

Echoes from a video

An accompanying video offered pronouncements from New Yorkers credentialed and not, about the need to build housing, improve infrastructure, and “green” the city.

For those attuned to the Atlantic Yards debate, unobjectionable general pronouncements offered a certain resonance. “Growth is great, but it has to be done right,” one interviewee declared. Another observed, “There’s no such thing as good housing without good parks.”

Previous suggestions

Aggarwala listed some suggestions that have emerged from prior meetings with Community Board and borough representatives, and others. Under OPENYC, they include:
--upzoning neighborhoods near transit hubs (note: the Atlantic Yards project would not be a rezoning, as the state would override city zoning)
--encourage “green roofs” as open space
--open school playgrounds year-round
--enforce traffic laws better.
--adopt congestion pricing (which also includes road pricing differentiated parking charges)

As for maintaining the city, the suggestions included:
--repair aging power plants
--create a fund for transit improvements
--educate people to reduce peak electricity demand and avoid blackouts
--finish Water Tunnel #3, which would allow the examination and repair of existing tunnels
--promote water conservation, as in the use of low-flow toilets

And for greening the city, the suggestions included:
--promote walking/biking/mass transit
--make the building code green
--retrofit existing buildings
--reduce sewer overflow by encouraging green roofs and permeable surfaces to absorb rainwater
--promote alternative fuel vehicles

(Both low-flow toilets and green roofs are planned for Atlantic Yards; the question is whether the enormous size of the development otherwise overwhelms our infrastructure.)

The audience speaks

Then came suggestions from the audience, reasonably diverse in race and age, and generally well-informed. (City Council Members David Yassky and Letitia James stopped by but didn’t stay. Writer, activist, and former Congressional candidate Kevin Powell presented his table’s list.)

Many were reprised from above, but among the suggestions:
--bus rapid transit
--using illegal housing coversions as a housing resource
--more staff for City Planning
--make the Office of Sustainability permanent
--parks on the roofs of one-story libraries (alternatively, it’s been suggested elsewhere that the libraries be replaced by larger mixed-use projects including a library)
--emphasize ferries
--charge more for streetside parking
--change zoning rules that require parking with new construction
--discincentives to drive to Downtown Brooklyn
--no free parking for city workers
--standardize the NYC building code (that’s coming_
--implement light rail
--make parks active use not passive use
--time lights to slow speeders
--residential parking permits
--penalties for taking away solar rights (an issue raised regarding Atlantic Yards)
--rethink the transportation of goods
--more meetings at the community level
--better recycling
--a bike and pedestrian path on the Verazzano Narrows Bridge

Not everything was unobjectionable. The suggestion of more one-way streets drew some boos from those already exercised by the controversial plan to turn Park Slope’s Seventh and Sixth avenues into one-way thoroughfares.

Bigger issues

Jim Vogel, secretary of the Council of Brooklyn Neighborhoods, raised the question of who the plan would serve, warning that it seemed to support wealthier New Yorkers. He pointed to the example of Brooklyn Bridge Park and wondered if it set a precedent for parks supported by commerce and a city withdrawal of full responsibility.

Aggarwala, who looked on a bit tensely as some representatives exceeded their mandate to address just three issues discussed at their table, said that the results would be synthesized on the web site, and then the office will report back on its recommendations, part of a “continued civic conversation.”

(At a 1/18/07 meeting with Brooklyn stakeholder groups, as reported by Nik Kovac in the Brooklyn Downtown Star, participants were presented with a letter to Bloomberg from more than 30 Brooklyn community groups, warning, "We want you to know that our organizations support well-planned growth in Brooklyn and all of New York City. But the city's traffic situation dictates that development...must be planned and implemented concurrently with significant transportation improvements.")

Cost and concerns

The hard questions, however, await. I caught up with Aggarwala afterward and asked how the city could pay for such changes.

For some issues, there’s a solution. Congestion pricing creates new revenues for public transit. Housing, he said, creates value, so “you can harness the value you create.” (Then again, cleaning up brownfields for housing is costly.) However, he acknowledged, “Do you really want parks to have to pay for themselves?”

On 2/6/07, Neil de Mause covered a meeting of architects and planners for Streetsblog, and found some other concerns emerged. New construction, a structural engineer said, has led to lowered building quality and a tension between union and non-union labor. And, as if presaging Barrett’s article in the Voice, they said there was little about climate change.

In a February article in Gotham Gazette headlined Plan NYC 2030, urban planning professor Tom Angotti questioned whether the population projection was correct, and suggested that the plan “continues, without further discussion, a city-wide land use policy that concentrates density around a small number of downtown centers instead of building centers for neighborhood living throughout the city.”

While Angotti acknowledged important community-driven issues have risen to the fore, including “the asthma epidemic, brownfields reclamation, power plant siting, and the lack of open space,” he pointed out that important community issues like “education, city services (especially sanitation), public health, noise, and neighborhood preservation” have been ignored.

Moreover, he observed that the plan seems to evade the City Charter's mandate about how such plans should be produced and vetted.

Stay tuned for Bloomberg's big announcement, coming sometime in April.

Monday, March 26, 2007

Preservation, planning, and Brooklyn at issue at HDC conference

Forest City Ratner’s much-criticized plans to demolish the Ward Bread Bakery, the issue of whether demolition can be truly green development, and the Atlantic Yards project in general represent Brooklyn embodiments of several issues raised at the Historic Districts Council (HDC) annual conference on 3/10/07.

Author and urbanist Roberta Brandes Gratz led off an overview panel by citing the enormous changes since the 1970s, when local activists responded to the city’s decline by establishing pocket parks in abandoned lots, community groups harnessed sweat equity and government funds to rehabilitate buildings, and intrepid brownstoners invested in yet-to-be historic districts.

“Anyone who doubts the enormous impact of historic preservation either wasn’t here or wasn’t paying attention,” Gratz declared.

Now, however, commented City Council Member Tony Avella, “The very people who brought the city back are being priced out of their developments.” While that may not be true for owners who’ve seen their property rise, Avella expressed a commonplace: “The system is geared to development.”

Avella and Gratz both bemoaned the seemingly inevitable rezoning of manufacturing districts to residential and the shift to a service economy. “The reason we don’t have planning from the bottom up is it’ll take away power from the people at the top,” Avella said. “We let the real estate industry do the planning.”

Preservation debate

Urban planner Alex Garvin Alex Garvin & Associates, who’s worked closely with Deputy Mayor Dan Doctoroff on the Olympics plan and produced a yet-unreleased land use plan for the city in 2006, offered a dose of skepticism. Preservation impulses, he said, can result from “a series of mistakes,” including nostalgia for the past, dislike of the newly-built environment, and selfish NIMBYism.

He offered some broad guidelines for preservationists, though leaving a large middle ground for debate. He recommended landmarking places of true historic significance (Independence Hall vs. “George Washington slept here”), of real esthetic prominence (example: University of Virginia), of social importance (example: the Tenement Museum), and of public significance when festivals happen (the National Mall).

[Would the Ward Bread Bakery qualify? Well, it didn’t make it past the not apolitical Landmarks Preservation Commission but its loss would be considered a significant adverse impact.]

Academic and HDC board member Jeffrey Kroessler said he wanted to contrast Garvin’s citation of “the selfishness of the preservation movement” with “the selfishness of the free market” Historic preservation, Kroessler asserted, “saved New York in the wake of the urban crisis.”

(Indeed, the Draft Environmental Impact Statement for Atlantic Yards downplays the role of historic preservation in the Brooklyn neighborhoods surrounding the proposed site, even though a 1974 city study cited “reviving brownstone residential neighborhoods.”)

Gratz picked up on the criticism. “I defy anyone to go into a community opposing a project to find they are against all change,” she stated. “They are against overwhelming change.”

Garvin wasn’t bowed. He suggested that preservation is intertwined with politics, noting that numerous historic districts are too small and that various resources, notably Art Deco buildings in the Bronx, have yet to get official recognition.

Planning, not preservation

Garvin suggested the issue was more planning that preservation, and referred to “the bad planning that’s quite evident elsewhere in the city.” There was no specific project attached, but read between the lines, Garvin might have been dissing Atlantic Yards.

After all, in his unreleased land use report, Garvin recommends (p. 17, or p. 8 of this PDF) that the process for developing a platform for development over Sunnyside Yards in Queens requires a feasibility study with input from "engineers, traffic analysts, site planners, and real estate entrepreneurs.” Regarding Atlantic Yards, all but the latter were engaged after the fact.

(Garvin's land-use plan has never been released; the Bloomberg administration, as I'll explore tomorrow, has instead expanded its aim, working toward a broader set of goals for 2030. It's not unlikely, however, that some of Garvin's study will emerge, notably its observation that the city can grow by platforming over railyards and highway trenches.)

Planning for growth

Garvin acknowledged that residents understand and care about their neighborhoods, but few can plan for the city as a whole. “It’s a serious question,” he continued. Sustainability, he said, depends on expansion of the transit system and the investment of billions of dollars.

He noted that, the demolition of the Third Avenue El in the 1960s devastated the Bronx. If bus rapid transit or light rail is introduced on Third Avenue between the Hub and the Cross-Bronx Expressway, along with a rezoning, the Bronx could accommodate 100,000 new people on vacant or nearly-vacant land within a quarter mile of the avenue.

The city’s capacity to grow through investment raises questions about Forest City Ratner’s plan for the Atlantic Yards site—sure, increased density could be accommodated near a transit hub, but should it be the density now planned?

Preservation politics

Donovan Rypkema offered the tart observation that preservation was more green than demolition (see architect Jonathan Cohn’s Brooklyn Views blog for more), and pointed out how attitudes had changed.

In the 1940s, the conventional wisdom of architects, developers, and many city officials was they had to raze Class B & C office buildings in Lower Manhattan that couldn’t accommodate more modern offices. “Had preservationists not stood up, those investment bankers wouldn’t have their $3 million condos.” (Left unsaid was that tax breaks supported such conversions, without requiring affordable housing as a tradeoff.)

Asked if we need to save all historic buildinga, Rypkema declared “Absolutely not. We’re not about making cities museums.” However, he suggested that “no demolition permit should be issued if what we’re going to get isn’t better than we have now.”

“I cannot identify a single example of downtown rehabilitation without historic preservation,” he said, noting that some “very expensive failures” have included destruction of buildings.

In several communities, historic buildings are natural incubators of small business. He cited Pioneer Square in Seattle, where tenants cited the historic nature and relatively low cost as reasons for locating there.

Hidden benefits

“I’m introduced as a preservationist, but I’m really an economic development consultant,” Rypkema said, pointing out that, while new construction is half-labor, half materials, historic rehabilitation is 60% to 70% labor and puts more money in the local community. However, he acknowledged, it’s more piecemeal work and generally not unionized and thus not backed by organized labor.

He pointed to the fallacy of considering “green” buildings in a vacuum. “You can build an energy-efficient Wal-Mart,” he said, “but the extra fuel to drive to it wipes out the energy savings.”

Still, he acknowledged, no one in the U.S. has yet tried to produce a complete cost-benefit analysis of a building that also values embodied energy. “We have lot line myopia,” he said, noting that such calculations have begun to emerge in Europe.

“The greenest building is one that’s already built,” added Carl Elefante of Quinn Evans Architects in Washington, DC. He contrasted the traditional wood window, which is completely renewable/repairable, with the modern aluminum window, which is mostly not recyclable.

Dealing with density

Then came a challenge. A participant asked about density, “a friend to the environment but an enemy of preservation,” since it’s an argument for tearing down old buildings in favor of dense new construction—indeed, that's the argument for demolition of industrial buildings on Pacific Street for the Atlantic Yards towers.

After a pause, Elefante observed that “there’s no pat answer,” adding that “the link between land use and infrastructure is profound,” a reference to the carrying capacity of the surrounding neighborhood.

Density, noted Stephen Tilly, an architect in Dobbs Ferry, NY, “can’t continue forever; it has to be balanced.” For example, density eventually conflicts with the emerging concept of solar zoning.

“Historic District Commissions and codes need to build in things like solar access, and that’s a real challenge," Tilly said. He had earlier pointed to generally low-rise Park Slope, Brooklyn, which has many smaller buildings and “lots of potential for harvesting energy with little impact on neighborhood character.”

(Indeed, the size of the Atlantic Yards buildings has short-circuited an effort by the Fifth Avenue Committee to place solar panels on a mid-rise building it plans just north of Atlantic Avenue.)

Growth and Brooklyn

At another panel, Lisa Kersavage of the Municipal Art Society (MAS) cited the “failure of the environmental review process to adequately consider historic districts,” She offered a slideshow of historic resources ignored in the Downtown Brooklyn rezoning and cited a “complete failure to identify historic resources” in the waterfront rezoning. The city identified eight known and 12 potential historic resources; MAS identified 264. (For Hudson Yards, by contrast, the city identified 110 resources, she said.)

“Politicians have the power to deny permits because of negative impacts,” she said, stressing that “we need historic resources identified first.”

At the 22-acre Ikea site in Red Hook, in 2004 rezoned from manufacturing to retail, Ikea plans to fill in and pave over a graving dock—a place for ship repair—even though a new such dock would cost $1 billion and be almost impossible to get through a permit process.

Ikea plans to mitigate the impact by drawing an outline of what’s been filled in, Kersavage reported, “much like a chalk outline around a corpse.” In other maritime cities, graving docks have remained, adapted for public use. In Belfast, two are preserved in a science park, while in London, one’s been landscaped into a park. MAS has filed suit, but Ikea has continued on its plan.

Behind Brooklyn’s growth

“Because of the market and rezoning, Brooklyn is booming,” Kersavage, a partial explanation which nonetheless drew a corrective from longtime community planner Ron Shiffman, who teaches at the Pratt Institute and is on the board of Develop Don’t Destroy Brooklyn.

“Brooklyn is not booming because of rezoning,” he said, urging a look at the diversity of building types and the preservationists, “risk-oblivious population,” newcomers and not, who invested in neighborhoods before it was chic. Community-based organizations renovated and rehabilitated 80,000 units of declining or abandoned housing in the past three decades. “These folks saved the neighborhoods so the risk averse developers could come in.”

Rezoning, Shiffman asserted, “is monolithic and cataclysmic,” and we need a planning program upfront, before developers articulate what they want. A former member of the City Planning Commission, Shiffman said that environmental impact statements—the product of both city and state reviews—are not read by the commissioners. “If they don’t read it, the politicians won’t.”

Wrangling with policy

Shiffman suggested that “we need to rethink density,” given that the city has erred in both directions. We shouldn’t downzone to exclude populations and uses, he said, citing the example of Toronto, where “performance-based zoning” allows light industry, under certain conditions, in residential areas. That would allow new production facilities to thrive in new places.

He cited the “major victory” of inclusionary zoning on the Greenpoint-Williamsburg waterfront, where affordable housing is required as a tradeoff for increased density, but lamented that the city rejected similar zoning on Fourth Avenue between Flatbush Avenue and 15th Street at the border of Park Slope—an area that is now booming with mid-rise luxury construction.

Shiffman showed a slide of the iconic Williamsburgh Savings Bank building “which is unfortunately being renovated into condos” with no affordable housing. The top tower is sheathed in black for renovation; of that black shroud, he said, “I think it is in mourning,” for itself, as well as the nearby Atlantic Yards development.

Cities need "staunch buildings," he said, and, declared the Ward Bakery one of the “staunch buildings… that should be saved.”

Eminent domain, Hamburg & AY

Shiffman criticized Atlantic Yards, saying that “the misuse of eminent domain to help a private developer” sets a dangerous precedent for the city’s growth. In Hafen City, a new port-area development Hamburg, proposed a few months before Atlantic Yards, the city invested in infrastructure—an opera house and subway station—before going forward. THe process has moved much faster there.

“Rather than turn it over to one developer, they spent nine months working on a community program,” he said. “If we did Atlantic Yards right, it would be 12 developers, not one,” he said. (Of course, it wouldn't be Atlantic Yards, because development would likely be limited to the 8.5-acre railyard, not the 22-acre site.)

The Hamburg project, however, included no mandate for subsidized housing, a key element behind the political support for Atlantic Yards. Affordable housing connects to density, but, regarding Atlantic Yards, the issue was take-it-or-leave-it rather than studied from the start.

That connected, in a way, to a comment Kroessler made earlier: “I’m tired of affordable housing being an albatross around the neck of historic preservation.” The tensions between the two might be mediated, as Garvin's comment suggested, by something in short shrift when it came to Atlantic Yards: planning.

Sunday, March 25, 2007

Inconsistent silence: the Times editorial page forgets Atlantic Yards subsidies

While the New York Times editorial page generally favors Atlantic Yards, it three times has argued that direct city and state subsidies were unnecessary, and that developer Bruce Ratner should pay his own way.

Now the city subsidy has more than doubled, but the Times has passed on a timely opportunity to restate its stance.

Consistent criticism

In a 3/27/05 editorial headlined A Triple Play for New York Teams, the Times opined:
A mixed-use development like this could be a shot in the arm for the local economy. The low- and moderate-income housing units would be a big plus, and the developer has agreed to pay fair market value for the railyards at the site. But the city and state are each supposed to contribute $100 million to build streets and sidewalks and prepare the site for development. That’s unnecessary: Mr. Ratner should pay his own way.

[Emphases added]

In an 11/27/05 editorial headlined A Matter of Scale in Brooklyn, the Times followed up:
Mr. Ratner has always made it clear that he expects government aid in preparing the arena site, and the city and state have each committed to pitch in $100 million in cash to help. There is no reason to expect taxpayer money to be used to help fund a profit-making real estate venture like this one; those costs should be absorbed by the builder.

The Times missed an opportunity to mention Atlantic Yards in an editorial last April criticizing subsidies "for the already rich owners of the Yankees and the Mets."

Most recently, in a 8/6/06 editorial headlined The Atlantic Yards Project, the Times commented:
And while the Ratner company will finance much of the project, taxpayers are still being asked to underwrite $200 million in direct city and state subsidies. Some $40 million, for example, is for land acquisition for the arena, which should be a developer expense. The project may require the city to build more classrooms, expand sewer and water services and provide more police on game days. It is up to Mayor Michael Bloomberg’s administration to demand from the developer every reasonable contribution to defray these extra expenses.

Missed opportunity

And the Times has failed to comment on the apparent doubling of the city's commitment, to $205 million, of which $100 million would be for land acquisition. That sum represents 2.5 times the $40 million sum the newspaper said last August "should be a developer expense."

Then again, it's not completely fair to blame the editorial writers for not keeping on top of many municipal issues. They rely in part on the Times's coverage--and the Times hasn't reported on the increased public subsidies.

More missed opportunities

Nor has the Times yet reported on the growing furor over the planned demolition of the Ward Bakery. Here's a comment from architectural historian Andrew Dolkart from an online petition:
This is an industrial building of extraordinary grace, heralded at the time of its construction and still a significant architectural monument. Over the past decades we have learned the value of creating urban neighborhoods of old buildings and new buildings. The Ward's Bakery should be preserved and incorporated into a residential community appropriate to the neighborhood.

The Times does find space today, however, for a not-so-brief article about moving feral cats from the Atlantic Yards site.

You'd think that a newspaper's job is to inform the public about important civic issues. When it comes to Atlantic Yards, however, too often the press just gets "brutally weird" and ignores its duty.

Saturday, March 24, 2007

FCR's Stuckey: the right man for the job, as shown in Times Square saga

So who's responsible for Forest City Ratner's aggressive demolitions strategy, aiming to create "facts on the ground" well before the Atlantic Yards legal battles are settled?

One key player is undoubtedly Jim Stuckey, a Forest City Ratner Executive VP and President of the Atlantic Yards Development Group. Last year I suggested that Stuckey was worth profiling and, though no one took me up on the suggestion (see 5. Who's Jim Stuckey?), there's another place to look. (Photo from PBS Newshour.)

The Times Square story

Stuckey turns up as a character in Lynne Sagalyn's comprehensive 2001 analysis of Times Square redevelopment, Times Square Roulette: Remaking a City Icon.

Stuckey then worked for the city, heading the Public Development Corporation (PDC), the forerunner of the New York City Economic Development Corporation. From that perch, curiously enough, he was serving a mayor who didn't want to be perceived as selling out to developers. (Does that attitude persist in city government today?)

Sagalyn writes:
In 1986, a big runup in land prices triggered by a speculative office boom sent PDC's president, James P. Stuckey, back to the negotiating table--on direct orders from Mayor Koch. Believing that the office deal was now unfavorable to the city and under growing criticism for the "loan" portion of the deal, Koch wanted to better the deal with TSCA [Times Square Center Associates]. He was nervous about the political nature of the city's position now that the real estate market had turned hot, particularly, about the developers "making a killing." The mayor, Stuckey explained, "did not want to subsidize a windfall."

Ends justify means?

And to accomplish the city's goals, Stuckey--exhibiting some of the skills that undoubtedly have served him well in his career--was deemed to be pragmatic and hardnosed.

Sagalyn writes:
Hard-driving, focused, and aggressive, the 32-year-old Stuckey was the right city negotiator for the task at hand. Appointed president of PDC in May 1986, he had worked his way up through the organization, which he joined in 1980. He was experienced in the ways of public development, having started his career in 1979 in the Mayor's Office of Development (which was folded into PDC in 1980) working on the South Street Seaport project. A graduate of St. John's University with both a bachelor of science and a master of arts, he focused intently on the politics of feasibility, on getting things done. During his three-and-a-half year tenure as PDC president, Stuckey was responsible for over $15 billion in commercial, industrial, and waterfront real estate development projects. In constrast to [Carl] Weisbrod who cared greatly about planning policy, process, and precedent, Stuckey's attitude toward deal making more closely matched the maxim "the ends justify the means." When interviewed about his role in the renegotiations, he recalled: "We were pulling down the gauntlet at the this time. We didn't want everything to get lost. We approached Pru, who was more pregnant than [its executives] wanted to be. Prudential stepped up to the plate, a real civic thing to do. They understood that they could not jeopardize what they had in it [the 42nd Street Development Project] already. Once in with the public sector," he concluded, "it is hard to pull out."

[Emphasis added]

Today, perhaps, the converse may be true: once in with the private sector, it is hard for a public agency to pull out.

Rounding out the picture

Stuckey, who's described in his Forest City Ratner biography as "an accomplished musician, capable of playing ten instruments," has a notable set of community involvements. He's served as Vice Chairman of Community Board 2 in Staten Island, and as a Trustee of the Jacques Marquis Center of Tibetan Art, also in Staten Island. (Yes, the point man for the city's densest development lives in New York's least-dense borough.)

But he's not born into a real estate dynasty, unlike boss Bruce Ratner. A brief profile in Crain's New York Business last May explained that Stuckey grew up in a "cramped Sunset Park apartment" and is pursuing a master's degree in theology, a fascinating detail.

In that article, Develop Don't Destroy Brooklyn spokesman Daniel Goldstein described Stuckey as "an absolutely cutthroat businessman." Stuckey joined Forest City, Crain's reported, "for precisely the opposite reason," to do projects with "a public purpose."

Would it be possible, as Sagalyn's account hints, that it's possible to have a cutthroat approach to a "public purpose"? Note also that "public purpose" is a legal term, a defense of eminent domain.

Art Commission

Also, since 2002, Stuckey's been a lay member of the city's Art Commission, the city agency that "reviews permanent works of art, architecture and landscape architecture proposed for City-owned property."

The Commission includes 11 members, including an architect, landscape architect, painter, and sculptor, plus representatives of the Brooklyn Museum, the Metropolitan Museum of Art, and the New York Public Library. Recently, Stuckey was named president of the Commission.

And, as I noted, he also served on the committee that chose Renzo Piano as the architect for the Times Tower, which Forest City is building in partnership with the New York Times Company. It will open later this year.

Media-savvy blog masters?

The Crain's article suggested: His first mission is to steer past the media-savvy blog masters who have mounted a David-like effort to stop Atlantic Yards.

Crain's, to its credit, published my letter in response:
As a journalist who closely follows the Atlantic Yards project in my blog, I can tell you how Stuckey and his company "steer past" us unpaid volunteers. They spend large sums on public relations materials and paid print advertising; they don't answer my questions; and they barred me from the May 11 press conference at which architect Frank Gehry discussed new designs for the project.
Perhaps they were afraid of questions about Mr. Gehry's former claim that the development would be "coming way back," about their plan for "interim surface parking" on two large areas of the proposed project footprint, and about Forest City's outlandish (yet often-repeated) claim that Atlantic Yards would provide $6 billion in new tax revenue to the city and state.

I wasn't barred from a subsequent developer event, but that doesn't mean Forest City representatives answer my questions. Stuckey, to his credit, has twice been willing to answer questions after I buttonholed him at public meetings. But it's not like transparency is a priority.

Park Slope one-way traffic plan dead? Well, "not moving forward"

Maybe I'm obtuse about semantics, but I'm still not quite clear on whether the Department of Transportation's plan to make Sixth and Seventh avenues in Park Slope one-way, which generated huge opposition, is dead or merely put aside to be revisited at a later date.

The Brooklyn Paper this week reported:
“We’re listening to the community and not moving ahead with the proposal,” said Department of Transportation (DoT) spokeswoman Kay Sarlin, who had earlier promised that the agency would kill the controversial proposal if “the community” rejected it.

I followed up and asked Sarlin: "Is that any different from following the CB6 transportation committee resolution, which requested that DOT not move forward 'at this time'? In other words, is the plan dead? Or just on hold for revision and discussion? Or?"

Her response: "We're not moving ahead with the plan."

More on the press

I last week criticized the Courier-Life chain for not providing enough coverage of the controversy in its Park Slope zoned edition; I should acknowledge the front-page lead story this week, which quotes Forest City Ratner transportation consultant Sam Schwartz as saying the developer had nothing to do with the plan.

That's not surprising; the story should have noted, as I'd pointed out, that, were the new plan described as an Atlantic Yards traffic mitigation, it could have been fodder for a lawsuit, because it was not mentioned in the environmental review process.

Gersh Kuntzman of the Brooklyn Paper offers a defense of "technocrat" Michael Primeggia of the DoT. In response, Lumi Rolley of NoLandGrab critiques the one-way success the DoT cites in East New York, and Aaron Naparstek of StreetsBlog offers countervailing evidence about the record of one-way streets.

Friday, March 23, 2007

Forest City embraces historic preservation, but not in Brooklyn

The first curious thing about yesterday’s announcement that Forest City Ratner would demolish the Ward Bread Bakery (right), a nearly century-old set of interconnected brick and terracotta-clad buildings beloved by preservationists, is: why now?

The towers planned for the block between Pacific and Dean streets and Carlton and Vanderbilt avenues wouldn’t be built for seven or eight years at the earliest, and likely much longer. Phase 2 of the Atlantic Yards project, which would deliver all the promised open space, isn’t supposed to start until after 2010, and that block would come last. Moreover, the promised ten-year build-out could take 15 or 20 years.

The developer says what’s needed are staging areas and a very large surface parking lot, first for construction workers. Neither need has been proven—note the Empire State Development Corporation’s defense of this notably not-so-transit-oriented development.

Equally importantly, it seems that, even before legal challenges are resolved, the developer wants to create “facts on the ground,” a sense of inevitability.

Forest City loves historic preservation

The second curious thing is that the developer, and especially its parent company, truly embraces historic preservation as a strategy—just not here.

Compare the photo of FCE's River Lofts project in Richmond, VA (right) with the view of Pacific Street east of Carlton Avenue (below), with Ward Bakery in background.

The Atlantic Yards project would involve not only the demolition of the yet-unrenovated bakery, but the demolition of two other former industrial buildings already renovated into condos, and another partially renovated for office space--the yellow building in the photo. (Former owner Shaya Boymelgreen once saw the "blighted" Ward Bakery as a potential hotel.)

Those are the kind of projects Forest City Enterprises (FCE) has accomplished proudly in several cities.

During the National Trust for Historic Preservation's National Preservation Conference in 2002, FCE was the principal sponsor, and keynote speaker Ronald Ratner, president and CEO of Forest City's Residential Group, made a strong case for incorporating buildings like those on Pacific Street into the company's projects.

"We need to think more about the adaptive re-use opportunities,” Ratner declared. “That's how we can balance historic preservation and economic reality."

He cited the importance of looking at the urban fabric: "We cannot focus on a single building. There is a much broader context of neighborhood, district, city and region. No matter how skillfully done, a building must be part of a vibrant urban fabric if it is to maintain its value and provide a return on financial and civic investment.”

Urban context

Indeed, the Ward Bakery is part of a context. On the next block, the “tooth” missing from the Atlantic Yards plan, is the Newswalk condo building (left), a former Daily News printing plant, now the tallest building on the block, and slated to be the shortest major building--at the corner are brownstones, directly across from the project--an anomalous nod to the past surrounded by Frank Gehry’s modernist project. (Photo from ThreeC.)

(Update: Also note that five former industrial buildings across the street from the Ward Bread Bakery on Dean Street, outside the project outlines, were given residential variances in 2002 and 2003. More on the bakery's history, and why it wasn't landmarked.)

Forest City has done adaptive re-use residential projects in Philadelphia, Boston, Denver, Los Angeles, Providence, and Richmond, for a total of 1673 units at eight properties, and converted “train stations, mills, warehouses and other historic buildings into upscale, mixed-use complexes.”

In Times Square, the developer moved the landmark Empire Theatre 168 feet down the street to house the lobby of the new AMC Theatres.

Earlier this month, during the Citigroup 2007 Global Property CEO Conference, Forest City Enterprises CEO Chuck Ratner explained the strategy (59:35 of the webcast).

“We’ve done a lot of historic rehab, buying old buildings, converting them into rental apartments, using historic tax credits, 80/20 housing, to drive down the cost of capital, increase the equity return,” he said.

(AY graphic from Environmental Simulation Center, adapted by Lumi Rolley of NoLandGrab. The block with the Ward Bakery is the southeast block.)

He followed up a little later (1:04:18). “That’s when you add the greatest value, when you see a piece of land and envision what it can be,” he said. “When you see an old tobacco warehouse in Richmond, Virginia, that was formerly Lucky Strike’s manufacturing plant and understand how it can be apartments.

The Richmond example

That Richmond complex, known as The River Lofts, is “a growing community that celebrates the area’s industrial heritage while creating a dynamic future.” According to the developer, the River Lofts offer 329 apartments within three historic buildings, with over 40 different floor plans to choose from.

The Ward Bakery and other buildings could offer a similar project, but in Brooklyn, that’s not enough. The Empire State Development Corporation (ESDC), in the Response to Comments chapter of the Final Environmental Impact Statement (FEIS), called the loss of the building a significant adverse impact, but deemed adaptive reuse “not practicable.”

Adaptive reuse

The reasons: some units would lack access to light and air and thus would be difficult to use and to market; fewer units would be created; repairing the bakery’s terra cotta fa├žade would be expensive; and the interiors and exteriors would be significantly altered. (Aren’t factories converted to residential use always altered?)

Moreover, many fewer units would be produced, and it would be impossible to create the density for the affordable housing plan.

And it would interfere with the project, since the bakery would be the site of some proposed open space, parking, and environmental remediation. The reuse, according to the FEIS, would “interfere” with sustainable design. (That, of course, is a narrow view of sustainability, given the concept of "embodied energy" and the lower energy cost of older materials .)

Size questions

The former Ward Bread Bakery could yield 103 units, the ESDC said in Chapter 7 of the FEIS—much smaller than the building that would go there, but, interestingly enough, comparable to the lofts built in Richmond. An additional 225,000 square feet could be developed above the the bakery, adding another 235 or so units. However, said the ESDC, construction costs would rise by $30 per square foot.

Unmentioned by the ESDC is the total cost of construction. According to an audit by KPMG for the ESDC that I acquired last December, construction costs are about $300 per square foot. That would make the increase about ten percent—not insignificant, but also no larger than other factors, such as the general rising cost of construction materials.

Due to the high costs associated with converting the buildings, however, “the conversion units would have to be condominiums offered at market value, which would preclude affordable housing from being provided in either” the Ward Bakery or the former LIRR stables.


So, is the tradeoff density and affordability for preservation and luxury? Partly yes, partly no. First off, given the developer's experience in 80/20 conversions, it seems likely that Forest City would ensure that 20 percent of the building would be affordable.

(Note that 20 percent of the Atlantic Yards rentals would be affordable to low-income residents, but 30 percent of the affordable units would be closer to and even above market rates.)

The community-developed UNITY plan, as well as the Extell bid, both were premised on mid-rise or high-rise development on the railyards, with a mixed, lower-rise development on adjacent Pacific and Dean streets. That would produce less housing, and less affordable housing, and no arena. They would preserve already-renovated buildings like the Spalding building (right).

However, the question is how much development is appropriate around and beyond the intersection of Atlantic and Flatbush avenues. At some point, as urban planner Ron Shiffman regularly points out, development exceeds the carrying capacity of the infrastructure. After all, if the goal is simply housing, we can build towers in our parks. (Map below from Develop Don't Destroy Brooklyn.)

And the Atlantic Yards site is not the only place for density, so the difference between a project involving 14,000 people--as currently planned under "extreme density"--and half that may not be crucial.

Urban planner and city advisor Alex Garvin, for example, has suggested that transportation changes--light rail or bus rapid transit--in the Bronx could easily accommodate 100,000 more people.

Reforms in the city 421-a subsidy program should yield thousands more affordable units. And, given the likely delays in the Atlantic Yards project, affordable housing would come much faster via other programs.

Mitigating the loss

So how would the loss of the Ward Bakery, and the other cited historic resource, former Long Island Railroad Stables, be mitigated? According to Chapter 19 of the FEIS, the partial mitigation would include “archival documentation of the buildings and additional measures that would document the history of the buildings.”

That’s not quite the same as preservation.

Converting a Ward Bakery

The innovative Ward Bread company built bakeries in cities around the country; some structures remain, and others don’t. In Syracuse, for example, the building was demolished in 1995 for a park, according to a 9/14/06 article in the Syracuse Post- Standard.

In Newark, the Ward Bakery closed in 1979, well before the Pechter Fields Bakery, the last bakery occupant of the Brooklyn building, closed in 1995. (Update: Since then, the building was occupied by a storage firm, which operated at least through 2004.)

The Newark building, bought in 1994 for $100,000 (!), was converted to “a mixed-use project combining 125 rental units with a community center, a daycare facility, and 16,000 square feet of commercial space,” according to the Urban Land Institute. “The building, however, required massive, expensive structural improvements and environmental cleanup.”

But it was, in fact, possible.

Costs and benefits

In the end, the preservation of a building is part of a complex set of questions, involving the value of history and context, the cost of conversion versus replacement, energy costs as expressed in “embedded energy” and new materials, and the tradeoffs regarding increased density.

Yes, the AY project would bring more housing, and more affordable housing, but it would cut off some solar access and impose new social burdens with increased traffic.

The EIS established some of the costs of conversion. But no one’s calculated the full—and in some ways hard to quantify—costs of Forest City Ratner’s plan.

FCE faces the costs

In his 2002 speech, Ronald Ratner said, "Historic rehabilitation introduces costs and complexities that are not associated with new construction. Bringing old buildings into compliance with new needs, codes and demands is very complex and expensive.” The 20 percent federal historic tax credit "brings some economic relief but in most cases it barely offsets the premium costs of doing historic rehabilitation."

Still, Ratner didn’t see that as a reason to throw in the towel. "As a developer, I am sometimes asked if we would ever be willing to sacrifice profitability to achieve excellence in historic preservation. My answer is that's a false choice. Using technical and financial creativity, and working in public-private partnerships, we can have it all, including economic return."

In this case, they didn’t try. They couldn't "drive down the cost of capital." There was a Gehry project (above) ready to fly.