Skip to main content

Forest City Ratner admits lie (well, "mistaken") about inflated AY revenue claim

They thought they could get away with it. Three times.

In three legal documents in the lawsuit challenging the Atlantic Yards environmental review, two Forest City Ratner officials and an FCR lawyer claimed that the Atlantic Yards project would generate $5.6 billion in new revenues and/or $4.4 billion in total revenues. They attributed those highly speculative estimates to the Empire State Development Corporation (ESDC).

However, no such figures appear in the ESDC's Final Environmental Impact Statement (FEIS), as claimed.

The first claim came in a 4/16/07 sworn affidavit from then-FCR executive Jim Stuckey, who asserted:
Furthermore, the Project will serve as a powerful engine of economic growth in other respects as well.
The Final Environmental Impact Statement (the "FEIS")... also estimates that the Project will generate $5.6 billion in new tax revenues — and $4.4 billion in net tax revenues — for the City and the State over the next 30 years.


(Graphics by Abby Weissman; click to enlarge.)

Last April, I called the claim a lie. It was ignored.

After the claim was repeated twice more, petitioners' attorney Jeffrey Baker, using slightly more diplomatic language in a legal document, last week called it "completely disingenuous."

In response, on Monday FCR lawyer Jeffrey Braun belatedly admitted his statement was "mistaken," acknowledging that the projection comes not from a government-commissioned analysis but from Andrew Zimbalist, a consultant paid by the developer.

That's a big difference.

Anything goes?

It seems that Forest City Ratner is willing to practice a "scorched earth policy of anything goes"--a policy FCR's Bruce Bender attributed to project opponents.

Whether or not state officials have been co-opted or corrupted, as alleged in the lawsuit over eminent domain, the failure of anyone at the ESDC to correct the developer on this basic fact clearly suggests favoritism--or negligence.

Two years ago, I questioned whether the ESDC could "be expected to do a fair job in both promoting economic development and evaluating the environmental impact of the proposed Atlantic Yards development." I concluded that "ESDC Chairman Charles Gargano gives little cause for confidence."

Even with a new administration, things haven't changed enough.

The lie, redux

Stuckey's successor, MaryAnne Gilmartin, in her 1/17/08 sworn affidavit, essentially repeated Stuckey's claim:
In addition to the direct public benefits that the Project will create, the Project also is a powerful engine of economic growth. The Final Environmental Impact Statement (the "FEIS")... also estimates that the Project will generate $5.6 billion in new tax revenues — and $4.4 billion in net tax revenues — for the City and the State over the next 30 years.

FCR attorney Jeffrey Braun, a 1/25/08 affirmation, which he "affirm[ed] under penalty of perjury," repeated a variant of the claim:
In addition to the foregoing public benefits, the project will be a powerful engine of economic growth. The environmental impact statement for the project estimates that the project will create... as $4.4 billion in net tax revenues for the City and the State over 30 years.

The response

Baker responded in his 1/31/08 affirmation:
Nor should the court be affected in any way on Mr. Braun's completely disingenuous statement that the "environmental impact statement for the project estimates that the project will create... $4.4 billion in net tax revenues for the City and the State over 30 years." There is simply no projection at all regarding the net tax revenues contained in the EIS.

The admission

In a footnote to an affirmation issued Monday, Braun acknowledged a mistake:
Mr. Baker correctly points out that my statement in my prior affirmation that the "environmental impact statement for the project estimates that the project will create ... $4.4 billion in net tax revenues for the City and the State over 30 years" is mistaken, because "[t]here is simply no projection at all regarding the net tax revenues contained in the EIS". The $4.4 billion figure is in the report of a consultant who had been retained by FCRC and does not appear in the FEIS. It remains true, however, that the Atlantic Yards project has been approved by ESDC and the other involved agencies on the basis of the significant public benefits that it is expected to generate, which include substantial additional tax revenues. The General Project Plan that ESDC adopted concluded that, "[o]n a present value basis, the Project will generate $652.3 million of City tax revenues and $745.3 million of State tax revenues," and that "the project will generate $944.2 million in net tax revenues in excess of the public contribution to the Project."

There's a big difference between "present value" and the much larger 30-year cumulative value. Also, there's a big difference between the ESDC's methodology and the consultant's methodology, though both are flawed in their ways.

(The Zimbalist report on Forest City Ratner's web site provides different totals, including both the 30-year cumulative numbers ($6.02 billion before costs)--never used by government analysts--as well as present value. The net fiscal benefit, according to Zimbalist, would be $1.55 billion in present value, which is more than 50% higher than the state analysis. Zimbalist's report was based on a somewhat different configuration of the project, so the $5.6 billion figure touted by FCR officials is presumably based on an updated analysis not publicly delineated.)

Flawed analyses

The report by Zimbalist is full of holes, as I wrote. It's a "promotional study."

And the ESDC's estimates, while they do factor in the direct subsidies, make no attempt to account for the public costs that the project would incur. In other words, the net benefit promised by the state can't be trusted because the analysis is inadequate.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …

"There is no alternative": DM Glen on de Blasio's affordable housing strategy

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.” Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.

It suggests the limits to …