Wednesday, February 06, 2008

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.

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