Skip to main content

The "close reading" on AY projections that the Times didn't do

Along with the failure to show the scale of the Atlantic Yards project, another major media lapse has been the unwillingness to challenge the $6 billion lie attributed to sports economist Andrew Zimbalist, Forest City Ratner's paid consultant. Economist Brad Humphreys told Congress last year, as I noted on Wednesday, that academically rigorous economic impact studies of merit are peer-reviewed, while "promotional" studies are not.

Zimbalist's "promotional" study got a pass, though, as I note below, the Times was considerably more skeptical of economic projections regarding the controversial West Side Stadium.

Almost an afterthought

Remember the New York Times's 6/29/04 coverage of the critique by Gustav Peebles and Jung Kim of Zimbalist's report? The article, headlined A Plan Passes And an Arena Is Protested In Brooklyn, first covered the Downtown Brooklyn rezoning, then turned to the critique. It closed:
The new report, written with Jung Kim, an urban planner with a master's degree from the London School of Economics, concludes that the project is not worth the public investment the developer is seeking.

''In other states and localities, developers pay impact fees out of their own revenues to cover the social costs arising from their projects,'' the report says. ''Here in New York, the payment is in reverse, with taxpayers handing over hundreds of millions to wealthy developers.''

Barry Baum, a spokesman for Forest City Ratner (which is The New York Times Company's partner in developing its new headquarters on Eighth Avenue in Manhattan), said company officials had not yet fully reviewed the report and could not comment on the details. ''However,'' he added, ''Andrew Zimbalist is a respected economist who has not in the past generally supported this kind of project, but clearly sees a great benefit for the city and state from the Atlantic Yards arena and development.''

Dr. Zimbalist, for his part, said he had not seen the report and knew only what he had heard from reporters. Saying he was unsure whether Dr. Peebles or Mr. Kim had fully understood the economic issues, he added, ''I was very careful in my use of numbers.''


Zimbalist got the last word.

No peer review

That's where the Times left it, despite numerous obvious flaws in Zimbalist's report, such as the untenable assumption that there would be no new arena in Newark and the failure to acknowledge additional costs of public safety, contradicted by the Independent Budget Office (IBO).

The Times coupled its coverage of the IBO report with other AY news, notably the doubling of the developer's cash offer for the Vanderbilt Yard. As with the article referenced above, the 9/7/05 article, headlined Offer Is Doubled by Developer to Build Arena in Brooklyn, treated the economic analysis as secondary :
Also yesterday, the New York City Independent Budget Office released a report stating that the arena would generate a modest but positive fiscal impact for the state and the city. After a significant public investment, which includes a $200 million subsidy, tax-exempt financing and numerous tax breaks, the arena would create an estimated fiscal surplus of $107 million over 30 years, or $28.5 million for the city alone, the budget office estimated.

Supporters and opponents of the project immediately seized on the report to buttress their arguments.

Mr. Ratner's company, Forest City Ratner, said in a statement released yesterday that it was pleased that the budget office had concluded that the arena was a "win-win" situation for the city and the state.

... Critics contended that large development projects rarely live up to the extravagant claims made in economic reports used to justify them.


It was left as a "he said, she said" dispute.

On the West Side

By contrast, a 6/20/04 article on the West Side Stadium, headlined Big Claims And Questions Surround Plan For a Stadium, showed the Times could generate significant reportorial skepticism:
According to the New York Jets, the stadium the team wants to build on the West Side of Manhattan will be an economic whirlwind, attracting 60 football games, soccer matches, concerts, trade shows and conventions a year. An Ernst & Young report commissioned by the team estimates that the stadium will generate $72.5 million in annual tax revenue.

But a close reading of the report and an examination of the track records of other combined stadium-exhibition halls suggest that the Jets' projections may be too optimistic.
No other similar stadium has attracted anywhere near as many events as the Jets are predicting. The most successful convertible stadium, in St. Louis, drew 32 events last year, only eight of which did not involve sports.

There are also unresolved questions about how the stadium would avoid competing for bookings with the Jacob K. Javits Convention Center next door, and how the team would juggle the demands of trade shows with a National Football League schedule.

Any shortfall in the number of bookings
would throw into question the projected number of jobs that would be created and hotel rooms that would be reserved in connection with the stadium, as well as the revenue it would collect. All of those estimates have formed the economic and political rationale for the proposed $600 million investment by the city and the state in the hotly contested $1.4 billion project.

(Emphases added)

The presence of the Newark arena, as noted, undermines Zimbalist's projections about bookings at the Brooklyn arena, while, as I've written, Zimbalist's revenue projections rely on counting taxes paid by new residents, an untenable assumption.

Yes, the city and state have since produced their own, differently-flawed economic impact studies. The Times, however, failed to scrutinize any of these studies.

As I pointed out in May 2007, the newspaper pursued peer review of claims that basketball referees were racially biased. Surely the same could have been done for the AY economic impact studies, especially given that a paid consultant, Zimbalist, was allowed the last word.

Comments

Popular posts from this blog

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…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.