Sunday, June 01, 2008

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.

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