Sunday, September 28, 2008

"Economic engine"? Markowitz repeats AY boilerplate, fails to check facts

It was inevitable, wasn’t it, that Atlantic Yards boosters like Brooklyn Borough President Marty Markowitz would promote the project as a solution to the current economic downturn. It’s not inevitable, however, to take their rhetoric at face value.

(No Land Grab's Lumi Rolley suggests Markowitz is channeling "Drill baby drill" into "Build baby build.")

The Courier-Life reported this week, in an article headlined, not without wit, "The market be damned!":
"The recent drop in the stock market and weakening of the American economy underscores the importance of moving ahead with projects like Atlantic Yards-which will not only create union jobs and affordable housing in Downtown Brooklyn, but also represents the kind of investment magnet that Brooklyn and New York City need right now," said Markowitz.
"It is critical that in the next few years, we plan for Brooklyn and New York City's future, and a catalyst for job creation and growth like Atlantic Yards can be the kind of economic engine that will power our borough through lean times," he added.


Markowitz’s “economic engine” quote comes from the Atlantic Yards web site and, while it’s true that any project creates temporary construction jobs--Atlantic Yards would be 1500 a year, but note that the choice is not between AY and nothing--and a growth in residents creates retail demand, the economic benefits of the project, compared to costs, are extremely murky.

We know the arena might be a loss. We know that Forest City Ratner's "economic engine" quote is attached to the dubious Ratner-commissioned study by sports economist Andrew Zimbalist, who counts taxes from residents of new housing, while more legitimate studies--including all those by government agencies, however flawed--count taxes not from residents but from new jobs.

(Click on graphics to enlarge)

Moreover, the most significant factor driving tax revenues is commercial space--remember, a drop in planned commercial space cut projected AY tax revenues by nearly one-third. Meanwhile, as Forest City Ratner cold-calls to find an anchor for the unscheduled Building 1 office tower, the commercial office market in New York has tanked.

As Michael Stoler wrote September 25 in the New York Sun:
An owner of downtown office buildings, who prefers not to be identified, said, "Leasing had dried up over the past four months. Today, the market is dead with little or no activity." If AIG consolidates its offices in Lower Manhattan, a vast amount of space will join the inventory of available space.


Jeffries and James

The Courier-Life checked in with Assemblyman Hakeem Jeffries, always cagey in his measured support for the project, and City Council Member Letitia James, a project opponent. The article quotes Jeffries:
"It [the project] obviously is important for projects that will create jobs and housing for working- and middle-class folks to move forward in these difficult economic times. However, everyone is going to have to sacrifice as state government deals with a ballooning budget deficit and that includes multi-million-dollar development companies," said Jeffries.
"My focus continues to be in making sure the developer's commitment to building affordable housing remains firm and that the state government assists in making that commitment a reality," he added.


So if Forest City Ratner has to sacrifice, that would suggest no additional subsidies, as the developer has indicated it “needs.” Then again, Jeffries’s use of the term “state government assists” rather than “assures” hints at a willingness to direct subsidies.

The newspaper quoted James:
"You can have both [economic development] and do a project consistent with the community wishes and also provide jobs," said James. "It's not an either/or proposition."
James said she remains a supporter of the Unity Plan, which her office provided some funding to create. The plan calls for a smaller, mainly residential project over the Vanderbilt Yards without an arena.
James said there was no developer in place for the plan, but developers could be found
through a competitive request for proposals [RFP] process.


There’s certainly an argument that a smaller project, cut into multiple parcels, could move forward faster, and thus deliver the benefits of housing, retail, and community space, even if the quantity is lower than that projected (but not guaranteed) in AY.

But economic development would more likely be manufacturing than housing. The former Pfizer factory in Williamsburg, closed last year, is slated to become housing, including affordable housing. Markowitz isn't calling it an economic engine.

BUILD president speaks

The Courier-Life's Stephen Witt returns to one of his favorite sources, Brooklyn United for Innovative Local Development’s (BUILD) president James Caldwell, who, perhaps most notably, in an August 2005 article blamed Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein for not having his organization solve the homeless problem at the MTA’s Vanderbilt Yard. (Here’s Goldstein’s deft response.)

That article quoting Caldwell, in a stroke that can only be described as brutally weird, was the only newspaper article--no hearsay articles about market trends, of course--included in the Empire State Development Corporation’s dubious Blight Study.

Caldwell is quoted in the current article as saying the project will bring tourists to the area and will help t-shirt vendors--essentially trickle-down:
"Even before the economy went down, people from our community were having a very tough time," said Caldwell. "The CBA will play a beneficial role to helping our people get some of these positions stemming from the Atlantic Yards project," said Caldwell.
Caldwell said many people in the area did not even know about the Unity Plan, let alone be behind it.
"It [Unity Plan] will not create as many jobs and it was minus an arena. All they had was architects that put together models and had no money lined up," said Caldwell.


“All they had was architects that put together models and had no money lined up.” Sounds a bit like Building 1.

The last word: FCR

In the article, the last word goes to the developer's paid flack:
Meanwhile, Forest City Ratner officials last week reiterated that the company remains steadfast that it can close on, get financing for and break ground on Atlantic Yards by year's end.
"We've said for sometime that it's obviously a tough market to build in, but FCRC has been very aggressive and successful in raising capital for projects, and remains completely confident about Atlantic Yards," said FCRC spokesperson Joe DePlasco.
DePlasco said among the remaining obstacles are two more appeals to court cases to stop the project, and an expected United States Treasury Department ruling on whether tax-exempt bonds can be used to finance the $950 million Barclay's Center Arena. "It is a significant investment in Brooklyn and the city, and in an [economic] environment like this it is even more important," said DePlasco.


An investment “in Brooklyn”? If “Brooklyn” were the owner, maybe--otherwise the private developer reaps most of the benefits.

DePlasco’s confidence should be taken with a large grain of salt. Remember, he said in 2004, “There’s no reason to think the team is not moving to Brooklyn for the 2007 season."

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