Skip to main content

"My humble fiction": Markowitz imagines lost opportunity for AY compromise, posits arena as corporate magnet

In his now-traditional end-of-the-year interview with the Brooklyn Paper's Gersh Kuntzman, Borough President Marty Markowitz offers some curious comments on Atlantic Yards, notably the suggestion that project opponents missed an opportunity to compromise on a smaller project, and that the presence of a basketball team would draw corporations to Brooklyn.

Those, I submit, are "humble fictions," the counterpoint to Markowitz's catch-phrase, "in my humble opinion."

More soberly, he bows somewhat to reality by acknowledging that the project could take "12 to 16 years" to build. That's a distinct contrast with the approved ten-year construction timeline, which was reiterated by Forest City Ratner CEO Bruce Ratner this past May, but it doesn't acknowledge that the State Funding Agreement gives the developer 12+ years to build Phase 1 and imposes no deadline for Phase 2.

Markowitz also puts in a few words for the "mend-it-don't-end-it" BrooklynSpeaks coalition, which, while slumbering, could still supply a framework for tweaking the project design and government oversight.

While the Brooklyn Paper's transcript is extensive, the comments on BrooklynSpeaks and other matters are not included, so I listened to the podcast and augmented the excerpts quoted below. The relevant passage starts at about 16:30.

Projects slowed

GK: The economy is affecting development, especially here in Downtown Brooklyn. What are you seeing out there?

MM: Getting credit is very difficult, but construction costs are beginning to come down. … When I look at Fourth Avenue, it doesn’t take a rocket scientist to know that not everything is selling out. It’s also true on Flatbush Avenue and it’s also true on Eastern Parkway at the Richard Meier building and I’m sure we can look at other examples.

GK: That’s true of individuals. But it’s true about developers, too. We have developers who haven’t started projects.

MM: We saw that with the Clarett Group on Court Street, as an example. And Atlantic Yards, though the lawsuits have prevented it. Those people who want to stop it did not know the economy was going to turn. They got lucky that the economy turned. But the truth of the matter is that, had it not been for the law cases, had it just been starting now... there still would be a problem today in terms of the credit market.... It has slowed down dramatically.

Reduced commitment

GK: Forest City Enterprises, the parent company [CEO] Charles Ratner said the other day that after the lawsuits are all settled... he’ll still wait and see where he’s at. I thought that was a big change. How did you read that?

MM: Obviously you know that I am a tremendous supporter. I think we need Atlantic Yards more this year coming than we needed it at any time before. It will be a generator of jobs, both during the construction phase and post-construction. Many industries will feed off of Atlantic Yards. The volume of people visiting the area, retailers and other industries, will be enhanced.

Arena as corporate magnet?

MM: And having an arena and a national team is a great selling point to corporations that are looking to either relocate or to expand. You know as well as I do that basketball has become in many ways the sport of corporate — corporate sport, meaning that men and women that work for corporations eagerly look forward to going to games and people bring clients there. So having an arena and a national team would be an unbelievable incentive, in my opinion, a catalyst for jobs and new companies coming and staying in Brooklyn — my humble opinion!

That's the first time that argument's been made regarding Atlantic Yards, as far as I know. And the reason it hasn't been made is that it's bogus. (It hasn't exactly turned East Rutherford, NJ, into a corporate magnet, has it?)

Economist Arthur Rolnick, testifying before Congress earlier this year, said that Minnesota attracted several Fortune 500 companies not because of sports teams but because of investment in education.

Why, the Treasury Department's Eric Solomon was asked at the hearing, are cities bidding against each other for sports teams even though the city spending might be a bad investment? Solomon responded:
Because the cities believe that there are various benefits. Perhaps they cannot be specifically identified, but there are various intangible benefits. And they -- of course, there are political constraints on their decisions as well as financial constraints.

Creating jobs

MM: And the affordable housing that also would be a component of it — although it will take somewhat longer now — is still job number 1 1/2. Job 1 is creating jobs. Job 1 1/2 is creating affordabe housing so we can continue to live here.... We still significantly lack affordable housing.... So of course I’m not happy to hear what Mr. Ratner said in Cleveland. I know that it’s a tough time for everybody. But I’m hoping once the president firmly sets his policies and the banking industry starts churning out again and investments are beginning to be made, Atlantic Yards can get back on track and we can have the shovel in the ground in the not too far distant future. I can’t tell you when but I hope it would happen soon.

While construction would create jobs, as would retail and building services, keep in mind that the one promised office tower--which likely would house more relocated than new jobs--is on indefinite hold, and that the developer initially announced 10,000 office jobs.

Better process?

GK: Is there any part of you that or other people you talk to, [that says], “Maybe if this project had been done differently. A little smaller. Gone through a ULURP [city land-use review] process rather than a state process.” Are there any regrets on that level that this could have been done by now?

MM: I’m going to back to remind you, during the beginning, a lot of the people that expressed their opposition don’t want an arena. Because they don’t want the traffic. They don’t want the people. They don’t want it. And there’s the other group that don’t want the apartment buildings because they’re going to cast shadows. It’s too much. The bulk is too much. The density is too much. So I have to tell you, when it was first proposed, attempts were made by me and my office to reach out to the very best we can, but the immediate response was, “We’re not interested. Shove it! We don’t want it. How many times do we have to tell you, Mr. Markowitz, we don’t want it. We don’t the buildings. We don’t want the arena. We don’t want it.” And when you have folks that say absolute no, not, “Maybe we’ll take some housing, six stories high, eight stories high, y’know, that was OK, but we don’t want the arena.” Obviously, I wanted it all. And I still feel that we need it sooner rather than later.
(Emphasis added)

When it was first proposed. The project started with Forest City Ratner's idea, not any public process regarding some valuable public land. Had there been an RFP, multiple projects might have been proposed; ULURP would have provided a framework for a rezoning. In this case, the state, at the behest of the city and the developer, would override city zoning.

Is Markowitz suggesting that public input could've created a smaller project? There was never room for negotiation; the size of Atlantic Yards has always been decided by the developer. When the project was publicly announced in December 2003, Markowitz told Brian Lehrer that there had not been any place for public input in the design:
To involve the community and get them involved initially, in the planning, when it was far from anywhere completed… I have a pledge, that I’ve made to the residents of that neighborhood, as well as to Bruce Ratner, that is, that my office, me personally, will be coordinating the efforts, through a task force with our community to make sure that their concerns to the fullest degree possible are resolved.

To the fullest degree possible. Not even Markowitz's own concerns on traffic and parking have been resolved, at least at last report.

Yes, some people just wanted row houses, but project opponents and critics quickly created the low- and mid-rise UNITY plan in 2004; developer Extell drew on the principles for its 2005 bid for the Vanderbilt Yard, and a revised UNITY plan, featuring some high-rises, emerged in 2007. All would be more dense than Markowitz's "six stories high" formulation.

Issues of density

GK: But the density is an issue. You make it sound like — this would be the densest Census tract in the country.

Not quite, because it wouldn't be its own census tract, but it would be more dense than the densest, according to the New York Observer.

MM: You know what? There are those that would disagree with you on that. I don’t have my statistics here.

You'd think he'd have checked the statistics by now.

Maximizing affordable housing

MM: But what I can say is that one of the guiding principles of Atlantic Yards was to maximize the units of affordable housing. If the opponents--if the community--was willing to say — I don’t want them to say — if they said, “You know what, forget about the affordable housing, scratch it all, make it all market rents or market coop price, or condo,” there is no doubt in my mind that the bulkiness would have been significantly less. But it was our demands, and you can blame me indirectly and others, that, absolutely made, as a holy grail of Atlantic Yards, that there must be a maximum affordability of apartments. Maximum!

He's got it backwards. Affordable housing was used to justify the scale Forest CIty Ratner proposed (even if it's not required, according to the City Funding Agreement, to build at that scale, which would mean less housing and thus less affordable housing). Had affordable housing had been the goal, the government would've set the parameters.

Meanwhile, Markowitz, a former tenant advocate, has been pretty sloppy describing the affordable housing. Two years ago, he inaccurately described AY as containing “thousands of affordable units for people of very low income.” (Actually, it would include 900 units for people of low income, not very low income.)

"The jobs and the housing will go to those that need it the most," Markowitz said at a City Council hearing, suggesting $80,000 should be the household income cap. That number is well over six figures. He also never commented on the switch that assigned 450 apartments once aimed at moderate-income households instead to middle-income housholds.

MM: Listen, if it was up to me, it would be 75 percent affordable. We got that pledge, we got that promise, and that was one of the guiding principles of Atlantic Yards. And we’ll see what the future brings. I am confident that it is going to happen. I really am. I really am. I was hoping it would have happened in 2006, 2007, 2008, 2009, so if it’s 2011, it’s 2011, as long as I know it’s on track, and I hope it is.

It it was up to him, he should be trying to analyze the tradeoffs between density and affordability, and where subsidies get the best bang per buck. I don't have any proof that other affordable housing organizations could build two or three times as many units for the same money (as NoLandGrab says, as has DDDB), but the cost-benefit analysis remains worth pursuing.

Train at the station?

GK: Is it on track?

MM: I hear that. I understand that. It’s sort of--the train is at the station. It’s moving very slowly.

It's an interesting metaphor, given that a temporary railyard at Vanderbilt Yard has yet to be constructed and is well behind schedule.

MM: And we have to see what the future brings. Listen, Forest City Ratner can’t do it if it’s not there. It’s very, very simple. So let’s see what the next six months, a year, bring us. We need the jobs, we need the economic activity. I do know that the beginning phase, just a few buildings, as you know, and the arena, then, y’know, it would be over the course of 16--12 to 16 years, for a full workout of Atlantic Yards.

In essence, Markowitz is recognizing the truth of Forest City Enterprises CEO Chuck Ratner's March 2007 acknowledgment--quickly but dubiously clarified--that the project would take 15 years to build.

Enter BrooklynSpeaks?

MM: And I know that, as you go down the line and you begin the first phase, y’know, the community is much more involved, I must tell you, in a systematic way. And I would not be surprised that Forest City Ratner, as they move ahead on it, would be... There’s now--Gib Veconi, I happen to like and respect very, very much, what is that [group], Brooklyn Voices?

GK: BrooklynSpeaks.

MM: BrooklynSpeaks. Listen, they’re not crazy about Atlantic Yards, for sure. But they’ve got some valid, viable ideas, they’re reasonable people, they are. You don’t know, as things go ahead and as plans adjust and amend, whatever, as they move forward, that here and there, you tweak it here, you tweak it there.

BrooklynSpeaks, among other things, suggests that the project "be substantially reduced," that Pacific Street (except under the arena) and Fifth Avenue be left open, that new streets be created to connect surrounding neighborhoods, and that existing buildings "such as the historic Ward Bakery" should be reused. (That last one is a little too late.)

Does Markowitz think those are reasonable?

BrooklynSpeaks hasn't posted anything new since June.

Still confident

GK: You really tweak it, we hear that Gehry’s fired--

MM: I read that. It seems to me that Forest City Ratner has done what they could at this. What more should they do right now when the future seems to be somewhat unsure? So, I’m assuming that, once the green light’s there, the rest of this could be done in a relatively reasonable amount of time. We’ve waited this long already, so it’ll be a little longer. I’m confident it’s going to happen.

What more should they do? Well, at least admit that work is stalled because of economics, not because of litigation. Actually, they pretty much did.


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…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

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…