Sunday, November 30, 2008

So, the 2006 IRS ruling the city requested for the Yankees hinged, in part, on a free luxury box

No major daily newspaper has been looking hard lately at Atlantic Yards, but the press keeps running with the Yankee Stadium story, thanks in part to new revelations via Assemblyman Richard Brodsky. E-mail messages from city officials acquired by Brodsky tell an interesting tale, as the Daily News reports:
Mayor Bloomberg's top aides engaged in a behind-the-scenes brawl to win a free luxury suite at the new Yankee Stadium that could wind up costing taxpayers, e-mails show.

Joseph Gunn, a city lawyer, in fact warned that the city would refuse to request a ruling from the Internal Revenue Service to allow tax-exempt funding if the city did not get the luxury suite.

As we know, such a Private Letter Ruling was achieved in 2006 for the Yankees and for the New York Mets. And the city this year successfully went to bat to get those rules grandfathered in for additional tax-exempt bonds for the baseball teams and, most importantly to the city, for tax-exempt bonds for the Atlantic Yards arena.

The coverage in the Times adds this piquant quote from Seth Pinsky of the New York City Economic Development Corporation: “This is a big issue to the mayor.”

We kind of knew that.

The investigation into the city's practices regarding tax-exempt bonds isn't over

In response to those who've prematurely assumed that the Atlantic Yards arena is dead, I've asserted that it is, rather, very much in play. Indeed, the recommitment of the Barclays Center naming rights deal is a sign that the project has some juice, even as the stock of parent Forest City Enterprises slumbers. (It´s still down nearly 90% from its peak, but up some 50% from its low.)

At the same time, the Congressional investigation led by Rep. Dennis Kucinich (D-OH) into questionable assessments of Yankee Stadium also remains in play, as Kucinich has vowed. (“We’re going to continue our work here, make no mistake about that," he said after a hearing October 24.)

Should further and more concrete evidence of dubious practices be found, that would cast doubt on the tax-exempt bonds issued for the Yankees and, inevitably, the still inchoate plan for tax-exempt bonds issued for the Atlantic Yards arena.

In other words, even though more lenient regulations for the arena bonds were grandfathered in, questions will be asked.

Attorney-client privilege

Noticing New York blogger Michael D.D. White has argued that the city, which has resisted turning over documents requested by Kucinich on the grounds of attorney-client privilege, doesn't have a good case.

He writes:
Attorney-client privilege doesn’t extend to facts. You can’t take facts that are not privileged and magically cloak them with privilege by communicating them to an attorney. It is also questionable whether this privilege of secrecy can apply at all to the public process of issuing bonds and taxing property. When it comes to bonds, almost the reverse is true; rather than being able to conceal negative information there is a special obligation to disclose it.

(Emphases in original)

Saturday, November 29, 2008

Is AY site in Fort Greene? Flashback to an odd caption

Though the New York Times has made several errors, large and small, in its Atlantic Yards coverage, I think a disproportionate number have been in captions (e.g., here, here, here, and here).

Captions can be treacherous, given that they are often written by a harried copy editor who doesn't know the story that well.

Still, that's no excuse for identifying buildings within the Atlantic Yards footprint as located in Fort Greene rather than Prospect Heights, as indicated by the caption in this 4/2/05 Times article.

(The caption also includes the superimposed AY footprint, with streets already demapped, though the northern boundary of the property at issue remains Pacific Street.)

Despite the Times's stated policy of correcting "all its factual errors, large and small," I'll assume that the failure to correct this--I did request a correction, to no avail--falls under the explanation, as per the Corrections Editor, "There is a limit to how many old articles we can correct in print."

Friday, November 28, 2008

The cozy relationship between Sheldon Silver, the Met Council, and Bruce Ratner

I know I'm late on this, but let's take another look at the cozy relationship between Assembly Speaker Sheldon Silver, the Metropolitan Council on Jewish Poverty, and developer Forest City Ratner. There's nothing illegal, just another episode of the questionable one-hand-washes-the-other power configuration that seems so prevalent in the city and state.

Silver says that those who care about process are "naive." Perhaps that's also his message for those who had hoped he'd ask hard questions about Atlantic Yards.

(Update November 29: Somehow I missed the October 27 press release about Silver welcoming the Nets' Yi Jianlian to Chinatown.)

Helping the Met Council

A 12/3/06 Associated Press article. headlined in the New York Post as
SHEL GAME: SILVER LINING PAL'S CHARITY, reported:
Assembly Speaker Sheldon Silver directed $1 million in public money to a charity and its affiliates whose chief executive is an old friend and the husband of Silver's chief of staff, Judy Rapfogel, according to records and interviews.

The grants are part of the legal and routine pork-barrel spending that annually totals $170 million between the Assembly and Senate, and is based on closed-door decisions by lawmakers.

Much of the money - more than 60 percent of the Assembly's share - goes to established social-service nonprofit firms to carry out programs not covered in the state budget.

The records released last week show that six grants, most under Silver's name alone and all directed by the Assembly majority, went to the Metropolitan New York Coordinating Council on Jewish Poverty.


The Met Council's CEO, William Rapfogel, has known Silver for 40 years and his wife, Judy Rapfogel, is Silver's chief of staff. Then again, William Rapfogel said, the Met Council received member items from Silver before he was chosen speaker, and his wife disqualifies herself from discussions regarding the Met Council. "While there is potential, it doesn't mean there is impropriety," he said.

(Unclear is whether the amount of grants increased, but that seems likely. Indeed, the New York Sun reported 12/4/06 that Silver gave out more than $7 million of the roughly $50 million in member item projects earmarked by the Assembly.)

Blair Horner of the New York Public Interest Research Group was a bit more wary, telling the AP: "I think the public should always be concerned when taxpayer dollars are awarded in secret and . . . the public should demand that the system be changed from awarding it on political power to one based on need or population."

In response

In a letter to the Post, Meyer Muschel acknowledged the system is broken but noted that the Met Council serves not just the Jewish community but all of New York City:
But criticizing Silver's support for the Metropolitan Council on Jewish Poverty and its executive director, William Rapfogel, is like throwing out the baby with the bath water.


In an editorial headlined SHELLY THE PORK PRINCE, the Post didn't buy it:
One thing New York does not lack for is cash-strapped do-good organizations. What elevates Met Council over the rest when it comes to taxpayer-funded baksheesh?

Obviously, it's Silver's personal ties to the group.


Silver's defense: caring about process "naive"

A 6/20/07 New York Times article headlined Assembly Leader Wields Power By Keeping Albany Guessing reported:
Among the most favored beneficiaries in the last fiscal year was the Metropolitan Council on Jewish Poverty and its affiliated organizations, which received nearly $1 million. The group's chief executive, William E. Rapfogel, is the husband of Mr. Silver's chief of staff, Judith Rapfogel. The council is widely acknowledged to provide useful services to all ethnic and racial groups throughout the city, and has long received generous public financing.

Though government watchdog groups criticize member items as unregulated pork, Mr. Silver says they are a legitimate way to finance worthy causes that do not get into the state budget. ''Those who look at process are naive,'' he said of the system's critics.


Honoring Ratner

Each year the Met Council holds a "Builder's Luncheon" to honor someone in the real estate field and raise funds for its supportive housing initiatives. This year's event, as the Council's widely-reported press release stated, raised $1 million and honored Bruce Ratner:
Numerous other elected and appointed officials were present as the keynote speaker, Speaker of the Assembly Sheldon Silver, presented Mr. Ratner with a beautifully decorated charity box.

That gets the developer, Silver, and the Met Council some nice publicity for a relatively small amount of money, even while the developer and Assembly Speaker deal in much larger sums for a project in which affordable housing does not come first.

As Eric McClure of No Land Grab pointed out, that "pales beside other gifts bestowed upon the developer by the Assembly Speaker, which include PACB approval in 2006 of the Atlantic Yards project and a special clause in 421-a legislation. But just in case you were thinking this was a one-way street, Ratner greased the Silver-controlled Democratic Assembly Campaign Committee with $58,000 just this past January."

Thursday, November 27, 2008

How the (unintended consequences of) the EIS process fostered suburban sprawl

Developer Jonathan Rose is one of the most-lauded developers by environmental and affordable housing advocates; on November 3, he was honored by the American Institute of Architects' New York chapter to give the annual lecture in honor of Samuel Ratensky. He was the first developer chosen for the honor, which goes to those who have made significant lifetime contributions to the advancement of housing and community design.

And Rose, who by the way whose initial effort at developing the Atlantic Terminal Urban Renewal Area (ATURA) was stymied in the 1980s, thinks the environmental review process went awry, starting with a federal law, which, I'll add, spawned state laws like the one under which Atlantic Yards was evaluated and approved.

Rose, who lamented the loss of the big picture, blamed environmentalists too focused on the opportunity for legal challenge and developers who realized that they could avoid or beat back most challenges.

Where the growth is

"In the next 50 years, America will grow by somewhere between 90 and 100 million people," Rose said at the lecture. "What you can see is the largest increases--a lot of them are in the South and Southwest in places that are either subject, like in Miami, in Florida, the whole place could be washed over by rising sea level, or places where they need a whole lot of air conditioning and where they don’t have much water and they’re frankly, from an environmental point of view and a global security point of view, the worst place to have dramatic population growth. But this is where the population growth seems to be."

Back to 1970

"We as a nation have done nothing to plan for this," he continued. "So I’m going to take you back to 1970, there were two bills in Congress, the National Planning Act and the National Environmental Protection Act [NEPA]. And all my environmental protection friends hate it when I tell you what I’m about to tell you."

Lawyers and developers

"The National Planning Act would’ve created a framework for national planning that would’ve dealt with our infrastructure issues and decided where development should be and shouldn’t be, and land preservation," he said.

"But the environmental community, which was basically formed by lawyers at that time--really the most vociferous environmental activists--and the real estate community both decided to endorse NEPA, which created the environmental impact statement [EIS] and a legal framework for reviewing individual projects. So everybody voted to say--the developers said, Y’know, listen, we can beat this thing, they’re not going to sue on every project, it’s just an impact statement, we can deal with that, planning could actually restrict growth and development, we don’t want that. And the environmentalists said, We’re a bunch of lawyers, we want the ability to take everybody to court."

The loss of national planning

"So the effect was that we turned our back on national planning, and we turned our back on a national infrastructure policy," Rose said. "And, at the same time, here’s what happens: 1000 individuals choose to subdivide a parcel in the suburbs, or the exurbs, and it falls under the screen of an environmental impact statement, each one is one individual act."

"One person chooses to build a 1000-unit urban project in a city and they get held up for five years in an environmental impact statement," he concluded. "And so the unintended consequence of NEPA actually was one more of the many things that made it easier for suburban sprawl to proceed from 1970 to 2000 instead of urban redevelopment."

Note that, in the mid-70s, NEPA spawned numerous state variants; in New York, it was the State Environmental Quality Review Act (SEQRA), as explained in Nicholas A. Robinson's 1982 Albany Law Review article, SEQRA's Siblings: Precedents from Little NEPA's in the Sister States.

Atlantic Yards was approved under SEQRA.

Systemic observation

Jane Jacobs, of course, was wary of planning, though she focused on cities rather than national policy. Would she have opposed the National Planning Act? Did she? I'm not sure, but she was no fan of suburban sprawl.

Previous comments

In a December 2007 interview with Planning magazine, Rose spoke similarly:
"If you wanted to build a 1,000-unit project that is mixed income, mixed use, green, next to mass transit, you could spend years going through the NEPA [National Environmental Policy Act] process. However, if 1,000 home builders each built just one house, leading to sprawl, there's no environmental impact statement required. But which creates the most traffic? Which is more wasteful of energy?

Clearly the 1,000 single homes, but because each one is used independently rather than synthetically, each one falls below the screening limit of NEPA."

To Rose, this is just one way the system currently favors sprawl over high-density, environmentally sustainable mixed income housing. Last May, while testifying before Congress on ways to expand the low income housing tax credit, Rose called for the federal government to take a leadership role in leaving "a more sustainable development legacy to future generations."

A key problem, as Rose sees it, is that the U.S. has no national plan, only regulatory statutes such as NEPA and the Clean Air Act. "Essentially we created a regulatory environment in which we made our decisions based on science and law, a good thing, but insufficient," he says. What is missing from this piecemeal approach, he says, is values. "You could no longer say we will preserve this historic landscape because it is important to our national heritage, because it is who we are as a people, because it is part of our moral regional value system, our social values, our spiritual values."

NEPA is also a poor planning tool, he says, because of its heavy reliance on environmental impact statements, whose accuracy he believes is unproven. "I ask this of Planning magazine readers: Does anybody have a good, broad-based study of a diverse group of environmental impact statements of [completed] projects that 10 years later were back-tested to see if the predictions were accurate?"

One of the reasons he believes they can't be accurate is that "they look at projects from a granular point of view; essentially, they look at a project by itself, and not the whole system."

Wednesday, November 26, 2008

Financing delays plague NYC projects for both offices and condos

There are more signs that the offices and condos planned for the Atlantic Yards project face financing delays, along with similar projects in the city--though, in the case at least of condos, there might be a silver lining.

(The arena and the mixed-income rentals depend significantly on tax-exempt bonds, which also face financing challenges.)

An 11/19/08 New York Times article, headlined Defying Slump, Developers Plan 60-Story Hospital Industry Center on West Side, described efforts to build a 60-story tower in Manhattan. The Times noted:
One executive who spoke on the condition of anonymity for fear of alienating Extell said he found it hard to believe that enough companies would commit to 10-year leases in the current market to make the project financially viable. “Under normal conditions, Israel Green and Extell could — and did — raise a lot of money,” the executive said. “They are as smart as they come.”

But he said that over the next 12 months, space would become cheaper to lease, and that it might make more sense to lease than to build. “There is nothing getting done or built that’s over $100 million these days, because you simply cannot get the lenders together to fund it,” the executive said. “In fact very little is being done above $75 million. When you’re looking into a crystal ball, a year to a year and a half looks to us like a train wreck just beginning to hit.”

And how might it be funded? The Times reported:
[Extell's] Mr. [Marc] Shaw said the developers were not asking for government financing at this point, though they might look for tax breaks down the road. He said the building would finance itself through leases that would “replace the conventional bond that’s hard to get right now.”

Condos hard to fund

On 11/17/08, the Real Deal reported delays in funding condos--but perhaps a silver lining in the long run:
Real estate developer and New York Observer publisher Jared Kushner says that because there's so much inventory on the market, "there's nothing too obnoxious that you can ask for right now," when looking for an apartment. Kushner was speaking last week at an event called "Real Estate Gets Real," hosted by the Observer, Halstead Development Marketing and Wells Fargo at the Scandinavia House on Park Avenue between 37th and 38th streets. Meanwhile, Stephen Kliegerman, executive director of Halstead Property Marketing, told the crowd not to expect any real funding for new condo projects until 2012 or for new rental buildings until 2010.


In the video, Kliegerman says:
Because of the banking crisis... there are no new condominium buildings that will be started for the next 12 to 36 months. So any hole in the ground... that has funding... is going to most likely get built. And I say most likely, because I believe that about 25 to 30 percent of the jobs that are just in the ground but are not superstructure up, probably won't get built, because those developers don't have deep enough pockets, and their bank may pull the plug and say, let's hold on right now.

Currently, we have about 6 to 8 months of inventory, resale and new construction. If the economy completely tanks, and no one buys another apartment for the next year,
that inventory will rise to 12 to 18 months. If you do the math, that means, within 24 months, what are we going to have in New York City? We're going to have a housing crisis. There will not be enough apartments to house all the people coming to New York.

Remember, New York is not just a local marketplace. It's an international marketplace as well. Even with international economies faltering, where do people put their money into times of crisis? Into real estate. Why. Because it's a long term hold. It's not a daily traded security. You don't lose half your money overnight.

So you have the 421-a deadline coming and going. You have the credit crunch that is slowing down or stopping any new construction. So 24 to 36 months from now, there's going to be relatively and virutally no new housing stock to speak of, until we get out of this time and the banks start lending again.

But all the projections are, and I was at a Real Estate Board function last week... all predicted that they won't see any realistic, reasonable funding for for-sale housing come until about 2012. Ad they don't believe there will be any reasonable funding for rentals until about 2010, 2011.

Tuesday, November 25, 2008

Developer Chakrabarti: environmental review process is "workfare" for lawyers and consultants

A lot of community groups don't like the environmental review process that, under city, state, and national law, requires elaborate disclosure documents that are burdensome to produce but not necessarily helpful.

And developers don't like them, either.

"Workfare program"

Vishaan Chakrabarti, the Executive Vice President of Design and Planning for the Related Companies, offered forceful comments (video) October 16 at the Vertical Density Symposium sponsored by the Skyscraper Museum in conjunction with its Vertical Cities: Hong Kong | New York exhibition.

"Our environmental impact process is completely flawed," he said. "Our regulatory process for a project like Moynihan Station--probably over $15 million has been spent on environmental work that no one will ever read, that is its own kind of workfare program for lawyers and consultants.”

Now Chakrabarti was arguing for a process that would make it easier to enable density at a site that he believes could accommodate such density--and needs it to make the project work economically.

But it was notable that a developer would share some of the same frustrations that community groups express: the process produces endless documents that are too hard for most people to read (well, it was worthwhile to read some not-so-credible statements in the AY review) and aimed significantly as a defensive strategy for litigation.

An even longer EIS

The Atlantic Yards Final Environmental Impact Statement (FEIS) comes on three CDs, plus another CD for the General Project Plan.

Just for the heck of it, I requested the FEIS for the Access to the Region's Core project, which would involve a new tunnel under the Hudson River.

It comes on a DVD. The Table of Contents alone is 29 pages.

Eminent domain case speeded up, might be heard in January

Well, the Atlantic Yards state eminent domain case will be heard on a faster track than first envisioned. On September 29, I predicted that final briefs would be due in late February, with a hearing sometime after that. That implied a decision no sooner than May or June.

The state appellate court, however, on its own accord changed the schedule, with the nine petitioners required to file their brief by this Friday, November 28. That means that the defendant Empire State Development Corporation has to respond by December 19 and that the petitioners' reply brief is due December 29.

Decision by March?

While no hearing has yet been scheduled, the timetable leaves open the possibility of a January hearing. And while a decision might come by March, that doesn't mean that Atlantic Yards backers would "get through litigation, some time in March," as New Jersey Nets CEO Brett Yormark said last week.

The losing side--most likely the petitioners, because the case is a long shot--would inevitably file an appeal, which could require several more months. And other litigation may persist or arise.

Monday, November 24, 2008

NYC's chief urban designer salutes continuity and vitality of streets (and what about AY?)

The Director of Urban Design for the Department of City Planning, Alexandros Washburn, only joined the administration in January 2007, so he's presumably had little contact with the Atlantic Yards project, which got its final state approval a month earlier. (The City Planning Commission in September 2006 had endorsed the project, with minor changes.)

Still, it was remarkable how, in a recent discussion of the city's planning practices, he saluted the High Line project, which began with public infrastructure, not a private developer, involved multiple developers, and emphasized streets rather than demapped them. The contrast with Atlantic Yards is stark.

Washburn, who's had a distinguished career that included serving as the only staff architect ever working for a U.S. Senator (Daniel Patrick Moynihan), spoke October 18 at the Vertical Density Symposium sponsored by the Skyscraper Museum in conjunction with its Vertical Cities: Hong Kong | New York exhibition.

(I'll have more complete coverage of the symposium going forward.)

The park came before the rezoning

"We are thinking of things as pedestrian-connected infrastructure. Something like the High Line is a very good example of what New York is doing," he said, citing a "disused piece of infrastructure from the 1930s. It was about to be torn down, so real estate interests that owned land underneath it could build."

"Friends of the High Line was formed by two citizens, not planning officials, not even architects, just two very concerned and creative citizens, who instituted a whole program to save this infrastructure, convert it into a park," he continued.

It didn't hurt, he noted, that one of the early Friends of the High Line was Amanda Burden, who became Mayor Mike Bloomberg's City Planning Commission Chairperson.

Washburn (right) described a win-win solution: "And with that, and the support of the Bloomberg administration, rezoned the neighborhood, in a manner that allowed development rights to be transferred off of this new park and onto the surrounding territory, therefore allowing densification, but only in context of this superb new linear park."

(Photo from W Architecture)

The High Line, he suggested was "in some ways the paradigm." (Vishaan Chakrabarti, the Executive Vice President of Design and Planning for the Related Companies, also cites the High Line as an example of development compatible with density.)

Moses and Jacobs

"In my job, where I have to be the chief urban designer, we are given these tasks: the deputy mayor says we need 5000 units of housing over here," Washburn continued. "Well, how are we going to do that? Is it Robert Moses? I mean, that’s the normal approach, that’s the top-down approach. OK, we need 5000 units of housing; that’s a lot of high-rises."

"But we don’t want the Robert Moses approach only. We love Jane Jacobs," he said. "We really think that [Jacobs'] The Death and Life of Great American Cities, The Death and Live of Great Vertical Cities--we’ve got to value our streets. Everything happens in the street. [Jacobs] called it the ballet of Hudson Street. But it applies to any street."

He cited a speaker from Hong Kong: "What you showed, that wonderful collage... it was a perfect example of that series of connections that happen at ground level among citizens."

It's all about the street

"It doesn’t matter how expensive the fabric is," he continued. "High-rise, low-rise. It’s the street itself. So we spend a huge amount of time battling with developers who in their sort of haste to put up the tower are trying to get past their responsibility to the street that needs to be shown by every building. So we believe in blocks. We believe in how the tower meets the block, meets the street, and it’s a remarkably complex streetscape...."

Note that the Empire State Development Corporation (ESDC), in the Atlantic Yards Final Environmental Impact Statement, took pains to argue that the project--well, at least in its second phase, to the east--would have a better superblock. While Pacific Street would be demapped, the ESDC noted, the buildings would create street walls rather than be isolated in a park, like Stuyvesant Town.

But however much that make Dean Street and Atlantic Avenue better off than many streets at the perimeter of superblocks, Pacific Street would be gone.

(Graphic from NoLandGrab.org)

Seeking the fine grain

Washburn continued: "In school, it seemed so stupid to me, those trash cans and benches and light bulbs--what’s so difficult about that? But, it’s not, it’s actually where all your theories of urbanism come together."

"You’ve got to make the street a lively place. You have to get all these very pedestrian systems to mesh. And I think that’s technically our biggest challenge, is how do we have towers come down and support the type a street where... the grain absolutely becomes the fineness that Jane Jacobs would love."

The green solution

He concluded: "So how do we get the quantity of Robert Moses with the quality of Jane Jacobs? And the only answer to the question mark that I could come up with is to look to another New Yorker, to look to Frederick Law Olmsted, not in the sense of designing another Central Park, but in the sense of trying to bring nature and green networks into every scale of every development that we do."

"And the High Line is an example of that, because it’s a green network to revive a neighborhood, with a degree of density that’s adding thousands of housing units, but to the degree of finesse and complexity that Jane Jacobs would’ve wanted."

"So I’m hoping... that, in seeking the green future, we will marry those traditions and continue with, I think, urbanistically, [what] is our greatest, greatest asset, the continuity and the vitality of our streets."

It's not like Pacific Street has always been a great connector. However, critics of Forest City Ratner's superblock project, in devising the UNITY plan (right), have added new streets, emphasizing continuity and vitality, which would further animate Pacific Street.

Remember, Rockefeller Center, to which the late New York Times architecture critic Herbert Muschamp misguidedly compared Atlantic Yards, added a street, while Atlantic Yards has subtracted them.

Even as lawsuits delay construction, demolition on Dean Street creates facts on the ground (and blight)

The picture at right, which I published last Wednesday, quickly became out of date. Photographer Tracy Collins on Saturday returned to the site and showed (below) that 487 Dean Street, at the northeast corner of Sixth Avenue, had already been chopped in half, with the only structure remaining behind some scaffolding.

Soon enough, 489 Dean Street, another structurally sound row house will be demolished. Then what? Forest City Ratner will have to wait. The owners of the building just to the east are plaintiffs in the pending eminent domain case, and the owner of the adjoining two buildings has not, as far as I know, been negotiating with the developer.

In a best-case scenario, it could take many months for the Empire State Development Corporation to prevail in court and then to pursue eminent domain, so Forest City Ratner could clear the land, destined to become a staging area for arena construction, should it ever begin, and later a tower nearly seven times taller than current structures, at 272 feet.

Why now? Why blight?

So why bother to demolish the buildings? Because they can. Surely it creates pressure on the neighbors--who likes living next to a demolition site and empty lot? And to some, at least, it creates facts on the ground, a situation that must be remediated by action.

In the short term, however, and perhaps in the long term, it's compounding blight, not--as is one of the stated goals of the Atlantic Yards project--removing blight.

Sunday, November 23, 2008

Lupica, again, questions the Brooklyn move

Daily News sports columnist Mike Lupica, in today's column, wonders:
One of these days [NBA] Commissioner [David] Stern needs to figure out where the [New Jersey] Nets are going to be playing in a few years if they're not playing in Brooklyn.


Meanwhile, the Nets are improving. That doesn't mean they're filling seats yet, though.

How taxpayers might help the Nets land LeBron James

By shedding expensive contracts, the New Jersey Nets have cleared salary cap space and positioned themselves to make big offers to free agents in 2010, notably superstar LeBron James of the Cleveland Cavaliers. (So have the Knicks, though the Nets have a stronger supporting cast.)

Maybe we should think of it another way, as well. It's not just about the Nets' contracts. It's about where the team owners would get the money to pay a free agent. Sure, a smaller payroll helps, but that's not the only thing.

It's also about the subsidies.

The example of the Yankees

The issue came up on the CUNY-TV talk show City Talk regarding the new Yankee Stadium, which I wrote about yesterday.

One guest was Baruch professor Neil Sullivan, author of The Diamond in the Bronx: Yankee Stadium and the Politics of New York (2001, updated 2008),

He pointed out how the San Francisco Giants privately financed PacBell Park:
Everyone was, 'Ohmigod, you can't build these things, you'll have no money left for the ballplayers.' They signed Barry Bonds, they went to a World Series, they functioned fine.

The great question in the off-season, one of the great questions that the Yankees will be considering, is do they make an offer to Manny Ramirez, that's going to be 20 to 25 million dollars... for four or five or maybe six years. Where do you think that money comes from? In this stadium game, one of the ways I think about it, the state picks up, the public picks up the capital budget for this private business. All of that money, hundreds of the millions... goes over to the operating side. They can go chase anybody they want.


Remember, the direct subsidies for Atlantic Yards so far total $305 million. The savings on tax-exempt bonds could be $165 million. Other subsidies and tax breaks would be enormous as well, though no one's produced definitive numbers.

That could help pay for a few good hoopsters.

"Bloomberg's bombast": historian Siegel says sports facility subsidies don't pass cost-benefit analysis

Historian Fred Siegel, writing in the 11/17/08 issue of the conservative Weekly Standard, doesn't forget that New York City Mayor Mike Bloomberg, in his first term--the one that even the Village Voice's Wayne Barrett praised--supported welfare for sports team owners.

Siegel's essay, headlined Bloomberg's Bombast: New York's mayor buys himself a third term, begins:
The folks over at Newsweek have a sly sense of humor. They put New York mayor Michael Bloomberg on the cover of their November 3 issue and let him dispense fiscal advice to the next president. In the article, Bloomberg, who has presided over record levels of spending and debt increases, chastised "Washington" for putting us in a hole by "spending with reckless abandon for years." The lofty Bloomberg told Newsweek's readers, "Programs that don't pass a cost-benefit analysis, that have been driven by politics rather than economics, should be cut."

This is excellent advice. But Bloomberg has never taken it. One of the few things economists agree on, for example, is that subsidized sports stadia are a bad investment of public funds. They are also one of Bloomberg's passions. The mayor tried and failed to subsidize a West Side football stadium to the tune of roughly $600 million, but succeeded in sending similar sums toward his developer friend Bruce Ratner for a massive Brooklyn project, centered on a basketball arena, now stalled, for which there was no demand. He subsidized the Mets' new home, Citi Field, and, through direct and indirect subsidies--some of which are now under New York state and congressional investigation--Bloomberg has been paying for the construction of George Steinbrenner's new Yankee Stadium. The costs to the city so far are $458 million (with tax breaks provided to the two teams for the stadium projects further costing the city an estimated $480 million in revenue). Yet, the mayor tells Newsweek's readers that national infrastructure projects have to be funded "strictly on merit."


Costs and benefits

I'm not sure $600 million is the appropriate sum for Atlantic Yards--the direct subsidies would be about half that and the indirect subsidies significantly more--but Seigel's point is sound. There's been no cost-benefit analysis. And the press has been supine.

No demand?

Is there "no demand" for Atlantic Yards? That's a good question. There was little demand for the much-ballyhooed office space. Surely there's demand for housing, but could the city and state have achieved housing faster had there been a more legitimate bidding process?

There is demand for an arena, given the opportunity to move a team from New Jersey, but not necessarily at the terms Forest City Ratner achieved. What if the state had tried to keep some of the naming rights? What if federal taxpayers didn't subsidize the move of a sports team, which does nothing for the federal treasury, as Rep. Dennis Kucinich has pointed out?

Saturday, November 22, 2008

On CityTalk: "How much welfare do you think the Steinbrenners should get?"

The Yankee Stadium deal was the subject of a scathing episode of the CUNY-TV talk show City Talk, taped November 11, which raised many issues that should be pursued regarding the planned Atlantic Yards arena.

Host Doug Muzzio, a Baruch College political scientist, was joined by two forceful guests. Bettina Damiani, Project Director, Good Jobs New York (GJNY), declared, "If somebody could write a book on how to make an opaque democratic process and screw over poor people, this would've been it."

Baruch professor Neil Sullivan, author of The Diamond in the Bronx: Yankee Stadium and the Politics of New York (2001, updated 2008), said the fundamental question was "how much welfare do you think the Steinbrenners [Yankee owners] should get?

(Note that the video for me was fuzzy, but I downloaded the audio.)

Opening up

Muzzio brought up the recent spate of critical news coverage.

DM: OK, the last week, stories all over the place, Jim Dwyer in the Times, For Yankees, Mayors Play Ball at City's Expense; Mike Lupica, The city's real tax burdens, Juan Gonzalez, Yanks caught stealin' from taxpayers again. Why the upsurge in interest? Why the news stories?

(Note that the headlines of the print articles, read by Muzzio, are not necessarily the same as those online).

The press enters, belatedly

BD: I think for two reasons. One is, we're watching our financial systems totally recreate themselves as they're melting down, so it's a little bit on the front of people's brains, about financial systems. Secondly, a little bit of a pessimist in me thinks that it's OK to write about these things, because this project is so far along nobody's going to get mad at the media for it.

Well, the press always likes to piggyback on a governmental investigation, and recent reports from committees led by Assemblyman Richard Brodsky and Rep. Dennis Kucinich certainly have provided a jump-start. Yankee Stadium is probably the poster child for questionable behavior, but it's not too late to take a look at Atlantic Yards, as pre-construction demolition and utility work continues.

(The Mets have gotten much less scrutiny regarding their new stadium, but, as Damiani pointed out, at least "they didn't try and gobble up Flushing Meadow Park.")

Fixed, or too complicated?

Muzzio raised the question about whether the press had rolled over.

DM: So you, in a sense, create a web of the permanent government, the movers and the shakers and the fixers. So you're telling me that the papers stayed away from it when it was hot because of their interest and now they're in it because it's a done deal.

BD: I wish I had the answer for that. Because, I mean, we could've fixed it early on, when there was really an opportunity to put some democratic process to this. The reality is, early on, the only people that really, really put their nose to grindstone on this was Pat Arden at Metro and Neil deMause, who's the author of Field of Schemes. It was a heavy lift, and I think part of it was because it's a very complicated project.

We should keep in mind that there's a difference between editorial pages, which are influenced by the publisher's interests--the prime example is the recent editorializing against term limits--and news coverage.

Then again, there's been ample evidence from groups like Good Jobs New York that the press could've relied on, so I suspect that the government investigations have given columnists the ammunition they feel they need.

Always a political building

Sullivan provided some history of Yankee Stadium.

NS: It's a political building, it always was. It was built by Jake Ruppert, who was a Tammany Hall Congressman... So Ruppert would've known... the Terminal Market was going to open up and he'd have a fan base... but he paid for the whole thing with his own money, which to me is exactly the way these things should be done. Let me just interject: everything we're talking about here... boils down to a very simple proposition, which is how much welfare do you think the Steinbrenners should get? That's what it all comes down to.
(Emphasis added)

The first phase is, possibly, honest graft. The second political phase is in the seventies, when Mayor [John] Lindsay, bargaining against himself, decides that the socialist model of stadiums, which began in the 1950s in Milwaukee, the cities, counties, states, would actually construct the stadium, finance it, and then rent it to the private entertainment business. That model took over.

The city was going into bankruptcy, the South Bronx was going into a free fall, and Lindsay persisted, that this stadium's going to be done. It was supposed to--they pulled $25 million out of the air because that's what it cost to build Shea Stadium--the stadium wound up costing... $120-$140 million, at the very time the city was imploding.

Muzzio cited "reverberations and echoes here" with the current situation.

The era of partnership

Now, Sullivan said, things are much more complicated. He didn't even deal with the question of whether PILOTs (payments in lieu of taxes) to pay for construction represent a free sports facility--Brodsky says yes, the Yankees say no, and the same arguments apply to the AY arena--but instead pointed to the consequences of municipal ownership.

NS: You're now in this current phase, we're getting out of the socialist phase, which at least had simplicity going for it, and now we're into the era of the partnership and when I first heard about this deal, the Yankees said, 'We're going to pick up the lion's share, we'll need a bit of stuff, the infrastructure... $800 million we're coming up with.' Well, that's an improvement.

Well, trying to get through this agreement, and I am not the sharpest knife in the drawer... I'm reading it, reading it, and reading it. In some ways, there's a benefit to taking a step back instead of plunging into the morass of details, you take a step back: OK, here's this private entertainment business, they gotta come up with $800 million of what was supposed to be $1.2 billion but they don't own the stadium. the city owns the stadium. And one of the points I've been hammering about for years, it does the cities no good to own these things. Because if you don't have a ball club in the stadium, you own the world's largest flowerpot. There's nothing you can do with this so-called asset. It's an albatross around the community's neck. So you want to get rid of the stadium, you should auction them off. You should get out of this business entirely, especially in this city. New York has never played the stadium game well. And it certainly hasn't played it well in this instance.

Why the fig leaf of public ownership?

The reason for public ownership is to provide the opportunity to issue tax-exempt bonds. The same goes for the Atlantic Yards arena, which a federal appellate court described in a 2/1/08 decision as "a publicly owned (albeit generously leased) stadium." Yes, the developer would use PILOTs (payments in lieu of taxes) to pay for construction. But rent would be nominal.

And what happens when the arena is obsolete? Surely that would happen before the 30-year bonds were paid off; after all deMause has observed that team owners try to get money for renovations as soon as possible.

The owners of Yankee Stadium, home of the country's richest team, do not need naming rights to pay for construction. The case of the Atlantic Yards arena is even more stark, given that developer Forest City Ratner gets to sell naming rights for a publicly-owned arena.

A brief history of machinations

Muzzio asked Damiani for "a brief history of what can only be described as the machinations behind this." He cited GJNY's July 2007 report, Insider Baseball: How Current and Former Public Officials Pitched a Community Shutout for the New York Yankees, and February 2006 report, Loot, Loot, Loot for the Home Team.

BD: This was sort of a perfect storm. You had the former Deputy Mayor, under Giuliani, who happens to be Randy Levine, who worked for baseball, then worked for City Hall, and then miraculously went back to the Yankees.... So there was this revolving door that was greased so well for a project like this, because you had the insiders going back and forth. Then you have... unfortunately, the Bronx doesn't have the best representation, we're going to leave it at that. Their local elected officials, I don't know where they were, but somehow it managed that 22 acres of parkland, some of the heaviest used parks in that area of the Bronx... were taken, as a state of emergency, through the city and state legislature, in nine days at the end of the legislative session.

She continued, her tone verging on incredulousness.

If somebody could write a book on how to make an opaque democratic process and screw over poor people, this would've been it. Because it was done perfectly. It was really quite ingenious. All of this was done at the end of the legislative session. People didn't have an opportunity--they didn't even know it was happening. There was no public hearing--22 acres of parkland in New York City! As we all know, this is a city; we do things by feet, much less by acres.... It was given not over for a hospital or a school or a road, but for a baseball stadium to move across the street.
(Emphasis added)

What about the CBA?

Sullivan joined the bandwagon of people criticizing Community Benefits Agreement (CBAs) for New York projects.

NS: That all went through, as I understand it, through this Community Benefit Agreement, that this was what spread the wealth around. The Community Benefit Agreement, as I understand it, is simply the modern expression for honest graft. Y'know, you guys stay quiet, we'll give you X amount of jobs, you'll get these contracts... The women, the minorities, various categories... So we'll scatter this around. But it's the same fundamental exchange that the city went through back at the [of Tammany Hall's George Washington] Plunkitt.

Lost parkland

Muzzio also was incredulous.

DM: But the community lost all this parkland--the parkland they're replacing it with is on the top of garages, it's not contiguous, it's not available yet.

BD: This is the issue. When you see Community Benefits Agreement, I can do little air quotes, because nobody from the community was involved in this process and nobody signed it. What irks me beyond belief, besides that they call it a Community Benefit Agreement, there's a process in which you're taking money out of the city treasury, essentially, this pot of money, and the Yankees are going to say we're going to privately give tons of money to community groups in the Bronx.

So people that head up this Community Benefit fund are the ones that decide how services are provided in the Bronx? It doesn't make any sense. It's totally counterintuitive to the democratic process. So, the issue of the CBA really kind of makes the hair go back up on my neck, because it's really was what helped seal it through. Everyone was going: It's OK, there'll be a CBA.... which has not been replicated in New York City anywhere like how it's been done out west.

Damiani gave definitive testimony 5/26/05 before the City Council pointing out how the Atlantic Yards CBA--which, I'd point out, looks better than the Yankee Stadium CBA--differs significantly from more legitimate CBAs. That was never covered in the press.

Public costs

DM: Let's talk a little about the magnitude of money. The IBO [Independent Budget Office] in an August 7 letter, they argued you would lose tax revenue over 40 years of $28.3 million... and would save the Yankees $189.9 million.... Then you've got the overt cash subsidies where there's not only an opportunity cost, but they're handing them cash to build garages. Excuse me--explain this to me.

(Keep in mind that, not only would tax-exempt bonds save the Atlantic Yards developer a large sum--I estimated $165 million--there would be $305 million in direct subsidies.)

BD: I wish I could... The reality is... the reason why it's been so difficult to write and advocate around this project is because it is so complicated. They just throw figures and numbers out. The reality is this project is being built with public money, despite what the mayor says... because tax-free bonds, so they're getting cheap and free tax-free financing, it's mostly a federal subsidy... but also we've gotta pay for new parks. We have to pay to tear down Yankee Stadium... Right now, when we're talking about an incredible deficit on the city and state level, we have to keep a very close eye on making sure that the South Bronx doesn't get shorthanded on the way these parks are rebuilt.

Who sacrifices?

Muzzio quoted Lupica, who pointed out that the city has canceled a class of new police recruits. Sullivan was sarcastic.

NS: Everybody's got to sacrifice because we're in tough times, but I'll repeat that you're sacrificing in this instance so you can transfer money up to the Steinbrenner family... They're the primary beneficiaries.... When I read Randy Levine's testimony, before the House committee... He talked about how there had never been transparency like this... And I thought, he's kidding, right? Well, y'know, in a way he's not. This is a fleecing of the taxpayer that's hiding in plain sight. It's all right there. But it's so complex that you would have to dig into this.
(Emphasis added)

Which means there's a job for journalists.

It's for the kids, right?

Sullivan went on to criticize the popular rhetoric--exemplified in the Atlantic Yards context by New Jersey Nets CEO Brett Yormark and lobbyist Richard Lipsky--that a new sports facility is about the children.

NS: You can write this down now. When the stadium opens, there'll be kids from the local schools who'll come out, and Bud Selig will appear, having done his own stadium scam in Milwaukee, and he'll be talking, 'Oh isn't it wonderful, the children, it's all about them, blah blah blah.' They go back to these godforesaken science labs in the Bronx. Their grandparents are going to go to hospitals and need all kinds of help. The most basic services are ignored so we can transfer money up to this family that owns one of the most lucrative private entertainment businesses in the world.

"The people are supine!"

The host started thinking aloud.

DM: Isn't this a small pieceof what we're witnessing nationally... to bail out the corporations, banks and insurance agencies? I don't want to sound like a populist yet... or I do.

NS: It's part of the explanation for how, historically, sports owners in New York City get away with this. There really is no kind of populist tradition in New York City

DM: The people are supine! You've been yelling in the wilderness for how long?

BD: Over three years.

I don't know if the people are supine, given general resistance to subsidies for sports teams. It's more that the infrastructure for analysis and resistance--the press and civic groups--is pretty thin. These stories are tough to do. And perhaps some traditional civic watchdogs have learned to pick their fights. The resistance that's grown up in response to Atlantic Yards is notable.

NS: My biggest surprise writing the book... in the 70s, I'm looking for all kinds of backroom stuff. Every single newspaper in town... told the entire story from start to finish. We are going into bankruptcy. The South Bronx is going into a free fall. And Lindsay has frozen capital budgets, except for Yankee Stadium....

The explosion of articles in the Daily News in particular now may well have to do--maybe some editor said, 'Dial it back for a period of time.' But at the end of the day, it's easy to blame Randy Levine and blame all these other people, but it's the people of New York who have put up with this.


DM: And their elected representatives.

Remember what Brodsky said at the Kucinich hearing: "[T]here is nothing like professional sports to make public people nutty."

They paid in San Francisco

Sullivan pointed out that the New York model isn't the only one.

NS: San Francisco, which is always trotted out as the most harebrained liberal place in America, four times, twice in San Francisco and twice in San Jose, they voted down a new public stadium for the Giants. They forced the San Francisco Giants to build PacBell Park... with private money... The Giants were fine.

What next?

Muzzio asked what's next. Damiani said the Yankees would have to request more tax-exempt bonds at a hearing before the New York City Industrial Development Agency, and GJNY will announced that hearing. She also said that the city needs more teeth in its Conflicts of Interest Board.

Nobody mentioned Atlantic Yards.

Final words

Muzzio asked his guests for some final observations.

NS: A candidate for mayor should give a serious, thoughtful look at auctioning off the stadium. See if that makes sense, give it to a private party and get out of this business.

BD: Make the Yankees pay their taxes like everyone else.

They'd make the same arguments, I presume, regarding the Atlantic Yards arena.

And, then, Forest City Enterprises stock price rises

The price of Forest City Enterprises stock went up 15% yesterday, to $3.94 which was a very good deal for anyone who bought the stock on Thursday, when it it closed at $3.42.

But it's still off 92% from its one-year high of $50.27. A day earlier, it was off 93%.

Friday, November 21, 2008

Port Authority's Ward: AY represents simple--er, complex--density challenge

Christopher Ward, named in May to become Executive Director of the Port Authority of New York and New Jersey, made some revealing comments about Atlantic Yards, showing that, while the project invites snap analysis, it's just not that simple. He spoke on October 16 at the Vertical Density Symposium sponsored by the Skyscraper Museum in conjunction with its Vertical Cities: Hong Kong New York exhibition.

(I'll have more complete coverage of the symposium next week.)

Ward (video) discussed how history leapfrogged, with London influencing New York, which influenced Hong Kong, and how each city built major new development outside the central business district, for example Canary Wharf on landfill in London and the World Financial Center on landfill in Manhattan.

Bruce Ratner's challenge

Then he got to Atlantic Yards. “That is part of the challenge that we face in terms of where we will build," he said.
"Think of the challenge that Bruce Ratner’s facing, Atlantic Yards, where you’ve had exactly what you could describe as a transit-oriented development resisted heavily, simply because--simply for the complex reason that the community around there does not match the height, density, and character. So you have the brownstone versus the skyscraper, although Atlantic I think is the MTA’s second-largest transit hub within the city, which lends itself to the very model that Hong Kong represents.”
(Emphasis added)

It's the third-largest transit hub, I believe, but not necessarily the third-busiest. (Aren't Times Square, Grand Central, and Union Square busier?)

More importantly, let's not confuse the arena site (above, in image from AtlanticYards.com, the arena is placed directly over the transit hub, even though it would be slightly to the southeast), from the project site as a whole.

The official web site states, "The development will be adjacent to New York's third-largest subway hub," indicated by the red star in the image at right. The arena would be located between Fifth Avenue (running north from the end of "St Marks Pl") and Sixth Avenue.

That map, however, omits other subway stations. Actually, most of the Atlantic Yards footprint would be closer to smaller subway stations, including Bergen Street, served by the 2 and 3 trains, 7th Avenue, served by the B & Q trains, and Clinton/Washington Avenue, served by the C train.
(See map below, from onNYTurf; it should indicate that the Atlantic Avenue station is served by additional subway lines.)

Yes, the arena block would benefit from a new entrance to the subway hub, but anything east of 6th Avenue--and, actually, parts of the arena block--would be closer to the other stations.

That's why Atlantic Yards would be an extension of Brooklyn's downtown, not an insert into the downtown. And that's why Forest City Ratner has so assiduously avoided any sense of ground-level scale in its periodic promotional brochures, aka "liar fliers."

Teasing out the syntax

Ward's awkward syntax suggests that the issue is more complex than simple. Yes, many have resisted the project's scale and density, but supporters of the UNITY plan welcome significant density, just not at the level that Forest City Ratner proposes. Urban planner Ron Shiffman, a supporter of density, has argued that the proposed density "far exceeds the carrying capacity of the area’s physical, social, cultural, and educational infrastructure."

Several other issues generate resistance, including the undemocratic approval process, the level of public subsidy, and the use of eminent domain based on questionable findings of blight.

After all, Kent Barwick of the Municipal Art Society wouldn't have mused that Atlantic Yards might be "this generation's Penn Station" were it only an issue of esthetics.

Curious coincidence

Ward was lauded at the symposium, but not everyone's a fan; see Bronx Assemblyman Jeffrey Dinowitz's 5/27/08 commentary in the Daily News.

A curious coincidence (and I'm not making a comparison): Ward has a theology degree and former Atlantic Yards point man Jim Stuckey has a degree in sacred scripture.

As Forest City's stock continues to plunge, one project is scrapped

As the stock of Forest City Enterprises (FCE) continued its mind-boggling fall--down nearly 18% yesterday to $3.42, a new low, and 93% for the year--the casualties have begun.

Yesterday, the Columbus Dispatch reported that Bayly Pointe, a project planned for 1000 acres in central Ohio, had been scrapped. Why? A letter from the company cited the poor economy and infrastructure issues.

Lessons for AY?

This doesn't necessarily signal anything about the developer's plans for Atlantic Yards, because Bayly Pointe had not yet been approved.

The developer, and its local arm Forest City Ratner, surely aim to hold onto a project like Atlantic Yards that has increased in value by gaining governmental approvals. After all, they "control the pace."

But the tanking stock has to concentrate the mind. Either Forest City Enterprises is headed for oblivion or it's a very good buy.

Thursday, November 20, 2008

Who's in charge? Forest City says "we control the pace" of Atlantic Yards

The Empire State Development Corporation (ESDC) says the state is in charge of the Atlantic Yards timetable.

However, Forest City Enterprises (FCE), parent of Atlantic Yards developer Forest City Ratner, is telling the real estate industry that Atlantic Yards is among "Active Large Scale Projects Where We Control the Pace."

That message was within an FCE PowerPoint presentation for the 2008 NAREIT (National Association of Real Estate Investment Trusts) Annual Convention this week in San Diego. (The slides accompanied presentations made by FCE officials.)

Both the ESDC and FCE, of course, seem to be discounting the effect of pending litigation and the availability of credit and tax-exempt bonds on delay.

But the message from FCE, apparently, is that, given that the project has received government approvals, the developer is in the driver's seat.

Public/private partnership?

It seems to be a direct contradiction of an ESDC lawyer's assertions in court this June.

And it puts an interesting gloss on FCE's Chuck Ratner statement, after approval in 2006, that Atlantic Yards is a "public/private partnership."

After all, project opponents have long called AY a developer-driven project. Even a "mend-it-don't-end-it" critic like the Municipal Art Society's Kent Barwick said, after the project approval, “From the beginning, the project has been a public-private partnership in which the public has not been represented."

Dubious timetable

Remember, as I reported June 24, George Locker, attorney for 13 residents of two rental buiildings in the Atlantic Yards footprint, questioned the project timetable during a court hearing.

While the General Project Plan and other documents projected a ten-year project timeline, the State Funding Agreement offers no start date for Phase 1, and gives the developer 12 years from the delivery of property to complete that phase without penalty. As for Phase 2, which would contain 70% of the affordable housing and all the open space, there’s no timetable.

“The bulk of the Atlantic Yards project, as far as the operative contracts are concerned, does not exist,” Locker said. About eight months after the December 2006 approval, he contended, “the project essentially disappears.”

“Reasonable” efforts to proceed

In court, ESDC attorney Philip Karmel attempted to rebut those concerns. “The foundation stone is the funding agreement,” he said, adding that the claim that there is no deadline “is a complete and total mischaracterization.” Rather, the developer is required to use “commercially reasonable efforts” to move forward.

What does that mean?

“It means you have to try your hardest,” he said.

Translation needed

This week's news raises a question: In what language does "we control the pace" mean "try your hardest"?

After 27% fall in stock price, how long before some news out of Forest City Enterprises?

What should we make of the astounding continued fall in the stock price of Forest City Enterprises, parent company of developer Forest City Ratner?

The nearly 27% decline yesterday brought the stock to $4.16, nearly 92% below the stock's 52-week high. (Graphic via DDDB.) The stock has fallen nearly 79% since October 10, when it was $19.79.

The entire market is in trouble, as the Dow hit a five-year low. The real estate sector is among the worst hit, but Forest City Enterprises seems to be having it even worse.

Institutional investors must be pulling out. Credit is tough to find. Forest City is laying off staffers.

By the same token, Forest City is moving ahead with its various projects.

The value of AY

How does the lack of investor confidence affect Atlantic Yards? Would the developer pull out? Well, the project passed governmental review, which is quite valuable--after all, the developer now says "we control the pace."

But the carrying costs of the project and the continued losses by the Nets basketball team have to hurt. Have the phone lines to Dubai, Russia, and other potential sources of rescue capital opened back up?

Times columnist: hard data needed to support benefits of projects

David Leonhardt's Economic Scene column in yesterday's New York Times, headlined Piling Up Monuments of Waste, suggested that funding for the nation’s infrastructure was less of a problem than the inability to set credible priorities.

Scattershot system

Leonhardt writes:
It’s hard to exaggerate how scattershot the current system is. Government agencies usually don’t even have to do a rigorous analysis of a project or how it would affect traffic and the environment, relative to its cost and to the alternatives — before deciding whether to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited a project’s potential benefits.

There are monuments to the resulting waste all over the country: the little-traveled Bud Shuster Highway in western Pennsylvania; new highways in suburban St. Louis and suburban Maryland that won’t alleviate traffic; all the fancy government-subsidized sports stadiums that have replaced perfectly good existing stadiums. These are the Bridges to (Almost) Nowhere that actually got built.


Well, the Atlantic Yards arena wouldn't replace a "perfectly good arena," given that the aging Izod Center is in another state and, without public transportation, is not the easiest place to visit. But federal taxpayers would subsidize new construction, even while a new arena in Newark could use a basketball team.

And, while the environmental review process in New York was extensive, was it truly rigorous? After all, the Empire State Development Corporation counted benefits but not costs. And the press punted and never analyzed the study that Forest City Ratner paid for.

Hard data needed

Leonhardt observes:
But now wouldn’t be a bad time to send a message. The current system is so inefficient that even a minimal amount of change would represent progress. If you want your project moved to the front of the line, you should have to come to Washington bearing hard data — not flimsy boosterism — about its economic and environmental benefits.

While Atlantic Yards is (mostly) not an infrastructure project, the same argument goes applies. It's not enough for project proponents to say that it's needed ever more in hard times.

The Voice's Barrett on Bloomberg's transformation (with a blind spot)

Wayne Barrett's Village Voice cover story, The Transformation of Mike Bloomberg, demolishes the claims that Bloomberg's decision to seek a third term was driven by a duty to confront the financial crisis and dissects the editorial arguments made in favor of Bloomberg's effort to extend term limits.

Best and worst mayor?

[Correction: an earlier version referred to Tom Robbins, who's also done good work on Bloomberg.]

Barrett's article begins:
Mike Bloomberg is the best mayor—in fact, the best state or city chief executive—I've covered in 31 years at the Voice. He's also the worst.

In his first term, he was able to close a gaping budget chasm without crippling city services by imposing the largest and bravest property-tax hike in history—and it sent his approval ratings plunging. When the city boomed again, this Nixon-to-China boldness by a businessman/mayor had forever refuted the knee-jerk right-wing orthodoxy that higher taxes invariably kill growth. His smoking ban proved that a mayor can literally change the air we breathe and was part of a lifesaving public-health commitment that pumped resources into city hospitals that his predecessor had stripped of city funding. While mayors before him had hidden behind the independent Board of Education to diffuse responsibility for the seemingly intractable dysfunction of the schools, Mike Bloomberg put himself in charge and staked his mayoralty on the slow but steady improvement that has occurred with him at the helm. The continuing decline in the murder rate under Bloomberg was a rebuke of the Giuliani years, when New Yorkers were led to believe that a polarized city was the price we had to pay to reduce crime.

As thankful as the city is for all Mayor Mike accomplished after 9/11, that was nearly a full term ago. Now, he's decided he wants a third term, even though he still owes us a second.


Bloomberg & AY

I think Barrett is a bit too generous about Bloomberg's first term. After all, there were already signs of the mayor's edifice complex and his unquestioning willingness to back a developer's plan.

Remember, this is the mayor who said, in a 1/23/04 radio interview six weeks after Atlantic Yards was announced:
Then, we’ve got to find a ways--Bruce Ratner’s got to find a ways--to build this complex in Brooklyn. Like everything else, it’s controversial, I’m sympathetic to people who don’t like something like this moving in to their neighborhood. People whose apartments are going to be replaced, or houses taken away, generally speaking, this guy Ratner is a very responsible developer. If you go back and look at his track record when he developed MetroTech, which made an enormous difference in the city, he treated people very well.

As I pointed out, Bloomberg essentially said that the city and the developer were on the same team, nearly a year and a half before the Metropolitan Transportation Authority put the Vanderbilt Yard--some 40% of the proposed site--out for bid.

Partnership for NYC

Barrett explains how politics works in the city, involving real estate developers and City Council Speaker Christine Quinn:
Kathy Wylde, the president of the Partnership, says she learned "in July" that the mayor was "seriously thinking about it," after making inquiries for at least a year. Wylde's board of directors includes virtually everyone whose name has appeared in stories detailing the early lobbying for another term—Speyer, Rattner, Kravis, Rubenstein, Parsons, Murdoch, and even Lauder's nephew, William, who actually runs the cosmetics company (Speyer went to William Lauder's father, Leonard, to put pressure on brother Ron). Bloomberg was once on the Partnership board himself, and its 20-member executive committee voted unanimously to support the extension legislation.

Wylde also lobbied Quinn, who's been a friend since the two worked together in housing organizations more than a decade ago. Wylde introduced Quinn to the Partnership honchos at a luncheon at the Speyer-owned Rockefeller Center shortly after she became speaker in 2006. "The universal opinion of the CEO is that she has a bright political future," Wylde declared from the onset. Wylde got 30 bigwigs to sign a letter backing the bill, 25 of whom are on her board, and an ad featuring it soon appeared in the Times. The fact is that under Wylde and Speyer's leadership, the Partnership is the closest thing we now have in New York to a political club with the clout to make a mayor.


Here's the Partnership's testimony about Atlantic Yards, at the 5/4/04 City Council hearing and at the 8/23/06 hearing on the Draft Enviornmental Impact Statement.

"I am personally confident that Bruce will continue to work in good faith to resolve the concerns of immediate neighbors," Wylde testified at the latter hearing.

Does that include trying to get out of paying for demolished trees?

How far Brooklyn has come

Wylde reflected:
I cut my teeth in community organizing by leading opposition to the relocation of the old Fort Green Meat Market from Atlantic Avenue to the Sunset Park waterfront in 1971. Our community lost that battle, and so did the City, which has lost money on the failed meat market almost since the day it opened. I mention that community struggle as a reminder of the many years—not very long ago—when the only development happening in Brooklyn was the construction of public projects that were unwanted in other places. Atlantic Yards is a symbol of how far Brooklyn has come since those days.

Isn't Atlantic Yards also a symbol of public officials not trying to figure out what valuable public land might be worth?