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Showing posts from November, 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 are…

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…

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 ca…

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…

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…

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, an…

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 acc…

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--wo…

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 m…

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…

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 hav…

"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.…

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 …

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, w…

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.

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 pu…

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 lo…

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 …

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 smokin…