Forest City Ratner's lean new web site emphasizes completion of projects

Maybe the truncated new web site for Forest City Ratner, currently just two pages, embodies current lean times. Or maybe the site, which offers less information than its previous incarnation, is just a work in progress, with links coming to projects like Atlantic Yards and Ridge Hill.

(Fun fact: Ridge Hill offers December 2008 construction updates; Atlantic Yards does not.)

Either way, it's notable that FCR now prominently cites its history as "a firm that consistently takes on and completes large, complex mixed-use projects"--a statement that reinforces the company's intention to ultimately forge ahead with the Atlantic Yards project.

(Click on all graphics to enlarge.)

The new web site

The home page offers an aerial photo of MetroTech in Downtown Brooklyn:
Forest City Ratner Companies, a wholly owned subsidiary of Forest City Enterprises, has developed, and currently owns and operates, 11 million square feet of commercial property in the New York metropolitan area, including office, retail and residential. Forest City Enterprises, Inc., based in Cleveland, is one of the largest publicly traded real estate firms in the U.S.

The About Us page is free of graphics:
One of the foremost urban real estate developers in the New York metropolitan area, Forest City Ratner Companies (FCRC) maintains a strong commitment to developments that enhance local communities and encourage economic development. Based in Brooklyn, FCRC is a full-service, vertically integrated real estate company with expertise in all facets of development: finance, land use, design, engineering, construction, leasing, government approvals and building operations. It is well known as a firm that consistently takes on and completes large, complex mixed-use projects.
(Emphasis added)


The old web site (via the Internet Archive)

The home page

The map of projects
The mission statement:
Forest City Ratner is an owner and developer of real estate, committed to building superior, long-term value for its stakeholders. We accomplish this through the development and operation of commercial, retail, hotel and urban entertainment projects. We operate by developing meaningful relationships and leveraging our entrepreneurial capabilities with creative talent in a fully integrated organization. Forest City Ratner is both firmly grounded in the wisdom of experience and inspired by the persistence of technological innovation.

The company overview previously touted a steady track record: Since the late 1980’s, FCRC has been the only developer to create major public projects for New York City at an average rate of nearly one million square feet of new construction each year.

The company leadership

A compilation of news items

A compilation of press releases

Bruce Ratner's bio, currently missing from Forest City Ratner's web site

Just in case Bruce Ratner's bio--which was apparently written in 2004--doesn't reappear on the revamped Forest City Ratner web site, here's a look at the old one, courtesy of the Internet Archive. The screen shot captures only part of the text, which is reproduced below.

BRUCE C. RATNER Chairman and Chief Executive Officer

Bruce C. Ratner is Chairman and Chief Executive Officer of Forest City Ratner Companies (FCRC). Under Mr. Ratner’s leadership, FCRC has become one of the foremost urban real estate developers in the New York metropolitan area.

After graduating cum laude from Harvard College in 1967 and receiving a law degree from Columbia University School of Law in 1970, Mr. Ratner joined the administration of Mayor John Lindsay as the director of a Model Cities program and later as the head of the Consumer Protection Division of the Department of Consumer Affairs. Following a four-year stint as a professor at New York University Law School, Mr. Ratner returned to government as the Commissioner of Consumer Affairs under Mayor Edward Koch, where he was responsible for designing major initiatives in consumer-fraud protection that became models for subsequent national legislation.

While at Consumer Affairs, Mr. Ratner also became interested in how major national retail outlets had long underserved inner-city residents and how the city itself had failed to utilize major business and transit hubs to offset corporate flight to New Jersey and the surrounding suburbs. These interests, along with a broader commitment to projects that enhance local communities, remain a driving force within FCRC.

One Pierrepont Plaza, which opened in 1988, was the first new office construction in downtown Brooklyn in a quarter of a century. The project, which was the first undertaken by FCRC, helped define what has since become New York City’s third central business district and contributed to what today is considered the “Brooklyn renaissance.” Since then, Mr. Ratner and FCRC have steadily developed MetroTech Center, a $1 billion, 16-acre campus with 14 buildings in the heart of downtown Brooklyn, which now hosts 20,000 jobs in its 6.4 million square feet of commercial, academic and high-tech office space.

Atlantic Center, a 400,000-square-foot shopping mall that opened in Brooklyn in 1996, adjacent to the Atlantic Terminal transportation hub, grew out of Mr. Ratner’s desire to bring major national retail outlets to a historically underserved part of the city. In 2005 Mr. Ratner expanded on this vision and finished the Atlantic Terminal Office and Retail Complex, a 10-story, 350,000-square-foot office building constructed above a four-story, 470,000-square-foot retail shopping center, located next door to Atlantic Center. The Bank of New York serves as the anchor tenant of the Atlantic Terminal office building, occupying 320,000 square feet and providing offices for 1,500 employees. The retail center’s anchor tenant, Target, occupies 194,000 square feet on three floors.

On a site adjacent to Atlantic Center, Mr. Ratner is preparing to construct Atlantic Yards, a 7.7 million-square-foot mixed-use development designed by internationally acclaimed architect Frank Gehry. Encompassing 8 acres of public open space, more than 2 million square feet of commercial space and more than double that amount of residential space—at a variety of price points, including affordable housing—Atlantic Yards will be anchored by the 800,000-square-foot, 18,000-seat Barclays Center arena, designed to be the home of the Nets professional basketball team, recently purchased by a group of investors led by Mr. Ratner.

Beyond Brooklyn, which is also home to Forest City Ratner Companies, FCRC continues to create major retail projects throughout the city and the metropolitan area. In Manhattan, FCRC developed the headquarters for the New York Mercantile Exchange in lower Manhattan, near the World Financial Center. FCRC played a key part in the rebirth of Times Square with the 42nd Street Entertainment and Retail Complex, a 335,000-square-foot development that features a 25-screen AMC Cineplex and a Madame Tussaud’s Wax Museum, topped with a 25-story, 455-room Hilton Hotel with sky-lobby restaurant. Forest City joined forces with The New York Times Company to build the newspaper’s new headquarters near Times Square, a 1.5 million-square-foot structure that includes approximately 700,000 rentable square feet of Class A office space. Designed by renowned architect Renzo Piano, the 52-story building is the first high-rise in the U.S. to feature an all-glass curtain wall with a sunscreen made of ceramic rods. In Battery Park City, FCRC developed a 617,000-square-foot mixed-use complex that includes a 14-story Embassy Suites Hotel, retail stores and a 4,000-seat, 16-screen United Artists Theater. Additional FCRC projects include The Shops at Bruckner Boulevard in the East Bronx; the Shops at Gun Hill Road in the Pelham Gardens/Baychester section of the Bronx; the Shops at Northern Boulevard in Woodside, Queens; Columbia Park in North Bergen, New Jersey; The Heights on Court Street in Brooklyn, and The Stores at Richmond Avenue on Staten Island.

Other FCRC projects under development include lower Manhattan’s 76-story Beekman Tower, designed by world-famous architect Frank Gehry with a glass-and-titanium curtain wall. Most of the building will house luxury residential units. In East Harlem, FCRC has teamed up with Blumenfeld Development Group to transform the former Washburn Wire Factory into East River Plaza, a 485,000-square-foot shopping complex just off the FDR Drive. And in Westchester County, Mr. Ratner is developing Ridge Hill, a mixed-use project that will include some 1.3 million square feet of retail space, 160,000 square feet of office and research facilities, and up to 1,000 mixed-income apartments, all arranged around a landscaped town square.

As a company, FCRC strives to be a responsible corporate neighbor that contributes to the betterment of the community. FCRC has maintained a goal of 14 percent minority-owned business and 9 percent women-owned business participation on all of its construction projects without government-mandated goals, and usually exceeds those percentages. Through the Community Labor Exchange, an aggressive community involvement program, all contractors on FCRC projects make one of every four field construction job slots available for a community hire.

On a personal level, Mr. Ratner is also a firm believer in giving back to the community. Mr. Ratner engages in philanthropic endeavors that promote social justice, a spirit of community and an improved quality of life. As such, he provides time, energy and financial support to educational and cultural institutions.

A supporter of the arts, Mr. Ratner works extensively with the world-renowned Brooklyn Academy of Music (BAM). He has been a BAM trustee since 1989 and was the chairman of its board from 1992 until 2001. As a result of his involvement with BAM, Mr. Ratner also created the MetroTech Downtown Fund, which encourages contributions to the arts from companies moving into Brooklyn.

In 1994, Mr. Ratner was the recipient of the New York State Governor’s Arts Award. Two years later the Metropolitan Museum of Art elected him as a trustee.

Mr. Ratner is a firm believer in the value of education. He has served as vice chairman of the board of Long Island University, and he sits on the board of The Futures in Education Foundation (a foundation for the preservation of Catholic education). Mr. Ratner and Forest City Ratner also support a number of educational programs throughout the city, including the Promise Scholarship Fund of Polytechnic University and the Brooklyn Bureau of Community Service. He is an overseer of the Weill Cornell Medical College and is on the board of the Memorial Sloan Kettering Cancer Center. In 1996, Mr. Ratner received an honorary Doctorate of Law from Pratt Institute.

Mr. Ratner is a strong advocate for New York City’s park system, believing that our parks play a crucial role in economic development and in enhancing the urban environment. He is currently a board member of the City Parks Foundation. He also serves on the boards of the Brooklyn Chamber of Commerce, the International Rescue Committee and the Museum of Jewish Heritage/A Living Memorial to the Holocaust.

As a member of the board of directors of the New York City Partnership, Mr. Ratner was heavily involved in framing the debate over economic development issues in the New York region. A report he wrote, “Marketing New York City in the Global Economy,” triggered the partnership’s initiative in promoting international investment. Mr. Ratner was also a panelist on urban issues at President Clinton’s Economic Summit in December 1992.

Born on January 23, 1945, Mr. Ratner has two daughters: Rebecca graduated from Brown University in 1995 and Elizabeth from Harvard College in 1997.

At home, Nets attendance finally increases

The attendance at the last three New Jersey Nets home games has picked up considerably, with an announced crowd of 16,203 (81.1% of 19,968) on December 22, 16,852 (84.4%) last Friday, and a crowd of 18,786 (94.1%) last night.

Even if that's just tickets distributed rather than gate count, it's a return to some higher numbers posted earlier in the season and an increase from a previous average that nudged above 15,000.

Photos from last night indicate few empty seats, though those from Friday indicate a good number of cheap seats empty. Note that the announced attendance was 16,722 when the Nets hosted the Knicks December 10; I attended and estimated a 25% fudge factor.

Last year, attendance picked up around the holiday season, as well. But if the Nets sustain some increased attendance, despite the team's surprisingly bad home record (contrasted with its strength on the road), one factor might be the team's effort to distribute free or low-cost tickets.

"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.

Following up on Morningstar's claim that Forest City Enterprises stock would be worthless

When Morningstar recently said that Forest City Enterprises stock was likely worthless, it took several days--even after it was picked up by the Washington Post--for FCE to respond forcefully, plausibly stressing that the consensus of other financial analysts was that the stock should be a buy.

Since then, there's been some interesting criticism from an anonymous financial analyst commenting on Cleveland journalist Jill Miller Zimon's blog Writes Like She Talks.

Among the comments about analyst Matthew Coffina, who graduated Oberlin College in 2007 with an award in economics and is a Level 3 Chartered Financial Analyst candidate:
The kid, and I emphasize kid who wrote this article has very little experience as a securities analyst... and operates as a generalist i.e., he has no particular expertiese in the real estate industry....

FCE/A has said that Morningstar never contacted them. No analyst puts out work w/out talking to company, because quality of management is always a key factor... The point is i’ve been a securities analyst for 15 years and studied FCE/A and it’s tough for me to get my head around the b/sheet. I think the level of analysis done was superficial, and there’s no way that guy has the industry experties to make that opinion. Now, the outcome may make him look brilliant (we are in severe recession) but I mean seriously there’s no analysis there.

[quoting] "during the next three years, Forest City could face severe financial distress, since it may need to refinance debt at ever-increasing interest rates while operating cash flow declines.”

How is this different than any other REIT? Did the analyst notice that the rates FCE/A has been getting on refinancing have actually gone DOWN.

As I suggested, maybe the Morningstar analysts and the others cited by Forest City can (intellectually) duke it out.

Hamhanded response?

Miller Zimon scoffed at the commenter's suggestion that the analyst's dis went under Forest City's radar:
I completely disagree that FCE didn’t know about Morningstar. Please. If they aren’t following what entities like that write or say about them, even at the most basic level through clipping or some other mechanism, then maybe they deserve whatever happens as a result of the publication of such information. This is the news age where people can find anything as much as say anything.

Morningstar's report was actually out for a couple of weeks before it was picked up by the Washington Post.

Does marketing trump basketball when it comes to the Nets starting Yi?

Some New Jersey Nets fans have become harsh critics of Chinese forward Yi Jianlian, whose performance has been inconsistent; a few even suggest marketing considerations trump basketball judgments.

Commented a fan self-described as JohnY (who's Chinese-American himself) on NetsDaily:
Yes, we are being forced to start Yi, by Ratner & co who thinks Yi is marketing the Nets to 200 million fans. right…

Guess which NYC developer bought the proverbial Brooklyn bridge from the Chinese?

Another commenter observed:
Yi hasn’t played to expectations nor will he. He is just there for marketing values get rid of him he’s not helping us; he is holding the team back.

Mixed incentives

Those assertions are tough to prove, of course, and Nets' basketball brass may be right in thinking Yi will be a success, even though, as fans point out, he doesn't get much fourth-quarter playing time these days.

Upon trading the established Richard Jefferson for Yi (and Bobby Simmons and cap space), principal owner Bruce Ratner said in July, that “It’s 100 percent about basketball” and “The fact that along with a great player like Yi comes marketing opportunities is a wonderful thing, but it’s secondary to basketball. "

Even though Yi has not yet been "great," there's another incentive to make sure he gets playing time. CEO Brett Yormark signed sponsorship deals in September with four Chinese companies.

The Nets just announced a marketing deal with PEAK, a Chinese sportswear company, and are broadcasting 31 games in China. (I'm not sure if PEAK represents a fifth deal or the announcement of one of the deals signed in September.)

All-Star Game voting

Fan sentiment from China has even distorted the balloting for the All-Star Game (ASG), with Yi occupying third place among Eastern Conference forward in overall fan voting, ahead of stars like Chris Bosh and Paul Pierce, among others.

One commenter on a Nets message board has a sig file (right) that suggests an effort to vote for Yi over Boston Celtics superstar Kevin Garnett, who's on track to be a starter, would make the ASG "more of a joke."

He explained:
I'm a Yi fan, but obviously he has a lot of flaws in his game. Can't take Yi too serious or it'll piss me off.

The fan vote determines only the starters; the coaches choose the rest of the team. My bet is that Yi won't be chosen, though at least one of the more deserving Nets guards, Devin Harris and Vince Carter, will make the team.

The Yi deal

In a 6/29/08 NetsDaily piece, NetIncome (aka Bobbo) sketched the team's grand ambitions:
Richard Jefferson wasn’t traded for a player or two. He was traded for a country… China.

It’s not that the two ideas are mutually exclusive, but Yi, if handled right, presents the Nets with a golden opportunity....

New York has the biggest Chinese population in the United States—and Chinatown is one subway stop away from the site of the Barclays Center. The United States in turn has the largest overseas Chinese population in the world....

There is money to be made here… and not just in ticket sales, but in corporate suite sales, sponsorships and naming rights, lots of it. And not just by the franchise, but by the players. Nets’ games will now be featured on the fifty-plus Chinese TV stations that carry NBA games. There are 300 million Chinese who play basketball and one billion viewers watch NBA games on Chinese television. Some months, the NBA brings in more revenue from China than it does from North America. The numbers are staggering.

Of course he acknowledged the challenge:
Of course, Yi has to prove he can be a major contributor to the Nets. If he becomes a mediocre, deep shooting softie, not much of this will matter. He MUST become a star, he MUST become the next Dirk Nowitzki. The Nets ownership will demand it. The Chinese Basketball Association will too. Good Luck with that, Kiki.

Indeed, the jury's still out.

Funny story: Yormark, in Star-Ledger profile, misremembers (or lies about) our encounter

A profile in the Newark Star-Ledger of New Jersey Nets CEO Brett Yormark, headlined Nets executive promotes New Jersey while selling Brooklyn, begins with the subject asserting he’s never read about P.T. Barnum, “the first great salesman/cajoler/marketer in American history.” Maybe that's a subtle sign that we should take what he says with a grain of salt.

The article, while offering much praise for Yormark’s hard work, salesmanship, and innovations, also addresses the challenges presented in the headline.

It also contains some very contradictory quotes from Yormark and me about who said what during a tour of Brooklyn I gave him before he was hired by the Nets.

From the article, it may seem impossible to arbitrate who’s right, but, as I contend (with backup evidence) below, in some places Yormark is either misremembering or simply not telling the truth.

(He hasn't been so good at predicting when the arena would open, has he?)

Watchdogging AY

I’ll reprint the section about hurdles facing the Brooklyn project and interpolate clarification and commentary. The article states:
Meanwhile, you can define Barclays only one way: inert. Some people -- many of the living around Flatbush and Atlantic Avenues -- like it that way. Organizations have been formed to fight it. Publications such as New York Magazine are increasingly skeptical. And then there are bloggers, such as watchdog journalist Norman Oder.

The censures and quibbles Oder has with the Atlantic Yards plan can fill a book, or at least his website (atlanticyardsreport.com). Generally, and methodically, he has taken every word that Yormark and Ratner have uttered in the past four years and scraped it with a rusty razor.

Some of his objections are big things, such as their credibility about groundbreaking dates and the dubious impact on traffic, the school system and the environment. And some are little things, such as the price of a hot dog at Izod Center and the claim that Yormark starts every work day by rising at 4 a.m.

(For the record, Yormark suggested in a recent Fox Business News interview that a hot dog can be purchased for $1; Oder went to the arena last week and couldn't find one for less than $4.25. And for the record, Nets employees who work at the team's practice facility say it is not uncommon to see Yormark in the weight room by 5 a.m.)

For the record, when asked how attendance could be made more affordable, Yormark replied by speaking about the NBA in general: "There are opportunities to go to the concession stand and buy a hot dog for a dollar now."

I don’t doubt Yormark often gets up early. But I pointed out that Yormark refused to confirm, when asked, that he rises every day at 3:30 a.m.

(Indeed, if he's working 18 hours a day, as suggested in the article, he can't get up at 3:30 a.m. after a Nets home game that ends after 9:30 p.m. This really isn't a big deal--he obviously works hard--but it does indicate the potential for mythmaking.)

Credibility

The article continues:
Regardless, "Atlantic Yards is, quite simply, the result of a bad process. Add to that a pervasive air of manipulation and dishonesty," Oder said in an interview conducted by e-mail. "Yormark is obviously an effective salesman. Unfortunately, he's too often not a credible one."

If the economy is the sisyphusian boulder threatening to crush Yormark's dream, Oder is the pebble in his shoe.

Of course, the blogger makes some valid points, at least with regard to obfuscation. For example, the official website for Atlantic Yards claims the project would create 15,000 construction jobs, but that is measured in "job years" -- meaning, 1,500 jobs a year for a decade, which is how long it will take to put up its 16 buildings.

Remarkably, Oder concedes that the political might is too strong to stop the project from going forward, but he'll write every day until the first shovel pierces the ground.

I didn’t make that concession in the email interview. I have said that, despite the troubles facing the project, I think it’s more likely than not that the developer and state will win the lawsuits and move forward. That chance of that happening has declined, but it’s still over 50%.

"Eats me up every day"?

The article continues:
"He's a nuisance," Yormark said. "Eats me up every day on his blog. And he's the guy responsible for me having this job -- totally sold me on Brooklyn, totally sold me on the Ratner project."

Every day?

Recently, I’ve mentioned Yormark quite often--20 posts since November 6, which is less than once every two days--because I’ve been writing about the Nets a lot. But I mentioned him in only 16 posts in the rest of 2008. That averages out to three times a month.

In 2007, I mentioned him in eight posts. In 2006, I mentioned him in three posts. In 2005, when I was blogging for just four months, I mentioned him once.

Funny story

The article continues:
Oh, funny story there.

In September 2004, Yormark -- like most guys from Jersey -- had enough knowledge of Brooklyn to fill a thimble. But to impress Ratner, he hired a tour guide for a fairly large sum, and became "Brooklynized" (his word) in just one day. The owner was blown away with Yormark's expertise of the borough and hired him after two interviews.

That tour guide's name? Norman Oder.

Oh, come now.

I have a tour guide business, and I was contacted by Yormark’s assistant to help familiarize Yormark with Brooklyn. It was before Yormark was hired in January 2005--the fall of 2004, I believe--well before I became immersed in Atlantic Yards. He didn't need to be sold on Atlantic Yards; rather, he needed to be able to show his potential employer he'd made an effort to learn something about the borough.

A fairly large sum? That’s the reporter’s efforts to square diametrically opposed recollections. He told me Yormark recalled paying me “around $1,000” for “9-10 hours.” I said I charged $100 (or maybe $120) for a tour that lasted less than two hours. (I do remember that he tipped me $50.)

I don’t charge $100 an hour for tours and, as my clients can attest, I offer step-down discounts after two and four hours. (Here are cost guidelines from the Guides Association of NYC, of which I’m a member.) Most of my tours last 2.5-3 hours. I’ve never done a tour longer than five hours or so--too tiring for me and for the client.

We spent less than two hours. Yormark was in such a hurry that we never got out of his SUV. We spent a good segment parked, talking. We never got out of the neighborhoods close to the AY footprint. We never set foot in Prospect Park, despite my urging that he get a sense of the landscape. Never got food. Never took a bathroom break.

If we’d had nine or ten hours, we could’ve gone to South Jersey and back. Could’ve walked Flatbush Avenue stem to stern, with time to spare. It just didn’t happen like he said.

As for becoming “Brooklynized,” as I said, Yormark wanted to be able to show his potential boss that he’d made an effort to understand the borough.

He did make an effort, but not a huge one. He kept trying to truncate the tour due to time pressure; he kept saying he was the boss as the client--hence my comment below calling him a "personable, master-of-the-universe" figure--while I was trying to convince him to gain more value from my expertise.

Great enthusiasm

The article continues:
Yormark insists that his guide-turned-nemesis spoke with "great enthusiasm" about the project during that fateful tour, but Oder's recollection is different.

"I did not speak effusively. I said there were very mixed opinions in Brooklyn," Oder said. "And I was barely familiar with Develop Don't Destroy Brooklyn, the main opposition group."

All Yormark knows is this: "He's the best tour guide money can buy," he said incredulously. "He helped me get my job, now he spends his entire life discrediting the project."

Well, I did wish Yormark well, as was appropriate for a client. While I appreciate his hyperbolic praise of my tour guiding abilities, I’ll happily concede that I look up to Francis Morrone.

Some back story

The article concludes:
Oder doesn't find this particularly ironic -- indeed, he has yet to write about the day he spent walking the streets of Flatbush with this "personable, master-of-the-universe" figure he now attacks daily.

Yormark has no time for irony, either, so he more or less considers their brief time together a Faustian bargain, or just the price of doing business. Two things P.T. Barnum would undoubtedly appreciate.

Well, we never walked anywhere. And it was just a couple of hours, not a day.

I hadn’t written about it because I was not acting as a journalist, so I didn’t feel it was my place to do so. But Yormark brought it up, so let me flesh out the story.

When we drove around the AY footprint and environs, I pointed out occasional signs opposing the project. Yormark, not inaccurately, observed that they were relatively few. I cautioned that the level of concern was likely greater than indicated.

Atlantic Yards, he told me more than once with great conviction, was going to happen; Bruce Ratner had assured him.

I didn’t know at that point what public process was to ensue--an environmental review by the Empire State Development Corporation, which began more than a year later--but that level of certainty, the kind of certainty that Yormark regularly peddles, stuck in my craw.

It still does.

Arena attendance

The article, early on, sketches Yormark's challenges with the Izod Center:
But you can sell only so much in an antiquated arena, one typically filled at only 80 percent capacity, with only 28 suites. That leaves one option: Yormark is moving the game.

I think "filled at only 80 percent capacity" is a stretch. The Nets are averaging 15,290, or 76.6%, in an arena that seats 19,968.

Plus, as I’ve contended, the Nets (and other NBA teams) report tickets distributed, not gate count, which means that the percentage “filled” is lower than reported attendance.

With $5B in NYC development on hold or dead, could union accord with contractors jump-start projects?

Today the New York Times tells us that, according to the Urban Land Institute (ULI), nearly $5 billion in development projects in New York City have been delayed or canceled--meaning a virtually unchanged landscape for two years.

“There’s no way to finance a project,” the ULI's Stephen R. Blank told the newspaper. (Forest City Enterprises, btw, is active in the ULI.)

That suggests that Forest City Ratner's plan to get an arena started in 2009--or even 2010--is a long shot.

Union/contractor accord?

On Tuesday, Crain's New York Business broke the news, in an article headlined Construction unions may finance building projects:
Ed Malloy, President of the Building and Construction Trades Council, says the unions may put $100 million of pension fund money into a fund that would fund various construction projects. However, he said the unions would seek matching funds from the city and the state to create a fund of $300 million. A proposal will be sent to government officials next year.

“As the days go on you hear about more projects with financial problems and we really want to do something to help,” said Mr. Malloy.

The unions are already negotiating with contractors in an effort to lower labor costs by up to 25%. Louis Coletti, chief executive of the Building Trades Employers’ Association, which represents contractors, estimated that labor accounts for 50% to 60% of a construction job’s cost. Union workers earn an average of $60 to $70 hour.


If the cost of construction goes down--through productivity increases and wage frezes, rather than lowered wages--banks might be more eager to lend.

On Brian Lehrer

Interviewed on WNYC's Brian Lehrer Show on Wednesday, Malloy and Coletti were optimistic when asked to predict the situation with construction jobs in a year.

Coletti said, "There's two scenarios. If we're unable to reach an agreement, I think this could be the deepest recession bordering on depression that we've ever seen in this industry. With an agreement, I think that we can minimize the unemployment. We have to keep in mind, what Ed said before, is we're coming off the best five years that this industry has ever seen."

Malloy was unequivocal: "Recovery under way."

Neither discussed Atlantic Yards specifically; it's likely that even a $300 million fund would be parceled out to many projects. But the labor concessions would benefit many more projects, including AY, lowering the overall cost and speeding the construction timetable.

In other words, if the money were available--and that's hardly a given--maybe the arena could be built in less than 32 months.

Ex-commercial banker: Don't bail out America's "credit-drunk" commercial landlords and real-estate bankers

An expert on commercial property lending, in a letter published in yesterday's Wall Street Journal, suggests that commercial-property developers should be ashamed at asking for a federal bailout. Mike Offitt wrote, in part:
Unlike residential borrowers, most commercial landlords don't live in their buildings, and unless they are pleading stupidity, they understood perfectly, as did the lenders themselves, that the loans they were seeking from overeager conduit and securitization lenders were too generous. They decided to roll the dice and got rich with these cheap and easy funds. Now they are asking their formerly rich Uncle Sam to bail them out as their loans come due.

As the founder and former head of Deutsche Bank's commercial lending unit, and former senior trader of CMBS and commercial loans for Goldman, I am well aware of the perils of letting commercial-property borrowers fail: Either their lenders will have to extend them new terms, or they will face bankruptcies and tax recapture issues. Their bankers or securities holders will have to take losses and new investors will get to buy their holdings at deep discounts. Any other solution would be a travesty. The only thing more startling about the suggestion that the Treasury bail out the likes of William Rudin, Stephen Ross and Steven Roth is that they had the nerve to raise it. Washington should focus on making REMIC and securitization laws more flexible to allow extensions of loans or collateral substitution, not giving America's credit-drunk landlords and real-estate bankers a mulligan on the taxpayer dime.

More on Offit.

Did Gehry lay off staff working on AY or just move (most of) them?

Did architect Frank Gehry lay off two dozen staffers working on Atlantic Yards, as reported by the Wall Street Journal and the Daily News?

A commenter on the Brooklyn Paper's web site had a slightly different take:
El Sonrisas from Los Angeles says:
The layoffs were not exclusively of the team, most people from the Brooklyn team remain working for Gehry Partners. The layoffs were across all projects and all ranks. Most people from the Brooklyn project, whom still work at Gehry's, were simply relocated to other projects.

If that's true, it would be much easier for Gehry to reconstitute the team should the project get back on track (and he gets paid).

WNYC's Schuerman on AY timetable oversight: "the deadlines are pretty generous"

On Wednesday, December 24, WNYC radio's economic development reporter, Matthew Schuerman, was interviewed about Atlantic Yards at approximately 25:45 of Hour 2 of Morning Edition. While there wasn't much new for Atlantic Yards watchers, it was a decent summary of the issues and a reminder of the developer's over-optimistic plans, the government's limited leverage, and the question mark over the project's future.

The segment began with a quote from developer Bruce Ratner, who's rarely available to the media but appeared on WNYC's Brian Lehrer show in December 2003: "It will us take a year to go through the different processes and plans for the arena. And in about three to three and a half years, I hope to have an arena up and the start of some residential development."

That not-so-credible Arena 2006 plan has been pushed back again and again; when the project was approved in December 2006, the opening date was projected to be 2009, but now it's 2011 (and I think that's doubtful).

Delays and work

The narrator said that developer Forest City Ratner "has said publicly it has done all it can do until two lawsuits... get resolved." While that's an accurate report of FCR's statements, it ignores the countervailing evidence.

Interviewed by Richard Hake, Schuerman said that FCR was "tearing down buildings on the terra firma portion of the project... where the housing was supposed to be built, 6400 apartments, a third affordable, a dozen or more high-rises, mid-rises, low-rises."

Just to be precise, the western segment of the project, the arena block would also support the arena, not just housing, and the 16 towers all would be high-rise, at a minimum of 184 feet and now a maximum of 511 feet. (It's the UNITY plan that proposes towers of more varying heights.)

Schuerman also mentioned that the upfront investment in the arena would be $200 million; I'm not sure whether he meant the government investment--which is accurate, regarding the arena block--or some other figure.

Litigation and timetable

Hake asked how easy it would be for the developer to restart the project even if they win the pending lawsuits. (The defendant is actually the Empire State Development Corporation.) I think that the eminent domain case is a longshot for the plaintiffs, given the rules in New York State; while the case regarding the environmental review is somewhat more up in the air, I've said that the state and the developer have to be considered favorites to prevail.

Schuerman noted that, if they win, FCR said they will have to evaluate the bond market again. He cited an interview with Assemblyman Hakeem Jeffries, who along with other elected officials attended a meeting Monday with FCR and ESDC.

Jeffries told Schuerman that Forest City didn't make any promises about groundbreaking but aimed for some time in the fall, which meant, Schuerman said, "they'd be able to construct the arena in time to open it for 2011-2012 basketball season."

He added one caveat: "that's assuming the economy would be good enough."

I'll add another: while Nets CEO Brett Yormark and others have said the arena could be built in 24 months, the official construction schedule says 32 months and Bruce Ratner has said 30 months. In other words, the best-case scenario is likely 2012--unless a speed-up in construction work is possible.

Government leverage

Hake asked what the government was doing to make sure the project doesn't collapse.

Schuerman suggested that the city and state had some leverage in terms of delivering pledged funds.

He added: "There are some ways where they can get some of that money back if Forest City Ratner doesn't meet deadlines, but I gotta tell you, the deadlines are pretty generous. I think the arena has to built within six years of the settlement of litigation, for example, and in the entire project, there isn't really a deadline Forest City has to meet. So for the most part, the city and the state are just crossing their fingers, waiting to see. It's a little too early to say that this project is doomed, exactly, and there's hope that the economy will turn around quickly."
(Emphasis added)

The generous deadlines and limited penalties imposed by the State Funding Agreement and City Funding Agreement, signed in September 2007--nine months after a ten-year buildout was anticipated in the project approval, and well before the market crash--deserve a lot more attention.

Schadenfreude?

Hake asked if AY opponents are jumping for joy.

Schuerman responded: "I'm sure there's some schadenfreude there, to see Forest City Ratner on the rocks like this, struggling to get this project under way, really. But they live here--it's a devastated neighborhood, it's even more devastated now that half, three-quarters of the buildings are cleared away, and they're really worried that Forest City Ratner will sit on this land, not doing anything for five, ten years, and their neighborhood will just get worse and worse."

I think that, while perhaps half of the buildings have been demolished, many larger buildings remain, so less than half of the non-railyard site has been cleared.

People in and bordering the footprint are living near empty lots--blight as defined by the state. Most of the opponents live outside the footprint and have a more peripheral relationship to the site--forced by the closure of the Carlton Avenue bridge to detour, or to pass some eyesores--but an ongoing relationship to the policy response, or lack thereof.

"Long stratagem and sports kingdom"? With Yi on board, Nets sign marketing deal with Chinese sportswear company

The New Jersey Nets are having Office Max help sponsor the holidays, in case you didn't notice. And forward, Yi Jianlian, of China, may be having an up-and-down season, but he wasn't named the NBA's ninth-most marketable player for nothing.

According to People's Daily, which apparently scooped the domestic press:
The Nets have entered into a multi-year sponsorship alliance with PEAK, a China-based company specializing in sports apparel production, including shoes, sportswear, and gear.

The announcement of the sponsorship was made at a press conference on Monday at the High Point Solutions Business Center at the IZOD CENTER, which was attended by PEAK general manager and executive director Xu Zhihua and Nets chief executive officer Brett Yormark. The press conference also included a performance by the Peking Opera and a fashion show, with PEAK models taking the ramp.

PEAK's sponsorship agreement with the Nets includes television visible courtside and baseline signage that can be seen during the 31 Nets' regular home games this season that will be broadcast in China. PEAK, which is based in Quanzhou, Fujian province, was founded in 1989.

At right, a PEAK official with Nets CEO Brett Yormark.

PEAK performance

PEAK has also signed seven NBA players to endorsements, one of them former Net Jason Kidd.

The press release could use a little editing, given that a PEAK spokesman was quoted as saying, "We will enhance the cooperation in the NBA market, and present the quality sports gears to more NBA players and the fans around the world.”

Reuters earlier this year wrote about the growth of Chinese companies producing sportswear.

Poaching from Milwaukee?

When the Nets traded for Yi last July, Bruce Ratner said, “The fact that along with a great player like Yi comes marketing opportunities is a wonderful thing, but it’s secondary to basketball."

Indeed, sports entertainment is an international business, not one about Brooklyn pride, as DDDB would remind us.

Last year, PEAK signed a deal with the Milwaukee Bucks, where Yi used to play. While the Bucks announced a multi-year deal, it's unclear how much was tied to Yi's presence. I suspect the new deal with the Nets takes precedence, given that the only other team with which PEAK has a contract is the Houston Rockets, with the Chinese center Yao Ming. Then again, the Bucks did play in China during the preseason.

I'll assume that the Nets will work with PEAK so that the company's press release will be a bit more polished than the one last year:
19th, Dec. 2007. PEAK partner with MILWAUKEE BUCKS of NBA.become the first one partner with BUCKS of NBA in china.PEAK will cooperate with MILWAUKEE BUCKS for long stratagem and sports kingdom.

Bad translations from Chinese to English have been such a feature of life in China that the government made a special effort to correct signage in the run-up to the Olympic Games, according to the Wall Street Journal.

Forest City Enterprises "astonished and appalled" at Morningstar for calling stock worthless

A Cleveland Plain Dealer blog entry headlined Forest City fights back reported that Forest City Enterprises Inc. called Morningstar's analysis that the stock is worthless "was based on flawed assumptions and inaccurate interpretations of the company's debt obligations and its construction costs."

The Plain Dealer reported:
"We disagree in the strongest possible terms with Morningstar's opinion," spokesman Jeff Linton wrote in a statement. "Further, we are astonished and appalled that Morningstar would issue such an opinion without having made contact with Forest City."

Linton said no Morningstar representative has contacted or spoken to any senior-level executive at Forest City in two years... Five analysts who regularly cover Forest City have taken a neutral stance on the stock or expect it to perform slightly better than the market.

"We remain stable, with good liquidity and solid cash flow from our operations, and we have implemented a strategy to specifically address current market conditions," Linton said.

Debate pending

I don't know whether Morningstar typically contacts senior-level executives before issuing such a dramatic assessment, but Forest City's grievance seems reasonable. (If only they would reciprocally answer questions from the press themselves. Updated: DDDB points to flawed assumptions and inaccurate interpretations re AY.)

The analysts who are neutral or slightly positive on the stock should count for something--indeed, the consensus among five analysts tracked by Yahoo is 2 on a scale of 1 (Buy) to 5 (Sell), with two at Strong Buy, one at Buy, and two at Hold. The analysts haven't exactly distinguished themselves by publicly asking hard questions of the company. But I think neither they nor Morningstar based their reports on a close look at Atlantic Yards.

Maybe they and the Morningstar analyst could put their cards on the table and have a debate.

Via Ticketmaster, Nets tickets are free (with service charge)

Well, if attendance in the NBA is about tickets distributed, then gate count is about getting fans in the seats to buy concessions, not what they paid to get there, right?

So the Nets are giving tickets away. An announcement on Ticketmaster:
As part of the Nets Tickets on Us Program, you are receiving this one time, complimentary* ticket offer to see the Nets take on some of the NBA's best at the IZOD Center. Simply select one of the home games listed below and you can receive up to two tickets to the game. It's about taking a break and enjoying a night out, courtesy of the Nets.

Valid on tickets regularly priced at: $110 $80, $76, $40, $20, and $15.

"New Improved Brooklyn" revisited more than 4.5 years later (with a hint about an architect helping Gehry)

Let's flash back to Alexandra Lange's 4/26/04 article in New York Magazine, headlined New Improved Brooklyn, subtitled "A glittering skyline, waterfront condos, new jobs, Frank Gehry buildings galore: Brooklyn is on the verge of a makeover even more extreme than you thought, re-creating itself in Manhattan’s image. What’s wrong with this picture?"

It's a fascinating look back, given the promises unfulfilled, and it even contains a hint that Forest City Ratner, despite public orders to the contrary, once planned to have Hugh Hardy, the architect of the developer's Atlantic Terminal mall and Court Street cinema complex, collaborate with Frank Gehry on Atlantic Yards.

The big rezonings

Lange wrote about Department of City Planning director Amanda Burden's plans to rezone Downtown Brooklyn and the Williamburg-Greenpoint waterfront:
Burden’s plans, enabled by two lengthy rezoning proposals, could add more than fifteen new towers, 4.5 million square feet of office space, and 8,500 new housing units. The city’s plans would have been enough to herald a major conceptual shift, but then, in October, developer Bruce Ratner of Forest City Ratner announced that he had hired Frank Gehry to design an arena for what will become the Brooklyn Nets over the MTA rail yards at Flatbush and Atlantic avenues. The less-examined portion of Ratner’s plan for the Atlantic rail yards adds residential towers for 4,500 people between Fort Greene and Prospect Heights. Across the street, Ratner is rushing to complete the Atlantic Terminal, a mall that includes a Target in a big box below and 1,500 Bank of New York employees in a tower above.

Well, the mall got built, but the arena has gone through two more designs, and that roof garden would no longer be public (nor even green). (And, yes, the arena would not be "over the MTA rail yards," an error the New York Times made too often; if so, no eminent domain would have been needed.)

In the BAM cultural district

Lange wrote:
Two blocks away, the BAM Local Development Corporation has just announced a second Frank Gehry project: The Theatre for a New Audience will be housed, sometime circa 2007, in a building designed by Gehry and echt–New York architect Hugh Hardy. The theater will share a triangular site with a public Visual and Performing Arts Library designed by up-and-coming Mexican architect Enrique Norten.

Well, Gehry's been ousted from the theater project, and the library plan--for an impressive building whose cost way outstripped the library's fundraising ability--is history.

What is Brooklyn?

Lange tried to assess the stakes:
On one level, this is simply the mother of all NIMBY (not in my backyard) battles—since Gehry’s stadium and its accompanying towers will literally be built in some Brooklynites’ backyards. And Brooklyn’s potent, sometimes cloying nostalgia for the way things were—dese and dose, egg creams and spaldeens—can fuel a knee-jerk rage at any change at all. But now there’s another force at work. In the past five years, Brooklyn has reached a new maturity and self-confidence. Gehry is arriving at a moment when the borough is fashionable, even by Manhattan’s exacting standards. Who wants to live on the Upper West Side when you can live in Park Slope? Who needs the East Village when you can socialize on Smith Street? Ratner and Burden seem to want to raise the borough up, make Brooklyn take a quantum leap, create a new kind of city—one that more closely resembles Manhattan. Which seems wrongheaded to many current residents. The real topic here is, what is Brooklyn?

Indeed. While some arena opponents might be called (and still are) NIMBYs, the emergence and embrace of the UNITY plan should have pretty much put that to rest.

And the question "what is Brooklyn" might have been well put to Brooklyn Borough President Marty Markowitz, who cloyingly invokes the Brooklyn Dodgers when plumping for the arena, and who seemed lost in the desperate 1990s when, in 2003, he told Brooklynites they should be thankful for Forest City Ratner's Atlantic Yards investment, rather than driving a hard bargain for some very valuable land.

Downtown a place for jobs?

Lange cited the city's justification for rezoning Downtown Brooklyn:
But residents, the city says, are refusing to see the greater good; in the post-9/11 era, the boroughs need to play their part in what is delicately referred to as “business-continuity planning.”

“When you look across the Hudson River, you can see all the jobs that should have been in New York City,” says Amanda Burden. “Downtown Brooklyn has every advantage and is completely underzoned right now for development.”

By increasing the possible heights on several city blocks, and assembling large land parcels that include the lot on which Chatel’s house sits, City Planning hopes to create sites for four new towers, of 18 to 40 stories each. Its goals are to knit MetroTech, Ratner’s earlier, much reviled project, on Adams, to the bustling retail corridor along Fulton Mall, creating a tall, tight Downtown business district and to connect this new, improved Downtown to Boerum Hill and Cobble Hill.

Well, there are sites for many more than four towers. Most, however, contain (or will contain) market-rate housing, given that the market for office space tanked and the city, in its lack of foresight (and pressure from activists) refused to consider requiring affordable housing as a tradeoff for the increased density and value offered to developers.

Design issues

Lange pointed to Ratner's checkered record with design:
Frank Gehry’s arena is Bruce Ratner’s glittering gift to Brooklyn’s intelligentsia. Since Bilbao, Gehry has levitated out of the architecture ghetto to become an American aesthetic hero, a god with feet of titanium. “Having a Frank Gehry–designed arena in Downtown Brooklyn will put Brooklyn on the map globally,” says Burden. “We know how great Brooklyn is; now everyone will know how great it is.”

“Bringing in Frank Gehry to do everything, that’s huge,” says Bruce Bender, a Forest City Ratner executive vice-president, a born-and-bred Brooklynite, lately of Peter Vallone’s office, who lives in Park Slope. “He could have gotten away with picking another architect, but he wanted it to be very special.”

Of course, many of the neighbors see Gehry as window-dressing, a beautiful distraction, a Trojan horse for Ratner and his cookie-cutter condos and big-box stores. To say that Ratner is not a figure most would entrust with Brooklyn’s aesthetic future would be an understatement. MetroTech is inarguably bland and deserted after five and on the weekends. His Atlantic Center mall is worthy of a Mike Davis inner-city architecture rant.

“The biggest complaint about this,” Bender says, gesturing across Atlantic Avenue at the sunken rail yards, “is that they don’t want it to be that,” pointing to Ratner’s hated Atlantic Center—a tan box with sidewalk-side retail on no sides, zero interior amenities, and long, hot institutional hallways between the few popular stores: Pathmark, Old Navy, Party City. “Bruce is very focused on upgrading Atlantic Center to the standards of Atlantic Terminal.”

Atlantic Terminal is an improvement: It is brick, or, at least, brick-faced, and its squat office tower is self-effacing. The architect, Hugh Hardy of Hardy Holzman Pfeiffer, has even given the whole a ballpark entrance: a white, semi-circular pavilion that pops out toward the intersection of Flatbush and Fourth Avenue. Hardy is a classic choice, and will be collaborating with Gehry in the next block, but he is best known to Brooklyn as the designer of the borough’s second most reviled building, the rick-rack-sided twelve-plex on Court Street in Brooklyn Heights, a pile of misplaced giant Christmas gifts.
(Emphasis added)

It seems like Lange broke some news here, in retrospect, given that Gehry has said he'd typically bring in other architects but "the client insisted that I do them all."

Could it be that, given a ten-year (official) or 20- (acknowledged by project landscape architect Laurie Olin) or 30-year (more likely, if ever) buildout of the project, Gehry, who turns 80 next February 28, was never expected to design the whole project?

After all, Gehry in 2006 said, "The determining factor [in taking a commission] is: Can I get it done while I am still alive?"

Open space & a superblock

Lange suggests that the architects, not the developer, drove the superblock design:
It is this desire for groves and lawns, a true escape, that pushed the architects to ask for the closing of Pacific Street, and the creation of what looks very like a sixties superblock. Olin dismisses this criticism—“We’re not going to build thirties towers in a greensward. We’ve learned in the last 30 years about seeing and being seen”—a paraphrase of “eyes on the street,” one of urban theorist Jane Jacobs’s most valuable insights.

Well, undoubtedly they could build a better superblock, with buildings flush to the street as opposed to isolated in a park. But that still doesn't mean the public, as opposed to project residents, would use the open space much. (Streetsblog hosted some interesting comments, some supportive of Olin, given his track record.)

Olin, in a 2/25/07 interview with the New York Observer, said he was brought in well after the decision to demap the street was made; the Observer's Matthew Schuerman observed that the street bed was needed to marginally increase the already-low open space ratio in the area.

The market at work?

Lange wote:
The most contentious issue is the displacement, via eminent domain, of the 200 to 400 people who live and work on and between Pacific and Dean streets. Ratner says he has to condemn these blocks of brownstones, condominiums, and small businesses, because the arena won’t fit any other way. Bender says the market has been given enough time to repurpose the old bakeries, the mini storage centers.
(Emphasis added)

Well, the number at risk of displacement--most, ultimately, not via eminent domain but the threat thereof--was 463 residents (plus 400 in a homeless shelter) and 225 workers, according to a Village Voice report, using numbers from activist Patti Hagan. (Develop Don't Destroy Brooklyn, based on work by Hagan and others, prepared a March 2004 census that showed 334 residents--209 tenants, 125 owners--and 235 employees, plus the 400 people who regularly use the shelter, some for over a year.)

The second sentence in that paragraph is misleading. True, the arena wouldn't fit without condemning the south side of Pacific Street and north side of Dean Street between Fifth and Sixth avenues: Block 1127. But the portion of Block 1128, on Dean and Pacific streets just east of Sixth Avenue, is needed for Forest City Ratner's plans to stage arena construction. And Block 1129, bounded by Pacific and Dean streets and Carlton and Vanderbilt avenues, was chosen for interim surface parking and Forest City Ratner's plans to maximize square footage.

And the third sentence is simply a lie. The market wasn't given much time because the neighborhood wasn't rezoned. Repurposed industrial buildings like Atlantic Arts, Spalding, and Newswalk were the result of spot rezonings. The Ward Bakery could have been repurposed and, as reported, owner Shaya Boymelgreen (the Newswalk developer) once considered it for a hotel.

Forest City Ratner got the state to override zoning rather than let the market work. Here's the ESDC's head-in-the-sand take.

Community contact?

Lange wrote:
Gehry and his associates have already begun holding videoconferences with members of the affected community, and the design is evolving from the publicized model. “It’s a shifting plan because they have community meetings. They call and say, We’re going to leave this building and that building and What if this happens? and What if that happens? We do a lot of what ifs, and ands, and buts.”

Videoconferences with members of the affected community? I sure don't remember the invite. Gehry has notoriously not been permitted to meet with the public.

(Update: I'm told that one such invitation-only videoconference was held, at the request of community members; the developer was not receptive to the idea of moving the arena.)

Battery Park City?

Lange checked in with the project's leading political opponent:
Like the Downtown Plan’s rendering of Willoughby Street as a second Rockefeller Center, Ratner’s idea of residential towers—however elegant—seems airlifted in from the other bank. “It’s a Battery Park City,” says City Councilwoman Letitia James, who represents Fort Greene as a member of the Working Families Party. She, practically alone among the better-known Brooklyn politicians (Marty, Chuck), has vehemently opposed Ratner’s plan, speaking against the arena, against eminent-domain abuse, for affordable housing, for jobs for Brooklynites. The Atlantic Yards plan is largely out of the city’s hands, on state-owned land, funded by a private developer. But it could have as great an impact, and as many towers, as the Downtown Plan: home to the Brooklyn Nets, 2.1 million square feet of office space, 4,500 housing units, and 300,000 square feet of retail space. The tallest projected tower, at the intersection of Atlantic and Flatbush, would top out at 620 feet—108 feet higher than the Williamsburgh Savings Bank building.

The irony is that Battery Park City, while criticized for not fulfilling promises of affordable housing, has much-praised open space and a projected density, at full buildout, a little more than half that of Atlantic Yards, at least as approved.

Lange wrote:
But to many, particularly the architecturally savvy, BPC is an image of an evil to be avoided at all costs—antiseptic, overpriced, homogenous, all that is not Brooklyn.

Affordable housing

The article didn't press James to explore a contradiction:
Tucked into the back of a social-service agency, James’s district office doesn’t even have a view of the back side of the Atlantic Center, much less the parks on the future arena site. Her barred windows look across a set of bare backyards. No pictures on the walls. Not even a flower on the desk. “The No. 1 issue throughout the city of New York is the crisis in affordable housing,” says James. “There are these ten acres of land available, and I would like to provide for the needs of my constituents. I’d like to see an expansion of Atlantic Commons”—three-story rowhouses, inexpensively built, between South Oxford and Cumberland streets. “I’d like to build more townhouses, I’d like to build some more rental units and some more commercial and retail units. Something which is more in character with the community.”

Well, like many of us, James has learned a lot more about urban planning over the years. Atlantic Commons, while pleasant enough for its residents, is far less dense than the infrastructure could support.

Atlantic Yards, as approved, would supply a significant amount (2250 units) of subsidized housing, even if only about half of that would be accessible to the "real Brooklyn" and it might take a very long time to get there. The complication is, to get that number of units, the developer, signing a privately negotiated affordable housing bonus with the advocacy group ACORN, got to decide the density. And the total is by no means guaranteed.

Manhattan vs. Brooklyn

Lange found more subtlety when looking into plans for the BAM LDC:
“We talked about the difference between Manhattan and Brooklyn, looking between the two places to try to identify what is the Brooklyn thing,” says Charles Renfro, the Diller Scofidio + Renfro partner who was team leader for the firm’s BAM LDC master plan. “We researched how many artists lived there, and Brooklyn has way more artists than Manhattan. The reality about Brooklyn is that people are living there and doing their stuff and not screaming out for attention.”

...“The Fort Greene district lies at the crossroads of all these different forces—how do you make something interesting that’s not dictatorial?” Renfro says. “How do you make something that deals with the scale of the city while not being banal? How do you reinforce it but also make it more interesting? We made images which tried to evoke a spirit, an experience of the place, as opposed to a look.”

Open spaces, like the one Norten describes, were a part of that spirit, as was an attempt to remove as few buildings as possible. “It is certainly a contrast to the Atlantic Yards development, which is exactly the kind of thing we tried not to do—a wiping clean of the blocks, and a top-down megastructure placed in it,” Renfro says.

In conclusion

Despite her sympathy for grand plans like Gehry's, Lange was skeptical in her conclusion:
It shouldn’t take towers along the waterfront to recenter our mental maps of New York on the East River, not at Central Park. Brooklyn is already different, inextricably linked, but equal. It shouldn’t be back-office territory, but front-office space for smaller businesses. Those potential Williamsburg towers really are on the Fifth Avenue of the future. Enrique Norten’s library, Frank Gehry’s theater and arena are equivalent to Herzog & de Meuron’s South Bank Tate Modern—jewels in the setting that is Brooklyn, rather than alien presences.

The trick, then, for Brooklyn’s neighbors is to negotiate with the city, with the developers, with the architects, from a position of strength. Know neighborhood character, and admit its weaknesses. Point the Manhattan developers to real instances of blight. Look to the development that has been and is now already occurring, without benefit of tax breaks and zoning incentives.

The fear of Manhattanization is not, in this case, knee-jerk nimby-ism, but the sense that many chose to Brooklynize instead—to move here from other places, to stay here for multiple generations. What is attracting all this top-down money is work that has already been done by people happy to say, when asked at a party, No, I don’t live in New York. I live in Brooklyn.
(Emphasis added)

The trick was that Mayor Mike Bloomberg and his allies never tried to let the neighbors negotiate.

Whitehead: our own eminent domain

An accompanying essay is headlined Don't You Be My Neighbor, subtitled "Colson Whitehead laments the latest death of Brooklyn at the hands of developers— but says we all practice forms of eminent domain."

The novelist wrote:
I used to live in Fort Greene, and whenever I visit my old neighborhood, I am tormented by the same absurd thought: I should have bought that crack house when I had the chance. Never mind that I was broke—this line of thinking is a natural member of that gang of peculiar New York regrets.

AY resistance

He wrote about those resisting Atlantic Yards, reminding us of a cohort that doesn't get acknowledged:
For weeks now, signs have been visible in the windows of Pacific Street apartments, saying SAVE OUR HOMES and HELL NO WE WON’T GO. Apartment buildings and businesses will be demolished to make way for these grand plans, and it’s estimated that 200 to 400 people will be displaced, though this figure doesn’t include a shadow number—the people who would have lived in the neighborhood in its current incarnation but won’t be able to afford it. Half of them probably don’t even live in the city limits now, haven’t bought their tickets yet.

What about the sky?

Whitehead wrote not without irony:
It was impossible not to notice the sky that afternoon. You could see it, lots of it. There was simply too much sky there, and the city hates it when there’s too much sky. The space needs to be filled. The anti-development folks were so small compared with the empty railroad tracks. You had to ask, What is the power of people against the might of buildings? I wish them luck. The people, that is. The buildings don’t need it.

The next new thing is always ugly in proportion to its inevitability. Is it the death of Fort Greene? It’s the death of Fort Greene.

But the current Fort Greene was the death of the one before it. Eminent domain approaches in many guises. It comes in sledgehammers, bulldozers, pieces of paper that declare in legalese, “This building condemned.” Then there is eminent domain in its quieter, less bombastic forms: the arrival of the goateed and bohemian-minded, rent increases, the monied, the condoed....

Does displacement simply segue into eminent domain or is there a difference?

Beyond adaptation

He concluded:
In the end, the same energy that draws us here, binds us to this place, is alternately creative and destructive, razing here, renovating there, and it’s all we can do to adapt. I doubt that the well-heeled future inhabitants of those Pacific Street high-rises will be happy come game day, when the jerseyed hordes bubble out of the Atlantic Avenue station. The only people who are happy and without care are the little cartoon people who promenade across architectural plans, in the artist’s renderings of the Atlantic Yards, the new World Trade Center, the Olympic Village in Queens. Certainly their features betray no troubled thoughts as they stand before the fountains, stadiums, and tree-lined plazas. It helps that they have no faces.

He's a brilliant writer, but his acceptance of inevitability sounds somewhat akin to that of Danny Hoch in his recent one-man show about gentrification, "Taking Over." The alternative to acceptance is community engagement in planning.

While many might see that engagement as dull and demanding, keep in mind that New York City as of now structurally inequipped; the community boards, which service areas the size of small cities, generally have just one professional staffer.

Details on AY housing point to 80/20 rentals, not condos, in a smaller Phase 1

As far back as May, developer Forest City Ratner was planning to convert at least one of the first three residential towers on the Atlantic Yards arena block from condos to rental housing, a recognition of the tough lending and consumer market for condos--and of the opportunities in gaining tax-exempt financing.

That's the indication from a fact sheet prepared (but not actively distributed) to accompany the release in May of new designs for the arena block, as well as from news emanating from a meeting Monday between local officials and the Empire State Development Corporation.

The fact sheet stated that the first of the three residential buildings, the 34-story, 350-unit B2 (in red), would have 50% affordable housing--and thus participate in the New York City Housing Development Corporation's (NYC HDC) 50/30/20 program, involving 50% market rate, 30% subsidized for middle- and moderate-income households, and 20% subsidized for low-income households.

The fact sheet said nothing specific about the contours of the affordable housing for the other two buildings, known as B3 and B4 (the office tower known as B1, at left, is on indefinite hold as the developer searches for an anchor tenant), but it did state:
These buildings will all include significant amounts of affordable housing and, like B2, will also require securing tax-exempt bonds from the City and State.
(Emphasis added)

The New York State Housing Finance Agency (HFA) does not support 50/30/20 programs, but rather 80/20 programs, with 20% low-income housing and 80% market-rate rentals, as at the developer's 80 DeKalb Avenue project.

So B4, which at one point was to be more than twice as big as the first two buildings combined, would be an 80/20 building, according to reports I got from the meeting Monday.

News breaks

The Daily News today broke the story, reporting that Forest City Ratner told officials that it would shift from condos to rentals, creating "approximately 900 rental units in three towers formerly planned for condominium and commercial space, said several officials who attended the meeting."

I don't think the first three towers were planned for condos and offices; rather, the fourth tower was the office tower, while the first three were to be a mix of rentals and condos.

"Going rental is consistent with what other developers are doing elsewhere," Council Member David Yassky (D-Brooklyn Heights) told the Daily News. "That's just what the market is dictating."

Whether the market and the city/state agencies can supply the tax-exempt bonds is another question.

Details on units

If the developer plans only 900 units in the first three buildings, that would be a much smaller Phase 1 than envisioned in May. According to p.r. materials prepared by the firm Geto & DeMilly, the 325,000-square-foot B2 would have 350 units, at about 928.6 square feet.

According to the fact sheet, the second residential building, known as B3, would be approximately 300,000 square feet (about 22 stories; to the right of B2). Construction would start a year later--in 2010, at least if B2 gets off the ground in 2009, which is hardly certain. That building, smaller than B2 and to its right in the rendering, would likely be a 50/30/20 program, with about 323 units.

But the big lift, at least as once planned, was to come with B4, the third and final arena block residential building (at center), containing about 700,000 square feet and rising 50 stories, commencing a year after B3, with about 754 units--most of them market-rate rentals.

Not only was B4 to be larger than both of the earlier buildings combined, it would be larger than the 650,000 square foot office tower planned for B1 (at left), once dubbed "Miss Brooklyn."

But if there would only be 900 residential units in Phase 1, then B4 would be a lot smaller, perhaps only 300,000 square feet.

Too small?

I think that number in the Daily News might be too small. If the developer builds only 900 residential units, then that would represent less than 900,000 square feet. Forest City must build 1.5 million square feet, according to the City Funding Agreement, to avoid incurring penalties.


Yassky pointed to a bait-and-switch. "I don't believe the project approved by the state is going to be going forward anytime soon," he told the Daily News. "Forest City Ratner should return the taxpayer dollars, and start talking about what actually can be built."

Then again, if the approximately 650,000 square foot Building 1 gets built within 12 years after the delivery of property via eminent domain, then Forest City could meet the goal of the funding agreement. That document, which allows the developer to build a project very different from that approved by the state, has drawn little scrutiny and criticism from public officials.

FCR seems to have backed off from plans for 1930 condos, an apartment type to which the developer is averse, as evidenced with the Beekman Tower project.

Affordable housing first?

Assemblyman Hakeem Jeffries told the Daily News he told Forest City Ratner executives to build the affordable housing before the arena, but that they didn't respond to his request.

I heard another version, that the response, not implausibly, was that, given that the buildings would wrap the arena, it would be logistically impossible to building the towers first, and, if the arena were still under construction, it would not be so comfortable for residents.

In other words, everyone supporting the affordable housing should've understood the bargain.

Looking at the NBA's (and Nets') history of inflated attendance figures

When I suggested that a 25 percent fudge factor should be applied to attendance at Nets games--and was criticized by the "homerest of homers" Bobbo/NetIncome/Mr. W. for lacking the expertise or metrics--it turns out that my eyeball estimate is close to the overstatement at other basketball arenas and for one of the Nets' highest-profile games.

I should acknowledge that the Nets operation is no different from most others in professional sports, since teams routinely--as per league policy--announce tickets distributed rather than report actual gate count.

Opening day, 2005

On opening day in 2005, the first full season Nets CEO Brett Yormark led the team, however, the Nets made a particular point of announcing a full house, and some media outlets bought it.

The New York Times, in an 11/3/05 article headlined Sellout Crowd Sees the Nets Stumble, reported unskeptically:
Judging by the sellout crowd -- the first for a home opener at Continental Arena since 1997 -- and courtside celebrities that included the rap mogul Jay-Z, a part owner of the team, and Acting Gov. Richard J. Codey, it appeared as if Nets fans were willing to stick by their team.

But the arena wasn't full. NetsDaily compiled (though links don't work) several articles questioning the numbers.

Flayed on the 'FAN

Indeed, on WFAN, hosts Mike Francesa and Chris (Mad Dog) Russo flayed Yormark for claiming that 20,098 people filled the arena.

As chronicled on NoLand Grab (though the audio no longer works):

Yormark: “There wasn’t seven-thousand no shows.”

Francesa: “Your announced crowd was 20,098, you said 17, which is a pipedream, I was trying to be charitable at 15. I’ve got other guys who have been in that building a million times who thought, 12 or 13,000 in the building that night — there were so many empty seats it was a joke.”

As the interview went on, Mike and Chris didn’t let up, both telling Yormark, “You totally misled everyone.”

Looking at the numbers

On 11/5/05, Neil Best of Newsday got some figures from the New Jersey Sports and Exposition Authority, reporting:
According to a turnstile count supplied to the New Jersey Sports and Exposition Authority, 15,504 people attended Wednesday's opener against the Bucks at Continental Airlines Arena.

The Nets made a point that night of announcing they had distributed 20,098 tickets, making it technically a sellout. But many tickets apparently went to corporate sponsors and were unused.

During a heated interview on WFAN on Thursday, CEO Brett Yormark estimated that 17,000 people attended the game and host Mike Francesa insisted there were no more than 15,000 there.

Francesa's "charitable" estimate was more accurate, according to the numbers, which represent a 23 percent reduction in attendance.

Fantasy numbers

In a 5/18/06 article headlined Mythinformation, the San Diego Union-Tribune's Mark Zeigler produced the definitive article on the issue, concluding:
If you believe the announced attendance figures at many pro and college sports events, you might as well believe in unicorns, too

Zeigler makes the cogent point that box scores from sports events are rigorously accurate in reporting statistics from games everybody observes. I'd add that one of the attractions of sports it that games are played in public, and ordinary fans can evaluate performance with their own eyes.

Zeigler writes:
Somewhere in the past few decades, the notion of attendance has been skewed by many teams and leagues to mean something entirely different. Most often it represents total tickets sold or total tickets distributed, no matter if people actually used them - a sort of best-case-scenario projection, the intersection of capitalism and wishful thinking.

At best, it is an innocuous if misleading effort by clubs to drive fan and sponsor interest. At worst, it is a shameless exercise in creative writing.

He notes that the Elias Sports Bureau tracks every statistic imaginable but declines to keep attendance records because, in part, their accuracy can't be verified.

He points out that, in sports terminology, "sellout" only means all available tickets are distributed, including those given away for free, not that the seats are full.

A 23% cut

Zeigler offers a number much like that for the Nets game noted above:
On example: Or the Orlando Magic, which announced an average home crowd of 14,584 last season only for the Orlando Sentinel newspaper to access city records from the TD Waterhouse Center and report the actual turnstile count was 11,830 – an inflation rate of 23 percent.

Actually, an updated account by the Sentinel, on 7/24/07, lifted the inflation rate over 25 percent:
Since the 2002-03 NBA season, the total announced crowd for regular-season Magic games is 25.4 percent above the total Centroplex turnstile count. (Magic officials said they follow NBA regulations for calculating attendance by adding the number of tickets sold to the number of complementary tickets used.)

League policies

A sidebar to Zeigler's article explains league policies. The National Basketball Association's policy is among the least transparent.

NFL: The league used to announce tickets distributed, tickets used and no-shows but changed its policy to leave it up to individual teams....

Major League Baseball: The National League announced turnstile counts before combining operations with the American League in the early 1990s. Both now announce tickets sold for revenue-sharing purposes.

NBA: A strict leaguewide policy of announcing tickets distributed, including comps. It refuses to release turnstile counts.

NHL: Announces tickets distributed, but the difference between that and turnstile counts appears to be growing.

Major League Soccer: Claims it announces tickets distributed, although that seems suspicious....

NCAA: Allows each school to determine its own formula for announced attendance....

In the NHL

A 9/26/06 Fort Lauderdale Sun-Sentinel article, headlined NOT WHAT YOU THINK described the leagues' curious policies.

One National Hockey League executive, however, said his team, the Florida Panthers, announces both season tickets sold -- including no-shows -- and only the individual, group and vouchers for complimentary tickets that get used. Behind that rationale is the knowledge that season-ticket holders in the NHL are more loyal than in the NBA.

"If we announced every ticket paid and distributed, that's, in my opinion, a bit misleading," the executive said. "We think this is a more accurate way of reporting attendance. There are going to be no-shows with season tickets, but always the majority are in the building."

His name: Michael Yormark, twin brother of the Nets' Brett--and subject of mutual laudatory profiles. (A commenter on Newsweek describes the Panthers experience as not unlike that at the Izod Center: "Going to the hockey games is like living inside of a non-stop commercial, at least make it worth it.")

Giving away tickets

This season, in an effort to boost attendance, the Nets offered free tickets to the unemployed. The Panthers, as reported in Sports Business Daily, gave out 500 tickets for several games at the clip of two for anyone with a Florida driver’s license.

Michael Yormark candidly explained that “the data is a warm lead” to sell more tickets. And, he added, “You put a warm body in a seat and they buy popcorn and beer, and that benefits you down the line.”

Indeed, as I pointed out, the Nets' generosity did not extend to food vouchers.

Just yesterday, it was announced that the Nets had sold (at, I assume, a deep discount) 100,000 tickets for Saveology.com to distribute to "charities, hospitals, and people in-need... as well as to Saveology.com customers," an effort that at least would provide "warm bodies" to buy popcorn and beer.

NBA the worst

The Sun-Sentinel article quoted Dennis Howard, a business professor who teaches sport finance at the University of Oregon:
He said the no-show rate can range from 12 percent to 20 percent on any given night. It is most striking, he said, in the NBA, where lower bowl seats are sold in large numbers -- sometimes as much as 20 percent to 30 percent of a team's inventory -- to corporations.

As noted, the NBA numbers can exceed 25 percent.

When a team told the truth

In a 4/10/02 article confusingly headlined FALSE ATTENDANCE WON'T HURT MOVE BID; NBA TELLS HORNETS TO RETURN TO ACCURATE REPORTING OF TICKET SALES, the Charlotte Observer reported:
The Hornets acknowledged they have reported the turnstile attendance figures for nine of 10 home games since Feb. 27, making the team's ticket sales seem lower than they really are.

...Coliseum records show that on average this season, the paid attendance through the first 28 games was 36 percent higher than the turnstile numbers. In all of those games, there were at least 2,000 more tickets sold or distributed than fans in the stands.

The Hornets may have been inaccurately reporting ticket sales, but they were accurately reporting actual attendance.

What was the motivation? The owners were trying to convince other team owners that the local market was so bad they'd approve a team move.

(The team soon moved to New Orleans, but the Charlotte Bobcats were established in 2004.)

It used to be worse

The NBA's problem--and policy--dates back to an era arguably worse than the current one. In a 4/9/00 article headlined LEAGUE'S ATTENDANCE PROBLEM IS OUT OF SIGHT, the Boston Globe's Peter May reported on a Hornets game against the Celtics that featured "probably half" the announced attendance and a Pistons-Celtics game where the gate count might have been a little over two-thirds the announced attendance.

May wrote:
The NBA would be in for sticker shock if turnstile count were used for attendance. That ludicrous capacity streak at the United Center would be history (it was equally ludicrous at the Boston Garden).

They can note that the average attendance this season is about the same as it was last year, but that misses the point. The tickets may be sold, but the seats are empty. It's a problem. And it will remain a problem until the product is worth the price. Right now, it isn't even close.

In a 2/1/01 Houston Chronicle article headlined WHETHER A RESULT OF LOW-SCORING GAMES, RISING TICKET PRICES OR LOSING MICHAEL JORDAN, THE NBA IS HAVING A PROBLEM KEEPING FANS IN THE SEATS, Michael Murphy cited a January 2001 game between the Celtics and the Atlanta Hawks in which paid attendance was announced at 11,194, but the crowd was closer to 2000.

At that point, the New Jersey Nets had the lowest attendance in the league, averaging 12,374. The average attendance was 15,185 after Monday's game.

The reasons for the downturn? "[L]ingering aftereffects of the 1998 lockout" plus the "post-Michael Jordan blues," among other things, the Chronicle suggested.

Now, the economy is probably the biggest factor. But the longtime fudging of the numbers sure doesn't build credibility.

Who's in control? Forest City and the indirect subsidy value of its "entitlements"

Even though the Atlantic Yards project may be in question, the toughest month for developer Forest City Ratner had to have been December 2006, when the project received two crucial approval votes.

First, the board of the Empire State Development Corporation (ESDC), controlled by AY supporter Gov. George Pataki, approved the project; that was expected, though the need to revise the Final Environmental Impact Statement meant that consultant AKRF--paid for by FCR, actually--had to work through Thanksgiving to get it all done before Pataki's administration left office.

Then the Public Authorities Control Board (PACB)--the "three men in a room"--had to approve the project, and there was some (unfounded) suspense over whether Assembly Speaker Sheldon Silver, who scotched the West Side Stadium, might vote no.

Carrying costs & "entitlement"

After that, Forest City Ratner gained its "entitlement," a word favored by Forest City Enterprises CEO Chuck Ratner, a word that indicates that the developer controls the pace, a phrase used last month at a real estate industry conference (right).

Chuck Ratner, speaking to investment analysts on December 10, said, "Despite the slow-down, we retain our core development capacity, as well as a reservoir of entitled opportunities where we can re-start additional vertical development, largely on our schedule, with modest carrying costs. When conditions improve, we will be able to take advantage of these opportunities."
(Emphasis added)

The size of the Atlantic Yards carrying costs is another question. In April 2007, then-executive Jim Stuckey estimated $4.15 million a month, while in January 2008, his successor MaryAnne Gilmartin claimed $6 million a month, both attempting to impress on a court the pain of delay.

It's unclear why the numbers jumped and, thus, whether the figures were accurate.

Maintaining entitlement

Ratner continued, "I need to emphasize here again that we remain committed to our projects under construction and we will meet our obligations and maintain our entitlements, including at our large multi-phase, mixed-use projects, such as Stapleton in Denver, Mesa del Sol in Albuquerque, Central Station in Chicago, the Yards and Waterfront Station in Washington, and of course, to Atlantic Yards in Brooklyn, where we continue make progress and remain committed to the project, despite hurdles that we still need to overcome."

As I wrote, the obligations, as so far expressed in the City and State Funding Agreements, give Forest City Ratner a long leash. The developer has 6 years after the delivery of property via eminent domain to build the arena and 12 years to build Phase 1--and can get away with building 44% less square footage than approved.

The penalties for a delayed arena for Phase 1 are quite modest. There's no timetable for Phase 2.

So the City and State Funding Agreements might be considered another form of indirect subsidy--a benefit to the developer without an actual outlay of government funds.

Presumably, public officials could, in revising and updating funding agreements and other contracts, strike a tougher deal. When the project was approved, it gained public and political backing because of promises regarding the content and timetable.

Were those promises supposed to be meaningful? Does Atlantic Yards "exist"? Is there any oversight?

More subsidies

Lets not forget that, in March 2007, Chuck Ratner told investment analysts, "We also have a public entitlement in this process. There’s a public subsidy, it’s been announced, $200 million. There’s an affordable housing requirement in this, a moderate housing requirement in this, and we’re still negotiating with the public authorities as to how that will come out."

That $200 million has risen more than 50%, to $305 million, and we don't know anything about those affordable housing subsidies yet.

Was the Izod Center 81.6% full last night?

The announced attendance at the Izod Center last night, when the New Jersey Nets met the Houston Rockets, was 16,303, meaning that the arena, which has an official capacity of 19,968 (and peaked last year at 19,990), was 81.6% full.

(Update: the New York Times called it "a generously announced 16,303.")

This photograph from the first quarter shows a good number of seats full in part of the upper bowl--"there was some extra juice in the building," wrote the Record's Al Iannazzone--but many empty seats closer to the floor. Here are a couple of other photos (time taken unclear), plus one from near the game's end.

Then again, with the NBA, official attendance does not refer to gate count but rather all tickets sold or distributed. That bolsters my estimate of a 25% fudge factor.

Genius or desperation (or both)? Nets unload 100,000 tickets via Saveology.com

Saveology.com™, a consumer comparison-shopping portal based in Fort Lauderdale, FL, has announced "it has purchased 100,000 Nets ticket vouchers that are being distributed to charities, hospitals, and people in-need in the New York metropolitan area, as well as to Saveology.com customers."

"During this sharp economic downturn we felt it was important to provide people with the opportunity to enjoy attending a Nets game on us," said Saveology.com CEO Benny Aboud in the press release. "This initiative also will enable our customers to attend Nets games and to receive future promotions, as well. We are thrilled with our partnership with the Nets as we continue our goal to help people."
(Emphasis added)

Besides helping people, Saveology.com is seeking customer leads: those "who sign up for tickets will have the chance to receive beneficial information on how to save on their essential services, which include home phone service, Internet, wireless phones, insurance, home security, moving services, and more."

Nets CEO Brett Yormark called it "a major investment by Saveology.com;" unmentioned in the press release was the discount the Nets offered. It's unlikely the team charged Saveology much to give away tickets to "people in need." For the Nets, the advantage comes in filling seats that otherwise seem empty, and with concession sales.

How many seats available?

The Nets are averaging 15,185 in an arena that can hold 19,968 people, leaving an average of 4805 seats. They have 26 more home games; that suggests that at least 124,358 seats would be available.

If the Saveology.com deal only covers this season--and it's not clear--that sounds like a tight fit. However, if, as I've suggested, there's a 25% fudge factor regarding attendance, there are more tickets available--and some the Nets are currently giving away might instead go to Saveology.com.

There's a reason for the fudge factor. With the NBA, official attendance does not refer to gate count but rather all tickets sold or distributed.

And how did Saveology.com connect to the Nets? I can't be sure, but here's one link. The company does deals with the Florida Panthers hockey team near its headquarters, and that team's CEO is none other than Michael Yormark, twin brother of the Nets' Brett--and subject of mutual laudatory profiles.

As analysts call Forest City Enterprises stock worthless, local elected officials get a vague update on Atlantic Yards

Yesterday, Brooklyn elected officials representing areas around the Atlantic Yards footprint met at the offices of the Empire State Development Corporation (ESDC) in Manhattan with ESDC officials and representatives of developer Forest City Ratner (FCR) for a status report on the project.

The meeting came shortly after investment analysts at Morningstar brutalized parent company Forest City Enterprises (FCE) as essentially worthless, in an article headlined Five More Stocks with Zero Value: We'd prefer a pack of gum to these businesses.

The analysis, which was picked up by the Washington Post (though not yet by the New York Times) hints at the pressure facing FCE and FCR officials to get Atlantic Yards going, ideally (from their perspective) with some additional government aid.

Timetable uncertain

I have only secondhand reports from the meeting, but it seems plausible that FCR officials would've said that, while they're committed to Atlantic Yards, they can't be certain of a timeline--not for the project nor the Carlton Avenue bridge reconstruction--but hope for lawsuits to be cleared next year, leading to the start of arena financing.

It's also plausible that FCR officials recognize that they can't get more direct subsidies from the city and state --and there was no indication anyone yesterday was offering aid--but still say they need more help. After all, in April, Chuck Ratner of parent FCE told investment analysts "we still need more" subsidies.

A federal bailout?

Such help could be faster payments from the city and slower payments to the state, as the New York Observer reported last week, but a new savior may have emerged: the federal government.

If FCE and FCR could get a piece of federal stimulus money next year--Developers Ask U.S. for Bailout as Massive Debt Looms, reported the Wall Street Journal yesterday--the backers of Atlantic Yards could get a major lifeline.

The Cleveland Plain Dealer, based in FCE's home town, reported yesterday that a letter sent to Treasury Secretary Henry Paulson pointed to "insufficient systemic capacity to refinance expiring, performing commercial real-estate loans." Among the signers of the letter was the National Association of Real Estate Investment Trusts, which includes FCE.

Such aid could bolster Atlantic Yards. After all, FCR owes $177 million to Gramercy Capital, due in February for a repayment or renegotiation.

If the auto and banking industries get federal aid, other industries could be expected to ask, too. Then again, the AY arena is already slated for federal subsidies of $100+ million, given that the feds take the biggest hit on tax-exempt bonds. And there's already an underutilized arena in Newark.

Crunch time: 2009

Call it a chess game, or holding pattern, but both FCE and FCR have suspended nearly all development activity to preserve cash flow. FCE can't keep absorbing $22.4 million annual losses from the New Jersey Nets without some good news, whether it be additional subsidies or new investors.

It looks like 2009 will be a tough year; New York Times columnist Paul Krugman yesterday predicted "months, perhaps even a year, of economic hell," but said he's "fairly optimistic about 2010."

Given FCR's cash flow problems, further delays from lingering lawsuits--even if FCR and the ESDC are likely to prevail--could be painful. On the other hand, if and when Atlantic Yards goes forward, a decline in construction costs could make the project more feasible than it previously seemed.

Major uncertainty

Indeed, Morningstar offered comfort to both bears and bulls. Regarding FCE, it warned:
From the Analyst Report: "At nearly 83%, Forest City's debt/total gross PP&E [property, plant & equipment] is much higher than peers'. With EBITDA/interest [Earnings Before Interest, Taxes, Depreciation and Amortization/interest] expense expected to dip below 1 times during the next three years, Forest City could face severe financial distress, since it may need to refinance debt at ever-increasing interest rates while operating cash flow declines."

At the same time, analysts allowed for major uncertainty:
The point is that even $0 fair value calls are far from a sure thing. All five of the stocks we highlight below carry our very high fair value uncertainty rating. Companies currently flirting with bankruptcy generally have a high degree of financial and/or operating leverage. While that has pushed them to the edge of a cliff in the current downturn, conditions could improve in a way we don't expect, drastically changing the fortunes of these companies.

Stock falls, rebounds

If everyone believed FCE was worthless, there might have been a complete selloff yesterday, as investors unloaded a sinking stock any cost.

In reality, however, FCE stock went down 4.4%, to $5.85 and, as the chart shows, had a recovery in the late afternoon.

That may have been related to the press release, issued at 4:10 p.m., that Forest City Announces Major Milestones for Mesa del Sol Project, a 12,900-acre, mixed-use project in Albuquerque, N.M.

One "major milestone" was a December 5 agreement with Sandia National Laboratories "to partner on research, development and demonstration of energy technologies;" the other was a December 10 ribbon-cutting ceremony for phase one of a new, 210,000-square-foot office building. (How many phases does an office building have?)

The lesson for AY

If the market can move (apparently) after those relatively small announcements, imagine how FCE stock might move if lawsuits regarding Atlantic Yards are cleared and Goldman Sachs goes forward with arena financing?

So, if Forest City Ratner seems to be fighting hard to maintain Atlantic Yards, it may be because the parent company itself is at stake.

Confidential but not at all correct: the latest AY footprint ownership map

Two years after the Empire State Development Corporation (ESDC) produced a deceptive map regarding the ownership and control of property within the Atlantic Yards footprint, developer Forest City Ratner (I believe) has produced an updated version of the map that maintains the deceptions and adds some more.

Most notably, the developer's foothold has actually grown more tenuous, since FCR two years ago claimed it owned or controlled 90 percent of the land needed for the project, but the map now claims 86 percent, based spuriously on "recent acquisitions."

It also omits the public streets that would be demapped for the project.

The new map

The following map, dated August 2008 and titled Brooklyn Arena and Atlantic Yards Block and Lot Map, was passed on by a reader. While I can't be certain of its provenance, the statement "All information is to the best of FCRC's knowledge" strongly suggests that the document was provided by the developer, or at least based on information it provided.

I'm not sure why the map's producers claim it's "Privileged & Strictly Confidential," given that it reproduces (though incorrectly) public information. Update: My understanding is that the percentage is of the properties needed, not the square footage.
(Click to enlarge.)


Recent acquisitions?

"With recent acquisitions included, [Forest City Ratner] now owns or controls 86 percent of the land needed for Atlantic Yards," according to the official AY FAQ. The term "recent acquisitions" suggests forward momentum rather than, more accurately, some slippage.

And both of those totals are questionable, since they include properties in which tenants holding leases remain in court. The city and state backed up that incorrect total in a letter earlier this year to federal regulators, in an effort to get tax-exempt bonds for the arena grandfathered in under more lenient rules. (It was successful.)

Indeed, I wrote in August 2006 how FCR's ownership did not mean control, given pending litigation.

Both maps could use asterixes for properties that may be owned by the developer but not fully under its control. For example, on Block 1127 in the southwest segment of the project, residential tenants remain in three buildings owned by the developer (Lots 21, 50, 46); those tenants are all plaintiffs in pending lawsuits.

Forest City Ratner seeks eminent domain (via "friendly condemnations") to extinguish rent-stabilized leases rather than go through the slower process overseen by the New York State Division of Housing & Community Renewal.

Also, Freddy's Bar & Backroom, at the southeast corner of the block (Lot 43), is in property owned by the developer, but the bar has a long-term lease and is a plaintiff in the pending eminent domain suit.

The earlier map

For comparison, here's the property ownership map from the 2006 General Project Plan produced by the Empire State Development Corporation.

Compare and contrast

Both maps indicate property owned or controlled by the developer, and owned by the MTA or the City.

Note that the earlier map acknowledges in orange that city streets (Pacific Street and Fifth Avenue) would be taken for the project and demapped for superblocks, but the more recent map does not.

Check out the asterixes. Three properties at the southeast corner of Carlton and Vanderbilt avenues have double asterixes, indicating a legal dispute.

As I wrote two years ago, "control" could be quite tenuous. At the time the earlier map was prepared, the purple color indicated that the developer "controlled" the site, but the asterixes noted that the owner of the property had objected to FCR's lease. In March 2007, a state judge ruled in favor of property owner Henry Weinstein. Developer Shaya Boymelgreen, who had transferred his lease to FCR, is appealing the decision.

In retrospect, the earlier map should have shown those properties in a neutral color, indicating a dispute, rather than defaulting to indicate--albeit with an asterix--that they were controlled by the developer.

Also note that the property at Block 1120, Lot 35 is described on both maps as controlled by the developer because it holds a ground lease. Given the experience with the Weinstein properties, maybe a more neutral color is appropriate.

Maybe it's time for a more accurate map.

Sports Business Daily: Ratner a person to watch in 2009

Sports Business Daily recently listed eight people as People To Watch: Who Will Shape The Industry In The New Year? (subscribers only).

The third name listed:
NETS OWNER BRUCE RATNER: Everyone remains intrigued by the prospect of an NBA team in Brooklyn, but can Ratner fight back the legal opposition and a sour economy to pull off the Atlantic Yards project?

Ratner's inclusion was notable, given that only one other sports team owner was part of the list. That suggests that the Brooklyn controversy is significantly on the national sports radar.

The list

Detroit Lions Vice Chair William Clay Ford Jr.

Major League Baseball Network President and CEO Tony Pettiti

Nets Owner Bruce Ratner

NBA China CEO Tim Chen

PGA Tour Executive VP & CMO Tom Wade

U.S. Olympic Committee Chair Larry Probst

U.S. Tennis Association Executive Director Gordon Smith

Versus President Jamie Davis

Lupica on Yankee Stadium: "It's a wonderful lie" (and NY mag on "perversely perfect symbols")

Most of Daily News sports columnist Mike Lupica's column today, headlined It's a wonderful lie, concerns the revelations, many from his collegue, Metro columnist Juan Gonzalez, about the strange and sudden leap in the valuation of the land under Yankee Stadium.

He writes:
So how come no politician in New York except Rep. Richard Brodsky seems to be asking the questions and carrying the fight on this? Or maybe the cozy relationship between the Yankees and City Hall that began when Yankee groupie Rudy Giuliani was mayor was turned over to Bloomberg like a well-turned double play. As always with the current mayor, pay close attention to what he does, not what he says.

And I'll add: And will any politician look closely at the valuation of the land under the Atlantic Yards arena, assuming the construction plan and issuance of tax-exempt bonds moves forward?

In New York magazine

In the year-end Reasons to Love New York 2008 issue, New York magazine's Chris Smith offers:
27. Because Our New Stadiums Are Perversely Perfect Symbols of the City Right Now
Just as New York and the rest of the country stagger into a profound recession, we’ll be dedicating two new towering, taxpayer-subsidized monuments to excess and misplaced priorities—two of the core impulses that have always animated the city. Let Seattle, which allowed the NBA SuperSonics to leave town rather than build a new arena, feel virtuous; we’re New York, and we need our overpriced diversions, now more than ever. Hey, we may not be able to keep our firehouses open, or overhaul Penn Station—but we’ve got $3 billion in shiny sports palaces!

Read on regarding the new stadiums for the Yankees and Mets.

As Columbia plan gets approved, a fight over blight and eminent domain emerges

Well, as the New York Times reported Friday, in an article headlined State Officials Approve Expansion by Columbia, the Empire State Development Corporation (ESDC), as expected, approved the Columbia University expansion project in West Harlem, aka Manhattanville.

The vote, however, "came after two hours of impassioned testimony against the plan by more than two dozen people, including residents, local business owners and their lawyers." (I don't think testimony was allowed when the ESDC approved the Atlantic Yards plan two years ago. Post-Gargano progress?)

Civil rights lawyer Norman Siegel, who represents Tuck-It-Away storage company owner Nick Sprayregen, the main (of two) landowners resisting eminent domain, said he'd file a lawsuit. Approval by the state's Public Authorities Control Board (PACB) is still necessary.

Sponsor blight?

The Times quoted Sprayregen:
He claims that the university purposely blighted the area by buying up property and then neglecting and “warehousing” it. Central to the suit, he said, would be recently acquired documentation that “paints a damning picture of the process, including collusion between Columbia and New York State, and conflicts of interests.”

Some of these issues came up last year, he said, in a case in which a state judge questioned the independence of the state development corporation, citing the appearance of collusion between the corporation and Columbia after the agency hired a consultant who was already working for Columbia on the Manhattanville project.

The back story

I'm hardly as up to speed on the Columbia situation as I am on AY, but, if Sprayregen's contentions are accurate--and so far, the courts have been sympathetic--the Columbia case may be even more outrageous than the AY case when it comes to blight.

After all, with Atlantic Yards, the state punted when asked to acknowledge that government agencies were responsible for the blight along the Metropolitan Transportation Authority's Vanderbilt Yard. With Columbia, the university seems to be responsible for a large portion of the blight.

That's the theme of Columbia University, Slumlord, a long article in the conservative Weekly Standard, which might be expected to take a withering look at eminent domain.

Jonathan V. Last writes:
It’s a curious situation—the government punishing a landowner who takes care of his property and rewarding an owner who does not. But this is the through-the-looking-glass world of New York eminent domain law.

Interestingly, while Columbia owns 70 percent of the land it seeks and public agencies control 26 percent, 4 percent is owned by Sprayregen and the Singh family, which owns two gas stations. (With Atlantic Yards, about 14% of the amount of footprint land is not owned or controlled by the developer or the government. More on this tomorrow.)

The blight fight

Last points out the uphill battle facing those challenging blight designations, issues pointed out at a State Senate hearing in September:
In New York, blight is essentially whatever the government says it is.

...But New York makes challenging eminent domain even more difficult. State law does not allow property owners to challenge eminent domain claims in a trial court. In every other state in the Union, owners have the right to challenge the government’s assertion of eminent domain before a trial judge—meaning that they get the chance for discovery, to call witnesses on their behalf, to introduce evidence, and to challenge the government’s assertions. New York routes challenges to eminent domain takings directly to an appellate court, where property owners are given 10 minutes to argue their case before a judge and cannot embark on any findings of fact—let alone challenge the facts asserted by the government. As Robert McNamara, a staff attorney for the Institute of Justice, wryly notes, “New York doesn’t just stack the deck against property owners. They don’t even let the property owners play.”

Sprayregen says he's committed to spending 3 million on legal fees for a case he expects to lose. That's well more than Develop Don't Destroy Brooklyn, which also has a volunteer legal team, has spent on various AY cases.

Last's article describes a series of blight studies, first conducted by a consulting firm called Urbitran--a study released only after Sprayregen's multiple Freedom of Information Law requests. Nearly all of these buildings within the zone of the Columbia expansion plan were owned by the university.

ESDC tried again, and used Columbia’s own consulting firm, AKRF:
The state of New York was charging a firm being paid significant amounts by Columbia University to make a determination of potentially great benefit to Columbia University. But, the ESDC was also more careful than the EDC had been. Before awarding the contract to perform the study, the ESDC asked AKRF to submit “preliminary” findings on blight in Manhattanville. This they did on August 23, 2006. The ESDC was pleased with what AKRF was suggesting it would find and, on September 11, 2006, signed a contract with AKRF to carry out the study.

As part of his fight to collect material from Columbia and the ESDC, Sprayregen went to court requesting documents pertaining to the ESDC’s relationship with AKRF.

In March 2007, Dennis Mincieli, an AKRF vice president, insisted in a court filing (arguing against one of Sprayregen’s FOIL requests) that there was nothing improper in the relationship because a “Chinese wall” had been erected between the teams working for Columbia and the ESDC. This was a dubious claim—after all, the same company benefited, even if the staffs were segregated—but it turned out not even to be true.

The ESDC, concerned that AKRF's study might be problematic legally, then hired another consultant, Earthtech, to replicate the AKRF study--which it did.

In the Atlantic Yards case, as I reported in August, ESDC hired AKRF after--not while--it had been working for Forest City Ratner. The ESDC's conflict-of-interest policy apparently doesn't address issues of consecutive representation. And AKRF was hired without any competitive bidding or public notice because the ESDC was convinced speed and continuity were important. AKRF never conducted a market study that was part of its contract scope.

Chutzpah

Last writes:
In its brief arguing against the temporary restraining order, the ESDC’s lawyers claimed that a delay in closing the Public Record might cost human lives:
"By 2011, this country will have a virtual tsunami of Alzheimer’s patients as baby boomers age. . . . Here, the first building to be constructed, the Jerome L. Greene Science Center, would be devoted to curing diseases, such as autism, dementia, Alzheimer’s and schizophrenia. The money is already available for the construction of that Center. How does one place a price tag in human suffering on delaying a possible cure of any such diseases by 18 months, 12 months, or 6 months?"

In the annals of eminent domain litigation, it’s hard to find a more brazen contention.

Well, it's certainly a lesser outrage, but it is just as brutally weird for the ESDC, as I wrote in September, in the litigation over the AY environmental review, to criticize the appellants by calling the AY arena the "Barclays Center," which just happens to be the name the developer uses.

Kelo redux?

Last thinks, as did AY opponents in their case, that the Supreme Court's Kelo v. New London case may have an impact on the Columbia case. No, Sprayregen won't be able to establish that the ESDC was engaged in “impermissible favoritism” toward Columbia, given that such a designation is much more likely in a trial court. (That's why the Develop Don't Destroy Brooklyn-organized lawsuit was first filed in federal court.)

Last thinks Sprayregen can argue that Columbia’s plan, unlike that endorsed in Kelo, is not “comprehensive” because Columbia has not made firm plans for the site. I'm not so sure; I suspect that the state will argue that the framework, at least, is comprehensive, and courts will defer to that.

And while courts have readily agreed to included non-blighted property to create contiguous sites, writes Last:
the Court has not been confronted with a case in which the neighborhood blight was directly caused by the party seeking the benefit of eminent domain.

Would that hold weight? I'm not sure, but it sure would be interesting to hear argued.

Ouroussoff on boom-time architecture: "somewhere along the way that fantasy took a wrong turn"

In an essay headlined It Was Fun Till the Money Ran Out, scheduled for Sunday's paper but already online, New York Times architectural critic Nicolai Ouroussoff makes a backhanded reference to Atlantic Yards in a lament that, maybe, architecture during the boom years was focused on the wrong things.

Ouroussoff writes:
WHO knew a year ago that we were nearing the end of one of the most delirious eras in modern architectural history? What’s more, who would have predicted that this turnaround, brought about by the biggest economic crisis in a half-century, would be met in some corners with a guilty sense of relief?

Before the financial cataclysm, the profession seemed to be in the midst of a major renaissance. Architects like Rem Koolhaas, Zaha Hadid, Frank Gehry, and Jacques Herzog and Pierre de Meuron, once deemed too radical for the mainstream, were celebrated as major cultural figures. And not just by high-minded cultural institutions; they were courted by developers who once scorned those talents as pretentious airheads.

Firms like Forest City Ratner and the Related Companies, which once worked exclusively with corporations that were more adept at handling big budgets than at architectural innovation, seized on these innovators as part of a shrewd business strategy. The architect’s prestige would not only win over discerning consumers but also persuade planning boards to accede to large-scale urban projects like, say, Mr. Gehry’s Atlantic Yards in Brooklyn.

About AY

The term "delirious," of course, refers to Koolhaas's 1978 book Delirious New York. Note that the City Planning Commission could not officially approve Atlantic Yards, though it did give the project its blessing, while recommending a few tweaks.

The Empire State Development Corporation, less a planning board than an agency that promotes business, did cite Gehry's role in announcing its approval 12/8/06:
The almost $4 billion Atlantic Yards project designed by world-class architect Frank Gehry...

Still, Gehry's role was probably more important in winning over parts of the public, rather than any official agencies.

What went wrong?

Ouroussoff, however, laments that "somewhere along the way that fantasy took a wrong turn," citing "luxury residential high-rises, high-end boutiques and corporate offices," without public housing, schools, hospitals or public infrastructure.

He points specifically to Manhattan, where major architects each seemed to be "designing an exclusive residential building."

He doesn't mention Atlantic Yards, which, though mostly luxury housing, would contain a considerable amount of subsidized housing--albeit much not accessible to the average Brooklyn household.

What next?

Ouroussoff expresses mixed opinions about the downturn, writing that "A lot of wonderful architecture is being thrown out with the bad." Examples: Jean Nouvel’s tower for the Museum of Modern Art, Renzo Piano’s new Whitney Museum of American Art, and Norman Foster's "interior renovation of the Beaux-Arts New York Public Library on Fifth Avenue."

He's hopeful that President-elect Barack Obama's plan to invest heavily in infrastructure would engage "a lot of first-rate architectural talent" currently on the shelf. Should the feds fund Atlantic Yards, as Brooklyn Borough President Marty Markowitz wishes? Ouroussoff's brief essay doesn't go there.

With Senate candidate and transportation policy, new politics look like old politics

In some cases, the new politics seems a bit too much like the old politics, and some tangents connect to Atlantic Yards.

Locally, the Kennedy coronation

First, the ascension of Caroline Kennedy as the front-runner for the soon-to-be-free Senate seat in New York has already drawn the endorsement of Rupert Murdoch's New York Post, support from Mayor Mike Bloomberg, and will involve the influential consultants Knickerbocker SKD, who work for Bloomberg, Sen. Chuck Schumer, and--of course--Forest City Ratner.

Wayne Barrett of the Village Voice laid it out, and NoLandGrab linked to a couple of pieces I've written about Knickerbocker SKD's propaganda for FCR and candidate Tracy Boyland.

In the Times, Judith Warner deftly disagreed with those plumping for Kennedy.

National transportation policy

On the national scene, President-elect Barack Obama's appointment of Ray LaHood as transportation secretary has provoked dismay from sustainable transport and smart growth advocates, wrote Streetsblog's Aaron Naparstek in Same.gov: A Transportation Secretary Who’s Hard to Believe In.

Lahood has "close ties to highway lobby stalwart Caterpillar Inc.," observed Naparstek, and, says Petra Todorovich, director of Regional Plan Association’s America 2050 program, "Obama still hasn't made the transportation - land use - climate connection."

Before the appointment, Streetsblog pointed to the division between states, which are emphasizing road projects in their wish list of stimulus projects, while cities are dealing with congestion.

New York's Metropolitian Transportation Authority, however, has only asked for station rehabs and accelerated track replacement, pointed out Streetsblog's Ben Fried, who added:
So what would a visionary infrastructure stimulus for New York look like? How about physically separated, radial BRT lines connecting the outer boroughs to Manhattan (or at least implementing the BRT pilot plan that's been public for more than two years). Or an accelerated and expanded build-out of the protected bike path network. If there was ever a time to think big, now is the moment.

Such BRT, or bus rapid transit, has been proposed for Flatbush Avenue and might be crucial to the success of AY, but BRT for Nostrand Avenue wouldn't come until 2012, with Flatbush Avenue unscheduled.

Short-term, long-term

Author and critic James Howard Kunstler, known for his book on peak oil, The Long Emergency, offered some serious warnings in a post headlined People Get Ready.

Investments in highway repair means we will be investing long-term in infrastructure that we probably won't be using the same way in ten years. But I doubt there is any way around it. The American public can't conceive of living any other way except in a car-centered society. Anyway, some parts of our highway-bridge-and-tunnel system are already so decrepit that they pose a menace right now, and the clamor to direct "stimulation" there is already very strong -- backed by all the fraternities of engineers.

Stimulus aimed at perpetuating mass motoring will be a tragic waste of our dwindling resources. We'd be better off aiming it at fixing the railroads (especially electrifying them), refitting our harbors with piers and warehouses in preparation to move more stuff by boats, and in repairing the electric grid.

He concluded:
Mr. Obama would be most successful if he could persuade the public how much more severe the required changes are than they currently realize, and inspire them to get with program of retrofitting American life to comply with these realities.

Bringing it all together

In What Kind of New Deal?, Richard Wells wrote in the December/January issue of the Brooklyn Rail about the importance of community organizing and agitation:
They proclaim, in their own modest ways, that ordinary people have “a right to the city,” and that, in the present context, is the important thing. Of course we’re a long way from actually securing this right, and the problem is not purely one of mustering, finally, enough strength to convince the mayor and the Department of City Planning that enough is enough. The withdrawal of federal support for urban development over the years created a vacuum that real estate giants like The Related Group and the Vornado Realty Trust have unfortunately filled.

Obama has declared his intention to upgrade the federal Community Development Block Grant program. That’s a good place to start, and indeed, he probably should fold such plans into his stimulus package as well. But the feds need to attach strings. In other words, aid has to be structured around a project for comprehensive planning for the public good, not around the ad hoc policy of incentivizing private sector profits that currently masquerades as planning. The city would then have to once and for all beef up its Uniform Land Review Process. For this to work, existing public institutions like Community Boards would have to be restructured, so that they have real, as opposed to advisory, power to decide what gets built where. They will also need to be staffed up with trained men and women, with real commitment, to work with residents on their plans. This would require more money in the form of targeted grants. Moses had his corps of unemployed architects, who found great satisfaction in their work; this time around, there will be plenty of under and unemployed BAs, MAs and, PhD.s, well schooled in the movements for housing reform, labor rights, and environmental justice, who would welcome a similar opportunity.
(Emphasis added)

In other words, process--as we've learned all too well in the Atlantic Yards saga--is inseparable from product.

Good game, bad weather, low attendance for the Nets

Given that last night began the weekend and the New Jersey Nets were playing the Dallas Mavericks, to whom fading star Nets point guard Jason Kidd was traded earlier this year for emerging star Devin Harris (and more), the Izod Center should have drawn a crowd larger than the 15,621 average.

However, due to some lousy weather, many people stayed home and the Nets drew an announced 9889 people to watch what Nets Daily described as Harris Scorches Kidd and Mavs, a sign that the trade has worked out quite well.

(ESPN's Mark Stein says Harris, so far, is the league's Most Improved Player.)

The AP reported:
With so many seats unfilled, the Nets allowed fans sitting in the upper section to move to the lower bowl during a second-quarter timeout. (Pregame photo.)

Is that the future of crowd management in low-attendance arenas? I suspect it will be reserved for special cases, like last night. Otherwise it runs the risk of making those paying full freight feel like suckers.

Trouble spot: Nets' attendance should be on the NBA's (and Times's) radar

The New York Times today, in a Sports section article headlined In Some N.B.A. Arenas, the Crowds Are Thin, describes how, while National Basketball Attendance is flat and arenas are reported at 89% of capacity, at par with last season, some teams and cities are "trouble spots."

At the top (or bottom) of the list is the Sacramento Kings:
The Kings are suffering from the twin perils of a poor economy and poor play, with a 7-19 record and no certified stars. The problems are mirrored in Indianapolis, Philadelphia, Minneapolis, Charlotte, N.C., and Memphis, which comprise the bottom fifth of the N.B.A. attendance list.

Missing from the article is any mention of the New Jersey Nets, which should be very close to that bottom fifth. Consider that the Indiana Pacers are drawing 14,180 fans, or 78.06% in an arena with the capacity of 18,165.

The announced Nets' attendance is just a fraction better. As of today, the Nets are averaging 15,621 fans, or 78.14% in an arena with the capacity of 19,990, a very slight decrease from last year's average of 15,657. (I had previously listed 19,968 as the capacity.)

That's a marginal distinction. Not only that, the Times acknowledges the capacity to fudge the numbers:
(N.B.A. teams report attendance based on tickets distributed, not turnstile counts. The latter figure is not publicly available.)

Making up for the lapse

I don't draw as quick a conclusion as NoLandGrab that the lapse is because the Times's parent company is business partners with New Jersey Nets principal owner Bruce Ratner. After all, a different Times sports reporter described the arena as "half-empty" when it was officially 89% full last month.

But it is true that the Daily News and newspapers in New Jersey, not to mention this blog, have followed up much more.

I suspect the Nets are as good as fudging the numbers as anybody, maybe better. After all, one of the issues facing the Nets is similar to that facing the suffering Kings, as the Times described it:
On top of everything else, the Kings are in a political battle for a new arena, and fans are nervous that they will leave.

Before the season ends, the Times should follow up on the "trouble spot" in its own backyard.

Indirect subsidies: how Forest City Ratner might save another $8 million (and a whole lot more)

The New York Observer's scoop this week--that developer Forest City Ratner is seeking all sorts of ways to indirectly increase subsidies--was accompanied by a subtext: that AY's "projected returns were apparently very marginal," especially compared to other developments.

That conclusion was based on an analysis of the project's internal rate of return (IRR); I pointed out that IRR is not profit, because it does not, for example, address Forest City's 5% development fee.

Also, and equally important, neither set of documents cited--a report by KPMG and Forest City Ratner's own projections--fully account for all the subsidies and benefits the developer would gain.

For example, I estimated last month that Forest City gained nearly $55 million when the city reimbursed the developer $100 million for property in the AY footprint for which it spent $103.5 million--but was more likely worth $158.1 million.

And think I've identified another $8 million, given the transfer of city streets and the conveyance of city property for just one dollar.

Beyond that, the use in project documents of a term known as "extraordinary infrastructure costs"--which Develop Don't Destroy Brooklyn has aptly called "a blank check"--leaves open the possibility of much more public subsidy.

From the IBO report

The New York City Independent Budget Office (IBO), in its September 2005 Fiscal Brief on Atlantic Yards, missed some things, such as the value of naming rights, and also focused on calculating city costs and revenues rather than the benefit to the developer--which is not the same thing--some of which is obscured in the 2/18/05 Memorandum of Understanding (MOU) the developer signed with the city and state.

The $1 street bed?

The report stated:
The city will not participate directly in the ground lease for the arena building site, but its contribution of key property will make the lease possible. According to the MOU, the city will transfer its property under the arena to ESDC for $1. This will include the Fifth Avenue street bed between Flatbush and Atlantic Avenues and the Pacific Street street bed between Flatbush and Sixth Avenues. IBO estimates that the current value of this street property is about $56,000.
(Emphasis added)

How is that calculated? The IBO said in a footnote:
Department of Finance estimates of full market value for adjacent land for the current fiscal year show a value of $20.00 per square foot. IBO estimates that the area of the street beds is approximately 2,820 square feet. Together, these estimates imply a value of $56,400 for the street beds to be transferred from the city to ESDC.

But maybe those Department of Finance numbers are way, way off, given the vast increase in development rights and the typical divorce between the department's valuation figures for tax purposes and actual market value.

At a Floor Area Ratio (FAR) of 10--the same used for the appraisal of the Vanderbilt Yard--and a price of $150 per buildable square foot (a price the city has sought nearby), the value of the land would be 2820 x 10 x 150, or $4,230,000.

So the city would be forgoing not $56,400 but instead more than $4 million.

The $21,465 plot of land?

The IBO report continued:
The city would also transfer a city-owned parcel (block 1127, lot 33), which is valued at $93,800 by the Department of Finance. The city was not collecting tax from this city-owned land; therefore, transferring it to FCRC will not reduce property tax revenues from their current level for this land. However, had the property been used for an alternative private purpose, property taxes may have been paid. The use of a nominal lease that ignores the opportunity cost of the land for the city thus increases the extent of the public subsidy provided to FCRC.
(Emphasis added)

Well, yes.

City property records (right) indicate that the plot is 25 feet x 110 feet, or 2750 square feet. The land is apparently valued by the Department of Finance at $21,465, or less than $7.81 per square foot.

(The overall value of the parcel is now apparenlty $120,000.)

However, following the formula above, at a Floor Area Ratio (FAR) of 10 and a price of $150 per buildable square foot, the value of the land would be 2750 x 10 x 150, or $4,125,000.

So the city would not be forgoing $21,465 but instead more than $4 million.

Bottom line

By my calculations, the street beds and Lot 33 are worth $8,355,000.

Forest City Ratner would pay just one buck.

Watch out for more

According to the MOU:
The City will convey the City Properties and the City Streets underlying the Arena (but not including the commercial office building sites adjacent to the arena) to ESDC for $1.00 and the remaining portions of the City Properties and City Streets to ESDC for fair market value (paid for by FCRC) based on an independent appraisal that determines value based on the contemplated Development Plan and the development rights associated with such property, taking into account the amount of the any [sic] capital contribution or other financial contribution by the Public Parlies to the Project (exclusive of the contributions for the Arena Site as specified in Section 10 below) and any extraordinary cost to FCRC of relocating public utilities and installing new public utility infrastructure.

It also states:
the Public Parties will consider making additional contributions for extraordinary infrastructure costs related to the mixed-use development on the Project Site (excluding the Arena Building Site)
(Emphases added)

That leaves a lot of wiggle room for additional subsidies.

Good timing, bad timing on AY naming rights deal, arena subcontractors, and construction materials

The Barclays Center naming rights deal for the Atlantic Yards arena, announced in January 2007, was clearly good timing for the Nets, with a record deal reported at $400 million over 20 years.

When Barclays announced its recommitment last month, neither the bank nor Forest City Ratner made clear that deal had been maintained at the same dollar value. I had suggested that Barclays had had some leverage to renegotiate.

New pressure on naming rights

Even with renogitiation, New York, as the country's media capital, offers an especially good platform for naming rights

The AP reported December 15 that the New Orleans Hornets will not have an easy time selling naming rights.

The source was none other than sports economist Andrew Zimbalist (who served as a paid consultant to Forest City Ratner, producing a spurious report on the fiscal impact of AY): "The advertising expenditure is going to have a lower payoff during a time of recession, especially during a time of severe recession."

Also, such naming rights become less of a priority in companies' advertising plans, he said. Marketing executive Tom George told the AP that his company, Octagon, would target "international corporations seeking to make an entry into the United States' market," but noted that the auto or banking industries were no longer on the list.

And Zimbalist, in a nice bit of synergy, cited the Barclays deal as an example of an international company using naming rights to enter the U.S. market.

Construction costs rise, then dip

As for construction of the AY arena, if it goes forward, Forest City Ratner has experienced both bad timing and some amelioration of the damage.

The announced cost projected for the planned Atlantic Yards arena went up 50% since project approval in December 2006. Then again, in the last few months, the number likely has declined from the $950 million figure disclosed in March.

After all, the cost of construction materials has gone down and, with fewer projects going up, subcontractors would be submitting some very competitive bids.

Bad timing on steel

However, it looks like Forest City Ratner may have experienced some unfortunate timing regarding at least some of those construction materials.

In September 2007, Nets CEO Brett Yormark told an interviewer, "We've just ordered steel and we're expecting, hopefully, to break ground, in October-November."

Now, however, the price of steel has fallen some 30 percent.

Heartwood Studios: digital storytelling used (still?) to market the Barclays Center

Heartwood Studios, which offers "Digital Storytelling® through Visual Extravaganza®!" is--or at least was--working on marketing the Barclays Center and suites there.

In the illustration at right, the graphic of the Barclays Center has been widely circulated and the Nets Sales Center has at least opened; however, the rendering at bottom is new to me. (Click to enlarge)

Is campaign paused?

It's also a bit stale, which offers further evidence that the project is paused. The figure in the background of the graphic is point guard Jason Kidd, wearing number 5, who was traded to Dallas in February.

Also, an anonymous commenter on NetsDaily said November 13 that "I happen to know they let go of almost ten key internal employees earlier this week and several that were selling for the new arena suites and seating."

First, the Cowboys

The East Bay Business Times explained last year that Heartwood gained attention with an animated presentation of the new stadium for the Dallas Cowboys:
That video, posted on a promotional site for the stadium in January, laid the groundwork for [CEO Neil] Wadhawan to make recent presentations to the New York Yankees and the New Jersey Nets, which have commissioned Heartwood to work with Gehry Partners LLP on their next stadium.

What's Gehry Partners doing right now on the AY arena? Not so much.

Would Gehry's staffers come back after the credit markets unfreeze?

The Architect's Newspaper warns against reading too much into Frank Gehry's laying off staff members working on the Atlantic Yards project.

AN's Matt Chaban quotes Kermit Baker: "What we’re seeing, as a result of the credit freeze, is a lot of projects, even a lot of good projects, being put on hold. Once the credit markets begin to unfreeze, though, a lot of this work will come back."

Baker was not speaking directly about AY, but Chaban suggests that situation could apply.

That's plausible. Then again, Forest City Ratner could have been a lot more enthusiastic in talking about the issue. Why not say Gehry's on sabbatical?

Chaban also warns not to read much into Gehry's unwillingness to comment, calling it par for the course.

Olin vs. Gehry?

The Architect's Newspaper reported last month that AY landscape architect Laurie Olin, said to be on sabbatical, may be at odds with Gehry:
Even if Atlantic Yards does build a second phase with Olin on the design team, though, the project may represent another sort of coda. Another architect, who asked for anonymity, told AN that working with Gehry’s proprietary software and idiosyncratic methods has become financially difficult for the Olin office. “I heard that when Laurie was passing ownership of the firm to the other partners, and they wanted to make it more solvent and profitable, they basically had to stop working on Gehry projects,” he said.

Hedge fund head says she's short on Forest City, which has a lot of debt coming due in 2009

In Trading the Real Estate Bounce on CNBC's Closing Bell yesterday, it's worth watching the segment to hear all the comments from Karen Finerman of Metropolitan Capital (a hedge fund) about Forest City Enterprises.

Where do you stand after the rate cut by the Federal Reserve, she was asked by Dylan Ratigan.

"Generally, we are still short," she replied. "I don't really think that the Fed's action has materially changed the commercial real estate picture."

How are you defining the commercial real estate picture, Ratigan asked.

"Well, it really depends on the area, of course, and how levered, but things that have development projects," Finerman replied. "And a name that we're short is Forest City, FCE slash A is the ticker. This is one probably best known for the Atlantic Yards development, which is in Brooklyn, which is where the Nets will be playing. They were and touted themselves as a development company and now that’s not a business model that’s working. And they have a lot of debt. And a lot of it comes due in '09. And so, that's the kind of thing that we're focusing on, where I think there could be some near-term issues.“

Btw, I couldn't find any report on the recent results for Metropolitan Capital, but it did recently hire Silda Wall Spitzer.

MTA: $1 billion refers to capital plan, not Atlantic Yards

No, the Metropolitan Transportation Authority does not expect $1 billion from Atlantic Yards, as reported erroneously by Reuters yesterday. As announced umpteen times, the authority would be paid $100 million cash for the Vanderbilt Yard.

MTA spokesman Jeremy Soffin says that the reporter wasn't at the MTA meeting at issue. The MTA's 2005-2009 capital plan assumes $1 billion in asset sales, he says, "which obviously includes Hudson Yards, not just AY." Thus the reporter erred in attributing the $1 billion to one project.

It took Reuters more than four hours to post a correction.

Was Izod Center 62.8% full last night?

Announced attendance Wednesday of 12,542 for the basketball game between the New Jersey Nets and the Utah Jazz meant the Izod Center was 62.8% full (capacity 19,968).

I've suggested a 25% fudge factor.

This first-quarter photo and this third-quarter photo suggest more empty seats, but the view of the arena is quite limited, so it's hard to judge.

Still, this is what a better-attended arena (in Toronto) looks like.

Daily News: layoffs may signal rift between Gehry and Ratner

The New York Daily News, which despite some egregious Atlantic Yards reportage and alleged interference by Forest City Ratner has been leading AY coverage among the dailies lately, advances the story by suggesting a rift between AY architect Frank Gehry and the developer.

While the Wall Street Journal two days ago reported that Gehry had dropped all his staffers working on the project, in an article today headlined Architect drops ax on Yards staff, the Daily News suggests that the layoff of some two dozen workers wasn't quite amicable:
"Almost all the people working on the Brooklyn project got laid off," said a source familiar with the cuts who claimed the developer had refused to pay Gehry additional costs for design revisions. "Basically, he's not willing to pay."

That suggests the effect of limited cash flow, not the all-purpose excuse of litigation, for which Forest City has blamed the work stoppage at the Metropolitan Transportation Authority's Vanderbilt Yard.

No one's talking

A Forest City Ratner spokesman wouldn't discuss the issue--DDDB has been pointing to the developer's unfulfilled promises of transparency--nor would anyone from Gehry's office, which led the Daily News to conclude:
It was unclear yesterday whether the relationship between Ratner and Gehry was over or merely put on hold because of the economy.

Major selling point

That's a very important question to answer. Gehry's role is a major selling point for the project. Would investors want to back an arena "partially designed by world-renowned Frank Gehry"?

Moreover, parent company Forest City Enterprises insists that Atlantic Yards, virtually alone among the developer's projects, is moving ahead, even though all evidence is to the contrary.

There's obviously an incentive to maintain at least the appearance of forward motion, but the New York Observer, for one, isn't buying it.

Meanwhile, landscape architect Laurie Olin is said to be on sabbatical--which is debatable, but at least there's no more work on Phase 1 for him to do. Gehry's only designed three of five buildings, including the arena, on the arena block, according to the most recent renderings, much less the sixth building at Site 5 or all of Phase 2.

Indirect subsidies: how Forest City pursues more aid (and can they revise the City Funding Agreement?)

So, now we know what Forest City Enterprises CEO Chuck Ratner meant when he told investment analysts in April that "we still need more" subsidies.

I commented that such a request might generate pushback from some elected officials. It did, and since then, the hemorrhaging of city and state budgets means that direct appropriations are very unlikely.

However, as the New York Observer reminded us this week, there are more ways to skin a budget, including:

• a delay in paying the Metropolitan Transportation Authority the $100 million (not $1 billion) it pledged to pay for the railyard
• additional subsidies boosting the affordable housing
• a speed-up in the city's pace to deliver the $100 million pledged

After all, if Forest City Ratner needs cash flow to pay its bills, then getting city money sooner saves borrowing costs, and avoiding paying a bill increases the value of cash on hand. Either way, it's a boost to the bottom line.

Speeding up city payments?

Regarding the city monies, the Observer reported:
About $40 million of this sum has already been paid to Forest City, and according to multiple people familiar with discussions, the city is considering speeding up the payments on the balance.

That, however, is already part of a contract, so it's not clear to me how much wiggle room there might be. According to Section 3.02 of the City Funding Agreement, the New York City Economic Development Corporation (NYCEDC) will disburse the city funding in five installments.

For the first $40 million, the developer had to prepare an itemization of "Eligible State Project Costs" of not less than $15 million payable by the Empire State Development Corporation pursuant to the State Funding Agreement.

For a second disbursement, worth $15 million in city funds, Forest City would have to itemize another $25 million in "Eligible State Project Costs."

Spending requirement

For a third disbursement, of $30 million in city funds, things would get more complicated--and potentially challenging.

According to the contract, Forest City would have to not only itemize another $15 million in "Eligible State Project Costs," reaching a total of not less than $55 million from the ESDC, it would also have to have "a reputable independent certified public accountant selected by Developer and reasonably satisfactory to NYCEDC" certify that the developer had paid or incurred total project costs of not less than $100 million during the "Second Contribution Period."

In other words, Forest City Ratner would have to be spending its own money on an ongoing bases, and previous land purchases, for example, would not count.

For a fourth disbursement, worth $10 million in city funds, Forest City would have to itemize another $30 million in "Eligible State Project Costs."

For the fifth and final disbursement, worth $5 million in city funds, Forest City would have to itemize not less than $15 million in "Eligible State Project Costs" and would have to have an accountant certify that the developer had paid or incurred total project costs of not less than $100 million during the "Third Contribution Period."

"Eligible State Project Costs," by the way, are defined in the State Funding Agreement as "the aggregate Hard Costs and Soft Costs incurred or paid for by Developer or its Affiliates for the design and construction of the Infrastructure."

Will Gramercy Capital, its stock tanking, easily renegotiate loan with Forest City Ratner?

The company that lent Forest City Ratner nearly $153 million to buy property in the Atlantic Yards footprint has seen its stock price tank, as has the stock of FCR's parent Forest City Enterprises, as it awaits repayment of $177 million it dearly needs.

While the stock of Gramercy Capital Corporation reached $28.51 for its 52-week high, it closed yesterday at $1.32. In October, it suspended its third-quarter dividend to save $32.3 million. (FCE acted similarly last week.) The company might be a little antsy about getting repaid promptly and in full.

The AY loan

The New York Observer reported this week on the loan:
And in terms of the private sector, the developer is seeking to extend a loan with Gramercy Capital on Forest City–owned property in the project’s footprint, slated to come due in February. The large bridge loan—a $152 million loan from Gramercy was listed in property records—was originally intended to be rolled into a larger financing package that Forest City would have obtained before construction started, according to an executive involved with the loan.

The Wall Street Journal clarified:
A $153 million land loan from Gramercy Capital Corp. that has accrued to $177 million, is due at the beginning of February. Forest City is in talks with Gramercy to extend the loan.

At right are excerpts from the Atlantic Yards City Funding Agreement (large PDF), where pages 87-92 concern various iterations of the Gramercy Capital loan.

And what's Gramercy Capital? The company web site explains:
Gramercy Capital Corp. (NYSE: GKK) is a national commercial real estate special finance company organized as a real estate investment trust (REIT). Sponsored by SL Green Realty Corp. (NYSE: SLG), Gramercy was formed in April 2004 to provide customized commercial real estate finance products to sophisticated property investors in markets throughout the United States. Gramercy is headquartered in New York City and has a regional investment office in Los Angeles.

...Gramercy originates and acquires a range of loan products intended to assist its clients in achieving their financing and liquidity needs quickly and cost-effectively, with professional execution and a continuing commitment to quality client service.

Smoking gun: emails show how Yankee Stadium valuation was "jacked up"

Daily News columnist Juan Gonzalez continues to look into the astounding inflation (from $26.8 million to $204 million) in valuation of the land under Yankee Stadium, apparently aimed to qualify for the amount of foregone taxes needed to pay off construction bonds via PILOTs (payments in lieu of taxes).

(Yes, Atlantic Yards watchers are waiting to see if something similar happens with the land under the planned $950 million arena.)

In a column yesterday headlined E-mails reveal how city went to bat for Yankee to inflate value of stadium land, Gonzalez describes how it took only hours for the Department of Finance's chief tax assessor to do an about-face and "jack up" the valuation.

Smoking gun

Gonzalez writes:
"This is the smoking gun," said Assemblyman Richard Brodsky, who has spearheaded a state probe into the stadium deal. "The professionals did their job. The political appointees then ordered them to change the assessment - and they did."

And Gonzalez points out that the emails contradict testimony from DOF Commissioner Martha Stark in October before the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee chaired by Rep. Dennis Kucinich (D-OH).'

Here's one from Michael Kalt, an aide to former Deputy Mayor Dan Doctoroff: "I don't want to get into this much further on e-mail, but we have to take into consideration that the AV [assessed value] is only so high because we're choosing a methodology to support the tax-exempt financing."

It's not over

Gonzalez observes that the city has refused to release to state and federal investigators hundreds more relevant e-mails. His conclusion:
That's why it's time for some prosecutor to step in, subpoena every document and figure out if the Bloomberg administration manipulated land assessments for the Yankees.

Potential impact

In the Village Voice, Neil deMause explains:
This wasn't just a matter of sloppy paperwork: If the IRS figure had been any lower, the Yanks' convoluted plan for getting tax-free bonds (involving setting property tax levels high enough that the team's private bond payments could be recast as public "payments in lieu of property taxes," or PILOTS) would have fallen apart; if the state figure were any higher, it would have been illegal to eliminate Macombs Dam Park without providing more new parkland to replace it.


More on the switch

The city's assessor, deMause reports, wrote a memo titled "Estimated Market Value for Proposed Yankee Stadium," that cited land values in the Bronx "growing by leaps and bounds," reaching $32.50 a square foot.

Twelve days later, a new paragraph cited comparables in Harlem, where "land sales north of 100 Street in Manhattan range from $200 to $323 per square foot."

deMause writes:
The "major revitalization" of Harlem over the past five years "has also spread across the river to the South Bronx," Kellman's memo now asserted, without explanation of why it concluded that Manhattan sale prices were considered a better means of valuing Bronx land than Bronx sale prices.

Beyond that, there's no mention in the Daily News, the Voice, or the memos of the astonishing inclusion of a vacant lot in Alphabet City as another comparable.

While deMause acknowledges that all the evidence is circumstantial, some is pretty juicy:
This past July, mayoral press aide Andrew Brent e-mailed a proposed statement to others in City Hall that concluded that the $204 million appraisal had been "made at the urging of EDC to satisfy the underwriters of the tax-exempt bonds that were to be used to finance the stadiums." Finance Department press officer Owen Stone e-mailed back, "I think you should skip that last sentence" about satisfying the underwriters, and suggested a more neutral replacement.

What next?

If the city cooked the books, the IRS could conduct an audit--and strip the bonds of their tax-exempt status. (Is there political juice for that?)

deMause adds:
And if nothing else, this should make for some fireworks when the IDA considers the Yanks' request for $259 million in new tax-exempt bonds -- now slated for a public hearing on January 15 at 10 am at 110 William Street.

That public hearing also involved $82.3 million in tax-free financing for the New York Mets. It was announced the other day via an ad on page 55 of the New York Post--and noticed by subsidy watchdogs Good Jobs New York.

Waiting for corrections: Reuters article on MTA/AY claims $1 billion railyard deal

[Correction 7:45 a.m. Thursday: the MTA says the $1 billion refers to the entire capital plan, not just Atlantic Yards, and that Dellaverson was misquoted.]

Are we supposed to believe, in a Reuters article bizarrely headlined NY MTA: Still sees $1 bln from Brooklyn's Atlantic Yards:

• that MTA Chief Financial Officer Gary Dellaverson knew what he was talking about when he said "We don't have any current concern with respect to the $1 billion" the agency expects from Forest City Ratner's Atlantic Yards plan?
• that the Reuters reporter didn't know the purchase price for the Vanderbilt Yard is $100 million?
• that the reporter thinks Atlantic Yards would "be built on one of the agency's rail yards"?
• that the reporter didn't realize that the real story, which MTA officials wouldn't touch, is the Observer's scoop about Ratner trying to delay paying the money owed?

In AY as "question mark," Observer breaks news that Ratner's renegotiating subsidy deals

In Atlantic Yards Becomes a Question Mark, the New York Observer's Eliot Brown tracks the decreasing confidence of developer Forest City Enterprises and its subsidiary Forest City Ratner in the Brooklyn project--and breaks a bunch of news about how the city and state might be helping with those pesky cash flow difficulties.

Brown reports:
According to multiple people familiar with discussions, his subsidiary company, Forest City Ratner, is attempting to cobble together extra money; trying to speed up tens of millions of dollars it is owed by public entities; delay tens of millions in payments it owes to both the public and private sectors; and tack on new subsidy programs for the housing piece of the project. Earlier this month, Bruce Ratner abruptly shut down preliminary construction efforts related to the NBA arena in an apparent attempt to preserve cash.

That latter observation shows that the claim that lawsuits have stalled the railyard work just doesn't wash. It's another example of the Observer providing the strongest mainstream reporting on Atlantic Yards.

IRR's not profit

I'm not sure that the Observer's correct in observing that the "project had an unusually low margin of return... as Mr. Ratner slathered on promises and concessions in an attempt to win political support."

The apparently low internal rate of return (IRR) is not profit. Two years ago, I asked affordable housing consultant David Smith for his analysis. He pointed out that IRR did not consider the fees to the sponsor. Forest City Ratner, the Times reported 7/1/07, would get a 5% fee on the project as a whole, even though the developer would put in only a fraction of the investment.

New situation

Brown cites several pressures on the development: losses from the Nets; increased financing costs; lowered housing prices; less valuable low-income tax credits; a fall in demand for office space; and construction costs that "have skyrocketed."

The latter two, I think, deserve an asterisk. The demand of AY office space was always overstated (though the economic downturn has certainly made it worse). And while construction costs rose significantly since the project was approved, they likely have dipped somewhat in recent months.

Renegotiating with public agencies

The big news, "according to multiple people familiar with discussions," concerns attempts to revise subsidies:

The developer is due to owe the M.T.A. $100 million when it closes on the three-block Vanderbilt rail yards, an act that is slated to happen after the eminent-domain litigation is completed. But financing is nearly impossible to find and Forest City is hardly swimming in cash. Thus, according to one person familiar with talks, the developer has asked the M.T.A. to restructure the payments so it does not pay the full $100 million upfront.

The developer is seeking the converse from the city, which owes Forest City a total of $100 million in direct payments to be spread out over time. About $40 million of this sum has already been paid to Forest City, and according to multiple people familiar with discussions, the city is considering speeding up the payments on the balance.

As for the housing component, much of which is for families with low or middle incomes, Forest City is in discussions to add on additional affordable-housing programs or incentives beyond what it outlined in 2006, bringing greater subsidy to the apartments.

While no official would comment on the record, it's all worth much more scrutiny.

Why should FCR not have to pay the MTA in timely fashion if that was part of the original deal (and the payment less than half the appraised value)? Will FCR even build a permanent new railyard or just leave the MTA with the interim, temporary yard?

Why should the cash-strapped city give FCR a special deal when so many programs are hurting?

And shouldn't there be transparency regarding the Atlantic Yards affordable housing? How would the subsidies compare to those for other projects?

WSJ: Gehry lays off staff working on Atlantic Yards; FCR again blames legal challenges

I guess those rumors about Atlantic Yards architect Frank Gehry were true. Earlier this year, I was told that Gehry was working only on the arena, not the rest of the project.

While that may not have been precisely true, the new designs released in May involved the arena plus just two towers--a distinct contrast with the previous iteration, which involved all five buildings on the arena block. (DDDB in September reminded us of four iterations of renderings and the two distinct phases--see below.)

And for weeks I've been told--all secondhand--that the Los Angeles-based Gehry Partners laid off staff working on the Atlantic Yards project.

Yesterday, the Wall Street Journal pinned it down enough to go public, in a brief piece headlined Gehry Lays Off Staff:
Frank Gehry laid off more than two dozen staffers in late November after client Forest City Ratner ordered the architect to put down his pencils on the $4 billion Atlantic Yards project, according to people familiar with the matter. A Gehry Partners LLP spokeswoman declined to comment.

A Forest City spokesman declined to comment and pointed to a previous statement that said work on the Brooklyn, N.Y., project was delayed because of legal challenges. Forest City has said it is committed to the 22-acre site, slated to be anchored by a basketball arena plus residential and office skyscrapers.

Explanation not credible

The blame-the-lawsuits ploy regarding Gehry is even less credible than the claim that lawsuits have stalled all work at the Metropolitan Transportation Authority's Vanderbilt Yard.

After all, if Forest City Ratner is truly committed to Atlantic Yards, couldn't they ask Gehry's office to work on Site 5? Or Phase 2?

Loan coming due

The Wall Street Journal also reported:
A $153 million land loan from Gramercy Capital Corp. that has accrued to $177 million, is due at the beginning of February. Forest City is in talks with Gramercy to extend the loan.

Keeping up with the Atlantic Yards Construction Updates

Well, the Atlantic Yards Construction Update issued by the Empire State Development Corporation (ESDC) for the weeks of December 15 and December 22 is the nearly same as the update issued for the weeks of December 1 and December 8.

There's no work at the Metropolitan Transportation Authority's Vanderbilt Yard. Demolition of 487 and 489 Dean Street "has been completed," whereas previously it "will continue."

That language is worth noting, because the ESDC never announced that work "has been completed" at the railyard.

That's one of the reasons I don't believe the explanation, from the ESDC and developer Forest City Ratner, that lawsuits have stalled work at the Vanderbilt Yard. Also, the explanation defies sworn statements by company executives that work on the railyard could proceed despite litigation.

And on the AY web site?

Curiously, the effort to chronicle Atlantic Yards construction lapsed (below) on the official Atlantic Yards web site in October.

That's odd, because a notice in the top right corner of the home page invites readers with questions about ongoing construction work to visit the Construction Updates page.

Is that because work slowed down? Or was the AtlanticYards.com webmaster a casualty of Forest City Ratner layoffs?

Team Hype: At the Izod Center, noise and flash obscure the hoops

The Izod Center (ex-Continental Airlines Arena, ex-Brendan Byrne Arena) may be the venue that fans love to hate, but New Jersey Nets president and CEO Brett Yormark remains an unabashed booster. Earlier this month, on the WFAN talk show Boomer & Carton (audio), Craig Carton suggested that the Nets move to the Prudential Center in Newark, sharing a home with the New Jersey Devils hockey team, with “great access via train from Manhattan.”

Doesn’t it make sense, Carton asked, to move to the Rock?

Yormark was cool: “Craig and Boomer, when was the last time you were at the Izod Center?”

“I was there for Ultimate Fighting about nine months ago,” Carton responded.

“OK,” replied Yormark, gaining steam. “Over the course of the last two years, the state has invested like never before in that venue. During our Nets games, we have incredible lounges for season ticket-holders, the service is better than ever before. We’ve rebranded the entire arena, we’ve got greater technology than ever before. And it’s a perfect setting for us right now. One of the key things for me is that I want to be the main tenant. I want to be the big dog…. And the Izod Center… is having the most successful year it’s had in ten years now that the Devils aren’t there.”

Carton, who expressed skepticism about the Nets’ plans to move to Brooklyn and Yormark’s denial of talks with the Miami Dolphins, responded, “I was told by a very high-ranking official of the New Jersey Sports and Exposition Authority… that if the Nets never played another game in the building it would be good for the state.”

“I would find that hard to believe and understand,” Yormark replied.

Team Hype

After gaining some very expensive tickets (for a song) to see the Nets last Wednesday night, I enjoyed watching the basketball, but I can’t say I’m eager to repeat the experience.

The game itself wasn’t bad--if you’re close enough, and we were, you can see professionals playing hoops at a high level. If you can get over the fact that the Nets are essentially fungible--a collection of players remixed at will, certainly no long-serving Brooklyn Dodgers--the team is rebuilding but promising.

But the wrapper around it, as with so much sports entertainment, is ever-increasing hype. Team Hype, the name of the Nets’ acrobatic pep squad, also describes the Izod Center experience—noise, flash, and a relentless marketing effort that can obscure the game.

As with my visit two years ago, the crowd seemed to get the most excited when “Team Hype” tossed free t-shirts, in a bit of a bread-and-circuses moment.

The loudest thing in the arena was the artificial noise generated on the public address system. The volume reminded me how music was used to drown at boos when, in October, Republican VP candidate Sarah Palin dropped the puck at the home opener of the Philadelphia Flyers.

Looking more closely

Let's go over Yormark’s claims.

During our Nets games, we have incredible lounges for season ticket-holders

No doubt season ticket-holders are treated well, but most people aren't season ticket-holders and won’t have a chance to see those lounges. (On Nets Daily, a ticket-holder commented that he's happy to have been able to meet players at parties.)

We’ve rebranded the entire arena

This suggests Yormark has spent a little too long in the marketing bubble. If new sponsors have placed their logos in new places, that may be good for the Nets’ bottom line--though the Star-Ledger quoted a Vonage spokesman as calling it a "minor" part of its marketing budget--but it doesn’t add to the visitor experience.

We’ve got greater technology than ever before

I guess that means that video replay and signage has improved. Perhaps. But that doesn’t help all that much.

And it’s a perfect setting for us right now

It depends on what you mean by “us.” If “us” means a team that doesn’t want to pay the fiscal and p.r. penalties to move to Newark at least temporarily (which likely would also increase revenue and generate positive p.r., too), maybe.

If it means fans, maybe not. Even the pseudonymous NetIncome (aka Bobbo), a Nets superfan and Atlantic Yards defender, commented last week on a fan message board, "The IZOD center is a horrible venue, annually voted the worst in the NBA."

The Izod Center… is having the most successful year it’s had in ten years

Well, the Daily News recently observed that attendance figures seem a bit inflated.

2.5+ or 3.5+ more seasons

Right now, the official line is that the Brooklyn arena would open in 2011, meaning that the Nets would play three seasons, including the partly-concluded current season, at the Meadowlands. (I think the more likely best-case scenario is 2012, given that it would take 30 months to build the arena, which would mean four seasons, including the current one.)

For now, parent company Forest City Enterprises, which is absorbing most of the Nets’ losses, is taking a punishing hit on losses, $22.4 million this year, while suspending the dividend to save $30 million.

A turnaround in revenues from the Nets would make a big difference. A move to the Rock likely would raise revenues from attendees and concessions, given its greater accessibility. However, given that the Nets would be a secondary tenant, the gain in sponsorship and suite revenue would be far less than expected in Brooklyn. And a big question is whether the $12 million penalty for moving in-state would be waived.

So for now Forest City is trying to hold on, to try to maintain fan base and revenues until the Brooklyn move, where access via public transit to a large new population makes it far more likely that the flashy new Barclays Center would be filled--and where the naming rights deal, other sponsorships, and lots of luxury suites would mean big revenues.

Even if the Nets don’t sell out in Brooklyn, it would be a lot easier to give away tickets and make sure that the ticket-holders actually make it to the game. The Barclays Center surely would represent Team Hype, albeit with a more fan-friendly design and greater accessibility via public transit.

This season’s toughest

If the Nets return next year to the Meadowlands, at least there should be a new public transportation option. This year, New Jersey Transit debuted a $10 rail-to-bus link, with a train from Penn Station connecting to a bus from Secaucus.

A new rail station at the Meadowlands has been in the works for years. In March 2004, New Jersey Transit announced that the Meadowlands rail link construction project “is scheduled to begin in the summer 2005 and conclude by the end of 2007.”

In January 2006, New Jersey Transit said that “[c]onstruction work is anticipated to commence on the project's first major contract by Spring 2006.” Last month, the Bergen Record reported that the rail link “is on track to begin accepting riders next spring.”

Forest City Ratner can’t build the Brooklyn arena--an impressive Frank Gehry structure with lots of luxury suites--without new subsidies and, probably, without new investors. The city and state, as of now, have no more money.

Perhaps the feds will step in, adding urban development funds that could be repurposed. Perhaps success in court would attract investment capital for the team and/or the project as a whole.

For now, it’s a holding pattern.

From Brooklyn, by car

A rail link sure makes it easier for visitors from Manhattan, but Brooklynites wanting to save the trip from Manhattan might try to go by car.

Last week, the round-trip from Park Slope took five hours, by car—and that’s with our group missing most of the first-quarter.

That was probably anomalous--there was a serious traffic jam at the Lincoln Tunnel--but it’s not encouraging.

Then came the parking. The parking lot for the Izod Center we used was a bit of a hike--more then ten minutes of brisk walking, through a long concrete passageway--just to get to the door of the building, much less reach our seats. I suspect that the parking lots for some other sports facilities are no closer, but there was something particularly grim about experience.

(At right, stills from some video I shot.)

“If you haven't been to the Izod Center lately, the parking is a mess--allow extra time for parking!,” wrote a commenter on Chowhound in October.

Inside the arena

The hype inside the arena can be a little strange. As I wrote, they were hyping Jones Soda, but it wasn’t available at the concession stand.

There was even a logo for sporting goods provider Spalding, which to Brooklyn eyes is a reminder of a Forest City Ratner-owned building that the developer has not yet chosen to demolish, likely because the renovated lofts could command a pretty penny if Atlantic Yards is scotched.

The building, as I estimated, was about 60% full, but I must admit that some of the photographs that show empty seats might be a little misleading. For one thing, photos taken late in the came may show seats emptied by fans getting an early trip home.

For another, it takes a while to get food and drink.

During the course of the game, despite sitting in some of the arena’s priciest seats, we were passed by exactly one vendor, hawking popcorn. For beer, hot dogs, soda, and more, we had to send emissaries to the concession stand.

Unlike at, say, local baseball stadiums, the Izod Center policy is that alcoholic beverages are “not vended in the seating areas,” which is defensible.

Also, according to the policy, guests “who appear to be under the age of 30 must provide valid proof of age.” That’s fine, as well, but a friend and I, both well over 40 (and look it), were carded, thus turning the Aramark employee into the arena equivalent of an automaton airport inspector and delaying the slow, slow line even more.

A boost in Brooklyn?

Brooklyn Borough President Marty Markowitz, the biggest booster of the Atlantic Yards project, can’t get over the Dodgers. He needs to reprogram his memories to encompass Team Hype.

Sure, big league basketball might be fun to watch. But this would give Brooklyn an identity? Arena rebranding?

As I wrote after my visit two years ago, we’re not in Dodgerland any more. No one is.

NY Mag: "Because Sometimes Immense, Gratuitous, Noncontextual Acts of Real-estate Ego Don’t Pan Out…"

While acknowledging that developer Forest City Ratner still has some momentum, New York Magazine writer Robert Kolker concludes that "At the moment, the old neighborhood is winning."

The occasion: the magazine's Reasons To Love New York 2008 package, in a short article headlined Because Sometimes Immense, Gratuitous, Noncontextual Acts of Real-estate Ego Don’t Pan Out….

Perhaps the neighborhood is winning in that Ratner has been thwarted somewhat, but a neighborhood doesn't win when demolition of viable structures creates indefinite empty lots.

Civic impact?

Kolker observes:
Some neighbors resisted right away, at first with little apparent effect. Ratner dialed down the size of his plan slightly, but more than a half-dozen lawsuits never seemed to get real traction.

In the end, though, all the project’s opponents may have had to do was delay the game until the market changed.

I'll agree that the market is probably the biggest factor, but I don't think the resistance had "little apparent effect." If nothing else, the enormous volume of comments filed in response to the Empire State Development Corporation's (ESDC) Draft Environmental Impact Statement created a paper trail that could be--as in the claim that there would be no redevelopment without AY-- brutally weird.

And the lawsuits, though not leading to decisions against the project, have had the salutary effect of forcing the ESDC to defend its dubious blight claims in court, and to provoke at least one state appellate court justice to express major skepticism.

The Times's deception persists

As for the claim that "Ratner dialed down the size of his plan slightly," well, that came only after dialing up. The scaleback returned the project to approximately the square footage as proposed.

Blame the New York Times for perpetuating that myth with a front-page lead story--probably the single worst piece of Atlantic Yards coverage in the newspaper.

In sign of Brooklyn arena commitment, Yormark close to eight-year deal with Nets

Whether or not Forest City Enterprises and Bruce Ratner ultimately sell all or part of their controlling share of the New Jersey Nets, the team will still have Nets Sports & Entertainment CEO Brett Yormark on board, apparently.

Sports Business Daily reports:
Since October, the rumor most rapidly circulating at sports properties, agencies and the brands supporting them was that New Jersey Nets Sports & Entertainment President and CEO Brett Yormark was taking the same job with the Miami Dolphins.

Indeed, Yormark flatly denied such rumors earlier this month. He said he was committed to the Nets, which seems confirmed, and that he had not talked to the Dolphins, which is hard to suss out.

The article continues:
Actually, the flamboyant Nets executive has agreed to terms and is close to signing a lengthy eight-year deal with the Nets, according to senior NBA sources. The deal comes as the Nets’ planned move to Brooklyn from New Jersey is mired in legal delays and has been pushed back until at least 2011.

“There are some doubts out there about the team’s future in Brooklyn, but obviously this shows a long-term commitment there,” said one league source.

Yormark has said he wants to see the move through, telling WFAN earlier this month: "When we get to Brooklyn, it will be the biggest story in sports entertainment in 25 years."

Bansal, attorney for ESDC in Atlantic Yards case, is on Obama's short list for Solicitor General, the "Tenth Justice"

(Update 1/5/09: Harvard Law School Dean Elena Kagan was named to the post.)

Now that President-elect Barack Obama has appointed New Yorkers Shaun Donovan and Adolfo Carrion (much more controversially) to become, respectively, secretary of the department of Housing and Urban Development and head of the new White House Office of Urban Policy, the latter two might offer support to the policies and project of the Bloomberg administration, including Atlantic Yards.

A third New Yorker is also up for a key job with Obama and, while the position almost surely would have nothing to do with AY, she's had a close and controversial relationship the legal battles over the project.

On the president-elect's short list for Solicitor General, who has primary and mostly independent responsibility for presenting the Government's case to the Supreme Court, is Preeta Bansal, a former New York State Solicitor General (supervising 40-50 appellate submissions per week), a member of his transition team, and the lead attorney representing the Empire State Development Corporation (ESDC) in appeals court.

Bansal, a partner in the blue-chip law firm of Skadden, Arps, is obviously an able lawyer. And while the rest of her work may well qualify her to be Solicitor General, her performance in the Atlantic Yards case is the work of an aggressive advocate willing to massage the facts, not the big-picture thinker aiming for justice.

The "Tenth Justice"

According to the official job description:
Except for rare authority exercised by the Attorney General, the Solicitor General has had sole discretion to decide which Government cases involve issues important enough to justify appeal to the Supreme Court and to make the final determination whether the Government's case is good enough to win there.

The Solicitor General is sometimes called the "tenth justice"--the title of a book by Lincoln Caplan.

According to the Publishers Weekly review:
[Caplan] charges that the Reagan administration has compromised the independence of the Solicitor General, the lawyer who is responsible for recommending which cases should be heard by the Supreme Court and for shaping the government's legal position on cases before the Court. Archibald Cox and Thurgood Marshall are among those who have held the post of Solicitor General, sometimes called the "tenth justice."

Bansal, in a 9/1/99 New York Times profile, sounded dismayed by having to play tough advising candidates for judicial nominations: "It wasn't high-minded legal analysis. It wasn't thoughtful. It was about how to package a thoughtful person into a few-second sound bite."

At the AY eminent domain appeal

Representing the ESDC at the 10/9/07 federal appeal of the Atlantic Yards eminent domain case, Bansal argued successfully--but, at times, questionably--for the state's case.

She told the court that Atlantic Yards would “create a publicly-owned sports arena.”

Publicly-owned?, asked a judge.

“And then leased” to a private entity, Bansal acknowledged.

Several people in the crowd snickered, knowing that the lease would be for $1.

She cited the planned Urban Room, “a nice entrance to the subway” and transit improvements “that Brooklyn has been trying to do for decades.” The MTA’s Vanderbilt Yard was “in desperate need of modernization.”

However, there was no testimony in the case that the MTA or “Brooklyn” had either of these on a publicly announced wish list. In fact, MTA board member Mitchell Pally said at a September 2005 hearing, “[The rail yard] works fine the way it is. Forest City Ratner money is not being used to substitute for projects the LIRR wants to do... We’re now going to spend money on projects we don’t want to do, never wanted to do and don’t need? It makes no sense.”

Tainted process?

“What if the process is tainted?” a judge asked.

The constitutional analysis, Bansal said, does not depend on the sequence by which Atlantic Yards was proposed and approved. In fact, she confidently gave a hypothetical worst-case scenario in which a smoking-gun memo or video showed that a public official stated, “I want to do this for Bruce Ratner.”

It would not make a difference. “The fact that there might be illicit motive,” she said, even if it’s the principal motive, if it results in public use, “that’s the end of the inquiry.”

She said the issue was whether public officials could have rationally concluded there was some public purpose, and any illicit motive could be addressed through other areas of the law.

Maximum private participation?

With respect to the sequence, she added, the “New York legislature has made a considered judgment that private enterprise-initiated projects… are to be favored.”

Actually, as I noted, when the Urban Development Corporation--the ESDC's official name--was established in 1968 the effort to encourage "maximum" private participation in projects not like Atlantic Yards, but instead intended to get the private sector to finally invest in the low- and middle-income subsidized housing after the ESDC first put in state money.

Few developers can do public-private projects like Atlantic Yards, she added, somehow missing the example of Hudson Yards and other projects with multiple bidders from the start: “The fact that a private developer came to the city is of no constitutional moment.”

Perhaps not. But it's sure no civics lesson.

Carbonation-related cognitive dissonance at the Izod Center

Fans watching the New Jersey Nets at the Izod Center might get a hankering for Jones Soda, given that digital advertising signage periodically presents advertisements for the product.

Pure cane soda, however, is not available at the concession stands. (Nor are the products of some other sponsors the Nets have signed up.)

At the game last Wednesday, I asked an employee of Aramark (the concessionaire) if they sold Jones Soda--which just happens to be the announced official soft drink provider at the planned Brooklyn arena.

"What?" she replied.

"Jones Soda. "

"What?"

The picture at right shows what's available.

A sweet deal?

I don't know what advertising deal Jones Soda got at the 'Zod, but I wonder if it might have gotten a little sweeter.

Jones Soda officials, their company reeling financially, have been talking about how to pull out of the Barclays Center deal, which has been reported at $1.7 million a year, given the delays in the new arena.

Should Jones withdraw, presumably another soft drink company would make a decent-sized bid for the rights.

That means the p.r. damage if Jones pulls out would be greater than the financial damage.

Thus, it certainly makes sense for the Nets and Forest City Ratner to make sure that Jones is happy.

Trees return (temporarily) to the perimeter of the Atlantic Yards footprint

Well, there are now some (temporary) trees around the perimeter of the Atlantic Yards footprint, as the photo I took today of the corner of Flatbush Avenue and Dean Street shows.

Last month, I wrote how, preparing to demolish 86 street trees (aftermath at bottom) around the Atlantic Yards footprint, Forest City Ratner contended last year that it did not need to pay $159,000 in partial restitution to the city because the trees in the Atlantic Yards open space eventually would “add much more value than the trees that will be removed during construction.”

That argument required chutzpah, given that no part of the Atlantic Yards open space would be constructed until the project’s Phase 2, for which there is no announced timetable and no penalties (as of yet) for delays.The city Department of Parks and Recreation, perhaps mindful of that timetable, held its ground, requiring the requested payment, and Forest City Ratner complied.

(Second photo, by Steve Soblick, taken before the Christmas tree season, shows Flatbush Avenue fence near Fifth Avenue, slightly to the northwest of the photo at top.)

Does Nets CEO Yormark really get up at 3:30 a.m.?

At the Izod Center Wednesday night, watching the New Jersey Nets lose to the New York Knicks, I spotted Nets Sports & Entertainment CEO Brett Yormark darting around the arena floor, stopping to glad-hand guests in various sectors, then to catch the action on the court. He's the guy standing in the photo below.

(Sorry about the poor quality of the photo, but the Izod Center doesn't allow guests to bring in "professional cameras.")

Yormark's energy level, as befits his reputation, was high. He was either energized by the hoops action or has a stash of Jolt Cola (unavailable at the 'Zod).

See, the Yormark legend has it that the hard-driving wunderkind “often starts his day at 3:30 in the morning,” as reported last March in Portfolio.

The game Wednesday night was over by 10 p.m. Surely, Yormark had a few post-game tasks. Even if he zipped home by jetpack, he didn’t hit the sack until 11 p.m. That would have left just four-and-a-half hours to recoup.

Dodging the question

So, is he a medical marvel? Maybe, maybe not. When asked about his sleep habits, Yormark hedged when queried last week on the WFAN talk show Boomer & Carton.

“It says you wake up--is it true?—3:30 every morning,” Boomer Esiaison asked.

“I’m up very early,” Yormark replied. “I start my day quite early.”

OK, it's no big deal--an executive burnishing his myth--especially given that Yormark has accomplished quite a lot.

However, as with Yormark's predictions regarding arena construction, assertions about his extreme sleep habits should be taken with a grain of salt.

[Note: Blogger allows users to 'schedule' posts. I was not up at 3:30 a.m.]

With NYC's Donovan as HUD chief, affordable housing help likely--and for AY?

The New York Times reports today:
President-elect Barack Obama has picked the widely respected housing commissioner for New York City, Shaun Donovan, to be the secretary of housing in his cabinet.

...As chief of New York’s Department of Housing Preservation and Development, Mr. Donovan is in charge of the Bloomberg administration’s $7.5 billion New Housing Marketplace Plan to build or preserve 165,000 units for to low- and moderate-income families, housing up to 500,000 residents, by 2013.

It's probably good news for cities and affordable housing. Advocates have called for much more direct federal aid for public housing and other assistance, including tax-exempt financing, to finance affordable housing.

As I reported in June 2006:
...Before Congress, HPD’s Shaun Donovan offered two proposals to increase funds available to the city; one would “allow for 'recycling' or 'refunding' of multi-family bonds after principal repayments or pre-payments of the bonds.” The second would involve “raising the allocation of volume cap for high cost areas” like New York. (As HPD commissioner, Donovan also serves as chairman of the HDC.)

New York City needs a lot more "volume cap," an allocation of federal tax-exempt financing for projects like the proposed Atlantic Yards affordable housing, which has been jeopardized by a funding crisis. Such an increase could lessen the expected significant delays in the AY housing (which of course wouldn't get started until the project moves forward).

[Correction: the headline originally said HPD, not HUD.]

What fudge factor should we assign to Izod Center attendance figures? At least 25%

Now that even the New York Daily News has observed that the New Jersey Nets' "officially listed average home crowd of 16,098 seems suspiciously high," the question becomes: what fudge factor should we assign?

At least one-quarter, I'd suggest. A 25% discount on the 16,098 average would mean 12,074.

Consider that announced attendance of 16,722 Wednesday meant the Izod Center was 83.7% full (capacity 19,968), but I estimated the arena was at best 60% full. That would mean 11,980, or a more than 25% smaller crowd. But let's just take 25% off 16,722 and call it 12,542.

Well, at last night's game with the Toronto Raptors, the attendance was announced at 13,926, or 69.7% full. Apply the 25% fudge factor and we get 10,452, or 52.3% full.

Given photos like this and this of the crowd, that seems far more realistic--even generous.

Carlton Avenue bridge reconstruction not delayed, ESDC tells Courier-Life; FCR remains mum

Now we can relax. An unnamed Empire State Development Corporation spokesman informs the Courier-Life's Stephen Witt, "Forest City Ratner has told us there are no changes in the schedule at this time" to reconstruct and reopen the half-demolished Carlton Avenue bridge.

That's more than I got out of the ESDC, which referred me to the developer. Witt also tried, but FCR "refused comment on the matter."

Given that the bridge was supposed to be closed for two years, while its actual reconstruction would take seven months, it's still possible to meet that timetable, despite Forest City Ratner's indefinite suspension of work at the Metropolitan Transportation Authority's Vanderbilt Yard.

But "no changes in the schedule at this time" and FCR's unwillingness to comment to a notably sympathetic reporter don't exactly inspire confidence about transparency.

Is litigation the cause?

ESDC spokesman Warner Johnston tells Witt, "Forest City Ratner reports that they have carried the project as far as they can until the outstanding litigation is resolved."

If that were really true, wouldn't the word "complete" have been used in the ESDC's most recent Construction Update regarding the "Long Island Rail Road/Vanderbilt Yard Work"?

And wouldn't Forest City have met one of the three deadlines to open a temporary yard?

Bloomberg: "Letting any group have a special deal is not what democracy is about"

On yesterday's Live from City Hall with Mayor Mike and John Gambling radio show, Mayor Mike Bloomberg said some very curious things about sweetheart deals, tax-exempt financing, and the Metropolitan Transportation Authority's capital budget.

Special deals

At about 25:45, he flatly declared:
Letting any group have a special deal is not what democracy is about. It breeds contempt for our laws.

Pop Quiz: That was said in relationship to...
A) The zoning override that allows Forest City Ratner to build Atlantic Yards at the size it desires
B) The City Council's vote, at his behest, to overturn and extend term limits
C) The ongoing sales by Indian reservations of tax-free cigarettes

Answer: C

Financing sports facilities

At 22:50, Gambling brought up a controversial issue with a big fat pitch:
Speaking of things that are expensive, I'm reading that our baseball stadiums are getting more and more expensive, and they've looked for more money…

Bloomberg responded breezily, if inaccurately:
The issue here is the federal government has a plan where, and the city has an agency that helps decide who gets it, there are tax-exempt bonds, they typically are free of state, city, and federal taxes. And since they are, you can sell the bonds at lower rates. So something like the Yankees or the Mets organization would like to use these bonds, 'cause the interest costs to them would be lower…

Why does the federal government have a program? It stimulates construction jobs and economic activity. They might not do these things, build stadiums or in this case some infrastructure around it, if it costs them more. The economics might not work.

So everybody says, look, we'll get less income from taxing the interest that the bondholders would pay, but in return there's more construction, more jobs, and that's good for society. It's not city money other than we would would forego… a very small amount of revenue on the interest on those bonds. So would the state, so would the federal government. But our development bank is set up to do this, and you do it for big projects, and the federal governments [sic] approve these projects, and we'll go on with them.
(Emphasis added)

Though Bloomberg was speaking casually, the federal government does not forego a "small amount of revenue" but rather bears the brunt of the tax exemption. As Rep. Dennis Kucinich (D-OH) has put it, "the practice of providing taxpayer subsidies to the building of sports stadiums is a transfer of wealth from the many taxpayers to the few wealthy owners."

“My plea is that you put some common sense restrictions on that,” Assemblyman Richard Brodsky testified in October before Kucinich's subcommittee. “There’s no value to the economy of the United States when the state of New York buys off a corporation to move from Pennsylvania.”

He also said, "We again conclude that there is no commensurate public value, that these are giveaways not investments, and that the Federal Government should cease its subsidies of any project where the public subsidy is not met with a public benefit of at least equal value."

The MTA

At about 16:30, Bloomberg brought up the MTA:
For example, the express buses. We have to hold the fares on the express buses.Let me step back. The MTA has an enormous deficit--a billion-plus dollar, maybe even bigger, who knows. And they have zero dollars for capital, zero. This is an enormous agency, needs technology, needs new equipment, and they don’t have any money.

Now, forget about the fact that there has been, in the past, proposed a plan that would've gotten $384 million from the federal government and to some extent would've fixed the problem, at least it would've fixed the capital side, not the operating side. Right now, the city, which has four votes out of 16... on the MTA board, we have to go and find a ways to work with the MTA, with the state. And Dick Ravitch has come up with some ideas. And I've talked to the Speaker of the Assembly--Shelley Silver understands we have a problem here, and try to go forward, not look back.

Which means everyone forgets that the Vanderbilt Yard was appraised at $214.5 million, including the construction of a new railyard, and, after Forest City Ratner bid $50 million and rival Extell bid $150 million, the MTA board decided to negotiate exclusively with FCR, which [corrected] upped its bid by $50 million to $100 million.

Nets' access to unemployed does not include arena food vouchers

A recent New Jersey Nets p.r. move almost read like something out of the Onion, which recently deadpanned, "American Airlines Now Charging Fees To Non-Passengers."

As New Jersey Nets CEO Brett Yormark explained last month, "Our philosophy for years has been about providing access, but it’s no longer about access to the paying customer, it’s now about access to the people who need us most, and those are the unemployed."

The Nets gave away 300 free tickets to each of five games, surely no big burden at a time when the Izod Center features large numbers of empty seats. (More impressive is the Nets' willingness to match jobless workers' resumes with employers.)

Could it be that giving away tickets to the unemployed, or (virtually) giving tickets away through a seat-filling service, at least helps make the arena seem full on TV and brings in some concession revenue?

I can say that my group of four, attending the game last Wednesday, spent a lot more on food and drink than on tickets. Those $7.75 beers add up, as do the $4.25 hot dogs.

If the Nets ever try again to offer access to "the people who need us most," those free tickets ought to come with arena food vouchers.

A look at the Brooklyn Paper's Atlantic Yards round-up

Last week, I criticized the Brooklyn Paper for ignoring the breaking news that Forest City Ratner had halted work at the Metropolitan Transportation Authority's Vanderbilt Yard, so I should acknowledge that this week the newspaper has a lead story headlined, at least online, Atlantic Yards at 5: What went wrong?.

The piece captures the big picture, with a decent survey of high points in the Atlantic Yards drama, including the recent news that Brooklyn Borough President Marty Markowitz's charities have received big bucks from developer Forest City Ratner and that corporate parent Forest City Enterprises acknowledged this week that the market would determine the pace of the project.

With a magnifying glass

But there are many small errors, and since NLG already challenged me to cite them, that's what I'll do below. (It's tough to blame a reporter who's been with the newspaper since May.)

What is going on at Atlantic Yards?

Actually, Atlantic Yards is a project, not a place. Better to have said, with Atlantic Yards.

a $4.2-billion, publicly subsidized project including 16 skyscrapers, a 19,000-seat sports arena, 6,800 apartments, and top-grade office space

Any cost number attached to Atlantic Yards right now is chimerical. While the projected cost once ballooned to $4.2 billion, it was approved in December 2006 at $4 billion. The New York Daily News keeps using the $4.2 billion figure, too.

While the project was once projected to include 6800 apartments, as approved, it would include 6430 apartments.

The project’s centerpiece — the iconic “Miss Brooklyn” tower at the gateway to Atlantic Yards, the corner of Atlantic and Flatbush avenues — isn’t part of the complex anymore, a victim of Ratner’s inability to land an anchor tenant for its commercial or office space.

Well, it's no more not part of the complex as any of the other yet-unfunded buildings. It remains part of the project renderings.

The site of an arena for the Ratner-owned New Jersey Nets, the most highly touted and arguably popular element of the project remains an empty pit...

Not at all. Approximately half of the arena site remains a functioning below-grade railyard. The rest includes city streets, existing buildings, both empty and with residents (and one business), and empty lots created by demolition.

At the time, Ratner said that the arena — then priced at $396-million — would be built with private money.

I hadn't seen the $396 million figure, but I did recently see a $400 million figure, though it was announced at $435 million. The original claim was "primarily privately funded," which offered the developer a lot of flexibility.

[Added]
But the arena’s cost has ballooned to close to $1 billion — all of it fronted by the public.

Well, it depends on whether the payments-in-lieu-of taxes, or PILOTs, represent represent taxes that would ever have been paid. In the analogous case of Yankee Stadium, at a Congressional hearing October 24, Assemblyman Richard Brodsky said, "Congressman, the private payments are the taxes they owe. It’s as though you built an extension on the house and you said to the taxing authority: send my payments to the bank to pay off the mortgage. The notion that this is being paid for by the Yankees is delusional.”

The Yankees' Randy Levine responded, “Mr. Brodsky, he really knows better. We don’t pay taxes now. We’re a tenant. We don’t pay taxes at the old Yankee Stadium. As I said before, there would not have been a new stadium, unless this mechanism was put into place.”

See the New York Post article based on calculations by Michael White of Noticing New York.

the promised seven acres of publicly accessible open space

Actually, it's up to eight acres.

What went wrong

No public review
Project opponents charge that the Original Sin of Atlantic Yards was a decision by the Empire State Development Corporation — a state agency that had the Bloomberg Administration’s blessing — to allow Ratner to proceed without the rigorous public review required of other developers who seek even the smallest land-use change from the city.

Yes, but it's worth remembering that even the city's Uniform Land Use Review Procedure (ULURP) wouldn't work that well for projects as large as AY, according to a top city housing official.

the huge influx of housing would have created the densest census tract in the country

Well, it wouldn’t be its own census tract, but the New York Observer gave the numbers.

Ratner did sign a “Community Benefits Agreement” with six community groups in 2004,

There are eight signatories.

Towers of lies

After years of pie-in-the-sky projections, state officials admitted in December, 2006, that the project would only create $15.7 million in tax revenues every year for the city and state — nearly $5 billion less over 30 years than project boosters initially promised.

Not at all. Forest City Ratner at one point announced the project would bring $$6 billion in aggregate revenue over 30 years, or $2.1 billion in present value, which is the standard way to present such figures.

The Empire State Development Corporation cut its estimate of present value revenue from $1.4 billion to $944 million. So, worst case, revenues were cut by more than $1 billion--from FCR's most optimistic number to the ESDC's number--not $5 billion.

That 10-year construction timeline? In March 2007, Ratner revealed that the full project would not be done until at least 2022, despite officials once saying it could be done by 2012.

Well, that was Chuck Ratner, not Bruce Ratner.

A year later, in March 2008, Ratner finally admitted that his megaproject was doomed. At that time, he unveiled an altered version that consisted of little more than the arena and two scaled-back residential buildings.

In March, Bruce Ratner admitted it was stalled, not doomed. The new designs were unveiled in May.

Absent that review, a group called Develop Don’t Destroy Brooklyn emerged as the principal opposition group. The group has filed four main lawsuits against the state and developer since the project started.

DDDB organized and funded the eminent domain case, but is not a plaintiff.

IFC Media Project's "Unreliable Sources" now on YouTube

While the video from Tuesday's program still isn't available on the IFC Media Project's web site, it is available via YouTube.

Why the fog? Behind Chuck Ratner's obfuscation about why AY is on hold

Q. When is something not on hold when it's on hold?

A. When it's Atlantic Yards.

Forest City Enterprises CEO Chuck Ratner said Wednesday that the company was putting "virtually all new development" on hold. Except Atlantic Yards.

If that were true, then Ratner should have continued, "When lawsuits are cleared, we will begin construction."

He didn't.

Instead, he said, "We remain committed to this and when we get--and we believe we will--successfully through the last of the litigation in 2009, we’ll evaluate the market at the time and see what our next steps are."

So, it's on hold.

Why the fog?

Consider Ratner's obfuscation a tactic aimed to (I speculate) encourage future investors to buy piece of the AY project and/or a piece (or all) of the money-losing New Jersey Nets basketball team.

Also, it could be seen as an effort to position Forest City for the additional subsidies that Ratner said in April "we still need."

And it could be seen as an effort to assuage pesky citizens concerned that their government agencies have abdicated responsibility for crucial public infrastructure like the half-demolished Carlton Avenue bridge (right).

(Photo by Jonathan Barkey. Click to enlarge.)

The press falls short

Would you believe that the Daily News did a better job teasing out the contradictions that the typically more incisive New York Observer? (And that the Times and the Post whiffed.) The Daily News reported:
Top brass behind Brooklyn's Atlantic Yards project insisted Wednesday the $4.2 billion project would survive the crumbling economy - but conceded there will likely be further delays and didn't have a construction time line.

Meanwhile, the Observer's Real Estate round-up yesterday got the summary wrong:
Ratner vows to continue Atlantic Yards construction as soon as the lawsuit threatening the project is resolved. [NYDN]

And the Observer's own story Wednesday got the details right but the frame wrong. The headline was Forest City: All New Development On Hold (Except Atlantic Yards).

The Observer reported:
The company will not stop projects under construction already, Mr. Ratner said, nor will it halt Atlantic Yards, the more than $4 billion planned project that would build a new Nets basketball arena and more than 6,000 units of housing in Brooklyn.

Those days are over. “With the exception of Atlantic Yards, we will start—in 2009, we do not expect to start more than one building,” he said.

Just how and when the company will be able to start the massive project, given the tumultuous economic climate, Mr. Ratner was unable to offer specifics.

That means Atlantic Yards is on indefinite hold.

The epistemological question

Coverage in both the Daily News and Crain's took the company line regarding the cessation of work at the railyard.

Crain's wrote:
While newspapers last weekend questioned whether Forest City could continue its huge 22-acre arena and mixed-use Atlantic Yards development in Brooklyn, Mr. Ratner said workers left the site because they completed some demolition work at the rail yard that the company had ordered. Forest City has completed all it can on the site until it resolves pending litigation related to the project, Mr. Ratner said.

That is simply not true.

Not. True.

NotTrueNotTrueNotTrueNotTrueNotTrueNotTrueNotTrueNotTrueNotTrueNotTrueNotTrue.

To repeat, then-FCR executive Jim Stuckey said in a 2007 sworn affidavit (which was seconded earlier this year by his successor):
FCRC’s construction schedule has been carefully drawn to allow the arena to be ready for the 2009-10 season by commencing work now on vacant properties that are owned by FCRC, the MTA and the City, with work on properties that are owned or occupied by other parties deferred until the pending judicial challenges to the Project have proceeded to a point where ESDC is in a position to actually use its powers of eminent domain to acquire title to and possession of those properties.

The $1 hot dog? Not at the Izod Center--not even close

Last month, New Jersey Nets CEO Brett Yormark was interviewed by the unskeptical Alexis Glick of Fox Business News.

When Glick asked how the cost to take a family to a sporting event could be made more affordable, Yormark replied thusly:
Well, the NBA has been very proactive in providing opportunities for anyone to come see an NBA game. There are teams out there that have tickets priced at 5, 10, and 15 dollars. There are opportunities to go to the concession stand and buy a hot dog for a dollar now. And all that is an opportunity to bring in as many people as possible.

He cleverly avoided saying whether that dollar hot dog was available at a Nets game. (Maybe in Oklahoma City?)

I pointed out that the November 2007 Team Marketing Report, which had the Nets at #7 in the NBA in Fan Cost Index, placed the price of a hot dog at $3.75.

My bad.

I checked out the Izod Center on Wednesday night. A hot dog now costs $4.25.

Daily News: Nets' official attendance "seems suspiciously high"

Julian Garcia, the New Jersey Nets beat writer for the New York Daily News, writes today about the team's surprisingly poor record at home:
The fact that the Nets are 22nd in the NBA in average home attendance likely has something to do with that. In fact, their officially listed average home crowd of 16,098 seems suspiciously high to those who regularly attend games at the Meadowlands, which they could be playing in for years to come. Officials with team owner Bruce Ratner's company admitted on Wednesday that the Atlantic Yards project in Brooklyn, which includes the team's proposed new arena, has been put off indefinitely for financial reasons.
(Emphasis added)

I've made that point about inflated attendance figures several times (here, here, here, here, and here).

The Star-Ledger also noticed that the arena on Wednesday night seemed to have as many fans of the Knicks as of the Nets:
After losing to the Knicks on Wednesday, they face the struggling Raptors Friday at Izod Center, where sparse crowds have been the backdrop for a disappointing home record.

Despite Nets' CEO Brett Yormark's denials, the Prudential Center in Newark has to be on the team's radar screen as at least an interim location.

Someone at The Simpsons has been reading Field of Schemes

I'm not sure the the episode of The Simpsons aired last Sunday, The Burns and the Bees, was about Atlantic Yards as much as asserted on NoLandGrab, but it sure does look like the design for the arena, wrapped in buildings--in this case, hives--was inspired by Frank Gehry's models.

One key difference: the new state-of-the-art arena for the Springfield Excitement emerges not from the vote of an unaccountable public authority, as with AY, but by public referendum.

"All those in favor of building this decadent monument to excess, say aye," asserts Mayor Joe Quimby.

Having achieved success in the vote, Montgomery Burns (above), in his self-satisfied way, declares, "Welcome to the American dream: a billionaire using public funds to construct a private playground for the rich and powerful."

Maybe Neil deMause of the book and web site Field of Schemes should get a royalty.

Second look at judge's ruling that "there are neither allegations nor proof... that the property will not be timely improved"

Given the statements yesterday by Forest City Enterprises' Chuck Ratner about how the market--not the timetable the developer announced in May--it's worth taking another look at a September 2008 decision in an AY-related lawsuit by state Supreme Court Justice Jane Solomon.

Solomon rejected charges by tenants in two AY footprint buildings that that the Empire State Development Corporation (ESDC) is violating a provision of state law that requires disposition of properties within a decade and should hold another hearing because the project has changed considerably.

No timetable?

On the latter issue, attorney George Locker had argued that, while the project, when approved in December 2006, was supposed to take a decade, the State Funding Agreement gives a long leash: there's no start date for Phase 1, and that the developer has 12 years from the delivery of property to complete that phase without penalty, and there’s no timetable for Phase 2, which would include 11 of 16 towers.

“The bulk of the Atlantic Yards project, as far as the operative contracts are concerned, does not exist,” Locker argued in court.

Solomon, despite expressing surprise in the court hearing that eminent domain had not commenced despite “all of this publicity” about the project, wrote:
There simply are neither allegations nor proof in petitioners' papers that the project is or will be abandoned, that the property will not be timely improved or that it is intended to be conveyed to a private user without giving the fee owner a right of first refusal.
(Emphasis added)

“Reasonable” efforts to proceed

In court, ESDC attorney Philip Karmel had said, "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.

As I pointed out last month, the developer at an investment conference claimed that "we control the pace."

In what language does "we control the pace" mean "try your hardest"?

"Unreliable Sources" redux: only one of three dailies covers the Forest City conference call

The New York Daily News came out the worst among the three New York daily newspapers in the IFC Media Project's "Unreliable Sources" segment Tuesday on coverage of Atlantic Yards.

After all, a former reporter said Forest City Ratner executives got her bounced from covering Atlantic Yards, and an unnamed source blamed it directly on Bruce Ratner.

Then again, the Daily News is the only one of the three to today cover the Forest City Enterprises conference call with investment analysts in which the parent company acknowledged that the market would determine the pace of Atlantic Yards.

That directly contradicts Bruce Ratner's public pledge--delivered prominently last May in the Daily News--that “[w]e anticipate finishing all of Atlantic Yards by 2018,” and the Daily News rightly called that a "reversal."

Prominence vs. absence

The Daily News article, though placed online in the Brooklyn section, appears on page 3 of the print edition, a deservedly prominent place. I have previously criticized the Daily News for relegating important AY stories to the edition distributed only in Brooklyn.

(I still think the article left unrebutted the developer's claims that litigation is the cause of the current work stoppage.)

The New York Post, whose reporter covering Brooklyn development lamented to the cameras that there was a lack of information about Atlantic Yards, ignored the conference call.

The New York Times, which has neglected Atlantic Yards and other development news only to play periodic catch-up, ignored the conference call.

The Times sees itself as a national newspaper. Then again, it should be news when FCE head Chuck Ratner says, "The near-term effect of these [moves] will be to transition Forest City from a development company with an operating portfolio to an operating company with a development capacity."

AY fatigue? At CBN's anniversary event, small crowd, two reporters hear call for project audit

Wednesday morning, on the the fifth anniversary of the announcement of the Atlantic Yards project, the Council of Brooklyn Neighborhoods requested the city and state comptrollers to conduct an audit of all public monies spent on the project.

At first, only about a dozen people attended the press conference, including two local activists, Jo Anne Simon and Ken Baer, who are running for the City Council seat currently occupied by David Yassky. State Senator Velmanette Montgomery and City Council Member Letitia James were late. Besides myself, only one reporter--a representative of the Brooklyn Paper--was in attendance.

Could it be that the press and public are tired of the Atlantic Yards issue, even as new questions--such as why the state has seemingly let developer Forest City Ratner stall the repairs on the Carlton Avenue bridge--have arisen? The event was held at the corner of Dean Street and Sixth Avenue, where Forest City Ratner recently tore down two structurally sound row houses, leaving what CBN calls developer's blight and the distinctive outline of a since-demolished house on its neighbor's wall.

(Photo by Jonathan Barkey shows CBN's Jim Vogel speaking.)

“Five years ago the people who lived here said this project would be a disaster for the community,” said Candace Carponter (below, with Patti Hagan at right), co-chair of CBN. “CBN was formed to analyze the project, and all our studies confirmed what many had believed: this project was not only ill-conceived and socially unfair, it was never economically viable. Now Forest City Ratner has stopped all work and is trying to blame legitimate lawsuits that are preventing the disaster from getting worse. It won’t wash.”

CBN has worked with the recently-quiet BrooklynSpeaks coalition on some issues, such as the Time Out rally in May. A number of elected officials have been more comfortable with the "mend-it-don't-end-it" stance of BrooklynSpeaks. But isn't it time for some of them to step up and make sure that the government, not Forest City is in charge of the timetable to repair the bridge?

Excerpts from the letters

CBN wrote:
Forest City Ratner Corporation [sic]has severely blighted the neighborhood with the destruction of valuable housing stock, and buildings that housed light manufacturing, and local industry. Hundreds of residents have been displaced. The Carlton Avenue bridge, a major connection between Prospect Heights and Fort Greene, has been closed in preparation for replacement and now has no date for re-opening. This closure is not only inconveniencing and isolating two sister communities, it is endangering Brooklyn residents by adding up to ten minutes to the response time of the fire station that serves those communities which relied on that bridge.

When it was learned last week that Forest City Ratner had halted all work on the project, the ESDC was contacted and asked when the Carlton Avenue Bridge would be returned to the public road grid. Amazingly, the ESDC said it was not their responsibility. They replied to a local resident, “The responsibility for work to construct a new Carlton Avenue Bridge is Forest City Ratner's. No work is being done on the bridge now. Beyond that, I will have to refer you to FCRC on all of your other questions." There have been no transferences of public property to the developer so their disposition is still a public responsibility, yet the Public Authority charged with oversight of this project defers to the private developer.

Most disappointingly, Forest City Ratner has done this damage with the extraordinary monetary support of New York City and New York State.

(Photo by Adrian Kinloch.)

Nets host Knicks, but attract modest crowd

With an announced attendance of 16,722, the Izod Center was allegedly 83.7% full (capacity 19,968) for the game last night between the New Jersey Nets and the New York Knicks.

Well, I was there, and saw scads of empty seats--I'd estimate the arena was at best 60% full--and this with a good number of Knicks fans, happy with the team's come-from-behind victory. (See empty upper deck seats here and here.)

That's part of why Forest City Enterprises is absorbing $22.4 million in losses from the Nets this year. It's also why, despite Forest City's claim that it can proceed with Atlantic Yards at its own pace (assuming litigation is cleared), it must be feeling the pressure.

After all, the company is saving $30 million by suspending its dividend. If the ownership of the Nets and the Atlantic Yards project had been magically wiped away, Forest City would have lost the a project with a significant potential upside. But it might have been able to keep its dividend.

Chuck Ratner repudiates cousin Bruce's AY 2018 pledge, says marketplace determines pace of project

Despite Bruce Ratner’s pledge in May that “[w]e anticipate finishing all of Atlantic Yards by 2018,” his cousin Chuck Ratner, president and CEO of parent Forest City Enterprises today told investment analysts in a conference call that, while Atlantic Yards would take longer than expected, he couldn’t predict a timeline because it would be determined by the market.

(He was assuming that legal challenges would be cleared.)

Chuck Ratner, who though questioned would not estimate the costs of delay, also reaffirmed the developer’s commitment to the project and declared that city and state officials maintained that commitment. Also, unchallenged by the analysts, he flatly stated that the developer had completed all the work it could at the Metropolitan Transportation Authority's Vanderbilt Yard.

Ratner's statements about Atlantic Yards--firm commitment at no announced pace--suggest that Forest City is hedging its bets, hoping to attract new investors and/or additional government subsidies.

Indeed, Ratner predicted a dramatic decline in the dollar value of construction starting next year--one building, with the exception of the Atlantic Yards project.

However, in another example of hedging his bets, he refused to attach a dollar value to Atlantic Yards construction even though, should the $950 million arena proceed as pledged, the value of construction in the developer's portfolio would not decline as dramatically as predicted.

(Update: Here's coverage from Crain's and the Daily News, which pointed out that Ratner's refusal to commit to a timeline was "a reversal from an earlier 2018 target date.")

Somber tone

Still, the overall tone was very somber, as Ratner declared that, though he'd seen many challenging times in 42 years of business, "I must confess, I’ve never seen anything quite like this. We believe conditions will worsen."

Ratner said FCE's near-term priority is maintaining liquidity, hence the decision to suspend the dividend and to hold a rare conference call after the release of third-quarter financial results. (Typically the calls are scheduled after second- and fourth-quarter results.)

The market reacted by sending Forest City's stock down more than 15%, closing at $6.97.

Nearly everything has slowed

Forest City has stalled nearly all new development. “The dynamics of the market have changed dramatically, and with rare exception, the returns available on new development do not justify the required equity commitment," said CFO Bob O'Brien.

Chuck Ratner declared, "The near-term effect of these [moves] will be to transition Forest City from a development company with an operating portfolio to an operating company with a development capacity. We’ve done this before, most recently in the early ‘90s, when we cut development in response to market conditions and ultimately emerged stronger from that downturn.”

"Despite the slow-down, we retain our core development capacity, as well as a reservoir of entitled opportunities where we can re-start additional vertical development, largely on our schedule, with modest carrying costs," he said. "When conditions improve, we will be able to take advantage of these opportunities."

“In fact, we’ve already been approached to fix broken development deals, participate in the purchase of deeply discounted project debt, and review distressed sellers’ situations," Ratner said. "To date, we’ve taken action on very few of these opportunities, and we believe the risk-adjusted returns need to be extraordinary before we’ll consider committing incremental capital.”

What have they closed down? "We had several one off retail opportunities that we elected not to proceed with," Ratner said. "We had next phases on several of our residential projects in Oakland, in Texas, in other places, elected not to proceed… We were ready to start the first building at our project in Washington, we're not going to start for a while. On the big mixed-use ones, as we indicated, we feel good about those. We’re going to sit—we had another building we were ready to do in Boston… if a tenant comes along and we can get a fully leased building… we’ll do it.

Committed to AY

Despite putting "virtually all new development on hold," Ratner declared, "I need to emphasize here again that we remain committed to our projects under construction and we will meet our obligations and maintain our entitlements, including at our large multi-phase, mixed-use projects, such as Stapleton in Denver, Mesa del Sol in Albuquerque, Central Station in Chicago, the Yards and Waterfront Station in Washington, and of course, to Atlantic Yards in Brooklyn, where we continue make progress and remain committed to the project, despite hurdles that we still need to overcome."

Note that the obligations, as so far expressed in the City and State Funding Agreements, give Forest City Ratner, the developer's New York affiliate, a long leash.

AY snags?

Analyst Rich Moore asked, "Looking at Brooklyn, real quick, can you give us a little color on how you guys feel about it. Obviously it’s a big project that comes up a lot… something that eventually could be an issue, could have impairments possibly, could have issues for you guys?"

"There’s lots of ‘coulds,’ OK?" Ratner responded. "There’s lots of things that could happen. We’ve been here before, right? We’re here with Brooklyn, 25 years ago, at MetroTech. We’re here with University Park at MIT. We were here with San Francisco Center for almost a decade. That doesn’t mean everything works out, you saw our project write-offs are up."

(Well, it depends on what "here" means. After all, Forest City Enterprises and Bruce Ratner have never had principal ownership of a basketball team, nor built a sports arena.)

"We’re very committed to this project, we believe very strongly in the market, which continues to be good," he continued. "The apartment market, the rental market, in Brooklyn, for that matter in Manhattan, continues to be strong. Yeah, there’s going to be more hurt and it’s going to go down before it goes up. But we remain very committed to this markets and these products, longer term."

Note that he didn't say anything about the availability of scarce bonds to finance the affordable housing.

Why work is stalled

"Specifically to Atlantic Yards, there were some articles in the newspaper, you probably saw them, that we’ve stopped work," he said. "We stopped work because the work we were doing came to an end. We did what we were supposed to do on the demolition and the railyards. Until we get our lawsuits resolved and some of the hurdles overcome, we appropriately stopped what we were doing."

Wrong.

"We remain committed to this and when we get--and we believe we will--successfully through the last of the litigation in 2009, we’ll evaluate the market at the time and see what our next steps are. But at this point in time, Rich, we don’t see any, uh—we don’t see any, uh, any potential impairment or any issue with our continuing to develop this property. It will take longer than we thought it was going to take, as it already has."

Loan renegotiation

Ratner then described a mortgage loan: "I’ll just preemptively reference one of the maturities in ‘09 that everybody asks about, which is the Gramercy loan… obviously, that’s a loan on the land at Atlantic Yards, it matures in February of 2009, and we’re actively engaged in a negotiation on extending the terms."

(Correction: I previously described the mortgage loan as $40 million; the Wall Street Journal says $153 million.)

The costs of delay

Another analyst asked a question that didn't get answered: "Jumping over to the Atlantic Yards project, thanks for addressing your commitment to it. I’m wondering, how long can you delay that project if you needed to and what’s the extra cost of carrying that?"

"How long can we delay the project?" Ratner responded. "We’ll continue to work with the public parties, they’re still very committed to the project, both the city and the state. And I say we’ve been here before, and I think we can successfully do that until we are prepared to start."

"I can’t tell you today in this market when that will be, but we certainly intend with 2000--when we have these legal problems behind us, we intend to evaluate the market, the financing, and then proceed," he continued. "I don’t know the answer specifically to how long we could delay. It’s not a question of entitlements, it’s a question of the marketplace."

Hedging, hedging on AY

An investment analyst asked when it would be clear that Forest City is spending significantly less on capital projects.

"In each of last four years, we have averaged $800 million of construction starts… much of that funded with mortgage debt, some of that funded with our equity," Ratner said, noting that the company has very little equity left.

"In the coming year, with the exception of Atlantic Yards, which we’ve talked a lot about, which we’re very committed to, and are prepared to deal as soon as we get-—as we resolve our issues with the lawsuits, with the exception of Atlantic Yards, we still do not expect to start more than one building," he said. "That will be the most immediate and dramatic effect of what we have done."

"Atlantic Yards is a big project, but leaving that aside, until we make a decision to do more, that’s where you’re going to see the most dramatic effect of the reduction of our development," he said.

However, a $950 million arena, even over three years, is more than $300 million a year. A first residential building would cost well over $100 million, parceled out over two years.

In other words, Ratner could have said that Forest City Enterprises expects to proceed with nearly half a billion dollars in development next year.

He didn’t.

Atlantic Yards remains very, very murky.

The Kolben chronicles: more likely it was her reports for the Brooklyn Paper, not the Daily News, that alarmed Ratner

So, if the scoop in last night's IFC Media Project report on Atlantic Yards was that Forest City Ratner executives--according to an unnamed source, Bruce Ratner himself--got Daily News reporter Deborah Kolben kicked off the Atlantic Yards beat, what exactly were her transgressions?

The answer: likely none committed while writing for the Daily News.

A review of Kolben's Daily News work shows exactly two articles, both co-bylines, concerning Atlantic Yards. A 6/24/05 article was headlined HOMES UP FOR GRABS Ruling ramps up anxiety in city. A 7/6/05 article was headlined A VISION SOARS IN B'KLYN. Yeas, nays over plan for Nets.

While the former article was--like much other initial coverage--somewhat alarmist about the effects of the Supreme Court's Kelo v. New London decision, the latter was essentially balanced.

(Update: I'm told Kolben also contributed to the Daily News as a non-staff stringer, though those articles are not accessible via a database search. Here's one, and another.)

Was it the past work?

So, perhaps Forest City Ratner had gotten wind of tougher coverage in the works at the Daily News.

More likely, however, they were peeved by Kolben's record at the Brooklyn Paper, where she wrote skeptical articles like the 7/17/04 SILENT PARTNERS, about an attempt to find out who was buying the New Jersey Nets; the 7/3/04 RATNER’S MONEY PIT, a sympathetic account of a critical report on alleged tax benefits from Atlantic Yards; and the 6/26/04 Watchdog calls for arena ‘ULURP’, about the importance of putting the project through the city's land use review procedures.

At today's conference call, will investment analysts finally ask FCE some tough questions about Atlantic Yards?

If Fox Business News anchor Alexis Glick is the glam, smiling face of business news, unwilling to do much research to contradict the spin of guests like New Jersey Nets CEO Brett Yormark, her away-from-the-camera counterparts are the investment analysts who follow the fortunes of Forest City Enterprises (FCE) but don't do any fact-checking.

In periodic conference calls with FCE executives, the investment analysts have heard those executives continually revise the timetable for and the promises regarding Atlantic Yards without acknowledging the inaccuracy of past statements.

And the analysts--all four--don't call them on it. (Hmm--maybe that kind of behavior, writ large, is part of why the country's in its current financial mess.)

At the conference call and webcast today, perhaps the analysts will finally have done some homework. I've provided a cheat sheet below.

Timing of arena and project

Forest City Enterprises executives Bob O'Brien and Chuck Ratner had a notable exchange in March 2007.

O'Brien said, "We would expect and our goal is to have vertical construction up and operating within 30 to 36 months, and hopefully, the current timeline is to have the ball team open in 10-11?"

Ratner seconded him: "10-11."

Later in the sequence, Ratner said, "This is going to be a 15-year buildout."

Of course Ratner quickly issued a convoluted clarification, claiming that the arena would open in 2009 and that the 15-year buildout referred to the total time from conception to completion.

(That's a dubious definition of the term "buildout." For example, in this 10/10/06 press release, FCE announced an agreement to develop a 160-acre life sciences office park near Denver: Build-out will occur over the next 20 years or more, with the first buildings expected to be completed by the end of 2008.
There was no indication that buildout had already begun just because the project had been conceived.)

In October 2007, Chuck Ratner told investors, that, according to FCR's MaryAnne Gilmartin, “I think her phrase was, begin construction in earnest on the arena and some of the adjoining stuff by the middle/end of '08, maybe earlier than that hopefully.”

Now Forest City is saying construction would begin in 2009 and the arena would open in 2011, though I think 2012 is a more likely best-case scenario.

Timing of legal resolution

In September 2007, O'Brien said of pending lawsuits, "We remain confident in our positions in all legal challenges and we are targeting resolution by the first half of fiscal year 2008."

In April 2008, FCR's Joanne Minieri told investment analysts, "We are proceeding with the expectation that the lawsuits may be resolved during the second half of this year."

Now Forest City does not (yet) officially predict a resolution, but it stated Monday that it considers it an important milestone that a hearing on the state eminent domain case is schedule for the first quarter of 2009.

There's also a pending state appellate court case involving the challenge to the Atlantic Yards environmental review. If the community challengers win a reversal, the Empire State Development Corporation of course will appeal. If the state prevails, the challengers of course will appeal. If the challengers get two of five votes--which is not impossible, based on comments at the hearing--they get an automatic appeal.

In other words, it could take a lot longer.

Land ownership

O'Brien said in March 2007 that "[we] own or control 90 percent of that land for the full development of that project," nearly two years later that percentage has gone down, rather than up.

That percentage declined to 85% thanks to a state Supreme Court judge's decision regarding a lease of Henry Weinstein's property. The decision is under appeal.

Suspension of work

O'Brien said in March 2007, "[W]e’ve begun to move some dirt on the site to relocate the Long Island Rail Road tracks so we can begin to build some of the infrastructure."

Robert Sanna, FCR’s Executive Vice President and Director of Construction & Design Development, said in October 2007, “[W]e've devised a plan to create a temporary yard, which we're in the process of constructing now and will complete so that we can begin construction on the arena site in earnest on that project. The temporary yard work is underway at the moment as we speak.”

Minieri said in April 2008, "[W]e continue to proceed with pre-development of Atlantic Yards, whereby certain site work and the construction of the temporary railyard are underway."

That work has come to a screeching halt. Forest City Ratner blames litigation--which defies sworn statements by company executives that work on the railyard could proceed despite litigation.

FCE acknowledges cash-flow difficulties. Perhaps at the conference call today, the analysts can press FCE executives to connect the dots.

More subsidies available?

Chuck Ratner said in April 2008, "[J]ust in these past six or eight months, we got the various governmental agencies, state, city, borough, in New York, to increase their commitments to Atlantic Yards by 105 million dollars on top of the 200 [million] they committed. We still need more."

There's no indication additional subsidies would be available, given the cuts in city and state budgets. City Comptroller William Thompson last month told the New York Observer he didn't think the project should get more government assistance.

The Illinois governor pressured the Chicago Tribune; in New York, the mayor & Ratner have had much less trouble

The sell-the-Senate-seat scandal immolating Illinois Gov. Rod Blagojevich has a very interesting subplot regarding state help for a sports facility and the role of Chicago's leading newspaper.

After the Department of Justice (DoJ) press release, I'll point to some interesting contrasts with the situation in New York.

$100 million at stake

The DOJ stated:
Misuse of State Funding To Induce Firing of Chicago Tribune Editorial Writers
According to the affidavit, intercepted phone calls revealed that the Tribune Company, which owns the Chicago Tribune and the Chicago Cubs, has explored the possibility of obtaining assistance from the Illinois Finance Authority (IFA) relating to the Tribune Company’s efforts to sell the Cubs and the financing or sale of Wrigley Field. In a November 6 phone call, [chief of staff John] Harris explained to Blagojevich that the deal the Tribune Company was trying to get through the IFA was basically a tax mitigation scheme in which the IFA would own title to Wrigley Field and the Tribune would not have to pay capital gains tax, which Harris estimated would save the company approximately $100 million.

Pressure on newspaper

The DoJ stated:
Intercepted calls allegedly show that Blagojevich directed Harris to inform Tribune Owner and an associate, identified as Tribune Financial Advisor, that state financial assistance would be withheld unless members of the Chicago Tribune’s editorial board were fired, primarily because Blagojevich viewed them as driving discussion of his possible impeachment. In a November 4 phone call, Blagojevich allegedly told Harris that he should say to Tribune Financial Advisor, Cubs Chairman and Tribune Owner, “our recommendation is fire all those [expletive] people, get ‘em the [expletive] out of there and get us some editorial support.”

...In a November 11 intercepted call, Harris allegedly told Blagojevich that Tribune Financial Advisor talked to Tribune Owner and Tribune Owner “got the message and is very sensitive to the issue.” Harris told Blagojevich that according to Tribune Financial Advisor, there would be “certain corporate reorganizations and budget cuts coming and, reading between the lines, he’s going after that section.” Blagojevich allegedly responded. “Oh. That’s fantastic.” After further discussion, Blagojevich said, “Wow. Okay, keep our fingers crossed. You’re the man. Good job, John.”

Meeting a tight deadline

The DoJ stated:
In a further conversation on November 21, Harris told Blagojevich that he had singled out to Tribune Financial Advisor the Tribune’s deputy editorial page editor, John McCormick, “as somebody who was the most biased and unfair.” After hearing that Tribune Financial Advisor had assured Harris that the Tribune would be making changes affecting the editorial board, Blagojevich allegedly had a series of conversations with Chicago Cubs representatives regarding efforts to provide state financing for Wrigley Field. On November 30, Blagojevich spoke with the president of a Chicago-area sports consulting firm, who indicated that he was working with the Cubs on matters involving Wrigley Field. Blagojevich and Sports Consultant discussed the importance of getting the IFA transaction approved at the agency’s December or January meeting because Blagojevich was contemplating leaving office in early January and his IFA appointees would still be in place to approve the deal, the charges allege.
(Emphasis added)

And in New York

Things are not quite so crude in New York. The same kind of agreement is sought, but the pressure and the process is far more politic, perhaps because so many have started on the same page.

Consider Mayor Mike Bloomberg's effort to extend term limits. Wrote Wayne Barrett in an 11/19 Village Voice article headlined The Transformation of Mike Bloomberg:
The day before Joe Biden's selection was formally announced in late August, The New York Times revealed that the mayor had been reaching out to fellow media titans—including Arthur Sulzberger of the Times, the Post's Rupert Murdoch, and the Daily News's Mort Zuckerman—to see if they would support a City Council bill to reverse the two-term limits that voters had approved in two overwhelmingly popular referendums. Two of the newspapers had to distance themselves from their own prior opposition to altering term limits by legislation, as did Bloomberg (he called a previous attempt "an absolute disgrace") and his council consigliere, Christine Quinn (in December, she nixed the possibility of a bill, saying that "the voters have made their will very, very clear").

Barrett added:
We are all used to editorial boards making endorsements determined by their owners, but this was the first time in memory that these three proud institutions had marched in such lockstep on a policy matter after meetings between a political figure and their three owners.

The rush to approve AY

And what about the rush to approve Atlantic Yards before 2006 and the end of the administration of Gov. George Pataki? Consultants for the Empire State Development Corporation (ESDC) worked over Thanksgiving to revise the Final Environmental Impact Statement.

The votes by the ESDC board and then the Public Authorities Control Board (PACB), on which Pataki had one of three crucial votes, came in December. Of course incoming Gov. Eliot Spitzer was a project supporter, but even Spitzer avoided endorsing the widespread calls--even from civic groups that didn't oppose the project--to delay approval.

And, of course, the city more than doubled its contribution to Atlantic Yards without any public explanation.