Friday, January 09, 2009

As FCR scales back arena cost, Gehry's role recedes; ESDC, which once touted architect, says developer controls aesthetics

When it comes to Atlantic Yards, you must keep your eye on the ball. Remember, Forest City Enterprises CEO said last month that AY was one of the developer's few projects not on hold. Except it is--and Ratner said the market would determine the company's moves should lawsuits be cleared.

Yesterday, three newspapers reported that architect Frank Gehry was still on the project. However, his role seems to be receding, given that cash-strapped developer Forest City Ratner has brought in what a Daily News source called "value engineering" companies to scale back the cost (but not the footprint) of the arena, announced at $435 million (and already the most expensive ever), which had ballooned to $950 million. It was approved by the state at $637.2 million.

Spokesman Joe DePlasco offered this quote: "We are continuing to speak with many arena experts and working hard to find ways to build a world class venue in an incredibly difficult economic environment."

Financing costs

The Gowanus Lounge's Bob Guskind on December 31 was prescient (and I wasn't):
Our prediction: Developer Bruce Ratner will have difficulty obtaining financing for a nearly $1 billion Gehry arena and the arena will either be scraped or a new version from an off-the-rack firm for $500 million will be built.

Would the arena look more like the Atlantic Lots design produced by the Municipal Art Society (right) than Gehry's latest design (top)? Or would it just look more ordinary, like the Prudential Center in Newark, which cost under $400 million, and is increasingly being suggested as an alternative?

(Update: I should add that the Prudential Center is a state-of-the-art arena and far superior to the Izod Center. But it is a standalone box.)

There's another reason behind the "value engineering," I surmise. There's just no way the land underneath the arena could be valued high enough for the foregone taxes to be sufficient to match the PILOTs, or payments in lieu of taxes, needed to pay off a $950 million arena.

Will valuations have to be "jacked up," as with Yankee Stadium, to pay off a $500 million arena? Stay tuned.

The value of the Gehry name

So why is Forest City Ratner insisting Gehry is still on the job?

Because, even if his role has diminished and his vision compromised, until Gehry walks, he's still a huge selling point for the project. After all, Barclays didn't commit a reported $400 million in naming rights for an arena designed by "just some guy" (to quote former MTA Chairman Peter Kalikow's dismissal of the agency's own appraiser).

And the big spenders who've committed to buying luxury suites in the Barclays Center, as well as the ones still considering purchases, must consider the Gehry cachet. The Barclays Center web site (right) touts Gehry as "one of the world’s most respected and celebrated architects." Other sponsors surely want to back in Gehry's glow.

It was Gehry who wowed New York Times architectural critics Herbert Muschamp (Courtside Seats to an Urban Garden) and (initially) Nicolai Ouroussoff. It was Gehry who drew praise from the Times editorial page, which told us that the buildings "would add a sense of excitement." It was Gehry who convinced New York magazine essayist Kurt Andersen that "Our long architectural snooze is over... Brooklyn should embrace him."

Tensions over the truth

That's why Forest City has regularly insisted that Gehry would design the arena and all the towers, despite his request to bring in other architects and landscape architect Laurie Olin's prediction that other architects would play a role.

(At right, original p.r. materials released 12/10/03. Click on graphics to enlarge.)

Remember, the New York Observer reported in February 2007:
“Laurie has his views,” countered Jim Stuckey, executive vice president of Forest City Ratner. “We don’t believe it is going to take 20 years. We expect that it will take 10.”

He added, “Frank Gehry will be the architect on every one of them.”


The now-departed Stuckey was way wrong on the first prediction. He's likely wrong on the second.

For now, something--loyalty? money? pride? a gag order?--is keeping Gehry from talking.

Remember, in a 5/5/08 press release, he dutifully declared:
“After a productive collaboration, our work for Atlantic Yards has come together in a way that makes me very pleased.... The design for Miss Brooklyn, which we now call Building One, has become very special for me. In response to the new program, it has evolved and has become slimmer, more elegant and more festive and is ideally suited for an office building... I am very eager to continue working on this project with my partner Bruce Ratner.”

Gehry said in January 2006, "If I think it got out of whack with my own principles, I’d walk away." Ouroussoff in March 2008 suggested he was already there.

ESDC defers to Ratner?

The Wall Street Journal reported, in an article headlined Developer May Scale Back Plan for Nets' Brooklyn Arena, that Gehry "has overseen the design of nearly every element" of the Brooklyn arena, but noted a "final design has never been approved.

The money quote came from Warner Johnston, spokesman for the Empire State Development Corporation (ESDC), who told the newspaper "The aesthetic choices are Forest City Ratner's."

He's technically right, given that nothing binds a particular architect to a project, though Gehry's office did produce the Design Guidelines issued under the ESDC's rubric. But city and state and borough officials sure went along for the ride, embracing Gehry, who appears prominently on the developer's web site (right).

On 3/3/05, a mayoral press release and an ESDC press release announcing a Memorandum of Understanding both promised "a Frank Gehry designed world-class arena."

The ESDC's 12/8/06 press release touting the project was unequivocal:
The almost $4 billion Atlantic Yards project designed by world-class architect Frank Gehry will transform an area that is currently blighted and largely underutilized into a vibrant mixed-use community.

There was some wiggle room in the ESDC's Modified General Project Plan: It is currently anticipated that the buildings will be based on designs by Frank Gehry, a world-renowned architect.

The arena was also anticipated to open in 2009, with the entire project to be completed in a decade.

Past bait-and-switch

If it's bait and switch, it certainly wouldn't be the first example. Remember, Forest City Ratner once promised 10,000 office jobs, a nice round number that enticed a couple of columnists.

The developer promised that half of all the housing units would be affordable, then said that ratio would apply only to the rentals. Originally, 900 of the 2250 affordable rentals were promised to moderate-income people earning 50%-100% of Area Median Income (AMI), but now only 450 units would go to that cohort, with 900 units for those earning above the AMI.

What set off the press?

In none of the three articles was a source cited, and the New York Times, in a CityRoom blog post headlined Atlantic Yards Developer Denies Removing Architect, began with a rumor detached from even a source:
The rumor this week concerning the troubled Atlantic Yards project near Downtown Brooklyn had the developer firing the famed architect Frank Gehry, who designed the project’s centerpiece: a $1 billion basketball arena.

But the rumor was sufficient to provoke coverage, right? Maybe they should've told us the source; as far as I know, it didn't come from fans of the project.

It can be dodgy to report on rumors, but the rumor that Gehry stopped work on the project was apparently true, and this one has some credence, too.

I commented that the Times was mis-framing the issue when it reported that Forest City Ratner had not "gotten rid of Mr. Gehry," because the developer, as evidence suggests, could be exploring “less expensive ways to build the arena” by simply not paying him. The Times also reported the claim that Forest City Ratner stopped site work because of lawsuits, which isn't credible.

(The Times article did not appear in print. The New York Post did run a brief article.)

Money worries

Things certainly have changed in three years. New York magazine's Andersen wrote 11/20/05:
Given Ratner’s track record, I asked Gehry if at first he mistrusted Ratner’s professed new dedication to quality and innovation. “Yeah. Yes, I did.” And how did he get over his skepticism? “I’m still getting over it,” he says, although so far, “the budget busts have not been architectural ones. He’s always voted with me on the side of the architectural. He runs into roadblocks sometimes in his company, but it has not been cataclysmic.”

Now, according to the Daily News, Ratner's in arrears with the architect. The headline: Brooklyn Nets Arena cutbacks? Bruce Ratner scales back plans; Star architect Frank Gehry may go.

(Oddly, the Daily News chose a 2005 graphic rather than a 2006 one or the current one.)

Andersen understood the politics behind Gehry's choice:
Ratner isn’t spending 15 percent extra on these new buildings simply because he wants to underwrite cool design. He understands that in Brooklyn, just as his quotas of apartments for poor people and construction jobs for women and minorities were ways of winning over key constituencies, hiring Gehry was politics by other means, sure to please the city’s BAM-loving chattering class. “The spirit of what you say,” Ratner agrees when I posit this theory, “is accurate.”

(At right, Gehry is touted in the second, and final, issue of the Brooklyn Standard "publication," which appeared in Fall 2005.)

Is it about pride?

In an odd coda to this all, a Brooklyn Eagle essay published yesterday an hour before the Gehry news was headlined Atlantic Yards: Is Pride Driving Ratner? In it, Raanan Geberer citied sketchy reports "often from biased news sources" about Atlantic Yards "getting bogged down in problems with construction financing (stemming from the current recession) and lawsuits."

Biased sources like the radical Wall Street Journal? (Eric McClure offers a thorough dissection on NLG.)

The columnist's big thought: This leads one to ask: Is Bruce Ratner’s desire to be acknowledged as a great developer and leader the main force in stubbornly keeping this project on the table?

This leads one to point instead to the big losses suffered by the New Jersey Nets ($22.4 million absorbed by FCE) and the team's declining value.

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