On Barclays/AIG, NJ Congressman vaults story into media; Yormark spins regional benefits, affordable housing
When City Council Member Letitia James issued a statement, it made the I-team blog from the Daily News Sports section and got a story buried (right) on page 14 in the Brooklyn Paper.
But when Rep. Bill Pascrell, a Paterson-based Democratic who represents a district near the Meadowlands, yesterday issued a press release and letter calling for Treasury Secretary Tim Geithner to void the deal, it drew coverage far and wide, including the New York Times (online, at least), the Record, Crain's New York Business, and the New York Observer, which provided this summary:
Mr. Pascrell, a Democrat who represents an area full of New Jersey Nets fans just west of the Izod, wrote to Mr. Geithner that he should block the naming rights deal, which has not yet closed, because Barclays received monies from embattled insurance company AIG, which itself received tens of billions in federal bailout dollars. In taking up this cause, he picks up an indirect connection to the bailout that was pushed by project opponents but failed to attract much attention among New York elected officials.
Contrast with CitiField
Indeed, it's an indirect connection, as with CitiGroup, and, though I've said that money's fungible, I acknowledge that it's not as if money was appropriated for this. And the Treasury Department, according to the Times, will take no action on the CitiGroup deal and--unless outrage grows even more--likely on the Barclays one as well..
But Pascrell, in his letter, did point out a disctinction:
I understand that the Treasury Department allowed CitiGroup, which had a similar naming rights agreement with the New York Mets in place, to move forward even after receiving federal bailout money. However, unlike that deal, construction on the Atlantic Yards arena has not yet broken ground. Furthermore, press reports indicate that the agreement between Barclays and the Atlantic Yards arena includes an opt-out clause and no money has exchanged hands.
Yormark: regional benefits + affordable housing
But rather than argue that the claim was bogus, New Jersey Nets CEO Brett Yormark issued this statement:
"Barclays has made a long-term commitment to Brooklyn and the Atlantic Yards development and in a very difficult economic environment has renewed that commitment," said Brett Yormark, CEO of the Nets. "Congressman Pascrell has long expressed his support for working families and one would hope that applies to the men and women of Brooklyn who will benefit from the much needed boost to the borough's economy, the thousands of new jobs and the affordable housing that will be part of the Atlantic Yards project. I can understand the Congressman's interest in keeping the Nets in New Jersey but I do not think he understands fully what this project means in terms of jobs and housing and the benefits for the entire region."
Benefits for the entire region?
A new arena would compete with the already-built Prudential Center for a finite number of events. The city's rationale for subsidies is that the arena would poach tax revenues from New Jersey. It's surprising that more New Jersey officials haven't glommed on to Pascrell's media gravy train.
The Barclays deal has nothing to do with affordable housing. Subsidized housing would rely on sufficient tax-exempt bonds issued by the New York City Housing Development Corporation. It just so happens that, in the take-it-or-leave-it AY plan that local officials endorsed--as opposed to dividing up the site into multiple parcels--the arena has to be built first.
But if the arena dies, and AY dies, guess what? The City Purpose Convenant, part of the State Funding Agreement, would require 35 percent affordable housing, albeit in a project less than one-third the size.
However, given that, as parent Forest City Enterprises has asserted that "we control the pace," an alternative plan might bring subsidized housing to parts of the AY site a lot faster than the current developer.