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Will we ever find out how much AY and arena now cost? More FOIL responses from NYC EDC and ESDC

So I appealed the decision by the New York City Economic Development Corporation (NYC EDC), that the current cost of the Atlantic Yards project is exempt from disclosure because it is either a trade secret or its disclosure "would cause substantial injury to the competitive position of the subject enterprise."

And the answer from the appeals officer, Judy Fensterman: no way.

The Financial Materials, NYC EDC said in a letter (full text below), "contain proprietary assumptions, analyses and projections regarding the feasibility and performance of the Project and provide insight into FCRC's proprietary financial models and other business practices, which would be detrimental to FCRC's competitive position if disclosed."

And disclosure would frustrate ongoing negotiations "relating to all aspects of the Project." Those negotiations include "private parties."

Impact of negotiations

What does that mean? I can't be sure, but as I wrote, a significantly less expensive arena--cut in half from $950 million?-- might confirm that Frank Gehry's design has been significantly altered. And that might cause consternation among the sponsors already signed up to plaster their names on a "landmark" arena.

(DDDB points skeptically to Nets CEO Brett Yormark's apparent statement that the original arena plan is on track.)

Or, perhaps, a cost estimate limited to Phase 1 might confirm that Forest City Ratner is unlikely to fulfill CEO Bruce Ratner's May 2008 pledge, "We anticipate finishing all of Atlantic Yards by 2018.

Bait and switch?

It's understandable, as a general matter, why "financial records provided by a commercial business to an agency during the course of negotiations... would have a chilling effect on our ability to do business," as Fensterman writes.

But the cost of the project and the arena was a public matter when the project was approved in December 2006. If the cost is now a secret, that suggests that developers and public agencies can announce one set of numbers to the public, then turn around and keep the actual numbers secret.

ESDC answers pending

I filed the same FOIL request about the current project cost with the Empire State Development Corporation (ESDC), and received a letter (full text below) from FOIL officer Antovk Pidedjian that indicates that the agency would grant me access to documents "not privileged or exempt from disclosure" only after Forest City Ratner gets the opportunity to argue for an exemption.

Thus, I am doubtful that much would be disclosed.

I also requested of ESDC "documents that explain whether any portion of the Atlantic Yards project, including but not limited to housing, a new railyard, and other infrastructure, has been presented, listed, or otherwise included as eligible for federal stimulus funding."

Since my request, a letter from local elected officials indicated that the ESDC has not requested federal stimulus funds for the project. But the issue may have been discussed.

ESDC's answer was an umbrella response to both request, so only documents "not privileged or exempt from disclosure" would be provided.

(Please click on images to enlarge documents.)

The NYC EDC letter

I am writing in response to your letter, dated February 11, 2009 (and received by me on February 18, 2009), appealing a determination made on February 11, 2009 (via email) by Judith Capolongo, Records Access Officer of the New York City Economic Development Corporation ("NYCEDC"), regarding your February 7, 2009 request for documents that provide current estimates of the cost of the Atlantic Yards project in Brooklyn (the "Project"), including the current estimated cost of the Project as well as the current estimated cost of the arena. In her February 11th email, Ms. Capolongo determined that the requested documents are exempt from disclosure pursuant to FOIL Section 87(2)(d).

After reviewing the requested documents and discussions with NYCEDC project staff regarding the nature and scope of the documents, being essentially financial projections and analysis (the "Financial Materials") for the proposed Project, I am hereby affirming NYCEDC's determination denying you access to such Financial Materials.

I have determined that NYCEDC can properly withhold the Financial Materials as "trade secrets or submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise" pursuant to FOIL Section 87(2)(d). The Financial Materials were delivered by Forest City Ratner Companies ("FCRC") to NYCEDC as part of NYCEDC's and The City of New York's (the "City") due diligence in connection with ongoing discussions concerning various ongoing aspects of the Project and with the expectation that they would be kept confidential. The Financial Materials contain proprietary assumptions, analyses and projections regarding the feasibility and performance of the Project and provide insight into FCRC's proprietary financial models and other business practices, which would be detrimental to FCRC's competitive position if disclosed. FCRC is in the process of moving toward the closing of the Project, and negotiations relating to all aspects of the Project are ongoing. The disclosure of the Financial Materials would frustrate this process by providing to the public, including private parties with whom FCRC is in ongoing negotiations, with confidential information as to Company assumptions included in its feasibility analyses. This could have a material adverse impact on FCRC's ability to acquire the Project site, negotiate material agreements with third parties, and ultimately carry out the Project.

Further, FCRC had every expectation that these documents containing commercially sensitive material would be kept confidential and used only in the context of project negotiations or they would not have otherwise submitted the same to NYCEDC or the City. And yet, without this essential information, NYCEDC and/or the City cannot reasonably be expected to undertake a deliberative process in which it reviews, evaluates, negotiates and seeks to undertake a project that effectively addresses the competing needs of the interested parties while also promoting the public interest. The Court of Appeals in Encore College Bookstores v. Auxiliary Services Corp. 87 N.Y.2d 410, 420 (1995) explained that the public policy behind FOIL Section 87(2)(d) is "to protect businesses from the deleterious consequences of disclosing confidential commercial information, so as to further the State's economic development efforts and attract business to New York." The disclosure of the confidential information contained in the Financial Materials is exactly the type of record provided to an agency that the Court concluded should be exempt from disclosure. If such type of financial records provided by a commercial business to an agency during the course of negotiations were made publicly available, it would have a chilling effect on our ability to do business. Businesses would reconsider the confidential information they shared with NYCEDC, thereby greatly impairing NYCEDC's ability to carry out its economic development functions.

For the reasons stated above I am hereby confirming NYCEDC's denial of access to the Financial Materials. You may seek judicial review of this determination pursuant to Article 78 of the New York Civil Practice Law and Rules.


The ESDC letter


ESDC is granting you access to those documents which are responsive to the above-referenced requests, on file at ESDC's and not privileged or exempt from disclosure pursuant to the Freedom of Information Law (Public Officers Law, Section 84 et seq.) ("FOIL"). ESDC is continuing to search for and review documents. ESDC will provide you with any non-exempt documents and/or inform you of any determination(s) pursuant to FOIL by March 17, 2008.

Additionally, please be advised that documents responsive to the above-referenced request regarding estimates of the cost of the Atlantic Yards project include information which (prior to the above-referenced request) FCR requested be excepted from disclosure by ESDC under sections 87(2)(d) and 89(5) of FOIL. These sections of FOIL relate to disclosure of trade secrets that would cause substantial injury to competitive positions. As a consequence of the guidelines explained below, a determination with respect to these documents may occur after the March 17, 2009 date given above.

As required by section 89(5)(b)(1) of FOIL, ESDC must inform FCR that it intends to determine whether FCR's requested exception from disclosure with respect to these documents should be granted or continued. According to section 89(5)(b)(2) of FOIL, FCR has ten business days from receipt of the notice to submit to ESDC a written statement of the necessity for the granting or continuation of such exception.

ESDC will notify FCR in writing within seven business days of the receipt of such written statement (or within seven days business days of the expiration of the period prescribed for submission of such statement) of ESDC's determination to grant, continue or terminate such exception and the reasons therefore. ESDC's determination will be sent to FCR and you.

FCR will have a right to appeal any denial of its requested exception within seven business days of receipt of any written notice of denial. Similarly, you will also have a right to appeal any grant of FCR's requested exception within seven business days of receipt of the written notice.

Comments

  1. well, well now...

    what have we here?

    a company that is in court over the public benefits of a project(FCR), whose public partner (ESDC) has admitted in court that there was no analysis of public benefit done, and a court that has decided that they have to trust that there is a public benefit.

    add to this a state organization(FOIL) that says that all communications about a publicly funded and driven project are so private so as to destroy the company (FCR) if revealed to the public where this company's stock has dropped 90% in the last year (41.84 to 4.06).

    i want to see a full wall chart of this process. the bodies are buried everywhere.

    it seems to me that each and every decision that has been made can be reopened if the state has not been forthcoming on public access. i cant imagine a more blatant example of state subtefuge.

    ReplyDelete

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