Saturday, March 07, 2009

WSJ on AY: "A Hole Grows in Brooklyn"

In a Wall Street Journal op-ed today about Atlantic Yards, headlined A Hole Grows in Brooklyn, Manhattan Institute senior fellow Julia Vitullo-Martin argues, not unpredictably for the newspaper and author, that the private market should have been allowed to do its work.

She writes:
Now, more than five years later, what's been brought to Brooklyn is a very large hole in the ground and a project that is coming to symbolize why large government projects can be riskier than allowing local residents to fix up their own communities.

Her conclusion:
The ill-fated project in Brooklyn reflects a breakdown of the state and city's strategy of favoring big-government, centrally supported, highly subsidized projects over the kind of small, privately funded, unsubsidized, incremental development that was already occurring in Prospect Heights, as the area is officially known.

Government as catalyst

I think Vitullo-Martin gets the big picture right--and appreciate the citation of AYR in her piece--but I wish she'd further noted the importance of government action as a catalyst. For the blocks in Prospect Heights below the Vanderbilt Yard, conversions of former manufacturing buildings into housing required spot rezonings.

A wholesale rezoning would've been necessary for both those blocks, and the railyards, to catalyze development. And some measure of subsidy would've been necessary to jump-start development over the railyards.

The difference would've been that a subsidy to build a deck over the railyards could've been announced before a single bidder had been selected, as with AY, and instead could've spurred development in multiple parcels with multiple bidders, as in the proposed UNITY Plan.

As I wrote in December 2006, the Empire State Development Corporation, in a not credible statement, contended that, without Atlantic Yards, there would have been no redevelopment in the project site.

The issue of blight

Vitullo-Martin touches on an important contradiction:
It seems that smaller scale redevelopment wasn't happening fast enough for government officials, eager to jump-start Brooklyn's economy. They leapt to support the developer's contention that the neighborhood was blighted, and that its property owners were therefore vulnerable to the state's exercise of eminent domain.

Since then, she notes, more blight has been created.

Indeed, the role of the private market and new investors suggests--as could have been mentioned in a longer piece--that Prospect Heights is very different from other neighborhoods designated as blighted, where (in the words of academic Lynne Sagalyn) "the fabric of a community is shot to hell."

Restoring health?

She concludes:
If Mr. Ratner can restart the project, he may be able to restore some health to the neighborhood. If not, Atlantic Yards will go down as a massive, government-backed renewal project that destroyed the neighborhood it was intended to save.

I think that depends on what timeline you choose and what you mean by "health." Even if the project is restarted, there would be many, many years of interim surface parking on the project site, for example. And there's no timetable for Phase 2.

A couple of quibbles

The op-ed opens:
In December 2003, Mayor Michael Bloomberg thought he had a slam dunk. He along with Brooklyn Borough President Marty Markowitz and developer Bruce Ratner struck a deal for a $4.3 billion development project that was to remake downtown Brooklyn by building expansive residential and retail space, and a gleaming new $950 million arena that would bring the New Jersey Nets to the borough.

When Atlantic Yards was announced, it was to cost $2.5 billion, with a $435 million arena. When the project was approved in December 2006, it was to cost $4 billion, with a $637.2 million arena. The $950 million arena price tag was not announced until March 2008. And now Forest City Ratner is apparently aiming to cut the price nearly in half.

Also, the column states:
The arena was to be built on a deck over the old Long Island Rail Road (LIRR) yards...

As noted lower in the column, activist Daniel Goldstein's "condo stands smack in the middle of the proposed arena site," which indicates that the arena obviously would extend to blocks below the railyards. If the arena plan had been confined to public property, there would have been no need to pursue eminent domain.

Also, the column states that Ratner "won support" of ACORN and "courted [influential African-American] activists." That's not untrue, but it leaves out the benefit to groups like ACORN, which would manage the affordable housing (and has since been bailed out) by the developer. Also, several signatories of the Community Benefits Agreement (CBA) have received direct funding from the developer, though CBA signatories elsewhere refuse such funding.

Also, Vitullo-Martin writes:
The projected December 2008 ground-breaking for the arena came and went without a shovel hitting the dirt. The chances that the Nets will be playing in Brooklyn for the 2009-10 season, as promised, are nil.

This may have been written some months ago, since developer Forest City Ratner has since projected a groundbreaking this year and promises an arena opening in 2011 (which I think is doubtful).

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