Skip to main content

Signs hint at money crunch for Atlantic Yards opponent DDDB, but reps say they're confident about fundraising

We know that the Goliath in the Atlantic Yards fight (Forest City Enterprises/Forest City Ratner) is hurting, as the parent company's stock price tumbles, analysts say it is worthless, the Beekman Tower seemingly stalls, and choice properties are put on the block to raise cash.

But what about David?

While Develop Don’t Destroy Brooklyn (DDDB) has not expressed public concern about its financial situation, a recently released Internal Revenue Service (IRS) document shows that the organization, in the year ending last June, spent nearly $118,000 more than it took in, cutting deeply into its reserves, leaving net assets of $20,757.

(Click on graphics to enlarge)

That raises questions about DDDB's capacity to maintain legal challenges as Forest City, bolstered by a new loan from the National Basketball Association for the Nets, limps ahead, renegotiating with unions at Beekman, and with more of a commitment to Atlantic Yards--the arena, at least--than nearly anything else in its portfolio. After all, a new arena would mean an end to losses from the Nets and an immediate increase in the value of the team.

But two DDDB representatives expressed confidence in current fundraising, noting that litigation expenses were much greater then than now.

Comparing sums

DDDB raised some $860,000 over three years (and more since last June 30), from more than 4000 donors, with a median (though not an average) donation of $50. That's significant support for a grassroots organization that has not raised money from foundations or one significant donor. (For example, West Harlem business owner Nick Sprayregen, fighting Columbia University's expansion plan, estimates he'll spend $2 million on legal fees.)

DDDB's fundraising, however, is dwarfed by the resources of the government and developer Forest City Ratner, which spent more than $900,000 on lobbying just last year, and additional sums on legal and public relations expenses.

As of June 2006, Forest City Ratner had distributed $538,000 to Community Benefits Agreements (CBA) signatories and, while there's been no public accounting of its donations--City Council candidate Delia Hunley-Adossa of Brooklyn Endeavor Experience (BEE) wouldn't say how much the developer has given--the sum is surely much higher.

And Forest City Ratner recently bailed out ACORN, the national organization whose local affiliate is a CBA signatory, with $1.5 million in grants and loans.

Tougher fundraising environment

Whatever the size of DDDB's current coffers, fundraising is undoubtedly more challenging than it’s been in the past few years, given the economy and the mistaken but not uncommon belief--for example, see the recent New York magazine timeline--that the Atlantic Yards fight is over.

That could mean difficulty in paying lawyers for legal battles--though volunteers might step up. And it could mean at least a diminishment, though likely not an end, to DDDB’s presence.

While DDDB includes a coalition of 21 community organizations and has been able to call on 800 volunteers and a 20-person volunteer legal team, the number of core contributors is relatively small.

That core is exemplified by the ubiquitous Daniel Goldstein, who’s now paid a modest consultant's fee to work 60 hours a week (his tally) as webmaster, organizer, graphic designer (see latest, at right), and media presence, recently finding much traction with the AIG/Barclays story.

(War historian, not so much; Goldstein says he misspoke.)

Goldstein was ranked #10 last year in Brownstoner's list of the 50 most powerful people in Brooklyn real estate. Crain's editorial director Greg David has said "opponents of... Atlantic Yards have conducted one of the most imaginative campaigns against it that I've ever seen."

DDDB confidence

"Despite a tough economy for everyone, we continue to raise funds throughout the year, and feel that our fundraising plans will allow us to move forward with all existing and planned litigation," said Goldstein in response to my query. (He's also the lead plaintiff in the pending eminent domain case.)

The organization raised $45,000 last October from its fourth annual Walk Don’t Destroy Walkathon, but no other major gifts have been announced. Regular DDDB mailings solicit funds and periodic house parties raise money.

"We have a good fundraising plan in place and I am confident that we can fund all current and planned litigation," commented Eric Reschke, the group's executive director. "We've been here for five years, and I expect the next five... if necessary."

Appeals supported

Goldstein said the organization has sufficient funding to pursue the appeal of the dismissal of the case challenging the project’s environmental review, as well as an appeal in the state case challenging the use of eminent domain, in which a decision is awaited.

In the first case, the appeal is discretionary, meaning that the lawyers must gain permission; in the second case, the appeal also would be discretionary unless the decision was split (and I believe that’s unlikely).

Other lawsuits?

Would there be other lawsuits after that? Unclear, but DDDB last June asked the Public Authorities Control Board (PACB) to reconsider its approval of the project, given that the project had changed so much.

The PACB has not done so and, arguably, some formal complaint could be filed. A lawyer representing a group of plaintiffs in a case not organized by DDDB has asked that the Empire State Development Corporation be required to hold a new hearing, given project changes.

Looking at the filings: 2006

DDDB has made three extant IRS Form 990 filings, available here. The next filing, covering the year ending June 30, is not due until November.

In the 2005 business year, which ran from 7/1/05 to 6/30/06, DDDB raised $199,454 in direct public support, spent $102,599 in program services and $33,386 in fundraising, and had $55,072 left over.

The $136,177 in expenses included $98,512 in legal fees, with the largest part, $61,553, going to the Albany law firm Young, Sommer, Ward, Ritzenberg, Baker & Moore, for the case challenging the project's environmental review.

The main paid consultant was Shabnam Merchant, one of the three trustees, was paid $33,000, without benefits, to work on fundraising, volunteer coordination, and community outreach. (Merchant and Goldstein, who met during the AY fight, were married nearly four years after it began, in 2007.)

Among the DDDB program services listed in the Form 990: held community forums, organized rallies, developed outreach programs, assisted/solicited other bids and plans, filed lawsuits, identified and recruited an advisory board, organized tenants, made presentations, and waged a media campaign.

Looking at the filings: 2007

In the 2006 business year, which ran from 7/1/06 to 6/30/07, DDDB raised significantly more money, likely because it recruited a high-profile advisory board announced 5/8/06 and because Atlantic Yards received significant public attention, given the enviromental review process, official approval of the project, and first round of lawsuits.

DDDB raised $366,065 in direct public support, and spent $283,181 on functional expenses, including $221,422 on program services and $52,700 in fundraising. Merchant received a total of $40,500.

DDDB spent $189,694 in legal fees, including $77,634 to Young, Sommer and $101,286 to Emery, Celli, Brinckerhoff & Abady, the New York City firm handling eminent domain litigation.

It had $138,054 in net assets left over.

Looking at the filings: 2008

In the 2007 business year, which ran 7/1/07 to 6/30/08, DDDB raised $293,952 in direct public support and spent $411,764 on functional expenses, including $385,094 on program services and $21,963 on fundraising. That meant a deficit of $117,297 for the year, and less than $21,000 left over.

The organization spent $353,562 in legal fees, including $192,693 to Emery, Celli and 126,386 to Young, Sommer.

A family and an organization

It also spent $33,750 in consultant fees to Merchant. After she had a baby, she stopped working for the organization (though she still volunteers).

Goldstein, who had volunteered his time and lived off savings, last July became a paid consultant, without benefits, working out of his condo in a footprint building otherwise owned by Forest City Ratner. Payments to him have not yet been reported, but he told me they're consistent with previous consultant payments.

In an interview March 15 with the Daily News's Mike Lupica, Goldstein indicated that he "doesn't know how long he can stay at this."

I asked him to elaborate. "I was talking about my growing family's personal hardships," he said, adding that his home is not for sale.

DDDB has raised a significant amount of money with volunteers and relatively low-paid consultants. For example, Hunley-Adossa's $51,447 compensation at BEE, a job for which she has had little public presence (other than running rallies for Forest City Ratner), is larger than the annual sum DDDB has spent on consultants--and BEE, in contrast to DDDB, has spent little on program services.

Atlantic Yards is not a one-person fight, as Nets CEO Brett Yormark recently contended. Still, the role of Goldstein, not just as a worker but a symbol in the eminent domain fight--a fight that may be over within the year--raises some questions: how much is the organization reliant on a few key people, and what happens if and when they can't do as much?

Comments

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.