Friday, April 03, 2009

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?

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