Skip to main content

Posts

Showing posts from June, 2009

State's highest court accepts eminent domain appeal; oral arguments in October, thus complicating AY end game

The Atlantic Yards end game just got a whole lot more complicated.

Despite claims May 15 by Forest City Ratner CEO Bruce Ratner that the unanimous dismissal of the state eminent domain case in May "is really the last hurdle," the state's highest court, the Court of Appeals, has accepted (PDF) an appeal in the case and won't hear oral arguments until the middle of October.

While eminent domain law still tilts significantly to the advantage of the condemnor, in this case the Empire State Development Corporation (ESDC), the court's willingness to hear it indicates that it believes the originating court, the Appellate Division, did not address some aspect of the legal argument.

Also, as Develop Don't Destroy Brooklyn (DDDB) noted, last year half of all civil appeals were affirmed, and the other half were either reversed (about 40%) or modified (about 10%).

The case is brought by nine residential and commercial tenants and property owners in the AY footprint, and is o…

Read the fine print: Investment analysts in bed with Forest City look positively on post-dealmaking Forest City

A New York Observer piece yesterday, headlined Analysts: New Atlantic Yards Deal A 'Significant Positive' for Forest City Ratner, brought highly unsurprising news.

From the report by investment firm Keefe, Bruyette & Woods (KBW):
While many of the details have not been completely outlined publicly, we believe staging a takedown of the land and paying for the air rights portion starting in 2012 is a significant positive for Forest City. While the stretched-out takedown and payments will require a higher total outlay (implied 6.5% annual interest rate) over the 19-year period starting in 2012, this reduces current cash outlays in 2009 and near term. In addition, this means that Forest City's takedown of the additional parcels (or air rights) will be more closely matched with vertical development of stages of the project."

What's ironic

I suspect analysts Sheila McGrath and Bill Carrier have absorbed some Forest City Ratner talking points:
The irony at this juncture i…

The Partnership for New York City's evolving (and misleading) support for Atlantic Yards

The Partnership for New York City (PFNYC), which exemplifies the business community, is sure straining in its support for Atlantic Yards, dropping previous enthusiasm about Frank Gehry and affordable housing to focus on the goal of building an arena, while misleadingly suggesting that the project as it stands would generate many permanent jobs.

The PFNYC is essentially the city's Chamber of Commerce, a nonprofit membership organization with some 200 CEOs (“Partners”) from New York City’s "top corporate, investment and entrepreneurial firms."

Given that Forest City Ratner, Nets Sports & Entertainment, and Barclays Capital are among the partners, it's hardly surprising that the PFNYC supports Atlantic Yards, but testimony from PFNYC President Kathryn Wylde opening the June 22 Metropolitan Transportation Authority (MTA) Finance Committee meeting was notably thin, clocking in at half the allotted two minutes.

The testimony


Wylde said: I'm Kathryn Wylde, president of t…

In "Why Atlantic Yards matters" editorial, Crain's ignores inconvenient facts

In an editorial headlined Why Atlantic Yards matters: Mr. Ratner must act quickly, or it will be too late, Crain's New York Business goes to bat for Forest City Ratner.

I've bolded sections for emphasis.

The editorial states:
Amid an outcry that the state and the MTA have given Forest City Ratner a sweetheart deal to keep alive its Atlantic Yards project, it's time to recall how this scheme originated and why it has such steadfast backing from responsible city and state officials. For those who are optimistic about the city's prospects, Atlantic Yards is crucial for realizing New York's potential.

Was the sweetheart deal necessary? Couldn't Forest City Ratner, whose parent company raised $300 million-plus in a stock offering, have been challenged to come up with more cash than $20 million?

The creation myth

The editorial continues:
It all began with a phone call from Brooklyn Borough President Marty Markowitz to Forest City's Bruce Ratner. “You have to buy the New…

Public hearing set for July 29 & 30; arena due 2012, 25 years to get Phase 2 started

A Empire State Development Corporation (ESDC) legal notice (below; click to enlarge), which takes some three-quarters of a page in today's New York Post announces a public hearing on the Atlantic Yards Modified General Project Plan to be held from 2-5 pm and 6-8 pm on July 29 and July 30.
The location: the Klitgord Auditorium (285 Jay Street) of New York City Technical College, where the epic 8/23/06 hearing on Draft Environmental Impact Statement and General Project Plan was held.

Speakers will be limited to three minutes. (Let's see if that's strictly enforced.) Comments will be accepted for 30 days after the close of the hearing. That suggests that the ESDC board will vote to approve the plan in early September.

The schedule is related to developer Forest City Ratner's need to tax-exempt bond financing for the arena by the end of the year. The financing would last approximately 33 years.

Time limits: 6 years, 12 years, 25 years

The hearing notice, for the first time, im…

MIA again: The Times editorial page on the MTA's bailout of Ratner (except for the naming rights deal)

It wasn't surprising that the New York Daily News, whose editorial page supports Atlantic Yards without question, published a erroneous and disingenuous editorial on Saturday that justified the MTA's bailout of Forest City Ratner, allowing the developer to defer payments of $80 million over 22 years, at a generous interest rate, and to build a replacement railyard that would cost $100 million less.

It was surprising that the New York Post, whose editorial page has generally supported the project, editorialized on Wednesday, the morning of the MTA's vote, that the board should reject the proposed compromise and accept only the original deal.

It was not surprising that the newspaper editorial pages, faced with an important public policy issue, felt obligated to weigh in.

What about the Times?

And it was not surprising, alas, that the New York Times editorial page was again missing in action regarding the deal as a whole, though today it offered a critical but essentially tangent…

Video: MTA official says FCR's arena plans were "principal driver" of "cramped" timing for board to vote on revised deal

I now have video of a remarkable exchange during the Metropolitan Transportation Authority (MTA) Finance Committee meeting last Monday, about which I wrote on Tuesday. 
The transcript below is more precise, and includes MTA Chief Financial Officer Gary Dellaverson explaining that if the board members felt cramped because they had less than 48 hours to evaluate a more generous deal with Forest City Ratner for the Vanderbilt Yard, well, "There's not much I can do about it. That is what it is."


Board member Doreen Frasca said, "I guess just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course…

The Times's "arena glut" story suggests Barclays Center is on the way, marginalizes IBO's analysis as the work of "critics'

An article in today's New York Times, headlined As Arenas Sprout, a Scramble to Keep Them Filled, makes some valuable points, including the money-losing (Newark) Prudential Center's need to attract the Nets and/or have the Izod Center close down, but deserves several footnotes, since it in some places frames the Barclays Center too generously.

The article begins:
In the inaugural season for the new ballparks for the New York Yankees and Mets, the teams have been embarrassed by television shots showing vast areas of premium seats going unsold.

But those who study sporting facilities say empty seats may become even more commonplace here, as New York faces a glut of sports arenas.

Five major complexes — four existing and one planned — will soon be slugging it out within an area 30 miles wide.

At least two of the existing arenas already lose money, and experts say further casualties are almost guaranteed.

“Five arenas is not going to work,” said Mark S. Rosentraub, a professor of sports…

And how did the Courier-Life's Witt twist last week's news? With a head count

So, after three board meetings (with opportunity for public comment) in which state agencies advanced Atlantic Yards, how would the Courier-Life's notorious Stephen Witt sum it up?

Well, his main story, headlined Bruce Ratner seals sweetheart deal with MTA, was better than the worst of the coverage, since it mentions the deferred payments and the generous interest rate, while ignoring the approval of a truncated permanent railyard that would save developer Forest City Ratner $100 million.

Most of the article, however, consists of boilerplate description of the project, with no mention of the Empire State Development Corporation's acknowledgment that most of the project--and thus most of the announced benefits--might be delayed.

Counting heads

However, a companion article, headlined Yards supporters outnumber foes, showed Witt's uncanny ability to twist the news:
The Empire State Development Corporation and MTA public meetings last week regarding the Atlantic Yards project highl…

When the MTA's Hemmerdinger called the AY arena a "public good," he was fantasizing

"And I think, in this economy, jobs and an arena in Brooklyn is a public good.”--Metropolitan Transportation Authority Chairman Dale Hemmerdinger, June 24

"On Thursday, we made some critical personnel decisions to secure financial flexibility for player moves now and in the future in order to give you the best product on the court."--Nets president Rod Thorn, e-mail to season ticket holders, June 28 (via NetsDaily)

(Emphases added)
Defining a "public good"

I suspect Hemmerdinger meant that an arena in Brooklyn was a "good thing for the public," rather than a public good.
The latter, as economist Paul Samuelson defined it, is "[goods] which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good..."

In other words, like national defense, or air, or (free) television.

Not an arena with a finite amount of tickets and a "product on the…

The Bloomberg and Ratner dodge on indirect subsidies for Atlantic Yards

It was last December when the New York Observer broke the news that Forest City Ratner was seeking additional direct and indirect subsidies, the latter including a delay in paying the Metropolitan Transportation Authority the $100 million it pledged to pay for the Vanderbilt Yard.

This week, after 48 hours after the deal surfaced, the MTA approved it.

Noticing New York's Michael D.D. White points to Mayor Mike Bloomberg's public claim last month, via the Brooklyn Paper, that "We’re not putting money in" to Atlantic Yards.

White writes:
What did Bloomberg really mean? He meant that he was about to ram through a deal to give his friend Bruce Ratner more than another $180 million out of the public till.

(I'm not sure everyone would agree on $180 million, nor is it a direct subsidy, but the value to Ratner is well over $100 million, given that he'd save $100 million alone on the replacement railyard.)

What about Ratner?

That same Brooklyn Paper article includes this cla…

Daily News disses straphangers, endorses Ratner bailout

The Atlantic Yards-loving Daily News editorial board, in an editorial headlined Build, Bruce, build: Developer Ratner presses ahead on Atlantic Yards, ignores the economic impact on straphangers in its uncritical endorsement of the Metropolitan Transportation Authority's (MTA) bailout of Forest City Ratner, as well as the MTA board's unwillingness to negotiate from a position of strength.
(See my coverage, with video of that MTA board.)
The newspaper editorializes:
Bully to the Metropolitan Transportation Authority for making a deal that keeps the Atlantic Yards development alive in Brooklyn. And bully to builder Bruce Ratner for hanging in there to get the project done.

It doesn't keep the development alive. It keeps the arena (and one building) alive. Ratner, who was willing to pause construction on the Beekman Tower in Lower Manhattan to renegotiate more favorable terms with unions, was not so much "hanging in there" but gaining the benefit of an agency run by a g…

"Fair market value," from 2004 to 2009

[F]or the land, the public land, the MTA land, is that, what we have agreed to is that we will lease or buy that land at the fair market value... by whatever independent process that they normally use.
--Forest City Ratner executive Jim Stuckey, New York City Council hearing, 5/4/04 (transcript)

Below are some quotes from the MTA board meeting on Wednesday in which the Metropolitan Transportation Authority (MTA) agreed to let Forest City Ratner pay $20 million down for the Vanderbilt Yard, and pay the rest of the pledged $80 million over 22 years, at a generous interest rate.
The developer also would save $100 million on a cheaper permanent replacement railyard. There was no consideration of a last-minute offer of $120 million by Develop Don't Destroy Brooklyn, no attempt to get an appraisal, no effort to test the market, and not even an acknowledgment of the Regional Plan Association's (RPA) proposal that the MTA get a cut of future project revenues.

“The market is what the mark…

Nets for sale? SI says rumors explain Carter trade; deal contingent on Brooklyn move

So, Sports Illustrated reports that the Nets might be for sale, but not to an ownership group--as Newark Mayor Cory Booker contends is in the wings--that would keep them in New Jersey.

Rather, the sale is contingent on the move to Brooklyn, which certainly makes sense. Should a new arena be built, there would be new revenues and the value of the team would go up. I just thought the [added: increasing talk about a] sale would happen closer to the opening of the new arena.

Sale allowed by state

A clause in the Empire State Development Corporation's General Project Plan, as I wrote in December 2006, states, in part:
In addition, in the event the Nets professional basketball franchise is sold to another entity prior to the completion of the Arena, Project Sponsors may transfer their interest in the Arena to the purchasing entity or its affiliate, provided ESDC and the City are reasonably satisfied that such entity can satisfactorily complete the development of the Arena or if such entit…

WNYC, following the Times, gets conclusory: "basketball arena... will soon be built"

WNYC apparently read the New York Times story Wednesday about the naming rights deal signed by Barclays, but not the corrective comment posted on the online article or on my (and others') blogs.



So, just as the Times could declare "There will, however, soon be a Barclays Center," so an WNYC reporter could reference (starting at about 1:38 of the report) "the Nets basketball arena that will soon be built along Atlantic Avenue."

There are no shovels in the ground yet, and while governmental approvals this week certainly have made the arena more likely, it's conclusory to say it "will soon be built."

Crain's : blame Amanda Burden for the leaked "hangar" renderings

From Crain's Insider, under the headline Fixing Atlantic Yards:
Forest City Ratner is hoping changes to its Brooklyn basketball arena will stop people from likening it to an airplane hangar. Renderings were leaked—by Planning Commissioner Amanda Burden, sources say—prompting ridicule. But the leak was early enough to allow time to amend the design. Forest City needs to break ground this year.

The leak was early enough? That sounds like Joe DePlasco-esque spin. The leak was not early enough to allow time to get a new design in the revised documents issued this week by the Empire State Development Corporation.

But yes, there's always time to tweak.

As for the leak, yes, I'd heard the same rumor. But sometimes I'm more reticent about rumors than the MSM.

James loses labor endorsement

Crain's also reports:
The Central Labor Council, a politically influential coalition of labor unions, left 10 Democratic City Council members off its list of endorsements this week. Thirty-three…

AY goals 2006 vs. 2009: elimination of blight, "state of the art" arena and railyard, "first-class" office space all have vanished

Has the Atlantic Yards project become far less ambitious? There are some curious and telling differences between two documents that describe the goals of the project, one issued by the Empire State Development Corporation (ESDC) in December 2006 and the other by the Metropolitan Transportation Authority (MTA) after the board voted on Wednesday to approve a revised Vanderbilt Yard sale with more generous terms for developer Forest City Ratner.
Even though the language is nearly the same, the MTA board resolution--not read aloud or made public before the vote--does not mention the removal of blight, perhaps because government officials recognize that persistent empty lots for "decades" might constitute the exacerbation of blight.
No longer is the term "state-of-the-art" applied to the planned arena or the permanent railyard, perhaps because starchitect Frank Gehry has left the project and both elements of the project have gone through value engineering. The railyard no…

Booker still optimistic about Nets in Newark, but weak on specifics (as well as promised date of Brooklyn move)

After a week in which governmental approvals--one final, one preliminary--fell into place to hasten the building of the Atlantic Yards project and thus move of the New Jersey Nets to Brooklyn, Newark Mayor Cory Booker is sounding only somewhat less optimistic than he did five weeks ago, when he declared, “I think there's going to be a comeuppance very soon where the team is going to go up for sale.”

That could mean a move, as Booker hopes, to the Prudential Center in Newark, where the Nets this October will play two of three preseason games. But Booker’s optimism should be taken with an extra grain of salt, given that he claimed that the Nets are slated to move to Brooklyn in 2014, not 2011, as developer Forest City Ratner claims, or 2012, as New York government officials and documents suggest.

Opening the WBGO radio show Newark Today with Mayor Cory Booker tonight, host Andrew Meyer pointed out that “it seems like [Nets principal owner Bruce Ratner] is getting his way. Last month …

The Prospect Heights Historic District passes, will wrap around block designated for AY parking

The Prospect Heights Historic District, subject of a hearing last October, has been OK'd by the Landmarks Preservation Commission, the largest landmark district created since 1990.

The map below is courtesy of photographer Tracy Collins. Note how two fingers of row houses would bookend the southeast block of the Atlantic Yards site, slated to be a staging area for arena construction, and also a massive parking lot for workers and visitors, ultimately with 2070 spaces.



Blight and the Ward Bakery

The Atlantic Yards site, according to the Empire State Development Corporation, is blighted. I wonder how many blighted areas are abutted by historic districts.

NoLandGrab's Eric McClure points to the loss of the Ward Bakery--mention of which unsettled the LPC last October--on that southeast block, and the role of the Municipal Art Society of New York (MAS) and the Prospect Heights Neighborhood Development Council (PHNDC) in advocating for the historic district.

NoLandGrab: While MAS and PHN…

Nets trade Carter in "salary dump"; all three stars from time of 2006 approval are gone

The last of the three Nets stars (circa 2006 Atlantic Yards approval) is now gone, as Vince Carter has been traded to the Orlando Magic in which Star-Ledger writer Dave D'Alessandro calls "another salary dump," thus saving the team his $16 million salary next year and $17.5 million a year later
That sum just happens to be 80% of the payment Forest City Ratner would make for the portion of the Vanderbilt Yard it needs for the arena block. (The Nets' principal owner is Bruce Ratner, not FCR.) 
Two new players the Nets got will earn $11 million-plus in the final seasons of their contracts. (The Nets also traded Ryan Anderson, whose contract offsets the third player, Courtney Lee.) So the total savings could be more than $20 million.
But it's not about land. The ultimate goal is to save cap space for 2010, when the Nets, like many other teams, will be shopping for big-name free agents.
(At right, a page from the new defunct Atlantic Yards site featuring Carter; a year ag…