Tuesday, June 23, 2009

New York Times editorial (in 1994): "It is wiser to walk away than stumble into a giveaway"

The Finance Committee of the Metropolitan Transportation Authority (MTA) was told Monday by CFO Gary Dellaverson that they had to go ahead with a sweeter Vanderbilt Yard deal for Forest City Ratner because it would be hard to get development on the property in this economy.

He also acknowledged that FCR's deadlines for tax-exempt bonds were driving the breakneck schedule.

Other than Nicole Gelinas in the New York Post, no one's editorialized about the deal, which is expected to be approved tomorrow (though not without some dissent). The New York Times's news coverage seemed especially tailored to downplay the controversy.

Once upon a time, however, the Times crusaded against a somewhat parallel effort to lowball a land deal and said it was better to wait than to rush.

(I almost forgot: the New York Times will never editorially oppose Atlantic Yards because of the Times's business relationship with Forest City Ratner.)

Excerpts from editorials are below; emphases are mine.

April 15, 1994: No Giveaway on the Coliseum

New York City has an undeniable interest in getting the old Coliseum site at Columbus Circle developed after years of delay and neglect -- but not at the expense of the public good. That is what makes the behavior of City Hall's chief negotiator, Deputy Mayor John Dyson, so regrettable. He sounds more like an agent for Mortimer Zuckerman, the developer, than a public servant.

...Stimulating the economy is one thing, and providing tax breaks and economic incentives to businesses that create jobs, including NBC, Chase Manhattan and The New York Times, is a common economic development tactic. But the sale of publicly owned, prime real estate is especially sensitive. Valuable properties should not be sold off in a climate of favoritism, or without determining that the public is getting a premium price.

Neither the city nor the site's owner, the Metropolitan Transportation Authority, knows what the site is worth today because the development community hasn't looked at it since Boston Properties was designated the developer in 1985. Mr. Zuckerman's suggestion that he pay for an independent appraisal to establish the value of the property is proof that even he recognizes the lack of market judgment. The problem with his idea is that appraisers, too, need a market competition to demonstrate value.

The most sensible course now is for the city to find out anew the market value of this property, and that cannot be accomplished through negotiations with one bidder.

...Negotiations must carry the appearance, as well as reality, of high ethical standards. Mr. Zuckerman is co-publisher of The Daily News and supported Rudolph Giuliani's mayoral bid. Former Mayor David Dinkins played politics with the Coliseum site, and now it looks as though the Giuliani administration is capable of doing the same.

City Hall must not appear to be orchestrating a favorable deal on the Coliseum as a political reward to a strong supporter; that would send a signal to all developers that they can count on the political system to bail them out should their commitments turn sour.

This page has argued for moving ahead with development on the Coliseum site after so many years of delay, but only in an apolitical atmosphere of fair dealings that bring an undisputed top price and put the public interest first. Whether it be eagerness for economic development, or political intrigue, City Hall shows every sign of losing its commitment to the public good.

The Giuliani administration's obligation is clear. It is not responsible for the expenses or cash-flow situation of any developer. After so many years of delay, there is no need to rush into a sweetheart deal. The property will still be there in a few years. A rebounding economy will likely increase its value. It is wiser to walk away than stumble into a giveaway.

April 21, 1994: Moving Ahead on the Coliseum

Endless negotiations, lawsuits and now the appearance of political favoritism have made this into a deal that every responsible citizen and officeholder must view with alarm. The public's best interest can be clearly stated: Mr. Zuckerman and his company, Boston Properties, should go ahead with the development deal they agreed to -- or else forfeit their $33.8 million letter of credit.

...Under no circumstance should an appraisal or additional bids be used as pretexts for giving Mr. Zuckerman a bargain price for one of the city's choicest parcels of real estate. That would cheat the public and destroy the political credibility of the new administration.

Mr. Giuliani is mistaken when he speaks of the Coliseum property as a "wasting asset." It could be an appreciating asset once the way is clear for other developers and the cloud of favoritism is removed. In the current environment, a new appraisal would likely be unreliable because it would focus on the recessionary past rather than the future value of a unique property. As for other offers, what developer would toss a top-dollar bid into the tempest of litigation and political intrigue created by Mr. Zuckerman and Mr. Giuliani?

What is needed here is a fresh beginning. Councilwoman Ronnie Eldridge is right when she says that even the $100 million price is too low. As steward of public property, Mayor Giuliani has an obligation to wait for the best price rather than strain to fashion a deal from lowball offers.

June 2, 1994: Snatch It Back, Mr. Mayor

There is still time for New York's Mayor, Rudolph Giuliani, to withdraw the sweetheart deal his staff has cooked up for Mortimer Zuckerman, and thereby avoid a lasting blot on his record. Common sense, and the wise counsel of political figures as diverse as former Mayor Edward Koch and the City Council member Ronnie Eldridge say that $100 million is too low a price for half the Coliseum site that was once going to bring $338 million.

...Mr. Zuckerman argues that the newest Coliseum deal might get development going at Columbus Circle. Maybe, some day. But it is not the imaginative or impressive kind of development project that so valuable a piece of public land deserves.

...The deal raises troubling questions. Is $100 million the best price that property could fetch? Is an office building the best use of an extraordinary piece of land at the southwest portal to Central Park? New Yorkers could have found out if the city and the M.T.A. had followed the advice of Mr. Koch, a Giuliani supporter. "The mayor ought to stop all negotiations and let things sit for a year or two as the real estate market continues to rebound," Mr. Koch wrote in The Post...

Mr. Zuckerman's large plans for the Coliseum site fell victim to litigation and a collapsing real estate market. But those are risks that all developers take. There has never been and is not today any valid business or fiscal reason for the city to bail him out with a bargain-basement price.

July 19, 1994: Goodbye to a Bad Deal

New York City taxpayers and Mayor Rudolph Giuliani are both winners in the collapse of the deal to develop the Coliseum site on Columbus Circle at the corner of Central Park.

The taxpayers benefit because this premier location in the center of Manhattan will not be sold for the distress-sale price cooked up as a boon to the developers by Deputy Mayor John Dyson. The Mayor benefits by escaping the long-term political liability of a deal that shortchanged the city and reeked of political favoritism.

...Lawsuit or no lawsuit, the Giuliani administration has gotten loose from a deal that would have haunted it, and now has a rare second chance to study the best use of this site. The Coliseum, completed in 1959, was the city's main exhibition and convention hall before the Javits Center came on line in 1986. The city and the M.T.A., a state agency, share control over plans for the Coliseum's future.

What matters now is that there be a fresh examination of the entire property. There should be no hurry for a quick sale. Considering the extraordinary value of the site, time is on the side of the city and the M.T.A.

...Calm planning, without artificial time pressures, is needed to devise a unified concept for the entire site, rather than another piecemeal approach that would chop up a unique property and yield less than top dollar. Second chances on prime sites are rare. Mr. Giuliani has an obligation to make the most of this one.

1 comment:

  1. Amazing.

    Let's hope that we get a second chance to do the right thing with the Atlantic Yards site.

    You reading this, Mayor Bloomberg, Governor Patterson, MTA, ESDC?

    ReplyDelete