ESDC, FCR face, answer, evade tough questions (subsidies, cost-benefit analysis, etc.); meeting marred by heckling and chaos
(Photos at left by Tracy Collins; photos at right by Adrian Kinloch.)
Representatives of Forest City Ratner (FCR) and the Empire State Development Corporation (ESDC) got thrown some hard questions—about the total amount of subsidies, the details of a cost-benefit analysis, and the absence of any site plan or arena renderings--and managed to evade or deflect many of them. In essence, they said the project--now $4.9 billion, previously $4 billion--could be approved by the ESDC board in September without such information being made subject to public scrutiny or comment.
(Noticing New York's Michael D.D. White also comments on how the ESDC board will approve the project on a "sight-unseen basis.")
Other answers were telling: FCR’s MaryAnne Gilmartin gave a long and convoluted answer to a question about affordable housing rents while avoiding the opportunity to state the monthly rent for an apartment. ESDC Senior Counsel Steve Matlin (at right, with Gilmartin) asserted--for the first time, I believe--that the arena naming rights bestowed on the developer were considered part of the financing of the project, a statement not part of any fiscal analysis of AY. ESDC dismissed but did not dispute a New York City Independent Budget Office (IBO) report saying the arena would be a net money-loser for the city.
She also acknowledged, for the first time, that Forest City Ratner has funding commitments for all of its Community Benefits Agreement (CBA) partners. Several of those groups, such as Brooklyn Endeavor Experience and Public Housing Communities, and the Downtown Brooklyn Neighborhood Alliance, have resisted answering questions about their funding.
Gilmartin, who took over in June 2007 after original point man Jim Stuckey departed mysteriously, was confident and resolute in her delivery, but, in her first true public appearance regarding AY, did show some lack of familiarity with the project, at one point reading a document that said the tallest building would be 620 feet--no, that was the original plan; it now would be 511 feet--and suggesting that only 80/20 bonds--for 80% market-rate housing and 20% low-income housing--would be used for the project, rather than the 50/30/20 (market/middle-moderate/low-income) program previously announced.
Out of control
The meeting, cosponsored by Community Boards 2, 6, and 8 and held at Long Island University’s Zeckendorf Health Sciences Center, was a dispiriting reminder of the difficulty in achieving an Atlantic Yards event without conflict and chaos. Some project opponents, dismayed by evasive responses or the lack of follow-up to required written questions, heckled the representatives on stage. (At left, former Green Party candidate for Brooklyn Borough President Gloria Mattera.)
As the meeting continued, project supporters, union members, other job-seekers, and representatives of Community Benefits Agreements signatories, sowed more disorder by regularly heckling, claiming they were the real Brooklyites, and, stalling the meeting, chanting “Go home.” (At right, below) In fact, as the video (well below) shows, that latter disruption was orchestrated, as the chanters, who had not previously been at the meeting, were escorted into the room for that purpose.
There was limited security at the space, with audience members essentially disregarding the remonstrations of moderator Craig Hammerman, the CB 6 District Manager. The disorder pointed to the potential for even more chaos at the official ESDC public hearing next Wednesday and Thursday at the Klitgord Auditorium of New York City Technical College.
Indeed, the opportunity for individuals to make public comment points to increased opportunity for partisanship, chanting, and heckling; then again, surely the ESDC learned from last night’s example.
CBs and officials
At the outset, Richard Bashner, chairman of CB 6, explained that the reason for written questions was not to avoid questions or follow-up—though that in fact occurred—but to “collate the questions in a sensible way.”
Behind the table were Bashner, CB 8 Chairperson Nizjoni Granville, and CB 2 Chairperson John Dew. Next to them were Darren Bloch, ESDC Executive VP; MaryAnne Gilmartin, FCR Executive VP; Steve Matlin, ESDC Senior Counsel; Rachel Shatz, ESDC VP of planning and environmental review; and Joe Petillo, ESDC counsel.
(Bashner and Bloch are in the photo above; Bloch, Gilmartin, Matlin, Shatz, and Petillo are in the photo at top.)
The claps for Gilmartin upon her introduction were a hint of a raucous night ahead.
Gilmartin, a resident of Westchester, and Matlin, a resident of Union County, NJ, took the lead for their respective entities; they were regularly applauded by project supporters who at times denounced opponents and critics as newcomers and illegitmate Brooklynites.
Summary of project
Matlin began with a brief summary of the 2009 Modified General Project Plan (MGPP) before the ESDC board and the subject of the hearing next week. Given that implementation has been delayed by both litigation and a “more challenging economic climate,” ESDC has agreed to have the project site be acquired in two or more stages, with construction to come.
“Over the past few weeks, some of the project opponents have asked why we're considering changes to the project that might be perceived as being beneficial to the developer,” Matlin declared. “The answer, quite simply, is without these changes, the project cannot move forward, and we believe that the project will be a great benefit to the city and state... It’s going to create jobs, affordable housing, new revenues for the state and city, and will result in a great entertainment venue for Brooklyn.”
Subject to any further modifications, he said, “we expect to present the project plan in early September, and start site assemblage later this year.”
He was applauded.
Gilmartin on stage
(Videos by Jonathan Barkey; edited by Norman Oder)
Gilmartin, whom I erroneously predicted wouldn’t show up, then spoke with a determined edge in her voice. “It is approaching half a decade since Forest City embarked on the Atlantic Yards project” she said, and after committing “hundreds of millions in equity invested and not a single new building built”—and, as we learned, gaining an unspecified amount of subsidies—“our resolve is stronger than ever to build the project we committed to build early on: a world-class arena, thousands of new housing units, 2250 of which will be affordable, a new transit entrance, open space, a new railyard for the Long Island Rail Road.”
(Wait—wasn’t the project they committed to early on supposed to be designed by Frank Gehry, offer space for 10,000 office jobs, and include an upgraded railyard that would accommodate more trains rather than fewer?)
“While the world has changed dramatically since we first started, the project’s scope and its benefits have not,” Gilmartin asserted, stating that delays and the economic crisis require value engineering and deferment of certain costs.
“Today, undeterred by an anemic economy and a relentless campaign of a few to delay the benefits to many,” she continued—in a bit of a hedge-- “Forest City stands committed to building the project as quickly as the market will allow.”
Gilmartin said a master closing is planned for later this year, in which all agreements are signed and arena financing is secured, leading construction to begin.
She said FCR had spent over $500 million on land acquisition, construction, demolition, and soft costs. (In October 2007, FCR told investors that the developer had spent $250 million.)
The construction schedule has not changed in terms of duration, she asserted. “It has simply been pushed out three years.”
The arena, she said, will be open for the 2011-12 basketball season—which may mean early 2012 or simply may be a stretch, given that government officials have been saying 2012.
“Some have said that the housing won’t get built,” she said. “I assure you that it will… We are motivated by our required return hurdles to build, and build expeditiously.” Then, acknowledging an excess of luxury housing, she said that “affordable housing represents a viable, almost recession proof opportunity.”
That depends, of course, on the amount of affordable housing subsidies. It also raises questions about the 1930 condos and 2250 market-rate rentals to go with the 2250 affordable rentals.
Arena design after approval
The arena design will be unveiled publicly in early fall, September or October, Gilmartin said, not explaining that that would be after the ESDC board approves the project. “The images that were in the public domain were not intended for release,” she asserted. “They were placeholders.”
“A good building is designed from the inside out,” she said, asserting that the images that have emerged were preliminary. Later she was asked explicitly why, if the images were not intended for release, they appeared in ESDC documents. Her answer:"we were asked to provide illustrative examples."
Why no renderings?
Why are no renderings being made available before the hearing?
Matlin said that the design of the arena is evolving, but guidelines are in place, and the new design will comply with the guidelines. Bloch said that the “fairly rigorous design guidelines”--which, for example, involve views in from the street to the arena--allow “us to go forward with a certain degree of confidence.”
Gilmartin said the Urban Room--the long-touted entrance building--will be built when the office building is built, but until then there would be interim open space. “Forest City is confident this is going to be a serious architectural statement.”
If the project is supposed to take ten years, why do the funding agreements give Forest City 12 years to build Phase 1 and new documents put a 25-year deadline on Phase 2?
“I think there’s been a lot of confusion about this,” Matlin responded. “There is a timetable that all the collective parties are striving to achieve... However, there are no guarantees.”
A dispute in the crowd halted Matlin’s response.
“Let them build the thing, we need jobs,” another person shouted. Hammerman requested quiet.
“There is a ten-year timetable,” Matlin said. “However, we need the capital markets, we need the residential markets to cooperate, so there is the possibility that the project will be delayed, beyond ten years.
(In photo at left, a union worker heckles. At right in photo is lobbyist and p.r. person Joyce Baumgarten of Geto & de Milly and, in the center, Sonya Covington of Forest City Ratner.)
Does ESDC stand by earlier promises not to restrict or re-route traffic because of security concerns? (This relates to concerns in Newark, where streets are closed next to the arena.”)
Shatz said that the EIS looked at traffic, taking into account whatever security measures: “So there’s no anticipation on our part that any additional streets would have to be closed when the arena opens.”
Phase 2 guaranteed?
Is there a guarantee that Phase 2 will be built at all? For Forest City to receive a return, “the only way to do that is to build out the project plan,” Matlin responded.
“So profit is the only incentive,” heckled Scott Turner of Fans for Fair Play, beginning a long night of audience heckling.
Hammerman (right) asked Turner to quiet down. Someone asked for respect.
“I don’t have any respect for them,” Turner shot back. A construction worker in the audience began chiding Turner loudly.
“There’s no cross-conversation or we’ll shut this meeting down,” Hammerman said, in a threat that was not enforced.
Why do penalties not kick in until 12 years for Phase 1 and, 25 years for Phase 2? The reason, responded Matlin in his bland and unruffled tones, is that development of the project is “somewhat subject to economic conditions.”
Forest City Enterprises’ viability?
Given that the parent Forest City Enterprises (FCE) has lost 90% of its value in the past two years, has the ESDC developed contingency plans?
“We’re confident with where they are,” the ESDC’s Bloch said.
Gilmartin said that FCE had been hit like many other companies, and cited examples of the corporation’s health, notably “an equity raise of $345 million” in May by issuing new stock. By slowing development and making other changes, “we have shaved 70 to 80 million of annualized costs off the operations of the company.”
(In other words, Forest City saved even more--some $100 million--by renegotiating a cheaper new Vanderbilt Yard with the MTA.)
Gilmartin also pointed to loan extensions on Atlantic Yards and the Ridge Hill project in Westchester, saying that lenders want to be affiliated only with developers that can make good on their promises.
Offering a bit of a stock tip, she said that “we have assets that are, in our opinion, worth many times more” than the current stock price.
How was the ESDC’s economic impact analysis conducted?
Matlin’s answer was vague. Expected construction costs and tax benefits were plugged into a model, and calculations were reflected in the 2006 MGPP.
“We’re constantly looking at that analysis and updating that analysis,” he asserted, a statement belied by the absence of any new numbers in the 2009 MGPP. He suggested that, since the the cost of the project has increased, “I’d expect that fiscal benefits will probably increase.”
“Will the cost-benefit analysis be available on the ESDC web site?” Hammerman asked later.
Matlin looked slightly quizzical, then offered a bland answer: “The summary of the cost-benefit analysis was in the 2006 [Modified] GPP and carried forward in the 2009 [Modified] GPP. To the extent those numbers are updated, we will reflect them at our next board approval, which we expect will be in September of 2009.”
In other words, the public won’t get an opportunity to comment.
Later, the issue came up again.
"How can the Empire State Development Corporation properly evaluate the appropriateness of subsidies for the project without producing an independent cost-benefit analysis?" Hammerman read.
"Well, ESDC does do a cost-benefit analysis," Matlin replied. "We have folks that look at the benefits of the project and the costs of the project. That''s an ongoing analysis, and we perform that internally."
"How come it's never been released?" asked Turner from the crowd.
I'd add that the cost-benefit analysis is premised on the impacts of a ten-year buildout, and that seems very unlikely.
What about the IBO report?
Hammerman read a question about a New York City Independent Budget Office report that concluded the arena would be a net money-loser for the city.
“We have heard that report,” Matlin replied phlegmatically. “We do our own analysis. We basically do an analysis of the entire project. We don’t do a separate analysis just of the arena component. What we bargained for was the entire project. We bargained for the benefits generated from the entire project. Our calculations determined that there would be a significant benefit to both the city and the state from the buildout of the project. I believe the city--the Mayor’s office and the EDC [New York City Economic Development Corporation] also reached a similar conclusion.”
However, they use different methodologies and the IBO has been more scrupulous about trying to assess public costs and subsidies.
Later, Hammerman read a question asserting that the costs to create jobs and affordable housing are two to four times the city average--so how do ESDC and FCR justify spending public money this way.
“Stupid question,” offered a heckler.
“Y’know, I’m not sure what that question is premised on,” Matlin responded. “What we do is, on a project-by-project basis, we evaluate the investment that the state is making, that the public sector is making. We look at the potential benefits that we expect to be generated from the project. And we make an evaluation as to whether the project is worthwhile or not. That’s basically what we did in this project. I don’t know how it compares to other projects.”
What are the penalties for delay and who imposes them?
Matlin said the multi-party negotiation includes the city, the state, and the MTA. “There will be remedies in place that relate to the failure to construct the first three residential buildings on the arena block,” he said, in a reference to the already-concluded City Funding Agreement and State Funding Agreement.
Additional remedies, he said, are under negotiation, but “until those negotiations are completed, we’re not going to speak to those issues.”
Bashner followed up by asking about remedies for other phases.
Matlin said there’d be a penalty if the entire project is not completed in 25 years. “However, it is in everyone’s interest to have this project built out and completed as soon as possible,” he said, drawing claps, hisses, and heckles.
(White notes that his follow-up question, which asked about assurances that ESDC will enforce its remedies against Forest City Ratner, was presented to the people sorting questions but was never asked. )
Given the depressed office market, and stalled condo market, can AY be built on the announced 10-year schedule and, if not, how does it change the financial projections?
“Nobody has a crystal ball about the real estate market,” Gilmartin responded, noting that Forest City believes the office market and the economy will recover.
(At right, Forest City Ratner's Jane Marshall, in the front row, occasionally passed information to Gilmartin. In the distance along the same front row are Forrest Taylor and Warner Johnston, the ESDC's AY ombudsman and spokesman, respectively._
Another question concerned the total amount of government subsidies, direct and indirect, for affordable housing and job creation, and how it compared to other projects.
Matlin evaded the question, saying he could only speak to the $100 million the state invested, and other benefits, such as the tax exemption on the arena parcel. Gilmartin cited $100 million from the city’s capital budget and additional infrastructure subsidies (which, she did not say, total $105 million).
“In addition, working hand in hand with our partners at ACORN,” she said, “...the city will make available its off-the-shelf” housing subsidies. She didn’t offer a figure, but said that the first building would have a significant amount of affordable housing.
The question recurred. “Why does the GPP exclude the costs for housing subsidies, the additional $105 million in city subsidies, and schools and sanitation, and so on,” Hammerman read a question. “Isn’t this misleading?”
“It certainly wasn’t intended to be misleading,” Matlin responded. “I think there was always the expectation, I think it’s pretty clear, that with affordable housing comes affordable housing subsidies. We were not able to quantify exactly what those subsidies were at the time we generated the original GPP, so those numbers were not in there. That was always the expectation and I think it was pretty well understood.”
Has Forest City Ratner asked the city and/or state for additional subsidies, including “extraordinary infrastructure costs,” (a fuzzy category that DDDB calls a “blank check.”) If so, how much and, to FCR, do you anticipate asking for more subsidies.
Matlin responded, “I think on every project that ESDC has been involved in, the developer always asks for more, and there’s always a dialogue and always a negotiation. The level of state commitment has remained the same; it’s a hundred million dollars.”
He did not answer whether FCR has asked the city for additional subsidies; indeed, it’s the city, not state, which has already more than doubled its commitment.
Hammerman followed up: “Does Forest City Ratner anticipate asking for more?” (This left out the question as to whether FCR has already asked the city for more.)
A union member in the audience heckled, “If these guys keep holding the project up, up, they’ll need more.”
Gilmartin said, “Forest City does not expect to ask for more subsidy.”
(Then again, Forest City has said it expected or anticipated opening the arena in 2006, 2007, and so on.)
Hammerman presented a yes or no question: “Would Forest City Ratner be willing to build the project without any subsidies?”
“No,” responded Gilmartin without hesitation.
“Honest answer,” Koteen shot out.
Indeed, any developer building over a railyard would be requesting some subsidies, and the alternative--requiring up-front public money--would have been for government entitites to first build a deck and/or new railyard, then seek bids.
The eminent domain process
What happens to people if they refuse to leave their homes? Petillo, speaking carefully and appearing slightly sheepish, said that “we’re very sensitive” to impacting people’s lives.
A few people jeered.
“We try to minimize the impact of our projects on folks who are displaced,” he said. “We have very little experience having to deal with people who refuse to leave. We have a good track record of assisting displaced businesses and residents… with what is a disruptive process.”
He went on to explain that, once a condemnation is approved, the ESDC would ask the condemnation judge in Kings County to issue a writ of assistance, comparable to an eviction notice. (Some of the others with Petillo looked somber.)
If they refused to leave, the sheriff would remove them and their possessions. “We don’t anticipate that happening,” he said.
A loss in court?
What if the Court of Appeals rules against the use of eminent domain after the hearing in October?
Petillo said that the ESDC was confident that, as in the past, the courts would sustain the use of eminent domain.
That’s not the question, someone heckled. Others followed up.
“I think in not answering the question, they’ve answered it,” Bashner commented. “They do not have a plan which does not rely on eminent domain.”
The Rev. Herbert Daughtry, sitting in the front row, got up to speak. Bashner asked for no crosstalk.
Hammerman asked for calm.
How many jobs?
A questioner asked how many jobs would be provided in the project, including the arena.
Someone in the crowd yelled, “Leave Forest City Ratner alone.”
Hammerman threatened to have disruptive people removed.
Matlin responded without granular information, quoting the GPP, noting that construction would lead to 12,500 new direct job-years and almost 22,000 total job-years, plus an average of 4500 new jobs in the city, direct and indirect, and an average of 5000 jobs in the state.
How does allowing FCR to build a 56-car railyard as opposed to one that was supposed to accommodate 72 cars constitute an upgrade?
Matlin said that ESDC didn’t speak for the MTA, but the latter had approved the upgrade.
In one example of the relatively few softball questions, the panelists were asked about the job recruitment method.
“Unions,” shouted a heckler.
“It’s union construction, and we don’t expect there will be any problem finding laborers,” Gilmartin said with a smile.
Rate of return
What rate of return (IRR, or internal rate of return), does Forest City Ratner expect on the residential properties in Phase 1?
(FCR has never answered this question in a public forum. The rate of return had been calculated for ESDC in a report by consultant KPMG, and Forest City’s earlier economic projections, provided to ESDC and later released after a request by Assemblyman Jim Brennan, did contain IRR.)
“I’m not going to go into details on Forest City’s return,” Gilmartin responded, then, in a bit of a non sequitur, added, “I can only say that it’s a transparent process’’--derisive laughter came from some in the crowd-- “where the government has looked at our models--”
“You’re not going to go into details in a transparent process?” heckled Turner.
Rev. Daughtry got up and started defending the company. Hammerman asked him to sit down.
The first building, B2, would have 400 units of housing, Gilmartin said. While FCR is obligated to provide at least 30% affordability on the arena block, given the market, it’s “quite possible” more would be built on the arena block. The next building, B3, would have 350 units. The other, B4, would be 800 units. “The expectation is that every six months a building would be launched, completing the arena block by 2014,” she said.
What is the rent range for the affordable housing?
Gilmartin gave much background context but did not answer the question. The rent ranges, she said, are set by government agencies involved in affordable housing, HPD (Department of Housing Preservation and Development) and HDC (New York City Housing Development Corporation), based on AMI, or Area Median Income, which includes not just the five boroughs but also suburban counties.
By way of example, she said that 100% of AMI is now $75,000 for a family of four, and rents are based on percentages, no more than 30% of income.
Eligibility for affordable housing, she said, goes to households earning as low as 40% of AMI. “So again, depending on what a family is earning, a family of four, there are rent levels that are set by the agencies and, again, it’s a moving target, because it’s reflective of when the project comes online and what the government allows.”
“Answer the question,” heckled Candace Carponter, legal chair for Develop Don’t Destroy Brooklyn. Project supporters shouted back at her to shut up.
Hammerman tried to rephrase the question: “We asked for rent ranges, and I believe they were providing us with income levels. Do you know what the actual rent ranges will be?”
“I can and will--go on to the next question--I’ll give you a range of the rents, based on the program of a particular building,” Gilmartin said, apparently indicating she’d consult her notes.
A bit later, Gilmartin, consulting a document, began explaining, “Rent ranges for low, all the way up through middle-income units--again, these are ranges, are twelve dollars and fifty cents a foot, and again, it depends on the size of the unit, these units can be 600 square feet to 1200 square feet, it depends on the size of the unit, so you’re talking about twelve dollars and fifty cents a foot for the low-income units, and it’s 22 dollars a foot for lowest band of middle income, and it goes up to 30 dollars a foot, again, for the highest level of middle income. Again, these are all pegged off what the income levels are of the people who qualify for the units.”
She was not pressed for an actual number.
What analysis has ESDC conducted that indicates bond financing will be available for the affordable housing subsidies the project will require over its life cycle?
Gilmartin responded by deflecting the question; “There are bonds being issued for the construction of the arena, and there are programs that are being accessed for construction housing, and there are two different things. 80/20 bonds, which are the bonds used to build market-rate housing with 20 percent low-income, are volume cap bonds, which are readily available in this state, because there’s an absence of construction, nothing, frankly, is being built right now, so there is not a concern about the availability of that financing for housing. The financing on the arena, which is a different form of financing, will take place by the end of 2009, as we indicated. Again, we’re optimistic we can sell the bonds necessary to commence constuction on the arena.
She did not mention that the buildings with 50 percent affordable housing are supposed to be financed through a separate program known as 50/30/20, involving 30 percent middle- and moderate-income units, and 20 percent low-income units.
Back to affordable housing
A questioner asked why, if the AMI in Prospect Heights is $28,000 and all of Brooklyn $35,000, what is the AMI Forest City Ratner is using and how many people at those levels would be eligible for housing. (Actually, that is likely not be AMI for a family of four but average household income, and it's not clear whether the number is current.) Bashner followed up to clarify.
“The point is that the AMIs are published and they’re not subject to interpretation, and the rents are set based on those AMIs, ” Gilmartin said, not unreasonably. A schedule shows the AMI.
“We can circulate the published AMI schedule,” Gilmartin said. “I can assure you it’s not Forest City’s schedule.”
Bashner asked, if there are 200 affordable units in a building, what the range would be? “Twenty percent of the bands were intended to be in the low-income range,” Gilmartin said, “which, again, are 60 percent of AMI or lower.”
“Thirty percent are set in the middle-income range, with middle-income being defined as the range of 60-160%.” (Quick: 160% of $75,000 is $120,000, with 30% of that as rent being $36,000, or $3000 a month.)
What’s the FAR?
Subtracting out the streets and the area devoted to green space, what’s the calculated Floor Area Ratio (FAR) and how does that compare to what would normally be permissible for residential development?
ESDC said they couldn’t provide a specific number. Shatz said, “As was mentioned before, this project did benefit from a zoning override. Although we did create design guidelines with input from City Planning, people have to undersand that this project was not subject to New York City zoning.”
White calls that "a non-response, except to the extent that it hints at an acknowledgment that the state’s override of local laws will cause the megadevelopment to exceed the density New York City zoning would legally permit."
Need for condos?
“With thousands of empty luxury condos, why would we need an additional 1900 [condos] and 2800 high-rent rentals; I guess this is speaking to market need; maybe Forest City can address that,” Hammerman said.
(Note that there would be 2250 market-rate rentals, but arguably a good slice of the upper-affordable apartments would be close to market rate.)
“Again, we’re not building into this market particularly, we’re building into market cycles, which is what a developer does,” Gilmartin said. “It’s our expectation that the market will recover. New York City has historically had a supply of rental housing that’s insufficient to meet the demand. It’s the flip flop of the rest of the country, where 70 percent of the people have home ownership and 30 percent rent. In New York City, the majority of the people rent, and 30 percent of the people own. We believe strongly that the rental market will come back, and it will recover. And, as I said, the focus on the affordable component seems ever more appropriate, given the economy, and we’re not anticipating condo development in the early stages, on the arena block, in recognition of the fact that there is an oversupply of condominiums presently in Brooklyn.”
She didn't address the question about market-rate rentals.
Several questions returned to issues addressed in the original round of governmental approval. Why was this project not allowed to go through normal city planning process, that involves the Uniform Land Use Review Procedure. (All three CBs did adopt resolutions requesting that.)
Matlin responded, “When UDC [Urban Development Corporation, the ESDC’s official name] was created many years ago, one of the reasons it was created was to help get big complicated broad projects developed in a quick fashion. I know folks in the local communities are comfortable with ULURP; we have an alternative review procedure. It’s something that’s been used with great success on other projects. It’s something we do with the consent of the city, and, in this case, the city did approve of the project under the UDC Act.”
“It did not,” a few people in the crowd responded, recognizing there was no vote by any city entity.
“We have been working collaboratively with the city from the very beginning of this project," Matlin continued in his calm, bureaucratic way. "The mayor’s office has certainly consented to this project… The planning folks have been involved in the design guidelines of this project to a very great degree.”
Role of community boards
What are the chairs of the community boards doing to stop the plan and study the community’s UNITY plan. Bashner noted that there’s no formal role for the CBs, and that CB 6 had in two motions voted overwhelmingly against the project. (The other two CBs did not formally oppose the project, but raised significant critical questions.)
CB 2’s Dew noted that the CB “did react very strenuously to the EIS [environmental impact statement].” CB 8’s Granville added, “I would just like to comment that I am a little disappointed that even though the project plan was changed, that there was not a new environmental impact statement, so at this point, we have as much to go on as you do.”
Earlier, ESDC staff had said that no new EIS was necessary.
Hammerman said several people passed up notes about how to find jobs. Gilmartin said those seeking jobs and housing should contact the CLO [community liaison officer].
As Hammerman asked Gilmartin to “remind us what a CLO is,” in the back, Darnell Canada, who had notably interrupted the November 2004 meeting of three CBs featuring Stuckey, began shouting, “We need the jobs, we need to start working. Same old questions. Same old questions. Same old questions--when’s it going to change?”
Hammerman remonstrated with him.
“Every time, same stuff,” Canada bellowed. “Taking time, you’re taking time--and doing nothing--holding up the project.”
Funding of CBA partners
How much has Forest City Ratner provided to its CBA partners?
“I don’t have those numbers,” Gilmartin responded.
Hammerman asked for an estimate.
“Forest City has funding obligations and commitments to each of the organizations, and they’re reviewed on an annual basis,” Gilmartin said. “We’re happy to provide an accounting, generally, of that, but I don’t have that information with me. Again, it depends on what they’re doing, presently, and what the expectations they’re going to be doing in the going-forward year, and it’s done on a very regular basis, in close consultation with each of the CBA members.”
Bashner asked about the extent to which luxury boxes are necessary to revenues for the arena and whether inexpensive tickets would be available.
The latter, Gilmartin said, has always been promised by FCR. Gilmartin said arenas are financed heavily via sponsorship revenue “and what we call contractually-obligated income,” a combination of sponsorship and the sale of suites and tickets. “We have, in a sense, pre-leased a large portion of the arena in terms of sponsorship. We view the suite revenue as a value-play, still,” she added, saying it was more favorable than a box at Yankee Stadium or Giants Stadium.
“We’re pricing at a point where we can take advantage of lessons learned," she said. "Part of our value-engineering effort was to produce a price point for those suites that’s more manageable in the current times we find ourselves in. All that gets proved out in the financing process, because the rating agencies and the bond purchasers are going to validate those assumptions because they’ll buy the bonds.”
How involved is rapper and entrepreneur Jay-Z in the project? (He owns a small piece of the Nets and has appeared at several press conferences to back AY.)
“I can tell you, up until now, he’s a passive investor," Gilmartin responded, "and I can’t speak to how he’ll be involved in the future.”
Impact of lawsuits
What has been the impact of the lawsuits on the timetable? Hammerman read a question.
“We quantify it as a three-year delay,” Gilmartin said, putting aside her company's financial difficulties.
“So the jobs which this economy and borough need now, which would get a great boost from the project--what needs to happen in order for the project to reactivate?” Hammerman asked, reading a question.
Gilmartin explained that FCR was completing the temporary railyard essential to commence arena construction. She repeated that documents are being prepared for the master closing, “which will occur before the end of 2009. The condemnation process will be under way. Title will pass, the bonds will be sold, and the arena will go into construction. And that will trigger the commencement of the project.”
Several people clapped.
B1 and the Urban Room
What conditions must be met before the office tower B1 and the associated Urban Room will be built--"and isn’t it true you won’t build it unless you have an anchor tenant?" Hammerman read.
“Because it is an office building,” Gilmartin responded, “and the way office buildings are built, ground up, they require a certain level of pre-leasing so they can be financed. So that building will be built when we can secure the financing and therefore, when we have enough pre-leasing... yes, indeed, it’s an office building, and it requires pre-leasing in order to get financed.”
“So no Urban Room,” muttered anti-AY activist Lucy Koteen from the crowd.
ESDC was asked if any other developer has entered into CBA.
“To our knowledge, Columbia University,” Shatz said.
From the back, Carpenters Local 926 President Sal Zarzana began shouting about non-union projects: “They build with out-of-towners, and illegals.”
“Can Forest City Ratner comment on why there have been public requests for federal stimulus funds to help with the construction of the arena?” Hammerman asked.
“It’s shovel-ready construction,” shouted Marie Louis of BUILD (Brooklyn United for Innovative Local Development), a CBA-signatory.
Gilmartin nodded: “Because it is shovel-ready construction, and the fact of the matter is that the project, like other projects around the country, has suffered, based on the economic downturn, and it’s our responsibility to try to do what we can to make the project happen and to maintain its viability.”
Then again, how much of the shovel-ready construction put forth for stimulus funds consists of public works and how many are private developers' projects? (See state list from ProPublica, and New York's list.)
Blight, and chaos
“Before Forest City Ratner developed its plans for the site, how long was the area blighted?” asked Hammerman.
The question was likely meant to pinpoint just why Forest City Ratner chose its peculiar 22-acre footprint, and why the ESDC studied just that area, but the question was never answered.
“Fifty years,” shouted one man in the audience.
“Decades,” shouted Louis. “Anyone who’s lived here knows...”
Bashner asked people to quiet down, engaging in an extended request to get one loud man to quiet down. “Threatening me personally is not helping,” Bashner said.
More shouting ensued. Gilmartin and Matlin maintained poker faces. “Read our questions,” Louis shouted.
Bashner asked people to calm down.
Several people shouted that they wanted their (presumably pro-project) questions heard.
“Build It Now,” began a chant.
At one point, Carpenters Union rep Anthony Pugliese began shouting from the back. “Fifty-five years old, I could walk there. I’ve seen nothing.”
“You’re a community board member," Bashner responded, “you know better.”
Pugliese said he was supporting a heckler: “He knows what it’s like to have nothing."
(At right, a regularly heckler; I'm told he owns property just adjacent to the site and supports the project. Just to the left of him in the photo is Daniel Goldstein of Develop Don't Destroy Brooklyn, with his finger on his lips.)
With the episode lasting more than six minutes, Hammerman decided to move on to a new question.
The CBA organizations, and more chaos
The meeting truly spiraled out of control early in the third hour, after Hammerman read a question asking about the CBA organizations and their interests and roles in the project.
Gilmartin asked FCR’s Sonya Covington to describe the organizations. Then Gilmartin pointed to Daughtry.
“Is he part of your team?” Hammerman asked.
“Yes,” responded Gilmartin, though the CBA is not part of any official state or city documents.
Daughtry got up and began a familiar spiel about the role of his group regarding the arena, “a state of the art health facility,” and an intergenerational complex. And he again questioned why no other developer had signed a CBA.
“Mr. Caldwell’s here,” Gilmartin said of James Caldwell, the president of BUILD, who began walking up to the front of the room.
(Caldwell is in right in photo taken earlier in the meeting, talking with FCR VP Scott Cantone.)
Mattera got up to protest, saying that only groups that supported the project got to speak.
“Let’s let Forest City Ratner’s team answer the question,” Hammerman responded.
Mattera said Develop Don’t Destroy Brooklyn should be able to speak, as well. “They’re all paid by Forest City Ratner,” added Turner.
Then Caldwell began with another description of his history and BUILD’s role in providing job training. “I’m not ashamed to say that Forest City Ratner has given our organization money,” he said.
“I’ve been in the community for 40 years,” Caldwell said. “My mother migrated here, she came here.”
“Please,” shouted Carponter, asking to be spared his personal history.
“You just need to come to our office,” Caldwell said.
“Answer some questions and cut the p.r.,” shouted Michael D.D. White of Noticing New York.
“We’re not going to speak about no bullshit here, we’re going to be straight up with you,” Caldwell said, upping the ante with some race- and class-baiting. “The fact of the matter is, in the community that you just came to here, that we’ve been here for years.”
“Bullshit,” shouted Koteen, a longtime Fort Greene resident.
All you need to do, Caldwell said, “is to come to our office and see the people coming to look for jobs.” (He also mentioned that he’s invited me. I’ve been to the office but not a job-training meeting or session.)
“Maybe you don’t want to hear it, but black folks are not working in our community. If they’re not working, what happens? They need to work in our community. Thanks to Forest City Ratner and ESDC--”
Hammerman interrupted, saying Caldwell wasn’t helping.
“We all live here,” shouted Koteen.
The orchestrated disruption
Hammerman continued, asking FCR's Sonya Covington about the role of the CBA partners. The video shows several people in the back, including FCR ally Thomas (Ziggy) Sicignano, a Brooklyn basketball booster with a colorful past; FCR VP Scott Cantone (in white shirt, with glasses); Carpenters Union leaders Sal Zarzana and Anthony Pugliese, both heckling; Darnell Canada (in the "I [heart] Black People" shirt), no longer heckling; and, notably, a group of men being escorted into the room by a man with an orange shirt.
"Go home, go home," they shouted. They had not been in the room previously. It seems quite clear this was an orchestrated disruption.
"Why will Forest City Ratner get to keep the naming rights revenues for what the ESDC claims will be a publicly-owned arena?" Hammerman asked.
“It’s part of the financing for the project,” Matlin responded.
"What?" someone in the audience asked quizzically. Indeed.
While it certainly is counted on by Forest City Ratner, it was never, as far as I know, suggested to be part of the benefits or part of the sources and uses for the project.
Closing Fifth Avenue?
If the arena is re-oriented (to a north-south direction, as images so far indicate) and the Urban Room eliminated--actually, FCR says it’s delayed--shouldn’t Fifth Avenue not be closed?
Gilmartin responded that, while the arena bowl got smaller, “it doesn’t change the general footprint for the arena itself… and the Urban Room has not been eliminated.”
Still, we haven’t seen the new site plan and may not until after approval.
Closing Pacific Street?
Given the potential delay in Phase 2 of the project, why not delay closing Pacific Street between Carlton and Vanderbilt avenues?
Shatz said that the southeastern block of the project, Block 1129 between Carlton, Vanderbilt, and Dean and Pacific streets, is needed for parking, construction staging, and logistics.
Can you describe the architects associated with the project?" Hammerman read.
"I think I answered the question already," Gilmartin responded, apparently referencing arena architect Ellerbe Becket, a firm that replaced Frank Gehry.
Bashner followed up:" You answered the question as to the arena. Is there anything you want to share with us about the architects on the residential buildings or any other aspect, the landscape archicture, anything like that?"
"No," said Gilmartin.
Note that the distinguished landscape architecture firm Field Operations does appear in an ESDC document and is apparently working on interim open space.
However, if Gilmartin answered that question, she might have had to explain whether or not Laurie Olin was still working on the landscape architecture plan. However, if Forest City Ratner is planning residential buildings, surely architects have been engaged.
Arena bonds hearing
Will there be a hearing on the arena bond financing?
Matlin said no. The only hearing is the one next week.
Compensation to displaced tenants
How much will Forest City Ratner compensate displaced tenants who do not want to take the offer to move into the project.
Petillo said the relocation program--actually, a small payment and assistance from a relocation firm--is spelled out in the GPP.
Will the project go back to the Public Authorities Control Board (PACB), the three-men-in-a-room who must review major state capital projects?
Matlin said no further approval is needed, given that the PACB approved the project, and the financing, in 2006.
We do not believe that the answer is correct because the mega-project and its financing have changed dramatically from what received PACB approval in 2006, tilting ever more strongly towards a very substantial likelihood that the financing will fail and an increasing need for it to be propped up with more subsidy just as it in fact was by the most recent actions of ESDC and the MTA. To say that the PACB does not need to approve substantial revisions of projects careening off toward failure is to deny the PACB its purpose and veer away from past precedent. To suggest that there is an effort underway to have the PACB not approve the substantial rewrite of the project’s financing that has occurred since 2006 says something about the fear that politicians have of taking responsibility for this project.