You wonder how this all would have worked out for Bruce Ratner if he'd tried to bring the Nets to Brooklyn the right way.
Not using them to make a real estate score.
Not looking to turn the part of Brooklyn that the city and state handed to him into Ratner World.
Not with some Frank Gehry/Star Wars arena.
Just a basketball arena for a basketball team that would have brought professional sports back to the borough of Brooklyn.
But that wasn't enough for Ratner, and soon he'll be out of the Nets business and somebody else will own the team that can't get any better because there's no money.
Ratner will blame this on the economy, or Develop Don't Destroy Brooklyn, or Danny Goldstein, who led the resistance.
The person Ratner ought to blame is himself.
Just an arena?
"Just a basketball arena for a basketball team" would never have been enough for Ratner, because Ratner is real estate developer, not a sports team owner. He never would've tried to bring the Nets to Brooklyn "the right way."
Also, a standalone arena would not have generated the seemingly-impressive but highly dubious economic projections Forest City Ratner distributed.
In fact, given the increases in city subsidies, the arena, taken by itself, now would be a money-loser for the city, according to the New York City Independent Budget Office. The Empire State Development Corporation (ESDC), which evaluates and approves the project, has not looked closely at the IBO but stands by its economic projections, which are premised on an unlikely ten-year buildout.
Below are excerpts from my article Thursday on the informational meeting Wednesday.
How was the ESDC’s economic impact analysis conducted?
ESDC Senior Counsel Steve Matlin’s answer was vague. Expected construction costs and tax benefits were plugged into a model, and calculations were reflected in the 2006 Modified General Project Plan (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?” moderator Craig Hammerman, District Manager of Community Board 6, 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 Scott Turner (for Fans for Fair Play) 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, asked if ESDC or FCR disputed the IBO report, watch how Forest City Ratner's MaryAnne Gilmartin handed the microphone to Matlin with a slight scowl. Matlin then said, "We have not looked closely at that report. We do our own number-crunching. We looked at the project as a whole as opposed to the arena specifically."
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.”