Skip to main content

Nets Are Scorching interview with me on lawsuits, press coverage, and the unclear AY endgame

I was interviewed via email by Mark Ginocchio of the blog Nets Are Scorching.

His intro:
As the Atlantic Yards saga has unfolded, the Atlantic Yards Report has served as a well-researched watchdog, analyzing details that were being overlooked by the mainstream press. The blog is run by Norman Oder, a journalist with more than 25 years of experience. Oder is not shy about the fact that he’s a critic of the Atlantic Yards proposal by Forest City Ratner, which would include a new arena for the New Jersey Nets. But he also prides himself of the amount of sourcing that goes into his posts.

With two new lawsuits recently filed against the project, NAS thought this was a good opportunity to talk to Oder about his recent research, and where he believes this project, and the Nets potential move to Brooklyn, may be headed.
1. Develop Don't Destroy Brooklyn (DDDB) has already lost several rounds in the legal fight challenging the Atlantic Yards project. What makes the latest suits--challenging the Metropolitan Transportation Authority (MTA) and the Empire State Development Corporation (ESDC)--any different?

DDDB has filed--or organized/funded--five major lawsuits, plus a sixth:
1. Blocking planned demolitions--lost. (This is the minor case.)
2. Challenging environmental review--lost at two levels of state court, request for appeal pending at state Court of Appeals.
3. Eminent domain #1--lost at two levels of federal court; request for appeal to Supreme Court denied.
4. Eminent domain #2--lost at first level (Appellate Division) in state court; appeal to Court of Appeals heard on October 14.
5. Challenge to MTA revision of deal--just filed.
6. Challenge to ESDC re-approval of deal--just filed.

I’m not a lawyer, I’m a journalist (who sometimes talks to lawyers), so don’t consider this definitive.

All of the cases are uphill challenges, given that, in none of the cases the plaintiffs/petitioners have been able to call their own expert witnesses and challenge defense witnesses under oath or proceed with discovery to extract new information. In other words, the courts evaluate the case based only on the administrative record. They generally defer to the administrative agencies if the agencies acted on a "rational" basis--a very low bar, as opposed to a higher level of scrutiny. Other states make it easier to challenge the government's determination in eminent domain cases, though cases challenging environmental review are always tough.

That said, as I've written regarding the newest suit against the ESDC, there are some very inconvenient facts regarding the announced and promised 10-year construction timeline, such as the MTA deal that structures payment over 22 years and proposed ESDC leases that allow 25 years for construction.

And the suit against the MTA raises some very interesting questions, since the Public Authorities Accountability Act of 2005, the basis for the case, has not—to my knowledge—been invoked previously in this way. And, at least as far as my Freedom of Information Law request showed, the MTA board members got no written legal advice--other than a check-off on a Staff Summary--stating that their action was appropriate, even though board member Jeffrey Kay told fellow board members on June 24 that the MTA's "legal department has advised us that this is a legal transaction."

Some people say these cases are only efforts to delay the project and throw a wrench into the effort to sell tax-exempt bonds. While they certainly might have that effect, they raise some important issues that no other oversight body has been willing to pursue. That's why, whatever the uphill challenge, it's valuable--from my POV--to see the cases ventilated in court, with the government agencies required to respond to some tough questions.

2. You yourself speculated that the media might be experiencing some "lawsuit fatigue" based on their recent coverage. Why do you think some outlets are moving slower to this story as the December 31 deadlines to break ground approaches?

Right--I can only speculate. Part of it is simple shorthandedness--the dailies, at least, have a limited print newshole and very few reporters assigned to Brooklyn, with more than enough to cover and not enough personnel to do so. Also, I suspect, their editors think that another lawsuit is more of the same. A couple of the reporters who've followed this most steadily--Eliot Brown of the New York Observer and Matthew Schuerman of WNYC (and formerly of the Observer)—did think the latest case was worthy of coverage.

Sure, the parade of lawsuits probably makes some editors’ eyes glaze over. They don’t have the time—or the interest—to read the filings, and that’s understandable. And the lack of consistency in coverage means that the dailies don’t have a reporter who’s followed the story steadily. That said, the New York Daily News did cover the latest lawsuit—a day late—and has been trying harder recently.

But the suits, as I said, deserve a close look. And there have been some fascinating arguments in past court cases that got little or no coverage in the dailies. See for example the case challenging the environmental review and the first eminent domain case.

3. Supposing that DDDB and project opponents are the "David" in this "David and Goliath" story, how important is it for the petitioners to have the support of the media?

The petitioners have never had the support of the editorial pages. All three dailies have supported the project in editorials, with the New York Times, I'd contend, somewhat compromised in its editorial stance by the parent company’s business relationship with Atlantic Yards developer Forest City Ratner.

The weekly Brooklyn Paper, before it was bought by Rupert Murdoch's CNG Group, opposed the project editorially--though it published an editorial shortly before the sale that supported the arena. Since then, the Brooklyn Paper has not maintained its editorial page opposition; this past week, however, it did publish a curious editorial chastising the state but not the developer.

How important? Clearly it helps a “David” to have regular news coverage, but I can’t quantify that. Actual investigative work--highly unusual in the daily press--makes more of a difference.

The unusual aspect of the AY saga is that it involves so much homegrown media of various stripes--something the Times noticed (and exaggerated somewhat) in 2006. That includes DDDB's own blog/press releases; the NoLandGrab blog that catalogs (and often critiques) almost every scrap of info related to the project, from a critical perspective; and photographers like Jonathan Barkey, Tracy Collins, and Adrian Kinloch, who shoot photos and videos of events that others either ignore or cover more briefly.

And there's my own watchdog blog, which, while generally critical of AY, is produced by a veteran journalist who aims at professional standards of evaluation and who's dug much deeper than other reporters on the project. I try to link to supporting documents as much as possible to bolster my credibility. My goal is not “he said, she said” objectivity, but fairness, as defined by former NYTimes Public Editor Daniel Okrent: "Fairness requires the consideration of all sides of an issue; it doesn't require the uncritical reporting of any."

One quick recent example of the media ecosystem: I believe that it was criticism in online media--coverage in NoLandGrab, my blog, and most graphically DDDB--that nudged Assemblyman Hakeem Jeffries to clarify his stand on Atlantic Yards last week.

4. With the number of active lawsuits being filed regarding the project, do you see any possible way for Ratner to legally break ground by the end of the year?

I'm not sure he has to legally break ground or that he plans/hopes to break ground more than ceremonially. He has to sell the bonds by the end of year—or get alternative financing by March 1. He can put the bonds in escrow until the cases are resolved.

But I suspect that only a few people in state government and the developer’s office understand the nitty-gritty details of the endgame—for example, what happens to the Barclays naming rights deal if the project lingers without resolution. I don’t claim to fully understand the endgame myself.

5. Do you believe this story ends by December 31? Do project opponents have the resources to continue fighting beyond then if necessary?

I think it's highly unlikely the story ends by December 31, though we should have much more clarity by then, including a resolution to the eminent domain case. If the plaintiffs win, the project folds. If the plaintiffs lose—and eminent domain challenges are very tough to win in New York—then the question is how much the other lawsuits affect the sale of arena bonds and/or construction.

Similarly, we should know before December 31 if Mikhail Prokhorov is approved by the NBA to buy the Nets; so far, Commissioner David Stern and owners quoted publicly seem positive about the transaction.

Keep in mind that, when AY was announced in December 2003, the arena was supposed to open in 2006. (In April 2006, state Senator Marty Golden declared, "It is the chance of a lifetime to have stars such as Jason Kidd, Vince Carter, Richard Jefferson and all the others have their home court based in Brooklyn." They're all gone now, as you know.)

When the project was first approved, in December 2006, the arena was supposed to open in 2009. So Atlantic Yards is a "never say never" project.

Nets CEO Brett Yormark has expressed certainty about an arena opening date but also has kept shifting the goalposts, so I compiled some audio of those statements.

Do project opponents have the resources? I don't have access to their ledger, nor have I discussed this recently with DDDB, but I wouldn't count them out. This isn't a repeat of the West Side Stadium controversy, where deep-pocketed Cablevision made the difference. Still, opposition to the project is centered in neighborhoods with a good number of relatively well-off, politically active people, so presumably a fundraising campaign could generate additional funds if needed.

Comments

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…