Tuesday, November 10, 2009

Is Atlantic Yards a public project , a private one, or "public-private"? Well, the latter, but Forest City Ratner's in the driver's seat

Develop Don't Destroy Brooklyn is making a big deal over Bruce Ratner's statement to Crain's New York Business that there's no reason to share project plans--which, of course, the developer did regularly before dumping Frank Gehry--because "[t]his isn't a public project."

But what exactly is Atlantic Yards? A public project? A private project? Or something in between?

Though proponents and opponents have used multiple terms, AY is better described as a "public-private project." That leaves a lot of wiggle room, so the key issue is whether, and how much, the public agency--in this case the Empire State Development Corporation--exercises its oversight.

Answer: not so much. Remember, Forest City Ratner prepares the weekly Construction Updates issued by the ESDC and parent company Forest City Enterprises proclaimed last November that "we control the pace."

Then again, project documentation, which presumably includes incentives for prompt completion and penalties for delay, is apparently under closed-doors negotiation. Given that the ESDC's track record--the initial State Funding Agreement provided no timetable for Phase 2 and 12+ years for Phase 1, all for a project supposed to take a decade--don't hold your breath.

What is AY?

The ESDC formally calls it "the Atlantic Yards Land Use Improvement and Civic Project," both of which have specific (and contested) statutory meanings.

During a federal court hearing on 11/21/06, ESDC lawyer Douglas Kraus, citing case law, said the courts should not interfere in the use of eminent domain because "the wisdom or advisability of a public project" is not subject to the court.

During the 10/9/07 appellate court hearing in the federal eminent domain case, ESDC attorney Preeta Bansal stated, according to the Brooklyn Paper, that “this matter begins and ends … with the multiple public benefits of Atlantic Yards. … This project will alleviate blight in 63 percent of the site. In and of itself, that is enough to end the case. This is a valid public project.”

As I wrote, Bansal contended that the “multiple public purposes” made it an open and shut case. Of course, when she said it would “create a publicly-owned sports arena,” she acknowledged it would be then leased to a private entity. That led to snickers, given that the lease would be for $1.

Public project?

At a 6/16/08 press conference for the Atlantic Yards Governance Act, which would create a development trust, a parallel to oversight bodies like the Battery Park City Authority, to oversee AY, Assemblyman Hakeem Jeffries said, "Atlantic Yards is a public project built on public land using public money overseen by a public entity for a public purpose," Jeffries declared. "It therefore deserves maximum public participation."

Eric McClure of NoLandGrab suggested some of those statements deserve footnotes, calling AY a "private project."

On 7/28/09, as I reported, during the ESDC's most recent public hearing, David Pechefsky, the Green Party candidate for the 39th Council District, noted that Forest City Ratner had been unwilling to answer a question about its internal rate of return.

“If this is truly a public project for the public good, it absolutely should be talked about,” said Pechefsky, a former City Council staffer.

Untangling the mess

So, AY is a public project when it comes to public purposes and the pursuit of eminent domain. It is a public project when it comes to the use of PILOTs (payments in lieu of taxes) to build a sports arena on tax-exempt land.

It's a public-private project when the state gives Forest City Ratner support to do things--like build a deck over the Vanderbilt Yard--that it's unwilling to do. It's a public-private project when Forest City Ratner seeks access to scarce housing bonds.

But it's a public-private project with the private entity in charge when the private entity draws the map of the "blighted" project site, the private entity controls the pace, and the private entity chooses not to show what anything looks like.

Urban planning professor Susan Fainstein said on November 7 that, when it comes to public-private partnerships, "the public sector could bargain a whole lot better than it actually has."

While she wasn't talking about Atlantic Yards, that statement certainly applies to AY.

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