Skip to main content

The "modern blueprint," fungible money, and why taxpayers are helping bail out ACORN and fund the AY CBA

"Money is fungible, Judge Robert Smith declared during the oral argument on the Atlantic Yards eminent domain case October 14 at the Court of Appeals in Albany.

His point was that $100 million in state subsidies for arena infrastructure made it easier for Forest City Ratner to build the rest of the project.

Empire State Development Corporation attorney Philip Karmel responded with a verbal shrug. But the issue deserves more attention.

The CBA signatories

Money is fungible.

That's why the Community Benefits Agreement (CBA) signatories were in Albany, proxies for the project and better for p.r. than a Forest City Ratner executive.

They were shepherded by a public relations representative from The Terrie Williams Agency--which has represented CBA signatories off and on since 2005. (As I wrote in October 2005, BUILD's James Caldwell told the New York Observer he didn't know who was paying for the agency that was representing his group.)

Forest City Ratner is spending a couple of million dollars on the CBA, first on direct payments to organizations with no other visible means of support.

A few of the eight organizations do have a track record before Atlantic Yards, but the most prominent, ACORN, lost support in the wake of an embezzlement scandal, and FCR stepped in last December with a $1.5 million grant/loan package. (So much for the "modern blueprint" the Times discerned four years ago, as noted below.)

Who paid for that?

We did. Money is fungible.

The public purse

Well, of course, we didn't pay for it directly or necessarily in full, and it's not on the books. However, public dollars--some $305 million in direct subsidies, plus tax breaks, below-market land, and more--have given Forest City Ratner the flexibility to shift money around.

More? How about--to pick one of the latest examples--a speed-up in the last $25 million state funding as part of an amendment to allow that money to be used--in contradiction of the original agreement--to pay the developer's "soft costs," such as design and engineering.

Once upon a time, Forest City Ratner paid its own soft costs. But--let's think aloud--paying those soft costs left it short on cash, cash needed to pay those CBA organizations, cash needed to help fund Delia Hunley-Adossa and Charlene Nimmons so they could work on a 35th District City Council campaign (ultimately with 2013 in mind?) without having to find other day jobs.

Now the state's going to pay those soft costs. That leaves more cash for FCR.

See how it works? Money is fungible.

The CBA press release: contradictions

From the press release reproduced above:
The CBA membership is comprised of local leaders who love their neighborhood and have their fingers on the pulse of the needs of the community's most vulnerable--children and senior citizens. The CBA believes local organizations should be involved in the land-use planning process and that quantifiable benefits for the community should be identified as part of the planning process.
That's a lot of pulse-taking, but what does it mean? Could it refer to the "intergenerational center" that the Rev. Herbert Daughtry so often touts, scheduled to be built in Phase 2 of the project, which could take 25 years.

The role of the CBA

At the state Senate oversight hearing on May 5/29/09, longtime community planner Ron Shiffman said minority hiring and contracting and affordable housing “should be part of public policy” rather than part of a CBA because it “allows the developer to literally buy” support for the project. Rather, there should be a level playing field.

Was that simply a minority view from a member of the Develop Don't Destroy Brooklyn board? Not really.

After all, Mayor Mike Bloomberg is "violently opposed" to CBAs. But he still hasn't repudiated the AY CBA, nor his role as a witness--nor the city press release that inaccurately claimed he was a signatory.

And it's taxpayer funds--whether via direct city subsidy or other means--that have helped the developer "to literally buy" support for the project.

Remember, money is fungible.


  1. yet despite all these government subsidies & handouts for atlantic yards, fce's stock price is once again in freefall mode, having dropped 40% in the last 5 weeks

    perhaps this is because investors aren't too optimistic about the future of atlantic yards


Post a Comment

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…