CBA signatories seek federal stimulus money for AY; ESDC flatly says project is not "shovel-ready"

In this week's issue of the Courier-Life chain, Stephen Witt, who in the past has found Atlantic Yards Community Benefit Agreement (CBA) signatories calling project opponents "the real-land-grabbers", now finds two, not unpredictably, suggesting that Atlantic Yards should get a share of the federal stimulus money.

The article quotes James Caldwell of the job-training group BUILD (Brooklyn United for Innovative Local Development):
"The way it [stimulus money] is being proposed is that it will go through the government and they will give it to unions and not to community based organizations that train and prepare people in our community," he added.

I don't think the plan is to give the money to unions.

(The article is not yet online.)

"Shovel-ready"?

The article continued:
Rep. Yvette Clarke, whose district includes the 22-acre project footprint, said stimulus money going toward the project is a possibility, but must go through the city and state, and not her office.

But that requires "shovel-ready projects" and, guess what, ESDC spokeswoman Lisa Willner said AY is not shovel-ready.

And Forest City Ratner officials refused comment.

That's not to say AY couldn't become shovel-ready at some point (Round 2 of the stimulus?) but it's notable that, rather than deferring comment on a sticky issue, ESDC was declarative.

That was the real news here.

At State of the District Address, Jeffries again talks housing, says economy has “slowed down the AY streamroller”

With his preacher’s cadences, lawyer’s acumen, and Brooklyn pol's sense of strategy, 57th District Assemblyman Hakeem Jeffries is an elected official worth watching, both for what he says and what he doesn’t say, as he begins his second two-year term in office.

In his second annual State of the District Address, delivered Wednesday night before an enthusiastic audience of more than 150 at the Pratt Institute’s Higgins Hall, he barely mentioned Atlantic Yards--though, compared to his glancing mention last year, he was more critical, an indication that the center of gravity regarding the project has shifted.

And, as I explain lower in this report, he thinks it’s likely that the legislature will hold a hearing on Atlantic Yards.

On video, three issues

Well, after a student musical performance--always good to draw a crowd--we first saw Jeffries on video, speaking eloquently against the repeal of term limits for city officials. Then again, the bill he’s proposing in the legislature wouldn’t impose term limits on entrenched Assemblymembers like Speaker Sheldon Silver, one of the fabled "three men in a room."

Then he argued that it’s time to close upstate prisons, challenging the "prison-industrial crisis" and for ending racial profiling. Only the latter has passed the legislature, though the state’s fiscal crisis looks like it will lead to the closing of some prisons and a rethink of past policies.

(The video, with a faux-anchorperson doing the introduction, was more polished than the one last year. Perhaps that indicates help from Jeffries' longtime friend Lupe Todd, now a consultant with George Arzt Communications, who was thanked publicly along with his in-house aides. She's a former staffer for Newark Mayor Cory Booker and, before that, Dan Klores Communications, where, among other things, she worked on the Forest City Ratner account.)

Introduction

Deb Howard of the Pratt Area Community Council introduced Jeffries, praising him for his work on legislation that helped bring a bank to an underserved strip on Fulton Street, and for his work establishing Operation Preserve, which provides legal counseling for those threatened with displacement.

It also includes an effort--always popular in the Assembly, but stymied by the Senate, which was Republican until the last election--to better protect rent-regulated tenants.

The range of issues

Jeffries talked of town halls he’d held on public safety, affordable housing, and mass transit, the latter culminating in additional service on the B38 bus. Unmentioned was his opposition to congestion pricing, which might have done much for his district and the city. (Was he triangulating because a reasonable number of his supporters do have cars?)

Despite the economic crisis, he declared there was reason for hope, “because of the change in occupancy at 1600 Pennsylvania Avenue. I’m not usually so happy when someone loses their home,” he said, in one of several lines that generated laughter.

(Jeffries didn't lob any humor at the state legislature itself, nor say the word “dysfunctional,” which is the Brennan Center’s description.)

(Update: As a reader points out, Jeffries should also be credited for efforts to gain tax credits to hire ex-prisoners and for holding "office hours" at subway stations. Even if the latter's something of a gimmick, but he shows up, and a lot of other elected officials don't do it.)

Affordable housing

As he said last year, the most significant issue in the district is affordable housing, a response to the “twin evils of gentrification and displacement.” (Some would call gentrification a mixed bag, certainly benefiting existing homeowners.)

He cited reform of the city’s 421-a law, but didn’t give it nearly as much time as last year, perhaps because--as he didn’t mention--the previous version subsidized much luxury housing but the reform has, with the economic downturn, created very little affordable housing.

He cited Operation Preserve, noting that there are 20,000 rent-stabilized apartment units in the area. He cited the effort by "predatory equity"--a term that has been used too infrequently--to squeeze profits out of such buildings.

The single greatest threat to affordable housing, he said, is vacancy decontrol, which lets landlords deregulate vacant rent-stabilized apartments if the rent reaches $2000--a figure enshrined in 1997 and not adjusted for inflation--a not-so-tough threshold to meet.

“The days of working families being thrown out of their communities are coming to an end,” he declared, to big applause.

Indeed, the single most important legislation for his district may be reform of rent regulation, an achievement dependent less on the Assembly, which has long supported such measures, but the newly-Democratic Senate.

Project Reclaim

Then Jeffries hit the sweet spot of his sermon. “And then when it comes to some of these developments--”

The crowd murmured “uh-huh.”

“--for all these vacant luxury condominium buildings across our community, we’re coming after you too. You can run--but you can’t hide.”

The audience laughed.

“Because it makes no sense to have all these vacant empty luxury apartments. You can’t sell ‘em because you’re charging too much in a bad economy. When so many people in our community need housing.

“That’s why we’re launching Project Reclaim,” he said, pledging to work with city, state, and federal agencies, “as well as local developers to figure out a way how we can take some of these vacant luxury apartments and figure out a way we can transform them into affordable housing for our community.”

Applause.

“We’re gonna reclaim them.”

How exactly that might work remains to be explained, but Jeffries and other local elected officials are having some conversations.

Greed and hope

“We have an opportunity to change the culture from “Greed is good” to “It is better to give than it is to receive,” Jeffries declared, getting deeper into his cadences.

“There is hope in the valley. For more than a decade, working families, middle class folks and senior citizens in our community have been under assault, victimized by high rents, abusive landlords, the subprime mortgage crisis, and a real estate market that was spiraling out of control. But the collapse of the economy has actually given us an opportunity to preserve the racial, social-economic, and cultural diversity that we care so much about in our community.”

So, it turns out, there’s a big silver lining.

Jeffries marched toward a conclusion:
“The economy has slowed down the gentrification.
The economy has slowed down the predatory equity.
The economy has slowed down the luxury condominium explosion.
The economy has slowed down the Atlantic Yards steamroller."

There were some murmurs and titters from the crowd, perhaps because Jeffries has been cagey about AY, perhaps because the most prominent AY opponent, his sometimes-ally, sometimes-rival Council Member Letitia James, was in the second row.

“The economy has slowed down the displacement of working families and middle class folks from our community. There is hope in the valley.”

An AY hearing?

After his address, and as the crowd enjoyed some free food--always a good lure for events like these--I asked Jeffries whether an Assembly hearing on Atlantic Yards would ever happen. I reminded him that last May he’d called for a hearing, but it hadn’t happened, perhaps--as I speculate--Speaker Silver, an ally of Forest City Ratner, has looked askance at the idea.

“I do think, since Assemblyman [Jim] Brennan, Assemblywoman [Joan] Millman and Assemblyman [Richard] Brodsky, the chairs of the three relevant committees, have committed to holding a hearing, there still is a good possibility it’s going to happen,” Jeffries said.

(I hadn’t gotten any indication that Brodsky, who’s been focusing on Yankee Stadium, was ready to touch Atlantic Yards. He once indicated that a hearing would encompass the AY arena, but Yankee Stadium was a big enough target. When questioned directly last May, he was noncommittal.)

“I’ve re-raised the issue with them; they’ve given me their commitment that they want to move forward with the hearing,” Jeffries continued, “and collectively we’re going to approach the leadership to raise the possibility of having a hearing sometime in the near future, certainly within the next six months.”

Maybe in the Senate

Given new prominence of State Senator Velmanette Montgomery in a majority-Democratic Senate, a hearing, Jeffries said, might be held in the Senate, or as a joint Senate-Assembly hearing.

“Daniel Squadron chairs the Cities committee, we plan to approach him,” Jeffries said. “I’ve spoken with State Senator Bill Perkins, who chairs the Corporations, Public Authorities committee on the Senate side. He’s interested." (Perkins has been a major critic of eminent domain.)

He concluded, "So I think that the relevant individuals, at the legislative level, in terms of the committee chairs, in both the Senate and the Assembly, are ready to move forward. We just have to be active and vigilant with the leadership, and eventually I’m confident we can persuade leadership to move forward.”

“They’ve had other priorities,” he said of the committees, citing Yankee Stadium and World Trade Center construction. “But I’ve constantly said to them we are just as relevant, as important as those other projects and we also have to shine a spotlight on the Atlantic Yards project to make sure that we have transparency and can get to the bottom of what’s happening now and where we go in the future.”

Jeffries’ call for transparency was no endorsement, but it wasn't out on a limb, either. Similarly, while calling for a hearing, he's been careful not to push too hard. It's the prudent posture of a legislator allied with Brooklyn Democratic machine head Vito Lopez--who’s clashed with James and would support Jeffries for Congress--and not about to derail his career by suicidally challenging kingpins in Albany.

IBO official: time for another look at AY incentives (but not for a cost-benefit analysis, yet)

The Brooklyn Paper quotes George Sweeting, Deputy Director of the New York City Independent Budget Office (IBO), says, according to the Brooklyn Paper, "It may be time for the city to take another look at the mix of incentives.”

He elaborated: “If amenities are scaled back and the overall scale of the project is reduced, it’s reasonable to stop and look at whether the city’s contributions and the MTA land deal still show a positive in the cost-benefit calculation. Some of the benefits to the public may now be less than originally assumed."

In fact, once the city's contribution was quietly doubled, Sweeting acknowledged that the revenues to the city might not offset the expense.

The implication of his more recent remarks is that the city should reduce rather than increase subsidies.

Second look?

Still, it doesn't look like the IBO is ready to perform another cost-benefit analysis. (The initial one had its flaws, since the IBO mainly focused on the arena.) In September 2007, Sweeting told me, "It remains unlikely that we will re-work the entire fiscal impact analysis, given other demands on our resources."

When I queried Sweeting yesterday, he responded, "We don’t have anything underway on Atlantic Yards at this time. As the plan evolves we may take another look--but we have to consider that in light of our own limited resources and other demands on them."

Indeed, the plan is hardly firm. However, that hasn't stopped Forest City Ratner from pursuing additional indirect subsidies. Shouldn't someone be calculating how this cuts into the originally promised benefits?

So, the Nets are the metro-area exception, giving tickets away

In a piece yesterday on public radio's The Takeaway headlined Sports teams slash ticket prices to keep fans, Jeff Beresford-Howe observed the extent to which teams nationally are desperately trying to fill seats, and offered a contrast: "The extent to which none of this has reached New York yet is remarkable."

Well, as DDDB and many others would point out, it sure has reached the New York metro area, where the Nets are actually giving tickets away--and even giving away corporate sponsorships, in a scheme NLG deems worthy of The Office.

On Wednesday night, the Izod Center was barely half-full, as the Nets drew an announced 10,138 for a game against the Toronto Raptors. Photos suggest the arena was even more empty.

Update: The New York Times this morning reports that the Knicks, indeed, are getting on the discount bandwagon--though, I'd point out, a 40% discount is not the same as a freebie.

Kucinich asks Citigroup to give up Citifield naming rights deal

Representatives Dennis Kucinich (D-OH) and Ted Poe (R-TX) have asked Treasury Secretary Timothy Geithner to demand that Citigroup dissolve its $400 million naming rights contract for the New York Mets, known as Citifield.

Citigroup has received more than $350 billion in taxpayer money from economic stabilization efforts and loans, the letter notes.

"In every state, American homes are foreclosed and people put on the street. At Citigroup, 50,000 people will lose their jobs. Yet in the boardroom of Citigroup, spending $400 million to put a name on stadium seems like a good idea. The Treasury Department, which forced Citigroup corporate executives to give up their private jet, should also demand that Citigroup cancel its $400 million advertisement at the Mets field and instead begin to repay their debt to the taxpayers," stated Kucinich.

Essentially, the naming rights agreement is a marketing expense, and even banks that take federal money aren't being asked to stop marketing, are they? (Can egregious marketing expenses be regulated?)

But it's probably not a marketing expense--at least at $20 million a year--that the bank would make today.

Barclays Capital has so far avoided nationalization. But the discussion about the Atlantic Yards arena naming rights deal might get interesting if the U.K. government does end up bailing out the bank.

Brennan to ESDC/FCR: here's Atlantic Yards blight, so listen to BrooklynSpeaks

Shortly after BrooklynSpeaks asked Gov. David Paterson to address multiple aspects of the stalled Atlantic Yards project, Brooklyn Borough President Marty Markowitz and Assemblymember Jim Brennan both sent letters requesting developer Forest City Ratner and the Empire State Development Corporation (ESDC) to respond.

There are distinct differences between the two letters, however, with Markowitz's tone hedged, friendly, and conciliatory, and Brennan's approach more pointed, accusing the developer of having created blight. Both are posted on the BrooklynSpeaks web site.

Brennan: here's blight

Brennan's letter, addressed to ESDC CEO Marisa Lago and FCR Executive VP MaryAnne Gilmartin, is more formal, essentially endorsing the elements of the BrooklynSpeaks letter, which, among other things, asked that further street closures and demolitions be halted, that viable vacant buildings be repurposed, that the Carlton Avenue Bridge be returned to service, and that interim public open space be created.

He writes:
As a follow-up to our discussion, I am enclosing for your response and comment an urgent letter sent by BrooklynSpeaks sponsors to Governor Paterson on December 31st and calling for a number of immediate steps to mitigate the blight and disruption to surrounding neighborhoods caused by the Atlantic Yards project and to improve communication with the community and its elected officials. Enclosed as well are photographs detailing the extent of the blight caused by demolition associated with the project.
(Emphasis in original is underlined; click on graphics to enlarge.)

I haven't seen the photos he sent, but the slideshow above, with photos by Tracy Collins, probably serves as a representative example.

Markowitz: "a number are... meritorious"

Markowitz wrote only to Gilmartin, not to the ESDC, and used her first name in a more familiar tone:
I enjoyed our conversation today regarding the proposal and many ideas put forward by BrooklynSpeaks. In reviewing the list, it seems to me that a number of them are meritorious. And it's my hope that Forest City Ratner will move quickly to implement those that will mitigate any of the problems associated with the project in the opinion of this group which speaks for so many who reside in the immediate area of Atlantic Yards.

Markowitz did not specify which ones are meritorious. And his third sentence, which essentially endorses the "opinion of this group," could be read to suggest that all are meritorious.

Perhaps Markowitz thinks it's practical and possible--and good p.r.--to "create interim public open space as play areas or community gardens," as BrooklynSpeaks requested.

But does he really think the developer would "[m]ake publicly available current expected and worst-case construction timelines" or "[r]eturn the Carlton Avenue Bridge to service"?

Unlikely.

Who speaks?

As to whether BrooklynSpeaks "speaks for so many," well, it certainly speaks for some, including most of the elected officials who represent the area around the project. But the Council of Brooklyn Neighborhoods (CBN) and Develop Don't Destroy Brooklyn (DDDB), both of which have gone to court to challenge the project, probably speak for more.

DDDB has kept the pressure on, pointing to the lack of transparency on the part of the developer and the state. And CBN has called for an audit of public monies spent. They, apparently, don't think that asking nicely will get them anywhere.

Despite announced two-year timetable to replace Carlton Avenue Bridge, contract gives FCR three years (and maybe more)

The Carlton Avenue Bridge, closed on 1/23/08 and currently half-demolished, was supposed to to be closed two years for reconstruction.

However, the contract for bridge work--which I obtained via a Freedom of Information Law request--gives developer Forest City Ratner three years before penalties kick in, and even longer in case of unavoidable delays. (Excerpt below.)

That three-year window has never been made public, as far as I know, and I got only a cursory explanation of why it was allowed.

“We negotiated an agreement with FCR which met our mutual needs," New York City Department of Transportation (DOT) spokesman Seth Solomonow told me. "The project end-date does not preclude the possibility of earlier completion.”

That's true, but it doesn't explain why no one announced that 36 months might be an end-date.

Moreover, as I describe below, "unavoidable delays" could extend the deadline to 60 months, or five years, to finish the job, without penalty--and loose contract language could stretch that deadline even more.

(Photo by Jonathan Barkey. Click on all graphics to enlarge.)

Reaction: "completely unacceptable"

I informed Terry Urban, co-chair of the Council of Brooklyn Neighborhoods, a plaintiff in the lawsuit challenging the AY environmental review, of the deadline and asked for comment. "It is completely unacceptable that the DOT gave Forest City Ratner three years, plus possible extensions, to re-open the Carlton Avenue Bridge, while representing to the electeds and the community that the work would only take two years," she said.

"But it is shocking that the ESDC [Empire State Development Corporation] represented to the appellate court that the work would be completed in two years, although as the lead agency on the project, it was unquestionably aware that the DOT contract gave FCR three years," she added. "Now work on the bridge has completely halted, without explanation or a restart date, and it is clear that there is no government authority with the will or desire to protect the community from Forest City Ratner."

Two-year estimate

The two-year estimate was in the Final Environmental Impact Statement (p. 17-23 of the Construction Impacts chapter, above) produced by the ESDC. And was cited in an ESDC Memorandum of Law (p. 13, PDF) filed 1/25/08 in the case challenging the Atlantic Yards environmental review.

The DOT says the work is "scheduled for completion January 2010."

No timetable

No timetable, however, was provided in the community notice (right) the ESDC issued last year regarding the closure and reconstruction of the bridge.

Maybe they were on to something.

Asked to comment, City Council Member Letitia James, who lives north of the bridge in Clinton Hill, contended, "The reconstruction of the Carlton Avenue Bridge is related to the now doomed Atlantic Yards project. The reconstruction of the bridge was not necessary. The bridge provided me and others safe passage to Prospect Heights and Park Slope. Governor [David] Paterson should return the bridge to a state of good repair and reopen it immediately to the community."

I noted that the bridge reconstruction is a city, not a state project; James pointed out that the state has overall responsibility for Atlantic Yards. The ESDC, of course, says reconstruction was necessary to enable a new railyard in the project. Then again, if there's no project, there's no need for a new railyard.

Contract questions

In a legal document filed 1/25/08, Forest City Ratner attorney Jeffrey Braun stated:
The Carlton Avenue bridge is being closed and dismantled in accordance with a contract between FCRC and the City of New York. FCRC is contractually obligated to the City to rebuild the bridge...

After I filed a FOIL request, the DOT provided the Carlton Avenue Bridge Construction Agreement. (First page at right.) It allows for up to 36 months for completion, with extensions possible for "unavoidable delay."

It was signed 12/17/07, a year and nine days after the ESDC approved the project. Similarly, the State Funding Agreement for the project, signed in September 2007, provides far more lenient deadlines than in project documents approved nine months earlier.

Penalties

What are the penalties if the bridge isn't rebuilt? The document states:
Subject to Unavoidable Delay, in the event that Developer fails to Substantially Complete Developer Work by the Date of Substantial Completion, Developer shall pay DOT liquidated damages of ten thousand dollars ($10,000) per day until the Bridge is Substantially Complete...

However, those damages might not kick in after three years.

"Unavoidable delay" and a five-year limit

That's because damages could be precluded by an "unavoidable delay," defined as:
[A]ny circumstances beyond the reasonable control of the Developer, including... the pendency of litigation challenging the approvals for, or seeking to enjoin the development of, the Atlantic Yards project (provided that Developer establishes to DOT that such litigation prevents Developer from proceeding with the Developer Work)...
Nothwithstanding the foregoing, Developer shall be responsible for Substantially Completing the Bridge no later than sixty (60) months from the date of this Agreement, regardless of any such unavoidable delay, unless the unavoidable delay directly and specifically precludes the Developer from Substantially Completing the Bridge. Developer shall make best efforts to take all necessary and reasonable steps, including legal action, to overcome any unavoidable delay in the Atlantic Yards Project required to Substantially Complete the Bridge.
(Emphasis added)

In other words, if "unavoidable delays" extend past the three-year deadline, the developer would have only a two-year grace period for such delays--unless the "unavoidable delays" are really, really unavoidable.

That strikes me as giving the developer a lot of leeway.

Unanswered questions

When I posed questions to the ESDC, I was told to ask DOT. The DOT's response, as noted above, was brief.

I asked both ESDC and DOT why the more generous deadline wasn't announced, and whether the there's any current estimate on when the bridge would be reconstructed. No answers were provided.

Target date, "probabilistic date"

Another unanswered question I posed: why aren't such projects announced as, for example, "expected two years, with up to three years contractually possible"?

After all, when pressed by Paterson about Ground Zero, Port Authority of NY/NJ Chairman Christopher Ward, according to the Times, presented two dates for each project: a target date and a “probabilistic” date, based on computer analysis of all the many random things that might go wrong.

Learning from Rockefeller Center: building during a downturn, the role of p.r., and the difficulty of effective urbanism

The late New York Times architecture critic Herbert Muschamp, in an unaccountably gushing 12/11/03 essay headlined Courtside Seats to an Urban Garden, heralded the just-announced Atlantic Yards project as "A Garden of Eden grows in Brooklyn."

He later offered another superlative:
Those who have been wondering whether it will ever be possible to create another Rockefeller Center can stop waiting for the answer. Here it is.

Well, aside from the unending delays in the project, another Rockefeller Center? As I've pointed out, the Atlantic Yards plan demaps city streets and creates a superblock, while Rockefeller Center (right) actually added a street, creating more liveliness for pedestrians. Muschamp, shamelessly, had it backwards.

What Muschamp didn't say--and I didn't know until recently--is that Rockefeller Center occupies 22 acres, the size of the current Atlantic Yards footprint (announced at 21 acres). Rock Center has 19 commercial buildings; Atlantic Yards would have an arena, an office building or two, and the rest of the 16 towers would be housing.

Despite a distinct difference between a complex with no housing and another that would mostly contain housing, there are some interesting comparisons and contrasts, as a reading of Daniel Okrent's terrific Great Fortune: The Epic of Rockefeller Center, published in 2003, suggests.

So some relevant issues, as I'll discuss below, include the shifting costs and program; the drumbeat of public relations; the relationship with holdouts; the role of zoning; the capacity to gain tax breaks; and the opportunity to build during an economic downturn.

Ultimately, however, the message is clear: even if Atlantic Yards gets built as proposed, which is enormously unlikely, Rockefeller Center would be a very difficult standard to meet.

Book summary

The book is a saga that encompasses architecture, finance, politics, law, and public relations, among other things.

The protagonist is not John D. Rockefeller Sr., the oilman and best-known Rockefeller, but rather John D. Rockefeller Jr. (aka Junior), who took on the project as an effort to build a new home for the Metropolitan Opera. The midtown site, leased from Columbia University beginning in 1929, was steered by a cast of characters including developer John R. Todd, real estate negotiator Charles O. Heydt, and architect Ray Hood.

While the National Broadcasting Company provided Radio City Music Hall and the name "Radio City," it took aggressive marketing and internal favors--the family's Standard Oil of New Jersey was an early tenant--to get Rockefeller Center going during the Depression years. But it became an enormous post-war success and an urban icon.

Richard Lacayo, in his 10/6/03 Time magazine review, offered a comparison not to Atlantic Yards but to an even more high-profile and controversial project:
More than just a supremely entertaining book, Daniel Okrent's cartwheeling account of how Rock Center came together is indispensable for anyone looking for reason to believe--and who isn't?--that we can pull off the same miracle where the World Trade Center stood... All they had to do was undertake a project that would have stumped the pharaohs, fight like pit vipers, face down the Depression, fend off naysayers on all sides and still produce what Okrent calls an "aesthetic, commercial, and--there's no other word for it--emotional success."

Political clout

Early in the book, we learn of the family's political clout:
The frenzy of acquisition was only part of Junior's campaign. At the same, according to the civic reformer William H. Allen, his representatives used political and economic muscle to keep tax appraisals substantially below market value. And now, in early May 1928, Heydt's attention was turned toward a skirmish taking place in the regulatory labyrinths of the city's zoning laws. Property owners on 53rd and 54th Streets who were not Rockefellers had petitioned the city to rezone the street for business, arguing that without such a change they'd go broke On May 11, when the Times reported the remarkable outcome, the story ran across two columns at the very top of page one. even though thirty-eight of forty-five non-Rockefeller property owners supported the rezoning, Junior prevailed.

As with developers today, the Rockefellers managed to make the zoning laws work to their advantage. Atlantic Yards would go one step farther, with the state overriding the city zoning.

An ear to government

Later in the book, Okrent explains that Rockefeller Center was treated gently by City Hall:
Close ties with Fiorello La Guardia's City Hall had been cemented so thoroughly... Once in office the mayor came close to appointing a tax commissioner whose candidates for the job terrified Charles Heydt. Pleading to lawyer Raymond Fosdick, Heydt said, "You know the animus which he has for my principal. Is there nothing to be done to prevent this calamity?"

There was. Heydt and Fosdick weren't the only men interested in blocking the appointment of William H. Allen; few in the real estate community liked Allen, a good-government reformer who was both well intentioned and highly outspoken. Consequently, Allen had to launch his attacks on junior from outside city govenrment. He used cannons. Allen called Junior the city's "Chief Tax Dolee," and noted how the assessments for the Center's Fifth Avenue lots had decreased after the land was developed. An Allen computation indicated that ridiculously low assessments enabled Junior to escape something between one and two million dollars a year in tax obligations. The land the Music Hall stood upon, he pointed out, was assessed at a lower rate than the land beneath a theater in Jamaica, Queens. In an oral history he prepared in 1950, a still apoplectic Allen explained how this had all happened: "Go to almost any group or person in this town," he told his interviewer. "A reference to Rockefeller tax favors will bring this: 'Maybe, but look at that skating rink, look at the tallest Christmas tree, look at the tulips!'"

That echoes the apparently gentle tax treatment of Yankee Stadium. As Assemblyman Richard Brodsky has said, "[T]here is nothing like professional sports to make public people nutty."

Perhaps the same goes for Rockefeller Center.

(Photos by WallyG via Flickr, reproduced according to a Creative Commmons license.)

Building around holdouts

Unlike with Atlantic Yards, the Rockefeller Center program was flexible around the edges:
The Rockefeller willingness to build around holdouts was a last warning to the few remaining recalcitrants: ask too much and you'll get nothing.

Dealing with the neighbors

Later, Okrent describes the down side of demolition:
Pedestrians flinched at the detonation of each dynamite charge, and despite the introduction of a new device called the Dust Eliminator a powdery mist hovered over the site like the shadow of an unseen giant. Mrs. Vanderbilt wasn't the only neighbor who complained about the ceaseless noise. The reluctant operator of a neighboring rooming house... wrote pleadingly to John R. Todd, "We are having an awful time keeping tenants in the building on account of your building operations..." Before passing the letter on to his field supervisors, Todd scribbled a note across the bottom that he would have done well to have run off on a printing press and handed out as needed over the next seven years. "Let the men on the job show some interest and an effort to be neighborly," Todd wrote, "even if they cannot do very much."

That sounds a little like the Atlantic Yards Community Liaison Office, circa 2008.

An architectural competition

Okrent writes:
A supervising trio of architects was selected to oversee proposals from seven invited architectural firms.

That's a distinct contrast with the choose-a-starchitect-and-don't-let-him-hire-other-firms Atlantic Yards plan. Maybe it makes more sense, given Frank Gehry's recent disappearing act.

In the profession

Rockefeller Center was way bigger than Atlantic Yards or even Ground Zero to architects:
It was a sign of the development's importance to the architectural profession that the magazine [Architectural Forum] would run a ten-month series describing every aspect of its design and its planned construction.

A moving target

The Atlantic Yards plan has switched office space to condos to market-rate rentals, but Rockefeller Center went through way more gyrations, given its more complex design.

Okrent writes:
Nearly all architectural projects begin with what the trade calls a "program," the systematic delineation of the project's intent and its requirements.... It would likely be posited in terms of a budget, and would also set forth the particular requirements of tenants already committed to the project.

The Metropolitan Square program articulated by Todd in November 1929 became a moving target. The first major change occurred when the opera house was dropped, but even the advent of RCA and its million-plus square feet of theaters, studios, and offices didn't stabilize matters. Todd and his architects would alter their course with each perceived change in the economy; with the appearance on the horizon of each potential major tenant; and with each explosion of imagination that detonated in the Graybar offices. These last events, generally but not exclusively sited somewhere in the skull of either Hood or Todd, confirmed a wise variation on a famous dictum. Louis Sullivan said, "Form follows function." Architectural historian Carol Willis's version: "Form follows finance."

If "Form follows finance" with Atlantic Yards, that's why there's nothing going on right now.

Siting and zoning

Okrent writes:
And why was the largest building sited on the Sixth Avenue end of the site?
It was obvious that the Fifth Avenue frontage was the best spot for retail businesses, which ideally would be contained in low buildings; no one liked to take elevators to do their shopping....

All of this would additionally enable the architects to capitalize on the zoning laws, which allowed the transfer of the low buildings' "tower rights" to other portions of the site. Consequently, the RCA Building could borrow from the Fifth Avenue buildings and the open plaza to soar to the sky without the burden of broad-shouldered setbacks; it could be whatever the architects wanted it to be.

When zoning is in play, architects have to work under certain constraints. With Atlantic Yards, yes, there's an effort to have relatively smaller street frontages, for example, at the eastern end of Dean Street. But there's no official constraint.

Big-time demolition

Perhaps four times as many buildings were demolished for Rockefeller Center as on the Atlantic Yards site. Okrent writes:
Fourteen months after demolition began, more than 200 buildings, most of them barely 50 years old, had been reduced to rubble.

Still, most of those buildings were small, the project didn't gain acreage by demapping streets, and there were no large industrial buildings like the Ward Bakery.

The role of the press

Maybe it was because little else was going on, or because there were so many newspapers, or because the New York Times covered New York City more attentively, but the project got a lot of press. Okrent writes:
For the next eight months nothing emerged from the Graybar for public viewing... The Times, which had published eight separate articles on the progress of the design during a single week in June 1930, went all but silent on the subject until the following March.

That picked up later:
From the beginning, coverage was constant. Over the three months just before construction began, the Times averaged more than three-quarters of a column about the development each day.

Variety of coverage

Okrent explains the context:
The press representatives invited to the design's debut were primed for the event. The Depression, more than a year old by now, had pushed most upbeat stories--expansive stories, optimistic stories--out of the newspapers. But in the three years since it had first popped into print, in May of 1928, the saga of John D. Rockefeller Jr. and Columbia's midtown land had never been far from the city's front pages. Even during those quiet months in the second half of 1930 when the Times had nothing to say about the design plans, its pages regularly featured speculation on subjects as varied as the prospects for television broadcasting from the new studios or whether Leopold Stokowski was really ready to abandon the Philadelphia Orchestra for a new podium in Radio City, the name by which the whole project was not generally known. On March 2, 1931, the paper of record announced that the plans for Radio City would be revealed three days later, and if that wasn't an adequate introductory drumroll, a longer story ran on the designated day itself, this one informing readers that the design "will be disclosed tonight when a model of the project will be shown for the first time in the office of Todd, Robertson & Todd."

Funny numbers

We've learned to take Atlantic Yards numbers with a grain of salt, and such skepticism has a pedigree. Okrent writes:
Amid all this activity, Junior could open his Times on June 14 [1930] to read this front-page headline: "ROCKEFELLER PLANS HUGE CULTURE CENTRE; 4 THEATRES IN $350,000,000 5TH AV. PROJECT."... Still, this number--three hundred fifty million dollars--was something new not only to the rest of the Times's readers, but to Junior himself.

No one--not Junior, not even Todd--had any meaningful notion of what the project would cost. Three days later, when the office Todd- and Sarnoff-approved version appeared on the paper's front page, the number had been modulated down to $250,000,000, a milder figure but every bit as arbitrary.

... No one--anywhere on earth, at an point in history--had ever tried to build anything like this, much less attempt to put a price tag on it.

The credulous press

As with Atlantic Yards, the press often reported what it was told:
Crowds of newspapermen and magazine writers mingled with Todd, the architects, and various RCA officials, and unquestioningly swallowed their assertions that the whole development would cost $250 million (double Todd's actual estimate); that it would be completed by the end of the following year; and that television programs would be broadcast from its studios immediately thereafter.

The power of p.r.

Okrent describes a major public relations effort:
Just in case the editors he wished to influence were unimpressed, [Merle] Crowell backloaded his opening phrase with dynamite. This was "excavation work," he wrote with insouciant immodesty, for nothing less than "the largest building project of all time." And--well, what the hell, why stop there?--here was a price tag for literalists who wanted their hyperbole buttered with statistics: the project was, Crowell proclaimed, a "$1,000,000,000 undertaking."

Soon enough, the man hired to tell the world about Junior's development dialed back his official estimate to a modest $250,000,000, which itself was a gross exaggeration but at least within the realm of human arithmetic. It may have been the only compromise with reality Crowell would ever make in his tenure as Rockefeller Center's head cheerleader, drumbeater, minnesinger, and mythmaker.... for the thirteen years Crowell presided over a publicity effort that ranks as one of the most effective campaigns since the evangelists wrote the gospels.

..The catchall locution Crowell eventually settled into was "the largest building project ever undertaken by private capital," those last three words an acknowledgment of the existence of, say, the Pyramids or the Great Wall of China.

With Atlantic Yards, it wasn't just the announcement of a $2.5 billion (now $4 billion) price tag and 10,000 jobs (now many fewer), it was an act of mythmaking: the return of professional sports to the site (or area) where Walter O'Malley wanted to build (with much government help) a new stadium for the Brooklyn Dodgers.

A critic sets the tone

A New Yorker critic set the tone:
Of all the people who hated the plans for Radio City--and almost everyone did--none hated them more than Lewis Mumford....

He assaulted its "absence of scale," its promotion of "super-congestion," even a perceived moral turpitude evidenced by its "failure to recognize civic obligations." ... "If Radio City is the best our architects can do with freedom," Mumford thundered, "The deserve to remain in chains."

Tempered criticism had begun to appear right after the press showing--a Times editorial was exquisitely balanced, applauding the effort while questioning its aptness--but Mumford's attack seemed to provide intellectual justification for the blizzard of criticism that soon filled the air...

The lay response was no kinder. The plans "aroused the public as no architectural undertaking has ever done," said a surprised writer at one of the architecture magazines.

By contrast, the initial enthusiasm by Muschamp and then Nicolai Ouroussoff for the Atlantic Yards plan has been replaced by dismay.

Mumford comes around

Mumford, as Okrent explains, came around, not so transparently:
Even that wasn't the last word, as a new Mumford polemic seemed to pop up in The New Yorker with the opening of each new Rockefeller Center building. Even when he found something to praise, Mumford couldn't quit pounding on the same themes... At last, as th 1930s concluded, and the project was nearly complete, when it had established itself as the heart of Manhattan... Mumford delivered his semifinal judgement: "This group of buildings has turned out so well".... A little more than a year later came the definitive thunderbolt: "architecturally", Mumford wrote, Rockefeller Center was "the most exciting mass of buildings in the city."

For some reason he declined not only to tell his readers why he had changed his mind, but that he had ever thought anything else.

Building during the Depression

Okrent describes the importance of the project in an economic downturn, an argument that may yet be made for Atlantic Yards:
In the construction business... well, there really wasn't any construction business left, at least not until the New Deal began providing federal dollars for various bridges, tunnels, post offices, and other public projects. But that was still more than two years off, and in December 1931 parts of New York looked as if God had gotten bored with the Creation business in the middle of the sixth day and simply walked off the job... The president of the American Institute of Architects urged recent graduates not to come to New York--there weren't any jobs.... Sixty-four percent of the city's construction workers were unemployed.

There is no way of knowing exactly how many people found employment during the Depression through the creation of Rockefeller Center, but it may have been a number exceeded only by the federal government's various job creation programs. Estimates emerging form the Center's press office over the years hovered in the range of 40,000 to 60,000, with occasional spikes to 75,000...

Win-win?

Rockefeller Center earned praise even as its builders drove a hard bargain:
As president of the American Federal of Labor in the nineteen fifties, George Meany... said he "could never forget what [Rockefeller Center] meant to the workman in the depression" and considered the project "a real act of patriotism on [Junior's] part."... To know what the union men were grateful for is to know just how bad the Depression was for the construction industry in New York: while other employers were demanding larger cuts, Junior was being thanked by the union officers for "the magnanimous spirit you displayed in favoring only a 15% reduction in our wages."

For Rockefeller Center, this was the other, salutary side of the Depression equation: sellers can get extremely cooperative when there's only one buyer in sight. Junior's concern for the working public was genuine, and his satisfaction in providing jobs was merited. But the delight of those who were spending his money and building his buildings was boundless. For them... the Depression was a lever that saved tens of millions of dollars, accelerated work schedules by months, and made the Rockefeller Center buildings the finest, hardiest, and eventually most valuable office buildings in New York.

Should Atlantic Yards go forward, there might be some significant savings from the previously inflated cost estimates.

Good timing

Building during an economic downturn can pay off. Okrent writes:
In 1940 the gross national product stood at $101.4 billion; five years later... it reached $215.2 bilion. Cash from redeemed war bonds, added to the smoldering fire of four years of pent-up consumer demand, accelerated a boom like none the country had ever known. In the heart of the commercial capital of the richest and most powerful nation on earth stood the only first-class office space... built in New York since the opening of the Empire State Building in 1931. Over those same fourteen years a transportation infrastructure... had been put in place... The private development and the public development made a fertile coupling.

Naming the project

While these days a project's name is decided before it's announced, back then, things were different. Okrent writes:
The Empire State Building, lifeless and teetering near bankruptcy, was a constant reminder of how failure begat more failure; once it had been hung with the nickname "Empty State Building" there was no saving the place. Whatever rental difficulties Rockefeller Center endured, it had an asset that came with the deal: it had the Rockefellers, in name and flesh.

The name wasn't an automatic. The idea of having his own surname "plastered on a real estate development" had never occurred to Junior, and when it was first broached it appalled him. Metropolitan Square had the virtue of bland anonymity and, at the same time, a descriptive connection to the opera company. Radio City came from the RCA lease... But Metropolitan Square had become an atavism, and Radio City would not do for the whole development, tainted as the words were by the scent of showbiz.

..Although many would claim credit for the idea, including Ivy Lee's main competitor in the public relations racket, Edward Bernays, it was Lee who first suggested "Rockefeller Center" to Junior, in the summer of 1931.

The impact of shadows

While Atlantic Yards defenders like Borough President Marty Markowitz scoff at concerns about shadows from some AY towers (considerable shorter than the tallest Rock Center building), it was a mainstream concern back then:
Some of [Junior's] neighbors were more troubled by the shadow the 850-foot building cast over the West 50s for six months of the year; The New Yorker called March 13, the day when the sun finally reached the south-facing windows on 53rd Street, "the Rockefeller Equinox."

Expressing its Age?

Okrent recounts an oracular observation:
"Architecture never lies," Hugh Ferriss once wrote. "Architecture invariably expresses its Age correctly." He was right, but in the Manhattan of the 1920s, the age took a while to define itself.

So, if Frank Gehry's Atlantic Yards design is built, does that express our Age? Is our time one of fallow sites? Or of belatedly value-engineered designs?

The ineffable question

Near the end of the book, Okrent wonders why Rockefeller Center is so singular:
But why had no one been able to successfully duplicate it? Why had none of the scores of office or cultural complexes all over the country, every one of them inspired by Rockefeller Center, even approached the original's aesthetic, commercial, and--there's no other word for it it--emotional success? "An infinite number of superimposed and unpredictable activities on a single site," as Rem Koolhaas phrased it, guaranteed a life that a dedicated cultural center or shopping center or business center never could... It was also evident that Rockefeller Center's placement right in the heart of Manhattan, part of the city's grid, made it real in the way that, say, a waterfront development never could be. Pedestrians didn't just go to Rockefeller Center, they went through it.

It wasn't a destination in the city; it was, organically, the city itself...

Despite what Muschamp said, it's hard to imagine a similar fate for Atlantic Yards.

Some quibbles

Adam Cohen's 9/28/03 New York Times review praised Great Fortune but raised some questions:
A greater flaw is the book's failure to situate Rockefeller Center in a larger historical context, or to extract deeper meaning. It would be interesting to get more of Okrent's thoughts about the project's impact on the development of New York City. How important a role did it play in making Midtown Manhattan the center of world business it was to become? How influential was it on development in other cities?

Also, like me, he thinks Okrent played down some of the unsavory side of building:
The book also has a light touch -- too light -- with the most unsettling parts of the story... Workers, represented by a toothless company union, were routinely mistreated. And the city was robbed of its fair share of this undertaking, since Junior, called by one critic New York's ''Chief Tax Dolee,'' had a knack for keeping assessments low.

Anthony Bianco's 11/3/03 Business Week review similarly praised the book but found flaws:
The author reliably locates the fun in his tale but tends to skip lightly over its dark side -- the predatory leasing tactics, the systematic chiseling of suppliers, the abortive attempt to interest Hitler's government in sponsoring a German building. On balance, though, Okrent's obvious admiration for Rockefeller Center and its creators is easy to forgive.

Rockefeller Center is an example in which product trumped process--in gauzy retrospect, the ends, many agree, justified the sometimes questionable means. Atlantic Yards, for now, has shifting ends, and increasingly suspect means.

Arena LDC emerges; why would it be used to pay for infrastructure for broader AY project?

Even as the Atlantic Yards project seems stalled, state officials have organized a local development corporation (LDC) to oversee tax-exempt bond financing for Forest City Ratner’s planned Barclays Center arena.

But the odd thing about the Brooklyn Arena Local Development Corporation (BALDC) is that its scope contemplates financing for infrastructure improvements beyond the arena—a function not mentioned in the Atlantic Yards General Project Plan (GPP).

That could help get the city and state off the hook for providing additional infrastructure while allowing Forest City Ratner favorable terms to pay for the infrastructure.

Keep in mind that the GPP (excerpt at right) budgets $544.4 million on project infrastructure, while, as of now, $205 million would come from government funds, with no particular source for the rest. As the project approached approval in December 2006 by the Empire State Development Corporation (ESDC), no one--as far as I know--raised questions about full funding for infrastructure.

And while the LDC appears to provide a vehicle for Forest City Ratner to pay for that infrastructure, other language in project documents opens up the possibility of additional governmental contributions.

The above analysis is preliminary, because the ESDC would provide only partial answers to my queries and was unwilling to explain whether such infrastructure financing was contemplated in the GPP.

LDC emerges

News of the LDC emerged via State Senator Velmanette Montgomery, who posed questions to Forrest Taylor, the ESDC’s Atlantic Yards ombudsman. Taylor explained that BALDC, which would raise funds via tax-exempt and taxable bonds, was formed pursuant to the New York State not-for-profit law on 11/6/08. While the BALDC is not ready to sell such bonds, such bonds must be issued by the end of 2009 to qualify under grandfathered-in Treasury Department regulations.

The BALDC was authorized by the New York State Job Development Authority (JDA), a sibling agency of the ESDC, “to facilitate financing for the arena and certain infrastructure improvements related to the project.”

Why the JDA? “ESDC and JDA have differing statutory powers,” spokesman Warner Johnston explained. “JDA has the authority to create LDC's; ESDC is more limited.” (See background below on the JDA.)

However, the BALDC is not a subsidiary of either agency; rather, the structure is similar to that of the Liberty Bonds Development Corporation. Its role, according to Taylor, will be limited to the financing of arena bonds and possibly the financing of project infrastructure. Project decisions will be made by ESDC.

The BALDC’s six board members are all state officials. (See details below.)

Neither the State, ESDC or JDA will have any obligations to the bondholders. No bond sale would occur until ESDC acquires the site by condemnation—and while ESDC targets 2009, that likely depends on lawsuits.

Paying back the bondholders

According to Taylor, “The bondholders will look to be repaid from (i) PILOT payments to be made by the Forest City affiliate that will be leasing the arena (with respect to the tax exempt arena bonds); (ii) rent payments to be made by the Forest City affiliate leasing the arena (with respect to taxable arena bonds); and (iii) a development fee to be paid by Forest City affiliate(s) leasing certain development parcels (with respect to the infrastructure bonds).”

What if the bondholders aren’t paid? They could exercise leasehold rights, which would be subordinate to the ESDC's rights, which means any lien holder could develop the project only in accordance with the ESDC’s General Project Plan. (Then again, the GPP could be amended, as noted in the City and State Funding Agreements.)

Hints in the GPP

As I wrote last April, some language on p. 27 of the GPP hints at future government reimbursement to the developer.

It defines advances of pledged State and City funds ($200 million at the time) under the Funding Agreements as "Additional Fundings" that would go to a variety of uses until the announced contributions are exhausted. Then, the document continues:
In addition, Additional Fundings shall be made taking into account monies expended by FCRC, provided that (1) at no time will (i) the costs reimbursed to FCRC by the City and State, in the aggregate, exceed fifty percent (50%) of the total costs incurred and paid by FCRC, and (ii) the amounts funded by the State exceed the amounts funded by the City, and (2) such Additional Fundings shall be made upon other terms and conditions to be agreed upon by the parties.

In other words, the term "Additional Fundings" is first used as a definition for pledged contributions, then used as a definition for further new contributions.

I had commented that the money might go to "extraordinary infrastructure"--an undefined term that I thought pointed to the railyard--but now that looks more open.

Develop Don't Destroy Brooklyn (DDDB) in 2005 belew the whistle on the "extraordinary infrastructure costs," pointing out that the term appears in the Atlantic Yards Memorandum of Understanding (MOU) signed by the city and state, leaving room for further reimbursement by public parties.

Both the city and state, according to the MOU (right), agreed to “consider making additional contributions for extraordinary infrastructure costs relating to the mixed-use development on the Project Site (excluding the Arena Building Site)." DDDB calls this a “blank check.”

About the infrastructure

I asked Johnston if the infrastructure financing would be limited to the arena. “It is envisioned that the Infrastructure financing will be for the project as a whole (certain parcels - including the arena parcel - may be excluded),” he replied.

Was it in the GPP? As far as I can tell, no.

According to the Atlantic Yards Modified General Project Plan (p. 23):
In the case of the Arena site, ESDC would lease the land for $1.00 to a Local Development Corporation ("LDC") organized under Article 14 of the Not-for-Profit Corporations Law. Subject to compliance with applicable Internal Revenue Service regulations, the LDC, which is expected to be organized at the direction of ESDC, will issue one or more series of tax-exempt "PILOT" bonds to pay the costs of constructing and fitting-out the Arena and its ancillary facilities.2 An FCRC affiliate ("ArenaCo"), as agent for the LDC, will use the bond proceeds to construct and fit out the Arena. The LDC will lease the land and Arena to ArenaCo, and ArenaCo will agree to maintain, operate and lease the Arena for professional basketball and other sports, entertainment and community events for an initial term of not less than 30 years and not more than 40 years. Certain costs of constructing the Arena will be financed through issuance by the LDC of taxable bonds; debt service on these bonds will be paid by assignment to the bond trustee of rent to be paid by ArenaCo under its lease from the LDC.

ESDC will retain ownership of the land under the Arena through the initial term of its lease to the LDC, and, under the financing arrangements described above, ESDC or the LDC will retain ownership of the Arena during the initial term. As a result, the land and improvements will be exempt from real estate taxes throughout the initial term. ArenaCo would enter into a payment-in-lieu-of-tax ("PILOT") agreement with ESDC and the LDC under which it would agree to make payments not to exceed the amount that full real estate taxes would be if the land and improvements were not exempt from such taxes as a result of ESDC's ownership thereof. ESDC will assign these PILOT payments to a PILOT trustee who, in turn, will assign to a bond trustee so much of the payments as is needed to pay debt service on the tax-exempt bonds. PILOT bonds will be payable solely out of PILOT payments by ArenaCo. Excess PILOT payments during the life of the bonds would be used to defray the cost of operating and maintaining the Arena. It is expected that ArenaCo's obligations under the PILOT agreement will be secured by PILOT mortgages on its leasehold interest; the taxable bonds will also be secured by a mortgage on the leasehold.

None of the City, the State or ESDC will be liable on the LDC bonds which will be non-recourse obligations of the LDC, payable solely out of PILOT payments from ArenaCo. None of the City, the State, ESDC or the LDC will be liable to make PILOT payments. PILOT payments under the PILOT Agreement will be the sole obligation of ArenaCo.

Development fee for infrastructure?

Johnston explained that PILOTs would not be used for infrastructure: “The LDC arena bond financing is distinct from the proposed LDC infrastructure bond financing. A ‘development fee’ (similar to a rental payment) will be the source of repayment of the infrastructure bonds."

The GPP (p. 22), however, contemplates only a $1 fee:
ESDC (directly or through a special purpose subsidiary) will hold fee title to the Project properties acquired by it, at least through construction of the improvements on these properties. The 73 tax lots to be acquired by ESDC will be subdivided and/or combined, at the sole expense of FCRC, to create the individual development parcels contemplated in the plan for the Project. It is expected that each development parcel will comprise an individual tax lot which, except for the Arena parcel, will be leased back to a special purpose FCRC developer affiliate for $1.00.
(Emphasis added)

“The development fee is an additional payment that flows from the developer to the LDC to repay the infrastructure bonds,” Johnson explained. “The structure is justifiable/desirable as it allows for additional project financing without cost/liability to ESDC or the State.”

Maybe so, but I posed several follow-up questions that got no answers:
--whether there was mention of the proposed LDC infrastructure bond financing in either the GPP or Final Environmental Impact Statement (FEIS)
--how the development fee would fit with the $1 lease
--what the dollar value of the infrastructure might be
--whether this model has been used in other projects.

“At this point, all I can tell you is that the proposed infrastructure financing structure has not been finalized," Johnston responded. "If and when it is - we will address further questions on this topic."

There's no mention of infrastructure funding in Chapter 11, Infrastructure, of the FEIS, nor in Chapter 0, Executive Summary.

After that, I took another look at p. 29 of the GPP:
FCRC shall be required to remit payments in lieu of sales taxes to ESDC under the lease or access agreement for each portion of the Project Site equal to all sales and compensating use taxes, if any, which FCRC would have been required to pay in connection with the development of such portion of the Project Site absent ESDC's ownership thereof, other than the Arena Sales Tax Exemption. After completion of construction, the fee interest to each development parcel will be conveyed for $1.00 to the development entity established for that parcel.

That looks like PILOTs of a different kind--in lieu of sales taxes, not real estate taxes--but directed to ESDC, not to bondholders.

Board of Directors

The board of directors consists entirely of state officials:
Frances Walton (ESDC CFO and BALDC President)
Laura Anglin (Director of Budget)
Andrew Kennedy (Budget Office staff person)
Peter Kiernan (Governor's counsel)
Robert Godley (ESDC Treasurer)
Anita Laremont (ESDC General Counsel)

About the JDA

According to the ESDC web site: Empire State Development is the parent organization for New York’s two principal economic development financing entities: the Empire State Development Corporation (formerly known as the Urban Development Corporation), and the Job Development Authority. In 1995, these agencies, which had previously functioned independently, were consolidated in order to increase efficiency, reduce overhead and enhance the delivery of the State’s economic development initiatives. Reorganized as Empire State Development, the combined agencies now function as a streamlined economic development organization whose primary mission is the facilitation of business growth and job creation across New York State.

As part of this economic development role, Empire State Development Corporation oversees the issuance of debt under the programs of both the Urban Development Corporation and the Job Development Authority. On the UDC side, bonding programs include Corporate Purpose, Correctional and Youth Facilities, Sports Stadium Assistance, and various educational and civic related project revenue bonds. The Job Development Authority issues both taxable and tax exempt bonds to finance its business lending programs. These programs are designed to promote job growth by providing loans to assist New York companies to build and expand facilities and acquire machinery and equipment.

Ex-Net Mourning on Ratner: owner prioritized move over team's success

NLG notices this article from the Palm Beach Post quoting ex-Net Alonzo Mourning on team majority owner Bruce Ratner:
In July 2003, Mourning departed the lowly Heat - remarking he didn't owe the franchise anything - and signed with title-contending New Jersey as an unrestricted free agent. But things soon went awry in New Jersey (owner Bruce Ratner didn't want to pay to keep center-forward Kenyon Martin or swingman Kerry Kittles) and when it seemed the Nets were finished throwing money around in pursuit of a title, Mourning, who went there to win a title, forced his exit.

He made life miserable for the Nets, spouting off to the media at every opportunity. Remarking on a conversation he had with Ratner, Mourning said, "I asked him, 'Other than your investment in this team for financial purposes - obviously getting a significant return - what's the reason why you bought the team?' " "And you ask anybody in here," Mourning continued, "he said, 'To move it to Brooklyn.' I mean, I didn't hear, 'To win a championship.' "I just shook my head."

And yes, NLG (and AYR) are a heck of a lot better at keeping up on Atlantic Yards than, say, Brownstoner, despite the New York Times's attentions.

Outward Bound: Forest City Ratner also gives to NY Times publisher Arthur Sulzberger's favorite charity

There's a lot of charitable money coming out of 1 MetroTech. Some, as I've detailed, comes from the Forest City Ratner Companies Foundation. Some, as with the loan/grant to ACORN, comes directly from Forest City Ratner itself. And some comes from Bruce Ratner.

Let's take a look at New York City Outward Bound, which lists Forest City Ratner among those supporters contributing $50,000-$99,999. This comes from the company, not the foundation.

There's an interesting potential synergy; the contributors at that level also include The New York Times Company and publisher Arthur Sulzberger, Jr., who is on the Outward Bound board.

In fact, Sulzberger "helped found and serves as chairman of the New York City Outward Bound Center," according to his official bio. A 12/19/05 New Yorker profile of Sulzberger, headlined The Inheritance, began with an anecdote about Outward Bound, which gave Sulzberger an award for furthering “the Outward Bound mission” Sulzberger said that, when he was a teen, Outward Bound changed his life.

Ratner's motivation?

That's good reason for Sulzberger to give back.

We can't be sure why Bruce Ratner gave--maybe Outward Bound holds a special place in his life, too--but it can't hurt relations with New York City's most powerful publisher, whose opinions are reflected in the Times's editorials (and silences).

Revisiting an editorial

Let's go back to the Times's last editorial on AY, published 8/6/06:
Some $40 million, for example, is for land acquisition for the arena, which should be a developer expense.

Well, that turned into $100 million, and Forest City Ratner may have saved an additional $55 million.

The Times editorial page hasn't seen fit to revisit the issue.

New York Times criticized for a deal with (Mexican) tycoon; could those criticisms apply to its deal with Ratner?

With an investment of $250 million in the New York Times Company, Mexican billionaire Carlos Slim Helu has gained more than the newspaper, contends former Times editorial writer Andres Martinez, whose piece in Slate is headlined Slim's Pickings: Will Carlos Slim use the New York Times to bolster his reputation?.

A major stock investment is more impactful than a business deal to build a Renzo Piano tower, and Slim has an even larger impact on his nation's economy than fabled John D. Rockefeller. Still, Martinez's criticisms do not sound out of place when applied to developer Forest City Ratner, whose CEO Bruce Ratner, like Slim, has been described as personally modest and philanthropic.

(Ratner's been called a billionaire but is more likely not so flush. USA Today in 2005 reported his net worth at $400 million and, while his shares in parent Forest City Enterprises later skyrocketed, they've recently sunk well below 2005 levels.)

Looking at the criticisms

As I quote some excerpts from Martinez's essay, I'll suggest some similar criticisms may apply to the Forest City Ratner deal.

Whether a weak Mexican state can develop and implement muscular antitrust policies to rein in the likes of Slim and foster greater competition is one of the keys to our neighbor's prosperity, which shouldn't be a minor story for an American newspaper.

Whether major projects like Atlantic Yards can be built in New York City via a transparent and fair process, including the role of eminent domain shouldn't be a minor story for New York's leading newspaper, especially given that the Times Tower itself was an example of such challenges.

The point is, Slim doesn't have to interfere at all. I know from experience that publishers do intervene in the editorial process, as is their prerogative. And I can assure you that Slim's investment will be a factor, even if unspoken, in editorial decision-making henceforth at the Times. Perhaps Mexico's crony capitalism will remain a mostly neglected topic—but now conspiracies will be read into the neglect.

I'll take the Times at their word that the publisher doesn't interfere in the news coverage. (Michael Wolff suggests Ratner is "protected" and, while there's no proof of that, and there has been some tough reporting, there's been a lot of weak reporting, too, and never a major investigative piece.)

But surely the Times's editorial page support for Atlantic Yards--awkward, amnesiac, and, crucially, absent--reflects the "spirit of the Times and the opinion of the publisher," as an editorial writer put it.

As for the Times, the newspaper is taking on an untenable appearance of a conflict, if not the reality of one, of the type it typically rails against in other institutions.

The prestige of the New York Times is such that it wields an unparalleled moral suasion... But from now on, any Times utterances on Mexico will now be interpreted, fairly or not, through the prism of Slim's stake in the company.

The Times could have tried to avoid that appearance of conflict, via rigorous reporting and committed editing regarding anything Ratner-related, and even the hiring of freelancers. It still could do much, much better.

The Edolphus Towns succession, Darryl Towns, and Forest City Ratner's interest and intervention$

City Hall News has an interesting piece on the potential race to succeed 74-year-old, 14-term 10th District Rep. Edolphus Towns, who in 2008 easily beat back a challenge from activist Kevin Powell though in 2006 was challenged more forcefully by City Council Member Charles Barron, whose impact was diluted by the spoiler role of Assemblyman Roger Green.

The article, headlined Big Egos and Ambitions Set To Collide in Prospective Race To Succeed Towns, doesn't mention the Atlantic Yards angle on past races nor the prospective one.

Still, Forest City Ratner has an interest in this race, part of the unwritten story about the developer's impact on Brooklyn politics. That interest includes a previously unreported Bruce Ratner campaign contribution to Assemblyman Darryl Towns and a surprise appearance by Towns himself at a recent AY-related meeting held by the Empire State Development Corporation.

Contrasts and contradictions

But first, some contrasts and contradictions suggested by the article.

First, though it had long been thought that Rep. Towns--whose questionable record includes an effort to block a smoking ban on passenger flights and a posture toward transparency that makes Forest City Ratner look like a sieve--was ready to retire, he said he's running again.

That means that two likely aspirants for the seat--his son, Darryl Towns, and Assemblyman Hakeem Jeffries--would put their potential candidacies on hold.

That would leave Barron as the strongest challenger, should he work out a deal with Powell to stay out of the race. However, as the article suggests, if City Council Member Letitia James--who denies interest in the seat--steps up, she could garner some of the anti-Towns vote that Powell got in the western part of the district. But she might want to wait her turn.

The article, using some curious passive voice, claims that James "is thought to lack the depth of a base in the black community that Barron has, the middle-class base that Jeffries has, or the name recognition of Towns." Well, she got reelected pretty easily in 2005, and got a boost in name recognition (and praise) from the recent term limits challenge.

Would Barron have a shot straight up against the incumbent? Maybe, but Towns would have the resources of incumbency. More interesting would be a multi-candidate race without the incumbent.

While Jeffries may be something of an insurgent in black politics--supporting Barack Obama early on, unlike some more established black leaders with ties to Hilary Clinton--he's got the support of Brooklyn Democratic kingpin Vito Lopez, which is an advantage, but could be targeted, as well, by an opponent.

James is expected to run in 2009 for her second full Council term, while Barron, though saying he wouldn't run for a third term should term limits be extended, has left the door open. It would be easier for Council Members to run in 2010 or 2012 for Congress, because they wouldn't give up their seats. Jeffries and Darryl Towns would be taking more of a risk.

The FCR connection

So what's Forest City Ratner's interest in the race? FCR certainly wouldn't want to lose an elected official who's been a reliable supporter, so reliable that Edolphus Towns endorsed the $6 billion lie.

That's likely why Bruce Ratner's brother Michael and his wife Karen Ranucci each gave $2000 for Towns's 2006 race. Also, an FCR executive contributed to Green's spoiler candidacy, as did people connected to the AY Community Benefits Agreement.

Last year, four members of the Ratner family, including FCR CEO Bruce Ratner, as well as the Forest City Enterprises Political Action Committee, contributed a total of $12,300 to Towns's re-election campaign.

Enter Darryl Towns

Darryl Towns, who in 2007 chaired the minority caucus of state legislators and got a special salute from Forest City Ratner, is a reliable voice of Atlantic Yards support. He in turn saluted the Barclays/Nets alliance. He spoke at the Brooklyn Day rally last June. He endorsed the $6 billion lie. He championed Barclays.

According to state filings, Bruce Ratner gave Towns $3000 last September. (So much for Ratner's one-time retreat from giving political contributions.)

Crashing the ESDC meeting

At a meeting December 22 at the offices of the Empire State Development Corporation (ESDC), Forest City Ratner and several local officials were present. City Council members David Yassky, Bill de Blasio (via a representative), and James, Rep. Yvette Clarke, State Senator Velmanette Montgomery, and Assemblymembers Jim Brennan, Joan Millman, and Hakeem Jeffries.

Also invited by Forest City Ratner to tilt the balance in a meeting in which nearly everyone would be at least a mild critic of Atlantic Yards were Darryl Towns and State Senator Marty Golden, another reliable AY supporter who happens to be ethically challenged. The ESDC, I'm told, wouldn't let them attend because the project would not directly impact their districts.

(After all, if Forest City Ratner were allowed to bring ringers to every meeting, then State Sen. Carl Kruger, he of the "Brooklyn" aria, would be at the next one, right?)

If not Towns?

So, if not Edolphus Towns, then Darryl Towns would seem to be the developer's choice. Barron and James (and, to a lesser extent, Powell) are Atlantic Yards opponents, so, if for some reason no Towns candidacy (or alternative candidate) emerged, Jeffries might be seen by FCR as the least unfavorable candidate.

Jeffries has been cautious and cagey on the Atlantic Yards issue, saying he opposes eminent domain to build a basketball arena but never opposing the project, instead leaning more to the BrooklynSpeaks "mend-it-don't-end-it" posture.

He's criticized the density of AY and called for affordable housing to be built first, even though the developer's design requires the arena at the center. He's called for an Assembly hearing on the project, though nothing's happened with that, likely because all-powerful Assembly Speaker Sheldon Silver, an AY supporter (and FCR beneficiary), hasn't favored it.

A federal role?

The critical bodies for oversight of and support for Atlantic Yards are the City Council and the state Legislature, not Congress.

However, it's possible that federal stimulus money could assist the project, and surely Forest City Ratner prefers to have high-profile elected officials supporting AY, not opposing it.

"Negotiating against ourselves": Council Member Gioia offered a prescient warning about the city's embrace of AY

Would you believe that, some four-and-a-half years ago, a top city economic development officials promised that the return on public investment in the Atlantic Yards project would be eclipsed by the impact of the New Jersey Nets moving to Brooklyn?

Or that an effort to "find a better deal" was seen to "discourage developers from coming to us," even though, since then, the city has held competitions for developers seeking to build megaprojects?

That's in the transcript of the 5/4/04 City Council hearing on AY.

There were two key exchanges between City Council Member Eric Gioia and Andrew Alper, then president of the New York City Economic Development Corporation.

(I augmented the transcript slightly with a look at some video.)

Dollar amount "within direct fiscal impact"

GIOIA: How much money, what is the real dollar amount, what is the public investment in this project, both in the City and from the State?

ALPER: We do not know yet, because it is still being negotiated. It will be within the direct fiscal impact of the arena and the team moving, we do not know the exact number yet, though.

That subsidy, $100 million, was announced in March 2005 after a Memorandum of Understanding was signed in the previous month. However, the city later quietly upped its contribution by $105 million and, arguably, that subsidy exceeds the modest fiscal impact predicted by the New York City Independent Budget Office, as an IBO official acknowledged in July 2007.

"Negotiating against ourselves"?

GIOIA: My last question, is, if we are trying to maximize public investment for public benefit, are we, for this issue, are we proactively then going out and saying to other similar developers, similar type entities? In other words, have you been doing a road show looking for other NBA teams or other athletic teams, or other developers to build stadiums? Or are we sitting back and that we’re in this position because this developer and this athletic team has come to us and said, 'I own this property, or I want to build this project and I think it is good for the City'? In other words, how proactive is the City's economic development plan: are we doing this now because this has been brought to us, or are we doing this because we proactively looked and said, we think this is good for Downtown Brooklyn, or we think this is good for New York City? And, depending on your answer, the second part of it: how do you know it’s a good deal, unless we know that there is somebody else out there? In other words, if we’re negotiating and it’s not--what else is the market out there, or are we negotiating against ourselves? If that makes sense, it is kind of a run-on question.
(Emphasis added)

ALPER: Well the answer is yes and no. We are actively out marketing the City all over the US, all over Europe, all over Asia to talk to companies and prospective tenants for buildings and prospective projects. We have been doing that very aggressively, and I think with some early success to bring more jobs to New York. This particular project came to us. We were not out soliciting, we were, as you know, developing a Downtown Brooklyn plan, but we were not out soliciting a professional sports franchise for Downtown Brooklyn. The developer came to us with what we though was actually a very clever plan. It is not only bringing a sports team back to Brooklyn, but to do it in a way that provided dramatic economic development catalyst in terms of housing, retail, commercial jobs, construction jobs, permanent jobs. So, they came to us, we didn’t come to them. And it is not really up to us then to go out and try to find a better deal. I think that would discourage developers from coming to us, if every time they came to us we went out and tried to shop their idea to somebody else. So, we are actively shopping, but not for another sports arena franchise for Brooklyn.

The Downtown Brooklyn plan, as proposed, overlapped with only a tiny piece of the Atlantic Yards plan, and that piece was excised from the rezoning. So one reason the city was not soliciting for a professional sports franchise for Downtown Brooklyn was that there was no place in the rezoning for an arena.

The developer's plan may have seemed "very clever," but there's ample evidence that the city knew that the market for increased office space was already tanking. And there's no evidence that city planner had evaluated whether there'd be enough tax-exempt bonds for the ambitious housing plan.

The "very clever" plan involved not only a claim on valuable public property, the Metropolitan Transportation Authority's Vanderbilt Yard, plus a host of special benefits, including a state override of zoning and a state use of eminent domain to acquire private property.

Boiled down, Alper's justification was apparently that sports franchises are such a scarce commodity that the city must negotiate against itself--an argument that, as Neil deMause might out, is often effective, especially in cities desperate to be "major league." (Do I hear Oklahoma City?) No other project was suggested or considered for the railyard or the rest of the Atlantic Yards site.

Since then

Though Alper claimed that "trying to find a better deal" would "discourage developers from coming to us," since then the city, in projects like Hudson Yards and Willets Point, however controversial, have at least put developers at the same starting line.

And the city, negotiating against itself, not only doubled its contribution to the Atlantic Yards project but has left itself open to future direct support and/or indirect subsidies.

A telling non-answer? When asked about AY concessions, MTA chief Sander says only that agency is "flexible and thoughtful"

So, would the Metropolitan Transportation Authority accede to Forest City Ratner's reported request to restructure and thus delay payment of the $100 million it owes for development rights at the MTA's Vanderbilt Yard?

And would the MTA accede to the developer's reported effort to build a less-expensive interim railyard as a replacement?

The person who might know, MTA executive director Lee Sander, gave no solid answer yesterday, but did acknowledge that the agency is "flexible and thoughtful" in all its negotiations.

The Hudson Yards in the balance

The big story from Sander's appearance at a breakfast yesterday sponsored by Crain's New York Business was the shaky fate of an even more ambitious deal: the $15 billion Hudson Yards project.

The Hudson Yards developer, the Related Cos., according to the Observer, has had trouble getting financing, stopped paying its architects (sounds familiar?), and even cut its lobbying expenditures in half.

As Crain's reported, Should the MTA and Related not reach a deal by January 31, the project could be postponed indefinitely or killed, thus jeopardizing the $1 billion the MTA might gain.

Yesterday, Crain's Editorial Director Greg David brought up Hudson Yards, asking Sander, "But do you still think a billion-dollar payment is realistic in the current environment and, as you approach this deadline, is MTA prepared to take into account the changed circumstances?"

"Really good question, Greg, but we are involved in those sensitive negotiations with Related, basically as we speak," Sander replied. "We certainly known what's going on in the real estate market, and some of the pressures that all the real estate companies have encountered. At the same time, we feel very good about what we achieved with Related, so we are having a conversation with them, and we'll see where that leads."

"Would you agree that, if Related were to walk away from this project, there wouldn't be someone as eager to step in as occurred the last time MTA decided to play hardball?" David asked.

"I think that's a very fair assessment on your part," Sander said.

(Given the open bidding process, it's fair to say that the 2008 Hudson Yards project differed significantly from the 2005 sale of rights to the MTA's Vanderbilt Yard, which attracted only one other bidder, given that the RFP was issued 18 months after Forest City Ratner was anointed the city and state's favored developer.)

"If the deal at Hudson Yards does crater and Related walks away from the project," David asked, "what will the implications be for the MTA and its capital budget?"

"Again, I'm loathe to engage in hypotheticals," Sander replied. "Again, I suspect that we would be able to deal with it, but it would not be pleasant, but again, that's not an outcome we're looking forward to. We're involved in sensitive discussions with Related. I wouldn't make conclusions as to how those would end up."

The MTA needs the revenue, so there's an argument for flexibility. Assemblyman Richard Gottfried, told Crain's, “On the other hand, I would not want the current market conditions to induce the MTA to give the developer even more leeway than they already have.”

The contract deadline, which has been pushed back once, could conceivably be pushed back again, Crain's noted.

What about AY?

Meanwhile, there's never been a firm deadline regarding the $100 million owed for the Vanderbilt Yard, a sum about which Sander last April expressed concern.

(Note this sentence from p. 14 of Part 1 of the Empire State Development Corporation's Modified General Project Plan: FCRC shall be required to consummate such purchase prior to or contemporaneously with the first acquisition by ESDC of a parcel within the Project Site not owned by the MTA.)

Yesterday, David asked Sander, "The Atlantic Yards project clearly hangs in the balance, even if the court cases go in favor of Forest City Ratner. Has the MTA recognized that it will also need to be flexible at Atlantic Yards if Forest City Ratner wins the court cases and tries to go out and finance the arena?"

(Actually, the defendant in pending lawsuits is the Empire State Development Corporation.)

"I think that we have been flexible and thoughtful in all these negotiations," Sander responded, speaking carefully. "I think if you had spoken to [developers] Jerry Speyer, Gary Barnett, Brookfield... I don't think you'll have [REBNY's] Steve Spinola or any of these people we interact with saying we were rigid, or unrealistic, and so forth."

"So, whether it's with Forest Ratner--with Forest City Ratner, with Bruce Rater, we will apply, as we have, intelligence, thoughtfulness, to the exercise," Sander said, proceeding to offer examples that were not quite related to AY. "We also have open lines of communication with the city. We worked unbelievably closely with Dan Doctoroff and Mayor [Mike] Bloomberg in the Hudson Yards transaction. We have extraordinary partnerships across the board, whether it's with [city officials] Ray Kelly, whether it's with Janette Sadik-Khan, whether it's with Ed Skyler. We do these things collaboratively."

Later, Sander was asked by WNYC's Matthew Schuerman if the MTA would accept a replacement yard with less value.

"I'm not sure I really want to engage in negotiations with you about Atlantic Yards," Sander replied. "The MTA has a good track record of being thoughtful and prudent."

(The New York Post has a story summarizing the issue, but with no comment from the MTA.)

Stock leaps

The stock of Forest City Enterpises, which on Tuesday went down 21.42%, yesterday leaped 24.3%. It must be a white-knuckle ride for day-traders.

Reading the fine print: if FCR doesn't produce an upgraded railyard, would that stall the arena?

Did the Empire State Development Corporation write itself into a contradiction?

According to the Atlantic Yards Modified General Project Plan (p. 22):
ESDC's acquisition of all such properties [via eminent domain] will not occur until such time as ESDC receives commitments, guaranties and other evidence satisfactory to ESDC that FCRC will (i) promptly commence construction of the Arena, the Upgraded Yard and all of the infrastructure necessary for the Arena (collectively, the "Arena Infrastructure"; together with the Arena and the Upgraded Yard, the "Initial Development"), and (ii) complete such construction within agreed-upon time periods.
(Emphasis added)

If developer Forest City Ratner does not create the upgraded railyard it intended--as the New York Times reported, citing an anonymous source--would that be violating the General Project Plan?

Then again, there's often some wiggle room. It probably depends on the definition of "Upgraded." But the issue is worth tracking.

Flashback: the lack of a schedule for Phase 2 was evident when the CPC considered Atlantic Yards

While many people are looking forward, AYR today offers a couple of flashbacks.

On 9/25/06, some two years and four months ago, the City Planning Commission considered a proposed minor scaleback in the size of the Atlantic Yards project. That was orchestrated.

So was a cut in the flagship tower Miss Brooklyn. “We really do believe the height it’s proposed at is really appropriate,” the Department of City Planning's Regina Myer said at the time. I wondered if that set the stage for a negotiated trim at a later date, and that turned out to be true.

Unscheduled Phase 2

But what's striking is how officials and critics pointed to the likelihood that the 11 towers of Phase 2 might not be constructed on schedule.

Is there a commitment for completing Phase 2 in a certain time, Rafael Cestero, Deputy Commissioner for Development at the Department of Housing Preservation & Development (HPD), was asked.

“There is no commitment on the time,” he replied, leading me to suggest that, depending on market forces and other factors, the majority of the affordable housing and the open space might not be completed by 2016 as promised. (Cestero has since left HPD, but now may be the front-runner to run the agency, according to the New York Observer.)

After the hearing, Stuart Pertz, a former city planning commissioner who was advising the Municipal Art Society on AY, observed that, given the failure to lock in the second phase, “They could be left with a hole in the ground and a lot of parking.”

Indeed, when the Empire State Development Corporation in September 2007 signed the State Funding Agreement, there was no timetable for Phase 2.

Now there are some empty lots, primed for parking. So Pertz was pretty prescient.

Flashback: four years ago, ACORN's Lewis scoffed at getting paid by Forest City Ratner

While many people are looking forward, AYR today offers a couple of flashbacks.

A little more than four years ago, Bertha Lewis, executive director of New York ACORN (Association of Community Organizations for Reform Now), scoffed when a questioner wondered if the organization was being paid by Forest City Ratner for its support of the developer's Atlantic Yards project.

Today, Lewis is the chief organizer of national ACORN, as it recovers from an embezzlement scandal, and Forest City Ratner has bailed out the organization with a grant and loan worth $1.5 million.

The situation is not exactly analogous: national ACORN is the beneficiary, not New York ACORN, and the Atlantic Yards project is no longer pending approval but has gained state approval.

But Lewis's outrage at the question is belied by the organization's current dependency on the developer.

Flashback to the meeting

The issue came up at an 11/29/04 public meeting on the Atlantic Yards plan, organized by Community Boards 2, 6, & 8 and featuring Forest City Ratner point man Jim Stuckey. (The Brooklyn Downtown Star called it The Plucky Jim Show.)

The Brooklyn Paper, in a follow-up article headlined POWER BROKERS, reported on questions posed regarding whether both ACORN and the fledgling job-development group BUILD ((Brooklyn United for Innovative Local Development) were getting paid:
Stuckey balked, and refused to answer the question, instead saying, “Why don’t you ask them yourself?”

A chorus of boos came from the ACORN and BUILD activists who largely packed the audience. Afterwards, Stuckey told The Brooklyn Papers he didn’t answer the question because, “It was insulting. Of course, BUILD and ACORN are not getting paid.”

Bertha Lewis, Brooklyn director for ACORN, called the accusation ridiculous.

“We’ve built housing for over a million people. I raise two to three million dollars a year,” Lewis told The Papers. “It just says to me, ‘This is exactly why people think stuff boils down to race and class.’ It’s like, how dare you?

“We got paid? We got paid with the biggest housing program that has our name on it that you can imagine. We’re gonna be famous!” she said, referring to the 50 percent affordable housing, compared to the typical 20 percent found in most modern developments with an affordability incentive, that Ratner has agreed to include in Atlantic Yards.

However, Lewis sacrificed any larger evaluation of the project, as she later acknowledged--"I can't do environment," she said at a memorable debate--trading off the housing pledge for the density the developer chose.

And, of course, the Housing Memorandum of Understanding signed 5/17/05, requires ACORN to publicly support the project.

Getting paid, then and now

In the Brooklyn Paper article, project opponent Patti Hagan suggested that, if the groups were being paid, "it compromises them as free agents in negotiating a community benefits agreement.”

Well, both ACORN and BUILD stood to benefit in the future, given that they would be in line for management contracts for the affordable housing and job training.

BUILD, it later emerged, had told the Internal Revenue Service it expected $5 million from Forest City Ratner. While that was an erroneous estimate, BUILD representatives were shown to have lied when they denied in August 2005 that BUILD had been paid by the developer.

In the generous phrasing of the New York Times, a 10/14/05 article reported that spokespeople for FCR and BUILD "revised that account."

(That phrasing appeared in the notorious "modern blueprint" story, in which the Times, apparently attached to a story line about the developer's capacity to reap community support, saw fit to bury a scoop--catching the developer and its CBA partner in baldfaced lies. It is, to my mind, the second-worst example of New York Times Atlantic Yards coverage, trailing the phantom scaleback article only because the latter appeared on the front page.)

So the distinction between current payments and expectation of future payments might be seen as a bit murky.

ACORN in a jam

More importantly, national ACORN's fortunes have fallen, as the revelation of a scandal--the brother of founder Wade Rathke embezzled nearly $1 million in 2000 and senior executives kept mum--led foundations that previously supported the organization to back off, jeopardizing ACORN's ability to pay back taxes.

Enter Forest City Ratner, which has no history of corporate support for ACORN.

Lewis had scoffed at the "race and class" aspects of the accusation that New York ACORN was getting paid.

Now, however, one of ACORN's few friends with deep pockets is a developer that has no particular interest in ACORN's overall agenda but very much needs "race and class" grassroots support for its stalled project in Brooklyn.

Indeed, while ACORN should face questions about whether the money from Forest City Ratner compromises ACORN's capacity to represent the community regarding AY, parent company Forest City Enterprises should face questions from shareholders, not just about the rationale for the grant/loan to ACORN, but whether this will become a standard practice in development deals.

Could Shaq connect the Nets to the Rock? Well, there's hope but no plan

The Newark Star-Ledger, which has been leading the coverage of the possibility that the New Jersey Nets might play pre-season games at the Prudential Center, now raises the question about whether native son Shaquille O'Neal, who's become a big investor in Newark, might be the man to bring the Nets to the Rock permanently.

The article is a tad premature, given that O'Neal still plays for the Phoenix Suns and can't exactly invest in a basketball team. But O'Neal has talked to New Jersey Devils owner Jeff Vanderbeek, and Steve Politi sets the scene:
Imagine the Nets finally giving up their Brooklyn fantasy and moving to the Rock with one of the all-time greats in uniform. Imagine Shaq, after he decides to retire, staying with the franchise as a part owner, his smiling face on billboards and his hulking frame sitting in courtside seats.

The thought has certainly occurred to O'Neal, who already is heavily involved in real estate ventures in the city and has a strong interest in getting involved in the business side of the sport.

"Yes. Yes. Yes," O'Neal said in a phone interview when asked if he wanted to get into ownership when he retired.

And if that team could be the Nets ...

"It'd be nice -- real nice," he said. "I know the area, I know the people, it's close to New York. Every organization needs two things: a great place to play and a couple of marquee players. You have that, and it's a no brainer."

Increased pessimism about AY

That's not exactly a full-fledged plan, but, on the New Jersey side of the Hudson River, the pessimism about the Brooklyn move has grown. "[F]ew outside the organization believe they're getting to Brooklyn any more," Politi writes.

"The best thing to do is wait and let it take care of itself," Sen. Richard Codey the state senate president, told the newspaper. "With Brooklyn looking like Dorothy from Kansas, they'll have to make a financial decision soon."

Last week, as DDDB reminds us, Codey said, "I think it’s a race to see which project is put in the grave first: the Brooklyn [Barclays] arena or [the Meadowlands' project] Xanadu."

The clock ticks

Forest City Enterprises stock, seesawing for weeks, was down a mere 21.42% yesterday. The Nets' losses continue. Earlier this month, Crain's New York Business Editorial Director Greg David observed, "If those [legal] challenges are not dismissed before March, the project will be in trouble."

He didn't give a rationale, and it's certainly possible that the project could survive even if legal cases linger. However, the clock is ticking.

A short history of Atlantic Yards orchestration: condos added, 8% scaleback, Miss Brooklyn cuts, and the arena redesign

Much in the Atlantic Yards saga, I suspect, has been strategized in Forest City Ratner's offices at 1 MetroTech.

Consider the 12/10/03 press conference at which public officials praised the project, and continue through exclusives bestowed on news organizations, For example: the 7/5/05 release to the Times of new Frank Gehry designs (Instant Skyline Added to Brooklyn Arena Plan, which, alarming readers with its visuals, backfired somewhat) and Bruce Ratner's 5/4/08 op-ed in the New York Daily News (Atlantic Yards dead? Dream on), which was, to say the least, factually challenged).

But some episodes have been truly orchestrated, a term I'll reserve for a sequence in which community or political leaders provide (or are said to provide) cover for something the developer likely wanted to do all along.

Brooklyn Borough President Marty Markowitz's attempt to play architectural adviser is only the latest. But it is the least effective, given that the public and press have woken up somewhat.

Adding condos to the Atlantic Yards plan

Problem: Forest City Ratner once promised a plan in which 50% of the housing would be affordable.

Strategy: sign a 50/50 housing plan regarding 4500 rentals, then quietly add (at the time) 2800 condos.

Orchestration: once that strategy was pointed out by critics and opponents, FCR explained in the New York Times: community leaders had pushed Mr. Ratner to include more housing in the project.

Effectiveness: High, but mainly because of the credulous press.

Quote: FCR's Jim Stuckey: "Projects change, markets change." Also: "Here we are opening ourselves up - tremendous transparency, for two years. Yet the criticism is, 'Wait a second, they didn't tell us something about the evolution of their planning process before the public process began'? Just think about what that means. It's Orwellian, almost."

Brutally weird twist: Documents later released showed FCR planned condos from the start.

Reducing the project "6 to 8 percent"

Problem: Forest City Ratner needed to convey that it was making serious reductions in a plan widely seen as too large.

Strategy: Announce 21-acre project at 8 million square feet, then, while adding another acre, up the size to 9.132 million square feet. Then announce cuts to bring the project down to square footage originally announced.

Orchestration: Float a "6 to 8 percent" cut in the 9/5/06 New York Times, then have such a cut recommended by the New York City Planning Commission.

Effectiveness: High, but mainly because of a major error in judgment by the New York Times and otherwise credulous press coverage.

Quote: “Everyone’s going to take credit for something that everyone knew would happen,” an executive who works with Forest City told the Times, which while winking at such inside baseball still saw fit to make the article the lead story.

Brutally weird twist: Documents later released showed that most of the cuts announced had been on the table for months.

Reducing the height of Miss Brooklyn (aka B1)

Problem: Forest City Ratner had offended people by designing the flagship office tower, then called Miss Brooklyn, taller than the Williamsburgh Savings Bank and, in the process, blocking the bank's iconic clock. The developer had pledged from the outset that the tower wouldn't block the clock.

Strategy: Distract people by focusing solely on the issue of height, reducing the new tower from 620 feet to 511 feet, one foot below the bank's height.

(Graphic of 620-foot Miss Brooklyn from Final Environmental Impact Statement.)

Orchestration: Have the City Planning Commission defend the height. Have the Times report that architect Frank Gehry objected to changes. Have Brooklyn Borough President Marty Markowitz request a cut in height, then praise the developer when that request is fulfilled.

Effectiveness: High, but mainly because of a press that didn't bother to check on whether the shorter building would block the clock.

Quote: Markowitz declared, "I am very encouraged as well that the PACB acted on our suggestion that the project’s 'Miss Brooklyn' building not be taller than Brooklyn’s Williamsburg Savings Bank building." (It was Forest City Ratner, not the Public Authorities Control Board, that acted, on the day of the board's approval.)

Brutally weird twist: There never was a market for Atlantic Yards office space when the project was announced.

Changing the design of the Atlantic Yards arena

Problem: At $950 million, the arena likely would be too costly for a bond issue, and the land underlying the arena likely couldn't be valued high enough to generate foregone property taxes commensurate to the arena bonds. Glass facades might pose a security risk.

Strategy: Hire unnamed firms to do value engineering on the arena, with Frank Gehry's role receding.

Orchestration: Get Markowitz to declare, "To create an arena that's in-your-face and may become an icon of the world is just not realistic anymore" and to suggest that the arena and other buildings might use less glass. Then have Forest City Ratner thank the BP for his suggestions.

Effectiveness: Low. By now, even the New York Times could report that Markowitz's call for a "more economically feasible" arena was "pretty much what Forest City Ratner acknowledged it was doing last week."

Quote: Markowitz said, "There may be a chance to incorporate design and construction changes that will lower the bottom line and celebrate the ‘Brownstone Brooklyn’ architecture that makes our borough unique."

(Graphic from DDDB.)

Brutally weird twist: Markowitz actually said he thought the arena would create affordable housing.

Two years later, a look at the promise by Barclays of a 2009 arena opening

When this Barclays Center ad appeared exactly two years ago in daily newspapers, the arena sponsor promised that its "gift" to Brooklyn was "technically not until 2009, but our excitement can hardly be contained."

At the time, I wrote that, given potential delays from lawsuits and other factors, 2009 might better be seen as a goal than as a given.

That was probably conservative. In retrospect, there was little chance to meet the 2009 goal. Now there's little chance to meet the stated 2011 goal, nor to produce something that looks like this picture any time soon, if at all.

(Click on graphic to enlarge.)

What New Yorkers want is... infrastructure

The headline in the lead story yesterday in the New York Times's City section was ‘Obama, Pave Atlantic Avenue’, and the main thrust of what (a selective cross-section of) New Yorkers want from President Barack Obama's administration is... infrastructure.

Two examples

SAM SCHWARTZ
President and chief executive officer, Sam Schwartz Engineering

Let’s think big, really big. Let’s take $100 million of the new funds to draw up plans for 2030 and beyond.

The Staten Island subway was started in 1923 and abruptly halted. Let’s finish it, and finally bring rail service from our most overlooked borough to Brooklyn and Manhattan.

Let’s run trains from Grand Central and Penn Station through Sunnyside Yards with a transfer via bus or light rail to the La Guardia shuttle.

Freight transport, long neglected in New York, must move to the front burner. Let’s advance Congressman Jerrold Nadler’s tunnel from New Jersey to Brooklyn. But, simultaneously, we need to figure out what to do once the freight gets to Brooklyn.

Let’s rebuild the anachronistic Belt Parkway, make it an expressway and get trucks off Caton Avenue, Linden Boulevard, Parkside Avenue and much of central Brooklyn.

AARON NAPARSTEK
Editor in chief, Streetsblog.org

New York’s surface transportation system needs a green makeover. We need to redesign our streets to put buses, bicycles and pedestrians first, and to handle curbside parking and deliveries more effectively.

The top priority has to be the creation of a citywide bus rapid-transit network, known in transportation circles as B.R.T. This is, essentially, a “surface subway” — it moves passengers quickly by giving buses their own dedicated express lanes, collecting fares before boarding and using real-time information to manage routing. A successful pilot project is already speeding up bus trips on Fordham Road in the Bronx.

A citywide network would cost less than subway expansion, reduce traffic congestion and emissions, extend the transit system into underserved neighborhoods and spread opportunities for economic development throughout the five boroughs. And it would quickly put thousands of New Yorkers to work building and running the system. Driving a bus is a green job.

Nobody mentioned an arena--though that should hardly be a federal priority.

Nobody even mentioned affordable housing, though I'd bet that's an artifact of not quoting anyone in the housing field. Then again, if the transportation infrastructure is improved, the housing will follow.

Some commenters questioned the wish lists posted and more than one suggested New York needs something many other major cities (and not-so-major-cities like Minneapolis and Cleveland) have: a direct train route to the airport.

Crain's: Goldman Sachs advised arena cost cutbacks

A Crain's New York Business article this week, headlined Atlantic Yards still just an artist's rendering: Project stalls amid lawsuits, recession and credit crunch, summarizes some major challenges facing the project:
Simply waiting for the economy to get better could prove costly to Forest City. It has to move the project along if it is to meet a year-end deadline to take advantage of tax-free bonds that would reduce borrowing costs by at least $100 million. Right now, it is attempting to renegotiate or extend a reported $152 million loan due next month and is scrambling to lower the cost of the arena, which has ballooned 40% in two years, to nearly $1 billion. Also, if construction doesn't begin by the summer, it is unlikely the arena will be ready by Forest City's targeted completion in 2011.

The $100 million-plus savings on bonds with that end-of-year deadline seems crucial, though I wonder if it could be extended.

The 2011 completion date is extremely unlikely, given that construction must begin, according to Bruce Ratner's 30-month schedule, by May 1, and, by the Empire State Development Corporation's 32-month schedule, by March 1.

Neither is tenable. Yes, it's possible that conditions might allow for a speed-up, but everything else construction-related has taken longer than anticipated. We should be talking 2012 as a more likely best-case scenario.

The impact of lawsuits

The article states:
Numerous lawsuits were filed against the project, but by last year, it looked as though all legal challenges had been exhausted. However, last October a New York appellate court refused to dismiss a case that challenged the use of eminent domain. The case is expected to go forward once a trial date is set.

Not quite. It looked like all legal challenges had been filed, with resolution possible. The appeal in the case challenging the environmental review was heard in September; a decision is awaited.

The Goldman Sachs role

Here's a piece of news:
Company executives told local elected officials last month that its bank, Goldman Sachs, suggested it cut the cost of the arena to ease the path to financing. Its current $950 million price tag is nearly double the cost of other arenas built in the United States, according to Sports Business Journal.

It's interesting that Goldman is driving the bus here.

The future

The article concludes:
Atlantic Yards' prospects may appear bleak, but experts note that big, inner-city development projects rarely progress in a smooth, timely manner and that Forest City has the expertise and experience to tackle the difficult circumstances. It took Forest City over 20 years to complete MetroTech Center, its office complex in downtown Brooklyn.

“Forest City is one of the best developers of mixed-use projects in this country,” says Richard Moore, an analyst with RBC Capital. “It will be difficult for them to raise debt, but that's the case for everyone.”

That's what Moore's been saying all along. The difference is that the parent company, Forest City Enterprises, suspended its dividend last month to save $30 million a year, while the losses on the Nets it absorbs represent about $22.4 million a year.

And the short-term prospect for the team, playing in an antiquated arena and with tickets to numerous games distributed free, is hardly positive.

So patience, as exhibited during the MetroTech buildout, might be harder to come by.

In Marty's Brooklyn!!, only a tangential mention of Atlantic Yards

I haven't yet received the Winter 2008 issue of Brooklyn Borough President Marty Markowitz's promotional publication Brooklyn!! in the mail, but the issue, now posted online, is worth a look.

As usual, the publication covers a range of Brooklyn people and happenings, emphasizing the "Shop Brooklyn" campaigned coordinated by Markowitz's office and other organizations, and including two pages of the smART Brooklyn Gallery Hop held December 14.

There's an op-ed on HIV/AIDS by Special Assistant to the Borough President Yvonne Graham, who was the Deputy Borough President before she changed status last February (and took a pay cut) to mount a campaign for Borough President in 2009--one she abandoned after the City Council overturned term limits allowing Markowitz to run again. According the BP's web site, Graham is currently Deputy Borough President, which means her status has changed (or the web site was never tweaked.)

One tangential AY mention

And, as in past issues, there's little mention of Brooklyn's biggest and most controversial project, Atlantic Yards, for which Markowitz is chief cheerleader. (The publication was undoubtedly produced before Forest City Ratner suspended work at the Vanderbilt Yard in December.)

On one of the two pages headlined "Marty's on the block," one photo caption describes a school playground renovated thanks to a donation from the Forest City Ratner, the New Jersey Nets, and Barclays Capital.

Star-Ledger: "Nets have nothing to lose by giving Newark a shot"

The Newark Star-Ledger editorial board thinks the New Jersey Nets protest too much regarding the contours of a deal to play three of four pre-season games at the Prudential Center:
Brett Yormark, the Nets' top executive, broached the idea with Devils management of playing three pre-season games in Newark. Then just as quickly, he dropped the idea. Sources with the team said the Devils don't have the "sales force or infrastructure" to generate the type of sales the team could get in the Meadowlands.

That's laughable. The number of fans who watch a pre-season game at the Izod Center would barely fill a No. 13 bus on Broad Street during rush hour.

The Nets have nothing to lose by giving Newark a shot, especially if they want to broaden their "base," as Yormark says. The Prudential Center is a warm and welcoming place. Give it shot. Work out the details.

As I wrote, there must be some middle ground in this dispute over price.

NYTimes Styles section counts AY stall among symbols of city's lag

An article in the Sunday Styles section of the New York Times, headlined When the Action Moves On, tries to capture the zeitgeist in which New York, capital of money and fashion, is slipping, while the focus turns to Washington.

Some excerpts:
The result is that some New Yorkers feel that the city is losing, along with many jobs, its swagger and its sense of pre-eminence, which is no small matter in a town where many feel like it takes an outsize swagger to survive.

...The swift reversal of fortune feels even more painful for having come on the heels of one of the most colorful epochs in the city’s history, marked by a skyrocketing economy and an expanding global profile, by championship sports teams and hit television shows that sold the world a vision of life in New York as the Emerald City.

AY as symbol

As with stories in this section, a string of factoids is strung together without much analysis:
A few years back, when everyone seemed flush, even those who never received a seven-figure bonus enjoyed the ride because success is infectious...

Todd Rosenberg, an animator who lives in Brooklyn, said that he finds himself sharing in the psychic pain of the city when neighborhood businesses go into their death throes...

Also being shed are some of those colorful and slightly absurd microindustries — de-cluttering consultants, aroma therapy for pets — that sprouted in recent years by catering to the well-heeled...

Massive development projects like Brooklyn’s Atlantic Yards, with its planned Frank Gehry-designed sports arena and 60-story skyscraper, appear stalled. There’s no sign the New Jersey Nets will be moving to the borough any time soon.

“I think the city that never sleeps definitely needs a nap,” Michael J. Petruzzello, a prominent Washington public relations consultant, said in an e-mail message. “Washington, not Wall Street, is where all the action is right now. We have the money, power and the celebrities. We own all of the banks and financial giants. The Obamas are the hottest power couple on the planet.”
(Emphasis added)

OK, but the real estate industry, though connected to Wall Street and its cascading wealth, is a product of other factors, like the push from the mayoral administration, and Atlantic Yards is stalled not merely because of economics but because it prompted serious resistance. And demolitions for Atlantic Yards, as part of a project ostensibly to remove blight, have created blight where there was none before.

While I don't doubt a new local sports team could gain a following, especially with p.r. and press support, I haven't seen signs many Brooklynites are hankering for the Nets; the few times I've watched their games on TVs in local sports bars close to the AY site the response has been indifferent.

Oh, and the Times writer should've checked with someone in the Metro section. That 60-story skyscraper, at last notice, was to be 511 feet, though it's on indefinite hold until an anchor tenant could be found. And the market for office jobs was bogus from the start.

Is Seattle an option for the Nets?

Ken Berger on CBSSports.com lays out the scenario, which involves the Washington state legislature coming up with $75 million for renovations to Seattle's Key Arena--and another struggling NBA team not getting there first.

Berger joins those who think the Nets' stated Brooklyn arena opening date of 2011 is a mirage:
At a time when NBA sources tell CBSSports.com that several teams are having trouble collecting naming-rights payments for their arenas -- the Miami Heat sued sponsors and premium seat holders who owe the team $1.6 million, according to published reports -- Barclays has reaffirmed its commitment to having its name on the Brooklyn arena. This arrangement, of course, would be contingent on the arena actually being built. Groundbreaking has now been pushed to sometime this year, which would make 2011-12 the earliest possible debut for the Brooklyn Nets. Forgive me if I'm in believe-it-when-I-see-it mode.

I'd add that some sponsors might be antsy about Frank Gehry's diminished role.

The Nets, of course, would have to be sold, and that wouldn't happen, I suspect, until and unless Atlantic Yards crashes completely.

Marty! A portrait of Brooklyn's moody BP and the limits of his office

Probably the definitive profile of Brooklyn Borough President Marty Markowitz was Rebecca Mead's 4/25/05 piece in the New Yorker (Mr. Brooklyn), which portrayed, in devastating detail, Markowitz's willingness to play nice with developer Bruce Ratner.

But the profile this week in Manhattan Media's City Hall News, headlined Marty! The Brooklyn BP on being overlooked, and what he plans to do about it, does a very good job of sketching the BP's moods, obsessions, and style, and provides useful contrast between Markowitz's approach and those of his counterparts.

The author, one Edward-Isaac Dovere, is best known to Atlantic Yards watchers as the Executive Editor of Forest City Ratner's promotional Brooklyn Standard, but his profile is not something that would've appeared in a puffy publication that portrayed Bruce Ratner as having a "humble, winsome" manner.

The AY albatross

Dovere describes an African-American crowd cheering Markowitz at the opening of "Notorious," the sanitized Notorious B.I.G. biopic, then moves on to the BP's albatross:
Across the street and up a few blocks, the dream that for so long has consumed his day job remains unfinished, barely started. If Markowitz is remembered for nothing else, he will be for Atlantic Yards, the multi-building project that is still scheduled to one day stand here, centered on an arena for the relocated Nets. Deservedly so: bringing a professional basketball team to Brooklyn was an idea that Markowitz first proposed on the campaign trail in 2001, and, the story goes, shortly after winning he convinced Bruce Ratner to buy the Nets for the purpose of moving them to a new home built over the old rail yards along Atlantic Avenue.

No, not over the rail yards.

The future of both AY and Markowitz's own office are shadowed by the recession, and the BP is not without emotions:
He is clearly annoyed by the people who fought the project through the flush years when construction would have been easier, and stands by the old talking points—that it would spur economic development, bring pride to Brooklyn, create 1,000 units of affordable housing and be a home for events even as significant as a Democratic Convention—which come to him as easily now as they ever did, though not with the same enthusiasm he once had.

If Markowitz has lowered the affordable housing estimate to 1000 from 2250, that would be news, but maybe he was just freestyling.

The blight comes in

Dovere writes:
At best, Atlantic Yards will be stalled and scaled back further. At worst, the blight which Markowitz and others decreed to help pave the way for eminent domain seizures will actually come to pass, an abandoned hole in the neighborhood without either the mega-project or the original businesses that were displaced.

Well, if blight is vacant lots, as the state asserts, then a lot more blight has already been created.

Not at the table

Dovere writes:
Asked whether Atlantic Yards will actually happen, he sighs.

“I don’t have doubts,” he says. “But listen, I’m not at the table.”

To Markowitz, Atlantic Yards has and remains an act of faith. The power lies with the city and the state.

And an act of froth--Dovere missed the most emblematic AY moment in recent months, when Markowitz declaimed defensively at "Brooklyn Day."

The shadows, and the facts

While Markowitz acknowledges his tendency to clown, "for Brooklyn,” Dovere is astute enough to recognize the "darkness" and vindictiveness behind the jocularity.

He writes:
And he is angry. For all the positive coverage he receives, he has also been battered in the press, mostly over Atlantic Yards, but also over the private fundraising he has done on behalf of the nonprofit run out of Borough Hall used to promote his Brooklyn agenda and for the famous summer concert series he has hosted since he was a state senator.

The attacks have gotten to him. A story circulated about his wife taking too many Takashi Murakami placemats from a party at the Brooklyn Museum of Art last April is “a crock of shit.” Claims that he misappropriated funds for his nonprofits are “bullshit.”

Hold on. The Brooklyn Paper has battered him over Atlantic Yards, as have a lot of those new media blog thingies, but the dailies--the Post and the Daily News--have stuck strictly to the issue of his nonprofits.

As for the "crock of shit," Markowitz acknowledged to the Daily News that "It's a little true."

Regarding his nonprofits, the issue isn't whether he misappropriated funds, it's whether it's appropriate--even if legal--to shape contracts for sums just under the threshold to trigger city oversight and to accept money from companies needing the BP's support.

Real grievances

Markowitz does have reasons for his grievances, suggesting that questions over the financies his nonprofit overshadow worthy initiatives like the Brooklyn Book Festival. (Solution: find new sponsors?)

And he portrays Mayor Mike Bloomberg bent on shrinking his office, pointedly refraining from endorsing Bloomberg for a third term.

What's a BP for?

Dovere points out that, "aside from championing redevelopment and rezonings, [Markowitz] has not distinguished himself as an out-front leader on anything divisive in politics and policy" and notes Markowitz doesn't yet have a specific agenda for the third term he inevitably will win, thanks to the repeal of term limits. (Indeed, Markowitz had trouble defining that agenda to the Brooklyn Paper.)

City Council Member Bill de Blasio, who's no longer running for BP but instead for Public Advocate, tells Dovere that his planned platform--that the BP should push back more against development (a bit late for him, right?)--is no longer operative.

Still, Dovere allows that there's a dispute over whether Brooklyn needs big projects or some other kind of development.

And he notes that, in contrast to Bronx BP Adolfo Carrión, who put most of his capital money toward affordable housing, Markowitz spreads his office's bucks around.

Dovere writes:
“As Borough President I will make sure that Brooklyn never takes a back seat to Manhattan or any other part of New York City,” [Markowitz] wrote in his statement for the Campaign Finance Board’s voter guide in 2001, and indeed, admits his opponent in that race, Ken Fisher, “Marty has been exactly the borough president that he promised he would be—a very visible symbol and face of a borough on the rise.”

What he has not been is a leader on any major policy initiative or distinct focus besides new building projects and the economic development which has flowed from these as well as the various events and promotions he has sponsored. Nor has Markowitz ever been much interested in overseeing a policy shop churning out the kind of data-driven reports which have become a specialty for Scott Stringer’s office and helped the Manhattan borough president create another distinct model for the position.

Brooklyn and its leaders

The profile raises a lot of questions, and they turn back, in a way, to Atlantic Yards. Brooklyn, arena supporters say, needs a team to be major league, though Oklahoma City, which has a team, surely is no Brooklyn.

Brooklyn could use a borough-wide daily newspaper, too. And a political system that would give the borough some more autonomy, leading to a BP with real clout, accountability, and a willingness to withstand vigorous political challenge.

Instead we get an energetic, entertaining, and enigmatic "visible symbol," who manages to be "on the block"(as his promotional publication Brooklyn!! puts it) a heck of a lot. At one point that was enough, but the increasingly testy Markowitz, who's "not at the table," has endured long enough to experience the limits of his position.

The Yankees get their bonds, but questions remain

The New York Yankees, as expected, got the tax-exempt bonds they sought, with one abstention among the board members of the New York City Industrial Development Agency, that of Comptroller William Thompson's representative. The New York Mets got their bonds, with no debate. Here's coverage in the Times.

Questions pending

I wasn't there, but Good Jobs New York's Allison Lack was, and she observed:
Representatives for the Yankees and Mets each made presentations during the hearing, which goes against standard IDA practice. By the IDA’s own rules, comments in favor or opposition to projects are limited to public hearings (one took place yesterday). At all the IDA board meetings Good Jobs New York has attended over the years, never before have we seen project applicants speak in favor of their projects during these meetings.

IDA staff presented a summary of public comments on the projects and responded to these. However, a number of concerns and questions remain unanswered, Among the many:

What will be the average wage of the part-time and contract workers, as these will be the majority of additional new employees at Yankee Stadium?

What accounts for the threefold increase of estimated tax benefits from the construction and operation of Yankee stadium since the project was initially approved in 2006? And what accounts for the large increase for the Mets’ Stadium? These figures are key in the city’s claim that fiscal benefits from these projects outweigh public costs, yet they remain a mystery.

What are the costs and benefits of these additional financings?

Why Frank Gehry is Brett Yormark's problem (and other FAQs)

The murky news that Atlantic Yards architect Frank Gehry's role has receded, and that an arena would be designed with cost-cutting in mind from its previous $950 million price tag, raises several questions, most of which can be answered only with circumstantial or incomplete evidence.

But that evidence, so far, hints at even more trouble for the project, at least if developer Forest City Ratner can't use Gehry to sell suites and sponsorships.

So, what happened with Gehry?

According to two news reports, though without named sources, Gehry laid off his staffers working on Atlantic Yards. (One commenter asserted the staffers were merely shifted.) One report said it was because he hadn't been paid.

Is Gehry off the project?

According to Forest City Ratner, no.

Is he on the project?

It depends on what we mean by "on." Gehry may still be providing guidance on his designs, but the arena may be out of his hands by now. Forest City Ratner won't specify what his role is.

Is Gehry's relationship with Forest City Ratner strained?

Possibly. He's been more cooperative in the past; last May, when the flagship office tower was redesigned, Gehry dutifully declared:
The design for Miss Brooklyn, which we now call Building One, has become very special for me.

Gehry hasn't said anything similar, defending his current role. When it was reported that landscape architect Laurie Olin was off the project, both Olin and the developer said he was on sabbatical but the relationship was fine.

Then, why hasn't Gehry complained about his (apparent) diminished role?

Unclear. Maybe he's waiting to get paid. Maybe he's expecting to have more of a role. Maybe a contract clause keeps him from speaking out. He said three years ago, "I think if it got out of whack with my own principles, I would walk away."

What's wrong with value engineering to reduce costs?

Nothing. Gehry recognized the issue three years ago. But it may be a little late in the process now. And it may change the design of the arena significantly.

Would it still be a Frank Gehry arena?

Well, surely his name would be on it. The Wall Street Journal reported that "Gehry has overseen the design of nearly every element of the planned Brooklyn arena." So maybe it depends on what changes are made.

How much cost-cutting at the arena is possible?

Unclear. Maybe not so much.

Why is Brooklyn Borough President Marty Markowitz weighing in on arena architecture, saying Forest City Ratner should pursue economies?

Well, likely to provide some political cover for changes the developer wants to make. Design is not exactly the BP's responsibility. And he has previously hailed Gehry's role.

What did Markowitz mean when he said Brooklyn-style stoops might be incorporated in Atlantic Yards towers?

Unless he was misquoted, the only thing he meant is that he really doesn't understand architecture. (Graphic from DDDB.)

Is the cost of the arena an issue to the government?

Not as much as it is to the developer. However, as I contended, there's no way the land underneath the arena could be valued high enough for the foregone taxes to be sufficient to match the PILOTs, or payments in lieu of taxes, needed to pay off a $950 million arena. So public officials might have nudged FCR for a less costly arena, as well.

Is the architecture the Empire State Development Corporation's (ESDC) problem?

Well, ESDC spokesman Warner Johnston said, "The aesthetic choices are Forest City Ratner's."

Really? Aren't there Design Guidelines?

Yes. According to page 6 of the ESDC's Modified General Project Plan:
Each element would be designed pursuant to the comprehensive design and open space guidelines developed by ESDC in consultation with the City and attached hereto as Exhibit B (collectively, as the same may be amended in accordance with the terms thereof, the "Design Guidelines"), which Design Guidelines are being approved in connection with this General Project Plan.

Didn't Gehry's office prepare those Design Guidelines?

Yup.

What do the Design Guidelines say, for example, about the arena?

Here's part of it:
The street walls of the Arena shall include glass elements having a minimum width of 100 feet and a minimum surface area of 5,000 square feet on each of the Atlantic Avenue and the Flatbush Avenue street walls.

... The Arena façade shall include transparent elements in the Atlantic Avenue and Flatbush Avenue street walls allowing for views into the arena concourse from the adjoining sidewalks.

But isn't Markowitz saying there should be less glass?

Yes. Those Design Guidelines can apparently be amended.

Is there another reason for getting rid of glass?

I think it would remove a security risk evinced at the Prudential Center in Newark.

If Gehry is gone or his role diminished, shouldn't Forest City Ratner be worried?

Well, Gehry was a selling point for a B1 anchor office tenant, for the market-rate housing, and for the arena.

Why is this a problem for New Jersey Nets CEO Brett Yormark?

Well, presumably when Barclays Capital bought arena naming rights, they wanted their name attached to a building designed by the world's most famous architect. Ditto for the sponsors who've already signed on. Those who've bought luxury suites, designed by Gehry, presumably factored Gehry's role into the cost. The unsold suites should be tougher to sell, and it should be harder to attract additional sponsors. And, depending on how things unfold, some who've already signed on may look for an escape clause.

Are elected officials more wary of Atlantic Yards?

It seems so. Mayor Mike Bloomberg yesterday, in his State of the City Address, cited Coney Island, Willets Point, and Hunters Point South as important projects. Atlantic Yards he ignored.

What may be bigger news this week?

The hint that Forest City Ratner may be trying to chintz the MTA out of an upgraded railyard.

At IDA hearing, Brodsky warns of "complete breakdown of the issuance of public debt"

An array of people, notably Assemblyman Richard Brodsky, testified yesterday at a hearing of the New York City Industrial Development Agency (IDA) on additional tax-exempt bonds for the New York Yankees and New York Mets.

Neil deMause has the highlights in the Village Voice blog, quoting Brodsky: "This event and this vote and this hurried process is only greater evidence of the complete breakdown of the issuance of public debt in New York State."

The IDA is scheduled to vote today. (Here's coverage from the Times and Newsday.)

Good Jobs New York has collected testimony. Michael D.D. White of Noticing New York offers observations on the scene--good government groups, construction workers, Bronx supporters of the Yankees--and his own testimony, questioning the legitimacy of the process and observing:
Financing additional luxuries at the stadiums induces no additional public benefit. It is only a way heap more financial benefit on those already flush with benefit.

Columnist Neil Best of Newsday shrugs, suggesting the tax-exempt bonds are "hardly a handout." (The Daily News, in an editorial, praises the deal.)

"Privately financed"?

Good Jobs New York testified on the issue that led to heated colloquys Wednesday between Brodsky, NYC IDA Chairman Seth Pinsky, and Yankees President Randy Levine:
Despite claims from the city that these projects are “privately financed,” the teams have gotten tax-free financing, grants, tax-breaks, the teams won’t pay rent, and the Yankees got parkland for the new stadium for free. Good Jobs New York estimates taxpayers have already invested over $1 billion for the new Yankee Stadium, and almost half a billion for the Mets’ new stadium.

If these projects were indeed privately financed – as City Hall has relentlessly insisted this week - why did the city, on the Yankees and Mets’ behalf, spend significant time and resources lobbying the Internal Revenue Service to allow the IDA to issue tax-free bonds for the project? Getting special permission from the IRS for a public authority to issue a financial package that consists of tax-exempt bonds, a variety of tax breaks, and significant capital costs to a city agency would fail to meet any definition of a private transaction.

A Times editorial--and another

Oh, and deMause notes a Times editorial yesterday:
Hating on the New York Yankees stadium deal after the fact is the new black. The The New York Times - which called the Yanks and Mets deals "a steal" compared to past city proposals back in 2005 - today calls on its editorial page for the latest round of Yankees bonds to be rejected.

Regarding Atlantic Yards, as I've pointed out, the Times has gone in the other direction, conveniently forgetting that it once opposed $200 million in city and state direct subsidies.

White concludes similarly:
Now all we need is for the Times to get similarly responsible on a bunch of other city development issues. The first priority for their next move? They should take up the issues that affect Forest City Ratner, their real estate partner: the Atlantic Yards megadevelopment.

The Times on "pay-to-play," but not the FCR/Silver version

On Wednesday, the New York Times editorialized on the charges involving New Mexico Gov. Bill Richardson, who, beyond the alleged scandal, has received a lot of money from developer Forest City Enterprises.

Headlined The Price of Pay-to-Play, it began:
We’re sure that he isn’t enjoying it, but Gov. Bill Richardson of New Mexico is offering statehouses across the nation a needed lesson in “pay-to-play” contamination. Mr. Richardson backed away from the chance to run the Commerce Department as federal prosecutors investigate whether his aides steered a lucrative state contract to a generous political donor.

...Pay-to-play is a staple of bad government. Proving an actual quid pro quo that can be prosecuted can be difficult, especially under porous state laws. But appearances — the fawning recipient, the deep-pocketed donor — taint all politicians. And pleas of “I didn’t know,” or “everyone else does it” aren’t fit for middle-schoolers let alone elected leaders.

The AY example

So, how about editorializing about the appearance of Forest City Ratner giving $58,420 to a committee controlled by Assembly Speaker Sheldon Silver, far more than could be given to any individual candidate?

And how about editorializing--well, a news story first would help--about Forest City Ratner's bailout of ACORN, its partner on the Atlantic Yards project?

Is arena value engineering also a security upgrade? Marty drops hint

From today's New York Daily News, in an article headlined Brooklyn Borough President Marty Markowitz: Ratchet down Yards arena:
The glitzy, world-class pro basketball arena slated for the Atlantic Yards project is now likely to be merely "functional," Borough President Marty Markowitz told the Daily News Wednesday.

In his strongest language yet, Markowitz called on developer Forest City Ratner to eliminate the costly flourishes and glassy facade of the Frank Gehry-designed NBA basketball arena in the face of an economic meltdown.

Maybe that that would make the AY arena more like Madison Square Garden and less like Newark's Prudential Center, and thus not pose dangers that require street closings.

And, as NLG points out, now Forest City Ratner is treating all the changes as Markowitz's idea.

Flashback, 2003

Remember what Markowitz said when the project was announced 12/10/03:
“We are on the threshold of restoring Brooklyn to its rightful place on the national sports stage. Brooklyn, as everyone knows, is a world-class city, and it deserves a world class team playing in a world class arena designed by a world-class architect.”

Are PILOTs a subsidy? At Assembly hearing, Brodsky goes around and around with reps from city, Yankees

Yesterday’s hastily-called Assembly hearing on the New York Yankees’ request for some $370 million in additional tax-exempt bonds featured antagonists who disagree fundamentally and easily reach the edge (and beyond) of civility: Assemblyman Richard Brodsky vs. New York City Industrial Development Agency Chairman Seth Pinsky and New York Yankees President Randy Levine, both present only via subpoena.

Levine, who has less reason to maintain comity, declared the Assemblyman "worthy of the grandstanding hall of fame," while Pinsky questioned "deliberately inflammatory and misleading language" used by stadium critics. Brodsky, dialing back on the bombast, pressed steadily for answers.

I’ll defer to Neil deMause’s excellent Village Voice wrap-up, which details some stretchers from both sides but concludes that the IDA has leverage to force the Yankees to accept more-expensive taxable bonds (also see coverage in the Times) and focus below on the overall financing plan, similar to that planned for the Atlantic Yards arena, which involves a debatable use of city property taxes to pay for construction.

Good Jobs New York, which cited "a mirage of benefits" at the stadium, commented on the justification for the new bonds, "To get funding for the project, the Yankees needed to threaten to leave New York. Many sports experts question the validity of this threat and NYC officials admit that they didn’t independently verify the Yankees claim. Considering the new Stadium is on track to open this April, the chance the team would leave is highly unlikely, especially since the Yankees made a legally binding commitment in 2006 to remain in The Bronx."
(Emphasis in original)

Tax-assessments gamed?

Given the focus on matters before an IDA hearing this morning (and scheduled vote Friday), the hearing didn’t address whether the tax assessments for the land underneath the stadium were gamed, a big issue for Brodsky (and Rep. Dennis Kucinich).

Brodsky declared, “Other matters, including the concerns about the New York City Department of Finance’s artificial manipulation of property tax assessments for the Yankee Stadium deal, are the subject of continuing interest.”

PILOTs and subsidies, Yankees vs. Nets

Second, as deMause details, the big news was the city Independent Budget Office upped its estimate of project subsidies significantly, to $854.7 million. Note that the IBO did not say that the PILOTs (payments in lieu of taxes) deal with the Yankees represents a cost to the city for the $1 billion-plus in foregone property taxes. (deMause disagrees, calculating $416.6 million in foregone taxes.) IBO does calculates the public costs for the first round of Yankees tax-exempt financing to be $205.2 million and the new round $72 million, with some 97% of that cost falling on federal taxpayers--which is why Kucinich is interested.

Nor did IBO say the PILOTs plan for the Atlantic Yards arena represents a full subsidy, though many AY critics think so. Brodsky hasn't opined on the issue, but if he's consistent, it seems he'd have to maintain the same posture that he has in the case of the Yankees.

There are some significant differences, however. Notably, because the land underneath the arena would be tax-exempt, and part of it is the MTA’s Vanderbilt Yard, “the MTA has an incentive to make a deal that maintains the tax exemption in order to maximize the price it receives for the development rights,” the IBO said in 2005.

It didn’t exactly happen, given that the MTA accepted a cash bid less than half the appraised value.

Demi-hearing

The PILOTs issue was encapsulated in the moments beforehand, where Brodsky (left) took questions from a group of reporters--who, as deMause points out, were far more interested than when the Yankees deal began.

(Photos from Village Voice)

Q: Why are you counting in the subsidy the amount of money the Yankees are paying?

RB: The city, in sworn documents to the IRS, said the city is choosing to use its property taxes to build and construct and operate Yankee Stadium. Now that’s not me.

Q: Wouldn’t there be no property taxes to pay, if there wasn’t this project?

RB: The Yankees are not constitutionally, or by God-given right, exempt from paying taxes. Like every other taxpayer, they have to pay taxes.

Q: But just to play devil’s advocate, they were allowed to do this by the IDA and the IRS.

RB: They were allowed to do it by the IDA, and I disagree with that decision. But that’s a choice, not an inevitability. The Yankees are a hugely profitable business. Someone explain to me why every other business in the city pays taxes, and the Yankees say they don’t have to. That’s not fair.

It may not be fair, but it's not true that every other business in the city pays taxes. A lot of companies have deals of some sort.

I’m going to read the words the City of New York used in writing, in order to get these bonds approved: “The city has determined to use its property taxes to finance the construction and operation of the stadium.” Okay? That’s not Richard Brodsky. That’s New York City... swearing to the IRS.

Q: Given the fact that mayor appoints the majority of IDA members, what realistically do you hope to achieve here?

RB: To tell the truth, to let the truth out and see what power it has. Look, the mayor’s already backed off on the luxury suite. Things happen.

Back to the future

The testimony reprised but expanded on testimony regarding PILOTs at a hearing Kucinich held in October.

“Congressman, the private payments are the taxes they owe,” Brodsky said at the time. “It’s as though you built an extension on the house and you said to the taxing authority: send my payments to the bank to pay off the mortgage. The notion that this is being paid for by the Yankees is delusional.”

Levine responded, “Mr. Brodsky, he really knows better. We don’t pay taxes now. We’re a tenant. We don’t pay taxes at the old Yankee Stadium. As I said before, there would not have been a new stadium, unless this mechanism was put into place.”

The new facility will be owned by a city entity, and “the money we will pay this entity will go to service the bonds.” There’s no money coming out of the city treasury that could go to schools or hospitals, he said. (He left out the various infrastructure improvements and other costs.)

Yesterday, city officials handed out supportive editorials from the New York Post and the New York Observer questioning Brodsky's motives.

Levine’s testimony

Levine, at left with Pinsky, stated:
Let me be very clear. The New York Yankees, not the taxpayers, are paying for the construction and operations of the new stadium. All of the money to finance the construction of the new stadium is from the Yankees and private investors. Those who keep repeating that the city is paying are either deliberately misrepresenting the facts or simply do not understand the financial mechanism that is available to build large-scale projects.

The mechanism is this: an entity controlled by the city issues bonds to build the new stadium. Those bonds are purchased by private investors, not the taxpayers. The Yankees have a long-term lease with the city entity that owns the building. That city entity doesn’t pay any taxes, no real property taxes. The Yankees make a payment in lieu of real estate taxes called a PILOT and this amount, and only this, and nothing additional from the government or the taxpayers pays back the private bondholders. Since the city entity and not the Yankees owns the stadium, this use of PILOTs does not cost the city anything. Zilch. The city does not lose anything, because city entities do not pay property taxes. The city does not collect property taxes at the present Yankee Stadium....

And without this financing, as members of the committee know... the Yankees would not have built a new stadium and thus no new taxes would have ever been received, at all.

In addition, the city saves money, because in the old Yankee Stadium, the city was responsible for tens of millions of dollars in maintenance costs... In the new stadium, the Yankees have that obligation.

This structure is better for New York City than others commonly used for stadium deals. And I submit, if you go to colleagues in all the other 49 states that have built arenas or stadia or any sports facilities and you said, Can I have the deal the Yankees have with the IDA or the deal that they put forward? 49 would say they’d rather have the deal that the city negotiated with the Yankees. In those stadium cases, direct taxes otherwise collected by municipalities were used to pay back the debt on stadium bonds, sales taxes, property taxes, rental taxes, income taxes, car rental taxes. In the Yankees deal, the taxpayers lose nothing that they would otherwise get. No money is diverted from the city’s capital or operating budget that will affect city operation or the building of schools, highways, or any other capital projects.

Moreover, in a very difficult economic climate, the new stadium projects creates jobs and is a stimulus for the local economy. For example, we have already employed 6000+ union construction workers during a period of reduced economic activity.

A good portion of the hearing room at 250 Broadway was occupied by construction workers.

Brodsky vs. Pinsky

Brodsky was a mix of prosecutorial, professorial, and faux-quizzical. At one point, he described himself as “just a country lawyer from Greenburgh,” even though, as his antagonists pointed out, he represents a wealthy suburban constituency.

Pinsky was resolute, but periodically snippy. At one point, as if aping Brodsky's faux self-deprecating description, he protested, “Look, I’m new to this game, I’m a simple rabbi’s son from the Midwest.” (He surely remembered the hearing last July, when Brodsky, a fellow Harvard Law School graduate of an earlier vintage, denigrated his legal analysis.)

RB: Now, on the merits, Mr. Pinsky, you’re an attorney, right?

SP: I am, but I’m not here in my capacity as being an attorney.

RB: Are you familiar with the applications made by the IDA to the Internal Revenue Service?

SP: Yes, I am.

RB: Do you recall representations made by the IRS by the IDA as to whether or not the money that is going to repay bondholders is taxpayer money or not taxpayer money?

SP: The substance of your question is--

RB: No, no--

SP: --No, I’m going to answer my question the way I want to answer it. You asked the question; I heard what you asked.

RB: Then answer if you want but don’t characterize the substance--

SP: That’s fine, I’m telling you that I think--I don’t think you can tell me what to think--I think that the substance of your question is: is the PILOT structure that we described a net payment from the city to--

RB: --No, no.

SP: --I’m going to answer it this way anyway. Is it a payment from the city to the IRS... The facts are these, the way this structure works is that, in order to make the bonds that are financing the stadium tax-exempt, they have to be backed by payments of generally applicable taxes or payments in lieu of generally applicable taxes, which is the case here, PILOTs, so the simple answer to your question is yes. The payments are payments in lieu of taxes to the city. And those payments are in turn being used to pay the bondholders. But I think that it’s very important to look at effectively what is happening here.

RB: Can you explain 'effectively,' so I understand what you mean by 'effectively'?

SP: Why don’t you let me finish and you can tell me if you don’t understand. Effectively what is happening here is that the city currently into its general funds receives nothing from the New York Yankees and the stadium. We also receive nothing from the property where new stadium is being constructed. The reason we don’t at the current stadium is that it’s city owned. The reason we don’t at the new stadium is that it used to be parkland. After the project is completed, we will be paid PILOTs… by the Yankees. Those payments will not go to the city’s general fund, but instead will go to repay the bonds. So effectively, the city will be in exactly the same position with respect to real estate taxes, both before and after this transaction, that is, it has not received money in real estate taxes from the Yankees and will not receive money from real estate taxes from the Yankees.

What is different between the current situation and the situation at the new stadium is that, every year, the Yankees are now writing a giant check, which I think this year is going to total over 50 million dollars, and that check is the sole security for the payment of the bonds.

RB: Let me turn to the effective part of your analysis--

SP: Absolutely--

RB: --as opposed to the legal part. The Yankees don’t pay taxes now is what I heard you say, therefore, one, they should never pay taxes?

SP: No, that’s not the argument. The argument is that, if the Yankees don’t pay taxes now and don’t pay taxes in the future, but--excuse me, if the city does not receive net taxes from the Yankees now and the city does not receive net taxes in the future, then the city is in the same position, we are no worse off than we were. If the Yankees, though, are making a payment now and didn’t make a payment before and that payment is the sole security for the bonds that were issued, then effectively the Yankees are paying for a new stadium. The city is no worse off. And let me just note for the record that I’m sure your constituents in Greenburgh appreciate very much your zealous protection of the city’s real estate taxes.

RB: That was irony, right?

SP: You can define it however you wish. And also if I can note for the record--

RB: Mr. Pinsky, no, no, no--

SP: --that the City Council was aware of this structure and approved this structure.

RB: Now, I just want to, having understood the effective part, I want to understand the legal part. In the IDA’s sworn statements to the IRS, they say, quote, “The city has determined to use its property taxes, in this case PILOTs, to finance the construction and operation of the stadium.” Is that an accurate statement?

SP: Absolutely. It’s how we’ve described this from the beginning.

RB: So your effective analysis differs somewhat from your legal analysis.

SP: You can characterize it however you want, I think I’ve characterized it multiple times--

RB: You believe your legal analysis differs from your effective analysis?

SP: I stand with my characterization, thank you.

RB: I understand your characterization and I accept it as that. Now, here’s a separate question: Does your legal analysis differ from your effective analysis?

SP: I’m not making a legal analysis. You can read the IRS letter as well as I can; we’ve discussed this on multiple occasions in the past.

RB: Thank you. Then I have concluded that statements the city made sworn to the IRS differ dramatically from what has been said publicly and that, as the city says, these are tax dollars that are paying for the construction and operations.

SP: Then I disagree with you.

Levine, earthy and not without bluster--"I have a lot to say," he warned at the outset--tried to intervene.

RL: If I can--

RB: Mr. Levine, not yet. You’ll get all the opportunity you want.

RL: But it’s very relevant.

RB: Mr. Levine, not yet, thank you.

RL: I forgot, you’re in total control. I apologize, Mr. Chairman.

RB: If I was in total control, Mr. Levine, this hearing would’ve started at 10:45.

There were some groans from the audience. The hearing actually started at 10 a.m. What Brodsky meant is that Levine and Pinsky were due at 10:45 a.m., but were a few minutes late.

Brodsky vs. Levine

Brodsky brought up the issue later in the hearing.

RB: Mr. Levine, Let me just explain the concern about jobs… 22 permanent jobs [actually: 57] is an extraordinarily low number of permanent jobs with respect to a subsidy of the kind we’re talking about. The 1000 or 1300... part-time jobs is relevant. You’ve not heard a peep from me about the virtue and value of those jobs being small. But when you measure it against the subsidy, it becomes an extraordinarily out of balance number. That’s the fundamental concern of the committee.

RL: Mr. Chairman, I don’t believe we’re getting any subsidy.

RB: I don’t interrupt you... Look, I’m going to return to this question, because I had a colloquy with Mr. Pinsky about it, but, understand, that if we’re right, and you happen to be wrong, and it’s happened.... If you’re wrong, then the amount of taxpayer dollars that are going to Yankee Stadium are as much as 5 or 50 or 500 million dollars a job. If you don’t agree, we’ll get to that in a minute. Please understand that if our reading of legal documents is correct, the subsidy is extraordinary at a time of crisis. Now I have two other brief areas--

($500M a job? His math was a little off.)

RL: May I respond?

RB: Please.

RL: That hypothetical is like me saying if I could fly the next space shuttle mission, I would go to the moon. I’ve already testified, very clearly, and have been saying it, that we don’t believe there’s a subsidy, but, more importantly, in reality, it’s clear to the record, if this financing mechanism wasn’t in place, there would not be a new stadium. There would not be any taxes paid to anybody. And today nobody pays taxes… so we’re dealing with a whole phantom situation. Now, I don’t believe we’re getting any subsidy, I think we’re paying for the construction and maintenance of this entire stadium, and I would also--

RB: --Let me interrupt, because I’m going to read you the document and want your comment on it. Fair enough. This is the sworn basis for the IRS granting permission to issue the bonds. This is a quote: “The city has determined to use its property taxes, in this cases, PILOTs, to finance the construction and operation of the stadium.” That is dramatically different than what you just said.

RL: It’s totally consistent. What I said and have said is that the Yankees are making a PILOT payment, and the city... is using those payments to pay for the construction of the stadium. Those payments originated with New York Yankees and would have not existed.... There would’ve been no new stadium whatsover if this financing arrangement wasn’t in place.

RB: Do Yankees have obligation to pay taxes like everybody else?

RL: We pay a lot of taxes. We pay taxes up and down, all kinds of taxes. But tenants, Mr. Chairman, don’t pay property taxes.

RB: But under an IDA deal, they pay PILOTs, which are legally taxes, aren’t they, Mr. Levine?

RL: Let me say it again, I’m not a bond expert, I’m not a tax expert. So I defer to Mr. Pinksy and to all of the people who are my tax and bond attorneys. The Yankees are making a PILOT payment which goes to the city, which is then used to pay for the construction of the stadium. If this financing mechanism was not in place, there would be no stadium that’s built. There would be no money that’s going to anybody. The city doesn’t receive anything now. The city is the owner of the property, so they wouldn’t be paying property taxes at all.


RB: I respectfully want you to understand that that explanation is inconsistent with the legal basis under which you got the bonds.

RL: And I totally disagree with you.

Then again, he's not a tax expert. Maybe the next hearing will feature a tax expert or two.

Is Newark dead? Devils owner wants to negotiate regarding Nets preseason games at the Prudential Center

After New Jersey Nets CEO Brett Yormark stated that, contrary to a report from the day before, the team was not considering playing preseason games at the Prudential Center in Newark, a commenter on this blog yesterday asked: "Is Newark really dead as Yormark says or is this just part of a negotiating ploy to get a better deal?"

Well, in Day 3 of the saga, the Star-Ledger reported last night that New Jersey Devils owner Jeff Vanderbeek told the Nets "that he had every intention of making a proposal to host Nets preseason games at the Prudential Center and was surprised that the team abruptly stopped negotiations."

The dispute was apparently over money, with the Nets asking Vanderbeek's Devils to guarantee a gate count typical in the regular season, even though preseason games, as Vanderbeek wrote, "typically play to half the audience of a regular-season game."

Middle ground?

There must be some middle ground in this dispute over price. After all, the Nets, like other NBA teams (and probably hockey teams, too), routinely inflate their attendance.

And, more importantly, the Nets this season are giving tickets away. For free. The Nets need more fan revenue and fan support, and the Izod Center clearly is no longer "the perfect setting for us right now," as Yormark said six weeks ago. Vanderbeek (and the city of Newark) need to get more action in the new arena.

(A petition drive has begun by Nets fans who pledge to buy tickets if the team plays at The Rock.)

That fact that they seem to be negotiating via the Star-Ledger doesn't exactly suggest harmony. But it's in both sides' interest to work something out.

The Power Broker, 2009: Mayor Mike Bloomberg

Last night, I and a host of others attended an hour-long, $18 session (lecture + Q&A) at the New-York Historical Society titled The Mark of Robert Moses, one of three events on the shapers of New York featuring author Robert Caro.

I'd heard most of Caro's anecdotes about writing The Power Broker, so what struck me was his basic premises: he began his investigation into Moses by tracing the influence of an unelected official who most saw as above politics, and he reminded us--after discussing the displacement caused by Moses's Cross-Bronx Expressway--that "it's important to understand political power because it shapes all our lives."

The Power Broker, 2009

OK, so, if Caro--who's essentially immersed in his Lyndon Johnson saga--isn't going to talk about contemporary New York, let's go to Wayne Barrett, who connects the dots in this week's Village Voice, contending that Mayor Mike Bloomberg has promoted Caroline Kennedy's anointment as Senator for several reasons, including an effort to neutralize President Barack Obama's role in the 2009 mayoral race.

In Bloomberg Maneuvers to Crown a Kennedy, Barrett further explains how Gov. David Paterson acceded to Bloomberg's effort to overturn and extend term limits, how Deputy Mayor Kevin Sheekey skirts ethics laws to promote Kennedy's candidacy, and Superintendent of Schools Joel Klein also shills for her.

The article, which Henry Stern of NY Civic also salutes, should've been handed out last night. Stern writes:
Governor Paterson is poised to appoint Caroline Kennedy to the position, which will be first major result of the Bloomberg-Paterson alliance, a union of unequals, based on incumbency and mutual ambition.

Reasons for concern

But maybe she's not such a great candidate. Barrett writes:
The dissembling that misrepresents Kennedy's DOE service has been extended to every phase of her life. She told the Times: "I've written seven books—two on the Constitution, two on American politics." But she's penned only two (both with a co-author who is, unlike her, a legal scholar), and edited five others that were collections of everything from her mother's favorite poems to other writers' essays about political courage. She has repeatedly referred to herself as a lawyer in her recent appearances, though she's never practiced law and even let her registration with the Bar Association lapse for years.

Though she wrote in A Patriot's Handbook that "the day I feel most proud to be an American is not the Fourth of July, but Election Day," she's missed half of the elections since 1988.

Paterson's choice

Barrett concludes:
The campaign that she and Bloomberg have conducted for this appointment is a campaign of prevarication. Its assumption is that David Paterson, who was first installed in the Senate two decades ago by a Harlem-based Democratic county committee when the incumbent died, and who rose to governor when another incumbent quit in disgrace, is too weak and uneasy about the challenge that awaits him in 2010 to do anything but knuckle under to their cabal. They believe Paterson will see Bloomberg and Kennedy's political marriage as a lucrative source of potential contributions for his own campaign, though Kennedy has given almost as little to New York Democrats as she has to its public school children, and Bloomberg has only bankrolled Republicans.

While they would never have mounted a Kennedy campaign in a normal election year, with a candidate so raw and uncertain, they clearly see Paterson's appointment process as tailor-made. It is, after all, precisely the kind of democracy Bloomberg likes best: a decision made by one man—or, in the case of term limits, by a small and vulnerable council—in the sort of moment when the power of titans always seems to prevail.

Back to term limits

In the New York Times yesterday, columnist Jim Dwyer connected a few dots, writing:
How handy, then, to have powerful allies, like the developer, Jerry I. Speyer and the lobbyist, Howard Rubenstein, to convince other influential people that term limits will deprive the city of an essential leader during an era of financial crisis.

Mr. Speyer is building Yankee Stadium. Mr. Rubenstein represents the Yankees. Their stated case for Mr. Bloomberg never rested on the mayor’s support for the stadium, but on his qualities as a manager and their view that he would be the most capable steward of the city during hard economic times.

(Tom Robbins of the Village Voice connected those dots last week. At least someone at the Times is reading the Voice, which, while hollowed by losses, still has a couple of reporters who know how power works in New York City.)

The p.r. firm

Barrett adds:
Should Paterson choose Kennedy, he is said to be considering signing up with Knickerbocker SKD, the political consultants already tied to Bloomberg, Kennedy, Chuck Schumer, and Christine Quinn, all of whom are up for re-election this year or next.

Remember, Knickerbocker SKD has produced Forest City Ratner's fliers and worked for pro-AY candidate Tracy Boyland. Examinations of power in New York City often lead to developers.

BrooklynSpeaks to Paterson: stop street closures, halt demolition, and come clean on Atlantic Yards timetables

Complaining that the preliminary and stalled work on Atlantic Yards has created blight and disruption, the sponsors of BrooklynSpeaks, the "mend-it-don't-end-it" group of Atlantic Yards critics, have asked Governor David Paterson to intervene.

In a letter sent December 31 (and posted January 9), before the recent flap about a discounted arena, they asked that Paterson ensure that the city, state, and developer Forest City Ratner halt further street closures, halt demolition of viable vacant buildings and repurpose them, return the Carlton Avenue Bridge to service, and create interim public open space as play areas or community gardens. (Full text below)

Not all of that may be practical; the bridge seems tied to reconstruction of the Vanderbilt Yard, which is on indefinite hold, and state and city officials have not clarified the timetable.

Clarity on construction

Perhaps that's why, in the letter, BrooklynSpeaks also asked Paterson to make available "current expected and worst-case construction timelines and release updated construction schedules."

That would be a significant shift, given that the project was approved with an anticipated 10-year timeline, which has long been questioned, and Chuck Ratner, CEO of parent Forest City Enterprises, said last month that the market would determine the project's pace.

Community involvement

They also asked that Paterson require Forest City Ratner and ESDC "to involve the community and its elected representatives with public forums and outreach" regarding construction mitigations; street closures, traffic flow, and parking issues; and safety and security problems fostered by the loss of business and residential activity.

"The disposition of the site and its future development are of huge concern to the surrounding communities," the letter states. "It is highly unlikely that the plan as approved by the ESDC will move ahead. Notwithstanding the uncertainty of the project, buildings have been razed and traffic routing around the site has been disrupted. This is unacceptable. We call on you to work with all stakeholders to repair the situation and reintegrate the Atlantic Yards site into our community."

The letter was CC'd to several elected officials, city agencies, and community board representatives. I'm told that Assemblyman Jim Brennan sent a copy to ESDC President and CEO Marisa Lago.

Conflict coming?

This seems like a sober attempt to mitigate some of the problems, and also sets forth some guidelines for an interim situation should the project be abandoned. It also suggests that the sponsors of BrooklynSpeaks, who have asked for significant changes in the project but mostly avoided confrontation, have lost trust in the developer and the government.

BrooklynSpeaks, led by the Municpal Art Society, took a pragmatic position that legal action would fail and also render the groups involved ineligible to sit at the table with the state and the developer. The organization offers a home for elected officials critical of the project who don't want to ally with project opponents.

Thus, even if BrooklynSpeaks' principles have not been adopted, project supporters like Brooklyn Borough President Marty Markowitz have called them "reasonable people."

Markowitz, however, has backed Atlantic Yards to the hilt, and reiterated that support yesterday. As BrooklynSpeaks questions the project more than ever, will Markowitz and fellow supporters listen?

Full text

Dear Governor Paterson:
As you know, construction activities at the Atlantic Yards site have ceased as of December 1. No matter how quickly the legal challenges and the present credit constraints are resolved the project’s developer can not meet the timetable disclosed to the public. The net effect of this project delay will be to damage our community fabric, create blight and disruption and reverse the trend of the neighborhood’s development progress which existed before the project’s announcement.

We ask you to engage the ESDC, Forest City Ratner Companies, and the City of New York to do the following:

• Until financing is in place for planned construction and construction timelines have been updated and shared with the community:
o Halt further street closures.
o Halt removal/displacement of residents or businesses in the footprint.
o Halt demolition of viable vacant buildings on land where there is no construction currently scheduled. If Forest City Ratner controls such vacant buildings, repurpose them for use as community facilities, small business or non-profit office space, or affordable housing until construction on those sites is ready to begin.
• Return the Carlton Avenue Bridge to service.
• Reduce the scale and locations of construction staging and construction worker parking consistent with scheduled work.
• On sites where demolition is complete, create interim public open space as play areas or community gardens.
• Design and maintain all fencing and sidewalk pedestrian consistently throughout the site for public safety, convenience and amenity.
• Make publicly available current expected and worst-case construction timelines and release updated construction schedules, including updates as soon as schedules are decided or changed.

Project delays heighten community concern about the custodianship of the full project site. We ask that you require Forest City Ratner and ESDC to involve the community and its elected representatives with public forums and outreach for input regarding:
• construction mitigations such as barricades, interim landscaping, rodent control, noise and dust abatement, and the maintenance of the site in general;
• street closures, truck routes, changes to pedestrian and bicycle pathways, traffic flow and parking availability, including the locations of parking lots, construction staging and their entrances and exits from the site; and
• safety and security problems which have resulted from removing business and residential activity from the project footprint.

The disposition of the site and its future development are of huge concern to the surrounding communities. It is highly unlikely that the plan as approved by the ESDC will move ahead. Notwithstanding the uncertainty of the project, buildings have been razed and traffic routing around the site has been disrupted. This is unacceptable. We call on you to work with all stakeholders to repair the situation and reintegrate the Atlantic Yards site into our community.

We look forward to your timely action to protect our neighborhoods.
Sincerely,

THE BROOKLYNSPEAKS SPONSORS:

Ian L. Kelley
President
Atlantic Avenue LDC

Sue Wolfe
President
Boerum Hill Association

Judy Stanton
Executive Director
Brooklyn Heights Association

John Massengale
Chairman
Congress of New Urbanism – New York

Michelle de la Uz
Executive Director
Fifth Avenue Committee

Kent Barwick
President
Municipal Art Society

Ken Freeman
President
Park Slope Civic Council

Deborah Howard
Executive Director
Pratt Area Community Council

Gib Veconi
Chairman
Prospect Heights Neighborhood Development Council

cc: Mayor Michael Bloomberg
Borough President Marty Markowitz
Representative Yvette Clarke
State Senator Velmanette Montgomery
State Senator Eric Adams
Assemblyman Hakeem Jeffries
Assemblywoman Joan Millman
Assemblyman Jim Brennan
Councilmember Letitia James
Councilmember David Yassky
Councilmember Bill DeBlasio
Robert Mathews, Chairman, CB8
Doris Alexander, District 8 Manager
Richard Bashner, Chairman, CB6
Craig Hammerman, District 6 Manager
John Dew, Chairman, CB2
Robert Perris, District 2 Manager
Amanda Burden, Commissioner,
NYC Dept. of City Planning
Janette Sadik-Khan, Commissioner,
NYC Dept. of Transportation
Raymond Kelly, Commissioner,
NYC Police Department
Adrian Benepe, Commissioner,
NYC Dept. of Parks and Recreation
Robert LiMandri, Commissioner,
NYC Dept. of Buildings

Yormark scotches Newark report, says arena will start this year

A day after reporting that the New Jersey Nets were planning to play three of four preseason games at the Prudential Center in Newark, the Star-Ledger reports that Nets CEO Brett Yormark says that isn't so, but the Nassau Coliseum--a "great feeder market" for Brooklyn, the team's destination, remain an option.

The newspaper reports:
Yormark would not discuss the financial drawbacks that submarined the discussions with [New Jersey Devils owner Jeff] Vanderbeek, but several Nets officials -- who cannot be identified, as they aren't authorized to speak for the team -- claim that a preseason game at The Rock wouldn't generate the same revenue they derive from one at Izod Center.

Brooklyn deadline

The article concludes:
Delayed repeatedly by legal challenges and financing issues, the construction of the $1 billion Barclays Center is scheduled to start sometime this year, Yormark has said, but no groundbreaking date has been set.

Since the average construction of an arena takes 30 months -- according to the estimate of Nets owner Bruce Ratner -- it will be difficult to open the 2011-12 season in Brooklyn if work doesn't begin by this May.

Yormark has said it would take 24 months. Ratner said last June that "it will be about two and a half years to build our arena." I think the construction schedule indicates 32 months.

Whatever arena proponents say, work beginning by May is highly unlikely--it implies not only clearing of lawsuits but no delays in exercising eminent domain. Thus 2012 is a more likely best-case scenario.

As hearing on Yankees' bond request approaches, Brennan questions tax-exemption for stadium

The hearing this morning that Assemblymembers Richard Brodsky and Jim Brennan will hold on the New York Yankees' request for some $430 million in additional tax-exempt bonds will inevitably get contentious, as Brodsky assured the the attendance of New York City Industrial Development Authority chair Seth Pinsky and Yankees president Randy Levine only via subpoena.

With them will be city Comptroller William Thompson, a mayoral candidate, who issued his own scathing criticism of the Yankees's plan yesterday, and asked that the IDA's planned hearing Thursday on bonds for the Yankees and the New York Mets be postponed. The fourth person testifying will be George Sweeting of the Independent Budget Office.

Tax-exempt sports facilities?

In the Village Voice, Tom Robbins reports on the run-up:
Brennan, who chairs the Assembly Committee on Cities, says he wants to understand why a financially thriving private enterprise is being excused from paying real estate taxes.

"It seems ludicrous to be exempting the new stadium from property taxes," says Brennan. "The company is wealthy, and it is not relocating outside the city. They can surely finance extra amenities like a giant TV screen from their own internal funds without a subsidy of any kind."

In other words, Brennan's interested in a question at the heart of the city's funding schemes for sports facilities: build them on tax-exempt land and let PILOTs (payments in lieu of taxes) pay off construction bonds.

What about AY arena?

The same question applies to the Atlantic Yards arena. Right now, Forest City Ratner and parent Forest City Enterprises (FCE) seems to be struggling, and the New Jersey Nets are losing money. But the arena plan was conceived when the companies were doing well.

One major contributor to FCE's losses is the hit the company absorbs from the Nets. Should the relative success of a company running a sports team and hoping for a new sports facility be what determines whether the public should subsidize the facility?

If not, then Brennan (and Brodsky) might take a closer look at the Atlantic Yards arena, a project they wouldn't be scrutinizing after construction.

Markowitz on Barclays Center: a chance to "celebrate the ‘Brownstone Brooklyn’ architecture" (?)

Here's Brooklyn Borough President Marty Markowitz's full statement on the Atlantic Yards arena, which was excerpted in the New York Times's CityRoom blog:

“Make no mistake—the Barclays Center will be built, the Nets will be playing in Brooklyn, and Brooklyn will have a world-class arena after more than fifty years of waiting to get back to the big leagues. But frankly, as we all know, the economic realities have changed since the inception of this project. As has been widely reported, Forest City Ratner is looking hard at ways to realize cost savings by doing things like using more cost-effective materials, while still maintaining the features approved during the public process. There may be a chance to incorporate design and construction changes that will lower the bottom line and celebrate the ‘Brownstone Brooklyn’ architecture that makes our borough unique.
(Emphasis added)

That doesn't sound very Frank Gehry-esque. Rather, it sounds a bit like the Atlantic Terminal Mall. Markowitz didn't mention Gehry, though he saluted him in his 2007 State of the Borough Address.

(Update: The Brooklyn Paper adds:
On the topic of Gehry, the Beep went cold-blooded.

“Frank Gehry is a world-class architect,” Markowitz said. “It’s the decision of the developers and others to decide who is the right person for the job.”)

Second look

The statement continues:
To that end, I am asking Forest City Ratner and the Empire State Development Corporation to give Barclays’ design a second look, and conceptualize a sports and entertainment venue that is more economically feasible but provides the modern amenities our residents and visitors to Brooklyn demand and deserve.

I can’t think of a more critical moment than now to create the jobs, affordable housing, tourism and enthusiasm that the arena will bring to Downtown Brooklyn and New York City—so let’s get together, let’s get it done and let’s bring the Barclays Center and the Nets to Brooklyn!”
(Emphasis added)

Are people going to be living in the arena?

Remember, the ESDC told the Wall Street Journal last week, ""The aesthetic choices are Forest City Ratner's."

Is Forest City Ratner trying to chintz the MTA on the Vanderbilt Yard replacement?

The big news in today's New York Times CityRoom post, headlined Markowitz Calls for Paring Cost of Atlantic Yards Arena [originally : "Paring Down"], is not that Borough President Marty Markowitz, who can be counted on to support anything developer Forest City Ratner decides, thinks it's a good idea to value-engineer (belatedly?) the planned Atlantic Yards arena.

No, it was the penultimate line:
The developer has also talked about building a less expensive railyard as a replacement, according to a state official who is involved with the project.

Well, I'd heard that one too.

Looking at the numbers

Remember, Forest City Ratner claimed that its bid for the MTA’s Vanderbilt Yard was enhanced by the value of the replacement railyard it was to build, saying its bid of $100 million cash plus enhancements was worth $445 million. (Remember, FCR initially bid $50 million cash, before the MTA decided to negotiate exclusively with them, rather than with rival bidder Extell, which bid $150 million cash but didn’t have FCR’s political backing)

This claim was belied by the fact the MTA’s own appraiser calculated the value of the railyard site at $214.5 million including the value of a new railyard.

So now the developer wants to build a less expensive railyard. Shouldn’t that original bid be reexamined?

What about Gehry?

The question is why Gehry isn't expressing his enthusiasm for the project, when he did so dutifully in May.

Did he really express his commitment only to a British web site called Building Design?

Star-Ledger: Nets will schedule three (of four) pre-season games at Newark's Prudential Center

With a report that three (of four) pre-season home games will be scheduled at the Prudential Center next year, the New Jersey Nets are apparently making an about-face in their willingness to consider Newark as an interim home, at least.

Interviewed December 2 on WFAN radio, New Jersey Nets CEO Brett Yormark was asked by host Craig Carton why the team didn't move to The Rock, at least until the Brooklyn arena arrived.

Yormark shrugged it off, praising the Izod Center in the Meadowlands: "Over the course of the last two years, the state has invested like never before in that venue. During our Nets games, we have incredible lounges for season ticket-holders, the service is better than ever before. We’ve rebranded the entire arena, we’ve got greater technology than ever before. And it’s a perfect setting for us right now. One of the key things for me is that I want to be the main tenant. I want to be the big dog…. And the Izod Center… is having the most successful year it’s had in ten years now that the Devils aren’t there.”
(Emphasis as spoken)

Exhibition games coming?

Last night, however, the Newark Star-Ledger reported:
Nets management has begun negotiations with Devils owner Jeffrey Vanderbeek to play three preseason games at the Prudential Center next October, according to several people with knowledge of the discussions who asked not to be identified out of concern for affecting the talks.

Nets CEO Brett Yormark would neither confirm nor deny the discussions Monday night, but he strongly implied such an arrangement could be feasible for his team.

"We're exploring many different options, continue to regionalize the franchise," Yormark said through a team spokesman. "Preseason games afford us the opportunity to do this."

Vanderbeek wouldn't confirm it either.

Newark a test?

And it's unclear whether Newark is an experiment or a prelude to a move, one that likely wouldn't happen next season. The Star-Ledger reported:
"That's what everyone is wondering," one high-ranking Nets official said Monday night. "With Brooklyn still up in the air, the question is whether they're warming to the idea of moving to Newark, even though it's clear that getting to Brooklyn is best for the long-term health of the franchise.

Yes, the naming rights and suite revenue from the Brooklyn arena are calculated to bring the profits projected. However, if Atlantic Yards falls through completely, a track record in Newark would make it easier to move the Nets there or sell it to local investors. (Yesterday, the stock of parent Forest City Enterprises fell 16% after Moody's Investors Service warned that high debt meant a negative credit outlook.)

The Newark location, near a train station, would likely draw a larger audience, and make it easier to distribute free or discount seats. After all, the Nets are having trouble drawing crowds even when they give tickets away. Announced attendance last night was 12,972, or 65% capacity, but that surely well exceeds the gate count. (It didn't look that full.)

The Nets would have to pay a penalty to the New Jersey Sports and Exposition Authority (NJSEA) were they to move--$12 million this year, though it declines in the future--though a re-elected Gov. Jon Corzine might get that penalty waived next year.

Yormark's contradictions

Meanwhile, Yormark has begun to contradict himself, telling the newspaper:
"We love our relationship with the NJSEA, they partner with us in every aspect of that building -- from the lounges to the LEDs (ad boards) to everything we've done there," Yormark said. "But (Izod Center) still doesn't provide us with the resources we need, and the contemporary look and feel of some of the newer building."

Not "the perfect setting for us right now."

At web sites of engineering and facade firms working on arena, some stale information (and a hint about "value engineering")

Well, just as Heartwood Studios was recently spotted with stale renderings related to the Atlantic Yards arena, two other firms related to the arena project offer some out-of-date details on their web sites, plus a hint that "value engineering" related to the arena may be coming on the late side.

Take for example the Brooklyn arena page on the web site of Front, a New York-based facade-engineering-and-design consultancy that has worked on numerous major projects and was the subject of a lengthy profile last June in the New York Times Magazine.

Completion 2009?

Given that the arena completion date is listed as 2009, and the four of five images are from 2006 (the colorful thumbnail on the left is from 2005), it's a good bet the page was prepared in 2006 or 2007. The official arena opening date is now 2011, but I think 2012 is a more likely best-case scenario.

The image highlighted above did not appear in the 2006 image gallery, but certainly looks like a cousin. (NLG's Lumi Rolley suggests it wasn't released because its street-level scale would've alarmed people.)

Front apparently does not update its web site all that often; after all, it lists the Brooklyn Public Library's canceled Visual and Performing Arts Library as one of its projects.

Curious detail: a February 2007 version of Front's Brooklyn arena page, courtesy of the Internet Archive, lists Permasteelisa as the Facade Contractor on the project, though no such contractor is currently listed. Value engineering? A step back?

The services engineer

Front's web site lists other participants in the project. While the names Forest City Ratner, Gehry Patners, Turner construction, and Thornton-Tomasetti were previously well-known, the role of services engineer Flack + Kurtz was new to me.

The company, now known as WSP Flack + Kurtz, is "assisting Forest City Ratner and architect Frank Gehry Partners, LLP with the master planning for the site as well as the MEP/IT systems design." MEP [corrected], by the way, stands for mechanical, electrical, plumbing and information technology.

The firm's Barclays Center web page states that completion is "scheduled for 2010," which suggests that the timetable was adjusted in late 2007 or early 2008, because only then did developer Forest City Ratner begin to acknowledge that 2009 was no longer likely.

Oddly enough, however, the cost of the arena is set at $555.3 million, which is a figure from September 2005, while the figure $637.2 million was announced in December 2006, at a time when the arena completion date was actually 2009.

So WSP Flack + Kurtz hasn't been paying full attention to this web page, perhaps because work is very delayed. The company has done a lot of work for Forest City Ratner, including the New York Times Building.

De-value engineering?

For those wondering about the concept of value engineering, WSP Flack + Kurtz offers its description:
Our philosophy is to identify realistic building system design criteria and the potential costs associated with making those criteria more stringent to determine the potential cost savings associated with relaxing certain criteria.

The firm offers an elaboration, with a warning about timing:
Value Engineering is most effective when it occurs during the conceptualization of a project, when design criteria are established and system concepts are developed to satisfy criteria.

Examples of design criteria and their impact are:

* Levels of redundancy which impact the quantity and size of equipment and distribution strategies
* Environmental conditions which affect the size and capacity of central equipment and distribution systems
* Energy/life cycle performance which affect the cost and perhaps size of the equipment
* Acoustics which affect construction techniques and materials; etc.

Once prudent and practical design criteria are established, together with appropriate budgetary allowances, the design should be able to be executed which satisfies both the criteria and the budget. The design and budget are then validated at the completion of Schematic Design and Design Development, however, by the end of Design Development, the systems and budget should be well established and fixed.

When "value engineering" occurs at the end of Construction Documents we consider it to be "de-value engineering". At this stage of the design process, there is the least opportunity to optimize the overall design, including architecture, structure, etc.. At this stage changes to systems or concepts usually impose major disruption to the design schedule, and potentially the construction schedule.

With our philosophy, the overall design concepts, including architecture, structure, and MEP, are optimized for the available budget so that the best value is achieved in an integrated fashion for the construction dollars expended.
(Emphasis added)

Well, the arena may not have reached the end phase of Construction Documents, which describe the design, location, and physical characteristics of building elements needed to convey to the contractor precisely what to build.

However, the arena is surely no longer in the conceptualization phase, when "value engineering" is most helpful, according to the firm.

Some common (and less-common) mistakes in Atlantic Yards coverage

More than five years past the announcement of the Atlantic Yards plan, it's way overdue for a list of common errors made by journalists in covering the project.

Some of them recurred just last week and, though they may not seem huge--I've heard many a journalist shrug them off--they generally shade the description of the project in favor of developer Forest City Ratner's permanent campaign.

Some on the list lower down are less prevalent, but deserve retrospective correction or should provoke greater skepticism.

1. Atlantic Yards is a place. No, it's a project. On WNYC last Friday, Amy Eddings described a plan that "would bring high rise offices and apartments to the Atlantic Yards in Brooklyn," Atlantic Yards does not exist. On NY1 Friday, the reporter kept referring to the Metropolitan Transportation Authority's Vanderbilt Yard as "Atlantic Yards." If the official name seems awkward, call it "the Atlantic railyards." This is important because a lot of people still think that...

2. The project would be built "over the railyards." No, the Vanderbilt Yard is about 8.5 acres, while the project footprint is 22 acres (originally 21). The Wall Street Journal reported Friday that the project was "proposed for a site above a rail yard at Flatbush and Atlantic avenues. If only the railyard were needed, we wouldn't have a fight over eminent domain.

(Map from Develop Don't Destroy Brooklyn. Click on graphics to enlarge.)

3. The site is in Downtown Brooklyn. No, it's in Prospect Heights, though arguably it would extend Downtown Brooklyn. That's important because Downtown Brooklyn was rezoned, and some people think that...

4. Atlantic Yards was the product of a rezoning. No, the project would be enacted via a state override of zoning. That's important because some people believe that...

5. The site received public approval by the city. No, the state process bypassed the City Planning Commission and the City Council.

6. The Atlantic Yards site is the same place Walter O'Malley wanted to build a replacement for Ebbets Field. That error has supported some columnists' nice nostalgic turnabout, but O'Malley didn't want to build over (and around) the Vanderbilt Yard, but rather across the street, north of Atlantic Avenue, on land now occupied by Forest City Ratner's Atlantic Center and Atlantic Terminal malls.

(Map from Henry Fetter's book Taking on the Yankees: Winning and Losing in the Business of Baseball.)

7. The Department of City Planning (DCP) "recommended" an 8% scaleback in the size of the project in the fall of 2006, as Atlantic Yards approached approval. Well, DCP did write a letter to that effect, the modest reduction--in square footage, a return to the number originally announced, actually--had long been in the cards. Despite the orchestration, even critics of the project mistakenly see the reduction as noteworthy.

8. The project would take ten years to construct. While that is the construction schedule as approved by the Empire State Development Corporation, and the schedule asserted by FCR CEO Bruce Ratner last May, Chuck Ratner, CEO of parent Forest City Enterprises, acknowledged in March 2007 that "we are terrible" about predicting when projects come to fruition and, a month later, I suggested the timeline was a fantasy. Last month, Chuck Ratner admitted that the market would control the pace. Moreover, city and state funding agreements provide a much longer leash, with no timetable for Phase 2; nevertheless, the courts have chosen to believe the official schedule. The deceptive timetable maintains an illusion about the timely arrival of some promised benefits, like the open space and affordable housing.

9. The arena would open in 2006, 2007, 2008, 2009, or 2010--all predictions by the developer dutifully repeated by the press, especially those writing for the Sports section. Just because someone says it doesn't mean it should be reported unskeptically. Now most everyone says 2011. Given the 30-month construction schedule, I say 2012 is a more likely best-case scenario. The arena opening date, confidently asserted by Nets CEO Brett Yormark, may help the developer sell suites and sponsorships, but even some sportswriters are beginning to show skepticism.

10. The developer asserts that the project would include 15,000 construction jobs. No, it would be 15,000 job-years, or 1500 jobs a year for a decade (or, obviously, some other configuration). Some news outlets have gotten better on this one.

(Graphic from 2004 Forest City Ratner flier.)

11. Fifty percent of the rental housing would be affordable. This is accurate, but it deserves an asterix, because the original plan was for fifty percent of all the housing to be affordable, because the housing consisted solely of rentals.

12. Forest City Ratner added market-rate condos to the Atlantic Yards plan because of a request by "community leaders" (apparently representing low-income residents). This has been reported only once, in the New York Times, but it deserves correction, because "It's Orwellian, almost" and, actually, condos were planned from the start.

13. The project would provide $6 billion in new tax revenue. That was Forest City Ratner's ridiculous estimate of aggregate payments, which would more accurately be represented as $2.1 billion in present value. This error has recurred mostly in editorials, but some reporting is in order to clarify the numbers. The Empire State Development Corporation, in its own flawed calculation (sans expenses), suggested $944 million in present value. Any projections in these cases are suspect and deserve some peer review, which the New York Times has more readily practiced regarding other issues, such as hoops bias.

(Graphic from May 2005 Forest City Ratner presentation to City Council.)

14. The project would be "almost exclusively privately financed," with all public money coming from incremental revenues and that Atlantic Yards, in Bruce Ratner's words, would “not touch the existing tax base.” No, the public support consists of both direct appropriations and tax breaks with many special benefits, despite the failure of sports economist Andrew Zimbalist, Forest City Ratner's hired consultant, to acknowledge them. There's no TIF, or tax-increment financing, which would've required legislative approval. While the press hasn't repeated these errors lately, it hasn't gone back and held the developer to account.

15. Forest City Ratner paid for generous buyouts that condo owners took. No, the city reimbursed the developer, though we only learned that a few years after the publicity. Again, this deserves a second look.

16. The rival Extell proposal would've included "mostly low-rise buildings." No, those buildings would have been high-rise. The error exaggerated the divide between the Extell plan and the Forest City Ratner plan.

17. Forest City Ratner "threw in" a new Brooklyn Tech High School as part of the Atlantic Yards plan. No, "work with" was a lot more vague. The follow-up in the Daily News last year still missed part of the story.

18. Opponents "lost 20 court decisions" regarding Atlantic Yards. Just because someone says it doesn't mean it should be reported unskeptically. That could apply to other reportage regarding AY, and to a lot of journalism in general.

In New Mexico, cloud over Gov. Richardson includes $290,000 from Forest City affiliates and representatives

It's been common knowledge for at least month now that New Mexico Gov. Bill Richardson, who withdrew as Commerce Secretary nominee under a cloud, has a cozy relationship with developer Forest City Enterprises, as it provided the "second-largest corporate source of money in his 2008 presidential bid," the DC Examiner reported December 6.

Last week, when Richardson withdrew, the reason was a federal investigation into CDR Financial Products, which contributed to his campaign, then got work on state bond contracts, the Wall Street Journal reported.

$290K from FCE

Yesterday, the New York Times expanded on Forest City's role:
One of the largest donors to Mr. Richardson has been Forest City Covington, a joint venture that is developing Mesa del Sol, a 12,900-acre tract of state-owned land just south of the Albuquerque airport.

From 2002 to 2007, Mr. Richardson’s two political action committees, his re-election campaign and his presidential campaign received more than $290,000 in cash and in-kind contributions from Forest City Covington and members of the families that control the company.

In that time, the University of New Mexico’s board of regents, controlled by Mr. Richardson’s appointees, and the state land office engineered a complicated three-way deal that made it possible for the developer to buy a 3,000-acre piece of the tract from the university for $9 million and a share of future profits. Overseeing the deal was the regent’s board president, Jamie Koch, a Richardson appointee and former state Democratic Party chairman.

The Legislature, with strong urging from the governor, also changed state law to let the developer divert tax receipts to underwrite bonds that would be used to pay for infrastructure on the site. In April 2007, Mr. Richardson signed off on legislation authorizing the developer to issue up to $500 million in bonds. Mr. Gallegos said Mr. Richardson supported the project because it would create jobs.

Michael Daly, president of Mesa del Sol, said the company donated to Mr. Richardson’s campaigns to support his pro-business policies, not to win particular legislation.

“Our job is to attract jobs to the state,” Mr. Daly said. “We think he does a great job to attract tenants.”

In New Mexico, scrutiny for many months

It wasn't like the press hadn't been pointing this out. On 4/10/07, the AP ran an article bluntly headlined Richardson Signs Bill Benefiting Donor. It began:
Democratic presidential hopeful Bill Richardson received about $150,000 in gubernatorial campaign contributions the past two years from a developer that benefits from taxpayer-subsidized bonds authorized in legislation he signed last week.

Among its contributions, the developer, Forest City Covington, gave the New Mexico governor the use of a leased corporate airplane for three trips last year that were valued at $21,727, according to a review of lobbyist expenditure and campaign finance reports by The Associated Press.

Richardson's office said the company's political contributions didn't influence his decision to sign the bonding legislation. "The governor makes decisions based upon what is best for the state - period," said Jon Goldstein, a spokesman for Richardson.

The company emphasized that its campaign contributions complied with state election law. New Mexico allows unlimited contributions from corporations and other donors. Federal law, however, limits contributions to presidential campaigns.

"The only influence we desire is that of continued economic growth and development for New Mexico," Anne Monson, a spokeswoman for the development, said in a statement.

But Massie Ritsch, a spokesman for the Center for Responsive Politics, a Washington-based nonpartisan group that tracks money in politics, said $150,000 was "a lot of money from one company to one politician."
(Emphasis added)

In New York

In New York, Forest City Ratner has mostly shied away from campaign contributions, though Bruce Ratner's brother Michael has done the company's bidding.

Last year, breaking a no-donation pattern, the developer gave $58,420 to a committee controlled by Assembly Speaker Sheldon Silver, far more than could be given to any individual candidate.

(Was that insurance against any Assembly inquiry into Atlantic Yards, one Brooklyn legislators have wanted since last spring?)

And charitable gifts from the company and its foundation also help build friendships with elected officials and nonprofit groups.

Was the billion-dollar arena a feint? And why isn't Gehry talking?

So, why did the cost of the Atlantic Yards arena escalate from $637.2 million in December 2006 to $950 million in March 2008?

Remember, last March, the $950 million figure appeared in the New York Times without explanation. The number, I wrote last December 2, just didn't compute, given that there was no similar announced escalation in the cost of the project as a whole.

Was it simply a consequence of rising construction costs and expensive Frank Gehry details aimed to sell suites and sponsorships? Was it part of an effort to gain even more tax-exempt bonds? Or was there a plan to announce an overambitious arena, with the intention of later cutting back?

Past example

I don't know, but there's at least one example of developer Forest City Ratner floating news in the New York Times in order to later pursue a plan already in its pocket. Remember a 9/5/06 New York Times article, placed unaccountably on the front page, touted a possible minor scaleback in the project. Most of the cuts, I later reported, had been on the table for months.

In that article, the Times presented a picture of a prima donna architect:
But according to executives briefed by the developer, Mr. Gehry has objected to any changes in his design for Miss Brooklyn.

Not quite. Gehry had already proposed a reduction from 620 feet to 595 feet and, three months later, acceded to Forest City Ratner's agreement to bring the building in at 511 feet, one foot shorter than the Williamsburgh Savings Bank.

Last May, when Miss Brooklyn was redesigned, with the more utilitarian B1 placeholder name taking precedence, Gehry was no prima donna, dutifully declaring:
The design for Miss Brooklyn, which we now call Building One, has become very special for me.

What's going on now?

Gehry's never had a chance to explain publicly why the cost of the arena went up. He hasn't even been quoted in a press release saying it's "very special to me"--a sign that he may be at odds with the developer. He hasn't said what his role is now or whether he still has staffers working on the project.

Could it be that one contingency was always a cheaper arena, one based on a concept by Gehry but with his role diminished?

We don't know, but a good start would be for Gehry to speak publicly. "They have to meet me as an equal," he said in 2006 of his relationship with clients.

Right now, his clients are speaking via press releases, and he's not saying anything at all. That doesn't sound very equal.

Daily News beat writer: 2011 Brooklyn arena's a fantasy; Lupica piles on

In the New York Daily News, Julian Garcia, the Nets beat writer, writes a scathing piece about the lukewarm support given to a decent team--the product of the Nets' lame-duck status. The headline: IZOD Center? How about we start calling it the U NOD OFF Center.

He writes:
But instead of fighting each other, the team and its fans should point the finger at ownership and those executives who promised more than five years ago to relocate to Brooklyn but have so far managed only to move to a town called limbo.

Delay after delay, mostly due to legal issues, has continuously pushed back the start of construction of a proposed downtown Brooklyn arena that is supposed to be part of a larger development project, Atlantic Yards. However, spokespeople for team owner Bruce Ratner continue to tell reporters that the Nets will be playing in Brooklyn before the end of 2011.

And I'll be the Nets' starting center by then.

Indeed. Maybe he's done the math, too, or just stopped believing Nets CEO Brett Yormark.

Value engineers

He writes:
wouldn't want to sit with 20,000 others in a building put up by "value engineers" and made out of materials bought on the cheap. Would you?

Well, I think he's misreading that one.

Destination Newark?

But he's reading this one right:
It seems less and less likely that the Nets are going anywhere except the place that really would make sense, the Prudential Center in downtown Newark. But you never know, which is the major problem here. Not knowing whether their team is coming or going, fans are apathetic toward the Nets. They aren't emotionally investing themselves in a team that is not fully invested in them.

Well, this ownership group, which is hoping Brooklyn would bring in the revenues, may not want to move the team to Newark. But there is already an arena built, and at least three more years at the Izod Center might be excruciating.

On NetsDaily, some fans agree with Garcia about the crowd's apathy.

Lupica piles on

Daily News sports columnist Mike Lupica adds:
Quick question for Caring Bruce Ratner:

Where can I buy my "Brooklyn Nets" T-shirt?

DDDB collects the barbs.

AY "on last legs," as per James? Well, Crain's editorial director says "nothing's for certain," points to March decision date

In today's New York Daily News, City Council Member Letitia James pronounces that Atlantic Yards "is definitely on its last legs," without any further stated evidence than the news that a not unusual value-engineering effort has been brought to the arena plan, and that Frank Gehry's role has receded.

Brooklyn Borough President Marty Markowitz and Deputy Mayor Robert Lieber offer statements asserting the project will proceed. Until and unless more information emerges, we're all speculating, but we have to give the edge to inertia, meaning that the city, state, and developer will be reluctant to pull the plug.

David of Crain's: "Nothing's for certain"

Then again, consider an interview yesterday on WNYC with Greg David, Crain's New York Business Editorial Director. The action comes at about 3:42.

The interviewer set up the segment by noting that Forest City Ratner "is reportedly looking to cut costs" and has denied rumors that Frank Gehry has been fired: "You've been a believer in this project. Do you think it will still happen?"

David responded, "Well, I think it will still happen, but nothing's for certain in this economy, is it? There are are two hurdles. First of all, you do have to remember that the opponents of... Atlantic Yards have conducted one of the most imaginative campaigns against it that I've ever seen. Of course, they're not journalists, so they're not responsible for sticking to the facts, and you need to be careful about accepting what they say."

(Graphic from Develop Don't Destroy Brooklyn. More discussion of "sticking to the facts" below.)

March deadline

David continued, "Having said that, there are a series of legal challenges pending at the appellate courts in New York. If those challenges are not dismissed before March, the project will be in trouble. If they are dismissed in March, the project will have a chance to go ahead if it can be financed. A year ago, it could've been financed. Can it be financed today? I have no idea."

David didn't explain why March is the deadline. Parent company Forest City Enterprises has a loan on footprint property with Gramercy Capital due in February. Perhaps that can only be renegotiated with a short horizon in sight? And would attorney George Locker's assertion that new lawsuits would cause further delay affect that March deadline?

As for getting financing, yesterday Charles Bagli of the New York Times suggested that Forest City Ratner couldn't get financing for a billion-dollar arena this year. Whether financing could be found for a $700 million or $500 million arena is an open question, as is whether how much cost-cutting could bring down the tab for an arena last year said to cost $950 million.

The "imaginative campaign"

Let's take a look at what David called "one of the most imaginative campaigns... that I've ever seen." Develop Don't Destroy Brooklyn has raised money for multiple lawsuits, helped stage rallies, and maintained a very active web site, blog, and mailing list. The Council of Brooklyn Neighborhoods has coordinated a wider range of concerned groups, in responding to the environmental review.

Some of DDDB's statements, such as the "Victory in Sight" message noted above, are hortatory and thus not exactly solid, but other times DDDB is merely citing other news items and commentary that provide a different angle on the official line.

Other volunteer activists, such as the photographers setting up the AY CAM, have also filled in gaps in scrutinizing the project.

Moving around the spectrum somewhat, NoLandGrab is an information portal that takes a critical position on the project. But its commentary is checkable, and, as NLG's Eric McClure pointed out yesterday, NLG's analysis of AY is a lot more sound than, say, that published in the Brooklyn Eagle, which dutifully publishes Forest City Ratner press releases.

Fact-checking and the blogosphere

What about AYR? I don't practice traditional journalism, given that this blog mixes reportage, analysis, and commentary, and I used to say I wasn't neutral. But neutrality can be code for "the mushy middle" and, with Atlantic Yards, it's important to analyze the facts.

And David's publication, Crain's New York Business, hasn't been doing such a good job. Consider the Crain's coverage of the Forest City Enterprises conference call last month, in which the newspaper took at face value the developer's claim that railyard work had stopped because of litigation.

Consider the Crain's report last May that "Critics also mischaracterize $105 million in city infrastructure work as a subsidy. Though listed under Atlantic Yards in the city budget, the work is not part of the development."

As I pointed out, it wasn't just critics who made that "mischaracterization." The developer did so, too.

Consider David's own June 2006 editorial in favor of Atlantic Yards, not exactly "sticking to the facts."

That doesn't mean Crain's can't be incisive. Last September, the publication was blunt: "Forest City Ratner still insists that it can break ground on its Brooklyn basketball arena this year. Reality says otherwise."

That's what opponents and critics, having done some fact-checking, had been saying all along. Most journalists repeated Forest City Ratner's claims uncritically.

So maybe the bigger problem in the Atlantic Yards discourse is not the spinning by opponents but the failure by journalists to check the claims by the developer and its allies.

Funny story: in "Design by Deception," analysis of megaproject cost overruns, the hero is... Frank Gehry

Let's take a step back. For one thing, the concept of "value engineering," bandied about yesterday in discussions of architect Frank Gehry's apparent receding role in Atlantic Yards, is hardly unusual, as this essay explains.

Brooklyn Borough President Marty Markowitz, on WNYC yesterday, said (in an interview perhaps incorrectly transcribed): "There is some economies value engineering as they call it, which is a good thing because you shouldn't be wasting money on a design or services that are not relevant."

Well, as NoLandGrab's Eric McClure pointed out, Markowitz has pivoted, last year touting the "exciting" evolution of Gehry’s designs: "With each new concept, we’ve seen creative possibilities for a thriving, gleaming city center like no other.” Markowitz can pretty much be counted on to express confidence in the developer, no matter what happens.

Frank Gehry, value engineer

For another, Gehry, in at least one account (but hardly all), is responsible for making sure projects come in on budget. Then again, if that applied to Atlantic Yards, then why did Gehry's Brooklyn arena balloon from $435 million to $637.2 million to $950 million? And why didn't developer Forest City Ratner let Gehry try to deliver the arena on budget instead of (apparently) letting the architect recede? Mysteries remain.

In Design by Deception: The Politics of Megaproject Approval, an article in the Spring/Summer 2005 issue of Harvard Design Magazine, Bent Flyvbjerg described how large construction projects, including public works, defense, and aerospace, around the world inevitably came in way over budget.

He wrote:
Which large projects get built? My research associates and I found it isn't necessarily the best ones, but instead those for which proponents best succeed in designing—deliberately or not—a fantasy world of underestimated costs, overestimated revenues, overvalued local development effects, and underestimated environmental impacts. Project approval in most cases depended on these factors....

Many project proponents don't hesitate to use this approach, even if it means misleading lawmakers, the public, and the media about the true costs and benefits of projects. This results is an inverted Darwinism—an unhealthy "survival of the unfittest"—for large public works and other construction projects.

His analysis sounds a lot like... Atlantic Yards:
Every large construction project does not follow the pattern of understated costs and overstated benefits, needless to say. But most do. Nine times out of ten, in the projects we studied, costs begin to soar after projects have been approved, leaving taxpayers or investors to pick up bills of hundreds of millions of dollars.

Note that the current discussion about AY concerns solely the announced costs of construction, not the public spending (and tax breaks) compared with the potential benefits. Still, increased costs of construction can drive additional public subsidies, such as for that murky term, "extraordinary infrastructure costs," which DDDB has called "a blank check."

Cost overrun worth it?

Flyvbjerg addressed the question of whether some terrific projects, including the Brooklyn Bridge and the Sydney Opera House, designed by Jorn Utzon, would've been built had their true costs been known. However, he declared, delusion is not necessary for action.

He wrote:
It seems to me, however, that one does Utzon and other architects a disservice if one indicates that their work could be built only through deception or wishful thinking, while similarly iconic and complex designs did not require this, for instance Frank Gehry's Guggenheim Bilbao Museum, which was built on time and budget and makes a lot more money than projected.

Gehry's record

Beyond Bilbao, where does Gehry fit? The record is murky.

Boston Globe architecture critic Robert Campbell dismissed cost overruns at MIT's Stata Center as being irrelevant, because "MIT kept adding new features" and "the job was bid at the worst possible time." Of course, MIT later sued Gehry, charging that design errors produced costly problems.

The New York Times reported 9/19/06 that Gehry's Grand Avenue project in downtown Los Angeles was "facing substantial cost overruns, and... Gehry, is working feverishly to bring them into line."

The cost increase, though, was not out of line with construction cost increases in the area. (That hasn't been the case with the AY arena, where the price tag exceeded cost increases.)

The management school at Case Western Reserve University, according to the Chronicle of Higher Education, was first supposed to cost $25 million, then, with Gehry on board, $40 million. The contractor and architects pledged it wouldn't go above $48.8 million. It cost some $61.7 million. One graduate thinks it's all worth it.

The "organization of the artist"

Flyvbjerg compared the monuments in Bilbao and in Sydney:
Frank Gehry has a reputation for building on time and budget, even for large, complex, and innovative structures. I asked Gehry how he and his associates do it. Gehry explained that the first step is to ensure that what he calls "the organization of the artists" prevails during construction. According to Gehry, the goal is to prevent political and business interests from interfering with design and thus to arrive an outcome as close as possible to the original design drawings. Gehry explains:

"One of the great failings in these public projects is public clients, that is, clients that are involved with politics and business interests. These clients often eliminate good architecture because they don't understand it, and they're wary of it, and they're unable to imagine that somebody who looks like an artist could possibly be responsible. There's a tendency to marginalize and treat the creative people like women are treated, 'sweetie, us big business guys know how to do this, just give us the design and we'll take it from there.' That is the worst thing that can happen. It requires the organization of the artist to prevail so that the end product is as close as possible to the object of desire that both the client and architect have come to agree on."
(Emphasis added)

It doesn't look like Forest City Ratner is letting "the organization of the artist" prevail in this case. If you read New York Times architecture critic Nicolai Ouroussoff, this battle has been occurring since mid-2006. Gehry was quoted as saying he had enough juice to get his vision across with clients: "They have to meet me as an equal." But the subtitle of the piece pointed out how little influence architects have with developers.

Realistic costs

Flyvbjerg wrote:
Once the design has been agreed on and the organization of the artist-architect set up, the next step in building on time and budget is to get a realistic cost estimate and control it. Gehry explains the difficulty of this:

"Building costs are not as controllable as people make them sound... You might have a project that you believe is budgeted property and has been assessed by other responsible assessors to be within budget, a change in the market throws it all out of whack right in the middle of your process, so there is no guarantee. The only way to control these things is to not proceed with the building until you have all the drawings complete, you have everything the way you want it, you've done your due diligence on cost analysis. Then it's a negotiation from there on with contractors and sub-contractors to keep them within your budget."

Finally, technology and continuing relationships with the individual building trades are important ingredients in keeping within budgets, says Gehry. He and his associates have pioneered the use of digital design models that greatly facilitate production of the data needed for arriving at accurate budgets. Here, Gehry also argues that construction should not start until it has been established that a project is indeed within the client's budget.

"In our practice we don't allow the client to start construction until we are sure we are doing a building that's within their budget and meets their requirements. We use all the technology available to us to quantify in a most precise way the elements of the building. This fact alone allows us to demystify for the construction people the elements of the building so there's not a lot of guessing. When there's guessing, money is added. We found that precision in documentation and continuing relationships with the individual building trades is a necessary process to keep buildings within the limits of the client's budget."

Well, construction sure hasn't started, so there's room to develop those numbers.

"The Lying Game"

Flyvbjerg, in a section titled "The Lying Game," mused on whether it was common for project proponents to mislead people:
And is Frank Gehry's approach, as described above, the exception? Such questions are rarely asked. Maybe because in an uncomfortable number of cases the answer is "Yes."

...But what's most disturbing is not deceptive individual project estimates, it's the massive extent to which rent-seeking behavior by stakeholders has hijacked and replaced the pursuit of public good in this important and expensive policy area and the high costs this behavior imposes on society. Deceptive cost-benefit analyses keeps critical scrutiny (by lawmakers, the public, and the media), accountability, and good governance at bay until it's too late, that is, until the sunk costs for a project are so high that its point of no return has been reached and construction must be completed.

A good deal of money has been spent on the Atlantic Yards project. But construction has not begun.

What to do?

Flyvbjerg concluded:
The key weapons in the war on deception is accountability and critical questioning. The professional expertise of planners, architects, engineers, economists, and administrators is certainly indispensable to constructing the buildings and infrastructures that make society work. Our studies show, however, that the claims about costs and benefits made by these groups usually cannot be trusted and should be carefully examined by independent specialists and organizations. The same holds for claims made by project-promoting politicians and officials. Institutional checks and balances--including financial, professional, or even criminal penalties for consistent and unjustified biases in claims and estimates of costs and benefits--should be developed and employed.

What does that mean in the case of Atlantic Yards? It means, I think, that, when the Empire State Development Corporation touted Gehry's Atlantic Yards designs when the project was approved, the design timeline and cost should have been realistic.

More importantly, it means that Brooklyn Borough President Marty Markowitz should be held accountable for his statement, when the project was announced, that Mayor Mike Bloomberg "made it clear, over and over again, the mayor, this city has no money, no money to provide in any way at all. This is all incremental funds."

And Bloomberg should be held accountable for his January 2004 statement that "any city monies of any meaningful size will be debt issues financed by the extra tax revenues that come from this."

And all of those (like City Council Member Bill deBlasio and many others, including Sen. Chuck Schumer, Public Advocate Betsy Gotbaum, Rep. Ed Towns, then-Assemblyman Roger Green, Assemblyman Joseph Lentol, then-State Sen. Carl Andrews, State Sen. Kevin Parker, State Sen. Carl Kruger, Council Member James Sanders, Council Member Lew Fidler, Council Member Erik Martin Dilan, and Council Member Michael Nelson) who sent letters, parrotting Forest City Ratner boilerplate and the $6 billion lie, should not be let off the hook.

(Interestingly, not every pol sending a letter to the MTA in 2005 blindly endorsed the developer's specious $6 billion figure. City Comptroller William Thompson more cautiously used the term "millions of dollars in revenue." Maybe he actually read what he was supposed to sign.)

Izod Center visitor: "fan experience... a joke"

Well, it's interesting to see that I'm not the only one who finds the Izod Center a little too noisy/flashy and thinks there's a big discrepancy between announced attendance and actual gate count.

Boston Celtics fan Steve Weinman, a Long Islander who looks positively on a Brooklyn arena, wrote on the Celtics blog about attending the game Wednesday between the New Jersey Nets and the Memphis Grizzlies. The headline: Fan Experience At IZOD a Joke.

Some excerpts:
Forgetting the fact that the East Rutherford arena is located in the less-than-optimally-accessible Meadowlands complex, the experience inside is a mess... It's hard to imagine there were anywhere close to the reported 11,552 observers at the arena last night as 6,000 seemed a generous estimate... The possibility of being left to one's own thoughts during a break in the action is all but none. Until the game's final television timeout at the 2:14 mark in the fourth quarter, we were constantly bombarded with either the underwhelming Nets Dancers or some odd gimmicks that involved contestants engaging in any number of confusing behaviors,

And he got free tickets, too.

On NetsDaily, some agreed with him, some said they were still hoping for Brooklyn, and some pointed to the arena already open in Newark. Others noted that such a weekday game was bound to draw a small crowd.

Was value-engineered arena driven by revenue analysis?

GumbyFresh, who notwithstanding the moniker is pretty well-situated to observe the financial markets, thinks the news of the value-engineered arena was driven by a cold hard look at the costs and revenues.

The New York Times's Charles Bagli, who appeared on the Brian Lehrer Show this morning, suggested it was a question of financing--a not dissimilar thing.

GF writes:
The crowd of financial types surrounding the project - ratings agencies, potential bond investors, the underwriter Goldman Sachs, and whatever sheisty "sports consultant" they're using to produce revenue predictions - have produced a number for the cash they think the stadium will throw off, and it isn't the number FCR wants. Because this number is not anywhere close to the required debt service and return on equity for a $1 billion stadium.

He's skeptical that shaving construction costs and "ditching Frank Gehry's Shiny Materials" would drive the cost down significantly, given that the Yankees and Mets stadiums went over budget. And he wonders if, when "the final tab on the new uglier stadium" (er, arena) hits $800 million, it's something that the bond market and politicians can support.

I wonder if it's time for some kind of audit of what exactly Forest City plans.

On Brian Lehrer

On Brian Lehrer, the host briefly brought up Atlantic Yards with Bagli, who specializes in commercial real estate.

BL: What about Atlantic Yards, there’s news today that the Ratner corporation is renegotiating, is simplifying the design for the stadium, for the Nets, maybe even firing Frank Gehry because he tends to do higher-end stuff. How much is actually going to go forward, all these high-rises that the people in the neighborhood don’t want?

(Here's Curbed's roundup.)

CB: Last March, Ratner acknowledged that the economy was becoming a problem for that project. It’s huge, it’s expensive, and it’s sort of a good-times project. He said that he wasn’t going to build the office [tower] until he found a tenant. And it’s unlikely he’s going to find a tenant anytime soon. And he said that residential will come more slowly. That left the arena. And it’s a billion dollar arena, probably twice as expensive as any other arena in the country. It’s unlikely that he could get financing for that, in today’s market, anyway, and I don’t expect that to change for a year, at least.

BL: The hole in the ground in Prospect Heights will remain for some time.

Well, the hole is a long-working railyard. It's more that the newly-created empty lots will remain.

CB: Sure. He’s got a team that he wants to put there that’s losing money. So you’re talking about putting a money-losing team into a money-losing facility.

The idea is to increase the value of the team by putting it into a new facility. And it's possible that a cheaper arena might not lose money. But AY is full of uncertainties today.

Brodsky, Brennan to hold hearing on Yankees' bond request a day before IDA hearing

The latest sports facility deals may have hit a bump in the road. Yes, the New York City Industrial Development Authority (IDA) has scheduled a hearing January 15 on $342 million in new tax-exempt bonds the New York Yankees and the New York Mets are requesting from the city, with a board meeting on approval the very next day.

Not so fast, say Assemblymembers Richard Brodsky and Jim Brennan, who chair the Committee on Cities and the Committee on Corporations, Authorities and Commissions respectively. They've scheduled a hearing January 14 "in the face of the refusal by the City to postpone a final decision until a full understanding of the law and the facts could be brought forward."

(Update: Location is 250 Broadway, at 10 a.m. It looks like city officials won't make it.)

"The City's attempt to ram through this complicated project without disclosure of its implications is not acceptable as the Legislature considers what changes in State law it ought to be making," Brodsky said.

"I'm concerned about the consequences of diverting property tax revenue to repay these bonds for such a lengthy period of time for the benefit of a wealthy company," Brennan said.

(Would they say the same about a similar request for the Atlantic Yards arena?)

Witnesses invited include representatives of the Yankees, the New York City Economic Development Corporation, the IDA, and the Finance Department, including the assessor responsible for the curious increase in the rise in assessed land value for Yankee Stadium.

As FCR scales back arena cost, Gehry's role recedes; ESDC, which once touted architect, says developer controls aesthetics

When it comes to Atlantic Yards, you must keep your eye on the ball. Remember, Forest City Enterprises CEO said last month that AY was one of the developer's few projects not on hold. Except it is--and Ratner said the market would determine the company's moves should lawsuits be cleared.

Yesterday, three newspapers reported that architect Frank Gehry was still on the project. However, his role seems to be receding, given that cash-strapped developer Forest City Ratner has brought in what a Daily News source called "value engineering" companies to scale back the cost (but not the footprint) of the arena, announced at $435 million (and already the most expensive ever), which had ballooned to $950 million. It was approved by the state at $637.2 million.

Spokesman Joe DePlasco offered this quote: "We are continuing to speak with many arena experts and working hard to find ways to build a world class venue in an incredibly difficult economic environment."

Financing costs

The Gowanus Lounge's Bob Guskind on December 31 was prescient (and I wasn't):
Our prediction: Developer Bruce Ratner will have difficulty obtaining financing for a nearly $1 billion Gehry arena and the arena will either be scraped or a new version from an off-the-rack firm for $500 million will be built.

Would the arena look more like the Atlantic Lots design produced by the Municipal Art Society (right) than Gehry's latest design (top)? Or would it just look more ordinary, like the Prudential Center in Newark, which cost under $400 million, and is increasingly being suggested as an alternative?

(Update: I should add that the Prudential Center is a state-of-the-art arena and far superior to the Izod Center. But it is a standalone box.)

There's another reason behind the "value engineering," I surmise. There's just no way the land underneath the arena could be valued high enough for the foregone taxes to be sufficient to match the PILOTs, or payments in lieu of taxes, needed to pay off a $950 million arena.

Will valuations have to be "jacked up," as with Yankee Stadium, to pay off a $500 million arena? Stay tuned.

The value of the Gehry name

So why is Forest City Ratner insisting Gehry is still on the job?

Because, even if his role has diminished and his vision compromised, until Gehry walks, he's still a huge selling point for the project. After all, Barclays didn't commit a reported $400 million in naming rights for an arena designed by "just some guy" (to quote former MTA Chairman Peter Kalikow's dismissal of the agency's own appraiser).

And the big spenders who've committed to buying luxury suites in the Barclays Center, as well as the ones still considering purchases, must consider the Gehry cachet. The Barclays Center web site (right) touts Gehry as "one of the world’s most respected and celebrated architects." Other sponsors surely want to back in Gehry's glow.

It was Gehry who wowed New York Times architectural critics Herbert Muschamp (Courtside Seats to an Urban Garden) and (initially) Nicolai Ouroussoff. It was Gehry who drew praise from the Times editorial page, which told us that the buildings "would add a sense of excitement." It was Gehry who convinced New York magazine essayist Kurt Andersen that "Our long architectural snooze is over... Brooklyn should embrace him."

Tensions over the truth

That's why Forest City has regularly insisted that Gehry would design the arena and all the towers, despite his request to bring in other architects and landscape architect Laurie Olin's prediction that other architects would play a role.

(At right, original p.r. materials released 12/10/03. Click on graphics to enlarge.)

Remember, the New York Observer reported in February 2007:
“Laurie has his views,” countered Jim Stuckey, executive vice president of Forest City Ratner. “We don’t believe it is going to take 20 years. We expect that it will take 10.”

He added, “Frank Gehry will be the architect on every one of them.”

The now-departed Stuckey was way wrong on the first prediction. He's likely wrong on the second.

For now, something--loyalty? money? pride? a gag order?--is keeping Gehry from talking.

Remember, in a 5/5/08 press release, he dutifully declared:
“After a productive collaboration, our work for Atlantic Yards has come together in a way that makes me very pleased.... The design for Miss Brooklyn, which we now call Building One, has become very special for me. In response to the new program, it has evolved and has become slimmer, more elegant and more festive and is ideally suited for an office building... I am very eager to continue working on this project with my partner Bruce Ratner.”

Gehry said in January 2006, "If I think it got out of whack with my own principles, I’d walk away." Ouroussoff in March 2008 suggested he was already there.

ESDC defers to Ratner?

The Wall Street Journal reported, in an article headlined Developer May Scale Back Plan for Nets' Brooklyn Arena, that Gehry "has overseen the design of nearly every element" of the Brooklyn arena, but noted a "final design has never been approved.

The money quote came from Warner Johnston, spokesman for the Empire State Development Corporation (ESDC), who told the newspaper "The aesthetic choices are Forest City Ratner's."

He's technically right, given that nothing binds a particular architect to a project, though Gehry's office did produce the Design Guidelines issued under the ESDC's rubric. But city and state and borough officials sure went along for the ride, embracing Gehry, who appears prominently on the developer's web site (right).

On 3/3/05, a mayoral press release and an ESDC press release announcing a Memorandum of Understanding both promised "a Frank Gehry designed world-class arena."

The ESDC's 12/8/06 press release touting the project was unequivocal:
The almost $4 billion Atlantic Yards project designed by world-class architect Frank Gehry will transform an area that is currently blighted and largely underutilized into a vibrant mixed-use community.

There was some wiggle room in the ESDC's Modified General Project Plan: It is currently anticipated that the buildings will be based on designs by Frank Gehry, a world-renowned architect.

The arena was also anticipated to open in 2009, with the entire project to be completed in a decade.

Past bait-and-switch

If it's bait and switch, it certainly wouldn't be the first example. Remember, Forest City Ratner once promised 10,000 office jobs, a nice round number that enticed a couple of columnists.

The developer promised that half of all the housing units would be affordable, then said that ratio would apply only to the rentals. Originally, 900 of the 2250 affordable rentals were promised to moderate-income people earning 50%-100% of Area Median Income (AMI), but now only 450 units would go to that cohort, with 900 units for those earning above the AMI.

What set off the press?

In none of the three articles was a source cited, and the New York Times, in a CityRoom blog post headlined Atlantic Yards Developer Denies Removing Architect, began with a rumor detached from even a source:
The rumor this week concerning the troubled Atlantic Yards project near Downtown Brooklyn had the developer firing the famed architect Frank Gehry, who designed the project’s centerpiece: a $1 billion basketball arena.

But the rumor was sufficient to provoke coverage, right? Maybe they should've told us the source; as far as I know, it didn't come from fans of the project.

It can be dodgy to report on rumors, but the rumor that Gehry stopped work on the project was apparently true, and this one has some credence, too.

I commented that the Times was mis-framing the issue when it reported that Forest City Ratner had not "gotten rid of Mr. Gehry," because the developer, as evidence suggests, could be exploring “less expensive ways to build the arena” by simply not paying him. The Times also reported the claim that Forest City Ratner stopped site work because of lawsuits, which isn't credible.

(The Times article did not appear in print. The New York Post did run a brief article.)

Money worries

Things certainly have changed in three years. New York magazine's Andersen wrote 11/20/05:
Given Ratner’s track record, I asked Gehry if at first he mistrusted Ratner’s professed new dedication to quality and innovation. “Yeah. Yes, I did.” And how did he get over his skepticism? “I’m still getting over it,” he says, although so far, “the budget busts have not been architectural ones. He’s always voted with me on the side of the architectural. He runs into roadblocks sometimes in his company, but it has not been cataclysmic.”

Now, according to the Daily News, Ratner's in arrears with the architect. The headline: Brooklyn Nets Arena cutbacks? Bruce Ratner scales back plans; Star architect Frank Gehry may go.

(Oddly, the Daily News chose a 2005 graphic rather than a 2006 one or the current one.)

Andersen understood the politics behind Gehry's choice:
Ratner isn’t spending 15 percent extra on these new buildings simply because he wants to underwrite cool design. He understands that in Brooklyn, just as his quotas of apartments for poor people and construction jobs for women and minorities were ways of winning over key constituencies, hiring Gehry was politics by other means, sure to please the city’s BAM-loving chattering class. “The spirit of what you say,” Ratner agrees when I posit this theory, “is accurate.”

(At right, Gehry is touted in the second, and final, issue of the Brooklyn Standard "publication," which appeared in Fall 2005.)

Is it about pride?

In an odd coda to this all, a Brooklyn Eagle essay published yesterday an hour before the Gehry news was headlined Atlantic Yards: Is Pride Driving Ratner? In it, Raanan Geberer citied sketchy reports "often from biased news sources" about Atlantic Yards "getting bogged down in problems with construction financing (stemming from the current recession) and lawsuits."

Biased sources like the radical Wall Street Journal? (Eric McClure offers a thorough dissection on NLG.)

The columnist's big thought: This leads one to ask: Is Bruce Ratner’s desire to be acknowledged as a great developer and leader the main force in stubbornly keeping this project on the table?

This leads one to point instead to the big losses suffered by the New Jersey Nets ($22.4 million absorbed by FCE) and the team's declining value.

A Letter to the Editor of the Newark Star-Ledger

A letter to the editor of the Newark Star-Ledger, published January 6, with an ungenerous headline:

A gripe grows in Brooklyn

In the Dec. 28 profile of New Jersey Nets CEO Brett Yormark ("Nets executive promotes New Jersey while selling Brooklyn," Dec. 28) , Yormark implausibly contends that I "totally sold [him] on the Ratner project," the plan to build an arena complex in Brooklyn.

Rather, New Jersey guy Yormark hired me, a Brooklyn tour guide, in an effort to show his future employer, Nets principal owner Bruce Ratner, that, along with having strong qualifications in the sports marketing business, he'd made a modest effort to understand Brooklyn.

The article claims that Yormark "hired a tour guide for a fairly large sum." Yormark's memory is faulty. The sum was about $100 and we spent less than two hours; he didn't have the time to get out of his vehicle, for example, to see Prospect Park.

At that time, the Atlantic Yards project had not gone through any public evaluation, and I knew relatively little about it. Yormark's certainty that the project would be officially approved helped provoke me into later launching a watchdog blog about it.

-- Norman Oder, Brooklyn

Was the Izod Center 57.8% full last night?

The New Jersey Nets won their third straight home game last night, a notable change; the officially announced attendance at the Izod Center was 11,552, or 57.8% of the 19,968 capacity. This photo, however, suggests a much lower percentage.

(Note that all dunks by the Memphis Grizzlies' Rudy Gay, according to the play by play, occurred during the second and third quarters, except for one near the end of the game, when he was fouled by Yi Jianlian, who is not evident in this photo.)

Latest from FCR's foundation: $100K+ to Markowitz series, BAM, Brooklyn Museum, Polytechnic (+ $1M for WTC memorial)

There's some new money for Brooklyn Borough President Marty Markowitz, but the most dramatic thing about the latest Internal Revenue Service filing from the Forest City Ratner Companies Foundation--which last April I called shadowy because of its lack of transparency--is that the total dispensed during tax year 2007, $1.89 million, exceeds the aggregate given out during the three previous years.

That's a bit misleading, however, given that the single largest gift by far, $1 million, was given to the World Trade Center Memorial, a fundraising effort led by Mayor Mike Bloomberg. The mayor has been a staunch supporter of Atlantic Yards, quietly adding $105 million to the city's initial $100 million cash pledge.

The New York Times reported 4/9/08 that Forest City Ratner's foundation has given $5 million to the $350 million raised for the memorial; the filing I examined covers the fiscal year through 1/31/08. Given that no previous FCR foundation gifts have been reported to the IRS, the additional $4 million apparently was (or was to be) delivered after the latest filing deadline.

How it works

The foundation, as I wrote, has a vague, almost tautological mission: "for the charitable purpose of stimulating and encouraging charitable contributions and activities as well as directing and concentrating FCRC's own charitable activities."

Corporate generosity, in this case, serves to bolster ties with charitable and nonprofit organizations in Brooklyn that, not coincidentally, can reciprocate support for FCR endeavors. For some other charities, such as Memorial Sloan-Kettering Hospital, the motivation may be simpler; Bruce Ratner's on the board.

The foundation's activities are often under the radar. Its officers, as I described, are FCR executives and employees; there's no web site for grant-seekers to use, nor listed criteria for grants, nor publicly announced call for contributions. The phone number is the FCR switchboard. Nor is the list of donees described in as much detail (address, purpose) as in the IRS reports from other foundations.

Money for Marty

Also new on this year's list is $100,000 for the Martin Luther King, Jr. Concert Series sponsored by Markowitz.

The web site for the concert series thanks Barclays and Forest City Ratner Companies/Nets among the sponsors, but does not single out the company's foundation.

The New York Post in October pointed out that the two concert series, as well as Markowitz's Best of Brooklyn charity, have since 2003 "raked in between $680,000 and $1,00,075 from various Ratner-affiliated companies and allies."

(Presumably that number is $1,000,075 and that the foundation is just one among the entities.)

$110,000 for the Brooklyn Museum

The foundation continued its support for the Brooklyn Museum with a gift of $110,000, for a total of at least $310,000 over the past three years. The museum honored Bruce Ratner in June, after that most recent gift. (Could the additional $10,000 have helped pay for the event?)

$125,000 for BAM, $200,000 for BAM LDC

In the three previous years, the foundation had given $100,000, $100,000, and $107,035 to the Brooklyn Academy of Music (BAM). Bruce Ratner has been a BAM Trustee since 1989 and chaired its board from 1992 until 2001. BAM has unequivocally supported the Atlantic Yards project.

This year the gift was $125,000.

Beyond that, for the first time, the foundation gave a donation to the BAM Local Development Corporation (LDC): $200,000.

The BAM LDC is part of the Downtown Brooklyn Partnership (DBP), aiming to promote a mixed-use arts district in the area around BAM. Forest City Ratner executive MaryAnne Gilmartin, the developer's point person on Atlantic Yards (and other projects), is on the DBP board.

$100,000 for Polytechnic

In the three previous years, donations to Polytechnic University, Forest City Ratner's neighbor and partner in building MetroTech, totaled $60,000 ($50,000 + $10,000 + 0). In the most recent filing period, the donation was $100,000.

That came before Polytechnic's controversial agreement to become consolidated into New York University. Forest City Ratner has signed a letter of intent regarding development of Polytechnic's air rights.

Other gifts

Other major donations by the foundation during the 2007 tax year included $50,000 to Memorial Sloan-Kettering Hospital (on whose board Bruce Ratner sits), $90,000 to the Brooklyn Children's Museum, and $55,000 to the City Parks Foundation (on whose board Ratner is Honorary Chair).

The FCRC Foundation also gave $6600 to the Futures in Education Foundation, which supports Catholic education; Ratner's on that board, as well.

Today's Andrew Zimbalist quiz

So, about what situation did the oft-quoted sports economist Andrew Zimbalist declare, "The notion that the stated pretext has anything to do with the reality is absurd"?

A. The estimate that the Atlantic Yards arena would host 225 events a year, assuming that the arena in the Meadowlands would close and no arena would be built in Newark.

B. The claim that, absent tax-exempt bonds, the Yankees, aka "Bronx Bombers," would have been forced to leave the city and state of New York.

C. The idea that simply building market-rate housing for a project like Atlantic Yards boosts local tax revenues.

D. That tax-exemptions claimed by sponsors of college bowl games to entice public funds would boost "climatic, recreational, commercial, agricultural, social, educational and economic interests."

E. The notion that "Forest City Ratner was simply taking advantage" of existing tax exemptions rather than additional government subsidies and special benefits in the Atlantic Yards plan.

Answer: D

Bonus: Zimbalist himself is responsible for A, C, and E.

Documents emerge about stadium subsidies; mayoral candidates shy away from criticism

The big news in today's papers is that, as the New York Times reports, in an article headlined City Gives Up Its Stadium Suite in Exchange for Cash: After intense criticism, the Bloomberg administration has given up a perk it worked fervently to secure: a free luxury suite at the new Yankee Stadium.

But lower down in the article there's a hint at the larger story:
“Does the Bloomberg administration really think that giving up a suite at Yankee Stadium is going to soften the blow that this project has had on city taxpayers?” said Bettina Damiani, director of Good Jobs New York...

Indeed, though Rep. Anthony Weiner, a stated mayoral candidate, criticizes the suite deal in the Times, Tom Robbins in the Village Voice points out that both Weiner and Comptroller William Thompson, a fellow candidate, are unwilling to criticize the larger question of taxpayer funds supporting the stadium via tax-exempt bonds.

If they're unwilling to raise that issue, it's unlikely they'd look closely at a similar funding scheme for the planned Atlantic Yards arena. The main critic of the stadium deals is Assemblyman Richard Brodsky.

(There are two levels of subsidy. First is the difference between taxable and tax-exempt bonds. Much larger, and more debatably, is whether tax-exempt bonds repaid by payments in lieu of taxes, or PILOTs, represent a full subsidy.)

Data emerges

Also in the Voice, Neil deMause reports that the New York City Industrial Development Agency just released its cost-benefit documents for the $342 million in new tax-exempt bonds the Yankees and the Mets are requesting from the city, a week ahead of a January 15 public hearing. (This is actually more transparent than usual, though deMause notes that a late-afternoon release of documents ensures they get little scrutiny in the next day's press.)

Notably, the city's cost-benefit analysis reflects only on the impact on the city, not that on the state or federal governments, which presumably are taking a bigger hit. Rep. Dennis Kucinich has been investigating whether the federal government should supply such subsidies.

deMause writes:
Covering 116 pages, the paperwork... goes into mind-numbing detail on just what gewgaws the teams would be using the money for: For the Yanks, such items as $38,608,134 for "Counter Terrorism Structure Hardening" and $4,750.000 for "Perforated Metal Mesh Panels Upgrades"; for the Mets, "Structural hardening and upgrade perimeter security" and "Modification of office and rotunda flooring material" (no price breakdowns provided).

All of which is well and good, but what of the question that this hearing is meant to address: Why should the city be giving the teams tax-subsidized financing to buy all this stuff?.... On this matter, the 116 pages are silent: Beyond recalculating the city's original dodgy figures for how much tax revenue it expects from the overall stadium projects (the new projections went up -- duh), there's no detail at all of the costs and benefits of the new bonds themselves. The city Independent Budget Office has estimated the public cost of the new round of bonds at about $96 million, most of which will come out of federal coffers (since bondholders will mostly be ducking federal taxes), but you'd never know it from the city's official paperwork.

Among the costs are $40 million in construction delay from litigation, $10.5 million for suite-level upgrades, and $34.6 million for contingencies. Go to page 56 of the Yankees document (PDF) to see the role of ubiquitous environmental consultant AKRF.

The threat to leave

Part of the application dutifully requires the Yankees to certify whether "the Applicant, but for the contemplated financial assistance," would "locate the related jobs outside the State of New York."

Remember, when asked about the threat to leave by Brodsky at a hearing last July, city official Seth Pinsky was vague. When asked by Rep. Dennis Kucinich in October, the Yankees' Randy Levine was similarly vague, though he claimed to reporters that New Jersey has wooed the Bronx Bombers--a claim for which there's no specific evidence.

The document released yesterday states:
A senior officer of the Yankees has publicly stated that absent financial assistance from the New York City Industrial Development Agency to develop and construct the Project, the Yankees would have been forced to leave the Bronx, New York. Although no alternative location for the Yankees was identified, the possibility of jobs being relocated outside of the State of New York was never ruled out.

There's a bit of a difference between "forced to leave" and "never ruled out."

Brett Yormark, remixed: Nets CEO's shifting predictions on arena opening date

A good salesman always sounds convincing, even if underlying facts change the spiel, and New Jersey Nets CEO Brett Yormark is at the top of the game.

In three radio or TV interviews over less than 15 months, Yormark offered unwavering predictions about the opening date of the Atlantic Yards arena (aka Barclays Center) in Brooklyn. First, he said 2009, then 2010, then 2011.

Just take a listen to this one-minute audio file. (Right-click on the link to open up a new window.) I’ve interpolated my own questions into the remix, but the original quotes come from the interviews transcribed below.

Why such confidence?

Why does Yormark radiate such confidence? I suspect the goal is to attract additional sponsors and buyers of suites. If the arena seems like a mirage, it'll be harder for them to sign on the bottom line.

Yormark sometimes qualifies his certainty, but mostly he doesn’t; he just moves on and offers a new prediction. Maybe that’s a habit developed in SportsWorld, where interviewers are often fawning or unprepared.

By contrast, the Empire State Development Corporation and Forest City Ratner more frequently use words like “expected” or “anticipate,” prudently leaving wiggle room in case the announced schedule won’t be met.

Bonus: at right is an excerpt from press materials distributed 12/10/03, in which Forest City Ratner suggested completion of the arena was "set for the summer of 2006."

“We’ll be in Brooklyn for the '09-'10 season”

In a 9/12/07 interview on WFAN radio, Yormark mentioned the move four times; two times he hedged slightly and the other two times he expressed certainty.

He was asked: What have your challenges been, marketing this New Jersey team? Because New York has always traditionally been a Knicks town. What have you overcome to get the name out there, particularly with this move to Brooklyn?

BY: Well, it has been challenging. When you think about what the next couple of years has in store for us: we’re leaving New Jersey, we’ve been very honest about it, and we’ll be in Brooklyn for the '09-'10 season. And our goal is not to alienate our core fan base in New Jersey, but at the same time encourage people from the other side of the river to start to test drive us, to sample us."

A little later a caller suggested that the move was more likely three years away, not two. Yormark hedged slightly.

BY: There's a lot of activity on the site right now, we're doing a lot of demolition. We're relocating the railyards. We've just ordered steel and we're expecting, hopefully, to break ground, in October-November. It usually takes about 24 months to build an arena that's 850,000 square feet, so we think we're going to be right there for the '09-'10 season, and very excited about it.

A little later, however, he returned to certainty.

BY: And when you think of Brooklyn, if it wasn't a borough it would be the fourth largest city in the U.S., it's been underserved in the area of sports entertainment for years, and we will be there for the '09-'10 season, and it's going to be one of those great moments in sports.

A bit later, he hedged once again.

BY: We’re extremely excited, as you know, about our move to Brooklyn, but we do have at least two years in Jersey, and while we’re in Jersey, we’re going to provide a great, great experience, a great product.

As I pointed out that the time, even Forest City Enterprises executives, speaking a day earlier, didn’t think lawsuits would be cleared until the middle of 2008.

Anything other than a faux groundbreaking couldn’t begin until then. Thus, the process Yormark said would take 24 months wouldn't have begun until 2008, which moved the arena in 2010, not 2009.

Actually, Bruce Ratner has said it would take 30 months and the ESDC’s construction schedule suggests 32 months. Though it's possible that, in the absence of other major construction project, construction could be accelerated, until such a speed-up is announced, we shouldn't accept a 24-month estimate.

[Update 10/22/09: the new architects say it would take 26 months.]

Bonus: Yormark contradicts himself

Yormark, in a 12/12/08 Star-Ledger profile, improbably suggested that, if not for me, he wouldn’t have taken the job with the Nets: “And he's the guy responsible for me having this job -- totally sold me on Brooklyn, totally sold me on the Ratner project."

Let’s go to the audiotape. He told WFAN in the above interview:
This is a job that I had my eyes on for quite some time. I started my career in 1988 with the Nets selling tickets. And my dream was always to come back and to lead the franchise.

“We plan on... being there for the '10-'11 season"

In a 7/30/08 Fox Business Channel interview focusing on sponsorship interviews, Yormark was given the opportunity to pitch the Nets.

His answer:
Things are going really well for us. In May, we opened up the Barclays Center showroom, in the New York Times Building. And we are selling our suites, and doing quite well. What we’re finding is that big companies, and brands, are investing, for the long haul, and we’re hoping that that investment will be part of the Barclays Center.

With respect to our other advertisers that we’re talking to, with respect to being involved with the Barclays Center, that’s going well, also. We recently announced seven of our 14 founding partners. A couple more are on the way. So we’re very excited about the interest. We plan on breaking ground in November and being there for the '10-'11 season.

As I pointed out at the time, Bruce Ratner had told shareholders a month earlier that construction would start in January 2009 and take two-and-a-half years--a timetable far different from the developer's public statements.

So Yormark, whose phrase “plan on breaking ground” offered a bit of a hedge, certainly knew better.

After all, an expected eminent domain suit had not yet been filed in state court--it was filed a few days later--and there was no reason to think it would be resolved by November. But that admission might have deterred some additional "founding partners."

An arena in three years? “Absolutely”

On 12/2/08, after Forest City Ratner had stalled all work at the MTA’s Vanderbilt Yard--but before that was widely known--WFAN host Craig Carton pressed Yormark (audio) and the CEO finally responded with an ironclad prediction.

CC: So let's get down to the bottom line here. You're not moving to Brooklyn.

BY: We are moving to Brooklyn.

CC: You're not moving to Brooklyn.

BY: We're moving to Brooklyn.

CC: Why can't you guys come clean and just be honest?

BY: We're moving to Brooklyn.

CC: How are you going to move to Brooklyn? [Chuckles] They haven't put a shovel in the ground yet.

BY: Craig, as we all know, it’s challenging to build in New York. And this project has presented its challenges, but we are going to get to Brooklyn. Right now--

CC: Give me a realistic time frame, because it ain’t going to happen in the next two years, or the next three either now, right--

BY: A realistic time frame is in Brooklyn, operating in the summer of 2011, being there for the '11-'12 season.

CC: So being there in the fall of 2011, so three years from this season--

BY: That’s correct--

CC: --you think that you’ll have everything built, the infrastructure done, and you will bounce a basketball in an arena in Brooklyn in three years?

BY: Absolutely. Convinced of it.

Drop-dead date?

Co-host Boomer Esiason then moved on to another topic, the Barclays naming rights recommitment, and Yormark said that nine founding partners had signed on. Then Carton returned to the timetable.

CC: There's got to be a drop-dead date. You can't keep Net fans and the borough of Brooklyn out there waiting and waiting and waiting.... Ballpark, what's the date on that?

BY: I think 2009's the year. Right now--

CC: If you don't put a shovel by next New Year's Eve, then you might come back and say 'You know what, we're not going to Brooklyn'?

BY: I wouldn't say that but I would say 2009 is the year. I say that for lots of different reasons. We've got really one piece of major litigation that remains... the eminent domain case. There will be a hearing in January, hopefully a favorable decision by the end of March... We just had a favorable ruling with the IRS, to use tax-exempt financing for the building. And Barclays, obviously, has reaffirmed their position. So I feel that 2009 is our year.

So, while Yormark is absolutely convinced that an arena will open in 2011, he's leaving open the option for construction to begin after 2009--meaning an opening date no earlier than 2012.

Timetable questions

Yormark may have convinced himself, but his best-case timetable is very unlikely.

Not only must current and future lawsuits have to be cleared by mid-April for groundbreaking to meet Bruce Ratner’s 30-month timetable, but also the credit markets have to recover.

If the timetable is, in fact, 32 months, the lawsuits would have to be dismissed by mid-February.

And that's assuming nothing else goes wrong. Given the shifting predictions--remember that 2006 opening date?--caution, rather than confidence, seems more prudent.

When will Yormark start offering 2012 as a best-case scenario?

Privately, I suspect, he’s already doing so. Publicly, however, he’ll first have to face some interviewers armed with inconvenient facts.