"Little guy" Gehry says Atlantic Yards is "stopped"; what are the implications?

As architect Frank Gehry turns 80, a valedictory interview in his home newspaper, the Los Angeles Times, is headlined Frank Gehry considers an accomplished past and uncertain future. Notably, when it comes to Atlantic Yards, Gehry considers himself "the little guy."

Christopher Hawthorne writes:
Most distressing of all for Gehry, two projects that he saw as capstones to his career, gigantic mixed-use developments on L.A.'s Grand Avenue and at Brooklyn's Atlantic Yards, have both been put on hold.

"I've had a disappointing year, couple of years, with Grand Avenue and Brooklyn," he said in a wide-ranging conversation in his office last week in which he was by turns ruminative, weary and hopeful. "All my life I've wanted to do projects like that, and they never came to me. And then all of a sudden I had two of them. I invested the last five years in them, and they're both stopped. So it leaves a very hollow feeling in your bones."

In response to the global slowdown, Gehry, like many of his peers, has been forced to radically cut his staff, which he said is now half the size it was just a year ago.

What does "stopped" mean?

Unexplained is the meaning of "stopped." Developer Forest City Ratner, of course, is chomping at the bit to break ground on the arena. The major legal cases may be cleared this spring, though appeals are possible, but financing remains uncertain.

Gehry could have easily have said the project is "on hold." So either he was infelicitous in his language or he knows more about the developer's plans than the rest of us.

Alternatively, he could have meant that the project is, for him, "stopped," given that his designs for an arena are undergoing major changes.

Gehry's statements back up (if not completely confirm) the reportage in the Wall Street Journal and New York Daily News that he's laid off his staff working on Atlantic Yards. It's too bad he wasn't asked a specific question.

Who's the little guy?

Hawthorne writes:
And Gehry is clearly stung by the charge that his most mammoth projects -- the Brooklyn development, in particular, which was originally planned to include as many as 16 towers -- have been vehicles for self-aggrandizement forced on unwilling communities. After all, he has long painted himself as a lonely talent pushed to the periphery of the profession in the early decades of his career by myopic developers and less principled colleagues.

In his mind, he doesn't run roughshod over the little guy, as he has been accused of doing by neighborhood activists in Brooklyn. He is the little guy.

Well, that's Gehry's mind. Remember that Gehry said he'd meet with local residents but was never given permission to do so. And that he disparaged local critics by cracking that they'd be "picketing Henry Ford."

DDDB points to Gehry calling the Miss Brooklyn tower "my ego trip" and his relish at the opportunity to "build a whole neighborhood practically from scratch and fit it into an existing fabric and make something special out of it."

ESPN's Simmons on NBA contraction: "Welcome to the No Benjamins Association"

In a piece cleverly headlined Welcome to the No Benjamins Association, ESPN columnist Bill Simmons points to the parlous economic future faced by the National Basketball Association (NBA).

He notes that, at previous All-Star Games, the topics were various:
This season? We talked about money. Constantly. We didn't even know about the line of credit on the horizon; that didn't leak until the Monday after the All-Star Game. (On Thursday, we learned that 12 teams will accept the league's offer to borrow $200 million from JPMorgan Chase and Bank of America, with between $13 million and $20 million available to each team...) We knew about layoffs of employees within the league and various franchises. We knew various local and national sponsors were bailing, most notably car companies and major banks (two staples for the NBA). We knew certain franchises were losing significant wads of money and reacting accordingly.

Attendance down

Simmons points to the common dodge in which attendance means tickets distributed, not gate count, and the fewer attendees, the lower the ancillary income:
How did we get here? The economy turned in August, well after deposits had been sent in for season tickets, courtside seats and luxury suites. The league would love for you to believe that attendance hasn't been affected, but the NBA's official tally counts only total "customers," counted as paid tickets, comps (seats given to celebrities, sponsors, friends of the team or whomever, a number that can be fudged any way you want), discounted tickets and no-shows. The numbers don't reflect any falloffs with parking money, concessions, merchandise and restaurant/bar revenue around arenas... They definitely don't reflect aggressive giveaways like Chicago's recent buy-one-get-one-free promotion or Memphis' Pepsi Family Plan Pack (four tickets, four Pepsis and four hot dogs for $48)... So, yeah, attendance is "up" 1.9 percent, as this recent Sports Business Daily story would lead you to believe. But not really. Especially when you include Seattle's move to a sold-out arena in Hijack City and how it skewed the overall numbers.

Hijack City? That's Oklahoma City, a location Simmons cannot bear to pronounce.

Suites lost?

The financial upside in the Nets' move from East Rutherford to Brooklyn would come significantly via naming rights/sponsorships and luxury suites, but Simmons has a warning about the latter:
Here's a little game to play during your next NBA outing: Look around for how many suites are dark. (You'll notice them specifically in the corners or behind the baskets.) A dark suite means either that nobody bought it or that somebody did buy it for the season, then made the decision, "Screw it, let's save the $1,200 [or whatever the number is] on food and drink and not give tonight's suite tickets to anyone." (Note: Only a handful of NBA teams control the concessions in their arenas.) That makes the less desirable suites somewhat of a sunk cost -- those companies can't get the money back for the season, but at the very least, they won't lose more money on that purchase. What will happen next season? They just won't buy the suite.

Home court disadvantage

Simmons cites a phenemonon I noticed in December when I saw New York Knicks fans dominate the crowd in the Izod Center:
That has been a recurring theme in general: Fans of popular visiting teams (Boston, New York, Cleveland, the Lakers) overpowering home arenas of unpopular teams. Flick around on any busy NBA night, and you'll see a staggering number of empty seats between the baskets in the first 15 rows in Miami, Memphis, New Jersey, Charlotte, Indiana. … I mean, we're a few weeks away from the NBA adopting Vegas' current policy of closing off as much of the blackjack area as possible so the open tables seem crowded.

Which teams will move?

Simmons counts the Nets among the teams most likely to move:
Franchise Hot Potato hinges on five factors in all, although only three need to be in play. You need a team with a dwindling fan base and/or bailing sponsors and suite/courtside customers. (I count 11: Indiana, Memphis, Milwaukee, Sacramento, New Jersey, New Orleans, Miami, Orlando, Minnesota, Charlotte and Philly.) You need a team trapped in an aging stadium that can't drum up local money for a new one. (I count three: Sacramento, Jersey and Milwaukee.) You need an owner who purchased his team because he was worth a ton of money ON PAPER … only now, he's worth significantly less and might even be worth $10 for all we know. (Consensus candidates for this list: Phoenix, Hijack City, Jersey, Memphis, Indiana, Atlanta, Milwaukee, Charlotte … and, surprisingly, Sacramento and Cleveland.) You need cities with NBA-ready, modern arenas either finished or about to be finished that would love nothing more than stealing a team. (Definitely Kansas City, Anaheim, San Jose, Louisville, Tulsa and Pittsburgh; possibly Columbus, St. Louis; and just for fun, let's throw in Montreal and London.) And you need a struggling team that can actually extricate itself from its lease.

Note that Brooklyn's not on the list, because the arena doesn't exist yet. Simmons predicts that several NBA franchises (guesses ranged from three to eight) will move cities, get sold or be taken over by the league.

He reflects on the Oklahoma City move:
The other 29 NBA cities learned an ominous lesson from SonicsGate: If you don't heed every arena-related wish of your team, no matter how insane or unrealistic those wishes are, then it might move and the commissioner's office will not protect you. As long as we have cities like K.C. and Anaheim waiting with open arms, teams will keep moving. And they will.

NHL troubles, and Newark

Other sports have it much worse, Simmons suggested, including baseball and hockey; in fact, one executive predicted "fifteen NHL teams would go under within the next two years (and was dead serious)."

What if the New Jersey Devils are in trouble? Surely the city of Newark, which wants those rent payments at the Prudential Center, would want to ensure that the Devils thrive, and that another team joins them to fill open dates.

Attendance promotions

Simmons takes a lighthearted view toward ticket promotions, with his top example from the Yormark twins:
When I write that NBA teams are unleashing aggressive promotions on their fans to boost attendance numbers, I'm not exaggerating. My favorites from this season: Snowbird Ticket Exchange (Nets): New Jersey season-ticket holders can swap their tickets for a pair of tickets for the NHL's Panthers if they're ever in Florida, and vice versa. No, really.

Will Nets be sold?

On NetsDaily, NetIncome (aka Bobbo) observes that the players will lose out if they resist owners' attempts to control costs, and teams will move.

He suggests that the Brooklyn arena has a decent chance, but if developer Bruce Ratner can't get financing, he'll sell the team.

Yormark claims (incorrectly) that Bloomberg saluted AY affordable housing

Yesterday, commenting on the most recent court ruling regarding the Atlantic Yards case, New Jersey Nets CEO Brett Yormark said, in a Fox Business Network (FBN) interview (at 3:45 of video):
"I'd love to echo the mayor's sentiments when he said we've got to get this project started, the affordable housing, the jobs, it's much-needed."

Well, Atlantic Yards backers may have memorized the affordable housing mantra, but that doesn't mean everyone else has done so. Why does Yormark have to make things up?

Here's the statement Mayor Mike Bloomberg issued:
“The Atlantic Yards project will create thousands of jobs and generate badly-needed tax revenue. The court’s unanimous affirmation today that the review and approvals processes were comprehensive and properly completed is a big step towards the start of construction.”

DDDB noted that affordable housing is on the back-burner.

Lack of skepticism

Unskeptical FBN host Alexis Glick enthused over the "Snowbird Ticket Exchange" in which New Jersey Nets (basketball) ticketholders and Florida Panthers (hockey) ticketholders can attend games in two leagues. She didn't ask her guests, twin CEOs Brett and Michael Yormark, how many tickets have actually been used. (ESPN's Bill Simmons is more skeptical.)

And she accepted the Forest City Ratner hype that Thursday's decision constituted the 22nd victory in court. The developer must be asked to back that number up.

Lawsuit coverage round-up: missing the story and, in most cases, the big picture

The most surprising thing about the coverage of yesterday's big appellate court decision rejecting the case challenging the AY environmental review is how little there is.

Missing the story in the first place

[Updated] Of the three big newspapers in New York City, only one covered it in print.

The New York Times's CityRoom blog headlined its brief post Legal Victory for Atlantic Yards Developer and, in what may be a first (in a Times story, as opposed to a Blogtalk roundup), actually linked to my coverage.

While the Times didn't think the story fit for print, it did cover two other legal disputes: a union hearing involving actor Jeremy Piven's exit from a play and a trial involving a Saks saleswoman charged with theft.

The Daily News story isn't online, but it's a three-sentence round-up, under the headline "Yards scores in court," in the NYMinute column. While the article mentions that "opponents... vowed to appeal," it says nothing about the misgivings expressed by the court and the fiery concurrence by one judge.

I don't know why the New York Post passed on the story, given that it has put far less important AY stories into print, especially when it has exclusives. Was it too complicated? Given that both Forest City Ratner and Develop Don't Destroy Brooklyn issued press releases, some story would've been easy to slap together.

Missing the overall point

Most of the other coverage either simply indicated that the case was dismissed or called it a big win for developer Forest City Ratner or even--as the developer's press release suggested--a big win for the project.

While the dismissal does help the project move forward and the developer was a secondary defendant, the big winner was the Empire State Development Corporation (ESDC), the state agency that was the main defendant and whose decisions, by law, must receive extreme deference from the court system.

In Newsday: Court tosses Atlantic Yards environmental lawsuit

On NY 1: Court Greenlights Atlantic Yards Review

In AM New York: Atlantic Yards wins legal victory

In Crain's: Atlantic Yards developer wins key legal victory

In the Brooklyn Paper: Breaking news! Ratner wins a big Yards case

In the Record of New Jersey: Nets' Brooklyn move clears hurdle

On WNYC: Court Tosses Atlantic Yards Environmental Lawsuit

Getting closer to the point

Three articles, I'd suggest, get closer to the complexity.

The New York Law Journal: Concerns 'Legitimate' But Project Proceeds

The New York Observer: Ratner Wins Another Round in Legal Fight Over Atlantic Yards

AYR: Appellate court, despite some misgivings, dismisses EIS case; one judge concurs but slams blight study, says his hands were tied

Something's wrong

While it is important to point out how the decision helps the project proceed, the court ruling and surprisingly bitter concurrence indicate that something's wrong.

Concurring Justice James Catterson believes that the Empire State Development Corporation's blight study was in many ways bogus, calling one argument "ludicrous."

And the main opinion, upholding the blight study, made no attempt to assess whether it was arbitrary for the state to call a lot built to 60% of its allowable development rights as underutilized.

Nor did those justices acknowledge, as Catterson did, that the original contract for a Blight Study required consultant AKRF to study market trends in and around the project site, but AKRF did not do so.

So, when Bruce Ratner says, “This project has been reviewed as thoroughly as any in the city and now it is time to put these cases behind us and get to work,” not only should it be pointed out--as NLG did--that nobody's getting to work just yet, but also that a formal and apparently extensive review by the unelected ESDC does not mean a truly thorough review.

Appellate court, despite some misgivings, dismisses EIS case; one judge concurs but slams blight study, says his hands were tied

In a decision that constitutes a crucial advance for the Atlantic Yards project (even if only an arena is planned as of now), an appeals court has rejected an appeal in which 26 community groups challenged a trial judge's dismissal of a wide-ranging challenge to the project's environmental review.

In the opinion (Develop Don't Destroy Brooklyn, et al., v. Urban Development Corporation dba Empire State Development Corporation, et al.), the judges in the Appellate Division, First Department, took pains to express some skepticism about the project, calling it “purportedly transformational” and noting that the ESDC, rather than being a neutral agency, had “promoted” Atlantic Yards.

And one judge, in a concurrence that had the tone of a dissent, slammed the ESDC for a "ludicrous" claim regarding the blight study.

However, the main opinion ignored a contract signed by the ESDC that gives the developer vastly more time than established in project approval documents.

Ultimately, the judges acknowledged that “our power to review the substantive adequacy of an EIS [Environmental Impact Statement] is extremely limited,” thus dismissing challenges regarding issues of terrorism, the project’s build timeline, and the findings of blight.

An appeal is planned, though the Court of Appeals, the state's highest court, is not obligated to hear the case. One more case, on eminent domain, is pending, after oral arguments Monday; it is even more of a long shot, given constraints on courts interfering with agency decisions.

A political issue

The court concluded:
While we do not agree with petitioners' legal arguments, we understand those arguments to be made largely as proxies for very legitimate concerns as to the effect of a project of such scale upon the face and social fabric of the area in which it is to be put. Those concerns, however, have relatively little to do with the project's legality and nearly everything to do with its socio-economic and aesthetic desirability, matters upon which we may not pass. To the extent that the fate of this multi-billion dollar project remains, in an increasingly forbidding economy, a matter of social and political volition, the controlling judgments as to its merits are the province of the policy-making branches of government, not the courts.

Of course the policy-making branches of government gave no Brooklyn residents or elected officials any voice in the project approval.

A fiery concurrence

Justice James Catterson, who was most skeptical during the oral arguments last September, slammed the ESDC in his concurrence “for being used as a tool of the developer to displace and destroy neighborhoods that are ‘underutilized,’” agreeing that consultant AKRF had failed to fulfill its Blight Study contract by ignoring market conditions, and criticizing the Blight Study for looking at contemporaneous conditions rather than those that existed when the project was announced in 2003.

While Catterson rejected the main opinion's core reasoning about the “perfunctory ‘blight study,” he wrote that his hands were tied: “Reluctantly, therefore I am compelled to accept the majority's conclusion that there is sufficient evidence of "blight" in the record under this standard of review.

Reaction from petitioners

"We are going to request that the Court of Appeals review this case because it is the only court that is able to require a harder look at the facts, rather than blind obeisance given by the Empire State Development Corporation to the dictates of Forest City Ratner," said lead attorney Jeffrey S. Baker, who represents the 26 petitioners, including Develop Don't Destroy Brooklyn, which organized and funded the case.

"Judge Catterson’s concurrence that the ESDC 'is ultimately being used as a tool of the developer' is the reason why extreme deference is not warranted in this case," he said in a statement issued by DDDB. "The Court of Appeals is the only court that can break the chain of previous cases, and we eagerly await our opportunity to argue before it."

Baker added, "The appellate court is constrained by previous decisions regarding the issue of blight, decisions which have shown a high level of deference to government agency decisions. While we recognize the limitations this court is under, we do not think this is a similar type of case, particularly with the severe condemnation of the ESDC’s actions and decisions as put forth in Judge Catterson’s concurrence. This case will provide the Court of Appeals an opportunity to make it clear that judicial review is not a meaningless exercise and require agencies making blight determinations to do so for legitimate reasons and not simply to facilitate the goals of a developer with political connections."

To do so, however, the Court of Appeals would have to agree to hear the appeal; it is not obligated to do so, given that two judges did not dissent. (One member of the original five-person panel, Jonathan Lippman, did not participate in the decision; he's now Chief Judge of the Court of Appeals.)

The petitioners have 30 days to file the appeal. Besides DDDB, they include, among others, the Council of Brooklyn Neighborhoods, NY Public Interest Research Group/Straphangers, the Sierra Club, and the Fort Greene Association.

Reaction from FCR

In a press release headlined (and misspelled) “APPELATE DIVISION RULES IN FAVOR OF ATLANTIC YARDS,” Bruce Ratner, CEO and Chairman of Forest City Ratner Companies, stated, “Once again the courts have decided in favor of Atlantic Yards.” (Full statement here.)

(Actually, the courts ruled in favor of the defendant agencies--ESDC, PACB, MTA--along with the developer.)

“This project has been reviewed as thoroughly as any in the City and now it is time to put these cases behind us and get to work,” he continued. “Today’s decision speaks comprehensively about the review and approval steps followed for this project and unanimously validates the process.”

“The courts have consistently ruled in favor of this project because it is good for the City, the State and the borough,” Ratner said, alleging that this was “the 22nd consecutive ruling in favor of Atlantic Yards.” (Um, no.)

Skepticism at the start

The main opinion begins with some skeptical language:
Respondent Forest City Ratner Companies (FCRC) has proposed to construct a vast and purportedly transformational mixed-use development on a 22-acre swath of real estate in Brooklyn…

...The project has been shepherded through its preconstruction phases and otherwise promoted by respondent New York State Urban Development Corporation, doing business as the Empire State Development Corporation (ESDC).

Areas of dispute

The judges stated:
While the principal focus of this appeal would appear to be upon the propriety of the ESDC's UDCA findings that the non-ATURA project blocks are blighted and that the proposed arena qualifies as a "civic project," petitioners in this hybrid article 78/declaratory judgment action have also raised numerous challenges to the adequacy of respondents' compliance with the State Environmental Quality Review Act (SEQRA), several of which survive for our review.

Again, the court has limited scope:
However, our power to review the substantive adequacy of an EIS is extremely limited. It is by now a familiar refrain that we may not disturb an agency determination as substantively flawed unless it is affected by an error of law, arbitrary and capricious, or constitutes an abuse of discretion…

Irrational timeline?

Were the "build years" used in the EIS irrational and thus skewed the ensuing analysis of the project's environmental effects?

The court made no attempt to distinguish between a construction timeline that addressed the length of time it might take contractors and the likelihood that the timeline would be adhered to, and ignored a contract signed by the ESDC that gives the developer vastly more time to build the arena and Phase 1, and no deadline to build Phase 2.

The court stated:
The record, however, discloses that in selecting the build years to be used in the EIS, the lead agency did not arbitrarily select a build year it found favorable but relied upon the detailed construction schedules of the project's highly experienced general contractor and upon the opinions of its own consultants and an independent contractor. It is, of course, possible that the lengths of the projected build-out periods (4 years for the first phase of the project, including the arena, and 10 years for the remaining elements) were underestimated, but the ultimate accuracy of the estimates is neither within our competence to judge nor dispositive of the issue properly before us, which is simply whether the lead agency's selection of build dates based on its independent review of the extensive construction scheduling data obtained from the project contractor may be deemed irrational or arbitrary and capricious, and it may not. The build dates having been rationally selected, there can be no viable legal claim that the EIS was vitiated simply by their use.

Real estate trends addressed?

Did the ESDC fail to study and give due consideration to real estate market trends in the non-ATURA project area-- the blocks in the footprint on Pacific and Dean streets--and thus not appropriately consider alternatives to the proposed project?

The court concluded:
Petitioners' contention is rather that the lead agency did not take into account in the EIS prevailing real estate trends, particularly as they affected and had become manifest in the non-ATURA project area at the time of the project's announcement, and thus could not have reasonably concluded that the proposed project was to be preferred to its alternatives for its purportedly unique capacity to alleviate blight in the non-ATURA blocks. This argument, however, necessarily supposes that the lead agency's judgment as to the relative desirability of the proposed project must have turned upon the project's purported efficacy as a means of improving the non-ATURA blocks. It is, however, clear from the EIS that the lead agency's rationale for preferring the proposed project was not so singularly grounded. The proposed project, in distinction to the alternatives preferred by petitioners, included an architecturally distinguished arena that would house a major professional sports franchise, an elaborate new subway entrance, a new and improved LIRR rail yard, improved pedestrian and bicycle linkages connecting the project and the surrounding neighborhoods on the north-south axis, an on-site stormwater drainage system, and eight acres of open space landscaped by Laurie Olin. It also made provision for significantly more affordable housing than would have been developed under alternative scenarios, and, by reason of its scale and range of uses, promised economic and fiscal benefits exceeding those expected to be generated under the other plans.

To be sure, as the EIS discloses, there were more adverse impacts associated with the proposed project than with its less ambitious alternatives, but, on balance, there is no tenable argument that the lead agency's preference for the FCRC project, arrived at after an evidently conscientious weighing of alternatives, was not rationally and sufficiently based on the project's distinctive constellation of otherwise unattainable benefits.

Whether the weighing of alternatives was “evidently conscientious” remains in dispute.

Terrorism

Was the ESDC's environmental review deficient due to its failure to address the risk of a terrorist attack?

SEQRA contains no provision expressly requiring an EIS to address the risk of terrorism and, indeed, it would not appear that terrorism may ordinarily be viewed as an "environmental impact of [a] proposed action" within the statute's purview.

The court left open the question of whether consideration of the prospect of terrorism might lie within the scope of the environmental review, but observed “that the project at issue does not pose extraordinary inherent risks,” unlike, for example, the siting of a nuclear storage facility or a biological weapons laboratory.

The creation of an project “dedicated to routine residential, commercial and recreational purposes,” even “in the form of a major urban development situated at a pre-existing transit hub,” does not clearly increase the risk of terrorism, the opinion states, though acknowledging that security must be part of the planning of any public project, particularly one concentrating large numbers of people.

Unmentioned is whether security concerns, as the petitioners contended, could lead to road closures, as at the new arena in Newark.

PACB approval

Was the Public Authorities Control Board’s (PACB) determination approving the ESDC's financial participation in the project improper in the absence of environmental findings?

Under SEQRA, the requirement to make certain environmental findings is premised upon the relevance of the EIS to the agency's decision. However, the court said, the PACB's approval of the ESDC's financial participation in the project was governed by closely drawn statutory criteria specifically relevant to a distinct, statutorily prescribed inquiry—in other words, whether there were funds committed by the state.

Effect of eminent domain case

While the petitioners also challenged the designation of the non-ATURA project area as blighted ("substandard and insanitary") and thus not a legitimate “land use improvement project,” the court noted that federal courts had held that the ESDC's exercise of its eminent domain power, including within the non-ATURA project blocks, was supported by the project's rational relation to "several classic public uses whose objective basis is not in doubt," among them the alleviation of blight.

Only in “the most extraordinary cases - those in which there is no conceivable public purpose to be served” should courts not defer “to the public purpose findings of the legislature and its agencies,” the court said.

The court stated:
The essential purpose of the blight finding in connection with condemnation, i.e., to qualify property for urban renewal, is not different under the ESDC's enabling statute, and, accordingly, the adequacy of blight findings in the two contexts should not be judged by different standards. What is fundamentally at issue in both contexts is the extent of the government's unitary power to define, and act in pursuance of a public purpose. It makes no difference that the agency through which the government has here acted, the ESDC, is organized as a public benefit corporation.

In other words, the fact that the ESDC is unelected has no bearing.

Blight study

The court found no reason to challenge the Blight Study, given the legal standard:
While it is possible to disagree with the agency's conclusion that the area at issue is blighted, and to argue that the blight designation is not warranted by the area's character and potential, on this record, all that is involved is a difference of opinion. In such a case, it does not matter whether we would be inclined to agree with petitioners; we are bound to defer to the agency to which the determination has been legislatively committed.

… The issue posed is not which of the parties has more persuasively characterized the area in question, but whether there was any basis at all for the exercise by the agency of the legislatively conferred power to make a blight finding, and plainly there was.

Unmentioned is the failure to conduct a market study, which was part of the original contract with AKRF.

The court noted that it’s nigh impossible to challenge such blight studies:
In the many years since Kaskel, agency blight findings have been found deficient in this State only where they were utterly unsupported (see e.g. Yonkers Community Dev. Agency, 37 NY2d at 484), and there has been no case in which the condition of an area has been deemed sufficiently at odds with an agency blight finding to raise a factual issue as to whether the agency exceeded its authority in making the finding.

The opinion, in a way, contained a defense of ARKF:
The point to be made is that "blight" has proved over time to be a highly malleable and elastic concept capable of enormously diverse application. This is not in the main attributable to the ingenuity of consultants eager to please the developers who pay their bills, but because the concept, within the field of its likely use, is more facilitative than limiting.

Not a civic project?

Is a professional arena a "civic project" under state law, because it “will be leased on a long-term basis, and provide financial benefit to private parties, the court asked?

In response, the court cited precedent that “a sports arena, even one privately operated for profit, may serve a public purpose.”

Unmentioned is the $1 annual lease and the granting of highly lucrative naming rights to the developer.

A critical concurrence

Catterson’s concurrence began critically:
Because I believe that the New York Urban Development Corporation Act… is ultimately being used as a tool of the developer to displace and destroy neighborhoods that are "underutilized," I write separately. I recognize that long-standing and substantial precedent requires a high level of deference to the Empire State Development Corporation's finding of blight. Reluctantly, therefore I am compelled to accept the majority's conclusion that there is sufficient evidence of "blight" in the record under this standard of review. However, I reject the majority's core reasoning, that a perfunctory "blight study" performed years after the conception of a vast development project should serve as the rational basis for a determination that a neighborhood is indeed blighted.

Unlike the main opinion, Catterson noted that, in February 2005, shortly after a memorandum of Understanding (MOU) was signed by the city, state, and developer, the Metropolitan Transportation Authority agreed to give the developer rights to develop above the Vanderbilt Yard—three months before a belated Request for Proposals was issued.

Who’s responsible for blight?

Catterson wrote:
There is no dispute that the MTA allowed the portion of the Project footprint which it owns, the Vanderbilt Yards, to deteriorate into a substandard, unsanitary, and blighted condition.

Though he didn’t say so, that constitutes an explicit contradiction of the ESDC, which punted on who’s responsible.

Wrong timing re non-ATURA blocks

While Catterson didn’t question blight in ATURA, he stated that the 2006 Blight Study made a crucial error in examining the non-ATURA blocks:
In my view, any determination that these blocks were substandard or insanitary should properly be based on a snapshot of the conditions that prevailed at the time that the Project was announced by FCRC in 2003. Any blight study that does not reflect this temporal limitation would necessarily allow the mere announcement of the massive project to predetermine the outcome of the study. On this point, I believe that the petitioners argue persuasively that any proposed or intended development in these blocks such as the Project would curtail any other private development; and that no new development would occur on property that might be subject to the broad powers of condemnation as wielded by a coalition of the ESDC and FCRC.

Scope of contract and timing

Catterson noted that the contract with AKRF required it to analyze residential and commercial rents on the project site and within the study areas; analyze assessed value trends on the project site, and compare to sample blocks with comparable uses in the study area, such as the Atlantic Center; and describe residential and commercial vacancy trends, among other things.

(That contract was not released by the ESDC but obtained by AYR via a Freedom of Information Law request.)

Catterson wrote blisteringly:
In my view, the petitioners are correct in asserting that the blight study failed to comport with the majority of the specific criteria set out in AKRF's contract. Furthermore, ESDC's contention that "as a matter of law," ESDC could only look at conditions contemporaneous with the study, which was conducted years after the announcment, is ludicrous on several levels.

He continued:
Initially, it should be noted that ESDC offers no legal support for that claim other than the obvious point that ESDC is permitted by statute to revitalize blighted areas. Second, ESDC's contract with AKRF as described above, clearly contemplated that AKRF would analyze both assessed value trends and current economic activity at the site and surrounding area. Finally, the obvious point raised by petitioners and dismissed by ESDC is that if the non-ATURA properties were in the midst of an economic revival, it would be counter to ESDC's mandate to step in, stop all productive development, and, in partnership with a private enterprise, develop the neighborhood according to its own vision of urban utopia, complete with professional basketball for the masses.

He noted in a footnote “that AKRF and the ESDC were recently criticized by this Court for their failure to maintain a relationship separate and distinct from the developer in another gargantuan project,” that involving Columbia University.

Effect of developer’s purchases

Citing several examples of recent condo conversions, he noted that “this rapid, private residential redevelopment of the area was commonly known and publicly reported in newspapers and periodicals.”

However he cited a contradiction:
Were this redevelopment more expansive and pervasive in the non-ATURA area, the petitioners would carry the day. Unfortunately for that position, FCRC's purchase of a significant portion of the non-ATURA area as well as many other dilapidated properties still held in private ownership and set out in the record supports, by the barest minimum, the agency's determination of blight. It is clearly within the agency's expertise to consider the effect of FCRC's conscious decision to allow its properties located within the non-ATURA area to lay fallow.

"Destruction of the neighborhood"

He concluded:
While I deplore the destruction of the neighborhood in this fashion, I cannot say, as a matter of law, that the ESDC did not have sufficient evidence of record to find "blight."

Paterson on stimulus spending: transparent, immediate, and effective

At a Leaders Briefing on Economic Recovery yesterday, Gov. David Paterson laid out (video) the areas in which the state expect to spend federal stimulus funds.

They include transportation, housing (especially weatherization), energy issues, water and sewer treatment programs, and the establishment of broadband service.

"Those are the areas we want to get shovels in the ground and people working as soon as we possibly can," Paterson said. "We want these projects to be transparent, so that there is no waste in the process. We want them to be immediate, so we can get people back to work as soon as we possibly can. And we want them to be effective, meaning that they will put the most people back to work on the projects that will serve the greatest public policy and also public need at the same time. Those are the three principles that we wish to operate from."

During the session, Timothy Gilchrist, who heads the Economic Development Recovery Cabinet, explained that $14 billion in project requests are pending for $4 billion in stimulus funds for infrastructure. Some will be eligible, he said, and some won't. They can be tracked on the web site economicrecovery.ny.gov.

"The Governor's required to certify that each project has received the full review and vetting required by law," Gilchrist said.

AY eligible?

Could Atlantic Yards qualify as transparent, immediate, and effective?

It would be tough to put the Atlantic Yards railyard on the list, as I suggested.

And, argues DDDB, the project would not be in compliance with the American Recovery and Reinvestment Act, because it's not shovel-ready, according to the bill's provisions, and it's a no-bid project.

State share, private share

One questioner pointed out that there were approved transportation projects that presumed 80% funding from the federal government and 20% from the state. Could the federal money be used to pick up the state share?

Gilchrist responded, "What I should've said earlier on all of this is, the federal government, for the transportation funding, has a requirement for maintenance of effort... The governor will have to certify that he maintained the same amount of transportation funding as was expected and reflected in the budget before this."

Wouldn't that be even more important regarding expected private funding?

Why Brooklyn arena tax revenues likely would be lower than projected (and why the IBO should take another look)

New York City's Independent Budget Office (IBO) may not be ready to recalculate a cost-benefit analysis for the planned Atlantic Yards arena, but there's surely a reason to do so, because one key statistic has likely changed, and one key assumption was likely wrong from the start.

As I describe below, that could mean a 23.2% decline in expected new spending, and a significant--if not quite as high--decline in sales tax revenues. If so, there'd be even more evidence that the arena would represent a loss to the city rather than, as previously analyzed by the IBO, a "modest fiscal surplus."

And it would be another reason to tilt the balance between public and private benefit from the project--the question at the heart of the AY eminent domain case argued Monday--a bit toward the latter.

My estimates are hardly foolproof. But any future study should offer a range of potential outcomes, rather than rely on past efforts at precision, which are inherently flawed.

And a decline in revenues would raise further questions about whether the project deserves federal stimulus funds, despite the developer's lobbying.

Questionable assumptions

Let me explain. When Smith College sports economist Andrew Zimbalist, Forest City Ratner's paid consultant, calculated expected tax revenues from the planned Atlantic Yards arena, one key element was what Zimbalist called the "recapture of tax revenues presently generated in New Jersey," current home of the Nets basketball team.

That estimate depends on multiple variables.

1) Do the arena attendance figures remain accurate? Likely no.

2) Did Zimbalist used the appropriate formula to calculate how many fans from New Jersey attended games in New Jersey? Again, likely no.

3) Did Zimbalist accurately estimate how many of those New Jersey fans would go to Brooklyn and thus represent new spending in New York? Perhaps yes at the time, but likely no at this point.

Keep in mind that, in terms of economic gain for the city (as opposed to gain for the developer), the key is not whether the Brooklyn arena would fill up, but how many fans would be come from out of state and deliver new revenues. (Spending by New Yorkers would not be a boost, since it mostly would be diverted from spending on other local events.) And if that New Jersey number declines, then estimates for new New York City tax revenues go down, as well.

Based on a dodge

First, an aside. When paid by Forest City Ratner, Zimbalist in his 5/1/04 report (Estimated Fiscal Impact of the Atlantic Yards Project on the New York City and New York State Treasuries) praised Atlantic Yards as different from most sports facility projects because it involved moving a team across state lines, not building a new arena for a team already in place. That means the AY arena would generate new local and state taxes, and New Jersey would lose out.

Unmentioned was that the burden fell on federal taxpayers to subsidize tax-exempt bonds for the new facility. Zimbalist, when not paid by FCR, wrote in a book published a year earlier that "there appears to be no rationale whatsoever for the federal government to subsidize the financial tug-of-war among the cities to host ball clubs."

He conveniently forgot that criticism in his report for FCR, which was not peer-reviewed but was taken seriously by the New York Times, among others.

Attendance numbers game

The IBO and Zimbalist used average attendance figures of 14,765, based on the first 32 home games at the Continental Airlines Arena, now Izod Center, in two seasons, 2002-03 and 2003-04. (The Nets actually drew more, averaging 15,184 in 2002-03 and 14,952 in 2003-04, according to ESPN.)

This year, announced attendance figures, though slightly higher, have been more suspect. For example, when the average was reported at 16,098, Julian Garcia of the Daily News wrote December 11, that "seems suspiciously high to those who regularly attend games at the Meadowlands."

Al Iannazzone of the Record, writing the next day, suggested several reasons for the dropoff, including the economy and the lingering promise that the Nets would move to Brooklyn. (Now the regularly-shifting official Brooklyn opening date is 2011, though many doubt that and I think 2012 is a more likely best-case scenario.)

Real attendance figures

At the halfway point of this season, the number was 15,153. (It's since dipped to 14,739, which is nearly the number Zimbalist used.)

However, if attendance (at the halfway point) is overstated by 10%, or 1515, then the gate count would be 13,638. If the overstatement is 20%, or 3031, then the average gate count would be 12,122.

I suggested a 25% fudge factor, which would turn the 15,153 average into 11,365 attendees. But I'll use the 20% discount in some calculations below.

Sales tax revenues are applied to ticket sales, concessions, and novelties. New revenues diminish if those paying for tickets (or getting them for free) don't attend, since there'd be no spending on concessions or novelties. They also diminish if tickets are given away or significantly discounted.

That suggests that current attendance, even if reported as slightly higher than the average in Zimbalist's report, produces lower tax revenues because so many tickets are essentially distributed free.

Zimbalist's numbers

So, how did Zimbalist calculate new New York tax revenues? He assumed that 30% of current New Jersey fans of the Nets would also attend games in Brooklyn.

There are three flaws in his assumptions:
1) the current total attendance
2) the calculation of current Nets fans from New Jersey
3) the calculation of how many of those fans would go to Brooklyn.

For now, though, let's look only at the second issue--how to estimate the number of current New Jersey fans.

Part of that calculation was simple. Of current season-ticket holders, 67.9% live in New Jersey, with "the large majority of the remaining holders live in New York, with a small proportion living in Connecticut and even smaller share in Pennsylvania," according to his report.

What about the rest of the fans? Zimbalist could have simply extrapolated from the season-ticket numbers to approximate the home states of those attending on a game-by-game basis, then adjusting the New Jersey percentage upward to account for the fact that those making game-day attendance decisions likely live closer to the arena.

Instead, his formula lowered the number of Nets fans from New Jersey. Lacking Nets data on the home state of fans who are not season-ticket holders, he instead used data regarding fans who attend New York Jets games at the Meadowlands: 51% from New Jersey, 44.7% from New York and 4.3% from Connecticut.

So, using those proportions for the balance of Nets fans, his blended average of New Jersey attendance at the Meadowlands arena is 60.5%, down from the 67.9% of season-ticket holders.

Basketball vs. football

In their May 2004 critique of Zimbalist's report, Jung Kim and Gustav Peebles demolished his assumptions regarding attendance:
Any knowledgeable local sports fan knows that the Jets, due to their glory years at Shea Stadium and the historical territorial split between Jets and Giants fans, have a large chunk of their fan base in Queens and Long Island. To boot, we all know that football fans must travel to New Jersey to see the game live, which is hardly true for basketball.

Also, I'd add, the far more infrequent football schedule and weekend game days make it more likely fans would decide to make a relatively long trip.

Kim and Peebles noted that the decrease in New Jersey attendance from 67.9% (season-ticket holders) to 60.5% has significant consequences for Zimbalist’s calculations. They wrote:
If, as we assume, there are more NJ-based fans who have to make the above decision, then this places a greater burden on NY-based fans in terms of fan attendance. In revenue terms, a greater share will be diverted from existing sales taxable expenditure in New York. Following Dr. Zimbalist’s other assumptions, we find that 55.9% of spending at the Atlantic Yards arena would be new to the NY economy, compared to his figure of 59.4%.

Looking at the numbers

I think the attendance percentage would end up even lower, but first, let's look at the calculations under both sets of assumptions, as noted in the chart below.

Even if there were a larger base in New Jersey, leading to slightly more fans came from New Jersey, under the Kim/Peebles calculations, the smaller number of existing New York fans means there'd have to be a larger number of additional New York-based fans to fill up the Brooklyn arena.

Remember, the new New York fans--the largest segment of attendees--would mostly be re-channeling entertainment dollars, so the larger that number, the lower the new revenues. Only a fraction of the revenue from current New York-based fans would represent new spending.

(Click to enlarge; note that the percentages are very slightly different from the text above.)


20% lower attendance

What happens if we apply the above assumptions to a 20% lower attendance? The need for additional new fans from New York goes up and, consequently, the amount of new spending would go down, to 52.4% under the Zimbalist assumptions and 49.5% under the more credible Kim/Peebles assumptions.

(The chart below and subsequent charts are my adaptations of an original Kim/Peebles spreadsheet.)


If fewer New Jersey fans come to Brooklyn

But we shouldn't stop there.

Why should we assume, as did Zimbalist, that 30% of New Jersey fans of the Nets would also attend games in Brooklyn? Though Kim/Peebles accepted that assumption, at this point, the long goodbye may have soured a larger number of New Jersey fans. That means a smaller percentage of the New Jersey fan base would come to Brooklyn.

Let's adjust that assumption to 20% of current New Jersey fans. If applied to the 2004 attendance figures, the percentage of new spending goes down, from 59.5% to 55.3% under the Zimbalist assumptions, or from 56% to 51.3% under the Kim/Peebles calculations.


But we're not done yet. Let's apply the assumption to a reduction in current attendance of 20%. That means fewer New Jersey-based fans would come to Brooklyn, and to fill the arena the team would have to draw even more New York-based fans--not 8708 under the original Zimbalist calculations but perhaps 11,672--who currently don't go to Nets games.


New spending down 23.2%?

What's the implication of these numbers? It would bring new spending down from 59.5%, under the original Zimbalist calculations, to 45.7%, under my calculations, which assume:
--a lower attendance base
--a larger number of New Jersey-based fans
--a smaller percentage of those fans coming to Brooklyn
--a larger number of new fans who already live in New York.

The reduction from 59.5% to 45.7% represents a decline of 23.2%, a figure that should be applied to expected sales tax revenues.

New revenue calculations

What does that number mean in practice?

Zimbalist started us along the way;
When I alter the assumption that 30 percent of current Nets attendees from New Jersey also attend games at the Atlantic Yards arena, the following results obtain. When the share is lowered to 25 percent, new sales tax revenues fall from $6.43 million in 2008 to $6.26 million, or a decrease of 2.6 percent. When the assumed share is raised to 35, the sales tax revenues grow to $6.62 million in 2008, or an increase of 2.9 percent.

If we assume that only 20 percent of Nets fans from New Jersey come to Brooklyn, the projected 2008 sales tax revenues fall to $6.08 million.

Looking more closely

Now things get a little more complicated. First, remember that Zimbalist's calculation applied to likely inaccurate assumptions regarding the New Jersey fan base, so it should be recalculated, with the projected revenues lowered (which I'll do below).

Under Zimbalist's original calculation, a reduction from $6.43 million to $6.08 million represents a cut of 5.44%. However, the charts above suggest a reduction from 59.5% of new spending to 55.3% of new spending--a 7.05% drop. So the numbers are obviously inexact.

Consider that the final chart shows new spending at 45.7%. That implies a 23.2% decline from the 59.5% figure in Zimbalist's report. However, if we extrapolate from the difference between the numbers in the above paragraph, the reduction in revenue may be slightly less than 23.2%, perhaps 20%,

Bottom line

But the bottom line is that an arena that was producing a modest surplus for the city under Zimbalist's calculations may well--after additional city contributions and more plausible assumptions regarding the home state of new fans--represent a loss.

The IBO, in its September 2005 Fiscal Brief on Atlantic Yards, calculated a net fiscal impact of $28.5 million for the city. That may already be a loss, given that the city's contribution of $100 million (Debt Service) has more than doubled.

More than 60% of the new tax revenues from arena operations would come from sales tax revenues, according to the IBO. That's nearly $70 million. Subtract 20% and that's another $14 million reduction in the net fiscal impact.

The role of the IBO

Am I sure of these calculations? No, but neither was Zimbalist--who at least, in footnotes, offered alternate numbers--nor was the IBO, which accepted Zimbalist's assumptions rather than provide multiple scenarios. The IBO used attendance figures of 14,765.

It also "used Forest City Ratner Companies' assumption that about half of those attending Nets games at the Atlantic Yards arena will be from the ranks of those attending now, based on data on recent attendance levels at Nets games. Assuming that 20 percent of the spending by the other half of the fans attending the Nets games will be new to New York City, IBO estimates that nearly 60 percent of Nets’ games sales revenue will be new to the city’s economy."

That's a rounding off of the 59.4% figure. But what if it were 45.7%, as noted in the above chart?

When the IBO does a recalculation, and it should, it should produce a range of results, given that differing assumptions can result in very different predictions.

New spending beyond current fans

To further explain Zimbalist's calculations--incorporated by Kim/Peebles and the IBO--note that they include an adjustment for new revenues from new fans:
The money they spend at the new Brooklyn arena will be largely recirculated within the New York economy, and for the most part will not represent new revenues.
However, some of these expenditures will be new either to the New York City or the New York State economy or both. The sources of this new money are the following. Some people from out of state (principally from New Jersey and Connecticut) will be new Nets fans. They will be attracted either to the new Frank Gehry-designed arena, to new players on the team or to the team itself. Second, other attendees will attend Nets games as an add-on to their leisure expenditures. Primarily, these individuals will be from upper income brackets who do not need to reduce other leisure-time expenditures in order to be able to afford Nets games. Third, others may attend Nets games and reduce out-of-town leisure spending. Fourth, some corporations may purchase premium seating and catering services as an add-on to their entertainment budgets. Fifth, some of the spending at the Atlantic Yards arena will come from fans in Nassau County, Suffolk County, or Westchester County who did not attend games at CAA. Together these three counties have a population of 3.74 million. When these fans spend money at the new Atlantic Yards arena on tickets, concessions, or novelties, it will bring new sales tax revenue to New York City (though not to New York State.)

Another reason for doubt

Remember, Zimbalist's report had another huge fundamental flaw, especially regarding revenues from non-basketball events in Brooklyn. He wrote:
Many of the numbers used in this report concerning Nets attendance, ticket prices, construction costs and other items come from projections done by or for FCRC. I have discussed these estimates with FCRC and they seem reasonable to me. FCRC projects that the arena will not host an NHL team and that it will host 224 events during the year (assuming the eventual closing of CAA, no new arena in Newark, no NHL and no minor league hockey events at the Atlantic Yards arena.)

While the CAA (Continental Airlines Arena, now Izod Center) may or may not close, a new arena in Newark opened in 2007. As Kim and Peebles pointed out in their report, his assumption was inherently flawed because it gave no place for the New Jersey Devils to play.

The Empire State Development Corporation, in responses to a comment about the closing of the New Jersey arena in the Atlantic Yards Final Environmental Impact Statement, simply punted, claiming that estimates of events at the Brooklyn arena--though the same number as in Zimbalist's report--came from a different source.

But when the IBO does its recalculation, it should factor in the presence of a competing arena in New Jersey.

Avoiding AY example, Schick, former ESDC leader, proposes "transparent" investment fund for commercial real estate

Former Empire State Development Corporation (ESDC) president Avi Schick, in a Daily News op-ed headlined How to get N.Y. building again: Create a real estate financing fund, suggested that the city and state Comptrollers should allocate $2 billion of the $200 billion in pension assets they manage to create a fund to finance commercial real estate.

And that would be matched from union pension funds, banks and others, thus financing a $5 billion real estate portfolio, though of course "requiring substantial equity participation from those seeking financing." (The term "substantial" isn't defined.)

Schick's idea has drawn severe criticism for ignoring market issues and for serving to further the interests of Daily News publisher, Mort Zuckerman.

But first let me point out how Schick's guidelines for public investment set out--at least on paper--a severe contrast with the way his former agency has shepherded the Atlantic Yards project.

Contrast with AY: transparency

Schick recommends:
* Investment guidelines, including the expected cost, timing and return, must be publicly articulated before any financing is provided. This transparency will help guarantee that investment decisions will be guided by professionals, not politics.

Only a vague "expected" timeline was provided by the ESDC in its approval of the Atlantic Yards project, and there was no assessment of the expected return--an issue in eminent domain case heard in state appellate court Monday.

In other words, Schick is setting out a higher standard. And while the justification may be a larger percentage of direct public investment in a project, the widespread special benefits for the Atlantic Yards project constitute a significant amount of publicly provided advantage.

Contrast with AY: no lobbying

Schick writes:
* Lobbying must be prohibited. The news that the banks receiving TARP money lobbied Treasury was one more sign that it was still business as usual in D.C. If pension funds are on the line, it must be all about the numbers, not who you know.

"Who you know" has been a watchword of developer Forest City Ratner, which has long been one of the state's top spenders on lobbying and has a particularly cozy relationship with all-powerful Assembly Speaker Sheldon Silver.

Lately, the developer has deployed former Senator and uber-lobbyist Al D'Amato, apparently to direct federal stimulus funds to the Atlantic Yards project.

Contrast with AY: equity stake

Schick writes:
* The fund must be given an equity stake in projects that obtain financing. The government will create substantial value by establishing this fund, entitling it to capture a portion of those profits when it exits the investment.

As noted above, while this may represent a larger percentage of direct public investment in a project than in Atlantic Yards, the widespread special benefits for the Atlantic Yards project constitute a significant amount of publicly provided advantage.

Indeed, Schick's formulation highlights Brooklyn Borough President Marty Markowitz's stunning willingness to direct federal money to the project without any attendant public share.

Avoiding mistakes of the past?

Schick concludes:
It also would avoid the mistakes of the past, when government stood idly by while unchecked excesses led to the real estate bubble. The looming liquidity crisis represents no less a market failure than the free money era that just ended, and government intervention is just as necessary to correct it.

All of which Nicole Gelinas of the Manhattan Institute, in a commentary headlined The Developers’ Bailout:Propping up politically connected real estate won’t help New York, calls "a truly awful idea."

She points out that there's already a glut of empty real estate, and preventing buildings from falling into default isn't necessarily a desired result--because the correction in a long-climbing market would benefit the new businesses taking cheaper office space.

And she points out that the state pension fund "has a history of allegedly choosing managers based on political contributions" and, yes, developer Bruce Ratner is already lobbying for federal stimulus money for his "centrally planned Brooklyn boondoggle that already benefits from hundreds of millions of dollars in public subsidies."

Bailing out Zuckerman?

New York Post columnist Steve Cuozzo, in a column yesterday headlined A HIDDEN AGENDA AT THE DAILY NEWS, came out swinging:
EVERY big newspaper has conflicts of interest - yet most publishers manage to be subtle about promoting their extracurricular agendas. Our distinguished opposites at the Daily News, however, seem guided by the principle that "desperation is blind."

He notes that Schick is still the chairman of the Lower Manhattan Development Corp., which has a "sorry record" in failing to dismantle the Deutsche Bank building as planned.

And he writes:
Schick's taxpayer-soaking plan would only pile more catastrophe on an industry that's mostly itself to blame for its plight - and which is inextricably bound up with the faltering News' fortunes.

News publisher Mort Zuckerman is also the chairman of the publicly traded real-estate company Boston Properties. Boston, America's largest commercial landlord, has gotten itself into a pickle in Manhattan that threatens the finances of the whole company.

Pension funds and "predatory equity"

Just a year ago, the shoe was very much on the other foot. Housing advocates had discovered that city pension funds had a stake in "predatory equity" investment funds that were buying rent-regulated buildings on the expectation that they could dislodge tenants and jack up rents--a tactic that has proven to be very unsustainable.

(See the example of Stuyvesant Town/Peter Cooper Village, which was bought by Tishman Speyer--not predatory equity--as detailed in New York magazine.)

What emerged was a new residential real estate investment principle, involving an effort to ensure fair treatment of tenants; the creation of a process in which the pension funds opted out of sketchy properties; and an effort to pursue Economically Targeted Investment (ETI) Programs.

The goal was "a market rate of return that is commensurate with the risk assumed, to fill capital gaps in New York City, and to provide specific quantitative or qualitative benefits to New York City and, in particular, its low-, moderate- and middle-income communities and populations."

Yes, that's a market intervention, and thus subject to scrutiny. But the beneficiaries would not be the Mort Zuckerman's of the world.

Noticing New York's critique of major projects, and the path not taken of site preparation (at Hudson Yards and AY)

If you want a one-stop critique of megadevelopments and major projects in New York City, go to Michael D.D. White's latest Noticing New York post, headlined UN-FUNNY VALENTINES ARRIVING LATE: YOUR COMMUNITY INTERESTS AT HEART.

There White takes on stadium projects, Brooklyn Bridge Park, the Columbia University expansion, the Rudin/St. Vincent’s Real Estate Deal, and a whole lot more. Atlantic Yards, not surprisingly, is deemed "Poster Child For Everything Developmentally Bad."

Site preparation + stimulus

But probably the most resonant observation regarding AY comes in the segment White devotes to the Hudson Yards project, to be built on railyards that require some very expensive platforms. (The Vanderbilt Yard, less than 40% of the AY site, also would require a platform but not one as extensive.)

White observes:
If the government (as opposed to a private developer) was preparing the site it would not be necessary to postpone the site’s preparation at this time. Site preparation during the current economic downturn might even be cheaper. As it would be a public work, it would arguably be in the running for funding through federal stimulus, an important part of that being that the prepared parcels would later be bid out. But stimulus money cannot be given to a private developer already signed onto the deal because it would totally change the equation based upon which the developer bid to pay the public a low amount for the site. Used that way, the money would eliminate the risk developer assumed and constitute an award of enormous private benefit to the developer without bid.

The same would be true regarding Atlantic Yards, despite Brooklyn Borough President Marty Markowitz's push for federal stimulus money for the railyard.

Public investment

White observes:
Would the current change in the economy resulting in the devloper's default have made it possible at this point to switch over and have the government prepare the site, especially as time now seems to have borne out that this would have been the better way to proceed in the first place? Yes, the developer missing its payments presented precisely this valuable opportunity. BUT that is exactly what the administration elected NOT to do when, instead, it extended the developer’s rights to the 26 acres.

Extending the developer’s rights seems consistent with a city administration bias, as exprssed by the adminstration itself, to bequeath extended monopoly rights to individual large developers for large swaths of acreage that they will have on an “unfolding” basis “across many years” and “economic cycles” no matter the “various economic conditions” encountered along the way. Why does the Bloomberg administration do this? Is there benefit to this particular administration’s making single large, unstructured and inchoate bequests that apply for decades going out, thus sidestepping multiple opportunities for bids and checkpoints on accountability going forward into the future? By their very nature these arrangements limit participation in ownership of the city only to the very largest developers, and the arrangement works out only if the very large developers happen to remain solvent for longer than many people’s careers.

Loss of the public realm

White concludes
Strip things down to their core and you find that something is being sold. What is being sold is what belongs to public. Sometimes it is referred to as the “public realm.” That means such things as the right not to have our streets and avenues closed and sold off, the right to our historic neighborhoods, the right to good urban design, livable density and the right not to have our parks or amusement areas like Coney Island given away for development or speculative purchase. Real estate taxes should be paid by everyone, without special friends of the mayor being excused or allowed to intercept those moneys for their own private use and benefit. Subsidies which come out of the public’s general funds (once those taxes have been collected) should not be made special and piled on the mayor’s favorites.

Government’s function should be to protect the public interest, not to sell off the public’s assets. Government functions should not be privatized and handed out to developers whose interest is adverse to the public. Eminent domain should be the public’s special and rarely used tool for those special public improvement the public itself creates and owns. It shouldn’t be handed out for private use by developers to enrich themselves however they chose by accumulating and owning more of the city.

The next mayoral race?

White muses:
All of this provokes the thought: If all our communities have similar interests in common then, collectively, these communities are in the majority. As a potentially powerful majority with common concerns at heart, there is no reason for our communities to be losing the fights to the mayor that they are. Or does the reasoning run that we must put up with this perpetual selling off of the public realm because Bloomberg is, in other respects, such a good mayor? Would one argue, as some do, that Bloomberg is needed as a mayor because his financial acumen is critical to the city? But the answer to that is the reverse. Just as the mayor has been squandering public realm assets by selling them off to the big real estate developers throughout the city, Bloomberg has also conducted the city’s finances in a squandering city-fiscal-health-debilitating way.

However, on issues of development, Bloomberg's major challengers (so far), Rep. Anthony Weiner and Comptroller Bill Thompson, haven't launched a significant critique and likely won't do so; they're also dependent on the same forces.

Longshot candidate Tony Avella, perhaps, will be the only person to raise the critique.

"If a shot falls in the woods," well, what if there weren't many Nets fans there to begin with?

Last night the Meadowlands hosted just about as exciting a game as you could possibly imagine," wrote Henry Abbott yesterday in ESPN's TrueHoop blog, referring to the New Jersey Nets-Philadelphia 76ers contest that ended with an astonishing half-court buzzer-beater from Nets point guard Devin Harris.

But his local newspaper, the New York Times, didn't send a staffer to the game, and it was covered with three paragraphs of bland AP copy. (The New Jersey papers, the Star-Ledger and the Record, surely played it big, and New York's tabloids hardly ignored it.)

The Times's omission--actually, they cover the Nets, but inconsistently--says more about shrinking newspaper budgets than anything.

How many people were there?

But Abbott's headline, If a Shot Falls in the Woods..., has another meaning: what if there weren't that many Nets fans in attendance in the Izod Center in the first place?

The reported attendance was 13,235, or 66.3% of the 19,968 capacity. Now, I know that attendance reflects tickets distributed, not gate count, but does anyone think they came even close to the reported total?

Keep in mind that the game was competitive until the end, so few should have left early.

(Photos are crops of copyrighted photos Jesse D. Garrabrant/NBAE via Getty Images. Note that crops on the first photo and the second photo
eliminate the value as intended--the hoops action--to focus on the crowd size.)

In a swift half-hour, eminent domain argument touches on balance of public and private benefit--but not much more

In a quick but somewhat disjointed 30-minute argument before a four-judge appellate court panel yesterday, attorneys in the Atlantic Yards eminent domain case touched lightly but inconclusively on several contested issues.

Does the state constitution, as the plaintiffs contend, require a stricter evaluation of public use--the bedrock of condemnation--than does the federal constitution? The judges in the ornate Brooklyn Heights courtroom of the Appellate Division, Second Department, seemed willing to consider the argument, but also injected skepticism.

The plaintiffs gained ground on one potentially important point. While the defendant Empire State Development Corporation (ESDC) had in legal papers claimed (without foundation) that a document quantified the private benefit to developer Forest City Ratner, that document went unmentioned.

Indeed, an ESDC lawyer conceded no such analysis comparing private and public benefit was performed, but quickly argued that no such analysis was required. Indeed, case law suggests that even if there's substantial benefit to a private entity, the condemnation should be confirmed if public purpose is dominant--and an ESDC lawyer claimed there's "overwhelming public benefit."

Still, one judge called the absence of such an analysis a "critical point."

Back to ESDC, or to higher court?

The bottom line, contended plaintiffs' attorney Matthew Brinckerhoff after the hearing, is that the case should be remanded to the ESDC. "Then we would finally find out what Ratner's profit projections were, and that could be compared to all the allegations of public benefit," he said.

The state found that public benefits include blight removal, affordable housing, transit improvements, open space, and a publicly-owned (though leased for $1) arena, and says that those benefits are palpable enough to preclude any balancing.

"This [profit] is something Ratner and his companies have zealously guarded," Brinckerhoff said. "What they don't want is for the public to understand that they're going to make billions of dollars when it was never bid out."

Should his clients lose in this court--and that's more likely than not, I'd say--the case likely will wind up in the state's highest court, the Court of Appeals, Brinckerhoff suggested. "They made it clear last week [in a ruling] that they're leaving open the possibility that the state constitution is not as forgiving of governmental takings as the federal government."

Assuming a decision on this case comes down within two months, the next step could last from two to seven months, he said. That would make it very tough to break ground, as the developer now predicts, in the spring or summer, and further confirms that 2012, not 2011, is a more likely best-case scenario for an arena opening. (The Nets just announced a new arena sponsor, in a seven-year deal for "low seven figures" a year.)

But it may not threaten the developer's goal of getting financing by the end of 2009, a deadline set by the Internal Revenue Service for tax-free bonds, though Develop Don't Destroy Brooklyn spokesman Daniel Goldstein, the lead plaintiff, said he doubted the deadline would be met.

Also pending is a decision in the appeal of the dismissal of the case challenging the AY environmental review; it was argued in September and a decision is overdue.

(Here's coverage in the Brooklyn Paper, the New York Observer, and the Bergen Record; the latter was the only daily newspaper to send a reporter.)

More discussion in federal court

The relatively brief hearing was a graphic reminder why the plaintiffs—originally 13 but now nine homeowners and business owners, and commercial and residential tenants—initially went to federal court, where, a little more than two years ago, their arguments questioning the public purpose of the project got a thoughtful and extended airing.

Ultimately a judge dismissed the case, concluding that there were sufficient public benefits to preclude bringing the case before a jury, an appellate court affirmed that decision, and the Supreme Court declined to hear the case.

The state’s Eminent Domain Procedure Law (EDPL), set up in 1977 to expedite and streamline eminent domain cases, allows only 15 minutes per side in oral arguments, with no witnesses nor discovery. The case starts in the mid-level court, the Appellate Division, and an appeal of an adverse decision is discretionary, unless there's a two-judge dissent.

The lawsuit, Goldstein et al. v. Empire State Development Corporation, is organized and funded by Develop Don’t Destroy Brooklyn.

Leading off

The judges yesterday seemed unsympathetic to the plaintiffs' argument, previously untested in court, that a section of the state constitution approved at the 1938 Constitutional Convention requires projects developed with state subsidies or loans to be restricted to low-income people.

Jennifer Levy of South Brooklyn Legal Services, the first attorney to argue for the plaintiffs, began somewhat nervously and soon found herself interrupted by Justice Randall Eng, who pointed out that this was a case not about sate funding for low-income housing but about an act of condemnation.

But the ESDC’s own approval of the project, Levy contended, violated the constitution. Furthermore, she pointed out, there’s a state funding component: $100 million for infrastructure.

“Why is that an issue here?” asked Presiding Justice Robert Spolzino (right), who asked the most questions.

Because ESDC’s receipt of state funding triggers Article 18, Section 6, she said.

Wouldn't more than 2000 affordable units be produced in the Atlantic Yards project, asked Justice Howard Miller.

“Yes,” said Levy, then catching herself to clarify that, while that may be the number as approved (actually: 2250), “we don’t know how it will be implemented.” (The plaintiffs' brief points out that the project could indirectly displace 2929 households, thus obviating the public benefit.)

After the hearing, Brinckerhoff noted that "the crazy thing" was that the project under discussion, Atlantic Yards as approved in December 2006, was unlikely to be built and no one knew exactly what it would be.

Slum clearance

Bolstering her point, Levy pointed out that the framers of the state constitution envisioned that slum clearance “would mean enormous displacement,” hence the provision for low-income housing.

There was no time to tease out the ironies of that statement, but Atlantic Yards is by no means a classic slum clearance case. There is no massive blight—remember, project proponent Roger Green declared that the neighborhood wasn’t blighted—nor would there be enormous immediate displacement (though there may be significant indirect displacement).

Eng asked what should happen.

The project should be remanded to the ESDC for review, Levy said.

She pointed out that courts have allowed the legislature to defined “low-income” as people who can’t afford to buy or rent on the private market. She noted that some of the Atlantic Yards units would rent for $2600 a month and be eligible to households earning 160% of Area Median Income (AMI)--the implication being that that was above-market.

Handoff to Brinckerhoff

Lead attorney Brinckerhoff, taking the remainder of the allotted 15 minutes, gained some steam, pointing out that the state offered many other benefits beyond the $100 million, such as “extraordinary infrastructure” (actually, that’s just a potential benefit) and “triple tax-free bonds.”

However, there was not enough time to argue, as he had in federal court and as expressed in briefs in this case, that Atlantic Yards seems to be a sweetheart deal, with, for example, a blight study limited to the properties Forest City Ratner sought and a likelihood that the arena would be a money-loser for the city in terms of tax revenues.

NYS and public use

Brinckerhoff told the panel “I’m sure you’re aware” of a Court of Appeals decision last Tuesday in a case known as In the Matter of Aspen Creek Estates, Ltd., v. Town of Brookhaven, in which the decision noted, "Finally, the parties have not argued, and we do not decide, whether the New York Constitution... imposes a more stringent standard for takings than does the Fifth Amendment as interpreted by" the U.S. Supreme Court's Kelo v. New London decision.

“Our argument,” he said, is that New York state does provide more protections than the federal constitution.

Spolzino responded skeptically. “There’s a century of decisions about public purpose,” he said. “A problem like this seems to fall under public purpose.”

Brinckerhoff suggested that the state constitution was strictly construed in early cases, but later cases relied on the federal constitution.

Relative benefit

He pointed to a 1951 state case known as Denihan Enterprises, Inc. v. O’Dwyer, which the court invalidated a deal between the city of New York and insurance company to build a parking garage and a small park. The court ruled that "the use is not public where the public benefit is only incidental to the private."

(Actually, the Court of Appeals found that the taxpayer had sufficiently pleaded its case to survive a motion to dismiss, stating, "We are here and now solely concerned with the legal sufficiency of plaintiff's complaint.")

“We have no record of what the private benefit will be,” Brinckerhoff declared.

"What about the Yonkers case," Spolzino asked, referring to a 1975 case known as Yonkers Community Develop. Agency v. Morris, and summarizing it as: once you have a finding of blight, the blight correction constitutes a public purpose.

Rulings in state cases on eminent domain, Brinckerhoff said, had been relying on the federal constitution, not the state constitution, which could be construed more narrowly.

(According to the state's brief, Yonkers affirmed that taking land for urban renewal was legitimate under both state and federal provisions.)

Questions of blight

Eng raised the issue of the railyard at the heart of the footprint. “We’re talking about acres and acres of blight,” he said.

“You consider it blighted,” Brinckerhoff responded.

It has been found to be blighted, Eng replied, referencing the state’s blight study.

“I’m not trying to say you can’t make a reasonable argument that that area is blighted,” Brinckerhoff conceded.

(It was a legitimate admission on legal grounds—the railyard is part of the Atlantic Terminal Urban Renewal Area, or ATURA, which is per se blighted, and all the plaintiffs have property outside ATURA. But it glossed over a much larger issue: the Vanderbilt Yard has been a working railyard rather than a fallow spot, and, as it finally became feasible as a site for high-rise development, the city and state never built a platform to entice developers nor put the site out for bid, until Forest City Ratner was anointed the site.)

However, he said, “you still have to argue the private benefit,” he said, stressing that there was no competing bid for the site (presumably he meant for the site as a whole; there was a belated RFP for the Vanderbilt Yard).

“There is no record—at all,” he said, of the state making a finding.

“That’s the critical point,” Spolzino said. “Had they made a record, we’d be in a position of sustaining judgment if it’s (a) reasonable (assessment).”

Brinckerhoff used his remaining moments to argue against defense contentions that the case was out of bounds. “You have to reach the merits” of the issue, he insisted.

Defense case

ESDC attorney Charles Webb began by criticizing Brinckerhoff for giving “very little attention to a significant issue,” the intent of the drafters of the state constitution.

Spolzino interrupted. “Could you address the last point,” he asked, wondering if the ESDC articulated the balance between private and public benefit.

There’s no requirement of such a finding, Webb said.

Is that an admission that ESDC did not make a finding, Spolzino asked.

Webb said no, stressing that the site was “afflicted for decades with substantial blight.”

Spolzino pressed the question, asking if a finding had been made.

“I don’t believe there is,” Webb conceded. “There’s no reason to. They don’t have to.”

(The Brooklyn Paper observed that Spolzino "appeared to be sympathetic to Brinckerhoff’s argument." I'll point out that Spolzino, in a separate case involving a challenge to the ESDC's relocation offer for AY footprint residents, seemed skeptical of the ESDC's arguments, but wound up joining the unanimous opinion in favor of the agency. Then again, he was the presiding judge who granted leave to appeal in the Aspen case, which led to the Court of Appeals' reference to not addressing whether the state constitution imposes a stricter standard when it comes to eminent domain.)

State vs. feds

What about the plaintiffs’ argument that there are “really no cases under the New York State constitution,” Spolzino asked.

Webb said there were, citing a 1936 case known as N.Y.C. Housing Auth. v. Muller, which had rejected the claim that public use literally required use by the public. (This was a case in which there was no private developer involved.)

“If we were arguing the case in 1909,” he said in a dig at his adversary, “I’m sure he would have a better set of authorities” to consult.

Procedural issues

“Let me go to the real issue: should they be here at all?” Webb asked rhetorically. “They made a calculated decision” to first go to federal court. Should other plaintiffs do that, and be permitted to refile their cases in state court, “the intent of the [EDPL] is completely thwarted.”

He also argued that, given that EDPL was enacted to expedite condemnation cases, any provision in the CPLR (Civil Practices Laws and Rules) that allowed the case to be delayed would be inconsistent. Brinckerhoff had argued that the CPLR applies to other special actions that are supposed to be expedited.

Prior to the EDPL, he noted, there was no provision for review prior to the government’s attempt to condemn property.

Was there no way to raise these issues, asked Spolzino.

“Not before the taking,” Webb responded.

The issue of procedural impropriety, however, got only a brief discussion; presumably, had the judges wanted to dismiss the case because it duplicated the federal lawsuit, they would have done so in an earlier legal round.

Finding of benefit?

ESDC attorney Philip Karmel soon took the podium. He noted that “ESDC made all the findings required,” pointing to page 20,078 from the absurdly voluminous record, which includes numerous documents created during the environmental review.

Spolzino questioned whether that page in the General Project Plan covered the question at issue.

It shows ESDC examined all aspects of how the project would be paid for, Karmel said, adding, “There’s overwhelming public benefit.”

He explained that while there may be no full explanation in the Determination and Findings of how the state’s $100 million appropriation would be used, there is an explanation in the General Project Plan.

Back to Article 18

In the final moments, Spolzino questioned Karmel about whether Article 18 had been violated.

Karmel said the petitioners had misinterpreted Section 6. While the petitioners say the ESDC has created a distinction between a low-income housing project and a project removing blight, he said ESDC was acting within the letter of the law.

“ESDC can address blighted conditions to create market-rate housing,” he said.

Beyond that, the project “would only displace 146 people."

“So your argument is, if Article 18 applies, it’s been satisfied,” Spolzino stated.

“Absolutely,” Karmel replied.

After a few more moments of discussion of Article 18, Section 6--the state's contention was that it applies only to low-rent housing projects, not a more wide-ranging project like AY--the argument was over.

Filing out

Dozens of people--perhaps half of the spectators, flooded out of the room, perhaps the last major court hearing in the Atlantic Yards saga. Among those looking on were ESDC general counsel Anita Laremont, BUILD president James Caldwell, Forest City Ratner executive MaryAnne Gilmartin, and additional lawyers on the case.

Those clustering around the defense lawyers seemed encouraged, even as Brinckerhoff, in the next room, with numerous Atlantic Yards opponents nearby, maintained that, no matter the outcome, the case would have to get a hearing in the state's highest court.

Missing from Chuck Ratner's Atlantic Yards claim: blight--and hoops

On February 13, after Gramercy Capital Corporation offered Forest City Ratner a crucial extension on a loan, Chuck Ratner, CEO of parent Forest City Enterprises told the New York Times, “This is a key step in our strategy of proactively managing our debt maturities. By working closely with Gramercy to secure this extension, we have put Atlantic Yards in a position to achieve the vision of economic revitalization, job creation and affordable housing for the future of Brooklyn.”
(Emphasis added)

What's missing from that statement?

First, the original Forest City Ratner slogan of "Jobs, Housing, and Hoops," one which by 2006 had already begun to downplay basketball for an emphasis on affordable housing. Now, the twin promises of economic revitalization" and "job creation" seem calibrated to the current zeitgeist.

Second, the primary (but not exclusive) official government goal of the Atlantic Yards project: blight removal.

FCR on blight

Though Forest City Ratner has never emphasized an intention to remove blight--that's the goal of the Empire State Development Corporation (ESDC)--it surely has been on the mind of the developer.

Former AY point man Jim Stuckey, said, according to an 11/3/05 episode of the Newshour, "There might be a need for eminent domain; there might be a need for condemnation... I think the state will make its decision, unlike [the] ‘Kelo’ [case in New London, CT] based on whether or not they believe this is a blighted area."

In federal court 2/7/07, FCR attorney Jeffrey Braun asserted, “I don’t think the fact that, you know, Forest City Ratner allegedly initiated this has any relevance. I mean, frankly, this is not the crossroads of the world, Times Square, where many developers would like to have an opportunity to build. I mean, this an extremely derelict stretch—no, we’re talking about the Vanderbilt Yards—which is an open trench that’s what we’re talking about.”

However, a month later, Chuck Ratner called the Atlantic Yards site “a great piece of real estate.” That doesn't sound much like blight.

But a lot of people (including some judges) looking at Atlantic Yards don't really believe the site is blighted. The issue is important, because blight claims are key to the eminent domain case being heard today.

The GPP on blight

The Atlantic Yards General Project Plan (GPP), issued by the ESDC, asserts that blight is the fundamental problem (all emphases below are added):
The principal goal of the Atlantic Yards Land Use Improvement and Civic Project is to transform an area that is blighted and underutilized into a vibrant, mixed-use, mixed-income community that capitalizes on the tremendous mass transit service available at this unique location. In addition to eliminating the blighting influence of the below-grade Yard and the blighted conditions of the area, the Project aims, through this comprehensive and cohesive plan, to provide for the following public uses and purposes:
[List below is truncated]
• a publicly owned state-of-the-art arena
• thousands of critically needed rental housing units
• first-class office space and possibly a hotel
• publicly accessible open space
• new ground level retail spaces
• community facility spaces
• a state-of-the-art rail storage, cleaning and inspection facility
• a subway connection on the south side of Atlantic Avenue
• sustainability and green design
• environmental remediation

Land Use Improvement Project
The ESDC had to find that Atlantic Yards qualifies as a Land Use Improvement Project, which also depends on blight.

The official text:
That the area in which the Project is to be located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area and tends to impair or arrest the sound growth and development of the municipality.

Is it believable?

St. John's University law professor Philip Weinberg doesn't buy it, according to testimony at an 11/4/05 Assembly hearing on reforming eminent domain laws.

“I think eliminating blight such as was done in Times Square by the City of New York was commendable because there the blight really amounted to the danger of crime where people simply didn’t want to go to Times Square,” testified Weinberg, who practiced for twenty years in the New York State Attorney General's Office and was Assistant Attorney General in Charge of the Environmental Protection Bureau.

“That’s very different from going into the middle of Brooklyn and using eminent domain to build a sports stadium and some high rise buildings which will mostly be market rate housing and the rest," he said. "To me it’s easy to differentiate. There’s always a problem in the middle, sure. But it’s easy to differentiate between those two situations.”

Guess what's missing from Bloomberg's campaign web site?

What's missing from Mayor Mike Bloomberg's extensive campaign web site?

Any mention of two new baseball stadiums and a long-stalled basketball arena, much less the city's allocation of $100 million and then another $105 million for the Atlantic Yards arena. Or that those expenditures might make the arena a money loser for the city.

Or quotes like:

1/04: Fundamentally, the answer to your question is: this will be done with private money, and any city monies of any meaningful size will be debt issues financed by the extra tax revenues that come from this. So, we’re not going to have to divert money from education, or police or fire or any other part of the city to do this. No. It is private money in that sense.

12/08: Letting any group have a special deal is not what democracy is about.

Then again, if potential rivals like Rep. Anthony Weiner are going to promote moving a hockey team into the Atlantic Yards arena, which is not even under construction, don't expect Bloomberg's vulnerability on sports facility deals to become an issue.

After all, 2005 candidate Freddy Ferrer stumbled in trying to make the arena an issue, and the press made it worse.

Then again, a Marist Poll says New York City voters are overwhelmingly against letting Citigroup, now a recipient of federal bailout funds, spend money on naming rights to the new Mets stadium. There's a lot of anger out there.

Borough President Marty Markowitz kicks off re-election campaign

There's no campaign web site just yet. However, after two terms and the extension of term limits, the Borough President's web site surely does double duty.

Man plans to row Atlantic again. Press dutifully provides publicity.

It probably sounds churlish to raise questions about the honorable effort by Victor Mooney, who lost one brother to AIDS and has another who's HIV-positive, to make a second attempt to row across the Atlantic Ocean to increase awareness of AIDS and--an added crusade--of global warming.

But the news coverage of Mooney’s effort has been shallow, and it dismays me that Mooney gets into the papers, while the press ignores much more important stories about institutional and governmental behavior like the closing of the Carlton Avenue bridge and New York University’s absorption of Polytechnic University.

After all, once Mooney got a lot of press in 2006, his effort lasted just three hours, given that his handmade boat started leaking and eventually sunk. In 2007, he announced a second effort, to launch later that year, which wound up being delayed more than a year.

But he got publicity at the time, announcing that he’d be honoring Barclays Center on the bow of his next boat. That seems to have died down considerably, and Forest City Ratner no longer seems to be contributing an "Atlantic Yards Boathouse."

Much missing in coverage

But this week Mooney held another press conference, and the New York Times and the Daily News, among others, dutifully complied--albeit with major gaps in their stories. Nobody mentioned Barclays. Nobody mentioned that Mooney’s preferred method--as reported in 2006--to avoid AIDS is abstinence, not condoms.

Nobody noticed the grandiosity on Mooney’s Goree Challenge II web site, which claims:
Billions will again follow Victor Mooney's journey across the Atlantic Ocean; thereby, providing a educational platform for learning about health, math, science, history, financial literacy and the environment.

And nobody noticed a complication: his boat, the Spirit of Zayed, is named for the former president of the United Arab Emirates, a place where homosexual acts are punished with long prison terms.

Raising money

Mooney would be the first African-American to row across the ocean. He still needs $50,000 to pay his expenses, and the free publicity surely didn’t hurt. His web site states:
Money raised after the cost of Goree Challenge II - Rowing for Change, will benefit AIDS Charities worldwide.

He claims that in the first attempt, Goree Challenge I, sponsorship information was seen worldwide via television, print, radio and web content and had an Equivalent Advertising Value of $5 million over a three-year period.

I doubt that calculation.

I wonder whether, instead of focusing on AIDS and global warming, Mooney might do even more good by dedicating his effort to to getting the United Arab Emirates to change its laws on sodomy.

I doubt that will happen. As the Times reported:
Mr. Mooney, who visited the U.A.E. two years ago, said he had not received money from the emirates, but would not mind if he did.

As eminent domain hearing approaches, remember, it's a "publicly owned" arena

Is it a publicly-owned arena--an issue that may come up at the eminent domain hearing tomorrow? DDDB has it wrong. NLG has it right--it would be publicly-owned by the state and leased for a buck.

And, if we're going to be precise, I'm not sure Ratner is a billionaire any more, and more than one-third of the apartments would be subsidized (though only about half, perhaps, would be "real housing for the real Brooklyn"). As for whether payments in lieu of taxes (PILOTs) qualify as taxpayer financing, Assemblyman Richard Brodsky would agree, but it is a matter of debate. Surely PILOTs represent a subsidy--worth perhaps $165 million.

Brutally weird: Courier-Life says "Yards opponents" are trying to block Ratner from applying for stimulus money

We know Atlantic Yards isn't dead, because things still keep getting brutally weird. The Courier-Life's Stephen Witt, who brought us the story of "the real land-grabbers," this week suggests that the real manipulators in the political system are the volunteer groups opposing a bailout for Forest City Ratner.
(Click to enlarge)

And the victim of the "counter lobbying offensive" is developer Forest City Ratner, which is paying uber-lobbyist Al D'Amato in an effort to get federal stimulus money for the Atlantic Yards project.

But the signers of the latest letter are not, as the headline suggests, "Yards opponents;" some are simply watchdog groups concerned with prudent infrastructure spending like the Straphangers Campaign and The Open Planning Project, as well as Good Jobs New York, notable for its scrutiny of subsidies, and the consultant Majora Carter.

As DDDB points out, the statement that a letter to Governor David Paterson was "obtained by this newspaper," is a tad overstated, given that the letter was widely distributed via a press release.

ACORN's role

The article gets truly weird when it comes to ACORN, recipient of a $1.5 million bailout via Forest City Ratner. That fact, as well as ACORN's contractual obligation to support the project, naturally goes unmentioned. So I'll "be the editor."

But Bertha Lewis, who heads the national organization, ACORN, and is a signatory of the community benefits agreement with FCRC, lambasted opponents of the project for trying to prevent anybody for applying for stimulus money.

No one's trying to block "anybody"--in this case, it would have to be a government agency, not the developer--from applying for stimulus money. The letter asks Paterson not to award stimulus money to the project.

"If there’s infrastructure money, it should go for infrastructure money. Why not?" Said [sic] Lewis. "You can even put strings on it. This is an opportunity to say, 'look, here is the strings we want.' He (Bruce Ratner) should have a chance for it like everyone else."

Stimulus money doesn't go to private developers. Joe Sitt and David Walentas aren't applying either.

DDDB = GOP?

Lewis said people lobbying against stimulus money for the project is akin to the Republican Party lobbying against ACORN from getting any of the money.

Lewis is known for her background in theater.

Bruce is an island

"They (opponents) should be fair and let him (Ratner) compete like everyone else. "We're absolutely committed to the affordable housing end of this (project) now more than ever," said Lewis. "Nobody else is applying for it (stimulus money) and the city and state let the area (Vanderbilt Yards) go forever. It’s not like someone is doing a gold-plated bathroom here. People shouldn't be so short sighted."

No one else is applying for stimulus money?

While Lewis may claim commitment, the developer has said the pace depends on the market.

Missing the point

The city and state didn't put the working railyard out to bid before Forest City Ratner proposed its project. But that's the point--even an eminent domain defender like John Echeverria says the decision to pursue condemnation should be separate from the process of selecting a developer. And that sequence would've nixed Atlantic Yards.

New Senator Gillibrand, in "listening tour," hears some Atlantic Yards criticism

Well, new Sen. Kirsten Gillibrand may be close with former Sen. Al D'Amato, now a lobbyist for developer Forest City Ratner, but she can't say she hasn't heard criticism of the Atlantic Yards project.

She met with about 50 civic and community leaders from Central Brooklyn on a listening tour earlier this week at Borough Hall organized by City Council Members Letitia James, Bill de Blasio, and David Yassky. (The Observer, reporting on her statewide tour, suggests that the new senator is "laying down a marker.")

Most of the discussion, moderated by James, revolved around the impact of federal stimulus funds on issues like health care, education, and infrastructure. As noted in the Courier-Life article at right, the attendees included both Atlantic Yards critics and supporters.

However, I'm told, supporters James Caldwell of BUILD and Charlene Nimmons of Public Housing Communities did not advocate for the project but rather spoke about job training and public housing issues.

AY criticism

So Gillibrand heard some criticism of AY, implicit and explicit. District Leader (and 33rd District Council candidate) JoAnne Simon stressed issues of accountability, oversight and transparency that she had mentioned in connection with federal stimulus money.

"I asked that she work to ensure that stimulus dollars go to projects that met those requirements," Simon told me. "I mentioned that in our experience many public authorities were engaged in projects that escaped such review and it was a significant and growing problem. Atlantic Yards was certainly among the projects I was thinking of, but I did not mention it (or any project) specifically."

Daniel Goldstein of Develop Don't Destroy Brooklyn told me that, unlike other attendees, he told Gillibrand about a project that "shouldn't get any of the stimulus money."

Gillibrand asked why. Goldstein said there were dozens of reasons, but, asked for one, said it wasn't "shovel-ready." He said he passed on a letter signed by DDDB and several other groups to a Gillibrand staffer.

Getting the AY summary wrong

The Brooklyn Downtown Star, for which I used to write periodically, sent a new reporter to cover Brooklyn Borough President Marty Markowitz's State of the Borough address, and this is the summary description that emerged for Atlantic Yards:

The project - potentially the biggest in the borough - calls for a new sports arena for the New Jersey Nets, apartment buildings, and open space on a vast tract of railyard land that has been unused for years. Plans for the site have been downsized significantly in the past few years in response to organized opposition from some elected officials, residents, and some community groups...

No, it's not on the railyard only.

No, the railyard is not "unused;" it's still a railyard, but until recently a platform for above-ground development hasn't been fiscally feasible.

And, no, the downsizing hasn't been significant.

Check here.

As oral argument in state eminent domain case approaches, questions of a cost-benefit analysis and a different state standard

The Atlantic Yards eminent domain case, after dismissal in the federal courts, goes to state court Monday, February 23, when the oral argument will be heard before the Appellate Division, Second Department. (That division, as opposed to a lower court, is designated to hear all cases challenging New York State’s Eminent Domain Procedure Law (EDPL).)

The new case has to be considered a long shot. The EDPL allows only 15 minutes for oral argument, and there’s no opportunity to cross-examine witnesses or acquire documents through discovery--reasons why critics say New York law is in desperate need of reform.

That’s why the plaintiffs--nine (originally 13) residential and commercial property owners and renters--first went to federal court, where the case was dismissed after two long hearings, an appellate argument, and then an unsuccessful effort to get the U.S. Supreme Court to hear it.

[Update] A decision could be issued within two months. Should the plaintiffs lose, they'd have several months to file an appeal to the state’s highest court, the Court of Appeals. (Is the appeal discretionary, as I originally wrote? It's mandatory if there's a "substantial" constitutional question, but that's a matter for debate.) The case is organized and funded by Develop Don't Destroy Brooklyn.

New twist

Some but not all of the arguments in Goldstein et al. v. Empire State Development Corporation (ESDC) reprise those made in the federal case, though, in one new argument, the plaintiffs may have established an advantage.

They contend that, in order for the state to assess whether public benefits from the project would trump the private ones, the ESDC should have conducted an analysis, but didn't do so.

The ESDC's response is to proffer a report that was not released publicly before the project was approved and did not truly represent an analysis, the plaintiffs point out. (Note that in the most recent set of legal volleys, the plaintiffs get the last word.)

Procedural issue

Many of the arguments in the pending case reprise those aired in legal papers arguing for the lawsuit to be dismissed. The Appellate Division, which rejected the motion for dismissal in September, did not make any judgment on the merits of the arguments.

The ESDC argues that the case was filed more than a year-and-a-half late, given the 30-day deadline to file in state court, but the petitioners “forum-shopped.” Should the challenge be precluded by that statute of limitations, the case would be over; however, the Appellate Division already passed on the opportunity to dismiss it for those reasons.

State vs. federal constitution

The U.S. Constitution allows private property to be taken for public use with just compensation, and the 2005 Kelo decision confirmed that public purpose--even for economic development based on the taking of private homes--could be considered public use.

In federal court, the Atlantic Yards eminent domain plaintiffs asked that the project be invalidated because the project represented a sweetheart deal, one they contended was disallowed by Kelo; a trial court judge and an appellate court said that the valid public purposes represented the end of the inquiry.

In the current case, the plaintiffs argue that the New York Constitution--despite similar text saying private property shall not be taken for public use without just compensation--must be given “an independent construction” that may be more protective than the United State Constitution. They contend that language requiring public use should be taken literally, despite expansion of the notion over the years.

They note that the state constitution, “irrespective of the Second Circuit Court of Appeals’ crabbed view of the Fifth Amendment”--a reference to the dismissal of the federal eminent domain case--offers greater protections, citing cases from 1878, 1888, 1918, and 1920, pointing out that those cases “have never been expressly overruled by the Court of Appeals.”

The brief contends that those earlier cases “are not infected by jurisprudence from the federal courts, including the Supreme Court, that have slowly moved away from a plain reading of the federal public use clause in favor of a test that considers only whether a proposed taking serves a conceivable public benefit or purpose no matter how remote or speculative it may be.” It cites a 2002 Illinois case in which the State Supreme Court distinguished between “public purpose” and “public use.”

In response, the ESDC points out that the petitioners’ brief fails “to cite a single Public Use case to support their assertion” and that as far back as the 1930s state courts had stopped requiring actual public use, just a rational relation to a public purpose. In fact, the ESDC says, state courts have generally interpreted public use under the EDPL more broadly than federal courts have interpreted public use under the Fifth Amendment.

The issue, however, may be unresolved until an appeal. Interestingly enough, in a decision issued Tuesday in a case (PDF) known as In the Matter of Aspen Creek Estates, Ltd., v. Town of Brookhaven, the Court of Appeals rejected a claim based on Kelo but noted, "Finally, the parties have not argued, and we do not decide, whether the New York Constitution... imposes a more stringent standard for takings than does the Fifth Amendment as interpreted by Kelo."

Sweetheart deal?

The plaintiffs' brief sets out the hurdles facing Ratner’s plan: private ownership of much land; a publicly-owned railyard; the need to override zoning; and the fact that selection of private developers for large projects is “typically subject to competitive selection.” Ratner’s solution: enlist the help of Gov. George Pataki and Mayor Mike Bloomberg.

The brief points out that the MTA initially said the railyards would go to Ratner, then held a belated, truncated RFP--far less extensive than that for the later Hudson Yards project--and wound up negotiating exclusively with Forest City Ratner, which offered a lower cash bid of $50 million to rival Extell’s $150 million, for property appraised at $214.5 million.

The plaintiffs note that the ESDC’s blight study reviewed not the irregularly-shaped AY site and environs, but only the properties selected by Ratner. (Indeed, there’s a vacant lot, by definition “blighted,”nearly adjacent to the site.) And the blight study was conducted by the consulting firm AKRF, which, "without exception" has always conducted "pro-development" studies.

The brief cites other pretextual public benefits, pointing out that the arena likely would be an economic loss, arguing that delays in affordable housing mean it “will never be realized.” (The brief calls the affordable housing “a stalking horse for luxury condominiums,” but since it was filed in late November, Forest City Ratner has backed away from condo plans.)

It argues that nearly 3000 low-income households would be displaced--overstating while citing the analysis in the environmental review that such households are at risk of displacement--"for the ever-dwindling possibility that it might create 2250 affordable units--a net affordable housing loss"

As for whether the case is precluded by the federal dismissal, the brief points out that there was no finding that the project has a public purpose, just that the court concluded that plaintiffs had failed to state a sufficient claim.

The ESDC relies on findings in the federal case, noting that the “federal district court determined that numerous public purposes undeniably would be achieved by the Project,” including tax revenues, job creation, blight removal, affordable housing, and a sports arena.

In a counter-statement of facts, the ESDC brief offers a fib I’ve already pointed out--delineating that it pursues its mission "in part by promoting large-scale real estate projects...” While that language (right) is attributed to a court opinion, the text in that opinion came directly from the ESDC’s own brief.

Procedural challenges


The plaintiffs' brief contends that there are two Equal Protection Clause violations: that properties owned by those similarly situated, such as Shaya Boymelgreen’s Newswalk condo, were excluded; and that no competitive bids were sought for the project as a whole.

The ESDC responds that the equal protection claim fails only if the public use claim fail, and that, because the EDPL requirements were followed, it complied with due process.

Separate case impact?

The ESDC argues that the petitioners are not entitled to judicial review of the EDPL's Determination and Findings, given that the state appellate court had previously confirmed them in a separate state case brought by renters in two footprint buildings.

“Allowing Petitioners to impose additional delays... would defeat the clear legislative intent that challenges to public projects be determined expeditiously, so as not to delay or cause suspension of public projects,” the ESDC argues, pointing out that such delays would defeat the legislative intent. (Whether or not that’s true, in this case, the economy is a larger factor in delays.)

Moreover, the petitioners' brief argues, “Respondent cynically (and irresponsibly) misleads this Court when it implies that the issues presented in this action were previously determined” in that previous case brought by renters in two buildings in the project footprint.

That case, however, did not challenge whether proposed eminent domain violated the EDPL’s public benefit requirement or the constitution’s public use, due process, and equal protection clauses, but rather questions whether the ESDC had adopted a feasible plan to relocate displaced tenants.

Beyond public use

In a claim not present in the federal case, the petitioners argue that Article 18, Section 6 of the New York Constitution requires projects developed with state subsidies or loans to be restricted to low-income people, looking back some 70 years to a state constitutional convention.

It provides that no loan or subsidy shall be made to aid any project unless the project contains a plan for the remediation of blight and the “occupancy of any such project shall be restricted to persons of low income as defined by law and preference shall be given to persons who live or shall have lived in such area or areas.”

The defense, however, says Article 18 must be understood as a whole, and that section 1 addresses housing “for persons of low income as defined by law, or for the clearance, replanning, reconstruction and rehabilitation of substandard and insanitary areas, or for both such purposes.”

As for Article 18, section 6, the “claim is meritless,” since restrictions apply “only to low-rent housing projects receiving state aid.” The ESDC argues that the interpretation would preclude other affordable housing projects aimed at people of moderate income.

In response, the plaintiffs argue that the interpretation of Article 18, Section 6 would not lead to absurd results; given that courts permit legislative discretion in defining low-income, “all that would be required for this project to be constitutional acceptable is a finding that the project will serve those who would be unable to afford a home if the unhindered free market was permitted to dictate housing costs.”

No such determination was made, the brief points out, because “at least” 50 percent of the housing can be market rate.

Cost-benefit analysis

The petitioners now emphasize an issue briefly mentioned in the initial lawsuit: that, because the ESDC “did virtually nothing” to determine the benefit to Ratner, “this fact alone merits a rejection” of the agency’s determination.

In more recent years, the plaintiffs argue, as the Court of Appeals has eschewed a strict public “use” test in favor of a more flexible public benefit or purpose analysis, it has still consistently invalidated proposed takings where the public benefit was “only incidental and in large measure subordinate to the private benefit conferred.”

However, the ESDC, the plaintiffs says, “never even considered the relative benefit to Ratner versus the perceived public benefit to be gained by approving the Project.”

In response, the ESDC argues that the private benefit is incidental to the public benefits: "Apart from sarcasm, citiations to unverified allegations of the Petition and reliance upon newspaper articles which are outside the record, Petitioners present nothing to establish their claim."

A footnote asserts that the petitioners’ claim that there had been no quantification of benefits was baseless: “At ESDC’s request, in 2006, prior to ESDC’s determination, FCRC provided to ESDC its financial projections for the Project, including FCRC’s projected return on its investment.”

And the ESDC retained KPMG to vet the numbers, which it did--here's the report in PDF, released in 2007 in the pending case challenging the project's environmental review.

However, the KPMG study tried to assess the financial viability of the project rather than assess profits or balance private and public benefits.

So, the plaintiffs in a reply brief cite two cases in which the court evaluated the ratio between public and private benefit. Given the absence of such evaluation, “the Determination must be rejected so that the ESDC can perform the required comparative analysis, disclose its findings to Petitioners and the public at large, and thereafter conduct a public hearing as required by the EDPL."

Though the ESDC argues that only the record should be considered, the plaintiffs point out, “Respondent allows that perhaps there should be a one-way exception for material that it would like to add to the record”--the KPMG report.

“Respondent is in a difficult position,” the brief states. “As it must, it acknowledges that there is no evidence of any kind in the administrative record that would allow this Court (or Petitioners) to compare Ratner’s profits form the Project to the perceived benefit to the public.”

The KPMG report, the brief states, was “a cursory (and secret) attempt that was provided only to ESDC, not the public, and not until after the ESDC approved the project.

Public disclosure, the plaintiffs argue, is “even more critical here because the members of Respondent ESDC are unelected and otherwise unaccountable.”

Pre-judging the case?

A footnote in the plaintiffs' papers offers an intriguing detail: “Respondent’s tactic appears to be an attempt to capitalize on the ill-informed statements made by the Clerk of the Court when he telephoned Petitioners’ counsel and announced the Court’s intention to expedite this case (beyond the expedited treatment already provided by the Court’s rules) because it was unfair to further delay the Project when this court had ‘previously decided the public benefit’ and other issues raised by Petitioners in this action. As Petitioners’ counsel explained during the call, that statement is false.”

Is the cost of Atlantic Yards now a "trade secret"? NYC EDC foils FOIL request

So, what's the current price tag on the Atlantic Yards project, including the cost of the arena?

The information is surely relevant to understand, among other things, the potential pace of the project and the potential need for more government money. For example, more costly affordable housing likely would require a greater level of housing subsidies.

And it might back up BrooklynSpeaks' comment Tuesday that "the current design, program and schedule for the project is unknown."

Forest City Ratner surely has an estimate, so I suspect government agencies have one too. To learn more, I filed several Freedom of Information Law (FOIL) requests.

NYC EDC says no

So far, however, I've been stymied, as a city-affiliated agency, the New York City Economic Development Corporation, declares that the information is exempt from disclosure because it is either a trade secret or its disclosure "would cause substantial injury to the competitive position of the subject enterprise."

Really?

The cost of the project was certainly not a trade secret when Atlantic Yards was approved in December 2006. The price tag was $4 billion, with the arena at $637.2 million, according to the General Project Plan.

Did approval flip some kind of secrecy switch?

What kind of injuries?

The denial made me wonder: what kind of injuries might the "subject enterprise" face via disclosure?

I came up with a few, but they have more to do with public relations than public policy.

For example, a significantly less expensive arena--cut in half from $950 million?-- might confirm that Frank Gehry's design has been significantly altered. And that might cause consternation among the sponsors already signed up to plaster their names on a "landmark" arena.

Or, perhaps, a cost estimate limited to Phase 1 might confirm that Forest City Ratner is unlikely to fulfill CEO Bruce Ratner's May 2008 pledge, "We anticipate finishing all of Atlantic Yards by 2018.

(I've asked the Empire State Development Corporation, the lead agency on Atlantic Yards, the same timetable question, and haven't yet gotten a response.)

The letter

Here's the text of the letter I received:
This e-mail is in further response to your request dated February 7, 2009, addressed to New York City Economic Development Corporation (“NYCEDC”), pursuant to the Freedom of Information Law (“FOIL”), Article 6 of the Public Officers Law, for documents that provide current estimates of the cost of Atlantic Yards project in Brooklyn, including the current estimated cost of the project as well as the current estimated cost of the arena.

NYCEDC has diligently searched its files for records responsive to your request and has located certain responsive documents. Please be advised NYCEDC is withholding such documents as records determined to be exempt from disclosure pursuant to one or more of the following FOIL Section(s):

· 87(2)(d) exempting from disclosure information that would be considered trade secrets or is submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise.

Any appeal with respect to this determination should be addressed in writing to Judy Fensterman, New York City Economic Development Corporation, 110 William Street, New York, New York 10038, within thirty (30) days from the date of this letter.

Sincerely,
Judith Capolongo
Records Access Officer

Yes, I've filed an appeal.

DDDB, CBN, Good Jobs NY, clergy oppose stimulus for Atlantic Yards

First, BrooklynSpeaks and NYPIRG's Straphangers Campaign issued statements Tuesday opposing the awarding of federal stimulus funds for Atlantic Yards. (Earlier, I'd argued that, if the project was shovel-ready, it had a huge asterisk.)

Yesterday, an even more forceful letter was sent to Gov. David Paterson, signed by some expected project opponents, the coalitions Develop Don't Destroy Brooklyn and the Council of Brooklyn Neighborhoods, several (but hardly all) of their constituent groups, and several other civic groups, including the Straphangers, the Sierra Club, and the Four Borough Neighborhood Preservation Alliance.

Among those signing the letter were Good Jobs New York, notable for its scrutiny of subsidies; Majora Carter Group, LLC, run by the MacArthur Prize-winning consultant and founder of Sustainable South Bronx (and Dan Doctoroff antagonist in a 2007 development debate); and The Open Planning Project, which has championed smart infrastructure via projects like Streetsblog.

Clergy but not electeds

Three influential clergymen signed the letter, all opponents or critics of the project: the Reverend Dennis Dillon, Brooklyn Christian Center, Chief Executive Minister; Reverend Dr. Daniel Meeter, Pastor of Old First Reformed Church, and the Reverend Clinton Miller, Pastor of Brown Memorial Baptist Church.

Notably, no elected officials signed either letter, though Miller is close to Assemblyman Hakeem Jeffries--who'd entertain the notion of stimulus funds for housing--and City Council Member Letitia James has announced that she'd send Paterson a letter.

Markowitz's pitch

Also, the New York Daily News reports that Borough President Marty Markowitz is lobbying hard to get the feds to pay for a new railyard:
Markowitz argued yesterday it didn't matter if Ratner originally promised to pay for the new railyard in his bid because court delays and the recession have changed the playing field.

"That was then and this is now," said Markowitz. "Had that not happened the first phase would already be open."

Stunning. The logical conclusion of Markowitz's request, however, is a federal share of the project, not a bailout for the developer.

In the Brooklyn Paper, Francis Byrd, a former 57th Assembly District leader, opposes a bailout.

Querying Governor's office

I asked Paterson's office if they had any comment on either yesterday's letter and the BrooklynSpeaks letter, and was told no by spokeswoman Erin Duggan.

I wouldn't read too much into that either way; I suspect that they have enough to address regarding the stimulus at this moment without entering the fray, especially since the hard copy of yesterday's letter surely hadn't arrived.

Atlantic Yards is probably the only potential beneficiary of the stimulus that not only has fervent proponents but also fervent opponents.

Duggan told the Daily News, "We're obviously aware of the project and we've had conversations about it. But we have not yet had a formal request for funding."

And the MTA hasn't made one.

Excerpts from letter

The DDDB/CBN/etc. letter states:
There are far greater priorities than the Atlantic Yards project, across Brooklyn, across the city and across the state. Atlantic Yards is simply too highly leveraged to return the public’s investment even with an infusion of federal stimulus funds.

An arena on land obtained through the questionable use of eminent domain violates both sound planning processes and sound community economic development. The process by which the development proposal has proceeded violates provisions of the bill that require a transparent and competitive public bidding process that meets federal standards.

The project, including the arena, is not “shovel-ready” by any stretch of the imagination or in the terms described in the stimulus bill, as Forest City Ratner doesn’t own the land it needs to construct it and, according to the developer, it is undergoing an extensive redesign with an unknown final plan, an unknown price tag, and unknown benefits for the public. The proposed affordable housing is nowhere in sight. Construction is highly unlikely to start in 2009.

The development proposal already has the financial benefit of city, state and federal subsidies in the form of direct cash payments, below-market land, free land, housing subsidies, tax breaks and tax exemptions, estimated by most close observers to be worth anywhere between $1.5 and $2 billion. A new federal subsidy through stimulus funds would be on top of the developer’s expected federal tax-exempt arena bond estimated to be a subsidy worth about $165 million. Yet, the proposed arena has been shown by the City’s Independent Budget Office to be a loss for the city and at best a slight gain for the state. It doesn’t deserve or need further taxpayer-backed financial support.

Actually, the total of subsidies and benefits remains in question. The proposed arena may be a loss for the city, according to extrapolations from previous IBO calculations, but they haven't said so formally.

Nearly all economists agree that arenas are not economic generators or cost-effective job creators. Forest City Ratner has never even publicly estimated the number of new jobs the arena would create because it would be woefully few, especially in relation to the public cost of the arena. And the opportunity costs are dramatic.

Job creation and affordable housing at the rail yards are being held hostage by the developer’s and ESDC’s prioritization of the arena over all else. The insistence on building the Barclays Center Arena, currently priced at an astounding $1 billion, is the chief impediment to meeting these critical needs on the MTA yards.

The latest announced price tag is $950 million, though Forest City Ratner is trying to cut costs.

Furthermore, this developer received the development rights to the MTA’s 8-acre Vanderbilt Rail Yard site, despite a bid less than half the appraised value, because it had committed to building a new, “state-of-the-art” rail yard. The sole purpose of the new rail yard is to facilitate the construction of the arena, rather than any transit need expressed by the MTA in 2005 when they approved their sale to Forest City or in the MTA’s 20-year projected needs assessment. This project is not an MTA priority. There are many other transit projects that are much more important priorities.

Granting a share of the stimulus funds to relieve the private developer of its commitments to the MTA and the public would be grossly inappropriate and would undermine the bill’s intent.

Signatories

Good Jobs New York
NYPIRG Straphangers
Sierra Club
Central Brooklyn Independent Democrats
Lambda Independent Democrats (LID)
Four Borough Neighborhood Preservation Alliance
Majora Carter Group, LLC
The New York Community Council
The Open Planning Project

Develop Don’t Destroy Brooklyn (21 Member Coalition)
Council of Brooklyn Neighborhoods (42 Member Coalition)

Atlantic Avenue Betterment Association
The Brooklyn Bear’s Gardens, Inc
Bergen Street-Prospect Heights Block Association
Brooklyn Vision Foundation, Inc.
Carlton Avenue Association
Carroll Gardens Neighborhood Association
Carroll Street Block Association Between 5th & 6th Aves.
Coalition for Respectful Development
Committee For Environmentally Sound Development
Concerned Citizens of Greenwood Heights
Crown Heights North Association, Inc.
Dean Street Block Association Between 4th and 5th Aves.
Dean Street Block Association, 6th Ave. to Vanderbilt
DUMBO Neighborhood Association
East Pacific Block Association
Fort Greene Association
Fort Greene Park Conservancy
Friends of Bond (Street)
Friends and Residents of Greater Gowanus
Gowanus Canal Community Development Corporation
Park Slope Civic Council
Park Slope Neighbors
Prospect Heights Action Coalition
Prospect Heights Neighborhood Development Council, Inc.
Prospect Place (of Brooklyn) Block Assoc., Inc. (Flatbush to Underhill)
Society for Clinton Hill
South Oxford Street Block Association
South Portland Avenue Block Association, Inc.

Reverend Dennis Dillon
Brooklyn Christian Center, Chief Executive Minister
The Christian Times, Publisher
The Black Church Means Business Conference, Executive Chair

Reverend Dr. Daniel Meeter
Pastor of Old First Reformed Church

Reverend Clinton Miller
Pastor of Brown Memorial Baptist Church

At trade deadline, Nets keep Carter--but what about this summer?

So, the Nets didn't move Vince Carter, and Dave D'Alessandro, in the Star-Ledger, doesn't doubt President Rod Thorn's claim there was no interference from principal owner Bruce Ratner.

D'Alessandro writes:
The salary dump? It was discussed. But only for as long as it took the Nets to realize they couldn't get away with it. They had to get something - anything - that would keep them competitive, or at least sell the fans on the delusion.

In the Daily News today, Julian Garcia wrote:
What does this mean for the Nets this season? Well, they obviously still have a chance to make the playoffs with the Carter-Devin Harris combo still intact. They are two games out now and have a lot of work to do to get to the postseason...

But don't think the Nets won't be trying to trade Carter over the summer so they can rid themselves of the remaining two years and $33 million he is owed.

Remember, parent company, Forest City Enterprises, in December suspended its dividend to save $30 million a year, while the losses on the Nets it absorbs represent about $22.4 million a year.

So getting rid of Carter's salary sure could help, as long as the team found a way to stay competitive. Not so easy, as Al Iannazzone wrote yesterday in the Nets Insider blog:
So what's next? It's up to the Nets' owners.

Do they want a competitive team? (That was hard to type with a straight face since the Nets have lost the last four games by a total of 73 points.) Or do they deal Carter for salary relief and play in front of a mostly empty Izod Center? (It was hard to type the last part with a straight face since with Carter the building isn't exactly full)

Flashback, 2005: Roger Green says AY area “not blighted;” academic says AY a far cry from Times Square blight

As a hearing on the Atlantic Yards eminent domain case approaches Monday in state appellate court, it’s worth looking back at an 11/4/05 New York State Assembly public hearing on eminent domain, a highly instructive session that received a virtual media blackout.

The one piece of news that emanated from the hearing was a report in the 11/11/05 Brooklyn Paper quoting Prospect Heights Assemblyman Roger Green, an Atlantic Yards proponent, as saying “For the record, that neighborhood is not blighted.”

(Note that, despite the Brooklyn Paper's assertion, Green wasn't exactly speaking against eminent domain.)

But two other pieces of news were unacknowledged. A St. John’s University law professor, formerly a top lawyer for New York State, cast cold water on governmental attempts to equate Atlantic Yards with other celebrated locations subject to eminent domain.

And a staunch defender of eminent domain said the decision to pursue condemnation should be separate from the process of selecting a developer--a sequence that would've nixed Atlantic Yards.

(I rely on the hearing transcript, in PDF.)

Times Square vs. AY

“I think eliminating blight such as was done in Times Square by the City of New York was commendable because there the blight really amounted to the danger of crime where people simply didn’t want to go to Times Square,” testified Philip Weinberg, who practiced for twenty years in the New York State Attorney General's Office and was Assistant Attorney General in Charge of the Environmental Protection Bureau.

“That’s very different from going into the middle of Brooklyn and using eminent domain to build a sports stadium and some high rise buildings which will mostly be market rate housing and the rest. To me it’s easy to differentiate. There’s always a problem in the middle, sure. But it’s easy to differentiate between those two situations.”

Curiously enough, a lawyer for developer Forest City Ratner, in a court hearing 2/7/07, tried to make the case for eminent domain with the opposite argument. "This is not the crossroads of the world, Times Square, where many developers would like to have an opportunity to build," declared Jeffrey Braun. "I mean, this an extremely derelict stretch."

Except the "crossroads of the world" was blighted. And the Atlantic Yards footprint represents one of the last significant pieces of land near Downtown and Brownstone Brooklyn.

[To clarify, Braun was arguing that there was nothing wrong with the government relying on a single developer for this project.]

The impact of Kelo

Weinberg distinguished himself from two advocates who also testified, Scott Bullock of the libertarian Institute for Justice, (IJ) who had litigated the Kelo v. New London case and lost at the Supreme Court 5-4 (but won in the public arena) and John Echeverria of the Georgetown Law and Policy Institute/NRDC, who considered the court’s decision wise.

“My take on this is in between those who think that Kelo was an unmitigated disaster and that the world’s going to come to an end, and those who applaud it as merely restating the law,” testified Weinberg, who said that the state Legislature “ought to step up and limit very strictly what those [state] agencies can do” in terms of condemnation for economic development.

That never happened.

Weinberg said he’d limit eminent domain to blight, as opposed to economic development, as in Connecticut. (He wrote a 2005 article saying that eminent domain should not be used for stadiums.) Still, he said the definition had to be tightened.

“Now, when you exercise eminent domain to remove blight, when the blight is pollution, when the blight is contamination, when the blight is a high crime incidence, then I think it’s perfectly valid to use it,” he elaborated. “But I share of the concerns expressed by Assemblyman [Richard] Brodsky and others that blight can be misused."

“That’s further a concern because of the attitude that the courts have where they will essentially rubber stamp because the test is only whether the agency acted rationally and it’s a very difficult burden for the attackers, assuming they have the funds and the time to hire lawyers and attack these things, to overcome,” he concluded.

That’s why it’s such an uphill battle for the plaintiffs in any New York eminent domain case, including Goldstein et al. v. Empire State Development Corporation.

Eminent domain defender vs. AY

Echeverria also suggested a reform that seemingly would have precluded the Atlantic Yards project. Remember, the developer approached the city with what Andrew Alper, former president of the New York City Economic Development Corporation, called “a very clever plan.”

“One of my favorite ideas, and I guess this goes on sometimes and sometimes not, is to try to seek ways of separating out... the decision whether or not to exercise eminent domain from the process of selecting a developer,” Echeverria said. “[T]oo often developers come up with a good idea and basically enlist the government, public officials as agents of their private development plans. We need to reverse that and ensure that eminent domain is used by public authorities for public purposes and developers, when private developers are brought in, and they bring a lot of skills to the table, are serving as the agents of the public and not the other way around.”

Unusual situation

In his opening, Brodsky, Chairman of the Committee on Corporations, Authorities and Commissions, acknowledged the ironies created in the wake of Kelo.

“We are in a very unusual situation," he said. "We’re now at a point in the public discourse where community activists, in many cases across the country who are traditionally grass-root progressives, are aligned to the [conservative Justices Antonin] Scalia [and Clarence] Thomas theory of public purpose, and where major developers have formed alliances with major community organizations in ways we never have. There is enormous confusion about what the law is, much less what it ought to be.”

NYC’s take: status quo

The New York City Corporation Counsel, Michael Cardozo, told the legislators they had nothing to worry about. “First, Kelo does not represent a sweeping legal change in New York. In New York, it has absolutely no effect whatsoever,” he said. “Second, the citizens of this State and this City need the power of eminent domain, including for economic development. And, third, New York law already regulates and limits the powers of eminent domain with a detailed and common sense process that protects all property owners.”

“And, therefore, the Kelo decision did not weaken New York’s law, which imposes far, far greater restrictions on eminent domain in the Connecticut statute,” he said, warning that further limits "could cripple the power in this State to develop vital economic growth.”

He gave three examples of how eminent domain has helped New York City: Lincoln Center, Times Square, and Brooklyn’s MetroTech, which was a project of Forest City Ratner.

Blight, not a blank check

Kelo, he noted, represented eminent domain for economic development without a showing of blight, something not achievable in the city.

“The City does not have a blank check, even if it wanted to, to condemn property for economic development,” he said. “I can’t emphasize this strongly enough. Under New York law, both pre- and post-Kelo, neither New York City nor any other municipality in this State, can condemn property for economic development purposes unless it shows that ‘the area is a substandard or unsanitary area, or is in danger of becoming a substandard or unsanitary area and tends to impair or arrest the sound growth and development of the municipality.’ And this need to show blight is also required if the Empire State Development Corporation (ESDC), rather than a municipality, seeks to exercise the power of eminent domain.”

More protections in NYC?

Cardozo cited ”substantial protections for individual property owners” in the city, noting that the public review process is governed by the Uniform Land Use Review Procedure (ULURP), which requires "a hearing before any affected community boards, input by the local borough president, another hearing before the City Planning Commission, and the right and always the opportunity for the City Counsel to act.”

“Even the public benefit corporation like the Empire State Development Corporation, although not subject to local review in every instance, is required by statute to consult and cooperate with local elected officials and community leaders,” he said, glossing over what consultation means in practice. “And these procedures, I suggest, foster an open and transparent process to facilitate the acquisition of property by eminent domain.”

Temporary commission needed

Still, he allowed that the Eminent Domain Procedure Law (EDPL) wasn’t set in stone, but urged caution, deferring action on pending reform and instead creating, as had been suggested, a temporary commission on eminent domain.

Such a commission was also suggested in a report finished in 2007 (and released in 2008) by a New York State Bar Association task force on eminent domain, but has not been appointed.

Spelling out blight

Assemblywoman Helene Weinstein, Chair of the Assembly Judiciary Committee, asked if blight should be more clearly defined.

Cardozo urged caution, saying that : “As we know, in the General Municipal Law, in Section 505, does define substandard or insanitary area, along with, I think, Section 502 which defines it a little bit more precisely. It does spell that out. As you note, there’s been a number of court decisions.”

Actually, Section 505 says only, "The area is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area and tends to impair or arrest the sound growth and development of the municipality." Section 502 defines the term "substandard or insanitary area" as "interchangeable with a slum, blighted, deteriorated or deteriorating area, or an area which has a blighting influence on the surrounding area." We're in the territory of tautology.)

“To start legislating in this area, again, I think is simply going to, therefore, produce lots and lots of litigation,” he said.

Then he allowed for some wiggle room: “On the other hand, I would suggest that that would be an appropriate topic for a temporary commission to take a harder look at.”

Supercompensation?

Weinstein raised the issue of supercompensation, given that Brodsky had proposed a bill requiring 150 percent above market value for private residences when eminent domain is used for economic development purposes. (I wrote about this issue when reviewing a new book about the Kelo case.)

Cardozo was, predictably enough, against it, and somewhat evasive. He suggest it would not only be "benefiting the property owner to an extent much more than expected, but you are penalizing the taxpayer and I think it is potentially very dangerous."

Eminent domain is already costly, from a procedural point of view. The idea of supercompensation is to add another level of caution.

What Cardozo left out is the enormous leap in land value when eminent domain is accompanied by a rezoning or, as in the case of Atlantic Yards, a state override of zoning.

Later, Brooklyn Assemblyman Green, whose district encompasses the AY footprint, brought up the whether a developer would pay back “the property owner and their heirs," citing the impact on generational wealth.

Cardozo was unbowed, calling it a "deterrent for the private developer to make an agreement that he’s going to redevelop this area.”

Again, he was leaving out the increase in land value.

Role of local elected officials

Assemblyman Robert Sweeney, Chair of the Committee on Local Governments, asked if elected officials were required to sign off on the taking of property.

For Cardozo, it was a fat pitch up the middle. “Not just any elected official,” he declared, citing ULURP. "[Y]ou got community board approval, you got borough president approval, you have the City Planning Commission, and ultimately you have the City Counsel.”

Actually, the community board is only advisory.

And none of that applies when the ESDC is the lead agency, as with Atlantic Yards.

Later, Weinberg agreed that the approval of elected officials would help, but said it’s no panacea, “because sometimes they’re going to be wrong and procedural safeguards are not sufficient protection.” Rather, he suggested a redefinition of public use.

Poverty = blight?

Brodsky raised a philosophical issue: “”Why should there be a limitation that says the city may only bring economic development to areas which are otherwise known as poor or blighted areas?”

Cardozo said poor does not mean blighted. “If it’s a low income neighborhood, for example, that is not blighted, that’s not environmentally damaged, that’s not vacant, doesn’t have a lot of problems, the fact that it’s a low income neighborhood would not mean it is blighted and, therefore, this limitation as it exists now would prevent condemnation,” he said. “If, in fact, the neighborhood is run down, vacant buildings and things of that nature, abandoned lots, dangerous and so forth, then it’s economically blighted. But I would not agree with you that blight equals a poor neighborhood.”

In other words, his description of blight sounds much like that given by planning professor Lynne Sagalyn: “When the fabric of a community is shot to hell.”

Blight like Detroit?

Later, in response to Assemblyman Charles Lavine, the IJ’s Bullock reflected that the blight justification has been around for 50 years.

Lavine mused, “It’s American troops returning from Europe after the second World War who viewed blight here in, for example, the City of Detroit and said to themselves, not much difference between portions of the City of Detroit and Dresden. Fair enough?

“Absolutely,” responded Bullock.

“Okay. That’s the philosophical basis,” Lavine agreed.

There are luxury condos in and next to the AY footprint.

What if it’s stalled?

Green raised the question of stalled projects, “when the state exercises eminent domain for a developer and the developer cancels or fails to complete the development project."

He gave an example: “Baruch College in the Atlantic Yards complex [sic] across the street from Atlantic Yards. It was supposed to have been built over 20 years ago. The state executed eminent domain. A number of homes were taken. The project never came into fruition and as a result the state actually created blight. What safeguards should we have?"

“I wouldn’t put the private developer necessarily as the ogre,” Cardozo replied. “Because even if the government was doing that, frankly, you could have exactly the same problem… [I]f it’s condemned, if the property owner would receive just compensation. If this is a problem, and I understand the citation of examples, maybe that’s something that the temporary commission should take a look at. But if the property is condemned, the property will have received the fair and just compensation.”

But that would leave aside the impact on the community at large, Green noted.

“And, as we all know, unfortunately government starts on a project and doesn’t finish it for a variety of reasons,” Cardozo followed up.

“Market pressures, blah, blah, blah,” Green continued.

“The economy goes into the dumps or something like that,” Cardozo said. “We certainly want to prevent that, and maybe we should take a look at that. But as far as the individual property owner is concerned, as distinct from the overall problem this creates, as long as the property owner has received fair and just compensation.”

Later, Kathryn Wylde, President of the Partnership for New York City, which represents business, agreed that it was worth a look: “I’ve experienced enough in neighborhoods where the property hanging out there while one bureaucracy after another didn’t go forward with plans, has had a depressing affect and has done anything but contribute to economic development.”

Inclusion of non-blighted properties

Can eminent domain be used to take non-blighted properties?

Cardozo responded: “For abutting property outside of the urban renewal? It has to be within – if you’re talking about for economic development purposes, Mr. Brodsky, in order for the City of New York to exercise its right of condemnation it must have been approved, the overall project must have been approved.”

In the case of Atlantic Yards, more than a third of the site would be outside the Atlantic Terminal Urban Renewal Area (ATURA), and most of the condemnation would be in that zone outside ATURA.

[In the map at right, anything in red (including a grayish red, but not the gray alone) is within ATURA. The blue-and-red striped areas between Atlantic Avenue and Pacific Street are within both ATURA and the Atlantic Yards footprint. The blocks in solid blue, which continue down to Dean Street, are within the Atlantic Yards footprint but not ATURA.]

Later, the IJ's Bullock suggested that “there should be a requirement in the law that the taking of so-called non-blighted properties in an overall blighted area has to be essential in order to accomplish the redevelopment projects.”

(The Atlantic Yards area beyond the railyard may not be blighted, according to Green, but the taking of non-blighted properties is in fact essential to Forest City Ratner’s plan.)

Friendly condemnation confusion

We now know that the ESDC plans to condemn the entire Atlantic Yards site, including buildings owned by Forest City Ratner, in “friendly condemnations,” which would both clear up title problems and also accelerate the dissolution of rent-stabilized leases held by tenants in FCR-owned buildings.

But when Green brought up the issue, without spelling out the reasons, Cardozo was confused.

“Let’s say that the City and State initiates an economic development plan with a developer and the developer as part of the footprint of this project purchases, let’s say, 98 percent of the properties in the footprint and then the state moves to execute eminent domain,” Green said, “the state would actually be executing eminent domain on the properties that the developer himself has already purchased.”

“I’m not sure I follow that last sentence,” Cardozo replied. “You said the developer had purchased the properties.”

“Yes,” Green continued. “I said that the state and city initiated an economic development plan, and that as part of that the developer went forward and purchased most of the properties within that footprint. Let’s say 92 percent, 98 percent of the property. The state afterwards executes eminent domain.”

“Why would it do that?” Cardozo asked. “It would exercise eminent domain on the properties that the developer did not purchase.”

“Executes eminent domain in the footprint, which would include properties that he didn’t purchase and properties that he did purchase,” Green said, without elaboration.

“You would only exercise eminent domain on properties where there weren’t building buyers,” Weinstein suggested.

“Not necessarily,” Green replied. “If I read the law correctly it is very possible that if, in fact, properties have been purchased within the footprint of an economic development plan and the state executes eminent domain that that could in fact impact on properties that were purchased by the developer.”

“I guess that’s theoretically possible,” Cardozo said. “I’m not sure the reality–“

Green continued: “I guess what I’m saying is how would we safeguard – should there be some clarity in the law that creates essentially like a firewall that would–“

“I’m not sure that I understand,” Cardozo said. “You’re increasing the cost to the municipality. I’m not sure who you’re protecting. If the developer goes out and buys a piece of property from someone and the state or the city would then condemn that property, I don’t quite know why that would happen and I don’t know who we’re protecting in your hypothetical. I guess I’m just not following it, sir.”

“Okay,” said Green, ending the colloquy.

Who would be protected? The rent-stabilized tenants.

Wylde’s defense

Wylde then gave a case for eminent domain, stressing a legitimate point: eminent domain is needed to control speculation, not people like Susette Kelo who just want to keep their homes but investors who try to make a killing in changing neighborhoods.

(Like, um, Shaya Boymelgreen?)

Wylde’s presentation had an air of some condescension, as she criticized the House of Representatives, which had just passed a bill (that ultimately stalled in the Senate) without having “a conversation with the people who have spent the last 40 years working on the revival of urban areas that we almost lost during the 60’s and 70’s.”

The people who revived Prospect Heights, however, did that without eminent domain.

“[I]f you haven’t spent a career in housing and economic development, it’s hard to come in and understand sort of how this framework of public/private relationships have been put together and how they have served the public good,” she said.

“We had no private market functioning in the City in the 60’s and 70’s," she said. "Our economy is very cyclical. The future of our City depends on constant private investment and rebuilding. We don’t have enough public money to the job alone. We have to leverage private money.”

Local control redux

Weinstein asked Wylde if she’d recommend changes for localities outside New York City.

“My own bias is that land use and development are profoundly local decisions,” Wylde responded. “So I think that New York City’s model is a good one. I’m not familiar enough with what kind of abuses exist outside of New York City to be able to respond to that.”

She continued: “I can’t recall a situation in which New York State has come in and used its powers in New York City without a home rule invitation, the friendly condemnation invitation from the City.”

Well, the Atlantic Yards invitation came from the mayor’s office, not from the City Council.

Brodsky was skeptical, saying Cardozo’s “read of the statutes and mine don’t comport…. So, theoretically, if one wanted to build, let’s say, oh, a stadium on the West Side, the MTA could have used condemnation power to do that arguing that the proceeds to them were a transportation purpose. So, I do not accept yet, and we don’t know what the law is... That’s problem one. But I do not accept that the protections in place in New York within the City are adequate.”

Wylde responded, “And, if as you say there are state authorities that have the ability to come into New York City and its neighborhoods and exercise those powers in areas that are not strictly limited to their public infrastructure purpose, I think that’s wrong.”

Either she was condemning the ESDC’s Atlantic Yards plan or, more likely, criticizing state authorities that act without a home rule invitation.

Blight in Brooklyn

Assemblyman Daniel O’Donnell asked about blight: "Ten years ago some people may have argued that the Meatpacking District was blighted. Twenty years ago somebody would argue that DUMBO was blighted. Now, they’re the hottest, hippest places to be.”

Wylde suggested that DUMBO would not have come back without the use of eminent domain in downtown Brooklyn.

O'Donnell didn't buy it: “I was a downtown Brooklynite for almost a decade. That area, from my experience the process was very slow but it began a very long time ago. Some of the same economic engines that New York City has and its need for artists and art space and a variety of things drove the beginning of what DUMBO now is.”

ULURP inadequate

O’Donnell questioned the value of ULURP, noting that “those votes are regularly ignored at the upper levels of government…. As the person who used to chair those ULURP hearings, knowing that it was to some degree a horse and pony show because no matter how a unanimous vote in opposition to a ULURP at a community board was rarely given anything more than a glance by the people who are making the larger decisions and looking at the 50 year plan or whatever else it may be.”

“I feel that our land use process is pretty good,” Wylde said. “But in terms of the resolution of the kind of issues you’re talking about, I don’t think eminent domain, I mean, I don’t think that’s the issue. You’re talking about more fundamental charter issues.”

She’s right. And the City Charter may be revised.

The anomaly of Atlantic Yards

Green asked Wylde about the “the issue of fair compensation, reciprocity, and possibly even reparations.”

“Typically, it’s a public or not-for-profit corporation often that is the custodian of the property for decades before there may be private developers that come in to work on it,” Wylde responded.

“Times Square,” riposted Green.

“Well, in the case of Times Square, no,” Wylde responded. “That was in a public entity for a long period of time. Fifteen years before you started having individual negotiations for developers to come in. There’s just no way to project in most cases. I think the projects that are top of mind – Atlantic Yards now, for example. Where you’ve got a developer in place, that’s an unusual situation, not the typical situation.”

Increased compensation?

Like Cardozo, Wylde expressed skepticism about supercompensation.

Green suggested, “But let’s say, for instance, in the case of the Atlantic Yards project where the developer obviously had to go back to his investors, his shareholders and to articulate the projected profits that would be made as a result of this project. Correct?”

Wylde said those projections would have to be updated, and the costs would be passed on to the public.

Green suggested that fair compensation should be projected in the developer's proposal.

“It will simply take out some of the community benefits you’ve negotiated, some of the affordable housing you’ve negotiated,” Wylde suggested.

In other words, she suggested, it was a zero sum game. But affordable housing depends most crucially on government subsidies.

Later, Echeverria said he supported “a modest premium, particularly for homeowners” keyed to longevity: "If somebody’s been there for 30 years, they’re entitled to extra compensation. If there’s a savvy speculator who moved into the neighborhood last month, they’re not.”

Now the best-known plaintiff in the Atlantic Yards case, Daniel Goldstein, had been an AY footprint resident for less than a year before the project was announced, but his opposition is a matter of principle, not profit.

The IJ perspective

Bullock praised proposed federal legislation, which “defines blight. It allows it for properties that are falling down, that are truly in disrepair that the community wants to revitalize, but it does not use it simply as a tool to gain property for private economic development.”

He noted that in many cases developers can build around holdouts, citing a book about New York City titled Architectural Holdouts.

An eminent domain defender

Echeverria, who noted he was also testifying on behalf of the Natural Resources Defense Council (NRDC), an environmental group, said he thought Kelo “was a wonderful decision.”

“I thought it was correctly decided, and I thought it was a model of judicial restraint,” he said, adding, “The dissenters in the decision acknowledged that they would have to jettison prior decisions, including prior decisions they, themselves, had written in order to reach a different result. And, most importantly, what the decision does is it says it’s up to the legislatures, up to Congress, and up to the state legislators to place what limitations they wish on the power of eminent domain.”

He suggested—as would the plaintiffs in the AY federal eminent domain litigation—that Kelo “actually narrowed the permissible scope of the eminent domain power,” because it required a development plan, “in which the City Council signed off that the City was trying to address a real economic need.”

He agreed with Wylde that that the problem was of land assembly: “[T]here’s going to be one idiosyncratic person who says I’m not going to sell at any price, or you’re going to put a few land owners in the position, after others have sold out at fair market value, of being able to extract monopolist profits.”

(Idiosyncratic or principled?)

And if they can’t deal with holdouts, “cities like New York are placed at an enormous disadvantage compared to other communities in revitalizing themselves”—hence NRDC’s concern.

Better process, not developer-driven

Echeverria suggested that reform lay in better process, ensuring that eminent domain “is carried out in the context of a comprehensive community planning effort, which is both public and transparent and considered.” And, as noted above, he suggested that the acquisition of land be separated from the selection of a developer.

He proposed an additional requirement of environmental impact statements—which, as those watching Atlantic Yards know, can be lengthy but not necessarily candid.

Stadiums vs. shopping centers

“It’s also, I think, very hard to draw sensible lines here,” Echeverria continued. “The Republican leadership in Congress seems to be intent on allowing opportunities for stadiums to go forward... But they seem less enthusiastic about, for example, shopping centers. But in my City, the Anacostia neighborhood has successfully persuaded the D.C. City Council to authorize the use of eminent domain so the Skyland Mall can be redeveloped so that the people east of the City in Washington can have one sit-down restaurant. I have a hard time finding a principled line between stadiums and shopping centers.”

He suggested that if the problem was private transfers, "what we’re going to end up with is publicly owned stadiums and publicly owned shopping centers. Frankly, I don’t think any of us want to go in that direction.”

A list still awaited

Echeverria suggested a task for the temporary commission: for him (and others) to “nominate the ten best eminent domain projects of the history of New York State” and for Bullock to compile a list of the ten worst.

“You could actually collect some facts and information about the process that was followed and the results achieved, talk to the affected landowners, talk to the businesses, find out what tax revenues were generated, what the collateral benefits were and say how does this process working on the ground, and what is it meaning to real communities and real people,” he said. “And only with that kind of information in hand, which takes a lot of work, but only with that information in had can you really make a considered judgment.”

Would AY make the list?

Fullilove on urban renewal

Mindy Fullilove, Professor Clinical Psychiatry at Columbia University, and author of Root Shock: How Tearing Up City Neighborhoods Hurts America and What We Can Do About It, has focused on the impact of 1960s urban renewal—not quite the same as the Atlantic Yards project—but reminded legislators how such products can wreck neighborhoods.

(In the case of AY, the impact would be less on those displaced from the footprint than a "spaceship" landing in the midst of the adjoining neighborhoods.)

“Eminent domain is an important tool,” she allowed. “When it’s employed without an adequate cost accounting, it’s improper. The cost accounting has never been appropriate. “

“I believe that we should be doing much more organic urban development where you nurture what’s there,” she said. “Columbia University owns half the buildings in Manhattanville. Why can’t they build really an urban campus that’s interspersed with the other buildings?”

Back to compensation

Law professor Weinberg questioned supercompensation, saying that if the condemnation is invalid, “then sugar coating it doesn’t make it any better. I think we have to address the substantive issue and not the compensation issue.”

“Because if I lose my house, why should I get 100 percent of the value if it’s taken for a road, or a public school, or a transit line and 150 if it’s taken for a sports stadium,” he said. “I’m sympathetic with the view that if there’s economic development that somebody ought to reimburse. But I’d rather cut off the source and limit the economic development takings in the first place.”

“Shopping malls, basketball stadiums, to me are not public uses whether the area is blighted or not,” he said. “They’re just not public uses.”

Fullilove mused, “So, why isn’t the fair market value the future fair market value? So that’s the first issue. But the second issue is that what if you were to add up everything that’s in a neighborhood and compensate the neighborhood for its contents?” She cited as example the loss of jazz clubs in “urban African American ghettos” targeted for urban renewal.

Relocating renters

Green brought up an issue later to surface in Forest City Ratner’s promises for Atlantic Yards: “What if we had a clause that essentially called for the developer to provide reasonable comparable living space, particularly if they’re developing housing? Reasonable comparable living space would be provided to the renters within the new location that would be developed.”

(However, at least with some of the contracts, those who’ve given up rent-stabilized leases would lose out if the project dies.)

“I think that might make a lot of sense,” Weinberg said. “If, indeed, a commission is set up, that would be a perfect issue for that commission to look at. I think there is something that’s worth exploring. As I understand it, the tenant gets relocation costs, but that’s just the mover and the costs of the crates and barrels.”

Indeed, that’s what a “feasible” relocation plan in the Atlantic Yards case apparently involves, as courts have affirmed.

An AY opponent

The final witness was Daniel Goldstein of Develop Don’t Destroy Brooklyn. He followed up on Weinberg’s remarks: “If the use is wrong, then who cares about the compensation. I’m sure you’ll figure out an appropriate compensation both for homeowners, renters, and business owners. But, surely, when the developer is going to make a profit many times of what the worth is before condemnation, the people condemned should share in that. But compensation is not the issue in my opinion.”

“It’s a shame that Mr. Cardozo had to leave because I’m very familiar with the Atlantic Yards proposal and opposed to it,” Goldstein said. “And everything he said about ULURP, about a deliberative process, a local process does not apply to the largest development plan in Brooklyn in the past three decades.”

"This project was proposed two years ago by the developer," he said. "It’s the developer driven process, the developer’s idea. It is not an economic development plan.

Goldstein noted that, unlike some others testifying, “I don’t have an agenda other than advocacy for reforming New York’s eminent domain law…. I do not have an extreme property rights agenda.”

AY favoritism charges

What’s abuse of eminent domain?

“I think it is like pornography,” Goldstein testified. “You do know it when you see it. In the case of the Ratner project, the abuse of eminent domain has reached, in my opinion, a corrupt extreme where the favoritism is blatant, the cronyism is clear and the developer is an old law school buddy of our Governor Pataki, one to he project’s chief political supporters. Mr. Ratner has a cozy relationship with Mayor Bloomberg. Just this past week if you watched the two debates, the issue of Atlantic Yards came up in each debate. Mayor Bloomberg cavalierly said this project has had more scrutiny than any other development project or as much scrutiny as any development project in the City’s history. That’s a fantasy world. The exact opposite has occurred, as I explained earlier.”

He criticized the role of consultants like AKRF: “Blight needs to be clearly defined. In many cases, those environmental reviews are written in tandem with the developer and consultants. Clearly, it’s to their benefit to call an area blighted. I don’t think a developer should have any say at all in whether or not an area is determined to be blighted.”

More sunlight

O’Donnell asked that, had Atlantic Yards reached the City Council, Goldstein’s position would have prevailed.

“No. I think the City Council would have voted for this project,” Goldstein said. “But I do think that had it gone through ULURP, the daylight that would have been shed on it would be far greater than what has occurred.

Back to blight

Goldstein brought up the malleable definition of blight: “What’s troubling is if you call that area blighted a lot of Roger’s district could be called blighted.

Green responded with the money quote: “The area, for the record, the area is not blighted. For the record.”

“And I appreciate that, “ Goldstein continued. “And Roger is correct. Just this week, in the Real Deal real estate magazine there’s a glowing article about how booming that area is. One of the buildings… that was mentioned in that article was my building, which is a converted warehouse which six months after it opened and people moved in, this project came along. Within a year and a half, the building has emptied out. I’m glad to hear Roger say that. If blight can be used for this neighborhood, as you go eastward in Brooklyn you better watch out because it will just continue.”

Sacramento mayor: "We need to find another way to make sure we get an arena built"

From NPR's Tell Me More today, beginning at about 6:00, Sacramento Mayor Kevin Johnson, a former NBA point guard answered questions from Michel Martin about a new arena in a city whose citizens said no.

KJ: The Sacramento Kings... they're an economic engine for our city. They provide jobs, quality of life. So it's much more than just a basketball arena.

MM: There's always a lot of debate about whether these sports arenas really yield what they cost, in terms of the tax abatements that people expect... Do you really think you make that sell in a time like this?

KJ: It's my job to convince the community that this is an investment that has a positive economic impact long-term. When you talk about the dollars that flow into our city. When you talk about what the Sacramento Kings have done to elevate our profile of our city of Sacramento.

To your point, a few years ago, our city declined to vote... to publicly finance an arena. We need to find another way to make sure we get an arena built, because we do not want to lose the Kings. But it was very clear that our community does not want to publicly finance an arena at this time.

Maybe the team should pay for it privately?

Nah.

Now the plan is for a mixed-use project. Neil deMause is doubtful.

As trade deadline approaches, will Nets move Vince Carter?

With 24 hours until the trade deadline, the Newark Star-Ledger's Dave D'Alessandro, in a piece headlined NJ Nets: The Armageddon Option, wonders whether the money-losing Nets will try a "straight salary dump," moving star Vince Carter just to save money.

He writes:
So consider the wide-angled reality of the matter. The season is probably going nowhere. The franchise is going to lose upwards of $35 million again. The arena is not generating any revenue. The fan base, such as it is, is already apoplectic. Brooklyn is still a pipedream until it isn't.

And against that backdrop, you have a former All-Star making $16 million next year and $17.5 million the following year (that's 40 percent of their committed payroll in 10-11) who can't change any of those harsh realities.

As one thoughtful front office denizen put it, "It's not spoken of -- nobody knows what instructions Rod gets directly from the top -- but it's just naive to assume it isn't being considered -- seriously."

...So at this time tomorrow, they are going to tell us one of two things. Either they're going to stick it out and take another huge financial hit, or they'll be in full dump mode - which is precisely what they'll be doing if they pull the trigger on some of those idiotic proposals that have been bouncing around in the last 48 hours.

Some skepticism

The New York Post's Fred Kerber is doubtful:
But Carter is a talent, having a terrific year all around and the Nets aren't going to give him away. Thorn would be more apt to duck his head in a vat of acid then deal Carter on a straight salary dump.

Maybe, but that means that that the team and owner will continue to take a hit.

The Money Fallacy

On the NetsDaily blog, the redoubtable NetIncome (aka Bobbo) misses the point in a piece headlined The Money Fallacy.

He writes:
Okay, the Nets are losing $30 million a year…but unlike the Maloof family in Sacramento, Bruce Ratner didn’t lose tens, maybe hundreds, of millions of dollars to Bernie Madoff’s Ponzi scheme.

And yeah, the Nets’ debt-to-equity ratio is the highest in professional sports, but it doesn’t have a feuding, fractured ownership like they do in Atlanta.

And by the way, the Nets’ payroll is ALREADY the fourth lowest in the NBA and nearly $10 million below the luxury tax threshold!

...So it is entirely possible without moving anyone, the Nets could have the second lowest team payroll in the NBA next year.

Well, as onetime Net Derrick Coleman observed, "Whoop-de-damn-do."

Maybe the Nets "have managed their payroll quite well and not just for 2010," but in the short term, it doesn't help the team from losing money, and it doesn't help the developer's current cash flow.

Post: MTA isn't seeking stimulus funds for Atlantic Yards

The New York Post reports that the Metropolitan Transportation Authority is not seeking stimulus funds for Atlantic Yards

"It's not on any of our lists [of projects]," an MTA official told the Post.

(We knew it wasn't on any of the preliminary lists. Are we sure it's not on the final list?)

However, the Post reported, developer Bruce Ratner "still has a shot at getting some of the federal pork directly through Gov. [David] Paterson."

As far as I can tell, that's a generic reference to the fact that Paterson will control discretionary funding, not an assurance that Atlantic Yards is on a specific Paterson list.

When it came to D'Amato's lobbying, Bloomberg once was scathing about buying "political connections"

Naively or cunningly, architect Frank Gehry 4/10/06 famously described Atlantic Yards developer Bruce Ratner as "politically my kind of guy, he's a do-gooder, liberal." Well, in his personal politics, Ratner may lean left, but when it comes to business, the developer is an equal-opportunity rent-seeker.

Hence Forest City Ratner's willingness, in the pursuit of federal stimulus funds, to enlist lobbyist and former Republican Senator D'Amato, who gained election as a conservative and maintained three terms as "Senator Pothole," emphasizing constituent service and pork.

Now D'Amato's an influence-peddler to the highest bidder, who previously was hired by the developer to make sure federal eminent domain laws didn't get tougher.

Bloomberg on D'Amato

Not so long ago, in 2004, D'Amato was hired by Cablevision, owner of Madison Square Garden, to lobby against the construction of a sports facility, the West Side Stadium, seen as a rival. Multi-Channel News reported that Madison Square Garden hired Park Strategies, the former senator's firm, for a six-month contract for $5,000 per month.

Bloomberg backed the stadium plan, and as Newsday pointed out, Bloomberg took aim at D'Amato during his 8/13/04 appearance on Live from City Hall with WABC radio's John Gambling.

(There's no counter on the page with the audio link, but the circle in the graphic indicates approximately how far along this segment occurs in the file.)

Bloomberg was scornful: "Cablevision's just out there hiring every political consultant, everybody that thinks they can get things done by pulling strings in the state and the city. It's a disgrace; they just run these ads that are so far off the mark. If we can't get these projects done, I don't know what we can get done, because these projects really do bring up a lot of jobs for the city, and it's jobs in particular for people who are starting up the economic ladder. And, also, if we don't get these two--the expansion to the Javits [Convention Center] and the stadium together--going, we are not going to be in contention for the Olympics."

"If they think they can buy their ways out, with a bunch of lobbyists who have political connections, I think that's a bad mistake. I think you're going to see the public rise up and say, enough--we've had too much of exactly that kind of decision-making done when it comes to big projects. We just cannot walk away from the future for our children just because one company is worried about competition."

(Emphases added)

The mayor will be mum

In the case of Atlantic Yards, D'Amato is lobbying for a project the mayor supports, so there's no reason to expect criticism from Bloomberg.

But the principle is the same. Decision-making by lobbyists detracts from democracy.

No party politics

As Jack Newfield and Paul DuBrul wrote in their 1977 book The Abuse of Power: The Permanent Government and the Fall of New York:
Legal graft is apolitical. It is important to understand that above a certain level of power, at the level of permanent power, there is no party politics. There are no Democrats and no Republicans. There are only class colleagues sharing profits.

In the Daily News

The New York Daily News, another backer of the stadium, was also scathing about D'Amato, in a 3/6/06 editorial headlined Getting to the Truth About Jets Stadium:
The naked self-interest of Cablevision bosses Charles and Jim Dolan - and their readiness to work against the best interests of New York - have been breathtaking. They have one aim, and that is to save the Garden, an antiquated frump in need of an extreme makeover, from competition by a stadium that would also serve as an entertainment venue and annex to the Javits Convention Center, as well as be the centerpiece venue of the 2012 Olympic Games.

To achieve their ends (while enjoying an undeserved $11 million yearly real estate tax exemption), the Dolans have retained a clown car's cargo of fixers, including Al D'Amato, a close pal of Kalikow, and Pat Lynch, confidant of Assembly Speaker Sheldon Silver.
(Emphasis added)

The Daily News pointed out, presciently enough, that critics of the West Side Stadium would not oppose the planned Yankee Stadium or the Nets arena, suggesting "high-stakes commercial and political agendas are obscuring the merits of a West Side stadium."

Alternatively, it might be argued that "high-stakes commercial and political agendas" have obscured the flaws of the other projects.

BrooklynSpeaks, Straphangers say there should be no stimulus for AY

Last Wednesday, District Leader JoAnne Simon asked a fundamental question of Atlantic Yards Ombudsman Forrest Taylor: "When is this project no longer this project and is so fundamentally altered that we need to look at it again and start over?"

Taylor said he'd take the question back, but BrooklynSpeaks, the "mend-it-don't-end-it" coalition of which Simon is member, yesterday issued a statement drawing on that issue to ask Governor David Paterson to reject any request by Forest City Ratner for federal stimulus funds.

Approving a "new project"

“The original Atlantic Yards plan was conceived for the economy of 2004. In 2009, that plan is no longer feasible, and the current design, program and schedule for the project is unknown,” said Prospect Height Neighborhood Development Council (PHNDC) representative Gib Veconi. “Providing stimulus for Atlantic Yards now would amount to the Governor approving a new project before it’s been disclosed to the public.”

It also would seem to bail out a developer for obligations previously committed.

“Atlantic Yards continues to be a project without any mechanism for meaningful participation by the community or local elected officials, or any true oversight or accountability from the State," Simon said. "To award stimulus funds when Atlantic Yards’ timeline and essential characteristics remain question marks would not only be bad for Brooklyn, but runs directly counter to the criteria for eligible, shovel-ready projects established by Congress.”

BrooklynSpeaks, for reasons of pragmatism as much as principle, has been unwilling to join lawsuits challenging the fundamentals of the project, the approval of Forest City Ratner's role.

Still, BrooklynSpeaks, which has proffered proposals for reform that haven't gotten much traction, at least has been praised by Brooklyn Borough President Marty Markowitz, the project's biggest cheerleader and a proponent of stimulus funds.

Other voices

BrooklynSpeaks, which has gotten support from local elected officials critical of Atlantic Yards but unwilling to oppose it--in other words, most outside of City Council Member Letitia James and State Senator Velamanette Montgomery--includes as sponsors both neighborhood groups and also the Tri-State Transportation Campaign, the Project for Public Spaces, the National Trust for Historic Preservation, and the Congress for New Urbanism, New York Chapter.

Straphangers weigh in

The New York Public Interest Research Group's Straphangers Campaign released the following statement yesterday:

There are many very worthwhile transit projects deserving of federal stimulus funds, from modernizing stations to replacing aged subway tunnel fans. The Atlantic Yards in Brooklyn is not one of these priorities.

The Atlantic Yards developer should pay for moving the yards to accommodate development, not the taxpayers.

Will the Times comment on Ratner's blatant bailout bid? Based on past performance, no

Will the New York Times editorialize against the private bailout Forest City Ratner apparently seeks, deploying federal stimulus funds to complete the new railyard the developer had committed to build?

It's doubtful, given the newspaper's steady path from criticizing AY subsidies to studious silence, even though a stimulus for Atlantic Yards is so contentious that it's drawn criticism from not only Develop Don't Destroy Brooklyn but also BrooklynSpeaks and the New York Public Interest Research Group's Straphangers Campaign.

But maybe the news desk, if it truly believes in small-d democracy, will do some more reporting.

Inconsistent silence

Nearly two years ago, I pointed to the Times's inconsistency on public subsidies for Atlantic Yards. In a 3/27/05 editorial, the Times opposed having the city and state each contributing $100 million to support the project:
That’s unnecessary: Mr. Ratner should pay his own way.

In an 11/27/05 editorial, the Times reiterated its position:
There is no reason to expect taxpayer money to be used to help fund a profit-making real estate venture like this one; those costs should be absorbed by the builder.

In an 8/6/06 editorial, the Times backed off somewhat, targeting only a portion of the $200 million then committed in public funds:
Some $40 million, for example, is for land acquisition for the arena, which should be a developer expense. The project may require the city to build more classrooms, expand sewer and water services and provide more police on game days. It is up to Mayor Michael Bloomberg’s administration to demand from the developer every reasonable contribution to defray these extra expenses.

And then, silence

After that, the Times was silent. The newspaper failed to to comment on the doubling of the city's commitment, to $205 million.

The Times has comment on the developer's efforts, on multiple fronts, to increase cash flow through delaying obligations and accelerating the delivery of subsidies.

Now, the Times faces a bigger test.

"The spirit of the Times"

We have to remember that the Times's editorial voice depends fundamentally on its publisher, who just might be wary of antagonizing the developer that joined with the New York Times Company to build the new Times Tower.

I wrote 2/23/08, citing an interview with Editorial Board Member Carolyn Curiel, the main writer of editorials on local issues.

"Our goal is to reflect the spirit of the Times and the opinion of the publisher, Arthur Sulzberger, Jr.," she explained. "And a lot of it is driven by the news pages, but we don't consult with the news pages... It's not a democracy. Consensus is often arrived at, sure, but not always.... There is something of a position being hammered out at the table."

"Again, we're not a democracy," she affirmed. "We are reasoned, in how we come to opinion. But no, it's not a democracy; it's reflective of the spirit of the Times."

After Mexican tycoon Carlos Slim Helu took a significant stake in the times, former editorial writer Andres Martinez commented last month:
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 same goes for editorials about (or avoiding) Forest City Ratner.

Time for Times city staff to step up?

New York magazine's Chris Smith, in a 1/24/09 article headlined The Zany Adventures of (Senator) Caroline Kennedy, suggested that the Times reporters had stepped up:
Kennedy also smacked headlong into a newly emboldened Times city staff. “We’ve grown a pair of balls, and I’m amazingly proud of the paper,” says a Times reporter. “The turning point was the editorial page’s rolling over for Bloomberg on erasing term limits. The reaction from the reporters and editors is that we’re the last line of defense—we’ve got to hold the line.” Not for or against any particular politician, that is, but to stand up for small-d democracy. After inflating her candidacy by making her simple declaration of interest in the job the lead story of the day, they compensated by hitting her hard.

Ok, but the coverage of this issue on the CityRoom blog, with an obligatory comment from AY uber-opponent Daniel Goldstein, doesn't cut it.

The effort to get Atlantic Yards a federal bailout is, to many, a blatant perversion of the goals of the stimulus program.

The coverage should be in depth, and in print.

Does he know something we don't? ESPN host says "Brooklyn’s done. Brooklyn’s finished."

ESPN columnist and radio host Bill Simmons, in his free-flowing February 16 podcast, flatly declared that the Nets' announced move is doomed: "Brooklyn’s done. Brooklyn’s finished."

There's no evidence that Simmons has any inside information--though a Nets official, speaking anonymously last October, told a Bergen Record columnist the move wouldn't happen. I think, however much the project appears to be struggling, it's hardly doomed.

Meanwhile, developer Forest City Ratner is angling to get federal stimulus funding to move the project along and is hoping for a swift resolution of pending legal cases, which is not implausible.

So, while Simmons' statement is opinion, not fact, it's another example of how the "Atlantic Yards is dead" meme has been getting around.

NBA teams on the ropes

At about 65:35 of the podcast, Simmons brought up rumors about troubles in the National Basketball Association:
Sacramento might move. New Orleans might move. The New Jersey owner is supposedly broke. Memphis--that situation is just a financial train wreck. That’s four teams... I think it’s going to be really interesting next year... especially when you’re talking about season ticket deposits coming in in April and May, which is only two or three months away.

That doesn't bode well for the Nets during the 2009-10 season.

Simmons' friend and radio foil Joe House brought up the possibility of a team in Las Vegas.

BS: I think Seattle is in play, Anaheim is in play. I think contraction is in play with somebody, though I think it’s a last resort for [Commissioner] David Stern... I would definitely say Las Vegas, Anaheim, and Seattle. Las Vegas--they don’t have the arena... I’d say that anybody that has a modern hockey arena is in play.

His example was Anaheim, but the Prudential Center in Newark surely is as modern a hockey arena as they come.

Brooklyn in the mix?

A few moments later, House brought up the Nets.

JH: Is Brooklyn back in the mix?

BS: Brooklyn’s so out. Brooklyn’s done. Brooklyn’s finished.

JH: That’s too bad. I liked that idea.

Smaller market

A few minutes later, Simmons suggested that a small market team, like the Oklahoma City Thunder, might be setting an example.

BS: We all make fun of the city that shall not be named, but they’ve been selling out; they sell the suites.

JH: They’re the only game in town.

BS: Maybe that’s where you go.

Social contract

After Simmons brought up the fact that a lot of team owners lost paper wealth, House skeptically brought up the impact of sports teams on urban economies.

JH: You know my point of view... the idea that a person owns a sports team to make money on it is just preposterous. It violates what I regard as the social contract between the city and the team. The cities go out of their way, bend over backwards, with the infrastructure, with the direct financial support, with the public money in so many of these instances. It’s been demonstrated that the economics behind a sports franchise doesn’t necessarily impact the community in a way that, like the Seattle baseball stadium was supposed to bring all this development that never proved out.

BS: It’s a racket, is what it is. We know this now--we didn’t know this--I think the first big thing was Camden Yards [in Baltimore], kinda rejuvenated that area... Well, what’s Camden Yards doing right now?

JH: They put the football stadium out there too. So the combination of football and baseball there. That’s not really much of a residential area...

BS: That led to PacBell, PacBell rejuvenated the area in San Fran that it’s in, and that I think led people to think it was the new trend. We need arenas, we need luxury suite money If you give us the money to build this arena, we’re going to pump up this part of your downtown. Now that the results are coming in, it’s really not happening. It’s kind of like a false premise, that nobody really totally knew, but they were able to rope these cities into money. Now you have like Sacramento, they want a new stadium and they’re like: "We can’t survive here, we need a new stadium." Sacramento’s probably looking at it thinking, "It’s not happening anywhere else, why should we give you 500 million?"

JH: "Yeah, we could use that money on schools, if that’s okay."

He and Simmons had a good laugh.

BS: "Thanks for your offer. We’re going to resist the urge to watch Beno Udrih for the next five years."

Declining fan base?

As they closed that segment, Simmons predicted that the economic downturn was going to hit sports attendance hard, calling the impact "catastrophic."

BS: The middle class, upper middle class of Detroit, St. Louis, Washington, the White Sox--who’s paying 90 bucks a ticket to take their family to a baseball game?

JH: People weren’t doing it in Washington last year, brand new stadium. You put bad product out; people aren’t going to pay money to see it.

That's a problem the Nets face. The product isn't bad, but it's not excellent either. And the use of stars like Vince Carter as salary cap chess pieces just fuels further fan cynicism.

NetIncome/Bobbo weighs in

On the Nets Daily forum, the man known as NetIncome (and, in commenting on this blog and elsewhere, as Bobbo), suggested that, given that Forest City Enterprises continues to absorb Nets losses, the company is committed to the Brooklyn move. Then again, "if the Nets trade Carter for cap space, that will be a strong indication they are retrenching and could mean they're going to sell."

"Four days after the trade deadline, the state of New York and the arena critics will be in court in Brooklyn on the biggest case yet," he wrote. "If Ratner gets a decision in his favor (probably come down in March), the state will move on condemnations. Then, we will see what Ratner has in the way of financing."

Actually, an arena financing plan is needed before (or simultaneously with) condemnations.

NetIncome wrote, "The Times reported the other day that Ratner wants to cut the cost of the arena in half. Sounds like a huge number, but the original $962 million estimate was the result of surging construction costs. Those costs have done a 180 and [Nets CEO] Yormark told fans two weeks ago that the arena will be a little smaller."

Actually, the original estimate was $435 million. It was up to $950 million last year. And cutting that cost in half would mean the arena would cost less than the one in Orlando. That's not going to happen.

"The reality is that Ratner keeps going," NetIncome concluded. "He may have stopped demolishing buildings at the site, but there wasn't much more to demolish."

This from a man who has been to Brooklyn once in four years. The reality is that Ratner stopped not because he ran out of work to do (trestle, anybody?) but (all evidence suggests) he ran out of money to go further. Hence the push for the stimulus.

NetIncome concluded by observing, not unwisely, that the move to small markets, however lucrative it may be for a team with an attractive arena deal, may not be good for the league, because smaller markets ultimately lessen the value of the national TV deal.

Decoding "shovel-ready": AY railyard may seem eligible, but with a huge bailout asterisk (and wouldn't be "fully vetted")

Last Wednesday, the Empire State Development Corporation's (ESDC) Atlantic Yards Ombudsman, Forrest Taylor was asked the definition of “shovel-ready,” the term used in discussion of projects eligible for federal stimulus funding.

“I think that ‘shovel-ready' will be a federal term,” Taylor said.

Perhaps, but there's no formal federal definition of shovel-ready, according to NPR. But the Federal Highway Administration's (FHA) "ready to go" designation seems a rough equivalent, NPR suggested last week, encompassing projects that have gotten through design work and environmental approval. And a New York definition, as I describe below, seems similar.

AY bailout?

The Atlantic Yards railyard might seem to qualify, though not the project as a whole, given that Forest City Ratner does not control the property. But the railyard would require a huge bailout asterisk, connected to FCR's lobbying.

As I've written, the difference between using federal funds for "shovel ready" city/state/MTA transit projects and using them for Atlantic Yards-- is that the former, unlike the latter, would not relieve a private developer of a previous commitment. (And, of course, federal aid to a private developer that relieves the developer of its costs and boosts the value of the team should mean federal ownership of the project and/or team.)

[Develop Don't Destroy Brooklyn quotes former Forest City Ratner point man Jim Stuckey, who said in September 2005, "That's not built with funny money - that's built with real cash."]

Rather, as Rep. Mike McMahon told the Brooklyn Paper, federal money should pay for not-yet-funded Metropolitan Transportation Authority (MTA) projects like renovation of train stations.

The railyard wasn't on a draft list of eligible projects, according to the New York Observer.

$182 million savings?

The reconstruction of the Vanderbilt Yard would be a $182 million project, at first. Forest City Ratner claimed its bid of $100 million cash plus the $182 million yard and other enhancements was worth $379.4 million. FCR's cash bid was doubled from $50 million after the MTA agreed to negotiate exclusively with the developer; though rival Extell, which bid $150 million in cash, was not given the opportunity to negotiate.

The MTA’s own appraiser calculated the value of the railyard site at $271.2 million and the cost of a new yard at $56.7 million, saying the agency should have gotten $214.5 million in cash.

Quizzical ignorance

Governor David Paterson and Senator Chuck Schumer, who last week expressed quizzical ignorance of whether Atlantic Yards would be eligible for infrastructure funding, should know better.

And beyond that, they skate on thin ice by advocating funds for a project which has no timeline and no design.

More legitimate scenario

Consider a more legitimate alternate scenario. What if, prior to putting the railyard site up for bid, the MTA had decided to invest public funds into moving the railyard function and building a deck, thus making the package far more attractive to investors?

In that case, federal funds could supply the jump-start. Instead, Forest City Ratner's bid for the railyard included a pledge to move and modernize the railyard, part of a package claimed to be worth $435 million to the MTA. A federal bailout would go directly to the developer's bottom line.

Transparency along the way

The apparent plan faces another significant hurdle. An overview of the stimulus package released by House Speaker Nancy Pelosi's office points to the need for transparency and fair dealing:
Governors, mayors, or others making funding decisions must personally certify that the investment has been fully vetted and is an appropriate use of taxpayer dollars.

But there's already evidence that work at the railyard has not been "fully vetted." Consider that the ESDC asserted, taking a cue from Forest City Ratner, that "the temporary suspension of work at Atlantic Yards is due to pending litigation. Once it has been resolved, work will continue. Stating that this site is not 'shovel-ready' was inaccurate."

Did Forest City Ratner explain to the ESDC why it had stopped work, and whether it was caused by litigation? No.

The only document I could find, after filing a Freedom of Information Law request, was an email (right) that quoted an FCR employee saying the developer "had completed the work needed thus far."

There was no explanation, for example, of how and why litigation had stopped work on a partially completed trestle (right).

(Photo by Tracy Collins)

In other words, the evidence suggests that the developer ran out of money, or decided not to spend any more money, while waiting for either new funding and/or the close of litigation.

And there's been no statement from either the developer or the ESDC explaining how the work suspension comports with the developer's claim, in sworn affidavits, that:
FCRC’s construction schedule has been carefully drawn to allow the arena to be ready for the 2009-10 season by commencing work now on vacant properties that are owned by FCRC, the MTA and the City, with work on properties that are owned or occupied by other parties deferred until the pending judicial challenges to the Project have proceeded to a point where ESDC is in a position to actually use its powers of eminent domain to acquire title to and possession of those properties.

The definition in New York

The ESDC and the Governor's Office for years have been working together on state program known as Shovel Ready Certification, essentially a "pre-permitting" program.

The explanation is logical:
Having an economic development site certified as a "Shovel Ready Site" means that the local developer has worked proactively with the State to address all major permitting issues, prior to a business expressing interest in the location. This advance work creates a site where construction can begin rapidly, once a prospective business decides to develop a facility there.
(Emphasis in original)

In other words, "shovel ready" means that the developer of a site has prepared it to attract new investments by businesses that would operate there. (Here's the self-evaluation checklist for developers.)

Analogously, in the case of projects eligible for federal funding, the definition would apply to a government agency that has already gotten permits but just hasn't raised the money yet.

The state's "Shovel Ready" program does involve grants from the Build Now-NY program. In the program, competitive grants "help local communities pay for professional services related to engineering studies, environmental assessments, and legal support."

In other words, the funds help get the sites "shovel ready." They don't pay for what happens next.

And where in the stimulus bill might money for AY come from?

So, where in the stimulus bill might there be money for Atlantic Yards? There aren't too many places and there's surely much competition for relatively limited funds.

Discretionary funding

There's some discretionary money for governors; the emphasis is on education but "other government services" are included. Take a look at Division A of the Recovery Bill and go to p. 429 of PDF:
(b) OTHER GOVERNMENT SERVICES.
(1) IN GENERAL -- The Governor shall use 18.2 percent of the State's allocation under section 14001 for public safety and other government services, which may include assistance for elementary and secondary education and public institutions of higher education, and for modernization, renovation, or repair of public school facilities and institutions of higher education facilities, including modernization, renovation, and repairs that are consistent with a recognized green building rating system.
(Emphasis added)

Of $53.6 billion, 18.2% would mean $9.8 billion spread nationally--not a huge amount of money for each state. The National Association of State Budget Officers (NASBO) calls it the State Stabilization Fund, which has "flexible funding for governors’ priorities." (NASBO states that includes $8.8 billion, but I think that's a typo--it should be $9.8 billion.)

Mass transit and housing

NASBO also identifies $9.3 billion in the bill for mass transit. (I couldn't find the reference.) The bill has provision for a "Public Housing Capital Fund." There's also $1 billion for a "Community Development Fund," but that money would go to grantees that received funding in FY 2008.

There's an additional $2.25 billion nationally for "capital investments in low-income housing tax credit projects;" New York State would get a relatively small fraction.

Might that involve Atlantic Yards? Well, the December 2006 KPMG report (p. 21 of PDF) to the Empire State Development Corporation states that developer Forest City Ratner would be eligible for such tax credits, a benefit of $95,000 to $165,00 per unit. Then again, the stimulus bill says that not less than 75 percent of the funds would have to be committed within a year.

Overview in the press

The New York Times, provides an overview of the impact of the stimulus on New York, identifying "$24.6 billion for Medicaid, education, transportation, and other priorities."

Drilling down, the newspaper reported $1.3 billion for transit projects, "nearly all of which would go to the Metropolitan Transportation Authority. About $500 million would go to the Fulton Street Transit Center in Lower Manhattan. As for the rest:
The authority has a long list of other projects that could get some of the stimulus money, including subway and commuter rail station renovation and improvements to behind-the-scenes infrastructure like rail yards and shops.

The Vanderbilt Yard was not on the MTA's initial list, but the decision is apparently in the hands of Gov. David Paterson.

Ban on stadiums proposed

On February 8, Develop Don't Destroy Brooklyn pointed out that the Senate version of the stimulus bill included an amendment that would not allow stimulus funds for, among other things, a stadium.

That stadium ban has since been removed, and I haven't found an explanation. Could it be that Forest City Ratner lobbyist Al D'Amato was earning his keep?

The amendment was proposed by Sen. Tom Coburn (R-OK), a libertarian. It stated:
None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project.

The amendment was inspired by the efforts of Las Vegas Mayor Oscar Goodman to gain stimulus funds for a "Mob Museum." (Click on graphics to enlarge.)

Would that have affected the Atlantic Yards project? An arena is not a stadium, but arguably the amendment was aimed at sports facilities. And it's hard to imagine that Paterson would have tried to use federal money to directly subsidize the arena.

Perhaps there was concern that the amendment might have been interpreted as affecting any part of a project that included a stadium or arena. Hence a reason to get it modified.

Ban on stadiums, cultural centers removed

The main modification came, as the New York Times reported Monday, in that museums, theaters, and arts centers were no longer excluded:
That Senate amendment, proposed by Tom Coburn, Republican of Oklahoma, had grouped museums, theaters and arts centers with implied frivolities like casinos and golf courses.

Perhaps because of the speed of legislation, Coburn's amendment had gained votes from Sens. Chuck Schumer (D-NY) and Dianne Feinstein (D-CA), who generally support such cultural efforts. Schumer told the Times he was unaware of the amendment's language--though he was quickly alerted by angry arts advocates.

I haven't been able to find an explanation of why the word "stadium" was eliminated.

For the final text, look at Division A of the Recovery Bill and go to p. 488 of the PDF:
None of the funds appropriated or other wise made available in this Act may be used by any State or local government, or any private entity, for any casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool.

Jeffries: no stimulus funds for railyard, but maybe for affordable housing

If City Council Member Letitia James, a staunch opponent of Atlantic Yards, opposes the use of federal stimulus funds for the project, Assemblyman Hakeem Jeffries, who's more on the fence, thinks money might be spent on housing--but not a new railyard.

"I’m unconvinced that the railyards are the appropriate place for the money to be spent," Jeffries said yesterday after I asked whether federal money should relieve developer Forest City Ratner of a previous obligation.

"It’s clear to me that a much stronger case could be made to spend stimulus money on affordable housing," given that it responds to "a permanent need."

I had queried him to amplify some quotes in an article in this week's Courier-Life chain, which could have left the impression that he supported stimulus money for a new Vanderbilt Yard as long as Phase 1 of the project contained affordable housing.

Courier-Life article

The article states:
"The highest priority should be placed on the creation of jobs and desperately needed affordable housing and I will not support the use of federal stimulus money on any project that does not substantially address these areas," said Jeffries.

Jeffries said he would not support stimulus money going for the Atlantic Yards project unless developer Bruce Ratner and the Empire State Development Corporation committed to affordable housing at the front end of the development.

How much affordable housing?

However, the Memorandum of Environmental Commitments already requires that 30% of housing on the arena block be affordable (though the number of affordable units depends on the amount of total units).

Jeffries told me that he thinks the percentage of affordable housing in the arena block (Phase 1) should equal the percentage promised for the project as a whole, 38%, and the percentage should be 50% if stimulus funds are used.

As it happens, the rental buildings would have 50% market and 50% affordable units, divided into 20% low-income and 30% middle- and moderate-income. The first residential tower is planned as such a 50/30/20 building, while the affordability percentage for the other buildings is unclear.

"I don’t believe we should have a discussion about the availability of federal stimulus money unless the developer and the ESDC (Empire State Development Corporation) commit to" 50% affordable housing, he said.

He said that he and State Sen. Velmanette Montgomery (who's an AY opponent) expect to discuss the stimulus issue with representatives of the governor's office and that he hoped to talk to Rep. Yvette Clarke and Sen. Chuck Schumer to learn their goals regarding the stimulus package.

Funding from NYC HDC

But the funding for such housing would come from the New York City Housing Development Corporation, I pointed out.

"ESDC should be playing the role of coordinating all of the relevant state and city agencies," Jeffries said. That does appear to be ESDC's role; however, in the case of the Carlton Avenue Bridge, it has deferred to the New York City Department of Transportation.

There doesn't appear to be much in the stimulus bill directed at housing like that promised for Atlantic Yards, though there is a small expansion of Low-Income Housing Tax Credits and there is discretionary money for each governor.

Is it possible for Atlantic Yards arena price tag to be cut (nearly) in half? And what would that mean?

New York Times reporter Charles Bagli, who last March almost casually broke the news that the price tag for the Atlantic Yards arena had reached $950 million (from $637.2 million as approved in December 2006), last Friday slipped in another cost estimate with major implications.

In a CityRoom blog post taking off from the news that Gramercy Capital Corporation had extended the terms of a loan to Forest City Ratner, Bagli wrote last Friday:
Forest City has indicated that it will delay building its planned office tower or the first of the residential buildings, but it is still hoping to start construction later this year on the arena, which was designed by the architect Frank Gehry. Knowing that it could not obtain financing in the credit markets for an arena costing $1 billion, Forest City has put engineers to work trying to cut the price in half.
(Emphasis added)

That's a pretty dramatic reduction, and it raises a question: what would a $500 million arena look like? It likely wouldn't look like the $950 million arena (right), as depicted in desgins released last May.

Keep in mind some other price tags: the Prudential Center in Newark, which opened in 2007, cost $380 million; the American Airlines Center in Dallas, which opened in 2001, cost $420 million; and the new Orlando arena, under construction and scheduled to open in 2010, will cost $480 million.

Construction premium: 40% in NYC

Keep in mind that New York City Department of Finance Commissioner Martha Stark testified before Congress on October 24 regarding Yankee Stadium: "Labor, transportation and overall construction costs are about 40 percent higher in New York City, on average, than in the other cities."

So, even with expected declines in construction costs and expected compromises from unions and contractors, it's hard to imagine that an arena only slightly more costly than the Orlando facility could be build in New York City.

Also keep in mind that by September 2005 the projected cost of the arena was $555.3 million.

And wouldn't it cost more to build over a railyard in New York than on land in Orlando?

What would be missing?

The Daily News, quoting an anonymous source, reported earlier this month that the leap in cost to $950 million came from the cost of high-security glass.

The Daily News reported:
"Security is one component of the cost of the arena, but by no means the most significant," said the source. "There are a whole host of reasons why the current design is expensive, including the size, the signature look and the materials. It would be very difficult to fund this arena in this economic environment."
(Emphasis added)

The implications for sponsors

So if the arena design presented by architect Frank Gehry last May (top) has been discarded or significantly altered--with, for example, much less glass--what would remain?

At what point does it become a "design inspired by Gehry" arena rather than a "Gehry-designed arena"?

And what would sponsors and suite buyers think? "We've never pitched this as an arena — we've pitched it as a landmark," Nets CEO Brett Yormark told the Bergen Record last April.

I suspect some of those people who signed up for a Frank Gehry "landmark" might want to see the current designs. And that Yormark has some explaining to do. The Barclays Center web site is still using the old designs.

Marty's "Best of Brooklyn" fig leaf

From Borough President Marty Markowitz's prepared State of the Borough remarks last Thursday:
As we do every year--in partnership with the non-profit "Best of Brooklyn"--my office sent 350 kids from public housing to "sleep-away camp"

They meet new friends, sleep under the stars, gain the self-esteem and personal responsibility they can only get from this sort of safe, organized setting.

We call it "Camp Brooklyn"

(Parents--who get a nice break--call it heaven)
(Emphases added)

The fig leaf

Well, it wasn't inaccurate to say "the non-profit 'Best of Brooklyn'" but it would have been more accurate for him to say "my non-profit 'Best of Brooklyn'."

Here's how it was described on the ticket (above) for Markowitz's annual Chinese New Year Banquet;
Best of Brooklyn, Inc., is a tax-exempt, 501(c)(3) organization for which Borough President Markowitz serves as honorary chair. Its mission is to enhance and enrich the lives of all Brooklynites, in particular our children.

The partnership is pretty tight. Best of Brooklyn does some excellent things. At the same time, it also serves as a vehicle for Markowitz to draw support from corporate donors (like Forest City Ratner) far beyond that which they could give to his campaigns.

The big banquet

I attended the dinner this year and can report it's quite an experience: as the menu indicates, a plethora of platters is delivered to the table. There are nice tchotchkes as parting gifts. The speechifying by Markowitz and guests is endurable. (The Pacificana restaurant is so large that, for attendees not with a clear view of the podium get to see the ceremonies on a screen.)

And it's only 50 bucks--thanks, in part, to corporate donations. As the menu indicates, there are numerous sponsors, notably hospitals and banks, not the big developers that have such sway in Brooklyn. A good number of notable neighborhood folk--Community Board members, etc.--appear, but not necessarily the borough's big shots. Here's coverage from the Brooklyn Eagle.

Transparency

The web site for the charity (right) is apparently "coming soon."


Legal center?

Another part of Markowitz's speech last Thursday deserved an asterix. He stated:
We know Morton's is getting business from our legal community--
And with one of the world's largest law firms -- Weil, Gotshal -- now at MetroTech -- Brooklyn is closer to another dream of mine -- "branding" Downtown Brooklyn as a "law center"

Well, maybe a back-office law center, as the text further indicated.

Weil, Gotshal & Manges didn't move its lawyers to Brooklyn, just staff groups like Information Systems, Finance and Operations.

Nets' Carter on the trading block (to pay off Gramercy?); Golden's "chance of a lifetime" down the tubes

One of the more overblown pieces of rhetoric during the Atlantic Yards approval process came from State Sen. Marty Golden, an ethically-challenged Bay Ridge Republican.

Upon the legislature's approval of $100 million in subsidies to the project, Golden declared, according to a 4/14/06 Courier-Life article:
“It is the chance of a lifetime to have stars such as Jason Kidd, Vince Carter, Richard Jefferson and all the others have their home court based in Brooklyn. I am proud to have championed these efforts for the future of Kings County,” said Golden.
(Emphasis added)

Trading away the stars

Well, Kidd's gone.

So is Jefferson.

And Carter is on the trading block. This isn't Dodgerland anymore. It's not about continuity; it's about money.

(New York Sun photo of Carter and Kidd at 8/23/06 press conference before the public hearing on the AY Draft Environmental Statement.)

The Star-Ledger's Dave D'Alessandro reports on the contours of a Nets deal with the San Antonio Spurs:
The primary benefit to the deal is financial: The Nets would rid themselves of Carter's $16.1 million salary next year, profoundly shortening their payroll: Mason ($3.8 million) and Hill ($1.1 million) would remain with the team, but Bowen and Oberto -- despite having a year left on their contracts -- have minimal salary protection if they are cut before July 1 and Aug. 1, respectively.

That would reduce the Nets' payroll to roughly $50 million at the end of the current season -- or an estimated $10 million under the salary cap -- which would make the Nets major players in the 2009 free-agent market.

A Gramercy connection?

Beyond the free-agent market, there could be an even shorter-term gain. If the Nets save $10 million+, that would go a long way toward paying off the $15 million that Forest City Ratner owes to Gramercy Capital Corporation. (Parent Forest City Enterprises, while not the majority owner, absorbs most of the team's losses.)

Further losses

Comments NLG's Eric McClure:
NoLandGrab: Oder's Nets equation leaves out one important variable — revenue — while D'Alessandro's doesn't factor in time.

If the Nets blatantly dump salary by moving Vince Carter while getting little talent in return, they'll further alienate their already-dwindling fan base. Sure, Brett Yormark is a genius, but even he will have a tough time selling more than a couple thousand tickets a game when the team won't even be able to pretend it's trying to win. Alas, poor Yormark.

And clearing salary cap now will do the Nets no good in the summer 2010 free agent market. They'll be at least two years short of playing in Brooklyn, so it's highly unlikely that LeBron or Dwayne Wade or anyone else for that matter will want to spend two years playing in a more-than-half-empty tomb with a gutted team far from contending for anything.

Ratner's like a chess player who has nothing left but his king and a couple pawns, playing against a superior opponent. Every time he makes a move, he finds himself in check, and the check-mate is looming.

And who's the state's new Chief Judge? Sheldon Silver's pal

Wayne Barrett points out in this week's Village Voice cover story, headlined Paterson Duped Again: Shelly Silver Gets Childhood Pal Jonathan Lippman State's Top Courts Job, points out something very unseemly in the judicial selection process.

(Graphic by Robin Eley)

Barrett writes:
In fact, the story of how Lippman reached this pinnacle has its shabby side. He exudes an above-politics reform aura, but he did not climb to the top of the state's judiciary without making some stops in the dark along the way. His ally, Silver, helped clear that path to power, working a system whose anti-democratic ways have been rebuked by two federal courts.

Lippman has been a hardworking ambassador and manager of the courts for decades, visiting almost all of the system's 343 locations and acquainting himself with virtually every one of its 1,300 judges. But he has also been its consummate political player, seemingly more interested in influence than law.

Notably, the only time Lippman ran for judicial office, in Westchester, he was nominated on all five ballot lines, facing no opposition, thanks to a deal generated by Silver (and endorsed, among others, by Assemblyman Richard Brodsky, a crusader on issues regarding public authorities). Once in office, he deftly practiced judicial patronage politics, helping establish new judgships and enabling a system that doled out lucrative assignments to insiders as "court evaluators" in competency cases.

Then a panel including two Lippman associates recommended him to Paterson as Chief Judge of the Court of Appeals. Barrett asserts that Paterson agreed to the appointment as long as Silver dropped his opposition to Caroline Kennedy's Senate candidacy. In the end, Paterson dropped Kennedy and got the short end of the stick.

And who cares?

New York Civic's Henry Stern contrasted Barrett's article with a New York Times piece on Lippman:
The Times this morning gives a more complimentary portrait of Lippman in a story by John Eligon that starts on pA25. It deals with a number of the issues Barrett raises, but in a matter-of-fact way, as if there were nothing unusual about what happened.

Stern observes:
Wayne Barrett is probably the city’s best investigative reporter. He and his journalism-school interns get information that mainstream dailies, other weeklies and bloggers fail to dig up. There is a problem in that his stories are too detailed and specific for some people to read, particularly those who pick up the Voice primarily for the entertainment coverage and the skin ads that fill its back pages. The facts he brings to light deserve wider recognition, but it is the habit of many papers that if we didn’t break the story, there can’t be a story. That helps the bad guys.

In the present situation, neither Lippman nor Silver has been accused of a crime or any corrupt or immoral act. It does show how far reaching is the Speaker’s influence, and how the Governor is not fully aware of facts that might help him make a sound judgment.

On the Voice's web site, some commenters piled on the criticism, with some even chide the Voice for not publishing the expose before Lippman's ascension was a fait accompli.

Lippman was approved by the state Senate Wednesday, the day the Voice hit the streets (though the article was released a day earlier on the web. As the Times reported Thursday, three abstaining senators expressed qualms, not about the Silver connection but the mostly white male panel of candidates presented to Paterson by the State Commission on Judicial Nomination.

An AY role

Lippman, as Presiding Justice of the Appellate Division, First Department, was on the panel that in September heard the appeal of the case challenging the AY environmental review; he asked some thoughtful questions and didn't betray his hand.

A ruling in that case is awaited. Should the defendant Empire State Development Corporation prevail, an appeal is automatic only if there are two dissenting judges.

Nets keep "selling" tickets: 10 for $10 each, including top teams

Hm. Maybe the tickets to Nets games distributed free on Ticketmaster were bought by Saveology, as the Times reported last Sunday, but if so, the team retained a marketing arrangement--perhaps because the tickets were sold so cheap.

From a commenter on NetsDaily:
BTW I got free tix from ticket master for 4 games. Then the Nets sales department called and asked if I would be interested in 10 games for 100.00. Games include Lakers, Cavs, Knicks and Magic. Not bad

Not bad, indeed. Those are three of the top teams in the league, plus a cross-town rival. And $20 is the lowest announced ticket price.

A correction in the record regarding the 2008 State of the Borough Address

In his 2008 State of the Borough Address, Brooklyn Borough President Marty Markowitz stated incorrectly, "At Atlantic Yards, we celebrate the fact that a Community Benefits Agreement will guarantee that fully one half of those units will be priced below market rates."

I pointed out 2/8/08 that only half of the rental units would be affordable, even though developer Forest City Ratner initially claimed that half of all the housing would be affordable.

Last night, I took a look at the transcript of the speech. It now includes an asterix:
AT ATLANTIC YARDS, WE CELEBRATE THE FACT THAT A COMMUNITY BENEFITS AGREEMENT WILL GUARANTEE THAT FULLY ONE HALF OF THOSE [RENTAL*] UNITS WILL BE PRICED BELOW MARKET RATES.
...
*Revision made on February 8 following delivery of State of the Borough Address

Apparently someone in the BP's office reads this blog, and responsibly corrected the record.

Yet another Times correction

The Times corrected the record:
Correction: February 12, 2009
An article on the Square Feet pages on Wednesday about Beekman Tower, a skyscraper in Manhattan designed by the architect Frank Gehry, referred incorrectly to the site of the proposed Atlantic Yards project, also designed by Mr. Gehry. The project is near Downtown Brooklyn, not in it.

Gramercy loan extended for Ratner; "some" state officials skeptical of stimulus funds for AY

The big news in this afternoon's New York Times City Room post, headlined Atlantic Yards Project Gets a Reprieve is that the developer got an extension on a loan.

The Times reports:
Forest City’s loan of $177 million from Gramercy Capital Corporation for the 22-acre property was due this month, which caused much speculation in political and real estate circles about the fate of the project.

According to executives familiar with the negotiations, Forest City will sign an agreement soon as today in which the company will make a $15 million payment immediately, as well as additional large payments in the future, in return for a two-year extension.

While I initially didn't make a prediction, it's not that surprising to me that Gramercy, which loaned Forest City Ratner money to buy property within the AY footprint, negotiated an extension; the prospect of owning certain buildings on the site could not have been attractive.

And Gramercy did get some cash. Its stock is barely $1, down from a 52-week high of $22.90.

"Some" opposition to stimulus

Perhaps more important news appeared lower down in the article:
In recent weeks, Mr. Ratner has sought to slash the arena’s cost and to get more subsidies from the city, the state and even New York’s portion of the recently approved federal stimulus package, beyond the $300 million in cash and tens of millions in tax breaks already committed to the project. Former Senator Alfonse M. D’Amato’s firm, Park Strategies, has been lobbying on behalf of Forest City to get federal money for infrastructure projects. But some state officials say that Atlantic Yards is unlikely to get that money, since other needs are more pressing.
(Emphasis added)

That's an interesting locution. It wasn't "some state officials say they don't think Atlantic Yards should get that money;" rather, it was "say that Atlantic Yards is unlikely..."

That suggests that those quoted aren't local elected officials spouting off but rather insiders with some say.

It's official: D'Amato lobbyied feds for AY stimulus funds; state list to emerge in a few weeks

The New York Observer's Eliot Brown has the scoop:
Now, according to a federal disclosure report filed by former Senator Alfonse D’Amato’s lobbying firm, Park Strategies, stimulus money is very much on Mr. Ratner’s mind. The disclosure form, filed last month, lists Forest City Ratner–related lobbying issues as: “funding for real estate-linked transportation projects; real estate project infrastructure development; stimulus spending."

Brown notes that the project does not appear yet on any federal or state list and that a prioritized list of Metropolitan Transportation Authority projects should appear in a few weeks.

Political bind

Brown observes:
Should the project turn out to be eligible to get money, it would require a major political step by Mr. Paterson to allocate the relatively scarce stimulus money. The project has always been a political hornet’s nest, and to date, neither Mr. Paterson nor his predecessor Eliot Spitzer have had to take any overt, highly public steps in support of it. Given that there are far more projects than there is stimulus funding, it's safe to say that money to Atlantic Yards would come at the expense of some other project in the area. If eligible, the question then becomes whether or not Bruce Ratner, Al D'Amato, supportive politicians and groups could push Atlantic Yards toward the top of the stack at the same time that other politicans are fighting for projects of their own favor.

Schumer, Paterson in the dark

The article captures a Keystone Kops-like exchange not quite conveyed in previous Reuters coverage:
Reporter: There's been a lot of chatter on the blogs about whether Atlantic Yards is a candidate for this infrastructure spending. Is it? Will it receive...

Mr. Schumer: I don't know enough details to answer that. Governor?

Mr. Paterson: I have no idea. I thought that Schumer knew.

Mr. Schumer: I thought you knew.

Brooklyn Paper editorial generates outrage; is AY project really "shovel-ready"?

At his State of the Borough Address last night, Brooklyn Borough President Marty Markowitz apparently declared that Atlantic Yards was "shovel-ready," echoing the Empire State Development Corporation.

Unanswered is a question Prospect Heights resident Peter Krashes raised Wednesday: would federal stimulus money lessen the burden of the developer or lessen the burden of government?

From the text

Markowitz's prepared remarks:
To ensure progress continues on creating the "city center" our borough of over 2.5 million deserves.
And let me tell you, if Brooklyn ever needed a project like Atlantic Yards--the time is now.
As the one who originally came up with the idea to make Brooklyn a "professional sports city" again --
And the one who insisted that the project include affordable housing--
I believe what's most important now -- is the thousands of union jobs it will create right when we need them most!
When it comes to ambitious, shovel-ready project, we say "Build Baby Build!"
Atlantic Yards -- Yes we can-- and yes we will.
And when Atlantic Yards is built -- it will keep on generating jobs in Downtown Brooklyn...
(Emphases in original)

Schumer's not sure

Sen. Chuck Schumer, according to Reuters, "said he did not know if the Metropolitan Transportation Authority's Atlantic Yards Brooklyn development would qualify" for federal funds. Well, it's Forest City Ratner's project, and federal money for a new MTA railyard within the project would bail out the developer rather than fulfill a government request already on the table.

AY vs. other projects

Noticing New York blogger Michael D.D. White overkills the Brooklyn Paper's shocker of an Atlantic Yards editorial, and adds his own editorial comment (right) on the newspaper's front page last week.

White offers numerous strong arguments, hearkening back to Publisher Ed Weintrob's previous editorials, and takes special aim at Weintrob's reductionist assertion:
Bottom line: If we don’t get the money, Peoria will.

White writes:
That’s not true. Getting money for Ratner only takes money away from other New York projects that are truly infrastructure and that would truly benefit the city and state, projects like the Second Avenue subway, the extension of the #7 IRT subway line to the west side of Manhattan, Moynihan Station, Brooklyn Bridge Park, Governors Island, the PATH tunnel to New Jersey and and the new water tunnel. Further, Atlantic Yards would not only be a net negative harmful to Brooklyn, it would be one that would also sap city and state dollars.

From DDDB

In a letter to the Brooklyn Paper, Develop Don't Destroy Brooklyn spokesman Daniel Goldstein and Board of Directors member Ron Shiffman write:
Weintrob wrote that “the most problematic, oversized components of Bruce Ratner’s proposal for Atlantic Yards should not be built, no matter how much federal money is being thrown around.” But the arena is the most problematic component of the project.

The arena, and the fixation on it, is the major impediment to the construction of affordable housing over the rail yards and job creation within any meaningful time horizon.

...But Weintrob does get it partly right. We should be asking for stimulus money for Brooklyn, but not for business as usual — not to benefit well-connected developers at the cost of generating jobs and building desperately needed low- and moderate-income housing and other infrastructure investments that generate well-paying, union jobs that would stimulate the local economy for years to come.

An arena on land obtained through the questionable use of eminent domain violates both sound planning processes and sound community economic development. It also violates provisions of the proposed bill that require a transparent and competitive public bidding process before contracts with entities such as FCR can be entered into.

They advocate for amending the Atlantic Yards proposal by sub-dividing the MTA’s eight-acre railyard into smaller, developable parcels, a la the UNITY plan. Whether there's a market for that right now is a question, but they say that stimulus funds to relocate the train tracks to enable the development of affordable housing would be a legitimate use of such funds.

Other voices

While some commenters on the Brooklyn Paper web site endorse the editorial, the most extensive comments, including other letters, are critical.

Writes Park Slope resident (and Streetsblog editor) Aaron Naparstek:
Bizarro! Your publisher just undermined years of award-winning anti-Yards reportage!

Writes Alan Rosner of Prospect Heights
What a thin, ethically challenged gruel your readers have been served. And how ironic that right above this editorial is The Paper’s self-congratulatory piece on winning national awards for last year’s editorials, one of which excoriated another of Forest City Ratner’s backroom dealings.

The Atlantic Yards Community Liaison: office or "capacity"?

You'd think that the Empire State Development Corporation's (ESDC) community point person, Atlantic Yards Ombudsman Forrest Taylor, would be up to speed on developer Forest City Ratner's community point person, the occupant of the Atlantic Yards Community Liaison Office (CLO), right?

So, how much did Taylor misspeak Wednesday night? That's when he identified Sonya Covington as the FCR's Community Liaison Officer; then, after speaking with the developer the next day, he contacted me to clarify that person in the job was Bill Murphy.

According to one community member, however, Taylor's initial statement was not far off, especially since Murphy, depending on semantics, might not be the Community Liaison Officer. And that, I suspect, may have something to do with the cash-strapped developer seeing its staff stretched thin and the CLO reconceived..

A tangled tale

Peter Krashes, who lives on Dean Street opposite the eastern end of the project footprint, told me of his difficulty last month in reaching the CLO, formerly run by Sheldon McCray, whose email address--albeit without an @ sign--is on the sign (right) posted on 6th Avenue between Pacific and Dean streets.

"My first step was to call the Community Liaison Office on the number that was on the sign, and left a message," Krashes recounted. "I went by there to the office, and did not find anybody there. I sent emails. I finally called Forrest Taylor. He gave me Sonya Covington's name."

Krashes left Covington a voicemail. She called back and left a voicemail, asking why he called. Krashes left another message, explaining that his inquiry was related to current construction activities.

About a day later, Krashes reported, "Bill Murphy left a message, saying he was calling because I had reached out to Sonya Covington."

"When I spoke to [Murphy], I asked specifically and he did not identify himself as the Community Liaison Officer," Krashes recounted. "He said, 'Forest City Ratner has a capacity for a Community Liaison Office, and I am part of that effort.' The Community Liaison Office does many things: jobs, housing, construction.'"

The original press release, issued in December 2006 as the project received its final approval, stated:
Forest City Ratner will also open a community affairs office on the project site that will be operated and staffed during all phases of the construction project.

So, Krashes asked, was Covington the Community Liaison Officer? Murphy, according to Krashes, "wouldn't answer; he said only that she works for Forest City Ratner. "

A result of layoffs?

What does all this mean? At the very least, that communication should be improved.

But the concept of a "capacity" suggests that Forest City Ratner, which has shedded employees in the economic downturn, is having its remaining staffers share roles.

(After all, the developer has fallen behind on its Construction Updates page, as I pointed out last December 17, and it still hasn't been updated since October.)

Charles Bagli of the New York Times recently called Atlantic Yards "sort of a good-times project," one born in a time of economic optimism.

Maybe the Community Liaison Office was a "good-times" element of a "good-times project."

Atlantic Yards Ombudsman faces audience frustrated with partial answers regarding stimulus funds, Carlton Avenue bridge

Some 13 months ago, in his first appearance at a meeting of the Council of Brooklyn Neighborhoods (CBN), Forrest Taylor, the Empire State Development Corporation’s Atlantic Yards Ombudsman, faced what I described as a “cordial but sometimes prickly audience.”

Last night, after another year of contention, (significant) stagnation, and (sporadic) revelation regarding the Atlantic Yards project, Taylor faced a somewhat more prickly and clearly more frustrated audience, which deemed many of Taylor’s--and thus the ESDC’s--answers inadequate or evasive. He spoke before about 60 people at the same venue--St. Cyril's Belarusian Cathedral on Atlantic Avenue.

(Copyrighted photos by Jonathan Barkey)

Notably, he was unable to say whether the ESDC formally backed an effort, encouraged at least by Borough President Marty Markowitz and reportedly developer Forest City Ratner, to gain federal stimulus funds for the Atlantic Yards project. He suggested that the city Department of Transportation bore all responsibility for the contract it signed allowing the reconstruction of the Carlton Avenue Bridge to take up to three years, even though the ESDC publicly announced it would take two years. And, as the ESDC has done, he maintained the official position that lawsuits, rather than the credit crunch, have stalled work on the Metropolitan Transportation Authority's Vanderbilt Yard.

Audience members learned, via Council Member Letitia James (right, with District Leader Olanike Alabi sitting in front of her), that Forest City Ratner now claims that it has completed the “first phase” of work on the Carlton Avenue Bridge, a milestone about which the ESDC has apparently never formally been notified, given that it did not turn up in response to my Freedom of Information Law request.

(Here's video of James's questioning of Taylor. Here's coverage in the Brooklyn Paper.)

Project fundamentally altered?

"When is this project no longer this project and is so fundamentally altered that we need to look at it again and start over?" asked District Leader JoAnne Simon, a candidate for the City Council seat currently occupied by David Yassky.

“It’s a very good question,” Taylor said. “We are not at that point yet--because I’ve asked that question." He said he'd take her concern back to the agency and be willing to respond publicly.

Taylor remained mostly on an even keel, but responded at times contentiously or with a touch of humor. While a few challenged him harshly and several expressed frustration, others said he was personally responsive but in an awkward position as the state’s AY point man. Indeed, he acknowledged he was "out of the loop" on some issues and "pretty low on the totem pole."

Council Member James, who knows Taylor from his previous stint as a Council aide [actually: Chief of Staff to Speaker Gifford Miller], teasingly suggested she’d like to see him in another job.

Also at the meeting, an aide to State Sen. Velmanette Montgomery announced an oversight hearing would be held on April 24.

Opening statement

Opening the Q&A session, which lasted a little longer than an hour, Taylor briefly described his job: “What I do is respond to complaints and questions by individuals, various community groups, as well as elected officials. I try to respond to those questions as quickly as possible. If people need to see me, I schedule appointments.”

“The past year has seen some infrastructure progress [for the project], mainly along Flatbush, Dean, and Sixth Avenues. A new sewer main was installed, a new water main, a new sewer chamber, as well as significant demolitions at roughly 33 addresses. Approximately $70 million has been spent,” he noted.

“But oddly enough, it seems we are no further along than we were a year ago,” he said, to some laughs and mild jeers. “When I came here a year ago, a number of folks said there were issues in the credit market, issues with lawsuits that may slow up or hinder the projects.” That’s what has happened, and Taylor acknowledged, it is probably worse today than it was a year ago.”

Questions begin

Candace Carponter, co-chair of CBN (at right, with Taylor; CBN's Steve Soblick is taking notes), explained that this was a community forum, so members of the media should allow community members to ask questions, and that it was up to Taylor to meet the media afterward. As it turned out, some questions were not fully answered, but Taylor--whose job description does not include media relations--did not stick around for further grilling.

Where does the money come from, one resident asked. The developer, Taylor said, spends the money on infrastructure, and the ESDC will reimburse up to the $100 million it had pledged.

Security questions

Taylor couldn’t shed much light on a report in the New York Daily News that the arena design changed because security glass cost $625 a square foot. Asked by CBN's Patti Hagan (below, right) about a reported early 2008 meeting involving the New York Police Department and the Department of Homeland Security, Taylor said that the meeting--which also included ESDC and FCR reps--had not led to design changes.

“No, that was basically for me, giving me some comfort, that NYPD approved the plans, that they were comfortable with the design of the building,” he said.

Were changes in the glass a result of the meeting?

“The meeting I attended was a confirmation that NYPD was comfortable and happy with the security measures vis a vis that design,” Taylor responded.

CBN’s Jim Vogel pressed him, asking if those changes occurred at any other time.

“I can only speak to the meeting I attended,” Taylor responded.

“We read about the design changes,” Vogel continued.

“That did not hit my radar,” Taylor maintained.

Reason for delays

Taylor was clearly familiar with many of his interlocutors. “My name is Wayne Bailey,” one resident began, and Taylor nodded in acknowledgement.

“I live at the epicenter of this, and one of the things this project was supposed to do was eliminate blight,” Bailey said, pointing out that now “I have nothing but a blighted neighborhood around my area,” He cited increasing trash and building break-ins. “When are we going to get some true dialogue that we can believe?”

“I think ESDC takes the position that the project would be moving along in the way and the spirit that it suggests in the EIS,” Taylor said. “However, there are some folks that are petitioning the court for redress that do not want to see this project happen, and therefore that has resulted in lawsuits, and as long as the lawsuits are hanging out there, the developer feels he’s gotten to a point where he cannot go any further in the process. Y’know, I try and be as transparent as I can... and certainly I will take your concerns back to ESDC, and you can rest assured I will lay them on the doorstep of my boss... Rest assured, when I come to these sorts of events, the concerns that the constituents in the community share with me I share those with the folks at the ESDC.”

Carlton Avenue Bridge

CBN’s Eric McClure (right) followed up: “Both the developer and ESDC have said publicly that the reason that Forest City stopped work on the demolition of the Carlton Avenue Bridge was because of the lawsuits. But there’s no lawsuit that I’m aware of that affects the disposition of the railyard or the work Forest City Ratner is able to do on the railyard. I was wondering if you can address why they think they cannot continue work on the bridge. Why did ESDC and FCR say publicly that it would take two years, but the agreement reached privately allowed for three years?”

Taylor answered the second question: “That agreement is actually between the New York City DOT [Department of Transportation] and Forest City Ratner. The ESDC is not a signatory or party to that agreement. When you tear up a street, a bridge in the city of New York, it is a city issue. That is a negotiation that took place that ESDC was not sitting at the table.”

But the ESDC, McClure pointed out, publicly announced that the closure would take two years. What responsibility does ESDC then take?

“I certainly recognize that ESDC said two years. And that was in fact my understanding,” Taylor said slowly. “The agreement between the DOT and FCR was negotiated--certainly, I was not at the table, and I’m pretty confident no one at ESDC was at the table. Certainly there are things that merit city attention and city approval that ESDC is not going to argue with the city, and that was certainly one of those occasions. ESDC continues to take the position that there are certain agreements we’re not party to, and we’re not going to interfere with, such as the Community Benefits Agreement.”

McClure pointed back to the first question. (Forest City Ratner officials, in sworn affidavits, told a court that the construction schedule was “carefully drawn to allow the arena to be ready for the 2009-10 season by commencing work now on vacant properties that are owned by FCRC, the MTA and the City, with work on properties that are owned or occupied by other parties deferred until the pending judicial challenges to the Project have proceeded....”)

Taylor responded but didn’t fully answer: “The demolition and reconstruction of the Carlton Avenue Bridge is pursuant to doing some work in the Long Island Railroad train yard. If that work didn’t have to be done, there would be no reason to deal with the bridge. So, until that work is done and completed, then you can’t tear down the other half and then rebuild it. I think, uh... if you, if some of the folks that are in fact bringing lawsuits to stop the project are successful, then the project doesn’t happen, then the work doesn’t get done in the railyard, then I guess ultimately the bridge has to be rebuilt. But until we get to that point then there is probably hope in the developer’s eyes and certainly in ESDC’s eyes that they will come out ahead in the lawsuit, and then the work will continue and then the bridge will ultimately be taken down, the work in the railroad yard is done and the bridge gets rebuilt.”

FCR’s bridge explanation

Later, Council Member James returned to the issue: “I know you... basically punted on whether ESDC has any jurisdiction over Carlton Avenue [Bridge] and I really take issue with that, because I know you are the lead agency. And I know that as a city we are a creature of the state.”

James read from an email she’d received from Forest City Ratner executive MaryAnne Gilmartin. It stated: “With respect to project delays, we are working diligently with our partners in the City and State toward a closing in 2009 and strongly believe we will achieve that goal. We also expect to resume infrastructure construction around the site later this year. Regarding the Carlton Avenue Bridge, we have successfully completed the first phase of the work. The next stage has been delayed as a result of litigation, which is delaying both further work on the bridge and the construction of the Permanent Yard for the LIRR. While we anticipated that, absent these delays, the bridge could be completed more quickly, the construction agreement we entered into with DOT allows us 3 years to complete the bridge, subject to unavoidable delay. I cannot provide any further detail on timing until the litigation is resolved and we have a Master Closing with the City and State.”

There’s been no Master Closing, Taylor confirmed. Asked about the “first phase,” he responded, “I assume the first phase she’s referring to is taking down the southern portion of the bridge. They have to take down the northern portion of the bridge, as well.”

As noted, FCR apparently never informed the ESDC of that milestone, and there’s no evidence that FCR has completed the “first phase” of a partially built train trestle.

Harsh questions

Scott Turner (right), who of Fans for Fair Play (which is, essentially, his blog) was Taylor’s harshest interlocutor, posing leading questions to the ombudsman after the sequence with McClure.

“You’re saying you blame the community for the delays Bruce Ratner’s own mismanagement caused, is that correct?” Turner asked.

“I’m not blaming anybody. it’s clear there are lawsuits,” Taylor responded.

“I’m asking if Mr. Taylor blames the community for all the problems with the project,” Turner continued.

Moderator Carponter gave Taylor a sympathetic look.

“Yes or no,” Turner pressed on.

“Do you have another question?” Taylor responded bluntly.

“Yes or no,” Turner repeated.

“Do you have another question?” Taylor said again.

“All right, yes, then,” Turner concluded. “Do you support--”

“--Are you going to answer that question?” Taylor asked, intercepting the query.

“Do you support federal bailout money, stimulus package, for Bruce Ratner?” Turner asked. “And does the ESDC support Bruce Ratner getting federal bailout money?”

“Well, ESDC supports this project, and I think it will come down to a decisions by the governor’s office where federal stimulus money goes,” Taylor responded evenly.

“So, even though you [ESDC] are the main progenitors of economic development,” Turner asked, “you yourself don’t have anything to say?

“If you’re asking my personal opinion,” Taylor responded with a touch of exasperation, “it’s really none of your business.”

“Sure it is,” Turner pressed on.

“No, it isn’t,” Taylor responded.

(Here's more on the stimulus debate: letters sent to the Brooklyn Paper in response to its editorial supporting federal funds for the arena.)

Back to the bridge

What happens if the bridge is not rebuilt, another audience member asked. The agreement with the city, Taylor confirmed, provides for liquidated damages.

“If Ratner was not ready to start the railyards work, why did he tear down the bridge?” came the query. “And why did ESDC let him tear down the bridge?”

The audience clapped.

“Once again, the bridge is a city bridge,” Taylor said. “Certain issues are city issues, certain issues are state issues. The ones that are city issues ESDC weighs in on." As for Forest City Ratner's agreements with various city agencies, "[Bruce Ratner’s] free to cut those deals as he sees fit and as the city sees fit.”

What was said in court

CBN co-chair Terry Urban was skeptical: “Here’s a little bit more information on that. As far as I recall, the ESDC was the prime law firm fighting the community’s wish for injunctive relief. The community wanted to delay tearing down the bridge until the lawsuits were decided. But at the time, the ESDC claimed in court that that wasn’t necessary. And now they’re claiming they have nothing to do with the decision to tear it down, and supporting the developer when he says it’s the lawsuits that are keeping it from being rebuilt. I don’t think the ESDC can have it both ways. It looks to me like it’s trying to.”

“Rather than a question, we’d like you to question ESDC why they can’t have a temporary bridge erected while the project is being redesigned,” Urban asked.

“Ms. Urban,” Taylor said steadily, “I’m more than willing to take that question back to ESDC and see that you get an answer.”

The exchange in court papers in January 2008 didn't quite get to the issue. Jeffrey Baker, attorney for the community coalition, including CBN, challenging the project environmental review, warned that, if the lawsuit was successful, appellants "could be faced with a bridge that has already been demolished without the financial means for its replacement or an extended period of time before it is replaced."

Forest City Ratner responded that a contract between the developer and the city obligated the developer's parent company to rebuild the bridge. Baker responded that there was not necessarily "means to assure that the bridge will be replaced in a timely fashion."

ESDC attorney Philip Karmel, stated in an affirmation, "The Carlton Avenue Bridge, whose southern abutment must be removed at this time to complete work on the temporary rail yard, will eventually be rebuilt in its current location, with different supporting girders that are compatible with the layout of the modernized and reconfigured rail yard."

He noted that the environmental review found no significant traffic impacts from the closing. But he didn't indicate that the lawsuit would have any impact on completing the work on the temporary yard effectuated by the bridge closure.

Ombudsman’s role

Raul Rothblatt (right), VP of the Prospect Place Block Association, commented, “I thought this was an ESDC project, not an Forest City Ratner project.”

“At what point do you [ESDC] stand up to the developer in defense of the citizens you’re supposed to represent, and what can you do to add credibility to the state’s process?” he asked.

“As an employee of the state, I attend all the meetings I’m invited to,” Taylor said, “and I take those issues and problems and concerns back to my boss, Susan Rahm, at ESDC. I thought it was clear that I’m not a policy-maker in my role. I hear your problems... and I try to get answers for you.”

For the first time publicly, Taylor identified his boss as Susan Rahm, an ESDC official with a very low public profile. (If you Google her name and ESDC, it comes up empty, though her name does appear on an email I got via a Freedom of Information Law request.)

“How do we know that you’re actually listening?” Rothblatt asked.

Taylor spread his palms: “I think I’m listening to you right now.”

Carponter followed up, asking what Taylor could do to resolve problems posed.

Taylor got a second wind: “Let’s back up for a second. I get answers. Sometimes you don’t like the answer and, y’know, you may have a problem, I bring that back and try and get you an answer, but my job is not to just eliminate all the problems. I can’t do that, because sometimes I take your problems and ESDC, for whatever reason, feels that you guys may not be right on that particular issue, or has a different perspective than you. All I can do is make sure that the concerns that you bring to my doorstep, that you put in letters, emails, phone calls, are heard by the highest levels of ESDC”

“The ESDC is supposed to be the lead agency,” Rothblatt followed up. “I’m a little confused. How can this be a negotiation [with DOT]?”

“I’ve answered the question two times,” Taylor said. “The streets in the city of New York are controlled by New York City DOT.”

Community liaison

In a moderate tone, Daniel Goldstein (right) of Develop Don’t Destroy Brooklyn asked Taylor several questions. “Is there a community liaison any more?” he began.

[Note correction below]
“My understanding is that there’s a community liaison, and that person’s name is Sonya Covington,” Taylor responded.

[Update, 1:30 pm Feb. 12:]
Taylor tells AYR that he misspoke; Bill Murphy is the Community Liaison Officer.

[Original, no-longer applicable text regarding Covington: If so, she’s certainly not occupying the office where the former community liaison officer, Sheldon McCray [corrected], worked. Covington, an assistant VP who’s worked on minority contracting issues, has apparently added the role of community liaison officer to her portfolio.]

Stimulus funds

Goldstein referred to recent reports in which ESDC communications reps at first said the project was not “shovel ready” and thus ineligible for stimulus funds but then said it was.

“That’s what I read,” Taylor responded, indicating he was out of the loop.

Later, he was asked how ESDC changed its position.

“I read it. It was not my quote,” Taylor responded. “The Communications department is actually right next to the CEO’s office. My office is actually in Brooklyn.”

Later, he was asked the definition of “shovel-ready.”

“I think that ‘shovel-ready' will be a federal term,” Taylor said.

A design for the arena?

“Is there a design for the arena, as we speak?” Goldstein asked.

“There was a design for the arena, but”--he smiled slightly--”I read what you read.”

The audience laughed.

“You don’t know,” Goldstein pressed cordially.

“There are times when I’m with you, Mr. Goldstein,” Taylor responded. “There are times when I’m not.”

Project status

Goldstein asked, “It would be good to know--the ESDC really should explain to the people where we are on this project, what it is what the arena is, how much it costs, what the design is. We’re all pretending they can build the project as approved, and we all know they can’t. Why not get a little honesty from the ESDC--say what the changes are, say what they really think is going to happen. Instead, we read in the paper often, the ESDC saying, ‘Ask Forest CIty Ratner.’ That’s really not Forest City Ratner’s job to answer questions for the state.”

“I will work on that, Mr. Goldstein,” Taylor responded.

Interaction with James

James stood up. “I feel for you, Forrest, I really do,” she said. “I hear Obama is hiring.” The crowd laughed. “I respect your intelligence and I would love to see you in another capacity.”

“Did I hear you correctly--you do not know if Forest City Ratner is lobbying the state, Governor Paterson, for federal stimulus funds?” James asked.

"As I tried to make clear, I’m pretty low on the totem pole. It’s not like the old days,” Taylor responded. “So I do not know. So I can imagine, and I know what I read, but I have no firsthand knowledge.”

She asked if ESDC had disagreed with DOT on other projects they’d worked on. Taylor noted he’s only been at ESDC a year and worked only on this project.

Ping-pong balls

“This question on the face of it is a bit naive,” asked Enid Braun of CBN (speaking, with Hagan and CBN's Terry Urban in the background). “Our local Councilwoman would love to be an advocate, but I’m sure if she went to DOT to inquire about their jurisdiction with the bridge, she would be ping-ponged back to the ESDC, and the problem for--a lot of obviously, the crabbiness you get from the community is the experience of being ping-pong-balled relative to many of these things. In all honesty, it’s a naive question, what would you advise for our elected officials to get to some practical truths without being a ping-pong ball?”

Taylor chuckled. “I certainly do feel the crabbiness,” he said, “and I actually feel quite a bit like a ping-pong ball as well,”

“But you’re paid for it,” one audience member riposted.

“But not nearly enough,” he quipped. (Well, his salary last year was reported at $105,000.)

“The Councilwoman certainly can call a meeting between ESDC and DOT and attempt to get to the bottom of it,” Taylor said. “I am always available to the elected officials and their respective staffs.”

Braun continued, “You might be willing to help get the ESDC--”

“I work for ESDC, I try to resolve issues,” Taylor interjected, clarifying that he was not a community advocate.

Unanswered questions

Dean Street resident Peter Krashes (right) prefaced his comment by saying that “Forrest has made himself available and personally been very responsive. The problem is that the ESDC is nonresponsive. There are critical questions that are not answered. I think everyone shares my frustration at not knowing what the project is and what the future of the project is.”

Krashes said he was concerned not just about current blight but “the goals of the state, which is to eliminate blight, will be exactly what the project achieves.” He asked the state to look at the potential income of the project, citing the market for apartments, access to credit and public money. “The government presumably is looking rationally at the project.”

Would federal stimulus money, he asked, lessen the burden of the developer or lessen the burden of government?

“We’re not there yet,” Taylor responded. “No bill has been signed. So I can’t imagine the ESDC knows what the money can be used for. To my knowledge there’s no process established to rank projects.”

As for concerns about subsidies and the condo market, Taylor responded, “My bosses say that the agency I work for supports this project, and the developer has not said that he is not trying to pursue this project, has not walked away from this project. So we are, as I said earlier, where we were a year ago, except the credit markets are probably in a much worse situation.”

Krashes said the Community Liaision Office closed two months before work stopped. (It’s not clear if the office at the 24 Sixth Avenue is currently staffed.) He said that the security company Forest City Ratner hired to protect the site is gone.

“Security’s been dropped by Forest City Ratner, and that’s outrageous,” Krashes concluded, pointing out that had nothing to do with lawsuits.

Assessment

Brad Lander (right), director of the Pratt Center for Community Development and a candidate for the City Council seat currently occupied by Bill de Blasio, noted many believe that tax-exempt bonds for Yankee Stadium were based on inflated assessment values. Has ESDC made sure that the same techniques of land valuation didn’t apply in the case of Atlantic Yards?

“To my knowledge, no one has gone back to do that,” Taylor said.

Traffic issues

McClure followed up, asking if there was any analysis of Fire Department response times since the bridge was closed.

No, Taylor said, but he’d be willing to check.

“The last time you were here, in response to questions about the future of traffic, you had stated a traffic plan was being worked on,” McClure noted, asking about its status.

Taylor again said he’d check on it.

Arena cost

“As of today,” McClure continued, “do you know if the estimated cost of the arena is still $950 million, or has that gone up or down?”

“Well,” Taylor said. “I know that they are engaging in some value engineering to get the cost down, so I don’t know where they’re at today... It’s still 950 until they come back and say it’s not something less.”

“No longer this project”?

Simon (right) had the final question: “It seems to me that there have been enough changes in the air and in the credit markets that this project at some point is no longer this project. My question--and I don’t know whether you have an answer, but I’d like you to come back with an answer--is: when is this project no longer this project and is so fundamentally altered that we need to look at it again and start over?”

“It’s a very good question,” Taylor said. “We are not at that point yet--because I’ve asked that question. I will take your concern back and obviously more than happy to come here” and discuss it.

Lingering over that was the recognition that the design for the arena has apparently changed drastically and that few outside the developer’s office believe the announced ten-year construction schedule is plausible.

As the meeting closed, James asked attendees to sign a letter asking Governor Paterson not to consider Atlantic Yards for stimulus funds.

State Senate to hold oversight hearing regarding Atlantic Yards

The New York State Legislature will finally hold an oversight hearing regarding Atlantic Yards, thanks apparently to the recent ascension of the Democratic Party to power in the State Senate. The hearing might help explain, as one of its proponents wonders, whether the Empire State Development Corporation (ESDC) in charge, or is it developer Forest City Ratner?

The hearing announcement was perhaps the most important news to emerge at last night's meeting of the Council of Brooklyn Neighborhoods, and it came not from the guest of honor, ESDC Ombudsman Forrest Taylor, but from an audience member, Irene Van Slyke (right), an aide to State Senator Velmanette Montgomery, whose district includes the Atlantic Yards site.

(Copyrighted photo by Jonathan Barkey)

The hearing would be held by the Senate Committee on Corporations, Public Authorities, and Commissions, which is chaired by State Sen. Bill Perkins and has an oversight role regarding the ESDC. Montgomery is a member of the committee, which held a hearing last September regarding reform of eminent domain laws. Also on the committee is new State Sen. Daniel Squadron, who represents a district including several neighborhoods along Brooklyn's western edge.

Tentative date: April 24

The hearing is scheduled for April 24, most likely at 250 Broadway in Manhattan. The picture regarding Atlantic Yards may have changed significantly by then. Should the two main lawsuits be resolved in the state's favor, as is more likely than not, the developer would get a boost. Should one of the cases linger, or be subject to appeal, delays would further hamper the project.

Van Slyke said Montgomery was particularly interested in plans to issue bonds for the project, and the question of "who is really in charge: is it the developer, or is it ESDC?"

The full scope of inquiry, as well as the witness list, obviously remain topics for further discussion, but the ESDC almost certainly will be called to explain its role. (As the hearing approaches, I expect to collect some questions that I hope are raised.)

And in the Assembly

And why hasn't the counterpart Assembly Corporations committee, headed by the formidable Richard Brodsky, not tackled Atlantic Yards? Brodsky has focused on Yankee Stadium over multiple investigations. Beyond that, he has remained studiously agnostic regarding Atlantic Yards.

Brooklyn Assemblymember Hakeem Jeffries represents a district that includes the Atlantic Yards site; as a freshman member, Jeffries last May backed an Assembly hearing, citing support from neighboring Assemblymembers Jim Brennan and Joan Millman.

Such a hearing never came about; beyond the Assembly's focus on the Yankees, many believe--but won't say for the record--that powerful Assembly Speaker Sheldon Silver, an Atlantic Yards backer (and indirect recipient of Forest City Ratner largess), hindered the effort.

So the Senate, given Montgomery's role and the Democrats' new capacity to steer hearings, now will become the venue, as Jeffries hinted when I spoke to him two weeks ago after his State of the District address.

Gaps in the Times: "Frank Gehry’s Software Keeps [Some] Buildings on Budget"

The legendarily press-shy architect Frank Gehry breaks his silence today for a piece of positive explanatory journalism on the real estate page of today's New York Times, headlined Frank Gehry’s Software Keeps Buildings on Budget.

The article, which focuses on the Beekman Tower the architect is designing for developer Forest City Ratner, seems perfectly reasonable on its face. But it serves as another argument that the Times must disclose the parent company's business relationship with the developer.

No such disclosure appears, but a disclosure--one hopes--would've prompted the writer and editors to ask Gehry a challenging question or two, rather than just softballs. The article aims to explain how Gehry's new software helps control costs at the tower; the article ignores the enormous cost increases at the Atlantic Yards project and fails to ask whether Gehry, in fact, continues to actively participate in the design.

"Potent tool"

The article states:
When Bruce Ratner hired Frank Gehry in 2004 to design a wrinkled-looking 76-story residential skyscraper in Manhattan near the Brooklyn Bridge, the market for eye-popping luxury condominiums was booming, and the world-class architect’s multimillion-dollar fees probably seemed relatively insignificant. Now, however, the economy is crumbling, the building is envisioned as rental apartments and Mr. Gehry is bringing a more potent tool to control costs than most architects can deliver.

For the Forest City Ratner Companies, the developer of Beekman Tower, the project will test the idea that an architect can provide powerful (and expensive) modeling software to help keep costs down. Using the software, fabricators have produced a facade with various textures at a price that Mr. Gehry says does not exceed what a developer would pay to build a conventional boxy building of similar dimensions.

The article serves as an advertisement for Gehry Technologies, the company that "sells Digital Project to other developers and architects and trains project teams to use it." Another architect not completely enamored of the software does get quoted.

What about AY?

The article offers one tantalizing paragraph:
Forest City Ratner’s relationship with Mr. Gehry is not limited to this project. He also created a design for the multibillion-dollar Atlantic Yards project, with 17 buildings, which the company has proposed for downtown Brooklyn. With lawsuits pending and the economy turned sour, however, none of those buildings have gone to construction.

(NLG catches me missing the "downtown Brooklyn" error.)

What does "created a design" mean? Shouldn't the Times have asked if that design is still pending? If cost controls have changed it? If the cost of security measures caused the arena price tag to soar? If Gehry laid off staff working on the arena?

Forest City Ratner told the Times that the Beekman Tower is on time and on budget. No such question was asked regarding Atlantic Yards.

Mayor Booker: moving Nets to Newark "fixed in my mind"

Even as political officials in New York are hoping to position Atlantic Yards for federal stimulus funds, Newark Mayor Cory Booker says that the city's effort to lure the New Jersey Nets to Newark is "fixed in my mind."

That comment came as Booker was interviewed last Thursday, February 5, on Newark Today with Mayor Cory Booker, a public affairs show on WBGO, Newark's public radio station, hosted by Andrew Meyer.

State of the City

Booker was more circumspect Monday night, apparently not mentioning the Nets during his State of the City address.

Actually, as the Star-Ledger's Brian Donohue explained in the video report Ledger Live, Booker's prepared--but not delivered--text included a planned slip. As the mayor discussed bringing different types of investments to the city, he was to say, "We're excited to see what's NETS... I mean, next."

WBGO's Meyer was interviewed about Booker's speech yesterday, on All Things Considered , at about 38:15 of the second hour. Beginning at about 42:15, Meyer was asked what Booker didn't talk about.

AM: I would almost say the New Jersey Nets. Now, he did have a quick reference to the Nets. [It's not clear whether Meyer was referring to the prepared text or not.]
But the big question right now, one of the big questions in the city is: what's going to happen with the Nets. They're waiting for their arena to be built in Brooklyn. But many people are saying, "Look, you've got this brand new sports arena right in downtown Newark where the [hockey New Jersey] Devils are playing... this would be an ideal location to bring the Nets. It's ready to go; they can just walk in and it's theirs." So, there's a lot of speculation about whether or not that team is going to end up here. Mayor Booker's holding his cards very tight to the vest on this one. We pressed him time and time again, and he'll just say that his staff would be very angry with him if he was to tip any details. But he says there are discussions going on there.

On WBGO, "out on a limb"

Last Thursday, however, the mayor was not reticent. The sequence began at about 35:10 of the show; both Booker and host Meyer sounded notably enthusiastic.

CB: Our city in the next three years is going to have the most exciting things happening in our downtown. And I can't wait. And I'm going to go out on a limb right now. When we start seeing things like the Nets return to Newark--and I say return, but come--

AM: --You read my mind, Mayor... When are they coming? What do you know?

CB:I tell you this. I am putting a considerable amount of time into this, strategies, working behind the scenes. I really don't want to go too far out on a limb and my staff is going to jump all over me because--

(Last May 1 the Star-Ledger reported on efforts by the city administration and Devils owner Jeff Vanderbeek to assemble an ownership group to buy the Nets.)

Brooklyn a mirage?

AM: Well, let me put out there what we know. We have a contributor here who's been tracking the project closely, and he's said basically that the Atlantic Yards in Brooklyn has ground to a halt, Bruce Ratner, the developer, is not moving forward with the arena, supposedly until all the lawsuits over eminent domain are settled, and they're not even due to go to trial until next year. You combine that with the lack of financing available for big projects and, y'know, the Brooklyn Nets seem more and more like a mirage.

Actually, the eminent domain lawsuit will be heard in less than two weeks (and a decision in the EIS case is pending). Forest City Ratner executives assert that construction would begin in mid-2009.

Booker remained enthusiastic

CB: I'm telling you right now I have it fixed in my mind. Every single day I think about it, that we're going to have the Newark Nets one day. It's taking a lot of work on both sides of the river, and there are a lot of people from Brooklyn to Newark that believe that that team belongs here. What it's going to mean for our city is, just like the bars and restaurants that I was around [downtown], on Super Bowl Sunday. It means another 50 nights of tens of thousands of people coming to the city of Newark. It means parking tax for the city, payroll tax for the city, it means more economic development, more minority businesses are going to open up in our downtown through our loan fund. It would make a tremendous difference, and create an incredible excitement, it's something I'm working very hard on, and I'm hoping that will be successful.

The rent and the parking

Meyer also brought up the dispute about the $2 million rent the New Jersey Devils, the primary tenant of the Prudential Center, allegedly owe the city.

Booker said the issue was in arbitration and "I will not yield." However, he said that the Devils "make a tremendous amount of contributions: to the community, so, while the city should demand every dollar it deserves, it should "continue to build the strength and steam of that institution."

Meyer brought up complaints that it costs $40 for parking near the arena. "Those are midtown Manhattan prices," he said.

Booker's response: "What I'm going to simply say is take public transportation... We're perfectly located in the middle of a great transportation hub." He also pointed out that, if visitors were willing to walk, parking was less costly a little farther from the arena.

Little Pink House: the absorbing story behind the Kelo case (but not the legal complexities)

Jeff Benedict’s new book, Little Pink House: A True Story of Defiance and Courage, comes with an additional subtitle, “One woman’s historic battle against eminent domain.”

So we know that the book will focus on the remarkable and enduring effort by Susette Kelo, a woman who stood up when redevelopment efforts in New London, CT, aimed at her hard-won home, and, with a handful of neighbors and the help of savvy lawyers, took the fight to the U.S. Supreme Court. And we get a hint that the book, though an impressively dramatic tale, barely sketches the bigger picture.

In the 2005 Supreme Court decision, the city won the battle--gaining permission to condemn a small piece [Parcel 4-A, below] of a 90-acre planned site--but lost the war, given the massive national backlash against eminent domain used for economic development and the significant, if mixed, responses by legislatures and courts in some 43 states to tighten eminent domain under state constitutions. And nothing's been built in New London.

(New York is one of the few states where no reforms have been passed, and a task force’s call for a special commission on eminent domain, has gone unheeded.)

Benedict, a prolific author of nonfiction books (e.g., The Mormon Way of Doing Business, Out of Bounds), lives near New London and has done a prodigious job reconstructing, in novelistic scenes, some eight years of controversy, drawing on hundreds of interviews, documents, and video and audiotape. (It may become a film.)

Benedict’s sympathy for Kelo (right, with attorney Scott Bullock) and fellow plaintiffs is clear, but he doesn't ignore the project proponents. Claire Guadiani, the president of the New London Development Corporation (NLDC), and Tom Londregan, the city attorney, both cooperated, among others, and are given a chance to make their case, though the diva-like Guadiani undermines herself.

Missing the larger story

Though Benedict has a law degree, the book can’t serve as a guide to the legal controversy. Most of the book focuses on the machinations and struggles leading up to the historic Supreme Court case, with virtually no analysis of the decision, and a brief reference to its impact. It’s as if Benedict was so worn out by reconstructing the fight that he punted on the fallout.

Thus Benedict relies significantly on the Institute for Justice (IJ), the libertarian public-interest law firm that agreed to take the New London case and chose Kelo, the most sympathetic and steadfast plaintiff, as the lead. (The IJ, with a sophisticated media operation, also kept detailed video and records, always helpful for an author. Here's a new Cato Institute video on the case.)

Benedict lightly addresses the organization’s politics (it’s introduced simply as a “public-interest law firm”), and gives little voice to the urban planners, government officials, and legal academics who make a plausible, if contestible, case for eminent domain. (I wrote last June about a post-Kelo conference featuring supporters of eminent domain and criticis of the IJ, who pointed to the organization’s larger agenda, such as an attack on “regulatory takings” like zoning.)

Reviewing Little Pink House in The Day, New London’s newspaper, Kate Moran has similar criticisms, noting that “Benedict gives his readers barely a whiff of the group's political agenda,” part of a larger set of arguments, as noted in a 4/1/7/05 New York Times Magazine article.

(More updates: a review in the New York Times, some criticism of that review.)

Eminent domain basics

“Eminent domain is the government’s power to take private property for public use,” Benedict writes in his prefatory author’s note. “Nobody particularly likes it.”

Hold on. You wouldn’t know, from reading this book, that the Kelo case drew amicus briefs supporting New London from the American Planning Association (on behalf of others, as well) and the National League of Cities (on behalf of the National Conference of State Legislatures, the U.S. Conference of Mayors, the Council of State Governments, and others), not to mention Brooklyn United for Innovative Local Development (BUILD), a signatory of the Atlantic Yards Community Benefits Agreement.

The BUILD brief makes the not unreasonable argument that eminent domain is not simply used to transfer property from low-income residents to higher-income ones but rather to increase density, thus allowing for lower-income residents, as well, in a denser new development. That would be the case with Atlantic Yards--though not as part of politically legitimate rezoning but a privately-negotiated zoning override.

The Fifth Amendment's takings clause says: "...nor shall private property be taken for public use, without just compensation." Benedict writes that “the Supreme Court changed the rules” in the Kelo case, equating these public benefits with public uses. However, the court didn’t so much change the rules as expand their interpretation.To many experts, this was not an expansion of public use--after all, two previous decisions had established that public use could mean public purpose.

Still, as not discussed fully in the book, there were two differences. One was that the foundation cases (Berman v. Parker and Hawaii Housing Authority v. Midkiff) did not primarily concern economic development but rather removal of blight and the ending of an oligopoly. (The latter is an economic issue but not directly analogous to Kelo; still, the court majority concluded, "Clearly, there is no basis for exempting economic development from our traditionally broad understanding of public purpose.”) Second, and more important in the public understanding--if not legally--is that Kelo, unlike its predecessors, targeted private homes, a visceral issue to many.

Did the court mean it?

A Wall Street Journal reviewer writes:
In Kelo, a majority of five justices came up with an extremely broad interpretation of "public use." The high court's four liberal members, joined by the ever-changeable Anthony Kennedy, ruled that government has the right to seize a private home for virtually any purpose -- including handing it over to private developers.

Virtually any purpose? That ignores the court majority’s conclusion that there are some inherent safeguards against abuse.

The issue remains a subject of debate. The National League of Cities says the decision didn’t expand the use or powers of eminent domain, but the Castle Coalition responded that new condemnations proceeded after the decision.

Law professor John R. Nolon commented:
The specter of corrupt, or misguided, local officials condemning title to property of private owners primarily to benefit developers was on the mind of the Court in the Kelo decision. The majority made it clear that “[s]uch a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case.”

Then again, in the Atlantic Yards federal eminent domain case, the plaintiffs argued that the plan was not legitimate, and that the potential for a sweetheart detail overshadowed the claimed public benefits--an argument that did not get very far.

The split Supreme Court

Interviewed on WNYC's Leonard Lopate Show February 4, Benedict was asked how the Supreme Court split 5-4.

"It's upside down, when you think about it," Benedict said, suggested that conservatives would typically support big business, and liberals would support the little guy.

Actually, it's more complicated. Liberals often support the power of the government to pursue urban renewal, while conservatives, though not unsympathetic to big business, also want to protect private property.

Lopate asked who wrote the majority opinion. Benedict had a bit of a brain freeze, then, mistakenly, identified the author as Justice Anthony Kennedy.

The plaintiff

But Benedict is on much stronger ground telling the human story. Kelo is a terrifically sympathetic plaintiff, a woman who had a hard-luck life, her father abandoning her family, enduring teenage motherhood and two loveless marriages to finally strike out on her own in 1997. Working as an EMT, she noticed a little pink house in the working-class neighborhood of Fort Trumbull, without many amenities but with a great view, and bought it for $42,000, well under the asking price. Nobody else wanted it. She did--and it was her only asset.

(Photo from The Day of New London)

Kelo’s got such a strong sense of pride--the theme of the book, Benedict said in a recent forum sponsored by the Cato Institute--that she refused to take a share of her husband’s house in their divorce. She even walked solo into the Italian Dramatic Club, a politically-connected men’s club that has managed to evade condemnation to challenge the members.

Benedict provides cinematic details about Kelo throughout the book--finding allies among her neighbors, launching a romance tinged by a tragic accident, getting a nursing degree and a second job with the city, testifying before Congress. (Watch this video to see her at the forum noted above; she’s not a polished speaker, but has an obvious roughhewn integrity.)

Official story

As the official story goes, in early 1998, the New London Development Corporation (NLDC) began a plan to redevelop the mixed-use neighborhood, which had more industrial and empty acres than residential uses, using the plan to lure Pfizer to build a new research headquarters in the city. But the official story wasn’t exactly true.

As Benedict explains--in details that emerged, in part, in the local press after the case was decided--the spur was Gov. John Rowland, a Republican eager to gain inroads in heavily Democratic New London.

The NLDC was the vehicle he chose, outside the city council, to accomplish the task, using a Democratic lobbyist who knew the ropes in New London and enlisting Guadiani, the idealistic and ambitious president of Connecticut College, to head the organization. (Guadiani, who aimed to help New London become a “hip little city,” also liked to reference Jesus Christ and Martin Luther King to justify the impact of the redevelopment efforts.)

The Hartford Courant's Tom Condon, reviewing the book, suggests it documents a tragedy on multiple counts:
Yet one of the elements that makes the story tragic is the initial success by Guadiani. Getting Pfizer to commit to built a $300 million complex on a brownfield next to a junkyard and a sewage treatment plant might have qualified for the Nobel Prize in economic development, were there one, except for what came next.

Pfizer, not unreasonably, wanted the area around its new facility improved. Company officials wanted the historic but run-down Fort Trumbull, after which the area is known, turned into a state park. They wanted the sewage plant cleaned up and capped, the scrap metal yard removed, a hotel and plan for the city to redevelop the area to advantage Pfizer's presence.

The area comprises 90 acres, which includes a former U.S. Navy facility. There were only two small city blocks with houses on them (my grandmother once lived in "The Fort."). Yet the New London Development Corp. decided to clear the area, acquire all the property (except for an Italian men's club with political connections), demolish it and build from scratch.

Connecting the dots

Despite claims to the contrary in the court case, there was much evidence that Pfizer was driving the plans. It’s too bad that Benedict doesn’t connect all the dots. After all, the Supreme Court’s majority opinion, written by Justice John Paul Stevens (who, curiously enough, wasn’t present for the oral argument), rested on the conclusion that this was executed as part of “an integrated development plan.”

And Justice Anthony Kennedy’s nonbinding concurrence--the thin reed (it turns out) on which the plaintiffs in the Atlantic Yards federal eminent domain case rested their hopes--asserted that the case showed no indicia of impermissible favoritism, though evidence outside the court record certainly complicates that conclusion.

Kennedy noted that the trial court conducted a careful and extensive inquiry into “whether, in fact, the development plan is of primary benefit to … the developer [i.e., Corcoran Jennison], and private businesses which may eventually locate in the plan area [e.g., Pfizer], and in that regard, only of incidental benefit to the city.”

And, he noted, that the trial court concluded, based on these findings, that benefiting Pfizer was not “the primary motivation or effect of this development plan”; instead, “the primary motivation for [respondents] was to take advantage of Pfizer’s presence.”

Later, however, in 2005, The Day reported that Pfizer had more of a role than was believed.

For Brooklyn, echoes and contrasts

For those of us who look at eminent domain through a Brooklyn lens, Little Pink House offers some curious contrasts and echoes. For example, how did Kelo, a woman who prizes her privacy and has no history as an activist, get her voice amplified?

The city mayor (!) connected her to Kathleen Mitchell, a social worker and political activist, who can organize a neighborhood. (Mitchell’s a bit of a loose cannon, at one point using her public access TV show to call Guadiani a “transsexual.”) No such well-placed public official offered help to Atlantic Yards opponents, though City Council Member Letitia James has been staunch.

One neighbor, Billy Von Winkle, owns several buildings; he’s insulted by governor’s statements about how this plan would revive the community, given that the city had ignored the provision of public services. This sounds like the charges made by business owners in Willets Point, Queens, where the roads remained unpaved.

The author reports on an in-house NLDC memo that advises moving in coordinated fashion, gaining control of blocks of property: “If we can create a sense of inevitability, it may motivate additional property owners to sell.” That sounds much like the strategy behind Atlantic Yards and, most likely, many other eminent domain cases.

The residents gained some allies. For example, Fred Paxton, a history professor at Connecticut College, looked at the alternatives in the NLDC plan and discovered that none included preserving the existing neighborhoods. He and others at the college helped turn the faculty against Guadiani.

One big difference is the role of the dominant newspaper. The Day published letters and op-eds critical of the project, and pursued Freedom of Information Law requests to uncover the activities of the NLDC.

With Atlantic Yards, of course, the developer is business partners with the parent company of the New York Times. Not only have there been masthead editorials in favor of the project, there have been relatively few letters published critical of the project and only two semi-critical op-eds. And the news staff has dug only sporadically.

Another is the size of the property at issue. The plaintiffs’ land was only 1.54 acres, or 2% of total development. The Atlantic Yards plaintiffs occupy more than 5% of the site, perhaps closer to 10%. (The developer and government say they control 85% of the land needed, though not all of the those who retain land are plaintiffs.)

One source of drama in Little Pink House is Guadiani’s deposition, as she faces forceful questions from IJ attorneys. Under New York eminent domain law, there’s no provision for such fact-finding; that’s why the AY plaintiffs first went to federal court and why they’re significantly disadvantaged in the upcoming state court argument.

Could you imagine former New York City Economic Development President Andrew Alper or Empire State Development Corporation Chairman Charles Gargano undergoing cross-examination?

A defense of eminent domain

On page 250, Little Pink House finally offers a defense of eminent domain, from city attorney Londregan. New London has most of its real estate tied up by nonprofit organizations, government entities, and other tax-exempt entities, he noted, arguing, “Where do we acquire large parcels of land to attract large economic engines to enable us to compete with suburbia?”

Indeed, that’s part of the challenge faced by the local judge in the first round of the case. An expert for the plaintiffs, a planning professor, testified that it’s very uncommon for land to be entirely cleared for new development, and says he can point to only one example in New England, in Bridgeport. In the region, only Boston had more tax-exempt land, but Boston was more than ten times larger.

The media effect

Bendict declares early on that “national media wasted no time making up its mind” about the case. However, the evidence he cites is an editorial from the Wall Street Journal, known for its conservative views, and a Boston Globe op-ed by conservative columnist Jeff Jacoby. (As it turned out, the national media ultimately did wind up portraying the plaintiffs’s case sympathetically.)

The condemnors, in this case at least, were overmatched. “I’m not used to competing in the media,” declared Londregan, even as the IJ--which had a masterful press kit, according to a Times reporter quoted at a conference I attended--steadily strategized, from holding the initial press conference outside Kelo’s little pink house to funding the Castle Coalition, a national effort at education and outreach.

The IJ even pitched 60 Minutes and got the influential show in September 2003 to cover egregious instances of eminent domain abuse in Lakewood, OH, and Mesa, AZ--and even to mention how eminent domain benefited the New York Times in building its new headquarters (in partnership with Forest City Ratner).

Supreme Court chances

In a fascinating sequence, Benedict reconstructs the thought processes of key players. Appellate attorney Wesley Horton, arguing for the city of New London, had estimated the chances of the Supreme Court taking the case at 1%, then upped it to 10% after the Michigan Supreme Court, in a case known as Hathcock, reversed its willingness to allow eminent domain for economic development.

Then, when the IJ got nationally syndicated conservative pundit George Will to write a column, headlined Despotism in New London, Horton upped the chances to 50%.

There’s been no such national publicity about the Atlantic Yards case.

Supreme Court strategy

Horton, Benedict explains, geared his oral argument to appeal to the two perceived swing voters, Justices Sandra Day O’Connor and Anthony Kennedy, perceived as less dogmatic, more likely to ask fact-based questions. Legal precedent favored the city, Benedict explains, without naming the cases (Berman, Midkiff) that serve as precedents.

Horton, testing the argument in moot court, was faced with a hypothetical that ultimately became the case's tag line: could the government condemn a motel to award the site to a big hotel expected to bring in more revenues? Horton’s instinctive answer was no, but he couldn’t draw the line.

So he decided to say yes. Londregan bristled, arguing that Horton should tell the judges the question irrelevant, because the New London project would contain substantial public benefits and public uses. Horton decided--perhaps fatally--that such an explanation would bog down rest of his 15-minute argument.

Beyond the book: oral argument

I took a look at the transcript of the oral argument to bolster the book’s account. In one sequence, the IJ’s Bullock told the judges that he does not believe that public use means public purpose. Justice David Souter asks him if he believes “the Slum clearance cases”--deriving from Berman--were wrongly decided.

(It’s a far cry from the Berman case, where 83.8% of the dwellings lacked central heating, to the “blight” of graffiti and weeds in the Atlantic Yards site. Remember, the Empire State Development Corporation punted when asked about the weeds,
and later citizens did the clean-up themselves, as the second photo shows.)

Bullock, intriguingly enough, tried to distinguish between condemnations for blight, which he considers more legitimate, and those for economic development. He declared that “governments have to meet certain objective criteria to satisfy that this is actually a blighted area.” (If the court allowed eminent domain for economic development, he said it should follow the dissent in the Connecticut Supreme Court and set forth a test of minimum standards to ensure promised public benefits did arrive.)

Of course, those “objective criteria” are highly flexible. As even the IJ states regarding a report on eminent domain in California, “California’s guidelines for declaring ‘blight’ are so vague... that every property in California is potentially at risk.”

E.D. vs. blight

New London's attorney, Horton, later commented on the distinction between takings for economic development and those for blight. Should the court rely only on blight as a justification, he warned, this is the problem you're going to have. You're going to end up making a blight jurisprudence because -- because what's going to happen is the cities are going to say, we can only do this by blight, so they are going to have marginal definitions of blight.

Florida, for example, says property is blighted if it's vacant. Is that blight? I mean, you're going to have a big headache in that --”

He was cut off by Justice Stephen Breyer, but the point was important. While previously plaintiffs’ lawyer Bullock had suggested that blight designations could be legitimate, and Horton, the condemnors’ lawyer, instead warned about fuzzy criteria.

You could easily imagine a plaintiffs’ attorney and a government attorney arguing from the opposite sides. After all, in the aforementioned Lakewood, OH, the IJ led a lawsuit against a bogus definition of blight (e.g., not having a two-car garage) and later got a citizen override.

What is blight? I'll defer to University of Pennsylvania planning professor Lynne Sagalyn, who defined it as “when the fabric of a community is shot to hell”--when the government must intervene to achieve land assembly.

Voluntary transfers?

Another exchange, not captured in the book, involves Justice Ruth Bader Ginsburg asking Horton how much of the property was sold voluntarily.

Horton responded:
The large share of it was, but of course, that's because there is always in the background the possibility of being able to condemn it. I mean, that obviously facilitates a lot of voluntary sales.
And if, if this is not [upheld]-- if this is not -- let me put it this way. I mean, there is going to be a more severe holdout problem.

So there. A lawyer for a condemning agency acknowledged the obvious: the threat of eminent domain drives property owners to sell. That certainly shadowed the decisions made by many in the Atlantic Yards footprint.

The Motel 6 and the Ritz

Bullock, Benedict reports, was stunned by Horton’s unprotesting admission in court that it would be OK to turn a Motel 6 into a Ritz-Carlton. That became the core of Justice Sandra Day O'Connor's dissent, but Horton got the result he wanted, getting the judges to focus on the difficulty of assembling land for a redevelopment.

And unmentioned in the book is that Stevens, who wrote the majority opinion, apparently did just that. Indeed, the brief for New London cited “staggering economic woes” and noted that “54 percent of New London’s land is tax-exempt.”

So, why weren't such condemnations happening willy-nilly? Horton told the justices that significant transaction costs--going to court--militate against widespread takings, as does the democratic process.

That doesn't mean that don't happen, and that's why many states narrowed their eminent domain laws.

Beyond corporate benefits

The New London brief also pointed to a wide range of beneficiaries:
...The trial court put the issue most eloquently: “On the other side of this controversy [from the petitioners] are what may be considered abstract entities – the City of New London, the New London Redevelopment Agency. But the people behind these abstractions have a dream also . . . Their dream is for their city buffeted for decades by hard times and until recently declining prospects.”
(Emphasis in original)

In Brooklyn, the condemnors did much better at putting names behind the abstractions: the public face of the beneficiaries was not Bruce Ratner or Forest City Enterprises but the signatories of the Community Benefits Agreement, who just happened to stand to benefit themselves.

E.D. for e.d. needed?

The plaintiffs’ reply brief in Kelo raised questions about whether eminent domain was needed to pursue economic development and whether there were boundaries:
Respondents and their amici offer not one example of a taking that might actually violate the public use requirement. Indeed, amicus American Planning Ass’n (APA) simply admits that the only way to violate the public use requirement would be to condemn without statutory authorization.

Respondents, of course, claim that development as we know it will grind to a halt. Yet despite all the huffing and puffing, Respondents and amici were able to come up with only a handful of successful economic development projects that involved eminent domain. Of the twenty-some projects discussed by amici, which they insist required the use of eminent domain for economic development, nearly all were condemnations in blighted or damaged areas.

One example of the latter, by the way, was the MetroTech development in Brooklyn. Indeed, the justification of blight removal has been easier to get past courts for those pursuing eminent domain but the line may be blurry.

After all, perhaps the main justification for eminent domain in the Atlantic Yards footprint is the removal of blight, but when AY supporters talk these days about the need for federal stimulus money, the justification is economic development and putting people to work.

The aftermath

As the book points out, O’Connor’s much-quoted dissent came right out of the IJ’s brief. The reaction was near-universal outrage, though, as planning professor Sagalyn has suggested, the complex issue “successfully lent itself to simplification,” leading to myths, mistakes, misrepresentation, and a “tremendous amount of inflammatory language”--with “the collective benefits side of the equation was totally absent from the debate.”

The IJ announced a Castle Coalition crusade called Hands Off My Home. Kelo testified before Congress. A new governor, Jodi Rell spendt $4.1 million to compensate the plaintiffs, and Kelo got her house disassembled and moved, turned into a museum, while she found a similar place--outside the city.

Author Benedict briefly mentions the backlash in the states, but the book ends almost abruptly.

Public-private partnerships

So, several state legislatures and courts have tightened the use of eminent domain. But some serious questions remain about the boundaries of eminent domain. One came up last week at about 36:30 of NPR's Diane Rehm Show on February 3.

A caller identified as Michael from Cleveland--it was lawyer and former Port Authority board chair Michael Wager, I confirmed--stated, “Without diminishing the human dimension of this compelling story, there’s a very complex issue that still is not adequately addressed, certainly in a time of increasing pressure on old cities and governments to provide for the citizenry, and that issue is the distinction between public use and public benefit. I think in an era of public-private partnership and the needs of citizenry, whether it be roads or whether it be job creation, are artificial distinctions. I’ve faced this myself as the chairman of a port authority in my hometown: how do you balance those interests of public and private? The facts in New London were egregious and I’m not here to defend them, but I am here to raise that important question. Job creation, new business, without conceding to the sometimes overreaching demands of a corporation: how do you balance that?”

“It’s a tough question,” replied Benedict. “I’m not an expert on policy, planning, and urban renewal, I’m a writer.” (Well, he might have looked into the issue.)

“I think most of the times there’s a compromise, there’s a way to work with people that makes good business sense and is also fair, and most of the time, you don’t need to resort to the club, which is eminent domain,” Benedict said.

In the beginning, he noted, the facts weren’t egregious--New London could have looked to other cities as a model and incorporated the existing homes. That is plausible, but in some fraction of cases there is a land-assembly problem, as proponents point out.

Legitimate process

One solution, based on Kennedy's concurrence and pursued in the Atlantic Yards eminent domain litigation, is to try to limit such condemnations to cases in which the process is clearly legitimate.

Affordable housing analyst David Smith, after the Kelo was decided, gave guidance via planning professor Jerold Kayden’s 8 Simple Rules For Taking My Urban Property. Among them:
4. Compete the bid. Use an RFP (Request For Proposal) or other competitive process to select the plan and developer and to eliminate the presumption of a hard-wired sweetheart deal.
5. Get what you pay for. Use performance benchmarks — cash flow participations, clawbacks, rescission, right of final refusal — to make developer perform.
7. Embrace public oversight. Have a special public oversight mechanism on the developer.

None of those are present in the Atlantic Yards case.

Compensation the solution?

Another potential solution may be supercompensation, an approach favored by libertarian law professor Richard Epstein and some others.

For example, Smith, writing before the lawsuit was decided, suggested that there was a public policy argument for eminent domain to assist urban renewal, and the important question was “the right measure of ‘just compensation.’”

Benefits must be credibly demonstrable, they must be a large multiple of costs, and government must show there was no good non-taking alternative, he noted.

He added:
If the city thinks Ms. Kelo’s property is so integral, in addition to paying her and her neighbors their fair market value today, give them a ratable share of the development’s upside. Make her and the other homeowners a 2.5% partner (2.4 acres out of 90).

That, of course, wouldn't have kept Kelo in the home she prized. However, it's a step toward fairness and a deterrent to government.

Indeed, during the oral argument in the Kelo case, Justice Kennedy brought up the issue:
It does seem ironic that 100 percent of the premium for the new development goes to the, goes to the developer and to the taxpayers and not to the property owner.

That argument for such a share was mentioned as an alternative at the post-Kelo conference I attended, and it certainly would be a deterrent to willy-nilly takings. Indeed, Forest City Ratner could pay so richly (ultimately with government funds) for properties in the AY footprint because the override of zoning made the land vastly more valuable.

An AY footnote

Everyone's heard of the Kelo case. Not so much Atlantic Yards.

At the end of the radio segment last week, host Leonard Lopate asked Benedict if there were local cases involving eminent domain that "New Yorkers would be upset to learn about."

Benedict, who'd just appeared at a forum at Columbia University, mentioned the Columbia expansion into West Harlem. Lopate brought up Willets Point, but Benedict was unfamiliar with the controversy.

Nobody mentioned Atlantic Yards.

Atlantic Yards and the stimulus bill: many questions pending

Despite a New York Post