At conference call, Forest City executives say "we are prepared to move forward" on Atlantic Yards arena

In a conference call with investment analysts today, Forest City Enterprises executives maintained optimism about the Atlantic Yards arena but also hedged with some of their language, saying "we are prepared to move forward" rather than committing with more certainty.

They were not asked any tough questions, such as whether architect Frank Gehry is actively working on the project.

Careful language on AY

CEO Chuck Ratner, in his prepared remarks, essentially repeated the message from yesterday's press release: "As you may have seen, we recently achieved another legal victory with the state appellate court upheld a prior State Supreme Court ruling related to public approvals and environmental review. We have one material lawsuit pending, and when we have cleared the legal hurdles, we are prepared to move forward with the first phase of development at Atlantic Yards."

He didn't predict a timeline.

Later, an investment analyst asked about the likelihood of Atlantic Yards, including potential alternatives or further revisions.

Joanne Minieri, president of subsidiary Forest City Ratner, responded, "As we’ve stated, once this litigation is resolved, this project is ready to go. We’ve worked diligently and actively on being prepared to proced with Atlantic Yards. We believe with respect to the arena there’s an opportunity in today’s market to finance it. We’ve done a lot of predevelopment work both on the site and in the soft cost area. On resolution of the litigation, we remain prepared to proceed."

There's also a lot of predevelopment work not done, since Forest City Ratner stopped working at the Vanderbilt Yard in December.

Long-term project

At various times during the call, Ratner alluded to the company's capacity to wait until the market improves. Citing the "development pipeline that we’re carrying," including Atlantic Yards, Ratner called the projects "relatively modest obligations... that we have a choice to make or not make."

It sounded a lot like Forest City's statement last November that "We control the pace" of projects like Atlantic Yards.

Later, Ratner grouped Atlantic Yards, along with projects like Denver's Stapleton and Chicago's Central Station, as among "great long-term opportunities."

In other words, the promise to deliver affordable housing and open space, among other benefits at the Atlantic Yards site, seems very unlikely to be fulfilled by the promised decade--2016 after project approval, and 2018 according to FCR CEO Bruce Ratner's pledge last year.

A "Bridge" showing losses

The developer today released an EBDT (Earnings Before Depreciation and Taxes) Bridge, which shows that the Nets contribute a significant slice of the company's losses--and is a reminder that the Brooklyn arena is seen as reversing losses and raising the value of the team.

(Click to enlarge)

Later, Ratner alluded to the significant drop in the value of the company's stock, down some 90% in the past year. "We do understand that our securities have performed poorly," he said. "We’re disappointed with that... and we remain, as you can hear, cautious but confident as we proceed.”

More calls to come

While Forest City has historically held earnings conference calls twice a year, last year the company held an unusual third-quarter call, and in 2009, Ratner said, calls will be scheduled quarterly.

New 35th District candidate: AY too distracting and James should have been a "facilitator"

If City Council Member Letitia James is a prominent opponent of Atlantic Yards and challenger Delia Hunley-Adossa is a prominent supporter (even if she's not talking about it), third candidate Medhanie Estiphanos is apparently trying to split the difference.

In an interview with the New York Times's blog, The Local, Estiphanos, who doesn't mention AY on his web site, says the project has been "incredibly detrimental to the community" mainly because "it’s taken too much of people’s time and focus" from other, more pressing matters.

Perhaps, but issues he prioritizes like education and affordable housing are also citywide issues, involving a larger number of stakeholders, giving local political officials somewhat less of a voice. Atlantic Yards is a local land use issue--or, at least, should have been, had it not gone through the state process overriding local zoning.

In the middle?

The Times reports:
While Mr. Estiphanos said he shared many of Ms. James’s reservations about Atlantic Yards, for example — “From the get-go,” he said, “I thought the scale of it was much bigger than Brooklyn could handle” — he faulted her for aligning herself as strongly with the project’s opponents as she has.

“I think she could’ve played a much better role being facilitator between Bruce Ratner, Paterson, the residents being affected by this, and really bring people to the table to cooperate,” he said.

That may seem reasonable from the outside, but cooperation depends on leverage, and James didn't have any, because the project did not go through the city's Uniform Land Use Review Procedure (ULURP), which typically gives the local City Council member significant power.

Was the Izod Center 61% full last night?

The announced attendance (but not necessarily gate count) for last night's home game between the New Jersey Nets and Milwaukee Bucks was 12,205, or 61.1% of the 19,968 capacity.

I doubt that many people attended, and surely there were not that many people there by the early fourth quarter of a blowout loss, as the photo indicates.

Cropped from photo by Ray Amati/NBAE via Getty Images, copyright 2009 NBAE.

At today's conference call, will investment analysts finally ask FCE what exactly Frank Gehry is doing?

Last December 10, I challenged the investment analysts following Forest City Enterprises to ask the company some tough questions about Atlantic Yards, notably the reason for stopping work at the Vanderbilt Yard and the timing of the project. They didn't.

Today they have another more opportunity, at an 11 a.m. conference call.

As I wrote, the investment analysts have heard those executives continually revise the timetable for and the promises regarding Atlantic Yards without acknowledging the inaccuracy of past statements. 

If the analysts don't ask some hard questions, they will sound ever more captive of the companies they cover, another example of the failure of the Wall Street ecosystem.

(FCE A stock closed yesterday at $3.41, down 8.9% from $3.74.)

What's Gehry's role?

This conference call should make it a little easier to focus on Atlantic Yards, because the arena is one of only two projects the developer expects to launch this year (though the timetable is questionable).

The important questions regard architect Frank Gehry, who's been a huge selling point for the project as a whole and the arena, which has gained a naming rights deal from Barclays and numerous other sponsors.

But if Gehry's off the project, then the arena becomes much less sexy.

In remarks published last week, Gehry said of Atlantic Yards, "I don't think it's going to happen." That led to backpedaling from Bruce Ratner, Gehry himself, and Nets CEO Brett Yormark.

The developer says Gehry is still the lead architect. But Gehry's laid off his staff working on Atlantic Yards. So what does that mean:

• Is Gehry still working on the project? How actively?
  
• Will he rehire staff to work on the project?
  
• Have other architects taken Gehry's designs and reworked them to save money?
  

In other words, is it still a Frank Gehry arena?

What about Turner Construction?

And maybe they can ask if Turner Construction, which produced the construction timetable and was called "a preeminent construction management company" in an affidavit by former FCR executive Jim Stuckey, is off the job, as a Curbed tipster suggested.

As foreclosures increase, real blight (unlike AY 'blight') creates "real-estate panic"

Recent coverage of the foreclosure crisis around the country reinforces the definition of blight offered by urban planning professor Lynne Sagalyn: where "the fabric of a community is shot to hell."

Outside Cleveland, the New York Times reported March 23, the city of "Euclid has installed alarm systems in some vacant houses to keep out people hoping to steal lights and other fixtures, drug users and squatters." 

Euclid and other inner suburbs are spending "millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic."

Yesterday, the Times reported on "bank walkaways," in which the banks won't even take possession of properties because it costs more to do so than the value of the real estate.

And in the AY footprint?

In the case of Atlantic Yards, there were some vacant buildings and empty lots, but there was and remains enormous demand for the land in and around the AY footprint.

That's why the failure by consultant AKRF to conduct the market study called for in its Blight Study contract with the Empire State Development Corporation looms large in the effort to appeal the dismissal of the case challenging the AY environmental review.

Instead, we saw AKRF straining to find blight, for example at the Mobil Station at Flatbush Avenue and Dean Street, contending that, "as shown in Photographs C and D, portions of the lot’s asphalt surface are pot holed (Photograph C shows a drainage grate near the lot’s entrance that has sunk below grade) and areas of the sidewalk surrounding the lot are cracked and uneven."

Develop Don't Destroy Brooklyn responded that the "so-called potholes are in fact asphalt patches applied to holes drilled by Roux Associates in the course of making soil sample borings for AKRF when FCR was purchasing the property. It is not evident as asserted in Photo 1127-1-D that the entry drainage grate has sunk below grade. Likewise, the concrete sidewalk has cracks so very modest and so easily fixed, they do not merit 'blight characteristic' status."

Who'd move in?

There's another intriguing contrast. Around the country, those suffering economically have lost their houses and even moved into tent cities. One solution, as suggested last night at a panel titled "Urbanism, Inc." sponsored by the Lower Manhattan Cultural Council, is to take back the foreclosed homes for those who need them. (Presumably, those are buildings not severely blighted.)

In the Atlantic Yards footprint, the most available units are not in buildings deemed unsafe, but in handsome former industrial buildings renovated into condos. And, as I've argued, we'll know Forest City Ratner is really serious only when it demolishes the Spalding Building, because, should the project fail, the units in that building could easily be re-sold.

What's left out of New York magazine's AY footprint

Here's the print issue version of New York magazine's Atlantic Yards timeline.

(Click to enlarge)

It's worth noting that the Frank Gehry rendering at the top represents only Phase 1, the arena block, bounded by Flatbush, Atlantic, and Sixth avenues, and by Dean Street. (Site 5 is omitted.)

It's also worth noting that the photo at bottom, which shows Forest City Ratner's malls and the Williamsburgh Savings Bank for perspective, only portrays part of the arena block. It focuses mainly on (part of) the Vanderbilt Yard, cutting off the block bounded by Flatbush, Fifth, and Sixth avenues, and Dean Street--the block that houses plaintiffs in two lawsuits.

More perspective

This photo by Jonathan Barkey, who took multiple aerial photos, provides more perspective.

Much of the project footprint is highlighted in the larger oval, with the arena block in the foreground, up to the bridge. The smaller ovals show towers in adjacent neighborhoods.

Forest City Enterprises announces losses, asserts that AY arena is one of only two new projects to launch in 2009

In another sign that the Atlantic Yards project is crucial to its struggling business, Forest City Enterprises (FCE) today announced in its year-end fiscal results that it would continue to significantly slow development, anticipating that it would commence construction on only two new projects, "the arena at our Atlantic Yards project in Brooklyn, and a fee-based development project in Las Vegas."

However, there are several doubts regarding arena construction, including pending legal cases disregarded by the developer and the availability of financing. While Forest City is indeed closer to starting construction than in previous years, consider that in 2007, for example, FCE CEO Chuck Ratner and other executives asserted that the arena would open in 2009, and New Jersey Nets CEO Brett Yormark has consistently shifted the goalposts.

In fact, in a 10-K document filed today with the Securities and Exchange Commission, the developer acknowledges that 2011 is hardly certain:
The Nets are currently operating at a loss and are projected to continue to operate at a loss at least as long as they remain in New Jersey, which is expected to be until at least 2011, and possibly longer.

Other delays

The 10-K document also acknowledges the potential for continued delays:
Brooklyn Atlantic Yards. We are in the process of developing Brooklyn Atlantic Yards, a long-term $4.0 billion mixed-use project in downtown Brooklyn expected to feature a state of the art sports and entertainment arena for the Nets basketball team, a franchise of the NBA. The acquisition and development of Brooklyn Atlantic Yards has been formally approved by the required state governmental authorities but final documentation of the transactions are subject to the completion of negotiations with local and state governmental authorities, including negotiation of the applicable development documentation and public subsidies. Pre-construction activities have commenced for the potential removal, remediation or other activities to address environmental contamination at, on, under or emanating to or from the land. There is also one lawsuit pending challenging the use of eminent domain which may not be resolved in our favor resulting in Brooklyn Atlantic Yards not being developed at all or not being developed with the features we anticipate. As a result of the foregoing, this project has experienced delays and may continue to experience further delays. There is also the potential for increased costs and delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies, (iii) our inability to obtain tax-exempt financing or the availability of financing or public subsidies, or our inability to retain the current land acquisition financing, (iv) our or our partners’ inability or failure to meet required equity contributions, (v) increasing rates for financings, (vi) loss of arena sponsorships and related revenues and (vii) other potential litigation seeking to enjoin or prevent the project or litigation for which there may not be insurance coverage. The development of Brooklyn Atlantic Yards is being done in connection with the proposed move of the Nets to the planned arena. The arena itself (and its plans) along with any movement of the team is subject to approval by the NBA, which we may not receive. If any of the foregoing risks were to occur, we may not be able to develop Brooklyn Atlantic Yards to the extent intended or at all. Even if we are able to continue with the development, we would likely not be able to do so as quickly as originally planned.

The importance of AY

Atlantic Yards has a significant upside for the developer, not only the control of a "great piece of real estate" (in Chuck Ratner's words) but the opportunity to stanch significant losses on the operation of the Nets, $35 million in the past year. A new arena would bring new revenues and also raise the value of the team, which has actually declined since an ownership group led by Forest City Ratner's Bruce Ratner bought the team in 2004.

So Atlantic Yards will be a fight to the finish, as the developer anticipates "continued challenging business conditions in 2009."

The AY overview

The press release states:
The Company's Atlantic Yards project in Brooklyn has had two significant achievements since the end of the fiscal year. The first is the previously mentioned $161.9 million land loan refinancing. The second is a ruling in New York State Appellate Court that upheld a prior State Supreme Court finding that the state met all of its obligations in the public approvals and environmental review process associated with the project. The ruling marks the 22nd consecutive court ruling in favor of the project, with only one material lawsuit still pending.

Is only one material lawsuit still pending? No, there's also an attempt to appeal the case challenging the environmental review. And an appeal in another case, involving renters in two footprint buildings, won't be filed until July; while this may not be a "material lawsuit" to Ratner, it would be somewhat harder to pursue financing with any lawsuit pending.

Earnings and losses

Forest City has decreased revenue:
EBDT (Earnings Before Depreciation, Amortization and Deferred Taxes) for the full year ended January 31, 2009, was $218.9 million, or $2.05 per share, a 17.0 percent decrease on a per-share basis compared with last year's $265.7 million, or $2.47 per share. EBDT for the fourth quarter was $70.5 million, or $0.66 per share, a 22.4 percent decrease on a per-share basis compared with last year's fourth-quarter EBDT of $91.2 million, or $0.85 per share. For an explanation of the variances, see the section titled "Review and Discussion of Results" in this news release.

The net loss for the full year was $112.2 million, or $1.09 per share, compared with net earnings of $52.4 million, or $0.51 per share, in 2007. The net loss for the fourth quarter was $45.1 million, or $0.44 per share, compared with net earnings of $12.6 million, or $0.12 per share.

Cash and credit available

Forest City says it has reserves:
At January 31, 2009, the Company had more than $500 million in cash and credit available, including $181.6 million in cash and $318.6 million of available borrowings on the Company's revolving line of credit.

Given that FCR owes the Metropolitan Transportation Authority $100 million cash for the Vanderbilt Yard, and must spend hundreds of millions of dollars more for an upgraded railyard, the parent company's cash/credit doesn't seem like a huge cushion. Hence the effort to gain indirect subsidies.

The 10-K document acknowledges potential challenges in obtaining financing:
Our high leverage may adversely affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and may make us more vulnerable to a continued downturn in the economy.

Nets losses, and loan

The press release states:
The increased loss from the Nets stems from the Company advancing capital to fund the team's operating losses on behalf of both itself and certain non-funding partners. While these advances receive preferential capital treatment, Forest City reports losses, including significant non-cash losses resulting from amortization, in excess of its 23 percent legal ownership. The overall operating loss for the team is comparable to the prior year.

Cost savings

Chuck Ratner noted that, "during the last four years, Forest City has begun construction of more than $3.4 billion in new real estate, including $1.0 billion in 2008," but will cut back significantly this year, though it will continue to complete projects already under construction, as well as to actively pursuing and maintaining entitlements on long-term developments in key markets. Forest City has laid off "approximately 30 percent of our non-property staff."

Refinancings in Brooklyn

And it has "proactively" managed debt maturities, several relating to Brooklyn:
In late January, 2009, the Company secured an extension on the financing for Two MetroTech Center, a 521,000-square-foot office building at the Company's MetroTech Center corporate campus in Brooklyn. In early February, we closed a $161.9 million refinancing from Gramercy Capital Corp. and certain co-lenders on a land loan associated with our Atlantic Yards project in Brooklyn. In mid-March, we announced an extension from JPMorgan Chase, N.A., of a credit facility related to the Nets.

80 DeKalb and Beekman

The press release suggests that the apparent halt in work at the Beekman Tower in Lower Manhattan is not related to a cutting it in half but rather to achieve savings on construction--perhaps renegotiation of contracts with contractors eager for work:
In the residential portfolio, construction continues on 80 Dekalb, a 34-story 80/20 residential tower in Brooklyn, Presidio a 161-unit adaptive re-use apartment community at the foot of the Golden Gate Bridge in San Francisco, and Beekman, a Frank Gehry-designed residential high-rise in lower Manhattan that will have approximately 900 market-rate apartments as well as a pre-K through eighth-grade school, and an ambulatory care center.

In light of economic and market conditions, including falling prices for construction, the Company has initiated a study of costs and timing for Beekman to identify possible options to achieve savings on completion of the project. Work continues at the site and both the school and ambulatory care center will open on time, as scheduled.

In effort to appeal EIS case, plaintiffs charge "evidence of corruption" in ESDC's blight study

On the same day that developer Forest City Enterprises asserted in a press release that "only one material lawsuit" is pending in the Atlantic Yards case, project opponent Develop Don't Destroy Brooklyn (DDDB) announced that one other lawsuit may indeed be alive.

In an effort to reverse an appeals court’s February decision rejecting an appeal of a trial judge's dismissal of the case challenging the Atlantic Yards environmental review, DDDB and 25 co-plaintiff community and civic groups have asked (PDF) the Appellate Division, First Department, to allow the state’s highest court to review the decision, arguing that the blight study by Empire State Development Corporation (ESDC) did not contain simply errors or misjudgments but rather is associated with “evidence of corruption” and that a for-profit company should not be able to lease a publicly-owned arena for a dollar a year.

Decision said to be tainted

The ESDC, argue the appellants, was “purposefully disregarding the contrary economic conditions and development trends which it asked its own consultant, AKRF, to study; knowingly misrepresenting the effect of the Vanderbilt Rail Yards on the non-ATURA [Atlantic Terminal Urban Renewal Area] portion as impeding development, while the non-ATURA portion and adjacent areas were enjoying substantial, desirable private redevelopment and rapidly rising property values; and knowingly misrepresenting the crime rate in the non-ATURA portion as higher than surrounding areas, while its own data showed just the opposite.”

“Simply put, New York law requires ESDC to do more than simply throw out a number of purported justifications for its “blight” determination without regard to truth, accuracy, or logic, secure in the knowledge that as long as any one of its proffered justifications can be called ‘rational,’ its blight determination will not be disturbed by judicial review,” the petitioners argue.

Thus the “the court should find the agency’s ultimate determination irremediably tainted, regardless of whether a few of its proffered justifications might arguably be valid.”

While the four judges acknowledged that “our power to review the substantive adequacy of an EIS [Environmental Impact Statement] is extremely limited,” the petitioners argue that, in this case, “[i]t is not a question of the courts substituting their judgment for the agency’s; rather, it is matter of the courts requiring an agency to be truthful and unbiased in making its judgment.”

Appeal not automatic

The appeal, filed as an affirmation by attorney Jeff Baker, is not automatic, and the defendants in Develop Don't Destroy Brooklyn, et al., v. Urban Development Corporation dba Empire State Development Corporation, et al. almost certainly will oppose the case moving forward.

The ESDC has less than two weeks to respond, and the Appellate Division's decision on whether to move the appeal should come down within 60 days.

Should the appeal not be granted, the plaintiffs will then appeal directly to the Court of Appeals.

If both are denied, that would leave the eminent domain case as the only extant major case challenging Atlantic Yards. That case is very likely a win for the state, and, unless there’s a split decision guaranteeing an appeal, the plaintiffs would also request leave to appeal.

However, if the case does go to the Court of Appeals, that would push the timetable for briefing and argument to the fall, further delaying the developer's stated plans to break ground this year and open the arena in 2011.

From the concurrence, a need for new standards

James Catterson, one of the four judges on the panel, filed a concurring opinion that read like a dissent, and the petitioners relied significantly on this.

“As Justice Catterson of this Court noted in his concurring opinion, 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,” the appeal states.

“Nevertheless, Justice Catterson felt compelled to join the majority in upholding ESDC’s findings and determinations regarding the Project, despite his belief that ESDC’s analysis did not provide a rational basis for its finding that the entire Project area is “blighted”, based on a perceived standard of review under which courts would be compelled to defer to ESDC’s findings and determinations as long as ESDC can provide any arguably plausible justification for them, regardless of how contrary they may be to the clearly stated purposes and plain language of ESDC’s enabling statutes and the environmental laws which ESDC is obliged to follow,” the appeal continues.

That, they say, is a reason for the Court of Appeals to step in and “determine the boundaries of judicial review of ESDC’s determinations.”

(DDDB's press release quotes Catterson's opinion: "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.… 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 [project’s] announcement, is ludicrous on several levels.")

Standard of review

The appellants note that the court relied heavily on two cases that required it “to afford a high level of deference” to the ESDC’s decision. 

However, they argue, the two cases relied under section 51 of the General Municipal Law, for which redress is available only in case of fraud or illegality, whereas this is “an ‘Article 78' proceeding dealing with a situation wherein it might be claimed that public officials, although acting within their powers, are doing so in a way that is arbitrary or capricious.”

In this case, the ESDC, for example, neglected the market study it required its consultant, AKRF, to perform--the request for which was in an AKRF contract I discovered after filing a Freedom of Information Law request.

“[T]here is no dispute that ESDC contracted with AKRF for a study of the development trends in and around the Project area, even though it later chose to ignore development trends and denied that they are relevant to its blight determination. Nor is there any dispute that the non-ATURA blocks and surrounding areas were undergoing well documented, substantial, desirable residential redevelopment both before and after the announcement of the Project and ESDC’s blight study," the appeal states.

"The record in this case leaves no room for any reasonable doubt that ESDC knew very well that its claims that, without the Project, ‘significant new development’ of the non-ATURA area ‘is considered unlikely given the blighting influence of the rail yard and the predominance of low-density manufacturing zoning on the project site’, and that the non-ATURA area 'would remain blighted' without the project, were unsupported by any evidence, and were false when they made them." the petitioners contend.

(I had called the “no redevelopment without AY” claim one of the least credible statements in the environmental review.)

Economic conditions and development trends

The Urban Development Corporation Act, which established the parent agency of the ESDC, is supposed to address areas which are “slum or blighted, or which are becoming slum or blighted areas . . . all of which impair or arrest the sound growth if the area, community or municipality, and the state as a whole.”

The appeal cites Catterson’s observation that that ESDC’s conduct was “ludicrous”--and the appeal contends it was therefore not rational and thus should be overturned.

“Civic project”?

While a federal appellate court in the eminent domain case agreed that a sports arena may serve a “public purpose” under the U.S. Constitution, the plaintiffs, according to the appeal, can still challenge the arena as a “civic project” under state law, contending that the appeals court “nevertheless proceeded to conflate the two issues.”

While the Court of Appeals did allow that a sports arena operated privately for profit may still serve a “public purpose,” the petitioners acknowledge, the case at hand was based on a differing governing statute, while the UDCA limits the ESDC’s ability to lease an arena to government agencies, public corporations, or “any other entity which is carrying out a community, municipal, public service or other civic purpose.” 

And that, they say, should not mean a real estate develper with a dollar-a-year lease, who would get all profits from the arena, including naming rights and sponsorship deals.

They assert that it’s circular logic: “In effect, the court determined that the private, for-profit FCRC subsidiary to which ESDC would lease the Barclays Center Arena would be engaged in a ‘public service or other civic purpose’... merely because the Barclays Center Arena has already been designated a ‘civic project.’”

In conclusion

The appeal concludes, “By its Decision herein, this Court has clouded the “arbitrary and capricious” standard of review of ESDC’s determinations with the more deferential standard of a taxpayer action, and incorrectly conflated constitutional requirements applicable to condemnation issues with the specific statutory requirements of the UDCA and SEQRA [State Environmental Quality Review Act]."

"Appellants respectfully submit that the Court of Appeals should address and clarify these issues, by recognizing that the proper focus of the courts’ review of ESDC’s conduct and determinations herein is not simply public policy or what constitutes a ‘public purpose’ under constitutional standards, but, rather, whether ESDC was within its legislatively proscribed authority, and whether it acted arbitrarily and capriciously, when it decided to demolish and rebuild a thriving urban neighborhood without taking an unbiased, objective, and rational look at the evidence before it.”

More criticism of the Atlantic Yards Community Benefits Agreement: it (mostly) doesn’t apply if Ratner sells the project

The Atlantic Yards Community Benefits Agreement (CBA), proclaimed Brooklyn Borough President Marty Markowitz in 2005, is “so comprehensive and far-reaching that it puts Brooklyn in a class by itself, at the forefront of the corporate responsibility movement.”

And Forest City Ratner executives have trumpeted “substantial legally enforceable penalties for a failure by FCRC to fulfill its obligations.”

However, a national expert on CBAs, speaking at a conference in Brooklyn Friday, identified three serious flaws in the AY CBA: it (mostly) doesn’t apply if Forest City Ratner sells the project; there are several roadblocks to enforcing the current obligations; and structures to implement the plan have apparently not been set up.

The two latter criticisms have been aired in the past, as have other concerns about enforceability, but I've heard little about the issue of successorship.

Importance of enforcement

The criticisms were raised at a panel titled “Community Input in Megadevelopments,” part of a Brooklyn Law School symposium, Getting It Right: Government’s Role in Housing and Economic Development.

Ben Beach works with community groups as a staff attorney at the Community Benefits Law Center, the legal program of the Partnership for Working Families, said enforceability and enforcement matter for several reasons.

They include: realizing benefits in a timely way, ensuring political integrity, empowering community groups, and professionalizing the community benefits movement, so signatories are not seen as “charity cases” but rather as participants in a fair exchange.

Key elements of enforceability

He cited several elements of enforceability, including specificity and clarity in the provisions, a timetable for performance, particularly on the part of a developer, and the importance of assigning the obligations to a developer’s successor.

AY CBA & successors

In part of his presentation, Beach took a look at the Atlantic Yards CBA, which he praised for the “broad slate of purported measures.”

However, he asked rhetorically, “are those enforceable measures?”

The CBA only applies to the developer and its affiliates. “This does not appear to bind the developer’s successors,” he said.

CBA language

After Beach's presentation, I took another look at the CBA, which states that Forest City Ratner would at least try to convince its successors to maintain the CBA, but is not required to guarantee it:
The Developers shall have the right to assign their interest in this Agreement to any Affiliated entity; provided, however, the obligations of the Developer shall be personal to the Developer and its Affiliates and shall not bind any non-affiliated entity that acquires an interest in the Project.  In the event a non-affiliated entity acquires a majority interest in the Project, the Developer shall arrange and attend a meeting between the Coalition members and the prospective acquiring entity at least thirty (30) days before the sale. At such a meeting, the Coalition members and the Developer will discuss with the prospective acquiring entity the economic benefits and community stabilizing effects of this Agreement in order to encourage the prospective acquiring entity to undertake the terms of this Agreement. If the Coalition members and the Developer are unsuccessful, then the Developer shall support the Jobs Development and Local Employment Initiatives in the form of liquidated damages provided in Section IV of this Agreement; and shall have no further obligations.
(Emphases added)

That means that Forest City Ratner would pay Brooklyn United for Innovative Local Development (BUILD) $500,000 for a Pre-Apprentice Training initiative.

Also, a state Memorandum of Environmental Commitments states that 2250 affordable rentals--as promised in the Affordable Housing Memorandum of Understanding (which is incorporated into the CBA)--would be built, and 30% of housing in Phase 1 would be affordable.

However, the City Funding Agreement allows for a much smaller Phase 1 than originally promised, and there’s no timetable for Phase 2.



Other provisions

So what isn’t guaranteed? The CBA promises a minimum of 35% of the jobs will be for minority workers and another 10% for women workers, and, during the construction phase, 20% of contract dollars for minority-owned firms and 10% for women-owned firms.

The State Funding Agreement cites those goals, but offers considerable wiggle room, stating, “Developer shall endeavor to cause the work with respect to the Infrastructure to achive this Project goal to the degree practicable.”

Also,  20% of total contract dollars (including Arena concession activities) are supposed to go to minority-women owned businesses for purchasing and service contracts. FCR hs pledged to build a health care center and inter-generational facility, to make the arena available to community groups for at least 10 events a year at a reasonable rent, to provide 50 upper bowl tickets, four lower bowl tickets and one suite for community use.

The CBA specifies that residents of public housing will be given priority in "all aspects of this agreement."  The developer is supposed to sponsor annual job fairs serving six public housing projects in the area. The developer is also supposed to work with a CBA signatory in developing four schools. 

Judicial enforcement

During his presentation, Beach walked through the challenge facing a CBA signatory seeking to enforce one of the obligations. After obtaining a report from the Independent Compliance Monitor--who, I might add, has never been publicly announced--that goes to the CBA Executive Committee for review. (Nor have other reports been publicly issued.)

Then the complainant can allege default, with the developer having 60 days to cure the default. Then the Executive Committee tries to resolve the disagreement. If that doesn’t lead to resolution, the ICM is required to select an independent mediator.

“Only after that entire process runs its course am I permitted to go to binding arbitration or pursue judicial review,” commented Beach, who called the right “fairly encumbered.”

Who’s the community?

Another panelist Friday, professor Patricia Salkin, who directs the Government Law Center at Albany Law School, defined a CBA as “a private contract between a coalition and a developer, where government is not involved” and the “product of substantial community involvement.”

“The key is developing a legitimate coalition of community groups/interests who can ‘speak for the community as a whole,” she said, citing labor, environmental, neighborhood, religious, and advocacy groups. (For an overview of CBAs, see Amy Lavine’s Community Benefits Agreements blog.)

While CBAs can seem to be a win-win--offering benefits not achievable via government, and helping developers by removing obstacles--broad-based support is essential, Salkin said, and can be hard to achieve in the case of controversial project.

The absence of broad-based support has been a common criticism of the AY CBA, including Columbia University urban planning professor Lance Freeman, who noted that “there is no mechanism to insure that the “community” in a CBA is representative of the community.

Growth of CBAs

Salkin attributed the growing interest in CBAs to several factors, including increased urban redevelopment (at least until the recent recession); shrinking federal aid to cities and tight municipal budgets; increased interest in smart growth and environmental justice; and increased public concern about developer accountability and the use of public subsidies.

Community groups, she noted, may be able to negotiate for more than what a government entity can achieve. A typical CBA can include social justice issues (living wage, first source hiring, job training, afforable housing, minority hiring, responsible contracting); environmental provisions (site remediation, mitigation of impacts, green building practices, smart growth provisions, public health support); and monitoring and enforcement (advisory committee, compliance monitor, public oversight, reporting requirements, injunctive relief).

Relationship to government

In a previous paper on CBAs, Salkin contrasted the AY CBA with agreements reached in California, noting that it “is not incorporated into a development agreement with the city, making enforcement possibly more difficult.”

Still, she said it was her opinion that government should not a party to a CBA, noting that it could distort the planning process.

Beach noted that other CBAs in New York have “featured a prominent and some might say overwhelming role of government,” which can distort the process.

While it is most common for CBAs to proceed via a private contract, in Los Angeles, there have been both private agreements as well as a separate development agreement with the city, both of which contain same set of benefits.

Failure to disclose

Later, with the examples of Brooklyn Endeavor Experience and Public Housing Communities in mind, I asked Beach if it was appropriate for CBA signatories to accept funding from the developer and, if they do, if they should disclose it.

(Both have received at least some funding from Forest City Ratner, but won’t say where they get the bulk of their money.)

“I’m generally not in favor of sigantories accepting money,” Beach said, saying it “undercuts the integrity of the deal.” However, if they do get money from the developer, yes, they should disclose it, he said.

Similarly, John Goldstein, National Program Director of The Partnership for Working Families, has said, “As a matter of principle, groups in our network don’t take money from developers. We want to avoid any appearance of a conflict of interest.”

NYC EDC's Pinsky: Atlantic Yards "not over" but "missed the market;" is streamlining environmental review the answer?

On Friday, New York City Economic Development Corporation (NYC EDC) President Seth Pinsky was the luncheon speaker at Getting It Right: Government’s Role in Housing and Economic Development, a symposium held at Brooklyn Law School.

In his address, he talked about Yankee Stadium, CitiField, the World Trade Center site, Hudson Yards, Coney Island, Willets Point, and Hunters Point South, among other major projects.

Unmentioned was Atlantic Yards, Brooklyn's most controversial project, so, during the Q&A, I brought it up in a nonconfrontational way (despite the temptation to ask whether NYC EDC would ever tell me how much the project costs).

"Are there any lessons to be learned from Atlantic Yards?" I asked.

Tricky environment

"Yes. The first is that it’s not over ‘til it’s over," Pinsky replied, to some chuckles. "We continue to work with Forest City and think that there are steps that can be taken that can allow that project to move forward. We’re hoping that that we can work with them to get the financing, to get at least the first phase of the project under way before the end of the year, but, no doubt, it’s a very tricky environment in which to do a major financing, so we’re hopeful, but nothing is real until it’s real. With respect to your question--"

"In terms of the other projects you’re doing," I followed up.

Building over a railyard

"The issue with Atlantic Yards is that you’re building over an active railyard, and there’s a reason why active railyards around the city have gone undeveloped for many, many years even when they’re surrounded by neighborhoods that have very valuable land," he said.

Which is an argument for having such a site bid out, as with Hudson Yards.

"And the reason is that it’s extremely expensive and it’s extremely complicated," he continued. "And the only way you can really pay for the expense is with a lot of density on top. And so, the economic realities sometimes come up against the political realities."

That's true, but it raises a question as to whether an anointed developer who designates the density is best way to address the political realities, or whether a more democratic process--a public rezoning--could have done so.

Missing the market

"I think in the case of Atlantic Yards, notwithstanding a lot of opposition--there’s no question that there is a lot of opposition--there’s also a lot of people who are in favor of the project. But because the opposition was as vocal as it was, they were able to tie the project up and, essentially, make it such that, at least for now, Forest City has missed the market," he said.

Yes, Atlantic Yards was announced and approved during a time of economic optimism. But should city and state planners have accepted the developer's optimistic and unrealistic (even then) assumptions, such as a ten-year buildout, or should they have developed alternative scenarios?

Remember, the Port Authority of NY/NJ recently presented both a target date and a “probabilistic” date for the World Trade Center site.

Streamlining city processes

"And so one of the things that we’re working on doing, going forward, is to try to make city processes more streamlined," Pinsky continued.

That's a reasonable point--that in some cases, as the Manhattan Institute has pointed out, the environmental review could revamped. However, with Atlantic Yards, the lengthy environmental review was performed by the Empire State Development Corporation (ESDC), not the city, and the avoidance of the city's land use review process meant that no local elected officials had a voice--a spur to criticism and opposition. So the city process was irrelevant.

"On the one hand, you don’t want to make it so easy for people to go through city processes that they’re meaningless, or that they don’t achieve their underlying aim, for example, with environmental impact statements," Pinsky continued. "But, when you get to a point where--and I’ll use an environmental impact statements as an example, when you get to a point where environmental impact statements are 8000 pages long, they’re just invitiations to litigation, and they’re not informing anyone about anything on these projects, because nobody’s going to read an 8000-page EIS except for a lawyer"--some in the crowd laughed--"I guess there are a lot here."

The lengthy EIS for Atlantic Yards also could have been seen as a protection against litigation. And some of the answers were informative, in their way, such as the state's contention that the Atlantic Yards site would be stagnant without this project.

"I think that figuring out how to strike that balance between, on the one hand, not wanting developers to run roughshod over city processes and over communities, but on the other hand, not making it so difficult to get projects done that you’re inevitably going to miss a market if you start during that market--that’s what we’re trying to figure out," he said.

Contrast with Willets Point

I followed up once more: "Willets Point is a contrast, because no developer has been selected yet. I was wondering if that’s in your mind, as well."

"There are projects we’re doing around the city that follow the Willets Point model. There are projects that we’re doing that will continue to follow on the Atlantic Yards model," he responded.

Perhaps, but Crain's has reported that, in a project like Willets Point that involves eminent domain, the city did not want to be accused of selecting one developer at the start and thus making itself vulnerable to a lawsuit.

Whose risk capital?

Pinsky continued: "The advantage that you have when there’s a developer there is that there’s someone who can pay for design and can do the analysis and figure out what’s financially feasible from a private perspective. When you don’t have the developer, the city’s paying for the design and we’re doing the analysis."

"And I think we’re doing a pretty good job of it, but we’re not putting our risk capital into the project, so I think there are advantages and disadvantages to both," he said. "I don’t think that, as a result of what has or hasn’t happened at Atlantic Yards, that we’re going to change one way or another on that issue."

Yes, Forest City and its partners have invested $250 million into the project. But the city and state have committed $305 million in direct subsidies, along with tax breaks and other benefits worth hundreds of millions of dollars (or more, some contend).

So the developer and the government are partners, with both having invested enough to not want to back up. That leaves the developer in a position to ask for more concessions, via indirect subsidies.

Community input

Later, when asked about involving communities in development, Pinsky responded, "We... have increasingly tried to bring the community into the discussions from the very early stage when we look at neighborhoods. I think we’ve always done a pretty good job at it, but we’ve learned some lessons over the course of the last few years and gotten much better at it."

He went on to cite the multiple phases of ULURP, the city's Uniform Land Use Review Procedure, which as noted above, did not apply to Atlantic Yards.

He sounded a little like former Deputy Mayor for Economic Development Dan Doctoroff, who also said the city was getting better at it.

New York magazine's timeline: "The Fall of the Atlantic Yards Megaplan"

A New York magazine timeline is titled Atlantic Yards, Inch by Inch: You can sue, sue, sue—but nothing ruins megaplans like a crashing economy.

Well, maybe. But keep in mind that the City Funding Agreement and the State Funding Agreement, both of which were signed during the optimistic economy of September 2007, give the developer a much longer leash to build a much smaller project that the December 2006 state approval seemingly enshrined.

And it could be argued that megaplans are ruined by their "mega"-ness and the lack of democratic process.

In other words, a somewhat less ambitious plan, involving multiple parcels and multiple developers, going through (rather than around) the city's Uniform Land Use Review Procedure (ULURP), would not have generated such opposition and could have led to development (though, most likely, not an arena.)

Project isn't dead

Keep in mind that, despite an alternate headline, "The Fall of the Atlantic Yards Megaplan," the project is far from dead. The overoptimistic megaplan may be dead, but Forest City Ratner is hoping to get a new arena started, so there might be a way to stave off losses on the Nets.

Also, the timeline is rather arbitrary, having left out such milestones as the overhyped 6-8% scaleback (NYTimes, front page!) and the December 2006 Empire State Development Corporation and Public Authorities Control Board approvals.

Lupica says Ratner's flacks are orchestrating emails

From Mike Lupica in today's New York Daily News:
Here's a heads-up for Bruce Ratner's flacks: When you put Brooklyn people up to sending me e-mails, I print them up and then make them into paper airplanes.

Why the New York Times needs to cover the Gehry story

Architect Frank Gehry's doubts about the Atlantic Yards project, which surfaced last week, generated widespread coverage, including in the New York Daily News and New York Post, and some creative backpedaling from Nets CEO Brett Yormark.

The New York Times ignored it. However, as DDDB reminds us, only a little more than a year ago, on 3/21/08, Forest City Ratner CEO Bruce Ratner "did say he was confident about starting construction on a $950 million basketball arena for the Nets by the end of the year."

That didn't happen. And now Yormark is promising construction this year. But there are a number of variables, and all predictions should be taken with a grain of salt. So the Times should be asking questions, rather than reprinting Bloomberg News stories based on Yormarkisms.

The Gehry born-in-Brooklyn claim may have started in the Brooklyn Paper

It was a tempest in a teapot last March: Forest City Ratner claimed, in legal papers and on its web site, that Atlantic Yards architect Frank Gehry was born in Brooklyn. When it was pointed out that Gehry actually was born in Toronto, FCR changed the Atlantic Yards web page.

Given that biographical information about Gehry is readily available, I think Forest City Ratner should've gotten it right, but I recently concluded that the developer doesn't deserve all the blame. The Brooklyn Paper also reported the born-in-Brooklyn claim when the project was announced nearly five years ago.

Back in 2003

In a 12/15/03 article (link to PDF of full issue) headlined "ARENA SET FOR NETS", the Brooklyn Paper reported:
This project would mark his first foray into Brooklyn, although the world-renowned architect and winner of the prestigious Pritzker Award said he was born in Brooklyn and lived on Flatbush Avenue and Avenue J in Flatlands.

Either Gehry was fabricating his past or the Brooklyn Paper misheard something.

Misscommunication?

I raised the issue last year, contending:
Well, it can't be an honest mistake, can it? After all, the Atlantic Yards bio of Gehry links directly to the architect's Pritzker Prize bio, which states that he was born in Canada.

The Brooklyn Paper followed up, in March reporting:
Forest City Ratner spokesman Loren Riegelhaupt admitted the error, but said, “The reality is that it was simply a miscommunication between his office and ours. He evidently lived in Brooklyn briefly at one point, but was not born here. We apologize for any confusion and have corrected the Web page.”

Maybe Gehry's office miscommunicated. Or maybe someone at FCR was reading the wrong clips--maybe an honest mistake, but, if so, a dumb one. After all, It wasn't the first error on the Atlantic Yards web site.

"Dee raises more than Tish" and other reasons for more journalistic voices (plus a new 35th District candidate)

"Society doesn’t need newspapers," wrote Clay Shirky recently in a much-discussed analysis of the fate of the press. "What we need is journalism."

In other words, we don't need another newspaper now owned by the same publisher to tell us that the headline "Dee raises more than Tish" (attached to an article written by the Courier-Life's inimitable Stephen Witt) could easily have been rewritten.

How about: "Challenger Hunley-Adossa holds first fundraiser; incumbent James has yet to hold one" (in the race for the 35th Council District).

And we need more independent media, as Sharon Toomer, former communications director for Borough President Marty Markowitz, reminds us.

Selling Hunley-Adossa short

Curiously enough, the Courier-Life's Witt sells Hunley-Adossa's campaign short, attributing to "sources" some broad-brush generalizations:

James will also get the anti-arena crowd in droves and the churches, sources said.

Well, won't Hunley-Adossa get the "pro-arena crowd"? And which churches has James locked up? Hunley-Adossa makes no secret of her religious faith, so I'm sure she'll get her share of support from churches.

The synagogues and mosques, apparently, are up for grabs.

A new challenger

I got a press release yesterday from Medhanie Estiphanos, the first male candidate in the race.

He's a "a financial consultant for a leading consulting firm" with a background as a teacher and for the Housing Authority of the City of Los Angeles.

The statement doesn't yet offer specifics:
In this unique moment, we have an opportunity to ensure a future of shared prosperity, equal and unfettered access to education and healthcare, to ensure a green and sustainable world, and ensure every citizen regardless of race, creed, religion, or sexual orientation has a fair shot at the American Dream. But we need to commit to the future and recognize the worth and contribution of every American to our collective prosperity. And it starts right here in our community.

Over the coming weeks and months, I'll be introducing specific initiatives that will change not only policy and legislations but the psychology of our communities. We need to re-think the way we see ourselves, our challenges, and the solutions to those challenges.

The web site lists five issues (not AY), without much detail:

• Green New York City
  
• Education
  
• Housing
  
• Public Transit and the MTA
  
• Keeping Art and Artists in Brooklyn
  

Correction: Yes, Atlantic Yards has been submitted for stimulus funds, but not by ESDC

[Update and correction 6:55 pm] I had written this morning, based on a state document, that "apparently, Atlantic Yards is shovel-ready, according to the Empire State Development Corporation (ESDC), which had gone back-and-forth on that issue."

A cryptic entry in the massive, 774-page Second Draft List - Project Proposals (PDF), issued March 25 by the New York State Economic Recovery and Reinvestment Cabinet, mentions AY but, in contrast to most other projects, without a budget or a description. (Click to enlarge)

Not submitted by ESDC

My error. I should've emphasized the caveat (below), which cited "projects submitted by municipalities, organizations and individuals throughout New York State."

Before I left for a day-long conference, I sent a query to the ESDC. When I returned at nearly 6 pm, I saw the response, which said all questions about stimulus funding should be directed to the governor's office.

I contacted Erin Duggan, who's handling press for the stimulus package, who responded, "That is a very draft list of the requests that have come in. That communication in particular was from a citizen, and was not any official request for the project. We have no requests for funding for Atlantic Yards."

I'm assuming that that doesn't rule out an AY funding request in the future, and Duggan said she believed that was so.

Big caveat

The document offers a caveat;
Please note: These are projects submitted by municipalities, organizations and individuals throughout New York State. Projects on this list have been reviewed by staff to the Economic Recovery Cabinet and have been forwarded to the appropriate New York State agency (as identified in this listing) for a determination of potential funding eligibility and next steps. Inclusion in the list in no way implies acceptance, validation or certification of any project. Further, inclusion does not in any way imply that a project either qualifies for or will receive funding under one or more ARRA programs. Similarly, if you are looking for a particular project and do not find it, that does not mean or imply its rejection.

So there's another reason for Forest City Ratner to be spending big bucks on lobbying.

Transparency questions

Should AY get serious consideration, would Governor David Paterson consider the project "fully vetted"? Would the spending be transparent, immediate, and effective?

The Barclays naming rights deal may be well under $400 million after all

Maybe, as British news report with an unnamed source indicates, Barclays Capital would pay much less than the reported $400 million for the Atlantic Yards arena naming rights deal

One of the lingering questions of the AY saga is why Barclays has stuck with the deal so steadfastly. Sure, they believed--not without evidence--that a Brooklyn arena might be a way to splash their name across America.

But they signed up in January 2007 for a Frank Gehry arena, not an "inspired by Frank Gehry arena" or a "Frank Gehry arena produced by architects who happen to work for someone else."

So as New Jersey Nets CEO (Chief Exaggeration Officer, to NLG) Brett Yormark does damage control about Gehry's role, maybe Barclays has already renegotiated the deal downward.

Reports the Independent:
The deal is a 20-year commitment, originally valued between $300m and $400m, but the bank is believed to have renegotiated the cost down since then.

A theory about the leak

The financially savvy British-born Brooklynite who goes by (on the Internet) Gringcorp suggests an explanation:
I'm going to speculate a little about why this little nugget got out there at this moment in time. If you have the time, go read my earlier rant about the relationship between financial journalists and their PR handlers. I'm guessing that the reporter, not unacquainted with matters of reporting hygiene, went to Barclays for comment. Now when a US-focused scumbag (I use the term fondly) asks Barclays PR about their deal, they're bound to say "we remain fully committed to the fragrant Mr. Ratner..." The intention here is to keep the heat off Ratner and his political catamites in New York.

But the Indy doesn't have that many readers in the US... So one assumes that if their man in New York goes to the PR, the PR will guess that the bigger story for the Indy readers is why a venerable UK high street bank is flinging money at a second-rate sports franchise in the middle of a financial nuclear winter. I imagine the bank PR might have said something like "this is strictly not for attribution but we're not on the hook for anywhere near as much. We're not that mental".

Questions pending

He could be wrong, he admits, but the questions should be flowing.

What sum has Barclays committed?

What exactly is Gehry doing on the project?

Less money from Barclays would make it ever more important to shave arena costs down, and/or extract new subsidies.

Behind Hunley-Adossa's campaign, treasurer Nimmons heads another dubious nonprofit, with Ratner funding

In her challenge to Council Member Letitia James in the 35th District race, Delia Hunley-Adossa relies significantly on her campaign treasurer, Charlene Nimmons, who also heads a questionable fledgling nonprofit organization that signed the Atlantic Yards Community Benefits Agreement (CBA).

As with Hunley-Adossa’s Brooklyn Endeavor Experience (BEE), Nimmons’s Public Housing Communities (PHC) likely relies on the largess of developer Forest City Ratner.

(Neither would confirm or deny that most funding comes from FCR, though Hunley-Adossa has acknowledged that FCR supported one program and Nimmons has cited an FCR-supported event sponsored by her organization.)

If so, given the light workload of both nonprofits, the salaries Nimmons and Hunley-Adossa both draw from their nonprofits give them leave to work on the campaign--which suggests that the developer is supporting the challenge to James even without direct contributions.

Nimmons was on the dais last December at the MetroTech tree lighting ceremony, and later posed (at right) for pictures with Bruce Ratner, developer of both MetroTech and Atlantic Yards.

(At left in the photo are City Council Member Darlene Mealy and CBA signatory Joseph Coello. Photo by Jonathan Barkey. Click on images to enlarge.)

Questions about PHC

In fact, as described below, the Internal Revenue Service Form 990 (PDF) required of nonprofit organizations suggests that Nimmons’s PHC makes Hunley-Adossa’s BEE look like Common Cause.

According to its 2007 Form 990, PHC has one board member, apparently Nimmons. It has no fundraising expenses. It has no program expenses. It spends a large majority of its money on salaries. It has no stated functions. Its one officer is described as “Soul Watcher,” which is either Nimmons's nickname or an alias.

It even fails to report, as the graphic indicates, where the organization's books are kept.

Nimmons is both executive director of PHC, one of eight CBA signatories, and also the treasurer of the CBA Executive Committee, a group Hunley-Adossa heads.

(Though I sent questions to Nimmons via the PHC email, called the PHC office, and also alerted Hunley-Adossa, I did not get any answers to my queries, which, among other things, concerned the sources of PHC funds and the absence of a board.)

Role in campaign

Nimmons, along with Hunley-Adossa’s daughter Saadia, was the host of Hunley-Adossa’s campaign kickoff fundraiser March 19. (Nimmons, who lives in the 33rd Council district, has a respected record of volunteer service that predates her involvement in the Atlantic Yards project.)

According to the audio published on The Local, the New York Times’s new blog, Hunley-Adossa, with about 5:17 left, declared, “For those who don’t know Charlene Nimmons, I have to give her a round of applause. She’s the treasurer of the campaign. She’s my business partner, she’s a friend.... And I really appreciate, because this is a scary venture for her, as well. Campaign finance, board of election, and all of this stuff, they have us on pins and needles. We will be challenged.”

“You can tell we’re amateurs, we’re new at this stuff,” Hunley-Adossa said on the audio, as well as the transcript published on The Local. “We picked up this week, some fantastic endorsements... Just this last week Charlene and I were able to pick up 23 endorsements from 23 local labor unions.”

Nimmons background

According to the PHC web site (which could use a little proofreading):
Charlene Nimmons is the Executive Director of Public Housing Communities Inc. She has lived in the community over 18 years and served in many capacties. Beginning with the New York City Board of Education parent teacher association, where she volunteered as a parent Advisory member. She was elected president and then second vice president on the district level. She also worked for five years for the same system as a child and teacher associate. In transition she began volunteering as the resident association president for Wyckoff Gardens Association. Recognizing the need to be pro-active and being a help to her neighbors.This encouraged her to branch out in the field of job development in the local area she reached out to other community leaders and developers to seek opportunities for the population that she is committed to serve.

When Nimmons was honored in March 2007 by the Kings County District Attorney’s Office (where, btw, Hunley-Adossa’s daughter works) as one of Brooklyn’s Extraordinary Women, the biography provided a longer description of her efforts at getting employment for her neighbors:
Ms. Nimmons was determined to address their concern. She contacted local developers and some additional community leaders in an effort to create more job opportunities. Ultimately, her efforts resulted in the formation of Public Housing Communities, Inc. (“PHC”), a consortium comprised of the presidents of various residents associations and others, all of whom are committed to establishing and promoting programs that promise to enhance small business development, job creation and referrals, community enrichment, community involvement and self-sufficiency in Brooklyn’s public housing communities.

(Photo from D.A.'s web site)

(Fun footnote. The person just after Nimmons in the Brooklyn’s Extraordinary Women list is Lumi Rolley, editor of No Land Grab, which is described rather euphemistically as a “sustainable development blog.”)
Boosting Atlantic Yards

At the epic 8/23/06 hearing on the AY Draft Environmental Statement, Nimmons delivered remarks boosting the project:
I'm here in support of Atlantic Yards for several reasons. I'm here today advocating for the jobs that are planned for minorities and women. I'm here to advocate for the environmental protections in place in the project under the environmental assurances section of the CBA. And I'm here because public housing residents, those most often invisible, forgotten and neglected, receive priority in the various aspects of the CBA.

She testified that PHC began as a reaction to expected cuts:
As part of the CBA, resources will be directed to help the area public housing communities. This push began for us at a Council of Tenant Association Presidents meeting in 2003 when a New York City Housing Authority (NYCHA) official briefed us on budget cuts and insisted that we seek out funds to close the gaps that we would be facing. Programs and resources were going to be eliminated and we were counseled that we had to solicit public and private dollars. The cuts hit us hard and we began to look at developments happening in the city and other companies.

...Because of the Community Benefits Agreement we will also be working with FCRC to sponsor annual job fairs serving the public housing complexes. There are job training resources in our community, there are jobs in the community and there are people needing employment. We plan to connect them.

(Screen shot from the PHC web site.)

Looking at PHC

The PHC web site states:
Our Mission is to promote the economic development of the community. To form a united network of local tenant association presidents who will coordinate programs or persons to assist tenants on how to most effectively operate and utilize their resources.

But the 2007 Form 1040 does not list any “Program Service Accomplishments,” a required section, nor describe its “primary exempt purpose.” So it's not clear if any such network of tenant association presidents has been formed.

As with BEE, originally the First Atlantic Terminal Housing Committee, PHC grew out of a resident association at one housing complex. Unlike BEE, whose officers are friends and neighbors of Hunley-Adossa, PHC lists no officers at all, other than “Soul Watcher,” apparently Nimmons. (“Soul Watcher” lives in 272 Wyckoff Street, as does Nimmons.)

In 2007, the organization raised $172,900, and spent $62,796 on management and general expenses, plus $44,009 on program services, leaving $66,095 in the bank.

However, a closer look shows that nearly all of the $106,805 spent went to compensation, including $48,439 to officers (“Soul Watcher”), $30,011 to other employees, and $8756 in employee benefits. Other large chunks of the budget went to supplies ($7300) unspecified “other cost” ($7776).

Where does the money come from? Nimmons wouldn’t answer my query, but, given that there were no fundraising expenses nor--to my knowledge--fundraising events or campaigns, it’s a good bet that the funding came from Forest City Ratner.

As noted below, a December 2007 article in the Courier-Life chain quoted Nimmons as crediting FCR for supporting an economic resource fair.

In the Courier-Life

Nimmons has also given good quote, no matter how nonsensical, to Stephen Witt, the Courier-Life reporter notorious for unskeptical reporting about the Atlantic Yards CBA. It shouldn't be big news that the head of a Ratner-supported group would be supporting Ratner, but the Courier-Life has treated it as such.

As I reported in December 2007, a Courier-Life article, headlined Yards proponents: Leave Bruce alone, began by casting Forest City Ratner and its partners as the underdog:
Local supporters of the Atlantic Yards project charged last week that the community is being choked out of any positive coverage occurring between developer Forest City Ratner Companies (FCRC) and the local community.

It continued:
“It’s just a focus around the negative qualities of the Atlantic Yards project,” said Charlene Nimmons, who signed the CBA on behalf of the New York City Housing Authority Tenants Association.

(Actually, there is no citywide tenants association, and PHC is a very different organization.)

“We hear more about the opposition, but we don’t hear anything about the groups that are working to bring forth positive action in the community,” she added.

Nimmons said a case in point is the FCRC-sponsored Economic Resource Fair that her organization hosted last week at the Atlantic Terminal Community Center, 501 Carlton Avenue.

The event, which got 40 people registered for services, involved Long Island College Hospital, the New York City Housing Authority Resident Employment Services, Opportunities for a Better Tomorrow, Health First and the Municipal Credit Union Program.

Those organizations overlap significantly with the list of partners on the PHC web site.

Last May, a bizarre Witt article headlined Yards foes called ‘real land-grabbers" quoted Nimmons:
"They are the real land grabbers, because they took the property first and turned back what was jobs into condos," chimed in Charlene Nimmons, sitting nearby and a signatory to the Atlantic Yards community benefits agreement (CBA) with developer Forest City Ratner Companies (FCRC).

Well, as I pointed out, the industrial buildings had closed, with no activity until housing developers came along.

In local politics

Nimmons is not only Resident Association president of Wyckoff Gardens, she also serves as Vice-Chair of the Executive Board of the Brooklyn West District of the NYCHA Citywide Council of Presidents.

That’s led her into the heart of local politics, beyond Atlantic Yards. As the New York Times reported 6/25/06, Nimmons was one of the prominent black supporters of David Yassky, the lone white candidate in the four-person race to succeed Rep. Major Owens, whose challenge, the Times observed, “has led to angry accusations of racial carpetbagging.”

The Times reported:
"We've had this seat for many years and nothing's been done with it," said Charlene Nimmons, who is with the Wyckoff Gardens Tenant Association. Referring to Mr. Yassky, Ms. Nimmons, who is black, said, "I know what he's done, and I can see him continuing that."

In an 8/5/06 article, the Times described how Yassky had run into trouble in his efforts to court black voters, given that Thelma Davis, the mother of the late Council Member James E. Davis, and her son Geoffrey Davis had rescinded their endorsement.

The article noted that, while no black elected officials had endorsed Yassky, his web site listed several black civic activists, among them Nimmons and James Caldwell, described as the president of the 77th Precinct Community Council. (He also heads another fledgling CBA signatory, Brooklyn United for Innovative Local Development, or BUILD.)

The Times reported:
“Whenever we needed him, he was there for us,” Ms. Nimmons said. “We have serious issues here, and he always addressed those issues. His work spoke for itself.”
Over the last three years, Ms. Nimmons said, Mr. Yassky has assisted the association in getting $150,000 from the city to refurbish its community room and $7,500 for its offices. She added that Mr. Yassky had helped put into place financing for $300,000 in new security cameras for the Wyckoff Gardens complex.

A 9/9/06 Brooklyn Paper article described how "Yassky had a donut hurled in his direction in a racially charged press conference with Mayor Bloomberg at the very housing project where he launched his campaign in May.”

The event at Wyckoff Gardens aimed “to publicize $600,000 Yassky had earmarked for long-sought security cameras there and in the neighboring Gowanus Houses. Nimmons was among those at the press conference.

A 4/1/08 article in the Daily News, headlined Moms take anti-gang fight to streets, pictured Nimmons along with two others opposing sports stores that sell “sports memorabilia in gang colors and styles.”

Nimmons clearly has a track record beyond Atlantic Yards. But she should be answering some obvious questions about her role as head of PHC.

Paging Lillian Hellman: on WFAN, Nets' Yormark does damage control on Gehry, reaching new depths of suspicious spin

New Jersey Nets CEO Brett Yormark probably isn’t a Lillian Hellman fan, but he really should become familiar with Mary McCarthy’s infamous dis of the author: "Every word she writes is a lie, including 'and' and 'the'."

Yormark isn't yet in Hellman territory, but he's getting closer. And the only reason he gets away with it is that reporters, like Joe Benigno and Evan Roberts of WFAN yesterday, fail to challenge him.

The tally

Yormark, hauled out to do damage control after architect Frank Gehry said he didn’t think Atlantic Yards would happen, yesterday reached new depths of suspicious spin, declaring that Gehry was “just venting,” promising that the Brooklyn arena would open in 2011, asserting new job numbers for the project, pronouncing New Jersey “just terrific for us,” and claiming that Atlantic Yards would bring things that the “country needs right now.”

And he even blamed the Atlantic Yards opposition on “one individual out there,” presumably Develop Don’t Destroy Brooklyn’s Daniel Goldstein, somehow ignoring the thousands of people who have donated money, gone to rallies, and signed petitions.

Brutally weird

Let me respond quickly to those Yormarkisms.

• Gehry has reason for his pessimism; he’s laid off his Atlantic Yards staff.
  
• Yormark’s confident predictions of arena openings in 2010 and 2011 have fallen by the wayside. (Here’s the audio.)
  
• Yormark apparently hasn’t checked the job figures on the AY web site.
  
• If New Jersey were so terrific, the team of course would stay.
  
• While the country needs jobs, the affordable housing Yormark claims Atlantic Yards would bring would not come “now,” nor, perhaps, for a very long while.
  
• Of course Gehry must be touted; he's key to the naming rights deal.

No wonder NLG calls the CEO the Chief Exaggeration Officer.

No Plan B

Yormark also stated firmly that “there is no Plan B” should Brooklyn fall by the wayside. He sounded convincing, but, then again, he also said there would be no preseason games in Newark, and reversed that.

DDDB said the developer should come clean about Gehry's role. That hasn't exactly happened.

Yormark: Gehry’s fine with it

Q: Frank Gehry said he doesn’t think this Brooklyn project is going to happen. The Nets are denying it.... First of all, obviously you guys disagree... Frank Gehry is wrong here, You still believe this project will indeed go forward?

BY: Absolutely. Frank Gehry is still the architect of this project. And he loves it. It’s very dear to his heart, no different than it is to all of us – Bruce Ratner, our investors and myself. I think his statements were misconstrued. He did put out a statement last night saying that. And we’re excited to ultimately break ground this summer, get past this last piece of litigation that we should hear something about in the next four weeks and get this much-needed project under way.
(Emphasis as delivered)

It may be much-needed more by investors than anyone else. And they need Gehry for the sizzle that attracts sponsors and partners. Without Gehry’s design and supervision, it’s not a Gehry arena, right? So why should Barclays continue with its naming rights agreement? That must be a big headache for Yormark.

"Frank Gehry is a friend, a great architect and someone I have huge respect for," Ratner Tuesday night in a prepared statement. "It is understandable how he and others have concerns about this project happening in the worst economic environment since the Great Depression.”

Of course Gehry’s concerned. He laid off his AY staff. He may not love it as much.

Gehry just venting

Q. So what did he mean then? Cause it seems like he’s losing confidence... What was he trying to say and how did it come out wrong?

BY: Guys, it’s close to his heart. I think it’s fair to say that there are a lot of people out there who are concerned. The project has been delayed but obviously things take time in New York City as we all know, especially from a development perspective. Y’now, Frank was just venting, probably. He’s a terrific guy. I’ve gotten to know him quite well. But he’s as passionate about this project today as he was years ago when it got started. We will get it done. It’s very much alive. Like I said, we have one last piece of litigation to face, which we should hear about - which is an eminent domain case, in in the next four weeks. And shortly thereafter, assuming we have a positive ruling, which I think we will, we’ll break ground this summer.

Gehry may be passionate about the project, but he just doesn't have anybody working on it.

Q: What happens if you don’t get positive ruling on this eminent domain thing?

BY: Y’know, that’s not even something I consider. We’re 22-0 in all litigation that’s been brought into this project so we’re not even considering that as an option. We feel very confident that we’ll get past it and then move forward, and we’re planning accordingly.

The state likely will win the eminent domain case, but can FCR in fact break ground? First, attempts would be made to appeal both the eminent domain case and (as is coming) the case challenging the environmental review. 

Those appeals are not automatic, but it will take some weeks for the state Court of Appeals to consider whether to take them. George Locker, who represents tenants in the footprint, also has an appeal planned, by July. Could groundbreaking and/or arena financing occur while any case is pending?

Also, keep in mind that the Empire State Development Corporation will not pursue condemnation until Forest City Ratner pays the $100 million it has pledged to the Metropolitan Transportation Authority, money the developer has not been willing to hand over. The ESDC also requires the construction of an upgraded railyard, an expense to which FCR has not yet been willing to commit.

But it's not an option because only a new arena would raise the value of the team and prep it for sale.

AY, mom, and apple pie

Q: It seemed like a few years ago, this was supposed to get done in 2009, 2010, it continues to get pushed back.... So tell us, for the Net fan who’s waiting for this to happen, or the Brooklynite who’s hoping for this to happen, why this continues to be pushed back?

BY: Obviously the litigation hasn’t helped. It’s playing itself out in the courts, and as I said earlier, we’re 22-0 and hopefully 23-0 in the next month or so. Unfortunately, there’s one individual out there who is putting his own personal interests before the project. This project brings a lot of affordable housing, job creation – all the right things that Brooklyn desperately needs now, that the country needs right now. So it’s unfortunate that it’s been delayed but it will play out, hopefully very successfully in the next month. And those Brooklynites, who I see every day because I’m in the borough quite often, that truly want this project. We’ll break ground and ultimately, obviously it’s been long awaited but we’re going to deliver a heck of an experience at the Barclays Center, and at the end of the day it will be very worthwhile for them and obviously, they’ve endured, but it’s something that they’re going to really appreciate when we get there.

Brooklyn isn’t going to get any affordable housing from the arena. And they're not 22-0, and shouldn't be allowed to make that claim without proof.

Shouldn't the "personal interests" of Bruce Ratner and his investors be factored in?

Arena, 2011?

Q: Let’s assume you do start breaking ground this summer, when would the Nets start playing in this new arena?

BY: If we break ground this summer I think it’s fair to say we’ll be there for the ‘11-’12 season. That’s the plan. We’ve got two more years in Jersey after this one. We break ground this summer and then we’re there for the ‘11-’12 season. 

His previous estimates have been off. I’ve called 2012 a more likely best-case scenario. It would be impossible to build the previous arena design in two years. Could a value-engineered arena be built by 2011? I still doubt it.

In the footprint

Q: For those who don’t want it to happen... what happens to these, I guess, businesses or people that are there?

BY: We’ve been working with those people since Day 1. We’ve offered them opportunities to be relocated and the same will hold true once this process unfolds. And obviously we want to make sure that they’re relocated in the appropriate fashion and that will certainly be a priority of ours, and the state and the city.

Since Day 1? Nope. But there have been gag orders. And, I'm told, no offers have been made for at least a year.

Q: Who is there right now?

BY: There’s some homes. There’s residents still near the site. And obviously as this eminent domain plays out, a decision will be made and then ultimately they’ll have to move and they’ll be provided with opportunities and they’ll take advantage of them, I’m sure.
(Emphasis added)

The residents are in the project footprint, not near it, and some are on the arena site.

Exaggerated benefits

Q: I feel bad about that, are they getting a fair deal?

BY: Absolutely. They’ll get a fair deal. They’ll get market rate value for their properties and, y’know, all will be well. Ultimately this is not just about a few residents. This is about 17,000 construction jobs, which will certainly be afforded to people out there that are unemployed. It’s going to be about 8500 permanent jobs. So obviously there will be some residents that will be moved, but I think for the better good of the borough, and for job creation, affordable housing, it’s for all the right reasons.

17,000 construction jobs and 8500 permanent jobs? He should check the AY web site, which claimes 15,000 construction jobs--actually 1500 a year over 10 years--and 1500 to 6400 permanent jobs. The latter figure depends mostly on office space and, guess what, there ain’t no market for office space in Brooklyn right now.

Fair deal? Forest City Ratner gets to build at the density it desires; were that density available to current property owners, their property would be worth much, much more.

Strong support in NJ?

Q: Now, are you concerned at all... maybe not so much next year, but certainly the year after that, that you’ll be basically playing to an empty building in New Jersey?

BY: I don’t think so, because what’s happening now and what has happened up until this point, is a lot of people in Brooklyn are buying season tickets and coming across the river to sample us now, because they now that if they buy seats now, they have the opportunity to be the first that will be able to be relocated in the new building. So we have a lot of season tickets from the five boroughs – obviously Manhattan, Brooklyn, Queens – and I think we’ll get even more so as we get closer to that opening date. And then in the last year we’re here in New Jersey, we’ll use it as a way to celebrate New Jersey and thank them for many, many years of support, because our fans have been terrific in New Jersey.

That’s why there have been many empty seats even as the team gives tickets away. Some on NetsDaily were scathing.

If you think about over the course of the last couple of years, attendance has risen, our sponsorship dollars are at the highest level they’ve ever been. So the companies in New Jersey, the fans in New Jersey, have been terrific to us, and we’re going to want to celebrate them. And then obviously we’ll encourage them to visit us in Brooklyn and to follow us to Brooklyn. If they do, terrific, and if not, hopefully they’ll find their way on an occasion to see a sporting event, or a concert or a family show at the Barclays Center.

It sounds like there would be no reason to leave.

Q: How about the finances here... assuming you win this lawsuits... how is this thing going to be paid for?

BY: We think that we’re going to get the financing... Obviously the Mets and Yankees earlier in the year, in January, went out and got some financing, on the Yankees’ front, it was oversubscribed to. So I think there’s a marketplace for us. We’ve done some things, as it’s been reported, value engineering the building. We’re looking to bring costs down without compromising the experience to the fans, which obviously is paramount to us. We obviously want to build a best-in-class venue that fans will be proud of. But at the same time we need to be responsible in our planning and we’ve got to bring it in at a number that makes sense and where we can get financing and I think we will. In talking to Goldman [Sachs] and Barclays, they’re confident that the marketplace will be there for us, as I am. And I think the last hurdle is getting through this litigation and once we do that we’re well on our way.

No Plan B

Q: Let’s just assume that the litigation doesn’t go your way... let’s assume Brooklyn doesn’t happen, Brett, what’s Plan B?

BY: Well, as far as I’m concerned, guys, and I speak obviously for the organization, but more on this note for myself – I came here for Brooklyn. I came here to see Brooklyn through. We will get to Brooklyn. There is no Plan B. We’re going to Brooklyn, and I want our fans throughout the tri-state area to understand that; they need to be confident in it. Obviously it’s taken a little longer than expected, but good things take time. And we will get to Brooklyn and they’re going to be proud of the Barclays Center when they’re there in the '11-'12 season.

Exhibition games

Q: So what was thinking behind... two exhibition games in Newark and then one at Carnesecca (St. John’s University)?

BY: Great question. The thinking around the two games at the Prudential Center is very simple. We do a lot of surveys with our season ticket holders. Obviously, given the economy, people are looking to reduce their overall spend against sports. And what we decided to do was take the preseason games off the full-season ticket commitment, which effectively reduces the season ticket holder’s cash outlay by seven percent. And because we were able to strike a great deal with the folks at the Prudential Center, it made a lot of sense for us to take our games there. With respect to St. John’s, obviously we plan on breaking ground this summer. So when we play at St. John’s, that’s going to be our coming out party. The original campus for St. John’s was in Brooklyn. Lou Carnesecca Hall, [actually: Arena] obviously was a coach of the Nets. So there is a lot of connectivity with the Nets and Brooklyn and St. John’s. So that makes all the sense in the world to be there in October shortly after our ground-breaking.

Nassau Coliseum and other locations?

Q: I got this theory now... If you guys are going to go to Brooklyn, which I hope... is it a consideration, in the meantime, play your games at the Nassau Coliseum?

BY: I don’t think we would move in a permanent fashion to Nassau Coliseum. But we’re open to exploring different opportunities and different locations for preseason games, and for that matter, some regular season games. And to your point, Long Island will be a feeder market for us. The Atlantic Terminal and that station that the Barclays Center will sit atop of, you’ve got 10 subway lines and the LIRR converging at the foot of our building. So, to your point, Long Island will be a major market for us, so to get our brand there and to expose our team a little more to that marketplace does make some sense.

I bet there will be regular-season games in Newark first.

Gersh speaks! Award-winning Brooklyn Paper editor answers (sort of) questions about new Post parent, Courier-Life sibling

[Updated 9:26 a.m. with additional comment from Kuntzman re item #8]

The Brooklyn Paper hasn't said all that much about its purchase by the New York Post's Community Newspaper Group (CNG) beyond a short March 12 article headlined Good buy! The Brooklyn Paper joins News Corp..

But in comments to AYR blog posts, the prolific, award-winning, self-exposing, self-referential Brooklyn Paper editor, multi-media star, and speedy author Gersh Kuntzman twice chided me for not contacting him with my questions.

The takeaway

Kuntzman agreed to an email interview. To summarize the news:
• Kuntzman doesn't think anything's changed with the paper's historically critical Atlantic Yards coverage (I disagree)
• he acknowledges that his newspaper can no longer critique its former rival
• he doesn't know if the two chains will be consolidated (I predict some level of that)
• he doesn't notice advertising in the paper (I think he should)

Kuntzman--whom I'm tempted to call Gersh, given that the Get your Gersh on headline is imprinted in my mind--indicated he may respond to my responses, as well, so stay tuned for another round.

(Brooklyn Paper photo of Kuntzman--by Kuntzman!--in Brooklyn, IA, during primary season last January.)

Crediting Kuntzman

Kuntzman made the Brooklyn Paper snappy and fun, full of cleverness, while (to some critics, including me) skimping somewhat on substance. (Then again, the Suburban Newspapers of America, who made the Brooklyn Paper a 2007 "Newspaper of the Year," have especially praised the Atlantic Yards coverage.) He deserves credit for being accessible and responsive, more or less, and for helming a web site where it's easy to comment and where editors (mostly him) respond.

By contrast, the Courier-Life chain has a far more opaque web site--articles get posted after publication, often with a lag, while Brooklyn Paper articles get posted mostly before publication. And who's the editor of the Courier-Life? The web site won't tell us, but the print edition lists Kenneth Brown.

Still, the independence Kuntzman once touted is no longer. Compromised? At least a little. But we should keep watch.

(He and I have a friendly enough professional relationship; it's been periodically contentious, but, on the whole, I've received a good amount of praise and credit in the Brooklyn Paper.)

My note to Kuntzman

I wrote him the following questions, reproduced verbatim (except for minor changes for clarity) and interpolate his verbatim responses, then add my comments. I've reordered the questions slightly by theme.

I wrote: I did, in a comment posted previously, invite your response.

Now I'm writing directly and am willing to post your answers in full (and, likely, comment on them.)

I think it's reasonable for me to speculate about constraints facing a newspaper under new ownership and new sibling-ship. Some of the questions I'm posing could be dismissed by you as "we'll cross that bridge when we get to it," above your pay grade, or none of my business, but, since you've invited questions, here goes:

The Brooklyn Paper and the Courier-Life

1) A 9/25/08 Brooklyn Paper editorial on BP Markowitz:
For example, Markowitz needs to explain:
• The inner workings of the deal he has with the Courier-Life newspaper chain to publish his “Brooklyn!!” promotional publication. A Brooklyn Paper review discovered that publicity and printing are a huge part of Borough Hall’s discretionary budget — costs that could be a payback to the Courier-Life chain for its consistently positive coverage of Markowitz.

Do you expect to make that point again editorially?

GK: We will always look at Borough President Markowitz's expenditures and report on them. I can't speak to anything involving "Brooklyn!!" because I simply don't know if that business relationship will continue. And I certainly don't know what the "relationship" consists of beyond the line item in the borough president's budget.

AYR: There are two parts to that answer. First, Kuntzman says "we'll cross that bridge when we come to it." I'll note that the Spring 2009 issue of "Brooklyn!!" remains a Courier-Life publication, so it's reasonable to assume that the relationship will continue. Also, while he may not know more about the relationship, he seems to be backing off from the previous request that Markowitz explain the relationship.

2) As I've written, "I highly doubt that the Brooklyn Paper will report on political contributions by the Courier-Life publisher."

Do you expect to do so? I've already posted the follow-up research.

GK: I believe that coverage of CNG is best left to outsiders. Indeed, you yourself have pointed out inconsistencies when the New York Times, for example, covers business dealings of ... the New York Times. I'll answer reporters' questions when I am able, but I didn't get into the news business to cover the company I work for. If I do so, readers would be the first to scream that the story is inherently biased, no? Perhaps you can start "CNGReport.blogspot.com" to do so.

AYR: As Kuntzman states, it's always difficult for newspapers to report on themselves. That doesn't mean they should ignore themselves--indeed, the New York Times does cover itself--but it generally means they won't do the most aggressive reporting. (On the Times, some of the best reporting came from Paul Moses in the Village Voice.) One solution may be to hire freelancers, as the Seattle Times once did, but, I'll admit, that's an unusual effort--and budgets are far less robust now.

While Kuntzman is being somewhat flip in his challenge to me, his answer confirms that, in a "city" of 2.4 million people, the two major newspaper chains--a source of significant media power--no longer can serve as watchdogs on each other. Kuntzman said he "didn't get into the news business to cover the company I work for," and that's understandable, but when that company is a significant source of power, shouldn't there be a watchdog? Isn't that an argument for a multiplicity of voices?

[Update and correction: Dan Holt is no longer listed as the Courier-Life publisher; that job goes to Clifford Luster, part of the family of longtime owners, who's listed in the print issue but not the web site. (No one pointed this out to me.) I'm not sure when Holt left, but he and Luster were co-publishers when the chain was sold in September 2006. According to city campaign finance records, Luster gave $250 each to the 2005 campaigns of Brooklyn Borough President Marty Markowitz and Bronx Borough President Adolfo Carrion. State records come up blank for him. So Holt has given much more. The Courier-Life, as an entity, gave several political contributions through 2006, including to the Kings County Democratic Party Committee and the Democratic Assembly Campaign Committee, but not since the newspaper was sold. ]

3) Given that the Brooklyn Paper has occasionally taken other shots at the Courier-Life--e.g., Ariella Cohen writing about Steve Witt hugging Bruce Ratner--do you feel constrained from doing such reporting when the competition, so to speak, is now a sibling publication?

GK: Asked and answered.

AYR: So if the AY-loving Witt hugs Ratner again, someone else will have to report it. And editorialize about it.

Consolidating the newspapers

4) Will any of the newspapers in the two chains be consolidated? If that's too soon to tell, do you think they should be? Will one newspaper and not the other end up covering Atlantic Yards?

GK: I do not know.

AYR: Note that he didn't give his opinion, which was prudent--and surely the decision is being made by those higher up, who, as noted below, wouldn't comment on the issue. I bet that the two chains will be consolidated, at least in part, as they start agreeing not to tread on each other's territory. However, their layouts, printing plants, and web sites are all disparate, so true consolidation might take a while.

Even if the Brooklyn Paper has been covering Atlantic Yards less aggressively, it won't fall into the "brutally weird" reporting of the Courier-Life's Witt, would it?

5) Are the Brooklyn Paper chain and the Courier-Life chain completely separate right now? If not, what functions are they sharing? Do the publishers and editors of each report to a CNG editor/publisher or does the BP (or C-L) editor/publisher report to the other, or vice versa?

GK: Why don't I give you the password to our alarm system, too.

AYR: Kuntzman is being a little flip. While he's obviously not required to disclose the inner workings of a business, an answer like, "The Brooklyn Paper editor reports to the Courier-Life editor", or vice versa, certainly would hint at an answer to question #4.

Brooklyn Tomorrow advertorial

6) As posed publicly: Will the Brooklyn Paper be distributing [Courier-Life produced advertorial] Brooklyn Tomorrow?

GK: I don't know. That is a business question, which is best directed at Les Goodstein at News Corp.

AYR: I posed questions to Goodstein, via spokeswoman Suzy Halpin at Rubenstein Communications. She responded, "I am pleased to confirm the acquisition, but have no additional comment." I bet it's inevitable. And Brooklyn Tomorrow is a signal example of major newspaper publishers' willingness to curry favor with advertisers and big corporations.

7) Additionally: Will the Brooklyn Paper be involved in producing Brooklyn Tomorrow?

GK: Again, I don't know. But I will say this: If I am asked to work on Brooklyn Tomorrow, I will, of course, do so in my inimitable fashion.

AYR: Which means that Kuntzman, most likely, wouldn't have to write the Atlantic Yards puff piece. He might not even have to write the (fill-in-the-blank) development puff piece. He might write the funny essay about real estate. But it still won't be a comfortable position.

Atlantic Yards coverage

8) My observation is that coverage of Atlantic Yards has tailed off somewhat. (No coverage of Delia Hunley-Adossa yet, nor Forest City Ratner's lobbying, both significant stories that I broke.) Do you agree with my observation? If you do, any explanation?

GK: Whether I agree with your observation or not, you have been stating it as fact around town, which disturbs me. That said, our coverage of Atlantic Yards has not "tailed off." You have provided no examples of that, save the Delia Hunley-Adossa race, which is not fully an Atlantic Yards story. It is a story about an election that is months away. Besides, Delia has not raised a DIME yet, which is typically our standard for determining whether a candidate merits coverage. Our lack of coverage of Hunley's longshot campaign should not be interpreted to mean anything — though you, no doubt, will continue to interpret to mean everything.

AYR: C'mon. Hunley-Adossa, as the Times reported Friday, has raised some $4000 and gained the support of construction unions, the same people who showed up to the "Brooklyn Day" rally she MC'd last June, which the Brooklyn Paper denounced editorially as "Ratner's false choice."

Beyond that, the questions I raised about her dubious nonprofit organization, Brooklyn Endeavor Experience, are worth pursuing whether or not she's a candidate. So I still contend that coverage has tailed off, though I acknowledge that some might be blamed on the paper's downsizing from three news reporters (plus Kuntzman) to two.

The Brooklyn Paper has long been a mix of fun, fluff, and substance, and deciding what to cover is of course a judgment call. And a mix of stories is needed to sell ads and stay in business.

However, in the past week, Kuntzman spent some of his prodigious journalistic energies on video reports on his last bites in DUMBO and covering the Greenpoint Mac Off. This is a newspaper that put Develop Don't Destroy Brooklyn spokesman Daniel Goldstein's baby (in a questionably large photo) and Forest City Ratner's Gehry born-in-Brooklyn lie on the front page. A newspaper devoted to informing Brooklynites would look more closely at Hunley-Adossa's campaign.

Part of it may be resistance to crediting someone else with the story, though the Brooklyn Paper has certainly credited AYR in the past. Just look at how the Brooklyn Paper crowed about its scoop regarding the increased cost of admission to the Brooklyn Museum.

Then again, I fully expect the Brooklyn Paper to cover architect Frank Gehry's "I don’t think it’s going to happen" bombshell.

GK responds: I don't think it was fair to write that I've been doing nothing but chronicling my eating. So far this week, I have filed these stories, some of which were long and detailed:

1. A long Dock Street story
2. Museum admission fee
3. My weekly police blotter
4. Ongoing George Weber coverage
5. Organizing our ping pong classic (which you should have mentioned!):
6. The Guskind memorial

And worked with reporters very closely to ensure accuracy — and DEPTH!!!! — to these stories:
1. Eighth Avenue two-way
2. Squadron tax plan
3. Breaking news that no one else had on Ringling Brosl

In other words, the 30 seconds I spend making a funny video does not indicate some sort of departure from my traditional role here. I am a multi-media legend, and I will remain one.

AYR responds: I wrote "some of his prodigious journalistic energies." I don't doubt Kuntzman works hard.

9) Do you expect coverage of and editorials regarding Atlantic Yards will change?

GK: No.

AYR: I probably could have worded that differently, since the Brooklyn Paper's coverage has been a moving target. The Brooklyn Paper, in recent weeks, has been covering Atlantic Yards somewhat less and, as noted, I don't know how much weight to put on the simple loss of staff. Even the story on City Council member Letitia James's criticism of the AIG-to-Barclays bailout was buried on page 14, though, as noted above, stories of (I'd argue) far less import made the front page. Such comparisons are imperfect, because some weeks have more news than others, but I do detect a shift.

(Brooklyn Paper mark-up from Michael D.D. White's Noticing New York.)

If the Brooklyn Paper won't change from its editorial stance calling a federal bailout of the arena, that indicates a change--in emphasis if not policy--from an editorial last June calling the "Brooklyn Day" rally "democracy as they practice it in North Korea, where lackeys are paid to show up and sing paeans to the Great Leader on command."

You'd think the voice behind that editorial might have something to say about the Hunley-Adossa candidacy.

Conflicts of interest and disclosure

10) Have you received any specific guidance from CNG regarding topics of coverage or an editorial position? To be specific, does CNG want the Brooklyn Paper to move its editorial stance on Atlantic Yards closer to that of the NY Post?

GK: No one has said anything to me about the New York Post, so your question is presumptuous.

AYR: Maybe somewhat presumptuous, but worth asking, especially since others have raised the question to me. Still, I'll acknowledge that the Post has kept a reasonably long leash. While it has distributed the Courier-Life produced advertorial Brooklyn Tomorrow, it has published harsh criticisms of the borough presidents like Markowitz, even while its subsidiary does business with Markowitz.

11) What kind of discomfort, if any, do you have, about the FCR ad in last week's paper? About moving into MetroTech and becoming tenants of Forest City Ratner? To what extent, and when, do you think the Brooklyn Paper should disclose in its coverage that it is a tenant of FCR? (I recognize that it is a different situation than being business partners in the Times Tower.)

GK: I don't see our ads before publication and I do not look at them after publication. Do you have a single example of The Brooklyn Paper skewing news coverage because of an advertisement in our paper? (Now I am pausing for dramatic effect). No, I didn't think you did.

You need to ask Les Goodstein about the nature of the business arrangement with FCR (as will I). But if we are merely a renter — as we have been with Two Trees Management here in DUMBO — I believe that the current level of disclosure is sufficient.

AYR: I admit that was a bit of a fat pitch. I wouldn't expect Kuntzman to have discomfort--you're supposed to shrug those things off professionally--and editors are not supposed to see ads before publication (though I don't doubt it happens with more and more newspapers and magazines).

I didn't accuse the Brooklyn Paper of skewing news coverage because of advertisements, and I agree that I don't have evidence of any such pattern.

However, Forest City Ratner's advertising and publicity campaigns are news-- remember front-page news in May 2006 (right) referring to Ratner's "latest propaganda"?--so the effort by the borough's leading developer to co-opt the Brooklyn Bridge in its advertisements should be worth comment.

While this is somewhat tangential, I do think that, like many other publications, the Brooklyn Paper tries to create an advertiser-friendly environment for its softer news. Its coverage of restaurants, though there are fewer reviews now, is generally positive--how many stories about health violations do we read? (Well, there was Kuntzman's slam at Peter Luger.) I don't think this is as important as coverage of government and politics, but I think it's part of running the business.

Regarding the disclosure issue, others have asked me about that and I'm not sure of the guidelines. Just because the newspaper is Ratner's tenant (in "spiffy new offices," as described today) doesn't mean that business relationship--certainly more indirect than that of the New York Times Company--should be mentioned in every story about Forest City Ratner. However, it might be worth mentioning in certain articles about the Downtown Brooklyn office market.

Ratner says AY will proceed, claims Gehry's in the lead; architect backs off comment

An update to Frank Gehry's "I don’t think it’s going to happen" quote about Atlantic Yards was inevitable, and so was the backpedaling.

According to the Star-Ledger:
"Frank Gehry is a friend, a great architect and someone I have huge respect for," Ratner said in a prepared statement Tuesday night. "It is understandable how he and others have concerns about this project happening in the worst economic environment since the Great Depression.

"But that said, we've prevailed in 22 judicial decisions and are ready to proceed even at a time when other projects and industries have faltered. Atlantic Yards will get built and there has never been a time when this project is more important to the people of the state and city of New York and the borough of Brooklyn."

Gehry backs off

The New York Post, which, amusingly enough published a rendering it credited to Gehry that, rather, was produced by the Municipal Art Society for its "Atlantic Lots" project, found the architect revising his comment:
Gehry later backtracked through a publicist, saying his comments to the trade publication were "misconstrued as a prediction" about the project and that he remains "hopeful it will come to fruition."

...A Ratner spokesman yesterday said Gehry was still the project's "lead architect," but opponents of the controversial development said they doubt the architect is still involved because of his remarks about the project.

"If they're saying he is the lead architect, he seems to be leading them nowhere," said Daniel Goldstein, a spokesman for the group Develop Don't Destroy Brooklyn.

Gehry on Atlantic Yards: "I don’t think it’s going to happen" (ask him May 11 in NYC)

Atlantic Yards architect Frank Gehry has finally expressed serious public doubts about Atlantic Yards, which leads to the following questions:

• how much does he know?
  
• what led to his candor?
• can the Barclays Center be built without him?
  

The interview

His comments came in a wide-ranging interview in The Architect's Newspaper, headlined Q&A: Gehry at 80: A sense of movement and a few regrets.

AN: Which other unrealized commissions do you most wish had been built?

FG: The Corcoran Gallery in DC, the Atlantic Yards project in Brooklyn—I don’t think it’s going to happen. There are projects underway that are being threatened, and may not be completed. That would be devastating to me. Grand Avenue in downtown Los Angeles is also on hold.

I wonder if "threatened" is a reference to the Beekman Tower project in Lower Manhattan, which may be built to only half the size projected.

AN: You’ve cut back on staff size—what was the peak?

FG: About 250, about a year and a half ago. We were doing Brooklyn and Grand Avenue, they were big staffs, 40 to 50 people each. Now we’re at about 120 to 125.

Is AY really dead?

While the New York Daily News said Gehry declared the project "dead," he didn't speak with complete certainty, so we should expect a statement soon from developer Forest City Ratner.

After all, Mayor Mike Bloomberg said yesterday that he thought the project could get built without the Gehry design.

If so, the Barclays Center naming rights deal, already under fire because of the AIG connection, might be reconsidered by the bank, since it was signing on to a Gehry arena, not a generic one. That raises major question marks about the developer's capacity to build an arena.

Gehry vs. Ratner

The Daily News probably was correct, however, in observing that "The comment suggests the troubled relationship between Gehry and developer Bruce Ratner is over."

On February 6, I suggested that Gehry wasn't talking about AY because he didn't want to jeopardize his relationship with Ratner, the developer of the Beekman Tower.

Now that the Beekman Tower may be compromised, Gehry may feel more free to talk.

Gehry in New York May 11

On May 11, Gehry will appear at the New York Public Library for $25, in an event titled FRANK GEHRY & ALEX ROSS in conversation with Barbara Isenberg. Ross is the New Yorker's music critic--another panel that night involves Los Angeles Philharmonic conductor Esa-Pekka Salonen--and the conversation seems centered on Gehry's Disney Hall in Los Angeles.

Isenberg is the author of Conversations with Frank Gehry, which reflects her interviews with the architect over the past 20 years; it will be published April 21.

When Gehry appeared in New York in January 2006, he said, with dismay, ""I didn’t expect this to be a thing about Brooklyn--I guess I should’ve known better." Despite the focus on Los Angeles, this time, he should know better.

Bloomberg says "it would be sad if Atlantic Yards gets built without the Gehry design" but seems resigned to it

The story in the New York Observer yesterday concerned Mayor Mike Bloomberg's comments about Larry Silverstein, developer at the World Trade Center site, but Bloomberg also offered some offhand and ill-informed support for Atlantic Yards, as well as resignation that it might be built on the cheap, without a Frank Gehry design. (Video from Azi Paybarah at PolitickerNY)



"It's also true that it's a good example to us when you--in this case, it wasn't like Atlantic Yards-- but when you litigate again and again, what happens is that the economy changes and the assumptions that were made in the past which are typically made at the top of the market, because that's when people want to build things, have to get changed, downscaled, and it would be sad if Atlantic Yards gets built without the Gehry design, which would've been phenomenal for this city, although I gather at this point it looks like that the only ways Ratner's going to get that done is to do it at a lower cost and not to do everything at the same time."

The myopic mayor

What's Bloomberg leaving out? Oh, that maybe government shouldn't endorse the assumptions that are made at the top of the market, but maybe should proceed with more caution.

Bloomberg doesn't sound like he's informed beyond reading the newspaper, but he should know that his own administration, via the City Funding Agreement, allowed the developer to build far less than promised and at a slower pace--all before the economic downturn.

Is Gehry still on the job?

Yesterday, Forest City Enterprises announced it will release its fourth-quarter and full-year 2008 financial results on Monday, March 30, and will hold a conference call with investors on Tuesday, March 31.

Perhaps one of the investment analysts will ask whether Gehry's design for Atlantic Yards is in play.

On Barclays/AIG, NJ Congressman vaults story into media; Yormark spins regional benefits, affordable housing

When Develop Don't Destroy Brooklyn last week argued that, thanks to the AIG bailout funds distributed to banks, "the American taxpayer is, in essence, picking up the tab" for the Barclays Center naming rights deal, it drew coverage in the Bergen Record and in a column by Daily News's Juan Gonzalez.

When City Council Member Letitia James issued a statement, it made the I-team blog from the Daily News Sports section and got a story buried (right) on page 14 in the Brooklyn Paper.

But when Rep. Bill Pascrell, a Paterson-based Democratic who represents a district near the Meadowlands, yesterday issued a press release and letter calling for Treasury Secretary Tim Geithner to void the deal, it drew coverage far and wide, including the New York Times (online, at least), the Record, Crain's New York Business, and the New York Observer, which provided this summary:
Mr. Pascrell, a Democrat who represents an area full of New Jersey Nets fans just west of the Izod, wrote to Mr. Geithner that he should block the naming rights deal, which has not yet closed, because Barclays received monies from embattled insurance company AIG, which itself received tens of billions in federal bailout dollars. In taking up this cause, he picks up an indirect connection to the bailout that was pushed by project opponents but failed to attract much attention among New York elected officials.

Contrast with CitiField

Indeed, it's an indirect connection, as with CitiGroup, and, though I've said that money's fungible, I acknowledge that it's not as if money was appropriated for this. And the Treasury Department, according to the Times, will take no action on the CitiGroup deal and--unless outrage grows even more--likely on the Barclays one as well..

But Pascrell, in his letter, did point out a disctinction:
I understand that the Treasury Department allowed CitiGroup, which had a similar naming rights agreement with the New York Mets in place, to move forward even after receiving federal bailout money. However, unlike that deal, construction on the Atlantic Yards arena has not yet broken ground. Furthermore, press reports indicate that the agreement between Barclays and the Atlantic Yards arena includes an opt-out clause and no money has exchanged hands.

Yormark: regional benefits + affordable housing

But rather than argue that the claim was bogus, New Jersey Nets CEO Brett Yormark issued this statement:
"Barclays has made a long-term commitment to Brooklyn and the Atlantic Yards development and in a very difficult economic environment has renewed that commitment," said Brett Yormark, CEO of the Nets. "Congressman Pascrell has long expressed his support for working families and one would hope that applies to the men and women of Brooklyn who will benefit from the much needed boost to the borough's economy, the thousands of new jobs and the affordable housing that will be part of the Atlantic Yards project. I can understand the Congressman's interest in keeping the Nets in New Jersey but I do not think he understands fully what this project means in terms of jobs and housing and the benefits for the entire region."

Benefits for the entire region?

A new arena would compete with the already-built Prudential Center for a finite number of events. The city's rationale for subsidies is that the arena would poach tax revenues from New Jersey. It's surprising that more New Jersey officials haven't glommed on to Pascrell's media gravy train.

Affordable housing?

The Barclays deal has nothing to do with affordable housing. Subsidized housing would rely on sufficient tax-exempt bonds issued by the New York City Housing Development Corporation. It just so happens that, in the take-it-or-leave-it AY plan that local officials endorsed--as opposed to dividing up the site into multiple parcels--the arena has to be built first.

But if the arena dies, and AY dies, guess what? The City Purpose Convenant, part of the State Funding Agreement, would require 35 percent affordable housing, albeit in a project less than one-third the size.

However, given that, as parent Forest City Enterprises has asserted that "we control the pace," an alternative plan might bring subsidized housing to parts of the AY site a lot faster than the current developer.

Putting a stake in the heart of Dodgers nostalgia, new book on O’Malley points out that Brooklyn had rebounded by the 1960s

For Atlantic Yards watchers, probably the most significant thing about Michael D’Antonio's revisionist biography of Brooklyn Dodgers owner Walter O’Malley, Forever Blue: The True Story of Walter O'Malley, Baseball's Most Controversial Owner,and the Dodgers of Brooklyn and Los Angeles, is his effort to put Dodgers nostalgia in perspective, blaming it on Roger Kahn’s book The Boys of Summer, and his explanation of why the Brooklyn Dodgers were America’s team in a way that no team today--let alone the Brooklyn Nets--could be.

Remember, as Atlantic Yards boosters would have it, the Brooklyn Nets would salve a deep wound. When Atlantic Yards was announced in December 2006, the New York Times reported 12/11/03:
But the Brooklyn Borough president, Marty Markowitz, said the project would fill the hole left when the Brooklyn Dodgers moved to Los Angeles after the 1957 season, a moment that he said still reduces him to tears.

(Actual quote: “crying like a baby.")

Eighteen months later, the Times had reified Markowitz’s sentiments into a gross generalization, reporting, in a 6/9/05 article headlined Unlike Stadium on West Side, an Arena in Brooklyn Is Still a Go:
Brooklyn, still smarting from the loss of the Dodgers nearly 50 years ago, is generally more welcoming to projects that could help put it on the national map.

Nah.

Recovery after six years

Remember, the Dodgers left in 1957. Consider this excerpt from Forever Blue published in Sports Illustrated:
Was it true? Had O'Malley crushed Brooklyn's spirit? The answer is no. In 1963, after the Dodgers vanquished the Yankees in the World Series, a New York Times editorial titled Joy in Flatbush declared, "At last the wounds have healed." In 1969, when the New York Mets won the World Series, Brooklyn honored them with a rally at Borough Hall. The victory made the Dodgers seem like ancient history.

But then, in 1972, Kahn published one of the most romantic and moving baseball books ever written. The Boys of Summer turned the Brooklyn Dodgers into paragons of virtue, living symbols of all that was good about America before the upheavals of the 1960s: the counterculture, the shock of political assassinations and the wrenching protests over the Vietnam War. The book became a best seller and a sports classic not only because it was a good read but also because it was infused with the author's love for the team. Still, Kahn wouldn't deny that it also benefited from something in the national mood. TIME magazine described The Boys of Summer as part of a wave of nostalgia in popular culture that included the movie The Last Picture Show and the musical Grease. Like many a good story, the book had a villain: O'Malley, whom it depicted as a cheerless, money-obsessed old man.

Beloved in Southern California

At a reading and discussion Saturday at the Brooklyn Historical Society, New York Times sportswriter Richard Sandomir introduced the book by recounting an anecdote about meeting Hall of Fame pitcher Tom Seaver, who, upon meeting D’Antonio, exclaimed, “You’re writing a book about Walter O’Malley! Walter O’Malley brought baseball to the West Coast! I love Walter O’Malley!”

Indeed, D’Antonio writes:
As much as he was reviled in New York, O'Malley was loved in Southern California, and in the end he viewed his success there as a gift from Robert Moses. He revealed this once, in a note to an old friend. It was the only document among his papers that expressed this view of his nemesis. O'Malley wrote: "Bob became an enemy when he sabotaged our plans to build a stadium in Brooklyn. He became a benefactor when his opposition became so violent that we left Brooklyn and happily became established in California."

It's plain to see that O'Malley was right. And the sons and daughters of Brooklyn have reason to let go of their old grudge. Truth is good for the soul. Forgive, and forget.

AY vs. Dodgers

Remember, in a September 2007 New York Magazine article headlined Exorcising the Dodgers, Sam Anderson wrote:
Atlantic Yards is Dodgers nostalgia run amok: New Brooklyn getting rich on the dying myth of Old Brooklyn—a supposed tribute to the borough that may well end up defacing the Brooklyn it’s pretending to honor.

America’s team?

Back in November, 2005, Scott Turner of Fans for Fair Play savaged the relevance of Dodgers nostalgia in the context of the Atlantic Yards saga, contrasting owners, their devotion to sports, their commitment to local fans, the players, ticket costs, and commitment to local businesses, among other things.

An exhibiton at the Museum of the City of New York in 2007 about the “Glory Days” of New York baseball (1947-57) added a gloss:
Why do the Glory Days continue to exert such a hold on the fans who experienced them? In part, is is because baseball was the big game in town, not yet truly challenged by the other league sports such as football or basketball. But while it was the big time, it was not yet the big business it is today.

More from the book

D’Antonio adds more context on that issue. In an interview Friday with the New York Times, he was asked for context:

Q: "Forever Blue” describes the Brooklyn Dodgers as “America’s team before there was such a term.” Explain.

MD: Brooklyn, with its spirit and history as a first home for immigrants, has always had a special place in America’s heart. During the Great Depression, when the Dodgers were called the “Daffiness Boys” and “dem Bums,” the team had such hard luck that fans who loved the underdog loved them. In the 1940s, as they started to win regularly, management put together an ethnically diverse squad that resembled the idealized units of soldiers in movies about World War II.

Everyone could relate to someone on the team, and this became even more true when Jackie Robinson arrived and broke the color barrier. In the future, the Dallas Cowboys football team would claim the title of America’s team because they were powerful winners. I think the Brooklyn Dodgers held that title first because they were much more. This is why they drew more fans on the road than any other team in their league, more even than they saw at Ebbets Field.

On Leonard Lopate

In an interview Friday on WNYC radio’s Leonard Lopate Show, the host, at about 7:45, brought up the issue.



LL: In World War II movies, there was always a guy from Brooklyn who would go to great lengths to find out if the Dodgers had won that day.

MD: They were not just Brooklyn’s team. In many people’s hearts, across America, they were America’s team. And I think it’s because. in the 30s, they were perennial losers... but they were lovable. And then they started to win...

During the discussion Saturday at the Brooklyn Historical Society, D’Antonio added another layer, explaining that the Dodgers were the first team to have a national radio contract.

Consider that there’s no market for national coverage of the Nets. Consider also puffery from the likes of State Senator Marty Golden, who 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.”

Two of those three have already been traded.

An Atlantic Yards mention

During Friday’s interview, at about 15:05, Lopate misleadingly suggested (as other journalists have done) that O’Malley wanted to build on the Atlantic Yards site and, though his interviewee seemed to assent, described accurately the site of what is now the Atlantic Center mall.

LL: Well, He wanted to build a field in a big empty space that is controversial again today.

MD: Right.

LL: Bruce Ratner wants to build an arena where Walter O’Malley wanted to build a new stadium: Atlantic Yards.

MD: This spot, back in the late 1940s, was home to a public market that was all meat dealers and butchers, surround also by retail meat shops. It was one of the worst places to wander through on a summer day, you can imagine, the gutter ran with blood.
...In those days, the housing around it was all substandard. Also, there was usable space over the Long Island Rail Road tracks.

Yes, there was usable space, but it would’ve been very expensive to build a deck.

Effect on Brooklyn

At about 24:55, Lopate tried to connect past and present.

LL: What effect do you think the Dodgers’ move had on Brooklyn’s development?

MD: Y’know, I think it did knock the spirit out of Brooklyn for a while.

LL: The ballpark, which everybody loved, was replaced by some of the most ugly housing anybody could imagine. And that almost seemed symbolic of what was going on.

MD: It is, and it’s also, I think, symbolic that they never got to develop the property O’Malley was targeting into the center of entertainment and retailing that he envisioned. It would be so wonderful if we had that park there.

LL: I’m not so sure I feel the same way about the Atlantic Yards, but that’s a whole other matter.

It is a whole other matter, because 1) O’Malley wanted to build at the site of the Atlantic Center mall and 2) as far as I know, he was planning a ballpark, nothing more. Note that D’Antonio lives on Long Island, not Brooklyn.

Revisionism regarding Moses

The villain in D’Antonio’s saga is not O’Malley but rather Robert Moses, who was adamantly against a Brooklyn ballpark, and instead wanted to put a ballpark in Flushing Meadows in Queens, the eventual location of Shea Stadium. In fact, Moses had identified a location by 1945.

D’Antonio on Saturday suggested that "this guy wanted to give Brooklyn a private stadium," and there was a way for Moses to use eminent domain to get him the property.

What the author left out--at least in his talk (I haven’t read the book yet)--is that O’Malley wanted the land at a huge discount, as explained in Henry Fetter's book Taking on the Yankees: Winning and Losing in the Business of Baseball.

The effect of consolidation

D'Antonio also traces the loss of the Dodgers to Brooklyn's status as a borough, not a city, without its own mayor and city planning department to steer its destiny. That certainly makes sense, but it's not the whole story.

"They gave away so much" in losing their autonomy, D'Antonio said of Brooklyn leaders and voters who agreed (narrowly) to consolidation in 1898. 

Maybe, but he leaves out, as explained in the book Gotham, by Edwin G. Burrows and Mike L. Wallace, that Brooklyn was in a difficult situation, running out of water and needing to be part of a larger entity to have bonds issued for public works.

Looking at the Times's article on the effects of economics on sports

A New York Times Sports section article today, headlined In Economic Downturn, Corporate Ties Put Bind on Sports, takes a national view, with a couple of mentions of the New Jersey Nets, and a couple of missed opportunities, as well.

Some excerpts:
The worst economy since the Great Depression is settling over the fields, courts, tracks, luxury suites and boardrooms of professional sports.

The N.F.L. cut 169 jobs, and its commissioner reduced his salary by about 20 percent. The N.B.A. shed a tenth of its staff, and ESPN will not fill 200 vacant jobs. The United States Olympic Committee laid off 54 workers to cut millions from its budget, and Nascar teams have laid off hundreds of employees.

...Teams have frozen or cut ticket prices, and some, like the Nets and the Minnesota Timberwolves, will give refunds to season-ticket holders if they lose their jobs.

Unmentioned: the Nets have also pursued the attention-grabbing but (likely) not very useful Snowbird Ticket Exchange.

The central point & Barclays questions

The Times's summary:
Pro sports were once thought to be more resistant than other industries to recessions, but this is no ordinary downturn. Teams, leagues and tours have become increasingly reliant on revenue from corporate sponsorships, advertising and luxury suites, and are likely to suffer more than they did in previous downturns. The financial and automotive industries, so heavily invested in the marketing of sports, are undergoing upheavals that have required government bailouts and rounds of layoffs to survive.

Unmentioned: the recommitment of Barclays Capital to the Brooklyn arena, a situation that raises questions not only about the funneling of money from AIG but also whether the Frank Gehry arena to which Barclays originally agreed still would be built.

Loans from the NBA

The Times reports:
The Indiana Pacers are losing $30 million this season and are among 15 N.B.A. teams in the red. The 30-team league would not say if the Pacers were one of 12 teams that borrowed from a recent $200 million addition to its $1.7 billion credit facility. The new credit, Commissioner David Stern said, is an affirmation of strength, not financial weakness.

“Owners can borrow at better terms than they can get individually,” he said, adding that the additional credit is not crisis-related but can be used for various purposes.

Unmentioned is the Nets' borrowing of $20 million, which, as far as I can tell, is an effort to stanch the team's losses.

Losses at the Izod

The Times reports:
Closer to home, P.S.E.&G., New Jersey’s largest utility, made a decision that, if emulated in stadiums and arenas nationwide, will erode bottom lines. It chose to save $400,000 a year by not renewing its leases on luxury boxes at the Izod Center, the Prudential Center, the minor league Riverfront Stadium and Giants Stadium (although it has chosen to rent one at the new Giants-Jets stadium), and at two arts facilities.

That means more losses for the Nets. And it raises questions about any corporation's willingness to commit to luxury suites at the yet-unbuilt Barclays Center. Remember, Nets' uber-marketer Brett Yormark recently claimed that 20% of the suites have been sold--the same number claimed last May.

Will the Brooklyn Paper start distributing Brooklyn Tomorrow?

How could I have forgotten? Perhaps the clearest dependence on/capitulation to developer Forest City Ratner by the New York Post is the production of, by the Courier-Life staff, the annual Brooklyn Tomorrow advertorial distributed by both the Post and the Courier-Life.

That advertorial has included rapturous coverage of Atlantic Yards and, not coincidentally, significant advertising from Forest City Ratner.

That raises a question: will the Brooklyn Paper, now a part of the Post's Community Newspaper Group, start distributing Brooklyn Tomorrow? Will its reporters write for it?

We'll see in June.

(Thanks to longstanding Ratner foe Patti Hagan for the reminder.)

The Xanadu story: a reminder about "public authorities largely operating out of public view" and some sobering AY parallels

The saga of New Jersey's ill-fated Meadowlands Xanadu project--newly delayed or worse--suggests some sobering parallels with the Atlantic Yards project, including overly optimistic projections, decisions involving political connections, and opaque oversight of a public-private enterprise.

Xanadu--the construction of which, along with the new Meadowlands Stadium, has made going to New Jersey Nets games at the Izod Center that much more complicated--has been in the news a lot this week.

WNYC radio and the nonprofit public interest news organization Pro Publica have been looking into federal stimulus spending, in a project called ShovelWatch; a piece March 17, headlined NJ's Xanadu: Lessons for Stimulus Spending?, began with a shot at the New Jersey Sports and Exposition Authority (NJSEA) and especially the Port Authority of New York and New Jersey:
Billions of dollars in federal stimulus aid is on the way to our region. But while local politicians are applauding the aid, many of the decisions about how the money will be spent will be made by public authorities largely operating out of public view.

(Images, including construction above and rendering below, from official Xanadu site. More from the WNYC news blog.)

Why be concerned about the Port Authority?
[It] was founded in the 1920's as a way to reform patronage-driven public works projects. It's first major project, the George Washington Bridge, came in under budget and ahead of schedule. But in modern times, appointments to the board have been dominated by campaign contributors and developers like Port Authority Chairman Anthony Coscia and Commissioner David Mack.

How different is that from the Empire State Development Corporation (ESDC) in New York, the unelected authority whose board (many of whom didn't show up for the Atlantic Yards vote) I described 12/7/06 as "team players and big donors."

A shot at Ratner: "all hat and no cattle"

On the very same day, 12/10/03, that Atlantic Yards was announced, so too was the rail spur to the Meadowlands, to enhance a then-2.2 million square foot "entertainment and retail megaplex" called Xanadu--y'know, the one with an interior ski slope. (Now it's up to 4.8 million sf.)

The WNYC piece includes this flashback:
On this day in 2003, George Zoffinger, the CEO of the New Jersey Sports and Exposition Authority was facing a triple threat of losing three of the Sports Authority's teams -- the Jets, the Devils and the Nets. Zoffinger used this press opportunity to take a shot at rival Bruce Ratner, who wants to move the Nets to Brooklyn.

ZOFFINGER: Economics are going to drive the process and frankly we took a look at what Mr. Ratner had to say this morning. My contention is that it's all hat and no cattle.

Well, that rail spur was also supposed to help rival bidders compete with Ratner to buy the Nets and, as we know, Ratner succeeded, with the sale announced just six weeks later.

(Flashback to some lousy reporting: the New York Times reported on the sale 1/24/04: Ratner plans to build an 800,000-square-foot sports arena with 19,000 seats in an unused railroad yard that lies between Flatbush and Atlantic Avenues. No, the arena couldn't be sited solely over the railyard, and no, the railyard is not "unused." Here's the crib sheet.)

Now, more than five years later, Ratner certainly has pursued his Atlantic Yards plan, and parent company Forest City Enterprises and partners have invested $250 million.

But Ratner's predictions--an arena by 2006! by 2009!--were laughably overoptimistic, and the current pledge, delivered by ever-confident New Jersey Nets CEO Brett Yormark, of a 2011 arena opening date remains quite dubious.

What about Newark?

Prospect Heights and the edge of Downtown Brooklyn, however, differ from the Meadowlands, and Sierra Club of New Jersey executive director Jeff Tittel told WNYC that type of development should be in an urban center like Newark.

Newark, in contrast to Brooklyn, has a lot of empty land. But it's a reminder that most Brooklynites critical of or opposing AY aren't against density, just the level of density planned for Atlantic Yards.

Too much optimism

James W. Hughes, dean of Rutgers University's Edward J. Bloustein School of Planning and Public Policy, pointed to a lack of foresight when Xanadu was approved:
HUGHES: In 2003, we were in the early stages of perhaps the greatest spending spree in the history of the planet. We lost the distinction between needs and necessities versus discretionary items and indulgences. Right now indulgences are in real trouble. If we look at a Xanadu will that be an indulgence or will it be a necessity?

Similarly, Charles Bagli of the New York Times has called Atlantic Yards "sort of a good-times project," one born in a time of economic optimism. 

True, though I've pointed out many a time that the claim of 10,000 office jobs was overblown from the start, given the oversupply of office space in Downtown Brooklyn nearby.

Need for skepticism

The WNYC piece pointed to Hughes's wariness about using federal stimulus funds to support public private partnerships like Xanadu:
HUGHES: On the public sector side there was desperation in order to generate jobs, and at the same time the private sector wants that public sector support in order to lessen its risks in a commercial venture. So we have a fundamental different set of psychology by the two sectors and that’s dangerous.

Indeed, the ESDC has the potentially contradictory roles of evaluating AY and promoting economic development. And stimulus funds, as more than a few Brooklynites and elected officials have pointed out, shouldn't be used to bail out a private developer.

Dispute over public costs

A separate Pro Publica article presents dueling views over the extent of public support for the project:
The New Jersey Sierra Club estimates the public contribution exceeds $900 million when property tax breaks, financing and other types of subsidies are counted. But John Samerjan, a spokesman for the New Jersey Sports and Exposition Authority, disputes that. He said the developers have so far spent $260 million for lease payments to the state and for transportation and environmental cleanup costs.

The authority seems to be counting only direct dollars, but, as we know with Atlantic Yards, the $305 million in direct subsidies are the base for hundreds of millions of dollars--some say well more than $1 billion--in public benefit. No governmental entity has produced a full calculation.

Xanadu in trouble, like FCR

WNYC pointed out that Colony Capital -- the current private sponsor of Xanadu -- failed to make its November payments on a $360 million loan to creditors.

And the Star-Ledger reported yesterday that workers at the Xanadu site "said they were told they were being let go, but a spokesman for the developer, Meadowlands Xanadu, said the project is not being halted," just delayed.

That echoes the mysterious close of work at the Vanderbilt Yard in Brooklyn, which Forest City Ratner blamed on lawsuits but which workers said (I've been told secondhand) was due to cash flow problems. Remember, FCR made virtually no explanation even to the ESDC.

And parent Forest City Enterprises, apparently trying to avoid the fate of a Colony Capital, is selling prime properties to raise cash and is reevaluating the Beekman Tower in Manhattan and may leave it at 50% of its planned height.

Moving the goalposts

The WNYC piece notes that Business Week reported that some prospective tenants Xanadu proudly promoted have not actually signed leases--which Xanadu confirmed but claimed the site is 70 percent leased and ready to open in August.

Oops. 

Yesterday, the Star-Ledger reported that August 2009 was no longer the goal, a reminder that, in Brooklyn, all dates are speculative. 

What's gone wrong with Xanadu? One partner in an 18-screen movie theater is in financial default. Real estate industry people told the newspaper they were skeptical of the 70 percent figure. (Similar skepticism should be applied to Yormark's claim that 20% of suites in the yet-unbuilt Barclays Center have been sold.)

Money quotes

The Star-Ledger quotes Hughes's skepticism about the market for the new complex:
"Labor markets keep getting worse, home equity is declining, and 401(k) nest eggs have big cracks in them, so people are zipping up their wallets," he said. "There is not a lot of slack purchasing power out there that will flow to Xanadu. It will go to Wal-Mart."

Indeed, a good-times project.

And the Sierra Club's Tittel gets the final word:
"We've given millions in incentives, tax breaks and transportation on a project that was pushed through because of political connections -- not because we needed it," he said. "Xanadu is a monument to hubris and excess. It's ugly. It's toxic. And now it's empty."

The Atlantic Yards arena, in the regional context, might be part of an ugly zero-sum game. As I wrote March 10, why build a new arena when another new one is hardly full--especially when the ever-declining rationale for federal subsidy is to poach tax revenues from an adjoining state?

In Baltimore, Forest City's project is stalled, too

Public Radio's Marketplace reported this week on troubles facing the 31-acre Science + Technology Park at Johns Hopkins, Forest City Enterprises' project in Baltimore, another sign of the developer's struggles.

Half the labs aren't operating; Forest City's leasing head Scott Levitan says, "The challenge now is to ride out the storm, get over the Valley of Death."

The problem: the business model has changed in just three years, as big firms have chosen to buy smaller ones than invest in basic research.

Meanwhile residents who sold their homes for the project are waiting for the promised replacements, but rehabbed houses still await construction loans from banks.

Not walking away

Levitan says Forest City has invested $47 million, while the city, the state, and philanthropic partners have put up $120 million--a nice deal compared to Atlantic Yards, where the direct investment vs. direct subsidy would be $250 million vs. $305 million, except that the other public benefits total hundreds of millions, perhaps more than a billion dollars.

Which means Forest City isn't walking away.

Let's go to the tape:
LEVITAN: No, ha, ha, ha. We're not.

A nervous laugh about an ambitious project trying to tough out the recession.

They're not walking from AY either, I'd bet. It could be Forest City's last project standing.

Was the Izod Center 90.7% full Friday night?

The announced attendance--which means ticket distribution, not gate count--at the game Friday night between the New Jersey Nets and Miami Heat was 18,108, which is 90.7% of the 19,968 capacity.





These excerpts from game photos suggest otherwise.

Original photos: Copyright 2009 NBAE (Photo by Jesse D. Garrabrant/NBAE via Getty Images)

Sign of the times: Forest City Ratner buys welcome ad in the Brooklyn Paper

This week, Forest City Ratner welcomed its new tenant, the Community Newspaper Group of Rupert Murdoch's News Corporation, to its new office at MetroTech.

The Courier-Life chain was well on its way; now that the Brooklyn Paper has joined Murdoch's fold, the landlord ran a full-page ad (above; click to enlarge) on the back page of this week's Brooklyn Paper, as well as an ad in the Courier-Life.

It's the first Forest City Ratner advertisement in the Brooklyn Paper in recent years, at least as far as I remember. The developer has been happy to advertise in the Courier-Life, however.

Will the developer keep advertising in those papers? Will that advertising have any influence on the editorial pages or even news coverage?

We'll see, but I did speculate that the Brooklyn Paper's news coverage of Atlantic Yards will diminish somewhat (as it already has), and its editorial criticism will diminish even more.

The Brooklyn Bridge

As a commenter notes, the advertisement portrays the Brooklyn Bridge, which happens to be closer to the Brooklyn Paper's longtime DUMBO offices, rather than the generic MetroTech office park.

Then again, Forest City Ratner has not been shy about appropriating Brooklyn Bridge iconography in advertising, as in this ad in the Courier-Life two years ago.

In the Times

In an article in the New York Times's Sunday City section (but already online), headlined A Scrappy Local Paper Ponders Its New Parent, most of the pondering came from skeptics like me, Brooklyn Paper columnist (and OTBKB blogger) Louise Crawford, and Assemblyman Joseph Lentol.

I was quoted:
“I’m going to go out on a limb here and predict that The Brooklyn Paper’s news coverage of Atlantic Yards will diminish somewhat (as it already has), and its editorial criticism will diminish even more,” wrote Norman Oder, a critic of the development, on his blog Atlantic Yards Report.

The only pondering from the newspaper was this:
“The Brooklyn Paper’s always had a very independent feel, and we’ve been told to continue that feel,” said Mr. Kuntzman, whose paper is peppered with playful headlines with exclamation points. “We’re a scrappy paper. We always have been; we always will be.”

Well, I don't doubt that the Brooklyn Paper will continue to be playful and clever. However, as I told the Times reporter (in a comment he didn't use), "I highly doubt that the Brooklyn Paper will report on political contributions by the Courier-Life publisher and point out that Borough President Marty Markowitz's promotional Brooklyn!! Publication is published by the Courier-Life."

Nor did Kuntzman or a News Corporation spokesperson explain whether any of the two chains' papers would be consolidated, but the Times noted that the Greenpoint Courier has already been closed, and a former staffer there commented, "“It just doesn’t make sense to have two sets of advertisers and two sets of reporters who cover the same area.”

(Also see Patti Hagan's comment about the production, by Courier-Life staff, of the Brooklyn Tomorrow advertorial that appeared in the Courier-Life and the Post.)

Who's supporting Hunley-Adossa against James in the 35th? Construction unions

Well, challenger Delia Hunley-Adossa may or may not garner direct support from employees of Atlantic Yards developer Forest City Ratner in her challenge to unseat incumbent Letitia James in the race for the 35th District seat in the City Council, but, thanks to the New York Times's blog The Local, we know who is supporting her: construction unions that have rallied in support of the project. 

(Update: She's raised nearly $4000.)

According to The Local, which gained a report from an attendee at Hunley-Adossa's inaugural fundraiser, the candidate did not pronounce the words "Atlantic Yards," a topic she has avoided. 

But it had to be in the background. After all, one host of her event was Charlene Nimmons, who, like Hunley-Adossa, runs a fledgling nonprofit organization that signed the Atlantic Yards Community Benefits Agreement (and, likely, is funded by the developer).

If FCR's Beekman Tower faces 50% cut, what does that say about Atlantic Yards promises (and designs)?

News that Forest City Ratner may downsize the planned (and, purportedly, funded) Frank Gehry-designed 867-foot Beekman Tower in Lower Manhattan by 50 percent raises serious questions about the developer's promises regarding the Atlantic Yards project.

(Photo from Curbed)

After all, as DDDB points out, Forest City Ratner has no lawsuits to blame for the potential downsizing, as with Atlantic Yards. And that raises serious questions about the state's steadfast support for a project whose cost is now a secret.

Second half on hold

After WNYC broke the story, Crain's New York Business reported that FCR would continue work on the lower 38 stories but would put the second half on hold.

Crain's reported: “Given the current economy, we are conducting a study to assess costs, risks and overall timing,” said a spokesperson for the company, in a statement. “Work is continuing on the building including on the school and we should have some conclusive answers shortly.”

The Tribeca Trib reported that, though WNYC reported that a work permit issued by the Department of Buildings treated the top of the current structure as a roof, FCR said that was just a setback already part of Gehry's design.

However, the developer hedged when asked if the building would reach 76 stories and 904 apartments.

Beekman gyrations

The Gehry Tower, to be the city's tallest apartment building, was once to become condos but was switched to rentals. As FCR executive MaryAnne Gilmartin said last October, “we just simply do not know how to give up.”

She also said "every deal dies three times." The Beekman Tower project may have many more lives.

Though a 38-story Beekman Tower would surely represent an enormous compromise for Gehry's vision, it still could find a place in the market. "We're selling views," Gilmartin said last October. "From the moment you step into the apartment, you see sky.” Each apartment has three vistas, “which is extraordinary… When you clear the 11th floor, there’s not much to compete with it.”

Tax-exempt Liberty Bonds

The $680 million in financing for the project—the largest construction loan in the company’s history (according to the Trib)--was announced a year ago.

The bonds issued by the New York City Housing Development Corporation (NYC HDC) are a combination of $190 million in tax-exempt Liberty Bonds, aimed to revive Lower Manhattan, and $476.1 million in taxable bonds. The New York State Housing Finance Agency contributed $13.9 million from its Liberty Bond allocation.

("That’s the beauty of the Liberty Bonds, tax-exempt rates and all market-rate units," an executive from parent Forest City Enterprises, told investment analysts last April. Atlantic Yards, by contrast, would get housing bonds for rental buildings that include affordable units.)

Do they have to give bonds back?

I asked NYC HDC spokesperson Catie Marshall yesterday how much the developer would be allowed to spend. "The funding for a project such as the Beekman is generally done in tranches, thus it is phased (sort of pay-as-you-go)," she responded. "In the case of the Beekman, the bonds are variable rate and only the first two tranches have been issued. In general terms, if a project is altered and does not need all of the funding, the remaining tranche(s) will not close. It’s pretty straight forward."

"Variable rate bonds can be called at any time – there is no exposure to bond holders or to HDC as they are backed by a letter of credit from a bank or consortium of banks," she added.

Marshall said she didn't have any specific numbers regarding the cost of the project or the amount spent. "For that you would have to contact the developer," she said.

Could AY be cut 50 percent?

The downsizing of Beekman may open up an opportunity for whimsical artist Bruce McCall to revisit Atlantic Yards.

In September 2006, taking off from a way overhyped New York Times article about a proposed six to eight percent cut in the Atlantic Yards project, McCall produced a piece of Op-Art in the Times that I called "more questionable than funny."

Now, however, there's a real opportunity to show how the Atlantic Yards project might look if chopped completely in half. FCR can't quite do that with an arena, unless, as NLG points out, the hoopsters start playing half-court.

Otherwise, a 50 percent downsizing isn't out of the question; under the City Funding Agreement, the developer faces no penalties as long as, within 12+ years, 1.5 million square feet are built in Phase 1--some 44% smaller than promised in the General Project Plan approved in December 2006.

There's no timetable for Phase 2, but, should AY be abandoned, a City Purpose Covenant cited in the State Funding Agreement requires 1845 units of housing, less than 29 percent of the 6430 units approved.

Under fire, Finance Commissioner Stark gives up moonlighting job; won't talk about conflict-of-interest situation

In October, New York City Finance Commissioner Martha Stark seemed unflappable when she testified before a Congressional subcommittee regarding the valuations for the Yankee Stadium site, valuations that critics believed were "gamed" to ensure sufficient PILOTs (payments in lieu of taxes) to repay construction bonds.

Despite Stark's confidence, there was still a big gap between her explanation that, when choosing comparable sites for an assessment, the first priority is proximity, and the city's practice, which included a vastly non-comparable site in Alphabet City, more than seven miles away.

Should the Atlantic Yards arena proceed, Stark's department will have a crucial role in ensuring an assessment commensurate with the bonds. This week, there are new reasons to question Stark's judgment and integrity.

Moonlighting

Last Sunday, the New York Post had a scoop. In an article headlined COMMISH A 'TWO-TIMER': REAL-ESTATE SIDE GIG SECRETLY OK'D BY CITY, the Post reported that, while department heads are forbidden to take outside jobs, Stark earned some $134,000 in two years as a board member for an apartment company called Tarragon, which does not operate in the city.

(Graphic from New York Post)

The mayor's office was surprised, but Stark's office "released a confidential April 11, 2005, letter from Steven Rosenfeld, chairman of the city's Conflicts of Interest Board, saying her work for Tarragon 'would not violate' city rules," as long as she recused herself from any city matter involving Tarragon or its officers or shareholders, among other restrictions.

Tarragon's CEO told the Post that the four board meetings and audit committee meeting total only about ten hours a year, William Friedman, and a DOF spokesman Owen Stone said that work was not within Stark's required 35-hour week.

Fishy situation

That sounded fishy, and it was. In a New York Times article Monday headlined City Finance Official Resigns Seat on a Developer’s Board, Citing Publicity, the New York Times reported that Stark had been told by the city's Law Department that four meetings a year would not be a problem, but that the board had 16 meetings in 2007.

Beyond that, Tarragon’s CEO said that a task force for which Stark gained $64,000 required extra work, “never more than five hours in one week.”

The New York Post added, in an article Monday headlined DOUBLE-DIP NIPPED that "Stark did not disclose her Tarragon position or pay on public financial disclosure forms filed with the COIB [Conflicts of Interests Board] until 2008."

The parking judge

Yesterday, in an article headlined Parking Judge to Be Reassigned After Conflict-of-Interest Allegation, the New York Times reported that Stark had been warned by the Department of Investigation (DOI) that "a senior parking ticket judge who is married to the agency’s first deputy commissioner had billed for office hours when he was not present."

Stark took no action, because Judge Allan Patricof, according to her review, had worked those hours, just not in his office but at home and elsewhere. But city investigators said that the judge "had been an intimidating presence in the agency," the Times reported, even as Stark resisted those concerns.

The DOI stated, "Although the Department of Finance felt his conduct never warranted disciplinary action, we understand that he will now be leaving the Department of Finance, which is consistent with our recommendation and appropriate under the circumstances.”

Stark would not respond to the Times's requests for comment.

April Fool's? No, Nets tickets really are 75% off

Well, they're not giving them away. But Nets tickets for a game against the Detroit Pistons on April 1 really are 75% off.

Forest City selling three NYC movie theaters, Queens Place mall

Yesterday, I speculated on which four New York City retail properties would be sold, among a total of some 15 properties nationally, by developer Forest City Enterprises to raise cash.

It turns out that yes, the outer-borough movie theaters are on the block.

A reader put me out of my misery by forwarding the actual coverage in the newsletter Real Estate Alert:
Eastdil is also marketing the retail properties, which are in three outer boroughs of New York. The largest is Queens Place, in the Elmhurst section of Queens. The 222,000-sf vertical power center, built in 2001, is filled by big-box stores, including Target, Best Buy and shoe retailer DSW.

Also being offered is The Heights on Court Street in Brooklyn (102,000 sf). The property is occupied by a United Artists movie theater and a Barnes & Noble book store. United Artists also leases the other two retail properties up for grabs: the 84,000-sf Steinway Street Theaters in the Astoria section of Queens and the 70,000-sf Forest Avenue Cinemas on Staten Island.

Case closed (and Blight Study bogus): high crime in Sector 88E relates to Ratner's malls, not AY footprint

I've long argued that claims in the Empire State Development Corporation's Blight Study of high crime in the Atlantic Yards footprint were dubious, first writing in July 2006. The state's evidence was so weak that Supreme Court Justice Joan Madden, in her January 2008 dismissal of the case challenging the Atlantic Yards environmental review, punted on even addressing the crime issue.

Last April, the Daily News, quoted an anonymous source as saying the need for a police presence at the Atlantic Terminal Mall has cut into the ranks of officers policing the rest of the 88th Precinct.

Case closed

Last night, a police official clarified the issue and closed the case: yes, Forest City Ratner's Atlantic Center and Atlantic Terminal malls are prime crime locations in the precinct.

"A large percentage of our crime--particularly grand larceny and petit larceny--occurs in the malls," declared Captain Vanessa Kight, 88th Precinct Executive Officer, at the monthly meeting of the 88th Precinct Community and Youth Council, held at the Cadman Memorial Church in Clinton Hill.

Even though four officers are assigned to the malls at various times, there have been 195 crimes so far this calendar year at the malls, notably the snatching of unattended purses. (Here's a list of recent purse-snatchings at Target, in The Local, the New York Times's new blog, and a follow-up today.)

ESDC: not the malls

Remember, the AY footprint contains sectors from three separate precincts, and the only sector where a rise in crime had been seen--the source of the Blight Study's sweeping conclusions--was Sector 88E, shown at right. The footprint blocks are those below Atlantic Avenue.

(ESDC graphic adapted by Lumi Rolley of NoLandGrab; click to enlarge.)

The report tried to assess whether the malls, in the western end of Sector 88E above Atlantic Avenue and thus the footprint, contribute to crime:
The Atlantic Center and Atlantic Terminal shopping centers are located immediately north of the project site, also within the boundaries of Sector 88E. In an effort to determine whether a large proportion of crimes reported for Sector 88E might have occurred on the Atlantic Center/Atlantic Terminal premises rather than on the project site, crime data were obtained from the security staff at the shopping centers.
Based on this data, which reflects incidents occurring within the Atlantic Center and Atlantic Terminal shopping and parking areas as well as on the surrounding sidewalks, it is unlikely that a large proportion of crimes in sector 88E occurred on the Atlantic Center or Atlantic Terminal premises. For example, while there were 39 robberies in sector 88E in 2005, the shopping center security records indicate that no robberies occurred that year at Atlantic Center or Atlantic Terminal. Similarly, while there were 115 grand larceny crimes reported for sector 88E in 2005, the shopping center security force recorded only one incident of larceny that same year. Although crimes catalogued by the Atlantic Center and Atlantic Terminal security staff are not necessarily the same as those catalogued by the NYPD, the relatively low number of crimes reported at the shopping centers indicates that the high crime rate in sector 88E is more likely a result of crimes occurring on the project site than in Atlantic Center or Atlantic Terminal.
(Emphasis added)

What a crock.

Remember, Jim Stuckey, then president of the Atlantic Yards Development Group, straightfacedly told WNYC talk show host Brian Lehrer in July 2006, ""The crime in these [AY footprint] areas is substantially higher than areas around it."

What a crock.

Which source to trust?

As I wrote last April, could it be that mall security staff, whose records indicate that only one incident of grand larceny--theft of property of more than $250 in value--occurred during a year, according to the Blight Study, might be fudging the books?

More to the point, why did the authors of the Blight Study rely on mall security staff rather than police statistics?

And why didn't critics of the Blight Study, including myself, not spend more time at 88th Precinct Community Council meetings to hear the cops tell the straight story?

This statement in the Blight Study sure seems misleading:
Sectors are the smallest geographic area for which the NYPD publishes crime data. Therefore, it is not possible to determine the number of crimes that have occurred on the project site itself. However, crime rates in the sectors that overlap the project site (referred to here as the study area) can be compared to precinct averages to determine whether there are any substantial differences between crime rates on and around the project site and crime rates in the larger precincts.
(Emphasis added)

The Police Department may not publish crime data on geographic areas smaller than sectors, but, as I learned last night, it sure keeps crime data on hot spots within the sectors, like the malls.

Two rivals at the Community Council

I didn't go to the meeting last night to check out crime statistics. I wanted to see the Community Council in action, given that its president is Delia Hunley-Adossa, the newly declared challenger to Letitia James for the 35th District Council seat.

Hunley-Adossa ran the meeting smoothly enough, even as new Fort Greene blogger Andy Newman of the New York Times provided more saturation coverage (and occasionally distracting picture-taking) than the Community Council has likely ever experienced.

(Maybe unpaid citizen journalists are supposed to cover such meetings thoroughly, but in this case it took a professional from the Times to ask the cops questions residents posed on The Local.)

And when the incumbent James joined Hunley-Adossa to flank the two "Cop of the Month" winners as they posed for photographs, the two rivals were carefully cordial. 

James is no shrinking violet, and she made her own announcements at the meeting with perhaps extra brio, as if reminding the audience--which was just as receptive to her as they were to the meeting chair--who actually has been elected.

The AIG to Barclays story has legs

From the Bergen Record (via DDDB):
AIG’s distribution of $8.5 billion in federal bailout money to Barclays Bank means Barclays should call off its $400-million naming-rights deal for a proposed Brooklyn arena, project critics charged Tuesday.

From Juan Gonzalez's column in the New York Daily News (via DDDB): If it ever gets built, we should call it the American Bailout Arena, for the old ABA, where the Nets got their start.

DDDB's press release has apparently been read.

Forest City borrows $20 million from NBA lenders to counter Nets' losses

Despite suffering serious losses, more than $30 million a year, the owners of the New Jersey Nets have adjusted a key loan that could help the team limp toward a transition to a new Brooklyn arena.

The Forest City Enterprises press release issued yesterday sounds like gobbledygook:
Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) announced today that Brooklyn Basketball, LLC, in which the Company has an equity interest, has secured an extension of a $65 million credit facility related to the National Basketball Association (NBA) Nets professional basketball team. At closing, Brooklyn Basketball reduced the principal of the facility to $45 million through a $20 million add-on facility funded by a routine borrowing by the team under the NBA's League-wide Financing Facility.

The credit facility, through JPMorgan Chase Bank, N.A., has been extended to September 9, 2010, with a second extension available to June 9, 2011. The $20 million add-on is a combination of five-year and seven-year fixed-rate notes.

What does that mean? Well, as far as I can tell, it means that the owners of the Nets had already borrowed $65 million and not only extended that loan, but lowered the principal on it by taking out a separate $20 million loan.

Reasons to hang on

And, among the 12 teams in the 30-team league that were interested in a loan, the Nets borrowed the maximum. Remember, Forbes reported in December that the Nets were among only seven teams that declined in value, and the Nets experienced the largest retreat, of 13%.

A new arena paid for by naming rights (and maybe just taxpayers), with many luxury suites, would raise the value of the team enormously. That's why, as Forest City Enterprises struggles financially, selling off viable properties, Atlantic Yards likely will be held until the bitter end.

Forest City and partners have invested $250 million in Atlantic Yards, above and beyond the Nets. That's the largest single investment the company has made, an official told investors in October 2007, declaring it "risk-appropriate."

While that's actually less than the direct public subsidies for the project, it still indicates a commitment that Forest City is unlkely to walk away from soon.

NBA adds $200 million

Here's the background. The AP reported February 27:
The NBA has lined up $200 million to distribute to teams interested in additional cash, which the league considers a sign it remains strong in a slumping economy.

Between $13 million and $20 million will be available to each of 12 teams that have expressed interest in the funds, commissioner David Stern said Thursday. The money can be used for any purpose, including helping teams deal with operating losses incurred because of the economy.

It should not, Stern said, be construed as a bailout. At a time when credit markets have been frozen, investors saw the NBA as a safe bet.

"It's exactly the opposite" of a bailout, Stern told The Associated Press "This was a show of strength in the creditworthiness of the NBA's teams."

...The league has an existing $1.7 billion credit facility, essentially a line of credit established by lenders from which teams can borrow. The league had been interested in growing the facility when the credit markets seized up last fall.

FCE's comment

Yesterday's press release concluded:
"This is another example of our companywide strategy of proactively managing debt maturities across the full range of our business interests," said Charles A. Ratner, Forest City president and chief executive officer. "As always, we appreciate the support of our lenders in this effort, and I congratulate our internal team that secured the extension."

Three months later, Morningstar again says Forest City Enterprises stock is worthless

It looks like déjà vu from December. An analyst from Morningstar, in a report (subscribers-only) that repeats nearly verbatim the conclusions in a report issued three months ago, yesterday again warned that stock from Forest City Enterprises (FCE), parent company of Forest City Ratner, is essentially worthless.

And, most likely, company representatives will fire back, as they did in December, by contrasting Morningstar's take with more optimistic assessments from other analysts and pointing out that the Morningstar analyst didn't speak to them.

Indeed, for the past three months, five analysts tracking FCE have consistently rated the stock (FCE.A) as a buy, or 2, on a scale of 1 (Strong Buy) to 5 (Sell), according to Yahoo Finance.

Specifically, two called it a Strong Buy (1), one called it a buy (2), and two recommended Hold (3). No one rated it Underperform (4) or Sell (5).

Market cap plummets

Still, at least one dramatic change bolsters Morningstar's pessimism. Morningstar's December report, based on data from 9/30/08, calculated FCE's market capitalization (the number of shares outstanding multiplied by the price) at $605 million.

The report issued yesterday, based on data from 12/31/08, listed the market cap at $447 million, a 26% drop. The market cap, as of yesterday, had continued to fall, to $397.3 million, a 34% drop since the end of last September. Yesterday, the stock went down 11% to $3.84. Given that, in May 2007, the stock topped $72, the market cap was once nearly 20 times higher.

Another reason for pessimism is Forest City's decision, which apparently surfaced after the report was written, to start selling some prime properties to raise cash. 

Morningstar's take

Morningstar analyst David Rodziewicz (who, as a 2008 college graduate, presumably does not have the experience of other analysts tracking the company) offers some harsh conclusions:
Although the company has historically performed well, its increased position in retail real estate and high leverage should weigh on performance and will probably lead to financial distress. Volatile economic conditions, a challenging credit market, and the likelihood of bankruptcy lead us to a very high fair value uncertainty rating on this no-moat real estate company.

Specifically, while Morningstar estimates Forest City will earn 6.9% on its assets over the next decade, its weighted average cost of capital is estimated at 10.1%.

While Forest City specializes in mixed-use projects in partnership with municipalities, the strategy has become more difficult in "as credit markets continue to remain tight and government budgets are strained."

Defaulting on debt

Given such higher borrowing costs and decreasing earnings, Forest City faces a crossroads:
As underwriting standards become more conservative and property values decline, the likelihood increases that Forest City will have to sell off properties to pay down debt. If this scenario were to play out, there may be no value left for common shareholders.

This is why some investors are buying FCE bonds at a deep discount. And why FCE has begun to sell some prime properties. 

Valuation: worthless, most likely

The report concludes:
We are maintaining our fair value estimate at $0. In our opinion, the chance of common shareholders realizing any value from an investment in Forest City is very small. 

(Emphasis added)

If the economy recovers, or of the developer can find a cheap source of financing, Morningstar says the company could survive, with a $10 share price.

Note that analysts surveyed by Yahoo Finance suggest targets between $10 and $22, with a mean (average) of $15 and a median (middle value) of $13.

Note that the Barclays Center naming rights deal, coupled with triple tax-exempt financing for the planned arena, would constitute a cheap source of financing--at least for one project.

Trouble in the pipeline

The Morningstar report suggests that Forest City will have trouble achieving the returns anticipated in its $1.8 billion development pipeline.

Atlantic Yards has not yet reached that pipeline. FCE categorizes Atlantic Yards in the "initial development stage," one step behind the "shadow pipeline," which itself is behind the development pipeline.

Earnings estimate and upcoming info

Morningstar forecasts average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) growth of 2.2% over the next three years. In December, Morningstar estimated growth of 2.1% over five years.

In December, Morningstar estimated that net operating income would increase "at a paltry 1.4%, on average, during the next five years." Yesterday's report estimates 2.1% over ten years.

We'll see what Forest City says. Their annual report is due in the coming weeks, and that will be followed by a conference call with investment analysts.

Are American taxpayers paying for the Barclays Center naming rights deal?

Are American taxpayers paying for the Barclays Center naming rights deal?

Well, if money's fungible, you certainly could say so.

DDDB's graphic breaks it down.

From yesterday's New York Times, in an article headlined A.I.G. Lists Banks It Paid With U.S. Bailout Funds:
Amid rising pressure from Congress and taxpayers, the American International Group on Sunday released the names of dozens of financial institutions that benefited from the Federal Reserve’s decision last fall to save the giant insurer from collapse with a huge rescue loan.

...Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).
(Emphasis added)

What does Forest City have on the block in New York City?

According to Crain's Cleveland Business (via NLG), Forest City Enterprises (FCE) is so desperate for cash that, rather than sell only poor-performing properties, it is now marketing a very different portfolio, "gem office and retail buildings in superior markets and apartments in hot rental markets."

On the block are 10 apartment buildings around the country, office space in Boston, and, via brokers CB Richard Ellis and the Holliday Fenoglio Fowler, four retail properties in New York City.

What's on the block?

There are no Forest City Ratner listings publicly available via either the CBRE or the Holliday Fenoglio Fowler web sites.

I've listed the properties below, in the order they appear on the FCE web site. I'll bet that the 42nd Street Complex, Atlantic Center Mall, and Atlantic Terminal Mall are untouchable, because the latter two would benefit enormously from Atlantic Yards and the Times Square location is prime.

(Remember, as the New York Times Magazine told us Sunday, in an articled headlined Where Is the New Brooklyn?, Brooklyn is a euphemism for gentrification,)

The Shops at Atlantic Center Site V aren't on the block, either, because a) FCR doesn't control all the land and b) the site is in the Atlantic Yards footprint. The Museum of Jewish Heritage is a small retail space.

The rest is up for grabs. I don't know enough about the retail market, nor FCR's sense of core efforts, to know whether movie theaters--which do reasonably well in bad economies, right?--are more or less likely to be sold.

But Forest City has a lot more property than you might think. The text below is excerpted from the FCE web site.

42nd Street Complex

42nd St. Retail and Entertainment Complex
234 West 42nd St.
New York, NY 10036
A key part of the new 42nd Street and booming Times Square area, the project is steps away from various entertainment destinations, including Disney's New Amsterdam Theatre, the Ford Performing Arts Center and the 24-hour, neon signage of Times Square. The area's role as a major corporate center has been enhanced by the Reuters building, the new Condé Nast building and the new headquarters for Ernst & Young.

Date opened June 2000

Square footage 306,000 square feet
Number of shops 9

Atlantic Center Mall

Atlantic Center
625 Atlantic Avenue
Brooklyn, NY 11217

Atlantic Center is adjacent to Atlantic Terminal, the third-largest mass transportation hub in New York City. Nearly 40 million passengers pass through Atlantic Terminal each year. It is accessible by subways M, N, R, W, Q, 1,2,3,4,5, C and the Long Island Railroad.

Date opened November 1996

Square footage 393,713 square feet

Atlantic Terminal

Atlantic Terminal
139 Flatbush Avenue
Brooklyn, N.Y. 11217

Atlantic Terminal sits atop the largest transportation hub in the 2.5-million-person borough of Brooklyn. The retail center includes five levels and more than 370,000 square feet of retail space, including Target, DSW, Chuck E. Cheese’s and The Children’s Place.

Above the retail center is a new, 400,000-square-foot office building for The Bank of New York. Employees and visitors to Atlantic Terminal benefit from internal access to the retail shopping center, nine subways and the Long Island Railroad.

More than 30 million passengers pass through the Atlantic Terminal station every year.

Date opened March 2004

Square footage 373,000 square feet

Brooklyn Commons

Brooklyn Commons
124-136 2nd Avenue
Brooklyn, NY 11215

Opening date 2004

Property size 151,000

Property location
Located in Brooklyn on 2nd Avenue and 11th Street, adjacent to the Gowanus Canal.

Castle Center

Castle Center
1685 Eastchester Road
Bronx, NY 10461

Date opened July 2000

Square footage 63,000 square feet

East River Plaza

East River Plaza
East 116th Street at the FDR Drive
New York, NY 10035

Forest City Ratner Companies and Blumenfeld Development Group will transform the former Washburn Wire Factory into East River Plaza, a vibrant commercial center in East Harlem.

With some of the country’s top retailers opening in Upper Manhattan for the first time, East River will provide premium shopping with plenty of on-site parking for the community and all New Yorkers.

The project will create thousands of new jobs and generate millions of dollars in new tax revenue. East River Plaza is an investment in the East Harlem community and will be a catalyst for further economic development.

Property size 517,000 square feet

Forest Avenue Cinemas

Forest Avenue Cinemas
2474 Forest Avenue
Staten Island, NY 10303

Date opened May 2000

Square footage 70,000 square feet

Harlem Center

Harlem Center
125 West 125 Street
New York, NY 10027

Located on 125th Street – the busiest shopping street in Harlem.

Date opened September 2002

Square footage 126,000 square feet

Museum of Jewish Heritage

Museum of Jewish Heritage
18 First Place
New York, NY 10004

Square footage 30,000 square feet

Shops at Atlantic Center Site V

Shops at Atlantic Center Site V
590 Atlantic Avenue
Brooklyn, NY 11217

Adjacent to the Atlantic Terminal subway and train stations, the Shops at Atlanic Center Site V is located across the street from Forest City's Atlantic Center and Atlantic Terminal retail projects.

Date opened June 1998

Square footage 16,980

Queens Place

Queens Place
88-01 Queens Blvd
Forest Hills, NY 11379

Queens Place is a vertical power center located in the heart of Queens.

This center offers 440,000 square feet of prime retail space on five levels, with easy access to more than 1,200 parking spaces, along with outstanding visibility and access from major roads. Destination tenants like Target and Best Buy provide a high profile and assured traffic to the center.

More than 900,000 consumers live within a three-mile radius of Queens Place. Adjacent to the Queens Center Mall and easily accessible from the rest of the borough, Queens Place offers retailers superb access to this massive, but traditionally under served, consumer market.

Date opened/acquired September 2001

Square footage 221,509 square feet

[Note: the address says Forest Hills. Everyone else identifies the location as Elmhurst. NLG last month tweaked Forest City Ratner for misidentifying the mall.]

Shops at Bruckner Boulevard

Shops at Bruckner Boulevard
1910 Story Avenue
Bronx, NY 10473

Date opened November 1996

Square footage 113,485 square feet

Shops at Grand Avenue / Maspeth Center


Shops at Grand Avenue / Maspeth Center
74-17 Grand Avenue
Maspeth, NY 11378

Date opened December 1997

Square footage 100,000 square feet

Shops at Gun Hill Road


Shops at Gun Hill Road
1806 Gun Hill Road
Bronx, NY 10469

Date opened 1997

Square footage 147,000 square feet

Shops at Northern Boulevard

Shops at Northern Boulevard
48-18 Northern Blvd
Long Island City, NY 11101

Date opened November 1997

Square footage 218,059 square feet

Shops at Richmond Avenue


Shops at Richmond Avenue
2505-2535 Richmond Avenue
Staten Island, NY 10311

Located in front of the Staten Island Mall, the only regional mall on Staten Island, this center offers 76,000 square feet of retail.

Date opened February 1998

Square footage 76,000 square feet

Steinway Street Theaters / Kaufman Studios


Steinway Street Theaters / Kaufman Studios
3501 37th Street
Astoria, NY 10132

Date opened October 1999

Square footage 84,000 square feet

Location description
Directly off Steinway Street at 35th Street, and located between the Steinway Street local shopping district and the Northern Boulevard regional shopping area.

The Heights


The Heights
94-110 Court Street
Brooklyn, NY 11201

The Heights offers retail and entertainment opportunities for the 2.5 million residents of Brooklyn.

Date opened July 2000

Square footage 102,177 square feet

Location description
Located between downtown Brooklyn and affluent Brooklyn Heights in New York.

City criticizes developer for writing Coney zoning amendments, but has not criticized source of AY design guidelines

Sunday, the New York Daily News reported, in an article headlined Local Brooklyn politicians push developer's zoning changes for Coney Island, about some apparent collusion that has generated outrage:
Local pols approved dramatic new changes to the city's plan for Coney Island at a developer's urging, infuriating city officials, sources said.

Thor Equities officials floated a half-dozen recommendations - and Community Board 13 even adopted some of the wording, city sources said.

"Having a for-profit developer write these zoning amendments is the equivalent of having a Big Tobacco lobbyist write anti-smoking legislation," a city official said.

And what about AY?

In November 2006, I reported how, according to the Atlantic Yards Final Environmental Impact Statement (FEIS), government agencies worked together (and with the developer) to create design guidelines.

However, while the agencies did contribute to the Design Guidelines, memos acquired via a Freedom of Information Law request to the Department of City Planning show that the guidelines were the work of architect Frank Gehry's office--and that the agencies agreed with Forest City Ratner's plan (see memo above; click to enlarge) to take Gehry's name off the guidelines.

Not quite a direct parallel

Design Guidelines are not exactly the same as zoning amendments. But in the case of Atlantic Yards, there was no need to rewrite zoning. The Empire State Development Corporation (ESDC) can override city zoning, and the ESDC was invited by Mayor Mike Bloomberg to do just that.

Second thoughts on yesterday's post: FCR's lobbying will continue

Yesterday, the AYR headline read: Despite Atlantic Yards slowdown, Forest City Ratner spent $928,652 in 2008 on city/state lobbying.

My point was that, even though there was much less going on with Atlantic Yards, the developer still spent a lot of money, only 20% less than the 2007 total.

But maybe there's another way to look at it. Forest City Ratner had to spend significant sums lobbying because there was much less going on.

Because questions of housing subsidies, city payments, and a contract with the Metropolitan Transportation Authority remain unresolved, the developer needs to lobby more than ever.

After all, as Chuck Ratner, CEO of parent Forest City Enterprises, famously said last April, "We still need more" subsidies.

And that will probably continue into the indefinite future.

Despite Atlantic Yards slowdown, Forest City Ratner spent $928,652 in 2008 on city/state lobbying

Though the Atlantic Yards project was significantly stalled during 2008, developer Forest City Ratner spent $928,652 on city and state lobbying. At least 80% of the spending involved Atlantic Yards.

The total represents only a 20% decline from the 2007 total of $1,160,186. That total ranked the developer eighth in the state and second (to Columbia University) among real estate projects, according to a 4/9/08 report from the New York State Commission on Public Integrity. 

The 2008 rankings have not yet been released, but Forest City Ratner likely will be near or in the top ten.

(At right, the lobbying expenditures from January-June 2008 by the Atlantic Yards Development Group. Below are the details from July-December 2008. Click on graphics to enlarge.)

Arena site valuation at issue?

While the subjects of the lobby effort are described in broad terms (e.g., "budget regulatory and legislative issues"), they also offer some tantalizing hints. Forest City Ratner is apparently trying to ensure it receives credits for brownfield cleanup. 

It is in talks with the city and Metropolitan Transportation Authority--remember, the New York Observer reported that FCR is trying to delay paying the MTA the $100 million in cash pledged, and has sought a speedier delivery of the city's pledged $100 million.

And, perhaps most importantly regarding the issuance of bonds for the planned Brooklyn arena, Forest City Ratner is lobbying the New York City Department of Finance (DOF). Remember, the arena site would be tax-exempt, but PILOTs (payments in lieu of taxes) would be used to repay the arena bonds. However, the PILOTs cannot be larger than the foregone taxes, and the arena site valuation must be high enough to ensure that the foregone taxes are significant.

In order to value the Yankee Stadium site, the DOF looked well beyond the South Bronx for comps (comparable properties), even to a vacant lot in Alphabet City, more than seven miles away.

Largest contract goes to Fried Frank

In 2007, Forest City Ratner had the second largest lobbying contract. with the law firm Fried Frank Harris Shriver & Jacobson, valued at $771,170. According to 2008 lobby data from the commission, the developer last year paid Fried Frank $364,874.

In 2006, the year during which the City Planning Commission considered AY for an advisory vote, the three affected Community Boards weighed in, and the Empire State Development Corporation and Public Authorities Control Board approved the project, Forest City Ratner spent $2,105,141 on lobbying.

AY and beyond

According to 2008 data, Forest City Ratner's Atlantic Yards Development Group spent $746,201.

Forest City Ratner spent $105,035 on lobbying firms and $17,416 on in-house lobbyists, on a variety of projects. The Forest City Residential group spent $60,000 on lobbyists regarding projects in Westchester.

List of lobbyists for AY Development Group

NYC Metro area: Geto & DeMilly; Locicero & Tan; Richard Lipsky Associates; and The Carey Group.

Albany: Meyer, Suozzi, English & Klein; Patricia Lynch Associates (run by a former top aide to Assembly Speaker Sheldon Silver); and Wilson, Elser, Moskowitz, Edelman & Dicker.

Details of AY lobbying

State lobby data offers these details regarding lobbying by the Atlantic Yards Development Group:

Subject Lobbied

DETERMINATION OF BOARD OR COMMISSION, LAND USE IN CONNECTION WITH THE PROPOSED DEVELOPMENT OFTHE ATLANTIC YARDS PROJECT IN BROOKLYN, ATLANTIC YARDS AND NEW JERSEY NETS, 421-A TAX ,ICIP, EMINENT DOMAIN, BUDGET REGULATORY AND LEGISLATIVE ISSUES PERTAINING TO REAL ESTATE, CONSTRUCTION AND ECONOMIC DEVELOPMENT; ACQUISITION OF ATLANTIC YARDS AND CITY PROPERTY RELATED TO THE DEVELOPMENT OF ATLANTIC YARDS BROOKLYN,NY; NYC COUNCIL, NYS ASSEMBLY AND SENATE; ECONOMIC DEVELOPMENT; BROWNFIELD CLEANUP

Person, State Agency, Municipality, or Legislative Body Expect to Lobby

MTA, EMPIRE STATE DEV. CORP., NYC DEPT. OF FINANCE, MEMBERS OF BROOKLYN COMMUNITY BOARDS #2,#6,#8, NYC COUNCIL, NYS ASSEMBLY AND SENATE, ADMINISTRATIVE, EXECUTIVE AND LEGISLATIVE BRANCHES OF GOVERNMENT, ASSEMBLY, SENATE, EXECUTIVE, NYS & NYC EXECUTIVE & LEGISLATIVE BRANCHES; NYC LAW DEPARTMENT

Bill, Rule, Regulation or Rate Number Expect to Lobby

A9167 S6125 A9304 S6386 S6446 A9373 A9805 S6805 A9809 S6809 A660 A661A A1264 A1265 A1268 A1436 A2168 A2198 A2690 A3159 A5653 A7122 A7144 A7145 A7430 A7489 A7744A A7745B A8674 A9196B A9268 A9274A A9373A A9510A A9676 A10073A A11394 A11395 A11396 A11585 A11586 A11692 S79 S94 S96 S282 S683 S686 S688 S915A S2302 S2418 S2822 S5410A S5422B S5828 S6025 S6255B S6333 S6366A S6446A S6794 S6933 S8250 S8353 S8434 S8461 A9800-A9810 S6800-S6810 A11741A A11742 A11755 A11768 S8672, S8705, S8717

The Brooklyn Paper and its new Courier-Life sibling: Markowitz, Ratner, and advertising

Earlier this week, I questioned whether the Brooklyn Paper, newly sold to Rupert Murdoch's News Corporation, would continue to raise questions about political contributions made by Dan Holt, publisher of the now-sibling Courier-Life chain.

[Update March 25: Dan Holt is no longer listed as the Courier-Life publisher; that job goes to Clifford Luster, part of the family of longtime owners, who's listed in the print issue but not the web site. I'm not sure when Holt left, but he and Luster were co-publishers when the chain was sold in September 2006.]

But there's more that we may not be reading about.

The relationship with Markowitz

I also pointed out that the Courier-Life publishes Borough President Marty Markowitz's Brooklyn!! promotional publication. But I didn't point to this 9/25/08 Brooklyn Paper editorial on Markowitz:
For example, Markowitz needs to explain:

• The inner workings of the deal he has with the Courier-Life newspaper chain to publish his “Brooklyn!!” promotional publication. A Brooklyn Paper review discovered that publicity and printing are a huge part of Borough Hall’s discretionary budget — costs that could be a payback to the Courier-Life chain for its consistently positive coverage of Markowitz.

Kowtowing to Ratner

The Brooklyn Paper reported 4/23/05:
Kowtowing to demands by developer Bruce Ratner, the Brooklyn Chamber of Commerce this week barred the public from an official Chamber function, a luncheon where Ratner’s controversial Atlantic Yards project was discussed.

The event had been advertised for three weeks as “free and open to all businesses” on the Chamber’s web site as well as on postcards sent to the Chamber’s mailing list, which, in addition to Chamber members, included the news media, community board offices and non-members.

In unusual form for the Chamber, which serves to publicize and promote businesses in the borough, the Chamber barred several merchants and residents who have expressed criticism of Ratner’s plan, as well as reporters, from attending the meeting.

“This was not set up to be a debate about the project,” said Randy Pierce, a spokesman for the Chamber. “We knew there wasn’t going to be any new information; that’s why we didn’t invite the press.”

Some local newspaper publishers were invited on the understanding that they would not report on the meeting. The chairman of the Chamber is Dan Holt, co-publisher of the Courier-Life newspaper chain. Holt could not be reached for comment by press time.

Pierce said the meeting was closed to foes of the Ratner plan in order to avoid stirring controversy, and the Chamber had complied with Forest City Ratner’s requests to ban certain community members and business owners from the meeting.

Advertising policies

The Brooklyn Paper, on 5/12/07, also took a shot at the rival chain for its advertising policies:
So far, nine publications have signed on to the pledge, including Time Out New York and Hoy. The New York Post-owned Courier-Life chain continues to publish ads for escort services and massages.

Its publisher, Dan Holt, did not return repeated requests for comment.

Jon Stewart to Jim Cramer: "You don’t just take their word at face value."

In a devastating takedown Thursday of CNBC "Mad Money" host Jim Cramer, "Daily Show" host Jon Stewart offered this sardonic observation: "I’m under the assumption, and maybe this is purely ridiculous, but I’m under the assumption that you don’t just take their word at face value, that you actually then go around and try to figure it out."

Those interviewing New Jersey Nets CEO Brett Yormark might take that warning to heart.

More on media complicity from Salon's Glenn Greenwald. 

In unskeptical Bloomberg News article (in the Times), Yormark asserts 2011 arena opening; Newark's Booker still optimistic

In publishing a Bloomberg News article quoting Nets CEO Brett Yormark's prediction of a 2011 Brooklyn arena opening--an article in which Yormark was not challenged, nor was his dubious record of predictions noted--the New York Times sports section today has sunk into the swamp.

[Update: Despite an online statement that "A version of this article appeared in print on March 14, 2009, on page D2 of the New York edition," it's not in my copy. Perhaps it appeared in the early edition, before the Knicks game report came in.]

The article fails to include the disclaimer that the parent New York Times Company is business partners with Atlantic Yards developer Forest City Ratner; such a disclosure might have served to alert editors to add a dollop of skepticism.

The Bloomberg News article is based on a Bloomberg Television interview; it's the Bloomberg way of repurposing news in different media.

But if Newark's public radio station, WBGO, had an associated news service, it would've produced its own sole-source article, quoting Newark Mayor Cory Booker as saying he's optimistic about bringing the Nets to the new Prudential Center.

Suite sales static

The article, headlined Nets Have Sights Set on Brooklyn in 2011-12, begins:
The Nets are committed to moving to a yet-to-be-built Brooklyn arena for the 2011-12 season, overcoming economic concerns and legal opposition, Brett Yormark, the team’s chief executive, said.

“It will happen,” Yormark said in an interview for Bloomberg Television’s “For the Record.” “We’ll be there for the ’11-’12 season. We’ve presold 20 percent of our suites. We’ve got 8 of our 14 founding partnerships already completely signed. Next week, we’ll announce our ninth.”

NoLandGrab observed that, last May, ten months ago, Yormark was boasting about having pre-sold 20% of the suites, to "friends and family"--which means no one else has signed on. (Here's more from DDDB.)

He wasn't asked about the 32-month construction schedule, which, to my mind, makes 2012 a more likely best-case scenario.

Lack of skepticism

Oddly enough, the interview is conducted by Scott Soshnick, who elsewhere has demonstrated notable skepticism about sports team hype.

The interview opens with shots of admiring press coverage of Yormark--sans, of course, that Newark Star-Ledger article in which he claimed little knowledge of P.T. Barnum--which is a sign that there will be few tough questions.

"At the end of the day, I am judged with how much revenue we can generate," Yormark tells Soshnick. "When you really break it down, it's tickets and sponsorships."

Translation: he's willing to do what it takes to generate that revenue. Including making things up. And, as he tells his interviewer, putting corporate logos on uniforms: "I think it would be a great thing." After all, they do that in soccer, and in NASCAR, which he formerly ran.

The fundamental paradox

Consider that Yormark has been selling sponsorships and luxury suites for the Brooklyn arena, and no one knows what the arena would look like. Is this still Frank Gehry's arena? What does it mean to severely cut costs on Gehry's once-$950 million design?

Yormark's challenge is to paper over that difference.

More stretchers

"You've got to have price integrity," Yormark tells his interview. One thing season ticketholders said is that they don't want to have to pay for preseason games. Unmentioned: the Nets are essentially giving tickets away.

"I spend a lot of time in Brooklyn," he adds. "And I meet with kids all the time. I meet with thousands of kids of every day. And this project is going to enable them to dream a little bit bigger and bolder than they ever have. It's going to create jobs. It's going to create affordable housing. It will happen. We'll be there for the 11-12 season."

Thousands of kids every day? Is that like getting up every day at 3:30 a.m.?

Breaking ground in summer?

The article states:
Yormark said the team is awaiting resolution of an eminent-domain lawsuit before breaking ground on the Barclays Center. That may come in late spring or early summer, Barry Baum, a spokesman for the team’s owner, Bruce Ratner, said in an e-mail message.

“The table has been set,” Yormark said. “We feel very confident about the financing. We feel very confident about just the project in general, and once we get through this final piece of litigation, we’ll be in the accelerated mode to break ground and get ready to open.”

Well, while it's likely that the pending eminent domain case will be dismissed by a state appellate court, we don't know how long it will take for appeals in that case and the case challenging the environmental review to be addressed by the Court of Appeals. Nor do we know whether legal challenges will emerge if and when the Empire State Development Corporation (ESDC) pursues eminent domain.

But there's a good chance that, just as Yormark's predictions in the past have been proven wrong, this one will be too.

Keep in mind that the developer has reportedly been seeking federal funds to pay for a new railyard, and until that railyard is dealt with the project is stalled. Meanwhile, the ESDC's Modified General Project Plan states:
FCRC shall be required to consummate such purchase prior to or contemporaneously with the first acquisition by ESDC of a parcel within the Project Site not owned by the MTA.

What about Newark?

In the interview, Yormark continued to say that the Prudential Center was not an option:
“Would it make sense for another tenant to share that venue with the Devils? Maybe, but it won’t be the Nets. As much as we respect Cory [Booker] and everything he’s done for the city of Newark, we will not be there.”

Of course, three months ago, Forest City Enterprises said it was committed to Fresno.

Well, Booker was interviewed Thursday, March 12, on Newark Today with Mayor Cory Booker, a public affairs show on WGBO, Newark's public radio station, hosted by Andrew Meyer.

At about 12:45, Meyer asked what was going on around the Prudential Center, where relatively little development has occurred. "We've got an arena now and it is generating a tremendous amount of visitorship to our city. I'm working assiduously to try to make sure that we get more things in our city to drive even more, most particularly the Nets, frankly."

At 15:33, Meyer again brought up the Nets, noting that they'll play two preseason games in October. "How do you feel about this?" he asked the Mayor.

"I'm excited, but this is not the goal which I seek," Booker responded. "I really do seek to find a win-win for our entire state, to keep the team here in New Jersey. I'll be blunt, that there's a lot of conversations and a lot of work being done on it.... trying to make sure this happens for our city. We don't want to lose the Nets from New Jersey and we do believe Newark is the place they should play. We know the bottom line is the team could make more money. New Jersey could keep the tax revenue... Newark could generate more excitement around our arena."

Whose advantage?

At about 17:47, Meyer again brought up the Nets: "What is the latest with the Nets? We've asked you about this the last couple of shows. You said 'I might have a couple of ownership groups interested.' With each passing day, with each passing week that there's nothing really said, movement to Brooklyn or movement to Newark, whose advantage does that work out to, ours or New York's?"

"I want to say it works to New Jersey's advantage, not to parse between the Meadowlands and Newark," Booker responded. "Look, the Ratner project is not making progress. I think we're seeing a lot of legal challenges there. I think we're seeing a lot of problems. To build an arena in this economic climate, especially along the lines of what they've said is going to be a very difficult thing to do, and it makes me more optimistic that we'll be able to keep the team in New Jersey."

Well, those legal challenges are diminishing. I think the economics--and, ultimately, the effort to issue bonds--will loom even bigger than the legal challenges.

At about 21:00, there's some more discussion by Booker about cooperation between Newark and the Meadowlands, home of the Izod Center. "As a matter of months ago, there was a lot of tensions and disagreements between the Meadowlands and Newark... We're going to find a way to work together."

Times real estate magazine article on "Post-Bubble NYC" gets AY wrong (and boosts Bloomberg)

From Sunday's Key magazine, the real estate supplement to the New York Times Magazine, an article headlined After the Bubble provides a mostly admiring portrait of Mayor Mike Bloomberg's development ambitions, and the future of such ambitions.

It contains this sentence:
Thousands of apartment units and a new arena for the Nets would rise on the site of the Atlantic Yards in downtown Brooklyn.

Well, there's a planned or proposed Atlantic Yards site, but there's no "site of the Atlantic Yards," because the railyard is called the Vanderbilt Yard. The project would not be in downtown Brooklyn. Other sections of the Times have fixed such mistakes, but the Times, a many-headed beast, continues to produce errors.

Empowering the private sector

The article states:
And yet his legacy is already visible on the city’s landscape. It is less sweeping, perhaps, but no less significant: he empowered the private sector to remake the city bit by bit.

This was partly a function of the way Bloomberg ran New York, a natural byproduct of his ability to govern the ungovernable city. “The perception under Bloomberg has been that New York is a good place to do business, and that’s very important for developers,” says Jonathan Miller, one of the city’s best-known real estate appraisers.

But it was also deliberate. Bloomberg is a businessman. He believes in growth and has faith in the private sector. His administration expedited permits and signed off on building designs with minimal interference. It also freed up underutilized land — old piers, elevated freight lines, warehousing districts, rail yards — either by rezoning or by threatening to employ its powers of eminent domain. In many cases it offered attractive incentives, most notably tax breaks, to encourage companies to build. The administration did its share of construction too, adding parks across the boroughs and along the city’s long-neglected waterfront and, in partnership with private developers, initiating New York’s largest affordable-housing project in decades.

Well, isn't there a big difference between rezoning, which involves some level of accountability, and threatening to use eminent domain? And isn't there a difference between both of those and turning the decision to deploy eminent domain to an unaccountable state agency like the Empire State Development Corporation (ESDC), as in the case of Atlantic Yards?

What's missing in this sunny passage? Democracy.

Some problems acknowledged

Author Jonathan Mahler acknowledges some drawbacks:
But the building boom, while breathing new life into a number of long-struggling neighborhoods, was problematic in its own right. New York got some first-class architecture, but it also got more than its share of eyesores, and the proliferation of luxury-condo towers accelerated the regrettable transformation of Manhattan into an island of the wealthy. Too much of the new construction did nothing to enrich the fabric of the city. “Here we practice the art of the deal, not the art of the city,” as the architecture critic Ada Louise Huxtable has put it.

The downturn will give New York a chance to pause and reflect on this period of hyperactive development, and to think about what sort of buildings it needs in the future.

New York is some abstract entity that will reflect?

How about putting it plainly: reform of the processes regarding land use is necessary.

Need for infrastructure

The final quotes go to the (new) head of an organization that is sometimes a cordial critic of Bloomberg, and to Bloomberg's former deputy mayor:
Better still, the absence of private capital may spur federal investment that could enable the city to not simply patch up its deteriorating infrastructure but to reinvent it for a new, greener era. “Even though we’ve come through a period of real economic development, we have an infrastructure that badly needs investment and imagination,” says Vin Cipolla, president of New York’s Municipal Arts Society.

For its part, the Bloomberg administration has no intention of scaling back its Moses-like ambitions. When I spoke recently with [Dan] Doctoroff, who is now president of Bloomberg L.P., he told me that he and his colleagues had always envisioned their grand scheme as part of a long-term plan for New York. They never assumed they could outrun the next bust. “We are now in the middle of the 12th serious downturn since New York became a major financial center in the early 19th century,” Doctoroff said. “The lesson of every single one of these previous 11 busts is that the city always comes back stronger than ever. History is perfect on that one.”

If the administration has no intention of scaling back its Moses-like ambitions, expect--despite the absence of such acknowledgment in this article--continued (Jane) Jacobsian responses.

The Courier-Life misreads Tish vs. Dee

The Courier-Life's notorious Stephen Witt suggests, in an article headlined "Tish vs. Dee: a real battle" (click to enlarge) that Atlantic Yards won't be the deciding factor in the 35th District Council race.

But first he suggests they're evenly matched:
Political pundits are expecting an interesting battle this primary season for the 35th District City Council seat as popular incumbent Letitia (Tish) James faces popular community activist Delia (Dee) Hunley-Adossa.
..."It definitely will be a bruising battle," said Geoff Davis, brother of slain City Council member James Davis, who preceded James in the seat. "They both have name recognition. They both are community oriented. They both have participated in countless programs for young people and have two separate views on the Atlantic Yards project. Delia is for it and Tish James is against it."

Ok, but James is the incumbent. She's won two elections and has achieved a far different level of visibility. She crushed her opponent in 2005. Though James thinks AY is the big issue, Hunley-Adossa denies that.

"Refuses to be bullied"

Witt writes:
Hunley-Adossa said her platform revolves around the three E's--the economy, education and the environment. She also refuses to be bullied by opponents of the Atlantic Yards project, who she claims seldom allow opposing viewpoints.

This is almost as good as calling AY opponents "real land-grabbers" because some moved into industrial buildings renovated into condos.

The more important thing Hunley-Adossa refuses to do is to reveal how much money Forest City Ratner gives her dubious organization, Brooklyn Endeavor Experience (BEE). Witt writes vaguely that "Hunley-Adossa has received money from Atlantic Yards developer Bruce Ratner."

Who's got baggage?

Witt ignores the question of why BEE spends more money on salary for Hunley-Adossa than on program expenses.

He does point out that James comes out of the Brooklyn Democratic organization headed by Clarence Norman, later a convicted felon. Indeed, James does not come from a reform background. But in the past several years, she has opposed the party organization, now run by Assemblyman Vito Lopez, who nonetheless offers grudging respect for James's stand against Atlantic Yards.

Dee = Hakeem?

Witt concludes the article by outsourcing analysis to public relations expert Lupe Todd, who formerly worked on the Atlantic Yards project for Dan Klores Communications and helped her friend Hakeem Jeffries win the 57th District Assembly seat.

Todd doesn't think AY will be the deciding factor:
The recent Jeffries race proved that, she said. When the anti-Atlantic Yards people put up a candidate on that issue, he got trounced, said Todd.

Well, there are quite a few differences. In 2006, there was an open seat in the 57th, while there's an incumbent in the 35th. Jeffries had run strongly against Roger Green, so he had the most name recognition. He was a more polished candidate, with a deeper base, than AY opponent Bill Batson.

Batson actually got more than twice the votes as Freddie Hamilton, the staunchly pro-AY candidate and, like Hunley-Adossa, a signatory of the AY Community Benefits Agreement.

Jeffries, who at that point was pro-AY with some caveats, had published newspaper ads declaring himself critical of the development. The Daily News's Ben Smith commented that Jeffries "frantically muddied the water" regarding his position.

Given Hunley-Adossa's role MCing pro-AY rallies, that's not exactly an option.

Three months after pledging commitment, Forest City pulls the plug on Fresno project

Though developer Forest City Enterprises (FCE) in December maintained it was committed to a $300 million housing and office project in downtown Fresno, CA, yesterday FCE announced it has abandoned the project.

The key issue, apparently, was the inability to secure state and federal subsidies, despite the developer's effort to make cuts.

The Fresno Bee reported:
The company has had an exclusive development deal with the city of Fresno since 2004, but was unable to close a $100 million gap in funding for the South Stadium project.
Support for the project was strong on the City Council, which in December agreed to extend its exclusive negotiation agreement with the Cleveland-based developer for six more months.

“After considerable analysis and collaboration with the Fresno Redvelopment Agency, it has become clear that the financial gap is simply too great to develop a high-density, mixed-use project at this time,” said Kevin Ratner, president of Forest City Residential West. “Despite our combined efforts, including scaling back the overall project, achieving design efficiencies, and identifying other sources of funding, the gap remains too large to justify further pursuit of the project.”

No subsidies

The city's new mayor, Ashley Swearingin, was no fan of the project, but the real gap seems to be the failure to find $100 million in state or federal funds to fill that budget gap. The Bee reported in December that the six-month extension gave the developer time to pursue state and federal money.

Forest City apparently has no spare cash; just this week reports emerged about the company's effort to sell 15 properties.

There's a subsidy gap for Atlantic Yards, as well. However, New York City, especially Brooklyn, is a core market for the developer, and there's a significant upside to AY--or, at least, the erasure of a significant downside: the massive losses suffered via ownership of the Nets.

After taking over Governors Island and Brooklyn Bridge Park, would the city oversee Atlantic Yards? Nah

The New York Times reports today on Mayor Mike Bloomberg's proposal that the city take control over Governors Island, ending a city-state alliance and letting the state focus on other projects.

The Times reports:
Governors Island is only one of several joint city-state projects on which the Bloomberg administration has quietly sought an amicable divorce. City officials have grown increasingly frustrated with the partnerships and what they say is the state’s inability to make decisions and commit money.

The other projects under discussion are Brooklyn Bridge Park, which the city would like to take over, and the Jacob Javits Convention Center, which the city would cede to the state. The city would swap $300 million planned for the convention center into the two park projects.

What's missing? Atlantic Yards (among others).

Some contrasts

Now, why wouldn't New York City want to take over Atlantic Yards? Well, first of all, it's not a joint city-state project; rather, it's a state project with city contributions.

However, the difference is not that huge. The Brooklyn Bridge Park Development Corporation (BBPDC), for example, is a subsidiary of the Empire State Development Corporation (ESDC), which is the state agency shepherding Atlantic Yards.

The BBPDC board consists of members appointed by both Bloomberg and Gov. David Paterson. Same with the Governors Island Preservation and Education Corporation (GIPEC), another ESDC subsidiary.

The Convention Center Development Corporation is another ESDC subsidiary, though I don't see information about board members.

There's no board at all governing Atlantic Yards, which is also formally an ESDC project.

Reasons to steer clear

Let me suggest several other reasons the city wouldn't take over:

• the project requires a state override of city zoning
• a city takeover would make a mockery of the lack of city input during the approval process
  
• a state agency, the Empire State Development Corporation (ESDC), not a city one, has proposed using eminent domain
• the ESDC has led the way defending the project in court
  
• the city doesn't have any more money to contribute
• City Council member Letitia James, an AY opponent, might have some questions
• City Council members Bill de Blasio and David Yassky, sometime AY critics and current attention-seeking citywide candidates, also might have questions
• AY is a political hot potato, likely the only project that elected officials and civic groups have opposed as unworthy of federal stimulus funds
  

Yup, the Brooklyn Paper's moving into MetroTech

As I suspected, the Brooklyn Paper will join the Courier-Life chain in renting space in Forest City Ratner's MetroTech.

I wondered if this might make it tougher to report critically on Brooklyn's most powerful developer.

Then again, as NLG points out, the Courier-Life was pro-AY, in both editorial and news pages, before moving into MetroTech.

I'm going to go out on a limb here and predict that the Brooklyn Paper's news coverage of Atlantic Yards will diminish somewhat (as it already has), and its editorial criticism will diminish even more.

(I don't think it's going out on a limb to predict that the Brooklyn Paper will stop calling attention to political contributions by the Courier-Life's publisher, Dan Holt.)

[Update March 25: Dan Holt is no longer listed as the Courier-Life publisher; that job goes to Clifford Luster, part of the family of longtime owners, who's listed in the print issue but not the web site. I'm not sure when Holt left, but he and Luster were co-publishers when the chain was sold in September 2006.]

Alternatively, AY could become even less important if Rupert Murdoch's News Corporation consolidates the two semi-competing chains into some hybrid Courier-Paper.

Oh, I'm still waiting for Gersh Kuntzman to answer my questions.

Changes at 470 Vanderbilt: The Box plus a new residential building

In April 2007, I wrote about Forest City Ratner's flirtation with a plan to add 470 Vanderbilt Avenue, a nine-story former tire plant turned significantly empty telecom center just north of Atlantic Avenue, to the Atlantic Yards footprint.

That plan went by the wayside, and the telecom center became increasingly empty. But now it's showing signs of major changes: a renovation and rebranding of the office space, with new retail, plus a new residential building slated for the site's large parking lot.

And there's an important Atlantic Yards connection; follow along to the bottom and take note of the assessed value of the land.

News emerges

In January 2008, Brownstoner broke the news that "the Carlyle Group-owned Atlantic Telecom Center at 470 Vanderbilt Avenue in Fort Greene will be going residential if negotiations with City Planning conclude without a hitch... the property... currently has some 700,000 square feet of unleased space. We're also hearing that there could be some office, retail and possibly cultural space in the mix."

Adding residential

Last November, plans for a much expanded project were revealed. Brownstoner reported November 10 that the Carlyle Group had sold the "600,000-square-foot property" to GFI Development for $50 million.

(Note that PropertyShark has the building at 1.1 million square feet and the building's web site once said it offered 750,000 square feet. I can't suss out ACRIS records to be certain of the sale price.)

GFI, after some negotiation, now plans 350 residential units, with 90 of them affordable (25%) in a building that reaches 12 stories along Vanderbilt and Clermont avenues (though with a setback at nine stories) and an eight-story section along Fulton Street (with a setback at six stories), according to a February 12 article in the Brooklyn Daily Eagle. Community Board 2 has endorsed the project, which now faces approval by the City Planning Department.

It's unclear to what income groups the affordability is aimed, but usually 20% affordability involves only low-income units. City Council Member Letitia James agreed to support a somewhat larger new building in exchange for 25% affordable units, rather than 20%.

The building would include a supermarket along Fulton Street and a two-level underground parking garage.

Existing building

Brownstoner earlier reported:
Meanwhile the existing telecom building will be repositioned as Class B office space with retail (a bookstore or cafe, they hope) on the ground floor; the large floor plates are currently for rent in the $30-a-foot range.

Right now the plan is for a bowling alley.

A new name: The BOX

According to the GFI Capital web site (click on Development), the office space has a new name.
The Brooklyn Office Exchange (The BOX) sits on the edge of three vibrant downtown Brooklyn neighborhoods--Fort Greene, Prospect Heights and Clinton Hill.

The project will be a one million sq ft mix-use development with office, retail and a residential LEED-certified building. Occupancy of the office and retail will occur in the fourth quarter of 2009.

(By the way, a web site called CarrierHotels.com, which apparently has not been updated for a couple of years, seems to be advertising the building in its old incarnation. And in 2005, according to the Wired New York Forum, there were plans for a Karl Fischer conversion of the telecom center plus three new residential buildings, one of them 24 stories.)

Some details

Just to ballpark the tentative numbers, 350 units, averaging 800 square feet a unit, would total 280,000 square feet, plus shared space, in the new building. If the average were 900 square feet, the total would be 315,000 sf.

Crain's New York Business, reporting last November 8, headlined its article Progress on site near Atlantic Yards; it said (counter to some reports I've seen) the existing building had been empty since 2000. Crain's described plans for 500,000 square feet of office space and 100,000 square feet of retail space in the existing building.

Width vs. height

Crain's pointed to James's preference for a bulky rather than a tall building:
Ms. James insists that even the larger structure is preferable to the soaring towers envisioned for Atlantic Yards by Mr. Ratner's firm, Forest City Ratner.

"If they wanted to put 10-story buildings on Atlantic Yards, I would jump up and down and hug Forest City Ratner,'' she says.

James should know better than to refer to Atlantic Yards as a place rather than a project, but that just shows the extent of the meme.

This new building might be approximately the square footage of some of smaller AY towers, which range from 184 to 287 feet. The height is necessary to create open space to serve the new population.

So, while a large but relatively low new individual building at the 470 Vanderbilt site might work without added open space, a series of 16 such buildings would not generate many hugs. Indeed, when I queried James, she observed, "I support the UNITY plan, which has similar ten-story buildings. Obviously not 16 and absent an arena."

The UNITY plan, which would divide the railyard site into parcels, suggests blocks of open space and a range of building sizes, from mid-rise (as at 470 Vanderbilt) to high-rise, one up to 400 feet.

Which retail comes first?

James, Crain's reported, wants GFI to put a bowling alley and a bookstore into the retail space, given that those were at the top of a community survey.

Given the location bordering busy Atlantic Avenue, the bowling alley seems to be on the front burner, according to minutes from CB 2's Land Use Committee. There may be a desire for a bookstore, but independent bookstores--heck, all bookstores--are having it tough these days. Then again, with empty spaces, property owners are negotiating more.

Assessed land value: under $11

It's worth looking at Department of Finance records to see the latest assessment. While DOF does not provide the square footage of the site, multiplying the dimensions (441.67 feet x 218.92 feet) yields a lot size of 96,690 square feet. PropertyShark calculates 90,500 square feet.

The land is valued by the city at $990,000. (Click to enlarge.)

That's under $11 a square foot. Such valuations near the Atlantic Yards site will become increasingly relevant if and when the arena block is assessed for the purposes of issuing tax-exempt bonds, especially given the example of Yankee Stadium.

Purchase of FCE bonds, sale of FCE properties suggest corporation faces unsteady fate

NoLandGrab (with some help from Gari N. Corp) beats me to the punch regarding Atlantic Yards developer Forest City Enterprises' current financial difficulties.

First, Yahoo Finance, Tim Melvin of RealMoney.com declares that Third Avenue, the largest institutional holder of Forest City Enterprises stock, is also buying senior debt that would yield better than 30%.

It's a huge return should the company survive the recession or, according to Gari N. Corp, a potentially large return even if FCE hits bankruptcy, given that bondholders would be repaid first. He comments: "The fact that Third Ave is now buying bonds as well as stock suggests that it has a very real concern that the stock would be wiped out in bankruptcy."

FCE selling properties

The Cleveland Plain Dealer, citing newsletter Real Estate Alert, says that FCE is seeking buyers for 15 properties: 10 apartment properties, four shopping centers and the office portion of University Park at MIT, a mixed-use development at the Massachusetts Institute of Technology in Cambridge, MA.

Four shopping centers? I'll bet none are in Brooklyn, NY, where synergy is a goal. One reason why FCE values Atlantic Yards is it would increase the value of the Atlantic Terminal and Atlantic Center malls across Atlantic Avenue.

Another is that AY would not only stem significant losses in operating the Nets, but it would raise the value of the team.

So FCE likely will stick with Atlantic Yards

NLG points out that FCE stock closed at $4.25, down 9%. Above is the past week of FCE news via Morningstar.

Seeing through the marketing hype from the Nets and other sports teams

The Nets get some props from Forbes for offering "free tickets to unemployed fans who posted their résumés to the team's online job bank," but Forbes doesn't grapple with the knotty issue of food vouchers.

Seeing through the hype

Meanwhile, Bloomberg columnist Scott Soshnick sees through the sports marketing hype, commenting, in Depression-Minded Sports Teams Show Desperation, that teams (like the Nets) trumpeting no-risk ticket plans are finally recognizing "the concept of treating the customer fairly, offering value."

"Sadly, it took an economic calamity for most teams to make available the kinds of fan-friendly offerings that should have been standard practice long ago," he writes.

"Every pro sports team claims to be a source of civic pride," Soshnick observes. "And then they try to extract every last penny from the customers they’re supposed to represent."

He concludes that it's all about hype: "When the Timberwolves and other teams rescind their fan- friendly initiatives -- and they will -- there won’t be a press release or follow-up e-mail."

Brutally weird: Brooklyn Paper sold to Murdoch; now an independent online Brooklyn publication is needed

Given the pressures on the news industry, it's not surprising that Brooklyn Paper publisher Ed Weintrob might have put his weekly newspaper chain on the block, and it's not shocking that Rupert Murdoch's News Corporation, which already controls the Courier-Life chain, might have decided to make the purchase as the New York Observer reported yesterday.

(Graphic by Lumi Rolley of NoLandGrab.)

What is surprising--brutally weird, actually--is that Brooklyn Paper editor Gersh Kuntzman, a New York Post alumnus would tell the Observer, "They don’t want the product to change. And they love the product. And the product is fantastic."

Well, um, why wouldn't the News Corporation seek, as they say in the biz, efficiencies and synergies in Brooklyn news coverage and ad sales, given that both papers publish editions for neighborhoods like Park Slope, Brooklyn Heights, and Fort Greene? (There are areas with less overlap.) DDDB calls it Monopolyn.

For how long will two reporters compete to cover the same story for two competing newspapers owned by the same giant corporation? Brooklyn Optimist blogger Morgan Pehme already reports that consolidation has begun, with some staffers and the Greenpoint Courier getting the ax.

The Courier-Life chain recently moved from Sheepshead Bay to rent space in Forest City Ratner's MetroTech. Will the Brooklyn Paper, now headquartered in DUMBO, be consolidated into the same space? If so, it might make it tougher to report critically on Brooklyn's most powerful developer.

In the New York Times's new Fort Greene/Clinton Hill blog The Local, Andy Newman commented that "we were happy" to learn that the Paper, threatened with demise, was being purchased:
Now Mr. Kuntzman, a former New York Post reporter, will be back working for his old boss, which may or may not be a great thing but definitely beats unemployment.

Maybe the "voice that's Brooklyn to the core" (in Newman's words) will be preserved, but I have some doubts.

(Update: Politico's Michael Calderone points out that the deal helps Murdoch's properties compete with the New York Daily News, traditionally strong in Brooklyn and Queens.)

Establishment vs. outlier

The Courier-Life, as noted below, has always been the establishment chain, its publisher contributing to political candidates and chairing the Brooklyn Chamber of Commerce. The Courier-Life publishes Borough President Marty Markowitz's Brooklyn!! promotional publication. (Click on graphic to enlarge.)

The Brooklyn Paper has always been more of an outlier. In fact, Kuntzman told Gothamist a little more than a year ago, on 2/11/08, "Brooklyn needs us too much right now, what with local papers being snapped up by billionaire moguls who have no interest in local news except maximizing classified ad sales. Has Rupert Murdoch even BEEN to Brooklyn? His reporters don't know the territory, either."

Oh.

Who'll fill the gap? Online newspaper needed

The untimely loss of Gowanus Lounge founder Robert Guskind weighs heavily; not only would Guskind have offered some acid commentary on the consolidation, he would have been in the forefront of efforts to maintain independent reporting on the borough.

Will the Brooklyn Eagle, which focuses on downtown, step up? Will the Brooklyn Downtown Star, part of the Queens Ledger chairn/ I doubt it. Both Pehme and OTBKB's Louise Crawford think local blogs will become more important.

Brownstoner currently has a significant readership, more than the web sites of the major Brooklyn weeklies, and generates many comments, but essentially aggregates others' reporting, along with other information (press releases, etc.). Perhaps when the market recovers, Brownstoner will be able to restore the second staffer lost.

I don't doubt that blogs will become more important, but online journalism ideally should be an institution--say, a New Haven Independent, an online newspaper run by Paul Bass (a friend)--that can aggregate readers, distribute news tips, and maintain quality.

Brooklyn needs such a publication, a Voice of San Diego or a MinnPost, a nonprofit organization dedicated to reporting.

What about Atlantic Yards?

Consider a 12/30/06 Brooklyn Paper editorial headlined Covering Atlantic Yards:
Over the last 12 months, no story has been as important to Brooklyn — and, as a result, to this newspaper — as Bruce Ratner’s Atlantic Yards mega-development.

With its 16-towers, 19,000-seat basketball arena, 6,000 units of housing and hundreds of thousands of square feet of office and retail space, Ratner’s mini-city is the biggest single-developer project in the history of Brooklyn.

As such, it deserved — and got — our attention, sometimes obsessively so. As we prepared our year-in-review issue, we noticed that not a single issue this year was devoid of coverage of some element of the Ratner proposal.

Yet our laser-like focus has earned us little praise and sometimes even outright scorn from local elected officials. In an interview in this week’s Papers, the project’s biggest booster, Borough President Markowitz, calls us “biased” because our coverage revealed the shocking density of the project, the traffic it would cause, and the subsidy-enriched sweetheart deal Gov. Pataki’s cronies cooked up in Albany to make this project work for Ratner.

Given how we’ve been attacked for such coverage — and the overwhelming support the project enjoys among city and state powerbrokers — many of our readers have wondered why we even bothered. Indeed, it would have been far easier for us to blow off Atlantic Yards, as did the daily papers, and our weekly competitor, the New York Post-owned, Sheepshead Bay-based, Courier-Life chain.
(Emphasis added)

Let's assume that the Brooklyn Paper will be less likely to slam the Courier-Life chain, which, it should be pointed out, editorially supported Atlantic Yards before it was bought by Murdoch.

Will the Brooklyn Paper point out again that a Courier-Life reporter--the one who recently cast Bruce Ratner as a victim of project opponents bent on denying him stimulus funds--gave Ratner a bear hug?

Will the Brooklyn Paper again target Courier-Life publisher Dan Holt (and former Chamber of Commerce chair, still an ex officio board member), as it did 8/5/06 in the pre-Murdoch era for contributing to political candidates? (See graphic above; click to enlarge.) Probably not, though Holt remained at the paper and, as the graphic below indicates, has made another dozen contributions to candidates since then.

[Update March 25: Dan Holt is no longer listed as the Courier-Life publisher; that job goes to Clifford Luster, part of the family of longtime owners, who's listed in the print issue but not the web site. I'm not sure when Holt left, but he and Luster were co-publishers when the chain was sold in September 2006.]

Will the Brooklyn Paper maintain its tough coverage of Atlantic Yards? Well, it's already receded somewhat. Has the Brooklyn Paper covered Delia Hunley-Adossa's AY-related challenge to Letitia James? Not yet.

Is that because the newspaper is less aggressive or just shorthanded?

Was Weintrob's shocker of an editorial last month calling for a federal bailout of the AY arena related to an effort to sell the paper, to make it's AY position more palatable? I still doubt it, but there's a whiff of a question.

Murdoch believes

Kuntzman, who's no longer trashing "billionaire moguls," commented on the Observer:
Brooklyn still needs The Brooklyn Paper, which is why one of the only people in the world who still believes in newspapers — Rupert Murdoch — is putting his money and genius behind us.

Genius?

To be fair, Murdoch didn't dumb down the Wall Street Journal after he bought it. He did refocus the front page, and some even see improvement in the breadth of coverage. But the Journal is an elite paper, not a free one.

I suspect the Brooklyn Paper will continue to do some good work, but will it go after politicians and other powers-that-be in the same way? Some convergence with the Courier-Life seems inevitable.

Alan Paul in SLAM: "Newark just makes too much sense to ignore"

SLAM mag Far Post blogger Alan Paul, who's written some good stuff from his (former) base in Beijing, hit the Izod Center Sunday not so much to see the Nets play the Knicks but to catch exactly how the Nets were putting together an evening of Chinese culture.

The aim was to lure Chinese fans of Nets forward Yi Jianlian, but Paul, now back in his New Jersey home, concluded that his different worlds came together in some unexpected ways.

Big boondoggles

He connects the dots between China, the Meadowlands, and Brooklyn:
One bizarre, somewhat troubling thing you see all the time in China are boondoggle-like public construction projects. Fly into any decent-sized city anywhere in the country and you are likely to find at least one giant public building built with grandiose vision but hazy purposes. Stadiums and arenas that no one uses, for example, dot the country....

So when I drove up the NJ Turnpike to Exit 16 and saw the bizarre Xanadu complex rising out of the former Continental (now Izod) Arena parking lot, I felt just like I was back home in China! What an insane project. And to see it going up now, with the state –where I live and pay taxes — in such desperate financial straits and essential services being curbed.. well, it’s just nuts. And then I pulled into the complex and saw the new Giants Stadium rising next to the old Giants Stadium and thought about the fact that the Nets are supposed to pull out of here soon — not to move to the beautiful new Prudential Center down the road in downtown Newark but to a fantastical, not-even-close-to-being-built $1 billion arena in Brooklyn and the mind just boggles.

The Newark option

His conclusion:
The current economic climate will hopefully bring some common sense back to dollar and cents decisions at least and I hope that one of them will be a reconsideration by he Nets about where they will be playing their games in the future. Newark just makes too much sense to ignore.

Paul, as far as I can tell, has no skin in the game. He just can see the obvious. Why build a new arena when another new one is hardly full--especially when the ever-declining rationale for federal subsidy is to poach tax revenues from an adjoining state.

Is a U.S. Government bailout paying for Barclays Center naming rights?

The Wall Street Journal on Saturday broke the news that, last fall, the U.S. government's bailout of American International Group IAIG) benefited some two dozen U.S. and foreign financial institutions, among them Barclays Capital.

Yesterday, Ward Harkavy of the Village Voice's Smart Asset blog made the connection: It turns out that while the U.K. conglomerate was getting a share of the bailout money, it recommitted last November its deal to pay $400 million to the New Jersey/Brooklyn Nets for naming rights to the Center in Brooklyn.

It's not clear to me what percentage of the $50 billion was distributed to Barclays, but if it was distributed evenly, that would be some $4 billion.

What is clear is that Barclays, as well as other beneficiaries, isn't commenting on the Journal's report.

Money is fungible

The money was not directly funneled into the arena naming rights. But if money's fungible, and last time I checked it was, whatever benefit Barclays gained could be redirected to other ventures. (And, as DDDB notes, Barclays will benefit from a bailout from the U.K. government.)

Maybe that's why Nets CEO Brett Yormark was always so confident Barclays would stick with the deal.

Will we ever find out how much AY and arena now cost? More FOIL responses from NYC EDC and ESDC

So I appealed the decision by the New York City Economic Development Corporation (NYC EDC), that the current cost of the Atlantic Yards project 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."

And the answer from the appeals officer, Judy Fensterman: no way.

The Financial Materials, NYC EDC said in a letter (full text below), "contain proprietary assumptions, analyses and projections regarding the feasibility and performance of the Project and provide insight into FCRC's proprietary financial models and other business practices, which would be detrimental to FCRC's competitive position if disclosed."

And disclosure would frustrate ongoing negotiations "relating to all aspects of the Project." Those negotiations include "private parties."

Impact of negotiations

What does that mean? I can't be sure, but as I wrote, 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.

(DDDB points skeptically to Nets CEO Brett Yormark's apparent statement that the original arena plan is on track.)

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.

Bait and switch?

It's understandable, as a general matter, why "financial records provided by a commercial business to an agency during the course of negotiations... would have a chilling effect on our ability to do business," as Fensterman writes.

But the cost of the project and the arena was a public matter when the project was approved in December 2006. If the cost is now a secret, that suggests that developers and public agencies can announce one set of numbers to the public, then turn around and keep the actual numbers secret.

ESDC answers pending

I filed the same FOIL request about the current project cost with the Empire State Development Corporation (ESDC), and received a letter (full text below) from FOIL officer Antovk Pidedjian that indicates that the agency would grant me access to documents "not privileged or exempt from disclosure" only after Forest City Ratner gets the opportunity to argue for an exemption.

Thus, I am doubtful that much would be disclosed.

I also requested of ESDC "documents that explain whether any portion of the Atlantic Yards project, including but not limited to housing, a new railyard, and other infrastructure, has been presented, listed, or otherwise included as eligible for federal stimulus funding."

Since my request, a letter from local elected officials indicated that the ESDC has not requested federal stimulus funds for the project. But the issue may have been discussed.

ESDC's answer was an umbrella response to both request, so only documents "not privileged or exempt from disclosure" would be provided.

(Please click on images to enlarge documents.)

The NYC EDC letter

I am writing in response to your letter, dated February 11, 2009 (and received by me on February 18, 2009), appealing a determination made on February 11, 2009 (via email) by Judith Capolongo, Records Access Officer of the New York City Economic Development Corporation ("NYCEDC"), regarding your February 7, 2009 request for documents that provide current estimates of the cost of the Atlantic Yards project in Brooklyn (the "Project"), including the current estimated cost of the Project as well as the current estimated cost of the arena. In her February 11th email, Ms. Capolongo determined that the requested documents are exempt from disclosure pursuant to FOIL Section 87(2)(d).

After reviewing the requested documents and discussions with NYCEDC project staff regarding the nature and scope of the documents, being essentially financial projections and analysis (the "Financial Materials") for the proposed Project, I am hereby affirming NYCEDC's determination denying you access to such Financial Materials.

I have determined that NYCEDC can properly withhold the Financial Materials as "trade secrets or 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" pursuant to FOIL Section 87(2)(d). The Financial Materials were delivered by Forest City Ratner Companies ("FCRC") to NYCEDC as part of NYCEDC's and The City of New York's (the "City") due diligence in connection with ongoing discussions concerning various ongoing aspects of the Project and with the expectation that they would be kept confidential. The Financial Materials contain proprietary assumptions, analyses and projections regarding the feasibility and performance of the Project and provide insight into FCRC's proprietary financial models and other business practices, which would be detrimental to FCRC's competitive position if disclosed. FCRC is in the process of moving toward the closing of the Project, and negotiations relating to all aspects of the Project are ongoing. The disclosure of the Financial Materials would frustrate this process by providing to the public, including private parties with whom FCRC is in ongoing negotiations, with confidential information as to Company assumptions included in its feasibility analyses. This could have a material adverse impact on FCRC's ability to acquire the Project site, negotiate material agreements with third parties, and ultimately carry out the Project.

Further, FCRC had every expectation that these documents containing commercially sensitive material would be kept confidential and used only in the context of project negotiations or they would not have otherwise submitted the same to NYCEDC or the City. And yet, without this essential information, NYCEDC and/or the City cannot reasonably be expected to undertake a deliberative process in which it reviews, evaluates, negotiates and seeks to undertake a project that effectively addresses the competing needs of the interested parties while also promoting the public interest. The Court of Appeals in Encore College Bookstores v. Auxiliary Services Corp. 87 N.Y.2d 410, 420 (1995) explained that the public policy behind FOIL Section 87(2)(d) is "to protect businesses from the deleterious consequences of disclosing confidential commercial information, so as to further the State's economic development efforts and attract business to New York." The disclosure of the confidential information contained in the Financial Materials is exactly the type of record provided to an agency that the Court concluded should be exempt from disclosure. If such type of financial records provided by a commercial business to an agency during the course of negotiations were made publicly available, it would have a chilling effect on our ability to do business. Businesses would reconsider the confidential information they shared with NYCEDC, thereby greatly impairing NYCEDC's ability to carry out its economic development functions.

For the reasons stated above I am hereby confirming NYCEDC's denial of access to the Financial Materials. You may seek judicial review of this determination pursuant to Article 78 of the New York Civil Practice Law and Rules.

The ESDC letter


ESDC is granting you access to those documents which are responsive to the above-referenced requests, on file at ESDC's and not privileged or exempt from disclosure pursuant to the Freedom of Information Law (Public Officers Law, Section 84 et seq.) ("FOIL"). ESDC is continuing to search for and review documents. ESDC will provide you with any non-exempt documents and/or inform you of any determination(s) pursuant to FOIL by March 17, 2008.

Additionally, please be advised that documents responsive to the above-referenced request regarding estimates of the cost of the Atlantic Yards project include information which (prior to the above-referenced request) FCR requested be excepted from disclosure by ESDC under sections 87(2)(d) and 89(5) of FOIL. These sections of FOIL relate to disclosure of trade secrets that would cause substantial injury to competitive positions. As a consequence of the guidelines explained below, a determination with respect to these documents may occur after the March 17, 2009 date given above.

As required by section 89(5)(b)(1) of FOIL, ESDC must inform FCR that it intends to determine whether FCR's requested exception from disclosure with respect to these documents should be granted or continued. According to section 89(5)(b)(2) of FOIL, FCR has ten business days from receipt of the notice to submit to ESDC a written statement of the necessity for the granting or continuation of such exception.

ESDC will notify FCR in writing within seven business days of the receipt of such written statement (or within seven days business days of the expiration of the period prescribed for submission of such statement) of ESDC's determination to grant, continue or terminate such exception and the reasons therefore. ESDC's determination will be sent to FCR and you.

FCR will have a right to appeal any denial of its requested exception within seven business days of receipt of any written notice of denial. Similarly, you will also have a right to appeal any grant of FCR's requested exception within seven business days of receipt of the written notice.

The gaps in the Times's "Living In" Fort Greene

The worst thing about the New York Times Real Estate section article yesterday, Living In | Fort Greene, Brooklyn: Multiple Identities Can Be a Good Thing was not the reference to the neighborhood's location:
Snug in its corner between downtown Brooklyn, the Brooklyn Navy Yard, Clinton Hill and the Atlantic Yards area...

NLG pointed to the folly of such a description.

Fort Greene's diversity

The worst thing was the failure of the article to mention the presence of high-rise buildings other than new luxury housing. Fort Greene is a mixed-income neighborhood; it includes public housing and subsidized Mitchell-Lama buildings.

Those buildings do not show up in the New York Times classifieds. They likely are not the desired locations of typical Times readers. But they are part of "Living In" Fort Greene.

Given that the Times just started a neighborhood blog about Fort Greene, you'd think that the newspaper would try to get it right. But the Real Estate section too often places marketing above journalism.

Nets-to-Newark depends on closing of the Izod Center

The Newark Star-Ledger opines on the chances of the New Jersey Nets moving permanently to Newark:
In the end, the Nets' fate will come down to money -- whether Ratner and his investors still have enough of it, and if they don't, what follows as Plan B.

What [Newark Mayor Cory] Booker really needs is the closing of the Izod Center, which would allow Newark and the Prudential Center to land the lucrative A-list concerts currently booked at the Meadowlands. That's where the real money is.

In other words, there's a whole lot of New Jersey politics involved.

More on the battle

The newspaper reports today:
Last week's announcement that the New Jersey Nets, who call Izod home, will play two preseason games at Prudential next fall fueled new speculation that the team will abandon a five-year quest to move to Brooklyn and make a deal to play basketball in Newark. At the same time, it reignited a debate over the competition between the state-operated arena in the Meadowlands and the new arena, nicknamed "the Rock," that was intended to spark a renaissance in the state's largest city.

"I believe we need to start looking at this as a regional issue," said Newark Mayor Cory Booker. "Ultimately having a very old arena and a new arena cannibalizing each other is just not a productive thing for our state."

Prudential Center officials say they are not at war with Izod, but it was always their expectation that Izod would close once the Devils and Nets left the Meadowlands.

That was sports economist Andrew Zimbalist's assumption, too.

Indeed, while the Nets pay between $50,000 and $60,000 a game as tenants, a concert date "can make five, seven, 10 times more than an NBA date for us," a spokesman told the newspaper.

Turns out "You Don't Mess With the Zohan" is about a real estate dispute

Given the circumstances, it was fortuitous that You Don't Mess With the Zohan, the zany, dumb, and distracting movie starring Adam Sandler as an Israeli Special Forces Soldier-turned-hairdresser, showed up in my Netflix queue on Friday.

And guess what? It's sort of about sports and real estate, offering very tangential echoes of AY. Turns out that a villainous developer named Walbridge wants to clear a Lower Manhattan neighborhood--improbably a commercial district populated with Israelis and Arabs--so it can "have its own indoor mall, with its own 300-foot tall rollercoaster."

"Don't talk to me about that dump," Walbridge says disparagingly about the salon run by Zohan's Palestinian girlfriend Dahlia. "I've got a huge, classy hotel standing there, and it's standing there staring at that cheap garbage. I want it staring at SuperCuts."

So how does Walbridge get the disparate members of the community out of their buildings? He sponsors an Israel vs. Lebanon competition in Hacky-Sack Mania.

And who are the villains? Rednecks dressed as Arabs. "It's a gift, messing with the Jews and the terrorists at the same time," one of the miscreants tells his patron. "Right now, we're scheduled to sabotage a black people's parade in Chicago, but we can move that."

The film is gleefully vulgar, Mariah Carey has a silly cameo, and the ending brings a goofy example of Middle Eastern reconciliation. It's not as informative as, say, Brooklyn Matters, but it's a lot more entertaining.

(See the comment for a link to Marshall Berman's mention of the film in a discussion about eminent domain and AY.)

WSJ on AY: "A Hole Grows in Brooklyn"

In a Wall Street Journal op-ed today about Atlantic Yards, headlined A Hole Grows in Brooklyn, Manhattan Institute senior fellow Julia Vitullo-Martin argues, not unpredictably for the newspaper and author, that the private market should have been allowed to do its work.

She writes:
Now, more than five years later, what's been brought to Brooklyn is a very large hole in the ground and a project that is coming to symbolize why large government projects can be riskier than allowing local residents to fix up their own communities.

Her conclusion:
The ill-fated project in Brooklyn reflects a breakdown of the state and city's strategy of favoring big-government, centrally supported, highly subsidized projects over the kind of small, privately funded, unsubsidized, incremental development that was already occurring in Prospect Heights, as the area is officially known.

Government as catalyst

I think Vitullo-Martin gets the big picture right--and appreciate the citation of AYR in her piece--but I wish she'd further noted the importance of government action as a catalyst. For the blocks in Prospect Heights below the Vanderbilt Yard, conversions of former manufacturing buildings into housing required spot rezonings.

A wholesale rezoning would've been necessary for both those blocks, and the railyards, to catalyze development. And some measure of subsidy would've been necessary to jump-start development over the railyards.

The difference would've been that a subsidy to build a deck over the railyards could've been announced before a single bidder had been selected, as with AY, and instead could've spurred development in multiple parcels with multiple bidders, as in the proposed UNITY Plan.

As I wrote in December 2006, the Empire State Development Corporation, in a not credible statement, contended that, without Atlantic Yards, there would have been no redevelopment in the project site.

The issue of blight

Vitullo-Martin touches on an important contradiction:
It seems that smaller scale redevelopment wasn't happening fast enough for government officials, eager to jump-start Brooklyn's economy. They leapt to support the developer's contention that the neighborhood was blighted, and that its property owners were therefore vulnerable to the state's exercise of eminent domain.

Since then, she notes, more blight has been created.

Indeed, the role of the private market and new investors suggests--as could have been mentioned in a longer piece--that Prospect Heights is very different from other neighborhoods designated as blighted, where (in the words of academic Lynne Sagalyn) "the fabric of a community is shot to hell."

Restoring health?

She concludes:
If Mr. Ratner can restart the project, he may be able to restore some health to the neighborhood. If not, Atlantic Yards will go down as a massive, government-backed renewal project that destroyed the neighborhood it was intended to save.

I think that depends on what timeline you choose and what you mean by "health." Even if the project is restarted, there would be many, many years of interim surface parking on the project site, for example. And there's no timetable for Phase 2.

A couple of quibbles

The op-ed opens:
In December 2003, Mayor Michael Bloomberg thought he had a slam dunk. He along with Brooklyn Borough President Marty Markowitz and developer Bruce Ratner struck a deal for a $4.3 billion development project that was to remake downtown Brooklyn by building expansive residential and retail space, and a gleaming new $950 million arena that would bring the New Jersey Nets to the borough.

When Atlantic Yards was announced, it was to cost $2.5 billion, with a $435 million arena. When the project was approved in December 2006, it was to cost $4 billion, with a $637.2 million arena. The $950 million arena price tag was not announced until March 2008. And now Forest City Ratner is apparently aiming to cut the price nearly in half.

Also, the column states:
The arena was to be built on a deck over the old Long Island Rail Road (LIRR) yards...

As noted lower in the column, activist Daniel Goldstein's "condo stands smack in the middle of the proposed arena site," which indicates that the arena obviously would extend to blocks below the railyards. If the arena plan had been confined to public property, there would have been no need to pursue eminent domain.

Also, the column states that Ratner "won support" of ACORN and "courted [influential African-American] activists." That's not untrue, but it leaves out the benefit to groups like ACORN, which would manage the affordable housing (and has since been bailed out) by the developer. Also, several signatories of the Community Benefits Agreement (CBA) have received direct funding from the developer, though CBA signatories elsewhere refuse such funding.

Also, Vitullo-Martin writes:
The projected December 2008 ground-breaking for the arena came and went without a shovel hitting the dirt. The chances that the Nets will be playing in Brooklyn for the 2009-10 season, as promised, are nil.

This may have been written some months ago, since developer Forest City Ratner has since projected a groundbreaking this year and promises an arena opening in 2011 (which I think is doubtful).

At another Assembly hearing on the Yankees, PILOTs, taxes, ticket prices, and animosity

To the New York Times, the main event at a public hearing on Yankee Stadium yesterday was not the documents submitted (or withheld) but the continued animosity between team president Randy Levine and Assemblyman Richard Brodsky, chair of the Corporations, a Westchester Democrat. (Newsday also focused on the clash.)

To Bloomberg News, the lead was Levine's (predictable) opposition to a proposed state law that would require that 7 percent of tickets sold to a sporting event be "affordable" a long as the facilities had received state or local benefits.

But to Atlantic Yards watchers, the hearing, which attracted a far sparser crowd to 250 Broadway than another held in January, was intriguing because of unresolved questions regarding the tax assessment of the Yankee Stadium property and whether PILOTs (payments in lieu of taxes)--the strategy to pay off construction bonds--are a subsidy.

Tax assessment

Brodsky, who has said at a Congressional hearing he thinks the city used irregular procedures in assessing the site--and there is, indeed, evidence--pressed Levine about the assessment but didn't get too far.

Was Levine aware of concerns that the level of PILOTs would be insufficient to pay bondholders if the initial assessed value of the land had become official policy?

Levine reminded Brodsky that they sat together last October at the hearing called by Rep. Dennis Kucinich, and that New York City Commissioner of Finance Martha Stark had testified that the process was done appropriately. "What the Yankees did was provide construction information, which is a component of how they do the assessment," Levine said.

Brodsky re-asked the question.

"I’m not aware of any effort" by the Yankees to do anything that was other than appropriate and routine, Levine responded.

Brodsky asked again.

Levine said the Yankees understood that assessment had to support a PILOT, that information was submitted, and that Department of Finance had to make a decision on the on the merits.

"I wasn’t involved in that decision," Levine said. "[Stark's] testified. You should ask her. That’s what happened. She was the decision-maker… who’s already answered all your questions."

Was there a subsidy?

Assemblyman Brian Kavanagh argued for the ticket-pricing bill, noting that "certainly there’s very substantial public benefit going to this project."

Levine responded, "I don’t believe there’s any subsidy in the construction of the stadium."

"I didn’t call it a subsidy," Kavanagh responded. "There does seem to be a public benefit in the form of tax benefits. That’s not really disputable. You’d prefer [tax-exempt financing] to taxable financing. Is that fair?"

"Yes," replied Levine.

Are PILOTs a full subsidy?

Brodsky contends that the public is paying for the stadium because the tax-exempt bonds are paid off by PILOTs. The Independent Budget Office (IBO), however, considers only the break on interest rates the subsidy.

"I’m going to read language from the IRS letter," Brodsky said to Levine, referring to a letter in which city officials wrote, "The city has determined to use its property taxes to finance the construction and operation of the stadium."

"Is that accurate," he asked.

"I don’t know, I’m not a bond lawyer," Levine demurred. "I’ve testified, over and over, in my opinion, the New York Yankees are paying every cent of construction of the new Yankee Stadium." He noted that the Yankees do not pay property taxes and no new stadium would have been built without the opportunity to use PILOTs.

Only the Yankees have responsibility to pay for the bonds, he noted, adding that even the IBO believes there is no city subsidy.

"You don’t think PILOTs are property taxes," Brodsky asked.

"I’m not a tax lawyer," Levine responded. "I’m answering the question the way I want to answer it."

Brodsky pointed to a transcript from the previous hearing, where city official Seth Pinsky agreed that city property taxes were at issue--whereupon Levine's counsel pointed to another page of the transcript where Pinsky pointed out there was no net loss in property taxes.

Brodsky reminded Levine that, when Pinsky was asked if the city was using its property taxes to finance the stadium, he responded, "Absolutely."

"Mr. Pinsky can speak better for the city than I am," Levine responded.

The Nets-to-Newark scenario is bolstered by an interesting rumor

In a blog post headlined Brooklyn or bust, New York Daily News sports columnist Filip Bondy suggests that, if Atlantic Yards stalls more than two years, the losses suffered by the team, $30+ million a year, might force a sale.

Bondy writes that Nets executives assert that the only reason to play two preseason games in October at the Prudential Center in Newark is that "the Nets just couldn't sell preseason tickets at the Meadowlands."

Rumor of a sale

Here's the rumor:
A very specific report has been circulating around the team that Ray Chambers and Lewis Katz are preparing to invest $150 million with Ratner, as part of a contingency deal. If he can get the Brooklyn arena done in two years, fine. Otherwise, Chambers and Katz would purchase the team and move it to Newark.

I have to imagine that there's a little more wiggle room in that plan. It's unlikely that the Brooklyn arena would be completed in two years. The earlier arena design was supposed to take 32 months.

Even if the main remaining lawsuit (on eminent domain) is dismissed, as is likely, efforts will be made to file an appeal. Even if construction were to begin later this year, there's no guarantee that things would work smoothly.

Counting the cases

Bondy writes:
But again, the Nets strongly deny such an agreement. They continue to fight off a bunch of legal challenges to their Brooklyn project. "We've won 22 of 23 cases and we'll win the last one," Baum says.

He sounds certain. Two years from now, Baum will either look like a truthsaying visionary or a naive flack.

DDDB comments that there have only been seven cases. Forest City Ratner has never listed the cases (or decisions) in its list.

Roadblocks in Newark

The Record's John Brennan pointed out that a move to Newark wouldn't be simple:
Under the terms of the Devils’ lease, the National Hockey League team keeps nearly all of the revenue from all events held at the Prudential Center.

That raises questions about how much revenue a move to Newark would generate for the Nets. However, the value of luxury suites and corporate sponsorships would increase with a second major pro sports franchise.

Robert Guskind, in remembrance

Along with many others, I'm deeply saddened by the untimely death of fellow blogger--like me, he preferred a term like "online journalist"--Robert Guskind. Founder of the Gowanus Lounge, former editor at Curbed, and mentor to many Brooklyn bloggers, Bob was a thoughtful, talented, generous, and very complicated man. He was about 50 years old.

The best collection of tributes, reminiscences, and links is by Flatbush Gardener, who also posted this photo. (Here are two more, from DDDB and NLG, plus one from NLG's Lumi Rolley.)

OTBKB's Louise Crawford wrote an insightful, poignant recollection about Bob and his work, as did Brenda Becker.

Bob covered areas of Brooklyn from Coney Island to Greenpoint, finding both a street-level and neighborhood niche while maintaining a punishing schedule. But because this is AYR, I will point readers back to one Atlantic Yards-related episode.

On Brian Lehrer Live

In October 2007, we appeared together on the Brian Lehrer Live show. Our segment began about 21:20 in. Bob, a bearish man, was thoughtfully skeptical and gently compelling.

"Density is good," Guskind told the host, "but the issue with Atlantic Yards, in my opinion, is one of excessive density.... Frankly, I'm skeptical of the environmental review process that was done."

"Density is good, but who decides on density?" I continued. "Do you simply say, 'Hey, this is our plan, take it or leave it,' or do you have a public process, a rezoning...?"

Lehrer pointed out that Forest City Ratner has long portrayed Atlantic Yards as a "done deal "a