Tuesday, March 31, 2009

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.

Monday, March 30, 2009

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 signatories 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.

Sunday, March 29, 2009

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.

Saturday, March 28, 2009

"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

Friday, March 27, 2009

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.