Tuesday, January 05, 2010

The look ahead for 2010: the final endgame and, likely, a very changed landscape

At the end of 2008, with Atlantic Yards stalled, Develop Don't Destroy Brooklyn (DDDB) solicited donations by asserting that Victory is Within Sight. At the end of 2009, following the master closing on the project and a near-final victory for developer Forest City Ratner and its government partners, DDDB's pitch was more subdued.

After all, it looks like a done deal--but not quite. Even though the master closing has been completed and the bonds have been sold, they've been placed in escrow for a year, an unusual deal kink set up to both meet Internal Revenue Service deadlines (terms grandfathered in to the end of 2009) and leave room to overcome legal and financial hurdles, even as construction activities--if not yet full vertical construction--proceed.

While developer Forest City Ratner and its government partners have the clear upper hand in getting final funding and control of the land, the challenges raise serious questions, and likely will persist at least past visible signs of project progress, such as street closings.

(And what happens if the opponents win and everything gets reversed? A very interesting mess.)

Durable fight

For the opposition, it has hardly been a flawless fight. But the six-year struggle has been remarkably durable, compared to, say, the challenge to the new Yankee Stadium, sited in a community with fewer resources in both time and money. The AY challenge is one that other community activists in the city have begun to look to for inspiration and advice.

And, given the lack of accountability on the part of many government agencies and the developer, it's hard to say the fight could have been avoided. AY advocates often argue that DDDB should have negotiated a better outcome. But was there anything to negotiate? BrooklynSpeaks, the "mend-it-don't-end-it" coalition, tried to negotiate but ultimately went to court.

Pending legal challenges

There are several pending legal issues, though most could be dismissed without a further hearing or ruling on the merits.

The one that will get a hearing is the case challenging the ESDC's approval of the revised project, charging, among other things, that the ESDC board was "never officially informed about the changed financial terms" of the Vanderbilt Yard deal.

As with other cases challenging agency approval, the law gives significant latitude to agency decision, so the ESDC has to be favored. But that doesn't preclude a hard look at the rationale for those decisions. An oral argument is scheduled for January 15; I'll have an additional report on the case next week.

(It has not yet been combined with a similar case filed by BrooklynSpeaks, though that was expected.)

Wild cards

The lawsuit challenging the Metropolitan Transportation Authority's revision of the Vanderbilt Yard deal was dismissed last month. DDDB and fellow plaintiffs have not announced whether they will appeal.

The original case challenging the Atlantic Yards environmental review was dismissed at the trial court and appellate court levels, then refused by the Court of Appeals. However, in light of the Appellate Division's ruling overturning the Empire State Development Corporation's (ESDC) pursuit of eminent domain for the Columbia University expansion, the plaintiffs have asked that that appeal be reopened.

Similarly, the case challenging eminent domain was rejected by both the Appellate Division and then the Court of Appeals, but the plaintiffs have taken the unusual step, in light of the Columbia decision, to reargue the appeal or hold the motion in abeyance until the Columbia appeal has been decided.

What could happen in the Columbia case? It's unlikely that the court would turn around and uphold the Columbia decision on broad grounds, essentially admitting it was wrong in the Atlantic Yards case.

Rather, it could follow the advice of editorial boards at Crain's New York Business and the New York Times and offer sweeping deference to the ESDC. Or it could rule more narrowly and uphold the decision on more narrow grounds of bad faith--such as multiple blight studies--rather than ruling on the ESDC's use of blight criteria such as "underutilization."

New cases coming?

Also, though the legal space to challenge a condemnation petition is typically quite narrow, some of those facing condemnation will contest it, with attorney Matthew Brinckerhoff asserting that the petition "is defective in many respects."

There have been murmurs of a lawsuit challenging the murky Brooklyn Arena Local Development Corporation (BALDC) and its approval of bonds, but nothing yet. (Will state Attorney General Andrew Cuomo answer state Senator Bill Perkins' questions about the BALDC?)

Shortly after the eminent domain decision was released, DDDB lawyers pledged a new lawsuit seeking to compel the ESDC to issue new or amended public use findings, given that the decision was based on 2006 conditions. That has not been announced.

Does DDDB have the money? "Thanks to the ever supportive and resilient community we are proud that we actually surpassed our fundraising goals for 2009," DDDB's Daniel Goldstein stated, expressing confidence about the means to pursue ongoing and future legal challenges. (Meanwhile, he's also looking for a new apartment.)

Injunction possible?

"When construction begins or appears imminent, then we will seek an injunction to preserve the status quo and protect our rights," DDDB attorney Jeff Baker said in October.

"Bonds are normally required if a preliminary injunction is granted," Baker acknowledged. "However, the amount of the bond is at the discretion of the court and of course we would seek a nominal bond that is appropriate. Obviously whether a bond is affordable will depend on what the amount is."

That's a very big question, and a daunting one. Do judges, few of whom have stuck their necks out during the AY legal fight, want to stall "construction jobs" during a recession?

Condemnation and eviction

If everything goes smoothly--though there's no reason to think, in the convoluted AY saga, that it will--on January 29 the state Supreme Court judge in charge of condemnation in Kings County, Abraham Gerges, will sign the vesting order and transfer title to the ESDC.

A vesting order provides a period of time for condemnees to file claims. At that point, the condemning authority can authorize advance payments--generally the amount of money they offered in pre-vesting offers.

Those advance payments are generally authorized within 90 days and aim to get people to find a new home or business location. "Once advance payment is made, a condemning authority can move, by a writ of assistance, to remove condemnees from their premises," attorney Michael Rikon said.

And that removal could be theatrical--or even ugly. Consider that chains were installed at Freddy's Bar & Backroom so regulars can, in protest, chain themselves to the bar if condemnation proceeds.

Construction, street closures, groundbreaking

Last month, Forest City Enterprises officials said they anticipated a groundbreaking in the fourth quarter, meaning by the end of the January. No date has been announced.

Meanwhile, streets have been partially closed and "branded signage" has been installed. And, likely, the project developers will announce new sponsors for the arena, part of an extensive new effort at public relations.

Expect more street closings and more signage in the coming months, as well as significantly increased numbers of workers--demolition, utility, construction--and equipment.

And, if so, expect congratulatory words about jobs and spending from Brooklyn Borough President Marty Markowitz and Mayor Mike Bloomberg and a much more prominent role for the Community Benefits Agreement (CBA) signatories, groups funded by the developer.

But, even if the legal cases are dismissed, it may take a while for construction to ramp up. Consider the need for additional demolition before the footprint is cleared.

What about the Nets?

The expected confirmation of deep-pocketed new owner Mikhail Prokhorov within the next six months would provide a public relations boost for the lowly Nets. So would his willingness to trade for a big contract even before free agents become available.

The Nets might get a top draft pick and thus an impact player. And, like other teams, the Nets will be vying for the big free agents, notably the Cleveland Cavaliers' LeBron James, when they can test the market beginning on July 1.

Expect a lot more coverage of the team's chances than, say, the revision of the much-ballyhooed Barclays Center naming rights deal.

Residential tower coming?

Atlantic Yards is supposed to be about affordable housing, not an arena, and Forest City Ratner has promised that at least one tower would go up within six months after the arena begins.

If so, designs should be released and an architect named. While there are doubts that housing bonds would be available for the announced 2250 units over the promised ten-year timetable, it's a good bet that Mayor Mike Bloomberg's housing agencies could find a way to fund one tower, enough to ensure that ACORN, Forest City Ratner's loyal partner, has something palpable.

DDDB and electeds

What happens to the opposition? When the legal challenges end and if, as seems likely, Goldstein is forced to move, it's doubtful that he will remain as DDDB's full-time, modestly-paid staffer or as a symbol of a no-longer-extant legal fight.

So DDDB's presence likely would be diminished, and it's an open question as to how much he and other activists will maintain the organization over the long term.

Should the project move forward, and DDDB's role recede, look to other neighborhood organizations--the Council of Brooklyn Neighborhoods? Prospect Heights Neighborhood Development Council? the BrooklynSpeaks coalition?--to keep some tabs on the project. But they won't be able to match DDDB's pace.

Can elected officials like Council Member Letitia James, the project's leading opponent, still have a voice? Sure, she can ask questions, but look for officials like Assemblyman Hakeem Jeffries, who said he opposed eminent domain for a basketball arena but didn't go any farther than that, to have more dialogue with the developer than others who finally went to court.

Media watchdogs

Will NoLandGrab remain as a daily compiler (and commenter on) all things Atlantic Yards? That's up to the contributors, or the successors they manage to recruit.

Will AYR remain? I don't see the role of a watchdog blog evaporating if the challenge to the project ends. Then again, if there's less news, the pace of the blog should slow.

As noted yesterday, Atlantic Yards has reminded us of the need for accountability. That's not going away.

Lingering questions

There are major questions about the developer's capacity to fund the project, so, if another round of federal stimulus funds--or other new financing--emerges, look for Forest City Ratner to seek a piece of it.

State Senator Bill Perkins has re-launched the fight to reform state eminent domain laws. In doing so, will he take a tough look at AY? We'll see some signs at a hearing today (though it won't be the last opportunity).

Can $8.1 million in infrastructure contingency funds pay for repairs on damaged MTA tunnels when neither the extent nor the cost has been assessed? No, which increases the likelihood that more public funds would be sought for AY.

While Forest City Ratner and the Nets likely will engineer several positive stories about Atlantic Yards, the project has begun to get national attention as a poster child for unwise development and improper use of eminent domain, as in columns by Newsweek contributor Joel Kotkin and George Will.

And, despite the efforts of BrooklynSpeaks, there's been no effort to set up a governance structure for a project that could easily last 25 years.

Which leaves one looming question: who's really in charge?

That's another sign that, whatever happens to AY in 2010, its legacy will remain highly contested.

1 comment:

  1. It will take more than a year to resolve the legal challenges and appeals in the vesting proceeding. Judge Gerges will not be the last word. The residential rental tenants will remain while the appellate courts make their determinations.

    ReplyDelete