Skip to main content

Brutally weird: Forest City's fantasy of 8000 AY jobs comes from 2006, the ESDC offers backup (despite lower 2009 figures) & the WashPost takes a pass

The estimates of permanent jobs at the Atlantic Yards project have always been fantasies.

Remember the estimate of 10,000 jobs--the one that "enervated" Sen. Charles Schumer? It was bogus from the start. There was no market for that many office jobs. Forest City Ratner overstated the number of jobs that could fit in the four office towers projected to ring the arena. And it neglected to explain that most of the jobs would not be new but transferred from Manhattan. (Graphic from 2004 FCR flier. Click on all graphics to enlarge.)

But the latest projection of 8000 jobs (below), from Forest City Ratner and parent Forest City Enterprises (press release, letter to the Washington Post), is even more outrageous.

First, it's double the current official estimate (which itself is questionable) from the Empire State Development Corporation (ESDC). Also, it's based on 2006 data--which even back then was doubtful--regarding two or three more office towers than the one currently contemplated.

And, to make it brutally weird, Forest City Ratner in legal papers relies on the 2009 data.

The Post punts

Dismayingly, the Washington Post, after several exchanges with me after my request for a correction, decided to let the claim from Forest City Enterprises CEO Chuck Ratner stand as his "opinion."

Ratner wrote a 1/12/10 letter to the Post in response to a column by George Will on eminent domain for Atlantic Yards:
Mr. Will also did not mention that nearly 40 percent of the site is a submerged rail yard, long a scar dividing this area of Brooklyn, and that the project will create nearly 17,000 construction jobs, 8,000 permanent jobs and 2,250 affordable apartment units.
(Emphases added.)

I'd think that more recent estimates would trump ones more than three years old, but the Post, not unlike the judicial system, is willing to defer to a dated official statement that, upon examination, seems unmoored from reality.

Echoes of Poletown

Inflated claims about jobs are not unusual when developments are being sold to the public. Indeed, the ratio in this case echoes aspects of the notorious Poletown eminent domain case, where the city of Detroit, thanks to a 1981 state court ruling, razed an entire neighborhood for the promise of 6000 jobs in a General Motors factory.

While GM and most in the press promoted the promise of 6000 jobs, as noted in the book Poletown: A Community Betrayed, that figure reflected only the capacity at full employment, while GM committed to hire only 3000 workers, half the publicly stated number. (Also see Gideon Kanner's eminent domain blog regarding Poletown.)

Relying on the 2006 FEIS

I erred in crediting Forest City's numbers to a misreading of the latest estimates. Rather, the developer is relying on the Final Environmental Impact Statement (FEIS), issued in November 2006.

What if we relied on the FEIS regarding other aspects of the project?

Well, the arena would be open by now (see construction schedule at right), the Carlton Avenue Bridge would be open after two years of reconstruction, and the project would be designed by architect Frank Gehry, who's gone.

Untangling the numbers

Remember, an 9/17/09 ESDC board memo from Chairman Dennis Mullen that estimated 3998 jobs in New York City and 4277 jobs in New York State, inclusive of New York City. (Rather than add up to 8000 jobs, the total is about half that.)

And Forest City Ratner did rely on those recent figures in an 11/12/09 legal memo (p. 34 of this PDF) in the pending case challenging the ESDC's approval of the project.

But no.

After Chuck Ratner's letter, I sent a correction request to the Washington Post, including a link to the ESDC's 9/17/09 board memo with the updated figures. (Later I pointed to the Modified General Project Plan.)

A Washington Post editor asked Forest City Enterprises for the source of its figures.

This is more responsible than the New York Times, which, for example, has allowed a spokesman for the New York City Economic Development Corporation to lie that Atlantic Yards is "a site that is now an open railyard without any public benefit."

Forest City's response

Forest City sent back page 4-72 of the 2006 FEIS (from the chapter Socioeconomic Conditions), which includes Table 4-22 (right), referring to the Commercial Mixed-Use Variation of the project, which would include 1.6 million square feet of office space and 8560 jobs.

No one in 2006 was talking seriously about that scenario, which would involve three or four office towers, and no one is even mentioning it now. The same chapter, on p. 4-96, also includes Table 4-32 (below left), which addresses the far more likely Residential Mixed-Use Variation of the project, which would have one office tower and 3600 jobs.

The residential variation has long (since before 12/06 approval) been the version publicly discussed, because of the lack of an office market.

That's confirmed by the ESDC itself. At the time AY was first approved, in December 2006, the ESDC promised in a press release (no longer available, but excerpted below right) 5000 permanent jobs.

That's an overestimate (if you consider the projection of 3600 jobs), but clearly less than 8560 jobs.

Moreover, the ESDC's 2009 Modified General Project Plan (GPP) on p. 33 estimates somewhat more jobs but nothing near 8000:
ESDC has projected that the Project will have the following impacts during construction and for the first 30 years of operations:
...(iv) Operations at the Arena and mixed-use development will support an annual average of 4,538 new jobs in New York City (direct, indirect, and induced) and an annual average of 5,065 jobs (direct, indirect, and induced) in New York State, (inclusive of New York City).
Two reasons to doubts current projection

Even the ESDC's current projection of some 4000 jobs is likely a fantasy for the foreseeable future. After all, it depends on the construction of an office tower for which there is no market, as the developer acknowledged last November, in an interview with Crain's New York Business:
Initially, the project called for four office towers, but by early this year, only one was on the drawing boards. Asked when it will go up, Mr. Ratner responds with a question: “Can you tell me when we are going to need a new office tower?”
And even if there are 4000 jobs, about a third (1340) would be office jobs--and the New York City Economic Development Corporation, in a 6/27/05 report, estimated that only 30% of office jobs would be new, rather than relocated. So that would eliminate 938 jobs--nearly a quarter of the total.

So the claim that 8000 jobs would be created doesn't sound like much adherence to the values professed by Forest City Enterprises.

Under the heading "Integrity and Openness," the company states:
In all our dealings with all stakeholders, we will uphold the highest possible standards of ethical behavior. Our interactions will be characterized by an attitude of openness, candor and honesty.

The Bloomberg echo

Mayor Mike Bloomberg's office has unquestioningly reproduced Forest City Ratner's figure of 8000 jobs, as I noted 12/1/09.

The Post punts

After I queried the Washington Post, I had several off-the-record exchanges, which were quite cordial (in contrast to some of my exchanges with the New York Times). I cited the documents above: the ESDC board memo, the ESDC's GPP, and Forest City Ratner's legal memo.

Mike Larrabee, Post Letters and Local Opinions Editor, ultimately sent me the paper's conclusion:
Here is the comment given to me by Elizabeth Mitchell, a press person at the Empire State Development Corp., on Feb. 3. She had already told me that ESDC still thinks 8,000 jobs is a reasonable estimate, and her statement below was in response to my follow-up question asking her to square that with the language in Dennis Mullin's Sept. 17 memo, which you cited in arguing that 8,000 jobs was wrong.
"The Atlantic Yards Project FEIS and GPP allow for the developer to build one of two scenarios: one primarily residential and the other a commercial mixed use scenario. An excerpt from the FEIS: Once constructed, the annual operation of the completed project would support approximately 6,200 to 16,300 direct and indirect FTE jobs in New York City, and approximately 7,500 to 19,800 direct and indirect FTE jobs overall in New York State—with the first number in each case being that of the residential mixed-use variation and the second the commercial mixed-use variation. FCRC has always believed that as many as 8,000 jobs or more can result from this project, a number which was substantiated in the original project documents and which is not necessarily contradicted by any element of the project presently being developed."
We've looked into your concern. Your request for a correction is complicated by the fact that we're dealing with a jobs estimate, not a firm, knowable fact. There can be legitimate difference of opinion on this number, and you may be right that fewer jobs would result from the project. But given that Forest City is standing by the estimate in Mr. Ratner's letter, and that ESDC agrees it's a reasonable figure, I don't see how The Post can go on the record to state with certainty that Mr. Ratner's estimate is inaccurate. In the context in which is was presented, as his opinion, we've decided to let it stand.
(I added italics to Mitchell's letter, which, given the punctuation as conveyed by Larabee, could have left the impression that the FEIS contains the words "FCRC has always believed...")

Looking more closely

Well, Ratner wrote "will create... 8,000 permanent jobs," not "might create," and not "might create, based on 2006 estimates." In his letter, he chided Will for ignoring the jobs projection. But he didn't present the projection as his opinion; he presented it as a certainty.

Mitchell quoted from the 2006 FEIS. Shouldn't that information be superseded by more recent estimates in the the 2009 GPP and the board memo? Shouldn't the ESDC do its best to come clean with the public rather than back up Ratner's statement as a "reasonable figure"?

The ESDC and Forest City Ratner/Forest City Enterprises are relying on the same strategy they've used in court--that, if an estimate appears somewhere in a document created by a consultant, it's valid.

That strategy has been successful, because the legal standard is merely a "rational basis," and there's no opportunity for cross-examination or expert rebuttal.

But stating that the project "will create... 8,000 permanent jobs" misleads the reader.

What if a Washington Post reporter, in preparing a news article, tried to assess the claims for jobs at the project? Wouldn't that reporter consider that the most recent evidence was more reliable?

Letters and corrections

What's the standard for correcting errors in letters? Maybe the editor of a Letters page can't be expected to do rigorous factchecking. The Post's corrections policy does not address errors in letters--though surely the Post would avoid printing blatant errors.

The New York Times's corrections policy also does not address errors in letters, but such errors are periodically corrected.

In his 9/2/05 Web Journal criticizing New York Times columnists for not being forthright about corrections, then Public Editor Byron Calame wrote:
Opinions expressed on the editorial and Op-Ed pages of The New York Times aren’t part of the public editor’s mandate. But the facts are. And so are corrections of any misstatements.

So I'll contact the Washington Post Ombudsman to see what he thinks.

Master Closing Press Release

For Consideration September 17, 2009



Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…