Monday, March 22, 2010

Bruce Ratner's salute to Helena Williams and the MTA, Forest City Ratner's subordinate in a private-public partnership

Last week and this one I'll try to compensate slightly for the failure of any metro columnists to show up and glean insights from the rich spectacle of the Barclays Center groundbreaking March 11.

Of all the brutally weird moments in the groundbreaking--the Rev. Herbert Daughtry damning the project site as rat-infested; the Rev. Al Sharpton suggesting that Jay-Z's fractional ownership stake in the team might inspire minority youth; developer Bruce Ratner's shout-out to his-wife-Pam-the-hoops-fan; Gov. David Paterson's epic fantasies about job creation; Brooklyn Borough President Marty Markowitz's creepy fawning over Beyoncé--one was the most brutal.

It was brief, very brief.

It came during Ratner's 17-minute Commencement Day speech, in which he thanked everybody from labor to lawyers, looping back and forth through the calendar from 2004 to 2010, and waving his hands for occasional emphasis.

Government work

"In this business, you've got to deal with government agencies and, y'know what, it's been an honor to do that. I've worked for government for seven years. I understand what it is to be on both sides," he said. "I have huge respect for the city, the state, for anybody in government. It's one of the great callings of life. I can honestly say, my first seven years out of law school, I worked for the city and I'll tell you, even with this, those were the best seven years of my life."

"And so I'd like to to mention one very outstanding person: Helena Williams of the Long Island Rail Road," Ratner continued. "She met with [Forest City Ratner executive] MaryAnne Gilmartin in 2009, major breakthroughs. The railroad got done. We got all the agreements done, and we're on our way. Thank you very much, Helena."



Williams, on the stage, smiled and took in the applause.

She didn't have to do so.

She could've called in sick and skipped sharing the stage with paid supporters and compromised politicians.

The MTA and the developer

For whom does Williams work, the public, the developer, or, most likely, a governor who agreed from the get-go to support this project?

(Photo of Williams, testifying at 5/29/09 state Senate oversight hearing, copyright Jonathan Barkey.)

Last spring, acting MTA head Williams, presumably under pressure from her board, agreed to a smaller replacement railyard worth $100 million less.

The MTA also agreed to only $20 million down for the railyard segment needed for the arena, rather than $100 million for it all, with the remaining $80 million option on the remaining parcels to be paid at a generous 6.5% interest rate. (Eliot Brown of the Observer called the renegotiation "not the agency's finest hour.")

In other words, Forest City Ratner saved $180 million in cash flow, and at least $100 million in total--plus the difference between the MTA's interest rate and a bank's interest rate.

Essentially, Williams and the MTA board turned the public agency into Ratner's bank, giving him financing when there was none to be had, as the Real Deal noted, classifying the deal as one of the best during the credit crunch.

Yes, a state Supreme Court judge agreed that the deal was kosher, but he left out the 6.5% interest rate, as well as other sweeteners.

In other words, Atlantic Yards and the Vanderbilt Yard deal sound less like a public-private partnership than a private-public one.

Because if anything was clear from the groundbreaking, it was this: Ratner drove this train. A lot of people helped, but Ratner was driving.

(Meanwhile, the MTA was offering unsigned advice to bus riders about a bus stop closed for the groundbreaking and protest. Photo copyright Jonathan Barkey.)

The screen of thank-you messages

Around the tent housing the event, video screens broadcast a scroll of thank-you messages, to government agencies, lawyers, architects, all part of the same enterprise.

As the video below shows, it makes sense to give prominent place to the Empire State Development Corporation, the quasi-public agency that did the heavy lifting, spending Ratner's pass-through money on the environmental review and on lawyers.

Then came the MTA.

Then came the Community Benefits Agreement partners, groups supported financially by Ratner and fundamentally in the developer's debt.



MTA vs. CBA

There was little digital distance between the compromised CBA partners and the compromised MTA.

Only one of them, however, is responsible for moving millions of New Yorkers around the city.

And only one of them relies on scarce public funds.

Looking back at the deal

Williams didn't have to be there. In fact, there were reports that maybe the MTA--and perhaps even Williams--wasn't playing ball with Ratner.

At the hearing last May 29, state Senator Carl Kruger criticized the MTA for "foot-dragging in developing a dialogue” that could advance the project and also cited the MTA's “apparent refusal to move forward on a project that is critical to New York City’s economic future.”

When the deal was revealed last June 22, MTA board member Doreen Frasca said, "This is just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," MTA CFO Gary Dellaverson responded. "It's entirely at the board's discretion to accept or reject or send back to the negotiating table... I think that, in terms of why must it be now in the summer versus in the fall, I think it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]."

Two days later, Assemblyman Jim Brennan, said, “I’m here to discuss your duty not to squander your assets and your duty to be a good neighbor.”

Frasca, saying she'd studied the deal intensely, signed on.

Remember, WNYC's Matthew Schuerman reported (audio below) that MTA board members supported the deal because 1) they didn't think a better deal was in the offing and 2) they were under pressure from the mayor and governor who appointed them.

Yes, Williams got the deal done. But can she share Bruce Ratner's level of pride?

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