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ESDC leader jokes that he'd like to move Atlantic Yards "off our portfolio;" AKRF's tab tops $5 million; new owner's rep signed after conflict

This post is not an April Fool's Day joke.

Humor, sometimes, masks deep discomfort.

The Atlantic Yards project is apparently such a hot potato that last week Empire State Development Corporation (ESDC) Chairman-designate Dennis Mullen joked that Atlantic Yards is "a project that I would like to move off our portfolio."

The comment came about 24 minutes into the March 26 ESDC board meeting (agenda, webcast).

The ESDC board and staff had just concluded discussion about the city takeover of Brooklyn Bridge Park, initially a state-city project.

Moving on to AY

"Rachel, you're up," Mullen said, pointing to Rachel Shatz, Director of Planning and Environmental Review. "You're going to talk to us about Atlantic Yards--a project that I would like to move off our portfolio."

There was healthy laughter around the boardroom table in New York.

"No comment," said one person.

More laughter.

"Oh-kay," said Shatz jocularly. "Thank you."

"Did I actually say that out loud?" Mullen mused, on video from the Albany office.

More laughter.

More money for AKRF

Shatz explained that the directors were being asked "to authorize a contract amendment to the environmental consulting firm AKRF. In September 2005, the directors authorized ESDC to enter into a contract with AKRF for the preparation of an environmental impact statement to assess the development proposal for the Atlantic Yards arena project in Brooklyn."

"The directors authorized the first contract amendment in April 2006 to expand both the environmental impact statement's scope of analysis and the blight study," she said.

"A second amendment in September 2006 to cover expenses related to completing the Draft and Final EIS," she said. "And a third amendment in May 2007 to cover unanticipated additional work that was necessary to complete the final EIS, provide litigation support...and conduct interim mitigation."

(At that point, in May 2007, AKRF's tab exceeded $4.75 million.)

"This fourth contract amendment is requested to cover costs associated with preparation of a Technical Memorandum in connection with the General Project Plan modifications that were authorized by the directors in September 2009," Shatz read. "The consultants had also been asked to provide support during the public hearing process and certain technical assistance during the public review of the project and throughout the ongoing litigation."

Hence a contract amendment worth $250,000, bringing payments to AKRF to a total of $5,036,230.

"The contract is funded in its entirety from an interest account funded by the developer," she added.

In other words, more ammunition for the charge, by Appellate Division Justice James Catterson in his fiery concurrence in the AY EIS case, that the agency was being used as "a tool of the developer."

There was a bit of cross-talk among those at the conference table regarding the AKRF contract. No, they were told, Forest City Ratner does not have control over the consultant or set a ceiling on costs.

"That's the deal when they sign on," board member Kevin Corbett said. "They want our powers, they're along for the ride."

"It's part of each of the stages we have to go through," Mullen said. "This is a four-and-a-half billion dollar project. It affects many, many people in the middle of Brooklyn. And we have to make sure every 'i' is dotted and every 't' is crossed."

(Photo of Mullen, left, and Corbett, from 6/23/09 board meeting. Photo copyright Jonathan Barkey.)

A new owner's rep

The second AY-related item on the agenda related to a change in the owners' representative, a firm representing ESDC at the project site.

The initial consultant hired was Earthtech, owned by AECOM, which later absorbed Ellerbe Becket, the architect of record for the arena.

When the ESDC sought an owner’s rep, five respondent firms were shortlisted and Earthtech awarded the contract. But the change in ownership posed a conflict, so the board last week signed STV, second most qualified firm.

The contract won't exceed $1.25 million over two years. That's also paid by the developer.

"We will try not to do that to STV before the project's finished," joked Corbett, who also works for AECOM.

Irony #1: minor conflict vs. structural partnership

In a variant of the famous statement by Michael Kinsley that the scandal isn't what's illegal but rather what's legal, the ESDC's fastidiousness toward the conflict-of-interest issue with the owner's rep contrasts with the essential partnership it has with Forest City Ratner, which pays for its environmental consultants and outside lawyers.

(In fact, AKRF first worked on Atlantic Yards for FCR.)

Irony #2: AY part of ESDC's jobs mission?

Also, it's hardly clear that Atlantic Yards really falls within the ESDC's mission.

City Hall News reported yesterday, in an article headlined As City Takes Over Joint Projects, Concerns About Responsible Development:
State officials justified the move to transfer control to the city by explaining that neither Brooklyn Bridge Park nor Governors Island quite fit into the state-run Empire State Development Corporation’s core mission of luring businesses to create jobs.
Beyond construction jobs and the Nets, what businesses would be lured to create jobs at the Atlantic Yards site? There's no provision for manufacturing and relatively little planned office space, with no timetable.

Rather, to reference Corbett, it's more likely Forest City Ratner wanted the ESDC's powers--"truly amazing powers," in the words of planner Alexander Garvin.

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