Tuesday, April 06, 2010

Who wins? Atlantic Yards isn't "a loser for everyone," but Barclays, Prokhorov, Nets fans, and arena-goers aren't the public at large

Just before the groundbreaking, on March 10, Chris Smith of New York Magazine wrote an online article headlined Why the Atlantic Yards Is Currently a Loser for Everyone, Even Ratner.

With all due respect--Smith generously cited me--I think he looked at the issue too narrowly. There are a bunch of winners, but they're just not the public at large, for whose ultimate benefit subsidies, tax breaks, and the extraordinary power of eminent domain were presumably justified.

There was never a legitimate cost-benefit analysis for the project as a whole, so all assessments will remain forever murky. But they give much room for pause.

The New York City Independent Budget Office (IBO), which did the most careful (partial) study, called the arena a loser for the city but not the state. I think the IBO was too generous, because it didn't factor in the state's giveaway of naming rights, worth more than $200 million..

And the Empire State Development Corporation's (ESDC) economic impact analysis of the project as a whole is far from credible.

Losers?

Smith tallies some of the losses. Yes, as Smith notes, Frank Gehry's gone--and I'd add, there's only "vaportecture" for the rest of the project. Yes, ACORN's collapsed--though I'd add that its unofficial New York successor will remain Forest City Ratner's partner.

Yes, majority owner Bruce Ratner "was forced to unload the money-hemorrhaging Nets to Russia’s richest oligarch," but, I'd point out, that's a good thing for Ratner and his parent company, Forest City Enterprises: they cut their losses.

And yes, as Smith points out, the "most tangible quasi-public benefits that Ratner promised — housing and parks — have been pushed off into the unforeseeable future" and the fiscal benefits are more doubtful.

He concludes:
The fight over Atlantic Yards was about community and democracy. If the legacy of Develop Don’t Destroy [Brooklyn, or DDDB] is that whatever is finally built on the rest of the site is more in proportion with the brownstone neighborhoods surrounding Ratnerville, the group will have done the city a service. But until then, everyone's going to continue losing: Bruce Ratner is getting an arena he wanted only as a crowd-pleasing tool to divert attention from his lucrative condo towers, and New York gets a soulless billion-dollar basketball court next to a hole where there should be human-scale housing.
The winners

Actually, there likely are a good number of winners.

Barclays Capital is a huge winner, renegotiating the naming rights deal and getting signage affixed to renderings of the arena roof. It's using the Barclays Center as a form for brand recognition as it aims to grow in the United States. The groundbreaking ceremony on March 11 was a giant commercial for Barclays and, to a lesser extent, arena sponsors.

Russian billionaire Mikhail Prokhorov is another big winner. He's using the Nets as a "strategic investment," hoping to make a big splash in the U.S. So far, he's doing very well, thanks to mostly uncritical press coverage, including a valentine from 60 Minutes.

Many but not all existing and future Nets fans are winners. Sure, Ratner stripped the team, and a good number of (dwindling) New Jersey-based fans won't want to drive or make a train/bus + subway commute to Brooklyn.

But there's room to build a new fan base and most won't care about the larger story, as long as the team is better--and it will be, thanks to draft picks, cap space for free agents, and an owner willing to spend crazy money on a new coach and other components.

(Fun fact: Nets enthusiast Rusty_b, co-host of a Nets/Knicks podcast in which he refers to the Nets as "we," hails from Australia.)

People who can afford non-basketball events at the Barclays Center, a new venue, will be happy. There's a demand (according to a Ratner-funded study) for circuses and concerts beyond Madison Square Garden and the Nassau Coliseum, so a Brooklyn arena will offer a convenient alternative to a substantial population.

Jay-Z wins. He wins big. He's gotten great press and will get more when he (probably) opens the arena with some concerts.

Those getting jobs and housing will surely consider themselves winners. Benefits do trickle down when so much money is spent.

Very mixed victories

The lobbyists and lawyers and consultants who made big bucks off the project go home happy, though many, as noted below, with their reputations bruised, as do the elected officials who backed the project to the hilt.

Ditto with the nonprofit organizations, like the Brooklyn Historical Society, which get new support from FCR and Barclays--a fraction of redirected subsidies, of course--but may emerge tainted.

Forest City Ratner/Enterprises wins, in the sense that they cut their losses and renegotiated deals with the Metropolitan Transportation Authority and the ESDC. Then again, their wins come at an increasing cost to their reputation. Ditto for Nets Sports & Entertainment CEO Brett Yormark.

The ESDC has won passage of the project and victories in court, but with increasing questions about its methods.

Similarly, environmental consulting firm AKRF wins, earning $5 million-plus from the Atlantic Yards contract, but facing increasing scrutiny over its dubious practices.

Brooklyn Borough President Marty Markowitz gets the team and arena and (presumably) the opening ceremony he wanted, though it will dog him. Markowitz supported the project unquestioningly, continuing to believe that the 21st-century Nets would reincarnate the community spirit of the mid-20th-century Dodgers. (Will it? Likely for some, especially those pushed before cameras, but that won't tell the whole story.)

Mayor Mike Bloomberg wins, getting a megadevelopment off the ground, though history will not be kind to his unquestioning support.

Even Gov. David Paterson wins a tiny bit, briefly distracting the press and public from his travails.

The National Basketball Association (NBA) wins, trading a shallow-pocketed owner who wanted to use the team as leverage for a real estate deal for a deep-pocketed owner who wants to use the team as leverage for a larger investment platform. And the NBA gets to further internationalize the game.

Of course, if NBA Commissioner David Stern can't express confidence that Prokhorov is a "man of character," then a not-inconsiderable asterisk must be attached.

The Community Benefits Agreement partners and some of the people they serve win--they'll get the contracts they sought, right?--though these days lots of people, including Bloomberg, are skeptical about CBAs.

Who loses?

New Jersey loses, because New York has poached a team and tax revenues from another state, a tactic Bloomberg has criticized in other contexts.

Federal taxpayers, especially, lose on the gimmicky tax-exempt arena bonds that support an arena glut in the metro area. If there's reason for New York to get back a fairer share from the feds, sending it to Forest City Ratner is not exactly the solution. And a tax system that privileges business deductions for luxury suites also makes federal taxpayers a loser.

Fighters for good government like Assemblyman Richard Brodsky, a noted critic of the Yankee Stadium deal, and the Citizens Union lose, given their curious quiet.

The processes behind the project--the end-around the city's land use review and a legal system where the ESDC gets deference thanks to the magical words "rational basis"--also must be deemed losers.

Also losers are a good number of people in the neighborhoods surrounding the project, who will bear the brunt of blight and construction and traffic (why so much surface parking?), and face decades of project controversy.

But it's not ultimately about them, or about DDDB and allies in the David-and-Goliath fight, because that's the wrong frame.

The bigger picture

As Smith suggests, democracy loses. (DDDB elaborates on the failure of democracy, coupled with a "Corrupt Land Grab," a "Taxpayer Ripoff," and a "Bait and Switch of Epic Proportions.")

The real losers are likely the public at large, for whom the subsidies, tax breaks, and eminent domain are supposed to benefit.

Atlantic Yards is seen by proponents as an example of what political scientist James Q. Wilson called "entrepreneurial politics," with concentrated costs and broad benefits.

However, it's far more likely an example of "client politics," with concentrated benefits to Forest City Ratner, Barclays, Prokhorov, and others, and broad costs. But those beneficiaries have obscured the picture.

It's not simple to picture the alternatives--not just a different development on public property, but more funding for transportation and social services and the wiser deployment of scarce housing subsidies--all of which might have been achieved had there been a democratic process with a Request for Proposals (RFP) that didn't give Forest City Ratner a flying start.

(To be clear, the RFP applied only to the railyard, not the project as a whole for which there was no RFP.)

Basketball dominates

The public at large gets obscured when there are, in fact, some winners and media outlets--in the form of sports coverage--are far more interested in one aspect of the project (the team) than the project as a whole. Remember, the Sports section is a lot larger than the Metro section.

Even New York Magazine's Smith, in a recent piece for ESPN headlined Is Brooklyn Ready for the Nets? that doesn't scant the controversy, resorts to generalization:
Very grudgingly, Brooklyn is starting to peek at what Brook Lopez is doing and to wonder whether John Wall can become the Nets' Patrick Ewing.
Brooklyn? Well, a few people in Brooklyn he interviewed.

That leads to another big loser: the press, which theoretically serves as a proxy for the public. And that returns us to academic Lynne Sagalyn, who wrote in her book on Times Square redevelopment, Times Square Roulette (MIT Press, 2001):
That reporters and editors, as professionals, are not analytically trained to answer the cost/benefit question is not material. Using the appropriate forum, their job is to lever the press's political power as a vehicle for accountability from public officials who are responsible for providing forthright answers and full documentation of both costs and benefits. A mandate for broader and deeper investigative review of public subsidies sadly does not exist; seemingly, it has no constituency.
Sagalyn wrote that while the press in New York City was relatively robust. Today, the situation's worse.

Atlantic Yards was enabled by editorial pages that support the project to the hilt, Brooklyn bureaus populated by a mere handful of reporters (who can't pay full attention), and the New York Times has an awkward position--a business relationship with FCR--it never quite transcends.

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