Skip to main content

Panel discusses CBA reforms; in successful West Coast CBAs, signatories don't take developer cash; developer pays upfront for affordable housing

Even if experts disagree on some aspects of reforming Community Benefits Agreements (CBAs) in New York City, they pretty much agree on several factors that, in their absence, detract from the legitimacy of the Atlantic Yards CBA:
  • signatories shouldn't take money from the developer
  • the city's Uniform Land Use Review Procedure (ULURP) shouldn't be circumvented
  • the CBA should have real teeth in it
The panel discussion last night at the Bar Association of the City of New York was titled Community Benefits Agreements: Time for Reform? (Audio is here. Also see Michael D.D. White's take in his Noticing New York blog, which fills in some gaps below.)

Beyond debate about whether the city should establish rules on CBAs--a recommendation in a Bar Association report (below) issued in March--panelists also agreed that policies on issues like local hiring and living wages should be institutionalized citywide rather than subject to project-by-project negotiations.

The presence of such policies would vitiate the appeal of CBAs like the one for Atlantic Yards.

Dismay evident

The bar group's Land Use Committee, in its report, concluded that the rise of CBAs signals a deeper problem with land use process, observed Vicki Been, Director, Furman Center for Real Estate and Urban Policy, New York University School of Law. "Participation comes too late and too little in the process."

Julian Gross, Director of the Community Benefits Law Center, a project of the Partnership for Working Families, was there to support CBAs, but acknowledged, "I share everybody's concerns about the way CBAs have played out in New York."

He pointed to a law review article he wrote raising questions about three New York CBAs, involving Bronx Terminal Market, Yankee Stadium, and Columbia University. In a handout (below), he suggested that the problem in New York was "excessive government involvement in CBA negotiations, both in designating favored community representatives and in shaping the substance of CBAs."

Neither of those apply to the Atlantic Yards CBA; however, Mayor Mike Bloomberg signed the CBA as a "witness" and publicly extolled it. His press office issued a long press release, endorsing the CBA. Bloomberg has since called CBAs "extortion."

The good side of CBAs

In California, said the San Francisco-based Gross, the CBA process has worked, leaving not only his clients (community and labor groups) happy, but also developers, elected officials, and and redevelopment agency staffers.

(He gave as an example the 2008 Bayview-Hunters Point CBA in San Francisco, which, I'll note includes a requirement that the developer and/or its successors contribute $27,300,000 to affordable housing. No such requirement is part of the Atlantic Yards CBA, where the affordable housing commitment is dependent on government subsidies.)

Gross posited a process in which there is both a rigorous government review and a capacity for legitimate community groups to shape the project--rather than, I'd suggest, a done deal from the start, as with AY.

The groups are "influential enough with the decisonmakers that the developer would like to have their support in approval process or the process to obtain subsidy."

The reason for a CBA? The community groups do not trust the city's deal with the developer to create adequate assurance that the things they want will "actually occur as the project is built out over a period of decades."

Rather, "they want a legal right to enforce these benefits." The city is having parallel discussions with the developer, setting the terms of the subsidy.

With Atlantic Yards, I'd point out, the CBA defers to the public process, notably in the environmental assurances component.

California vs. NYC

Gross said he mostly agreed with the report's recommendation on non-subsidized process that the city not require CBAs as part of the land use process. As for projects that are subsidized, he said he disagreed with the report's recommendation that the city establish "an elaborate regulatory scheme for CBAs."

Some of the concerns raised here don't apply to successful West Coast CBAs. "The CBA does not involve any payments of any money to the groups that sign them," he said, "but do fairly benefit the entire community." (With Atlantic Yards, all the signatories were paid.)

"That probably sounds fanciful," he said, "but that played out in five or six large, controversial projects on the West Coast," he said. Participants "see it as supplementing the process, better than public hearings or elected official pow-wows."

Gross allowed that there are always questions of whether groups are sufficiently representative of the communities they purport to represent. That's up to the elected officials to decide.

With Atlantic Yards, of course, there were no elected officials to be convinced by a CBA to approve the project, since there was no approval process involving elected officials. Rather, the CBA was used by the developer and some elected officials to claim public support as the project went through an approval process shepherded by the Empire State Development Corporation.

Planner: AY should've gone through ULURP

Ethel Sheffer, Past President, American Planning Association, NY Metro Chapter, noted that, with Atlantic Yards, "there was no ULURP process, so the developer, I would say, grabbed the ball, and made a deal with community groups. I'll just summarize it that way, and not say any more, except that there are many who felt it was a great shame that that particular project was not subject to the city land use review procedure."

"It is overdue for us to try to find a way to have ULURP apply" to projects that are overseen by state and federal agencies," she added later. "It's very difficult for communities to be involved even though there are EIS's and public meetings."

Involve Community Boards

Sheffer noted that, while the City Charter does not allow Community Boards to enter into CBAs, the boards, in their advisory capacity, "could play a role and should play a role" to identify organizations that could negotiate on behalf of the community.

(Remember, the three affected Community Boards complained in 2006 that Forest City Ratner overstated their participation in the CBA.)

Sheffer added that Community Boards--which have seen their budgets shrink--should instead have more money for planning activities.

The political process

Al Rodriguez, General Counsel, Bronx Borough President, began by asking the audience to image a situation in which the city has an economic development policy that's comprehensive and citywide, and always balances the need between development and infrastructure. No CBAs would be needed, because the community benefits would be institutionalized.

"We know that economic development in New York City in most instances is not executed on some notion of having a balance between the project, the benefits that the city gets, and the community," he said. "We live in a democracy that is particularly subject to the influences of money and political power, dictating what happens with the project and who the benefits flow to. It's a political process."

"What we've done in New York is far from perfect. It's been botched in some cases," Rodgriguez said, "but the reality is the genie is out of the bottle. Communities will not accept large development projects that are subsidized by the city and the state without entering the political process."

And while Rodriguez recognizes the difficulties in balancing interests, he reiterated that certain aspects of CBAs--such as living wages and local hiring--should be institutionalized, not negotiated.

"Next week, a bill will be introduced in City Council to require living wages on all economic development projects that are benefiting from city subsidies," he said.

The EIS process

Rodriguez said the Charter Commission should examine the role of consultants in environmental impact statements.

While he didn't mention the ubiquitous consultant AKRF, it should be noted that AKRF frequently works for the developer and then for the government on the same project as with Atlantic Yards. With regard to the Columbia University expansion, the work was simultaneous.

"What consultant, in their right mind, who is being paid by the developer, is going to say something that the developer doesn't want to hear?" Rodriguez said. "This is the biggest joke in development projects. Consultants are not going to tell the developer that they have an unmitigatable impact if it exists. It just doesn't happen. You've got to change the situation so that consultants are not hired and controlled by the developer."

Conflict of interest?

Michael D.D. White, who handed out a print version of his Noticing New York post slamming the AY CBA, noted that city conflict-of-interest rules don't apply to private CBAs.

So, what to do about situations like Atlantic Yards, where all the signatories took money from the developer and ACORN also stands to benefit from the housing contract?

"I think that's a concern, but I don't think the city can legitimately govern all private relationships related to a development project with a set of rules," Gross responded, noting that the issue goes beyond CBAs, as developers frequently enter into grant agreements with local nonprofits for things like job training.

"On the stronger CBAs," he said, "we've made a point of not having our groups ever be in a position of receiving money," because it can undercut the validity of the their support for the project. "People would say, Look, you've been bought off. Maybe it is, maybe it isn't, but it undercuts the value of what they're offering to the developer."

Gross said the validity of a signatory's participation should be assessed individually.

Who's the watchdog?

Who's to do that? The discussion didn't go there, but there's been little role for watchdog groups in New York, and the press has not exactly been rigorous.

If the New York Times reporter Nicholas Confessore and his editors had recognized in October 2005 that their scoop was that Atlantic Yards CBA signatory BUILD had lied about being paid by the developer, that might have changed public opinion.

Instead, the headline was To Build Arena, Developer First Builds Bridges and the Times posited that Forest City Ratner was creating a "modern blueprint" to harvest community support.

And the mainstream press ignored the crucial May 2005 City Council testimony by Bettina Damiani of watchdog group Good Jobs New York that there are "several major differences between CBAs as they have been used in other parts of the country and the series of negotiations that FCRC is calling a CBA."

Enforceability of housing pledge?

An audience member pointed out that Atlantic Yards developer Forest City Ratner also got property via eminent domain. But what if--"just for the sake of argument"--it can't afford to build the housing promised, market-rate or subsidized?

(The questioner did not seem familiar with the loopholes in the AY Development Agreement, which allows extensions for lack of subsidies as well as lack of market financing.)

Summarizing the question, moderator Kenneth Fisher, chair of the bar association's land use committee, noted that it's very common for large projects in New York to experience "changes in shape."

"The question emphasizes the difference between the development agreement, let's call it, and the Community Benefits Agreement," Gross responded. "Both of these agreements are contracts. And both of these agreements, at the time they're negotiated, need to give some thought to different scenarios that can occur, and what the remedies are in those cases."

"If the contracts don't address those things, there's a set of common law principles," he continued. "What the government can do in its contract is say that if you don't build all the stuff you say you're going to build, you have to give the land back to us. I don't think the redevelopment agencies are very focused on those kind of scenarios, in cutting the strongest deal possible to address those bad situations, at the time they are negotiating the deal. If community groups thought redevelopment agencies were better about those things, there would be less interest in cutting their own deals."

Ideal vs. AY reality

Gross seemed to be describing a situation in which the CBA is more rigorous than the development agreement. With Atlantic Yards, the CBA does not require upfront money for housing, and it allows for arbitration and then injunctive relief.

Could ACORN, ever supportive of the project, be expected to come down hard on the patron that's bailed it out? And could the CBA trump the Development Agreement? Both are unlikely, I'd say.

"With the CBAs, every CBA has to be negotiated with the cognizance that the project may not go forward, or may get changed," Gross continued. "And again the parties have to give attention to what's the fair remedy in that situation. Contracts will do that. I think no one has suggested that, as was alluded to in the report, that the approvals could be rolled back at that point."

If the developer's not performing, the remedy could either be specific performance--fulfilling the obligation--injunctive relief, or paying damages.

But that is also conditioned on the political process that Rodriguez described.

Julian Gross on NYC Bar Report on Community Benefits Agreements

The Role of Community Benefit Agreements In

Atlantic Yards Community Benefits Agreement (CBA)


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…