Tuesday, June 22, 2010

My Times op-ed: "A Russian Billionaire, the Nets and Sweetheart Deals"

Balancing (?) a one-source portrait of Bruce Ratner, today's New York Times Sports section offers a piece by me labeled "essay" (initially "analysis") that I'd simply call an "op-ed," headlined A Russian Billionaire, the Nets and Sweetheart Deals.

OK, take a read. The conclusion:
But the arena process should have been fair, and [Prokhorov] should have paid full freight. Surely he can afford it.
Someone might've called foul

I posted an FAQ below, but first I'd like to amplify the piece slightly by restoring one line that was cut from the edit I saw three weeks ago:
All was forgotten as flashbulbs popped for Prokhorov, as was the notion that had a man worth nearly $18 billion put his hand out for subsidies, someone might have called foul.
Would it have been possible for Mayor Mike Bloomberg and Governor David Paterson to justify helping Prokhorov's cash flow, as they did with Ratner last September?

The parking lot


I wrote "Some people will want to drive there, but the Atlantic Yards site is a tight fit."

More pointedly--in a revision I didn't get in--luxury suiteholders will get to drive there.

(Bonus: at the 12/10/03 press conference announcing the project, Brooklyn Borough President Marty Markowitz called it "the only possible site where you truly don’t need a car to arrive.")

FAQ

Why write the piece?

I was astonished how much the sports press buffed Prokhorov, as if his purchase could be disassociated from the Atlantic Yards controversy and the public subsidies involved.

Why'd they accept the piece?

I can only speculate. But there's been overwhelmingly positive publicity about Prokhorov. And there's a very friendly article about Bruce Ratner today. So there's a hint of balance.

Where was the photo taken?

On the north side of Dean Street east of Sixth Avenue; in the background are two houses subject to eminent domain, but that "taking" has been shifted to a later phase. A 27-story building is supposed to be built on the site where five row houses--including these two--once stood. (Photo by Yana Paskova for the Times.)

You say Prokhorov should've paid full freight--are you letting Ratner off the hook?

No. But the argument for subsidies gets ever less defensible when the entity benefiting has pockets of incalculable depth.

But Prokhorov wasn't there when the naming rights deal was announced, the tax-exempt financing structure approved, and the subsidies renegotiated.

Yes. And the sale of the team wasn't announced until after not only the MTA's renegotiation of the railyard deal last June and the second approval of the Atlantic Yards project last September by the Empire State Development Corporation.

So what do you mean when you say Prokhorov should've paid full freight?

Well, partly that's metaphorical. But with a fair process, the city and state need not have compromised with Ratner. They could've said no to the railyard renegotiation, for example, or the shift of infrastructure money to land purchases, or to the modification of the General Project Plan to allow condemnation in stages--all of which helped Forest City Ratner's cash flow.

Would Forest City Ratner have walked away, or would they have asked their deep-pocketed new investor to take a larger piece of the deal? And thus Prokhorov would've been paying the money the city and state conceded.

Prokhorov wasn't officially announced until after the project had been re-approved in September 2009. Did the city and state have any leverage then?

Not as much, but the ESDC still had to negotiate a Development Agreement with entities controlled by Forest City Ratner, entities that would be joined by Prokhorov's companies. That Development Agreement is quite generous in terms of timetables and penalties. It could've been much tougher, recognizing the deep pockets involved.

Has Prokhorov taken any risks in buying most of the team and a share of the arena?

Some. He's agreed to absorb the team's losses, and we don't know the market for luxury suites in a new arena. However--and I don't think this was fully expected--the value to Prokhorov in positive publicity is already enormous.

Aren't there more subsidies?

Of course. For example, the tax-exempt status of the land should've driven a much higher price for the railyard, as noted by the New York City Independent Budget Office. It didn't. There are various other tax breaks. The subway naming rights deal could also be considered a subsidy.

Was Forest City Ratner's bid for the railyard really more valuable than that of Extell?

We can't fully compare them, because Extell was never allowed to develop its bid, but clearly some of FCR's claims were overblown. And only Extell, not FCR, submitted a pro forma showing its profit projections.

But Extell showed itself to be a willing bidder, offering three times the cash, the MTA chose not to ask Extell to revise its bid to compete with Ratner. It went back only to Ratner and concluded that there was no way to get more value out of the railyard--even though land prices have rebounded elsewhere.

Other bidding processes for valuable public land, such as with Hudson Yards, have been far more fair. And unfair processes like the one involving the Aqueduct racino have generated much more controversy.

Why is a surface parking lot in Prospect Heights bad urban planning?

At right is a photo I took of the north side of Dean Street between Carlton and Sixth avenues, the prime route to the arena from the 1100-space surface parking lot, which will especially serve suiteholders and other high-rollers.

As measured by Peter Krashes of the Dean Street Block Association, the passageway narrows to less than six feet. People are going to be walking in the street. More photos here of the Dean Street Squeeze.

So how does this op-ed fit with your longstanding criticism that the Times has not covered Atlantic Yards exactingly?

Well, it does, and it doesn't. The Times's staff reporters should have covered the issues raised in my piece in greater detail, and should have put it all together. They didn't.

And the Times should have been receptive years ago to op-eds critical of Atlantic Yards. (I submitted one.) But the acceptance of this piece shows that individual departments of the Times make their own decisions. And/or that the story is "over" enough to welcome a critical voice.

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