Monday, November 29, 2010

FCR lies about Community Benefits Agreement, claims it went into effect only when arena broke ground, avoids hiring Independent Compliance Monitor

Given that the controversial Atlantic Yards Community Benefits Agreement (CBA) is such a big part of the argument in favor of the project, as suggested in The Civilians' new play, IN THE FOOTPRINT: The Battle Over Atlantic Yards, the CBA is worth another look.

Notably, developer Forest City Ratner (FCR) recently lied, despite clear evidence to the contrary, that the CBA--signed more than five years ago--went into effect only when the arena broke ground this past March. (The FCR statement is on video below.)

Moreover, the developer claims that there's no need yet to hire an Independent Compliance Monitor (ICM) to provide a credible outside analysis of the CBA, despite provisions in the document to hire one "[a]s soon as reasonably practicable."

Instead of hiring an ICM, a process that began three years ago but was apparently put on hold, Forest City Ratner instead relies on its own subcontractor, Darryl Greene and his firm, The Darman Group. And Greene has such criminal baggage he was forced to withdraw from a widely-criticized bid for the Aqueduct "racino."

Advantage FCR

So, as the developer and its supporters, in p.r. and in legal papers, continue to laud the CBA, the first-ever in New York, FCR violates the "historic" contract. (Graphic from March 2008 brochure.)

In doing so, FCR has both saved money and short-circuited a process designed to add legitimacy to the CBA. (The CBA is embedded below and also searchable here).

The CBA has generated much criticism because of its inclusion of only project supporters (most of which were created after the project was announced), its lack of transparency, its improper claims regarding the role of community boards, and its limited enforceability.

Unbalanced enforcement

The failure of anyone to blow the whistle on Forest City Ratner's violations of the CBA point out the severe flaws in a process that involves groups financially dependent on the developer.

And while some CBA experts suggest that the flaws in New York CBAs result from excessive government involvement, in this case the absence of governmental involvement, and/or signatories with significant independent financial support, means no one serves as a counterweight to the developer.

By contrast, in a somewhat controversial report, a task force organized by Comptroller John Liu recommended in September that CBAs be made enforceable by incorporating their terms into a legally-binding regulatory agreement between the developer and a public agency and/or a restrictive declaration for review by the City Council, as well as have monitoring by the Comptroller.

The role of Darryl Greene and The Darman Group

FCR publicly touts its high percentage of minority contracting (such as at 1:30 of this video), without mentioning that the firm tracking such figures is The Darman Group, headed by disgraced executive Darryl Greene.

Greene pleaded guilty in 1999 to a misdemeanor count of mail fraud for fraudulently billing $500,000 in consulting and legal fees regarding minority contracting.

His role in the Aqueduct Entertainment Group's bid earlier this year for a state "racino" contract--a contract that required no one associated with the group have a criminal conviction--led to enormous controversy and his withdrawal.

The firm's bid was eventually rejected by the state, leading to a scathing report by the state Inspector General.

The New York Post, in a 2/4/10 editorial, called it The fetid Aqueduct deal, in part because of Greene's participation. Other editorials questioned the deal.

However, as I wrote 3/4/10, despite evidence that the Vanderbilt Yard deal was more scandalous, neither it nor Greene's role in Atlantic Yards has drawn similar scrutiny.

A public question about the ICM

FCR had not been publicly questioned about the ICM until a 9/29/10 public information session at Brooklyn Borough Hall, mainly concerning the planned arena plaza.

As shown in the video below, Carlo Scissura, Chief of Staff to the Brooklyn Borough President, read a question submitted by an audience member (me).

"Forest City Ratner was supposed to hire an independent compliance monitor for the CBA. What happened to that monitor and who is it?"

The misleading, somewhat uncertain response came from Forest City Ratner executive Jane Marshall.


(Video shot by Jonathan Barkey)

CBA timetable

"The CBA agreement was signed a long time ago," Marshall responded. "It didn't actually go into effect until we broke ground for the arena."

The CBA, as shown in the copy embedded below, was signed 6/27/05. The ceremonial arena groundbreaking was held 3/11/10.

The CBA clearly contradicts Marshall's claim:
TERM. This Agreement shall commence on the date hereof and continue until either (i) the Developers abandon their efforts to acquire or lease from the Metropolitan Transportation Authority and to obtain a rezoning of the Project site for large-scale development, or (ii) thirty (30) years from commencement of construction of the first residential building to be constructed by Project Developer or its Affiliates at the Project.
(Emphasis added)

Beyond that, in several places the CBA indicates that implementation would begin soon after it was signed, rather than some unspecified later groundbreaking. For example:
G. Project Implementation Plan. (1) Upon signing of this Agreement, the Developers, in consultation with the Coalition members, shall create a manual for the implementation of the programs and goals described in this Agreement (the “Project Implementation Plan”).
Additionally, job training was to begin immediately:
Commencing upon execution of this Agreement, Developers and BUILD [Brooklyn United for Innovative Local Development] shall initiate and coordinate a job training program....
FCR's reports

Also, Forest City Ratner was required to submit quarterly status reports:
Quarterly Reports. Within thirty (30) days after the end of each calendar quarter, the Developers will prepare and submit to the Coalition and the ICM a status report which shall analyze the then relevant initiatives broken down by Development Phase, and, if relevant, specify actions taken by Developers to fulfill their obligations under this Agreement...
Such reports are apparently the source of the developer's public statements.

The Darman Group, as indicated in the 2/6/08 report (embedded below) has been regularly reporting to the CBA executive committee regarding minority/local hiring and contracting with minority-owned and women-owned businesses.

For example, numbers touted by FCR executive MaryAnne Gilmartin at an 11/4/10 meeting of the Atlantic Yards District Service Cabinet (see 3:58 of this video) almost certainly come from The Darman Group.

Missing, however, is any oversight, even though such oversight was required by the CBA.

Monitoring "not appropriate right now"?


However, on September 29, Marshall continued, with some uncertainty in her voice, "And so now we are putting together a plan for kicking off the--with each group--the responsibilities and how and what they want to effectuate over the first year, the second year, other years. So far, we're engaged in a planning activity with them and we--so therefore it's not appropriate right now to have hired somebody or retained somebody to do--be the independent monitor because we have to first figure what they can be monitoring."

Not so. The reliance on The Darman Group short-circuits the more independent process laid out in the CBA, which clearly states what the ICM should be doing:
Independent Compliance Monitor. As soon as reasonably practicable after formation of the Executive Committee, the Executive Committee shall publish a Request for Proposals (“RFP”) to qualified, independent persons or entities with experience in overseeing compliance with similar arrangements or who have other experience deemed by the Executive Committee to be sufficiently relevant. The terms of employment and evaluation shall be determined by the Executive Committee. Such Independent Compliance Monitor (“ICM”) shall be selected and hired by the Executive Committee, at an annual payment of up to $100,000 to be paid by the Project Developer, and shall be responsible for oversight of the Project Developer’s, Arena Developer’s and Coalition members’ obligations under this Agreement, investigation of any complaints brought against the Developers or a Coalition member regarding implementation of this Agreement and review of the Developers reports required under Article X (the “Developer Reports”). After review of the Developer Reports, the ICM shall provide a report to the Executive Committee and the DBOAC [sic], as defined below, on the status of the implementation of all initiatives.
(Emphasis added)

The ICM, not The Darman Group, was supposed to provide a report to the Executive Committee and the Downtown Brooklyn Advisory and Oversight Committee, or DBAOC.

The role of the DBAOC

The DBAOC, according to the CBA, "shall be the community liaison for the Arena and the Project and shall provide periodic status reports to the Community on compliance by the Developers and the Executive Committee with this Agreement."

Has the DBAOC provided periodic status reports? It's provided a few to some community boards, but not to my knowledge at any publicly announced meetings regarding this topic.

Meanwhile, the DBAOC, as indicated in statements by its Chairman, Bill Howell, has long been a supporter of Atlantic Yards, not an independent analyst.

The role of the ICM in bidding

Moreover, the ICM was supposed to help monitor the bidding process. According to the CBA:
NOTICE OF UPCOMING BIDS. During the construction period, the Developers will prepare and submit to the Executive Committee and the ICM a monthly updated schedule of the contracts that Developers expect to obtain bids for over the upcoming three month period and the expected scope and value of each contract. Developers shall provide a copy of this report to BUILD and NYSAMC, and other locally based business organization as the Executive Committee shall direct.
Given that minority- and women-owned businesses have been hired for such things as demolition work, clearly the "construction period" began well before groundbreaking.

Indeed, the CBA states:
(1) Upon execution of this Agreement, Developers will seek to award not less than five (5%) percent of the total dollar value of pre-construction service contracts for each Development Phase of the Arena and the Project to Minority owned professional service firms and three (3%) percent of the total dollar value of pre-construction service contracts for each Development Phase to Women owned professional service firms.
Effort actually began in 2007

FCR's Marshall finished up: "And the other thing is that, when we do that, it will be something that the executive committee, the groups themselves, probably issue an RFP and select a monitor, based on the scope of work that they--have deemed is directly related to everybody's mandate, and hopefully we'll get it done soon, but I don't have the timetable right now."

Actually, such an RFP began three years ago.

In March 2007, a press release issued by a Forest City Ratner-paid public relations firm was headlined "ATLANTIC YARDS CBA COALITION SEEKS INDEPENDENT COMPLIANCE MONITOR: 'Watchdog' To Ensure Community Benefits for Local Community and Residents." (I wrote about this 3/8/10.)

The RFP for the ICM was to be handled by Greene's firm, The Darman Group.

The planned escrow account

According to the CBA, Forest City Ratner was supposed to put money down for an ICM when the document was signed:
ESCROW ACCOUNT. At the commencement of this Agreement, the Project Developer shall deposit $100,000 into an interest bearing escrow account to be maintained at Carver Federal Savings Bank. Such funds shall be used solely for the compensation of the ICM, and shall be replenished by the Project Developer, as necessary, to maintain a minimum balance of $100,000. Upon expiration or termination of this Agreement, the current ICM’s employment will be terminated and all funds in the escrow account shall revert to the Project Developer.
A query from the ESDC

Three years ago, that process was already in progress.

As the screenshot at right shows (click to enlarge), in August 2007 the Empire State Development Corporation (ESDC) agreed to meet with the Executive Committee of the Community Benefits Agreement Coalition. In preparation for that meeting, the ESDC asked Forest City Ratner about the status of various CBA action items.

The first item on the list: the ICM.

The message to FCR notes that Pat Foye, then ESDC's top official (later to be followed by Marisa Lago and Dennis Mullen), "will stress that while the State is not a party to the agreement, ESDC does support the agreement and spirit of cooperation between the community and FCRC."

That suggests that ESDC thinks that the CBA signatories are a legitimate proxy for the "community"--a questionable claim.

(I obtained the email messages posted here via a Freedom of Information Law request.)

FCR's response

The response (at left) to the ESDC from Forest City Ratner executive Scott Cantone: "FCRC and the CBA Partners are currently reviewing RFP responses and the $100,000 has been placed in an escrow account."

Also, he wrote, the Project Implementation Plan "is before the CBA Executive Committee for review and approval."

The unanswered question: why has no ICM been chosen in three years?

The bottom line

The CBA was supposed to ensure that an Independent Compliance Monitor would be hired.

No such ICM has been hired.

FCR has saved tens of thousands of dollars.

The statistics regularly presented by the developer come from a source that is 1) beholden to the developer and 2) unworthy of participating in other state-approved projects.

Failure of oversight

At an 11/4/10 meeting of the Atlantic Yards District Service Cabinet, a quarterly body of agencies and officials monitoring Atlantic Yards issues, Community Board 6 District Manager Craig Hammerman questioned why future meetings would address the CBA, given that community boards and the involved agencies aren't signatories to the contract.

"So, while I understand the importance of the CBA, I have to question the relevance of it to this body," Hammerman said. "And if there's an enforcement issue, it sounds to me like more of a legal matter, and not something of public planning concern. So I have to really question the appropriateness of using the venue for future CBA discussions."

Carlo Scissura, Chief of Staff to the Brooklyn Borough President, responded, "Well, I think the CBA is an important part of this whole project. At some point in these meetings, we will be updating people on where we are with it. I think it's something that's come to us."

City Council Member Letitia James added, "In all fairness, the concerns that I've received in my office include, but are not limited to, parking, traffic, security, et cetera. But they've also included the status of the CBA, in fact I've received a number of calls… Even though I was not a party to it and. as you know, was not even in support of this development project. I have a duty and obligation to respond to all constituents. So some constituents have asked, what is the status of the CBA, where are we in respect to hiring, WMBEs, affordable housing, et cetera. So I am just putting all the issues before Forest City Ratner."

However, the issues need not be put solely before Forest City Ratner.

An independent entity, the ICM, was and is supposed to answer such questions.
Atlantic Yards Community Benefits Agreement (CBA)

Report on the Atlantic Yards Community Benefits Agreement to the Downtown Brooklyn Advisory & Oversight Com...

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