Friday, April 30, 2010

A slam at the bond rating agencies (updated)

Remember how bond ratings agency Moody's made the questionable assumption that there would be 225 events a year at the Barclays Center? There's no effective oversight regarding rating agencies like Moody's, Standard and Poor's, and Fitch.

In Ratings Agencies Are Overrated, Hugo Dixon (editor of Reuters Breakingviews, the commentary arm of Reuters) and Christopher Swan write in the Times:
Why do markets still pay attention to what rating agencies have to say? After their appalling record predicting the subprime mortgage crisis, it is astonishing and sad that investors still seem to quake when Standard & Poor’s reduces Greece’s rating to junk status and downgrades Spain’s.

A Martian would find it hard to understand why anybody gives any credence at all to S.& P. and its rivals. It’s not just that they were pumping up the subprime market. For example, the agencies gave a AAA rating to Abacus, Goldman Sachs’s synthetic collateralized debt obligation, after smart investors saw trouble in the market.
They point to other miscues and then explain how the ratings agencies remain embedded in the current system. Still, they conclude:
It is high time regulators and investors dethroned them from their privileged status.
And another criticism

In a 5/2/10 editorial headlined What About the Raters?, the Times opined:
Everyone (except Wall Street bankers) seems to be outraged about Wall Street banks, which made billions by trading complex confections of dicey mortgages and then passed us the tab when the investments went belly up. But what about the agencies that bestowed triple-A ratings on many of the noxious financial products?

Moody’s, Standard & Poor’s and Fitch, whose ratings assured investors that the newfangled investments were as safe as United States Treasury bonds, arguably bear as much responsibility for the financial crisis as the banks that put the investments together. But the raters have mostly avoided public scrutiny, and from the look of Democrats’ current proposals to overhaul financial regulation, it looks as if they will remain off the hook.

...It is not just that ratings agencies are incompetent, made wrong assumptions about the housing market and used flawed models to evaluate mortgage-backed securities. Their business is rife with conflicts of interest. The banks pay the raters and have an enormous incentive to shop around for ratings. E-mail made public in April indicates that raters give in to the temptation to manage their ratings in order to acquire more business.

...And yet, the financial reform bills before Congress have only vague proposals to fix the agencies.

...That is not enough. Some good ideas are floating around to do much better. If raters are considered to be a public good, they should be financed like a public good, with a tax or other levy, and paid by the government. Another option would be to let banks pay for ratings but take away their ability to choose who rates their bonds, letting the S.E.C. decide based on raters’ performance.

If there is no way to improve raters’ track record, a more drastic step would be to eliminate them, or at least eliminate the legal requirement that some insurance companies, pension funds and other entities hold assets with high ratings, a rule that gives the raters enormous quasi-regulatory power.

More on Freddy's, including toasts on the Brian Lehrer Show

Here's a roundup of articles via NoLandGrab.

And here's Open Phones: Farewell To Freddy's, on the Brian Lehrer Show. It's embedded below, but check out the comments, including this one:
Sarah Brown from Brooklyn by way of London

I'd like to propose a toast to Freddy's, the home of the Cringe Reading Series, the idea that changed my life and career and led me to meeting my fiance, with whom I toasted our engagement well until the early hours of the morning at where else but Freddy's?

A time-lapse portrait of Freddy's, from Tracy Collins

Photographer Tracy Collins offers a time-lapse portrait of Freddy's.

Freddy's final night, the lost "patina that the patrons created," and the music/voices of Pinamonti ("The Burrow") and RebelMart ("Brooklyn Is Dying")

Also see a time-lapse portrait of Freddy's by Tracy Collins.

For a long time, I wasn't much of a fan of Freddy's Bar & Backroom, which closes its Dean Street location tonight, having taken a settlement in the wake of eminent domain.

Until the mayor banned smoking in bars and restaurants, I wasn't a fan of any bars, actually; they were just too smoky. And I'm not a big bar-goer.

But a lot of people who live in walking distance have their own Freddy's story, and here's what I'll remember most: Freddy's is where I discovered John Pinamonti.

Pinamonti is a Brooklyn-based roots musician--rock/country and a tinge of folk--who deserves much more notice than he's gotten.

"The Burrow"

I first heard Pinamonti at Freddy's nearly three years ago, playing his haunting Atlantic Yards anthem/elegy "The Burrow" as part of the quite variable "Ratnerville Singout." (One song presciently warned, "Freddy's is an Escalator Now.")

I became a fan. I bought Pinamonti's albums. I listen to his "JP Radio," essentially streaming audio of most of his work. And I've trekked to Red Hook to watch him play at Sunny's and Rocky Sullivan's.

Beyond "The Burrow," let me recommend "Chalino," "Oak Hill, West Virginia," "Like Willie Mays," and, especially, "It Wasn't the Rain," a Katrina elegy ("It wasn't the rain/it wasn't the wind/it was just greed and power/winning again").

I shot a 2010 version of "The Burrow" at Rocky's. I also adapted the original video into a sequence on how AY overseers don't follow Pinamonti's advice to "come down and see" what's going on in Brooklyn.

Turner/RebelMart on Freddy's

I caught Pinamonti January 22 at Rocky's along with Neil deMause (yes, the Field of Schemes author is a musician), and Scott Turner, the Atlantic Yards activist (DDDB Steering Committee member and graphic artist) who performs as the one-man band RebelMart.

The song "Brooklyn Is Dying" is not just about the authenticity of Freddy's--an antidote to big box stores and "soul-less Bloomberg-ian, Markowitz-ian, Ratner-ian idea that people have for Brooklyn."

It's also about Lee Houston, a teacher, writer, musician, Vietnam vet, and Freddy's regular who died in 2005 and whose wake was held in the bar. (Lyrics: "We buried Lee with tears and smiles/We only got each other for a while.")

"For events like Lee's wake do not occur in T.G.I.Friday's or Chuck E. Cheese," Turner wrote in his Fans for Fair Play blog. Manager Donald O'Finn, comped everyone's drinks and lost the revenue on a day that's typically busy.

"Brooklyn Is Dying"

See lyrics and Brooklyn scenes, including AY rallies and now-demolished parts of the Atlantic Yards footprint, in this video of another version of the song.

"Strength in Numbers"

The other AY-related song RebelMart sang was "Strength in Numbers," prefaced by an observation that if all the people who'd expressed dismay about Atlantic Yards had gotten together, there could've been more of a movement.

In a perhaps telling metaphor, the crowd at Rocky's was enthusiastic but small, as the performance competed against a benefit concert for earthquake relief in Haiti.

Leaving town

Turner wrote the regular commentary/rant/quiz invitation Greetings From Scott Turner for Louise Crawford's Only the Blog Knows Brooklyn. Here's his pitch last October for the Develop Don't Destroy Brooklyn walkathon and his dis of SHoP, the architecture firm hired to put a new facade on the arena.

Here's his Thanksgiving commentary on the DDDB struggle, after the loss last November in the eminent domain case: "if you win by walking all over people, it's no win at all."

Turner's left Brooklyn, too. As he explained:
A job offer in Seattle coincided with an awakening that I have to get back to music. Six years of fighting the Atlantic Yards project and lots else going on here in Brooklyn put a squelcher on the guitar and the singing. Seattle’s a clean-slate chance to play lots of music and get RebelMart functioning full-throttle.
And here's this week's message, reporting on a trip back for the weekend:
I’m a long way away — in a land.... not too far to grieve over the passing of Freddy’s Bar & Backroom.

That would be this Friday, April 30, at the corner of Dean Street and Sixth Avenue — the future site of not a school, not a health clinic, not an AIDS or cancer research center, not a job-training facility, not an emerging small business, not an artists’ colony, not a community center, not one stitch of affordable housing, not open space or green space or free space or peoples’ space. The future site of some ancillary structure connected to a Russian oligarch’s basketball team’s arena.

If Freddy's goes down

"If Freddy's goes down, Brooklyn is gone," Turner sang, in a bit of dramatic license.

Freddy's will move, and survive. After all, it's been through several iterations, as articles in the Brooklyn Paper and New York Times explain. (The Times cites both Pinamonti's launch at Freddy's and a memorial at the bar to Lee Houston.)

So Brooklyn isn't dying. But something will be lost.

In the New York Press, Joshua M. Bernstein suggested some context:
I admire [Manager Donald] Finn’s optimism and indefatigable spirit, as well as the fact of Freddy’s continued survival. However, it’s a tall order to re-create the scuffed charm of a structure that was once a bowling alley, speakeasy, cop hangout and clubhouse for employees of the former Daily News printing plant. Freddy’s will endure in spirit, but the patina that the patrons created will be lost in the rubble. Because I’ve lived in Prospect Heights since 2003, Freddy’s demise hits close to home, as does the coming construction nightmare (a dream for the jackhammering workers that will descend on the neighborhood like locusts to a crop). I will not pretend that I was a dyed-in-the wool Freddy’s regular. But I did like having it here. I did like popping in for a pint of properly poured Guinness and letting the hours dissolve as easily as butter in a hot pan.

You see, Freddy’s was as comfortable as an old sweatshirt, enveloping musicians and off-duty policemen, curmudgeonly oldtimers and young bucks—like me.
Come on down and see, one last time.

Public radio show State of the Re:Union visits Brooklyn and AY in broadcasts this weekend

WNYC this weekend will focus on Brooklyn, including Atlantic Yards, in its mini-series State of the Re:Union. It be broadcast Saturday May 1 at 2 pm and Sunday May 2 at 8 pm on AM820 and streamed live on

The promo:
State of the Re:Union visits New York City's most populated borough to examine how this diverse collection of communities handles the friction of change, the pull of tradition, and discovers that special something that makes this neighborhood so celebrated.

New York's most populous borough, Brooklyn, is ever-evolving. Brooklyn has been celebrated as everything from a bastion of industry to a refuge for immigrants from around the world. This episode of SOTRU charts Brooklyn's evolution, celebrates the diverse communities and explores both sides of the dilemma that high-rise condos and gentrification has brought.

Segments include:

ATLANTIC YARDS IS____: Atlantic Yards is the biggest development project in the history of Brooklyn.? With 17 high-rise buildings for housing and commerce, and a new basketball arena, it would be the densest residential community in the country.? The development, though not built yet, has already, and will continue to, profoundly alter the chemistry of the neighborhood in which it's being built.

LEVY'S UNIQUE NEW YORK: How did Brooklyn become Brooklyn?? We'll get a brief and whimsical history of the storied borough from New York's first family of tour guides, The Levys.

IT'S A SMALL WORLD: Brooklyn is one of the most culturally, and ethnically diverse areas in the world.? We'll go from Russia, to Pakistan, to Ethiopia, as we drop in on three community gathering spots for three distinctly different cultures, all while staying in Brooklyn.

DEAR BROOKLYN: A teenager from Brooklyn, rhapsodizes her beloved borough.

SOUNDS OF SWEET SCIENCE: In the Sunset Park neighborhood of Brooklyn, people of varying ages and backgrounds gather at Ardon's Sweet Science Boxing Gym to train.? The gym is not just a training hub, but also an emotional support center, and home away from home for many of the members.

MEMORIAL MURALS: Often comprised of a simple portrait, along with a name, birth and death year, and sometimes a message, memorial murals began to sprout up all over NYC in the 90s.? Today, it might be safe to say that there’s at least one memorial mural in every neighborhood in the city. We'll explore the culture of memorial murals and the mourning, memories, death, life, friends, family and art that goes along with them.

BREAKING OF A MAN: Brooklyn born and bred rapper, singer, and songwriter, John Forte is re-inventing himself.? After being granted a commutation by President George W. Bush after having served more than half of a 14 year drug possession sentence, Forte is getting ready to release his first new LP in almost a decade.

Thursday, April 29, 2010

Post columnist: "If it sounds too good to be true, it's probably just the media not doing its job."

Columnist John Crudele, writing in the New York Post:
So if you read outrageous stories like the one on new-home sales, remember the old adage: "If it sounds too good to be true, it's probably just the media not doing its job."
That old adage applies elsewhere. Did the media ever critique the Forest City Ratner brochure excerpted at right?

That photo suggests that the far west segment of the railyard--one of 7+ blocks--would somehow become a full project with smudgy greenery and red-topped buildings.

Actually, it's slated to become half the arena block.

Urbanism, authenticity, and the suburban lives of several people running Atlantic Yards (AKA a "major zoning exception")

Atlantic Yards may be a public-private project, according to the Empire State Development Corporation (ESDC), but developer Bruce Ratner famously said, "This isn't a public project."

That means the single most influential person regarding Brooklyn's biggest project is Forest City Ratner Executive VP MaryAnne Gilmartin, who lives in the Westchester suburb of Edgemont.

As depicted in a cropped Google satellite photo, her home looks more like an estate than a house. Would Gilmartin lie to maintain her privileged lifestyle?

On authenticity

Why make a big deal of the contested term authenticity? Well, it's prompted new discussion, thanks to Sharon Zukin's book Naked City: The Death and Life of Authentic Urban Places.

And some of those overseeing Atlantic Yards have taken pains to establish their (somewhat tenuous) Brooklyn bona fides; remember how former Empire State Development Corporation (ESDC) CEO Marisa Lago testified she'd gone to the dentist at the Williamsburgh Savings Bank building and claimed to enjoy bicycling in Brooklyn?

Or how Metropolitan Transportation Authority Acting Executive Director Helena Williams reminded the audience at an oversight hearing that the Long Island Rail Road was born in Brooklyn?

Why it matters

Now consider how so many people running the project live a good distance from Brooklyn, in fact and in spirit: Edgemont, NY; Mountainside, NJ; Montclair, NJ; Hastings-on-Hudson, NY.

Sure, there's no requirement that the people working on a project like Atlantic Yards live nearby, or even in the same city or state.

Still, when a project bypasses intermediate institutions like the elected City Council and the appointed (but local) community boards, it's notable how much responsibility has been thrust on unelected officials and private businesspeople who have little affinity for Brooklyn.

Density issues

Jim Stuckey, Forest City Ratner's point man through the stages of project approval (until his mysterious departure), famously described those protesting the mega-development as “some people who live close in not liking tall buildings.”

"If you can’t put density in at major mass transportation, where would you put it?" Stuckey said, not unreasonably, at another juncture.

But, as I pointed out, the issue's more complicated, and the project density is driven by the developer rather than a public process. I quoted urbanist Roberta Brandes Gratz, who, in her book The Living City, wrote:
Density comes when many people are in the same place doing things that gain strength from their interaction; congestion results when there are so many of them that interaction becomes difficult, access in and out unpleasant, and frustration high.
Far from density

Some people working on Atlantic Yards, such as Executive VP Darren Bloch of the ESDC, President Seth Pinsky of the New York City Economic Development Corporation, and Forest City Ratner executive Jane Marshall live in Brooklyn.

Still, as we've seen from the example of Forest City Ratner executive Bob Sanna, fighting an out-of-scale building in his hometown of Millburn, NJ, with deceptive claims, consistency helps. (His house and neighborhood are pictured at right.)

According to a recent report, "Sanna, a trustee of the Concerned Neighborhood Association... hand[ed] out buttons: 'Stop Major Zoning Exceptions.'"

What is Atlantic Yards if not a "Major Zoning Exception"?

Welcome to the neighborhood

The photos below show the neighborhoods--as far as I could determine, from public records--of the aforementioned Bloch, FCR's Gilmartin, ESDC Senior Counsel Steve Matlin, ESDC Director of Planning and Environmental Review Rachel Shatz, and ESDC outside counsel Philip Karmel.

(I've left out the addresses and street names in the interest of privacy and I've subjected myself to the same treatment. I also chose not to hone in any closer on the neighborhoods.)

How were the people picked? They were the panelists (l.-r.), with one exception, chosen to answer public questions at the infamous 7/22/09 informational meeting on Atlantic Yards.

(Karmel was not on the panel, but I'm substituting him for ESDC Counsel Joe Petillo, at far right, who lives in New Jersey but whose location I couldn't determine.)

What might the people who live in the neighborhoods below do when faced with a "Major Zoning Exception," especially one achieved via a process that excluded their elected representatives?

Well, we know what Gilmartin's colleague Sanna did.

Darren Bloch in Brooklyn

MaryAnne Gilmartin in Edgemont, NY

Steve Matlin in Mountainside, NJ

Rachel Shatz in Montclair, NJ

Philip Karmel in Hastings-on-Hudson

My neighborhood in Brooklyn

Freddy's Bar, the AY arena block (after demolitions), and beyond

Wednesday, April 28, 2010

Goldstein's attorney responds to Gilmartin's quote that sticking point in settlement was money: "This is an absolute untruth. "

Eminent domain attorney Michael Rikon wrote a letter to Stephen Brown of the Brooklyn Paper regarding the article (misleadingly) headlined Ratner exec: Goldstein was in it for the money! Gilmartin: 'He was in it for the money!'.
I read your story in which you quote Forest City executive [MaryAnne] Gilmartin saying "the sticking point was how much money he wanted." This is an absolute untruth.

I know that you were in court. After the argument, ESDC’s attorney asked for a conference. The reason was simple: its papers were defective as a matter of law. It could never obtain an eviction order on the Order to Show Cause it presented for a Writ of Assistance. We had a conference before the Court, first together and then individually. At this point is was only me. My son Joshua joined me much later as he was finalizing an Order to Show cause for Judge Gerges’ signature on another case.

The amount of money was calculated based on what our appraiser had indicated would be the fair market value of the Goldstein Condo, it also included amounts representing the estimated cost for temporary housing, moving storage and moving the stored items back to a final location together with relocation benefits as required under the Uniform Relocation Assistance Act. It also included my firm’s legal fees and an amount representing the two-week factor to vacate.

ESDC and Forest City had three law firms in Court that day with about 20 other employees, executives, in-house counsel and consultants. When it went into the Judge’s robing room, there were at least six lawyers.

After each session as negotiations progressed, we each conferred with our client. It is impossible for Ms. Gilmartin not to have known what was happening step by step.

The money never really changed. The amount was agreed to early in the process, perhaps within the first half hour.

What took six hours was Forest City’s insistence that Daniel Goldstein agree never to say a word about the project. His response was that he would never agree to waive his First Amendment rights for ten million [dollars] and would leave if that was a condition.

I reported that to the Judge and he spoke to Daniel. When the Judge realized the caliber of the man in front of him, he agreed that it would be wrong to condition a settlement on such a waiver. Thereafter, the language which was made part of the settlement was drafted by the judge and agreed to.

In short, Forest City should be ashamed of itself for planting statements it knows were false. It is unseemly for a large developer to act in such a mean and vindictive manner. This conduct does not reflect well on it and tarnishes the fine reputation it once had for dealing fairly with condemnees.

When we left the Court, I told Daniel that I was proud to represent him. I still am.

Michael Rikon
(I've cleaned up a few typos in the note from Rikon and link to my Rikon disclosure.)

At panel on eminent domain, Siegel describes abuses, proposes reforms; defender of status quo ignores problems raised in Columbia and AY cases

For those of us who have seen civil rights attorney Norman Siegel, victorious so far in the effort to block eminent domain for the Columbia University expansion, speak on panels or testify before an oversight hearing, most of his critique yesterday on "The Use (or Misuse) of Eminent Domain in NYC" at New York Law School (video) was not unfamiliar.

Siegel made some compelling points about eminent domain abuses, but more intriguing was the respondent, land use use attorney Ross Moskowitz, who offered a full defense of the status quo, warning of abuses--notably, the potential for holdouts to distort the process--while ignoring the problems raised in both the Columbia and Atlantic Yards cases.

Siegel's case

Siegel first noted that the definition of blight--"substandard or insanitary"--is vague, inviting subjectivity, selective enforcement, and favoritism. The law should be clarified, he said, noting that the Supreme Court of Ohio, in the 2006 Norwood case, had found a similar statue void for vagueness.

"In the context of eminent domain, unfettered discretion enables takings that are motivated by favoritism," he said, noting that the condemning agency can pronounce any area blighted, while its "chief characteristic is attractiveness to the favored developer."

(As in, I might suggest, "a great piece of real estate," to quote Forest City Enterprises CEO Chuck Ratner.)


Siegel also took aim at the use of underutilization as a factor in blight. Sometimes it disregards the character of the community, he said, and it ignores the property owners right to determine best use of his property.

Moreover, there was no rational basis to choose 60% of Floor Area Ratio (FAR) as the threshold for underutilization for the Columbia expansion, as the City Planning Commission uses 50%. (For Atlantic Yards, the state also used 60%.)

Indeed, the 60% standard in an area zoned for an FAR of 2 effectively means that a single-story building is blighted, Siegel said.

Using that 60% figure meant that 39% of the Columbia expansion area was underutilized, but the use of a 40% figure--less than one story--only 20% would've been blighted.

Either New York should eliminate eminent domain based exclusively on underutilization, he said, or establish uniform rules.

Poor process

Also, as Siegel has said, the current process to challenge eminent domain in court is unfair and unconstitutional, given that New York is apparently the only state in the country that bypasses trial court, giving no right to discovery or cross-examination.

The Eminent Domain Procedure Law (EDPL), he said, "in my opinion, violates the condemns' right to due process."

Conflict of interest

Seigel added that government agencies such as the ESDC should be prohibited from retaining consultants who simultaneously work for the developers, he said, calling it "the quintessential conflict of interest."

(While environmental consultant AKRF worked simultaneously for Columbia and the ESDC, it worked consecutively for Forest City Ratner and the ESDC.)

The Columbia appeal and AY

Anticipating the June 1 argument in the Columbia case before the Court of Appeals, Siegel said he thought "our cases needs to be distinguished from the Atlantic Yards case."

(Note that the plurality opinion in the Columbia case ignored the Atlantic Yards decision recently issued by the Court of Appeals, while the dissent cited the latter decision.)

The Court of Appeals, he said, had recognized the possibility that a physical conditions might be such that it would be irrational and baseless to call it substandard and insanitary.

The issue was not about "a difference of opinion," he said, going on to argue that, even in the latter case, courts should not be so deferential but rather should be looking at the record to see whether there's substantial evidence to support the findings of government agencies.

Siegel noted that, in Manhattanville, as opposed to Brooklyn, there was no prior legal designation of an urban renewal area (Atlantic Terminal Urban Renewal Area, or ATURA), and no de facto blight conditions such as railyard.

(Of course, the railyard might actually be a very valuable property if put out for bid, and the plaintiffs in the eminent domain cases were from outside ATURA.)

Respondent Moskowitz, in an analysis of the cases, wrote similarly:
Perhaps the most significant difference is that in In re Parminder Kaur, the finding of blight was made after the selection of the private party receiving majority of the benefit of the condemnation, whereas in both Kelo and In the Matter of Daniel Goldstein, the finding that the area was blighted and in need of economic redevelopment was made before the private developer was selected.
It all depends on what you mean by "area," since a large minority of the Atlantic Yards footprint was never part of the ATURA and property owners and investors had no idea they were vulnerable to eminent domain.

Siegel added that, To the extent any conditions that were documents "that could be conceivably indicative of blight," we submit that such things as vacancy and poor building conditions, "these were maintained, exacerbated, or caused by Columbia, with ESDC's knowledge." For example, he said, empty buildings had "For Rent" signs but, when the phone number was called, the person answering the phone said the buildings weren't available.

He added that neither the ESDC nor Columbia have ever made any offer to his client Tuck It Away, nor have responded to company owner Nick Sprayregen's offers for a land swap.

And he noted that a concurring opinion in the Columbia case emphasized the issue of bad faith, given that the state had closed the record while his client's Freedom of Information Law (FOIL) requests were pending.

The respondent

Moskowitz allowed that misapplication of eminent domain was wrong.

"However, I would suggest, and I'm going to pause," he said. "I would suggest that this is an issue of economic development, thin ice and all, and political decisionmaking. Eminent domain may be a power that people love to hate, but it's also one that communities that are serious about planning are rightly reluctant to resist, and restrict."

Was Atlantic Yards an example of seriousness about planning?

"As a legal matter, the legislature says the government can only take private property for a public use, but more than a century of precedent interprets that requirement to mean a government may use eminent domain for a public purpose," Moskowitz continued. "Just as government took private property to promote private railroads a decade ago, it has done so in recent decades to promote commercial redevelopment, to revitalize urban areas such as the Inner Harbor in Baltimore and, closer to home here, 42nd Street and Times Square."

While many people have heard about the Kelo case, he said, eminent domain is infrequently used to take away people's homes but rather to acquire property that is vacant, rundown, or contaminated.

"They don't think about property owned by absentee landlords who won't invest in their property despite considerable efforts by local government to bring about code enforcement," he said. That pattern hardly applied with Atlantic Yards, given that the state punted when asked who was responsible for weeds at the railyards.

Holdouts and process

Generally, government should be required to buy property it wants in the open market, Moskowitz said, but sometimes a land owner may be in a position to exercise holdout power and thus block a project with demands.

"In order to avoid misuse, area-wide development projects under state laws that govern them, are subject to onerous, transparent, and lengthy processes that provide all the details of the project and invite public participation and extensive debate," he said. "In Kelo, the public was asked what they thought about the redevelopment project, as the project was debated, shaped, and decided for a period of nearly two years. Here in New York, under the State Environmental Quality Review Act [SEQRA], redevelopment projects generate foot-high environmental impact statements that include a hard look at their impact on a community, character, and neighborhood change, and contain lengthy chapters on the economic and environmental impacts of the project."

"Public hearings, ULURP proceedings in New York City, reviews of impact statements, open meetings laws, conflict of interest rules, and a host of other legal protections ensure that the public knows who is involved, how they were chosen, what the proposed benefits are, and who will suffer," he said. "By the time such projects are approved, the public process has mediated the claims of those whose properties are to be taken, and the public benefits of urban revitalization, jobs, housing, increased taxes, better services, and a more livable community."

That sounds good in theory, but he didn't take a look at practice. Of course, Atlantic Yards bypassed ULURP. And the public process was a show.

Warnings of danger in reforms

Moskowitz warned that limits on eminent domain would cause New York City great difficulty in carrying out area-wide development like 42nd Street.

He expressed concerns about provisions in pending legislation that local governments would have the power to approve or disapprove the eminent domain decision of the condemning authority. "[They] may lack the resources or the expertise to make such decisions," he said, leading to delay or inappropriate disapprovals.

Maybe, but the ESDC board's level of ignorance has already been established.

Moskowitz also said that the criteria for the finding of blight would be so stringent that it would block condemning authorities from utilizing their powers. Maybe, but he didn't propose an alternative to the vague status quo.

He also warned of a potential inherent conflict of interest in the role of a proposed eminent domain Ombudsman. Of course he said nothing about the conflict-of-interest claims regarding consultants like AKRF.

He suggested more study was necessary regarding the role of eminent domain before any reforms are enacted.

"The reality is the eminent domain has concrete, real benefits," he said.

Perhaps, but is it used "prudently and in the sunshine of public scrutiny," as he stated? He ignored some concrete evidence.

Siegel's response

Siegel later said he didn't oppose real public use, purpose, and benefit, but said he was against the use of pretext--"the reason why there's so much anger and distrust is that people believe that government.. is not being forthright with people." And he identified pretext with both the Columbia case and "even Atlantic Yards."

Pointing to the examples of Pfizer in New London and Poletown in Detroit, Siegel noted that promises of economic development are often overblown.

He said that there must be clearer standards regarding such representations, and "the courts need to be not unwilling to look at the record to determine whether the representations are accurate."

Otherwise, he said, developers come in with big promises that are never fulfilled.

He didn't say it, but remember the 10,000 office jobs promised in Brooklyn?

In Times, City Bar task force members warn against CBA abuses; Atlantic Yards examples are actually more egregious

A New York Times Real Estate page (Square Feet) article today headlined Community Pacts Questioned in the Zoning Process takes off from the critical report on Community Benefits Agreements (CBA) issued last month (my coverage).

Notably, while the article makes but a glancing reference to Atlantic Yards, the abuses referenced all relate to projects that go before the City Council; Atlantic Yards didn't even face that level of oversight, given that it was shepherded by the unelected Empire State Development Corporation, ignoring the role of both the local Community Boards and the local Council Member.

Moreover, the report contains what might be considered struck me as a slap at ACORN, given that one influential lawyer warns against a Council Member designating which affordable housing group should be selected. (Update May 19: That lawyer, Kenneth Fisher, says he was not speaking about ACORN.) In the case of Atlantic Yards, there was not even that minimal level of local involvement; the decision was made by Forest City Ratner.

The City Bar report

The Times reports:
Now, in a report that is likely to have considerable influence on policy makers, the New York City Bar Association has urged the city to stop allowing community benefits agreements to be part of the zoning approval process. The report warns, among other things, that the agreements could create an opportunity for corruption.
A Council caution

The Times reports:
“Our feeling was that the process wasn’t satisfactory from anybody’s point of view,” said Kenneth K. Fisher, a partner at Cozen O’Connor and chairman of the bar association’s land-use committee. Mr. Fisher said the bar association was particularly concerned about the potential for corruption. Creating affordable housing might be a worthy goal, he said. “But it’s another thing for a council member to tell you which affordable housing group should be developing it,” said Mr. Fisher, a former city councilman.
(Emphasis added)

The example in the Times regards Bronx Council Member Larry Seabrook's alleged interference in a boiler contract for Yankee Stadium.

But, as noted, Fisher's quote seems to point a lot more to ACORN and Atlantic Yards, , though, as noted, he was not speaking about it.

City posture

The Times reports:
The city has not responded formally to the report. But in an e-mail message, Janel Patterson, spokeswoman for its Economic Development Corporation, endorsed the principal recommendation, saying: “The city should not be a party to community benefits agreements. The city works with the developer and the community board, as the recognized and appropriate community representative, through the public review process (Ulurp) to ensure that a project delivers benefits for the community directly related to the project.”
(Emphasis added)

With Atlantic Yards, Mayor Mike Bloomberg was an enthusiastic witness to the CBA. And, of course, the local Community Boards and ULURP were bypassed.

Going forward

Those interviewed agreed that CBAs may be inevitable, but government should either stay away or set strict standards.

The Times reports:
Another of the report’s authors, Ross F. Moskowitz, a land-use lawyer at Stroock & Stroock & Lavan, said the city needed to address this problem to let developers know in advance what they would be expected to provide and to prevent the failure of another major project. “Hopefully, what will come out of this debate is a process that will provide standards and certainty,” he said.

Tuesday, April 27, 2010

First the Vanderbilt Yard, then Hudson Yards; the MTA seems ready to cave to a developer's revised deal

The Metropolitan Transportation Authority (MTA) is still at the mercy of developers who (apparently) have the ear of the governor and mayor who control the authority.

Now the issue is a revised deal for the Hudson Yards, which gets far more incisive treatment from Michael D.D. White, as described below, than from the New York Times.

The "bum's rush"

From a Times article today headlined Railyards Deal May Still Be Weeks Away:
Members of the authority’s board, who received details of the deal on Sunday, expressed frustration that they had no time to review the plan before being asked to approve it. “I really feel that in these big developer deals we get the bum’s rush,” said Doreen Frasca, a board member. The finance committee issued no recommendation on the plan.
And last June?

When the revised Vanderbilt Yard deal was revealed last June 22, Frasca said, "This is just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," MTA CFO Gary Dellaverson responded. "It's entirely at the board's discretion to accept or reject or send back to the negotiating table... I think that, in terms of why must it be now in the summer versus in the fall, I think it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]."

Two days later, Frasca, saying she'd studied the deal intensely, signed on. Maybe she'd gotten a phone call, as well.

The revised deal

Under the new deal, Related can post a promissory note in lieu of cash. As White points out, now the developer has more time and must only pay in cash part of what was originally pledged.

Moreover, the 99-year lease wouldn't start until after the city’s real estate market improves.

White skewers rookie transit reporter Michael Grynbaum's assertion that
The arrangement addresses a sticking point in a negotiation that began in 2008, when the economy was still going strong.
White points out that "when the deal with Related was struck in May of 2008 the economy was already in a dramatic collapse."

The private-public partnership

He observes:
So the MTA is structuring a new plan. As is typical with so-called public-private partnerships where what is public and what is private is confused and up for grabs, the public is taking all the risk and the private developer (now getting a lower price and having less obligation) is cherry-picking to get all the benefit.

...Presumably, if the original bid had made it clear that the buyer had the option of proceeding only when the market was good, the competing bidders would have been willing to bid far higher amounts at the outset.
Forest City Ratner already got a very nice revision from the MTA.

Courier-Life: (unreliable) Gilmartin says sticking point for Goldstein was money; Goldstein says it was the gag order

An article from CNG--dubbed Courier-Life but written by Brooklyn Paper reporter Stephen Brown and first appearing on the New York Post web site--has the overhyped headline Ratner exec: Goldstein was in it for the money! Gilmartin: 'He was in it for the money!'.

Surely even Forest City Ratner officials don't think Daniel Goldstein spent more than six years fighting Atlantic Yards for the money. He could've doubled the value of his home in 2004. Rather, the headline refers to the action last week.

The article states:
Forest City Ratner officials abandoned their diplomatic talk on Tuesday to explicitly portray Daniel Goldstein, who ended his long holdout in the Atlantic Yards footprint for $3 million last week, as an opportunist looking to make as much money as possible.

Countering Goldstein’s own spin that his fight against Atlantic Yards was a principled stand against eminent domain abuse, Forest City Ratner Executive Vice President MaryAnne Gilmartin told us that last week’s final negotiations did not bog down due to Goldstein’s insistence that he be allowed to continue criticizing the project, but simply over how much money he could get out of developer Bruce Ratner.

“The sticking point was how much money he wanted,” Gilmartin said.

...Later, Goldstein called Gilmartin’s assessment simply false.

“The money amount was settled pretty quickly,” he said. “The sticking point that led to nearly four hours of discussions was Ratner’s insistent desire to bind me to some sort of gag order.
Um, how is it that Goldstein has a "spin" but the Scarsdale-dwelling Gilmartin has an "assessment"?

Given that the developer has consistently wrung additional subsidies and concessions out of public bodies, it's fair to say that Forest City Ratner always been the "opportunist looking to make as much money as possible."

Remember, Brown originally reported:
Goldstein’s lawyer, Mike Rikon, explained that the sticking point of during two hours of negotiations on Wednesday in the chambers of Justice Abraham Gerges in Downtown was Ratner’s demand that Goldstein relinquish his right to speak out against the project.

In the end, Ratner backed down because “[Goldstein] would have walked away from any offer if he lost his First Amendment rights,” Rikon said.

Idling dump trucks block Pacific Street, pinning drivers in: photos

A photographer reports from Pacific Street: some 12-15 dump trucks being used for Atlantic Yards were parked idling and lined up throughout the block of Pacific Street between 6th and Carlton Avenues.

This blocked some drivers for up to an hour. Had the fire department needed to use Pacific Street or had mistakenly turned down the Pacific, it would have been a dangerous mess, he says.

Public Advocate de Blasio criticizes Bertha Lewis's comments about Daniel Goldstein (not)

Public Advocate Bill de Blasio, who issues a stream of public statements and comments on issues local and national, failed to say anything about the Atlantic Yards arena groundbreaking last month. And this is what he didn't say about his longtime ally Bertha Lewis of ACORN.

I based my support for Atlantic Yards after talking consistently with people who I believe are good advisors on affordable housing. I count Bertha Lewis of ACORN among them. In my inaugural speech, I said that "our future will be based on the quintessentially New York ideals of tolerance and compassion."

So I part company with Ms. Lewis when, in the name of affordable housing, she uses nasty, over-the-top, and irrational rhetoric to denounce a political opponent, Daniel Goldstein.

As I've said before, corporate political spending is a scourge on this country and Mr. Goldstein, as much as anyone, has pointed to the danger of corporate spending regarding development projects.

In my inaugural speech, I said "our future will be determined by the quality of our democracy." If nothing else, Atlantic Yards represents a deficit of democracy, as the City Council, a body of which I was a member, had no role, as Mr. Goldstein has reminded us.

Ms. Lewis, whose ideals I share, knows we can all do better.

New York Times Sports section buffs Prokhorov, ignores unflattering details; shouldn't the Times disclose business relationship? (updated)

Updated below with response from the Times's Sports editor and my response.

New York Times sports reporter Howard Beck, in an article headlined
Russian Billionaire Is White Knight for the Nets, buffs expected Nets owner Mikhail Prokhorov:
But we will soon begin to see what one hypercompetitive individual with a bottomless bank account can do for a team.

The 44-year-old Prokhorov, the second-richest man in Russia, is expected to assume control of the woebegone Nets within the next few weeks. It may be the most anticipated ownership change in N.B.A. history.

Prokhorov is relatively young, wealthy, charming, tall, athletic and adventurous, a modern-day renaissance man with an air of cold war mystique. He could pass for a Bond villain, or a double agent in a Tom Clancy novel. The NetsDaily blog has dubbed him “the Most Interesting Man in the World,” after the suave fellow in the beer commercials.
Beck, with the assistance of two Times reporters, quoted the following sources in the article: Dallas Mavericks owner Mark Cuban, agent Marc Cornstein, former CSKA Moscow (and Prokhorov employee) Ettore Messina, former CSKA president Sergei Kuschenko, and Russan sports journalist Andrei Mitkov.

Beck writes:
When a “60 Minutes” interview veered into sensitive areas, like his 2007 run-in with the French police over suspected prostitution, Prokhorov defused the tension with humor and an impish smile.
What's missing

Here's what's missing from the piece: questions about Prokhorov's business practices, including alleged sanctions-busting in Zimbabwe; Prokhorov's use of sports as a platform for business investment in the United States; and Prokhorov's belief that, despite the Kremlin connections that fostered his wealth, he's a self-made man.

Remember, even mostly-fawning 60 Minutes described his stake in Norilsk Nickel as part of a process "probably not even legal under Western standards."

As for "the most interesting man in the world," could that really be ascribed to someone with such a Luddite streak? Remember, Prokhorov doesn't use a cell phone or a computer.

Disclosure missing

Missing from the article is any disclosure that Prokhorov, slated to buy 80% of the Nets, would also own 45% of the Atlantic Yards arena in partnership with a Forest City Ratner entity.

Forest City Ratner was the New York Times's business partner in the Times Tower, and the Times still (intermittently) discloses that relationship.

The then–Public Editor, Byron Calame, wrote 6/29/05:
The New York Times, I believe, has an obligation to alert readers when they are reading substantive articles about a company or individual with whom the newspaper has some business or professional relationship.

This obligation wasn’t fulfilled Sunday when the chatty “Questions for Bruce Ratner” in The New York Times Magazine failed to mention that the real estate developer and the parent company of this newspaper are partners in the construction of the The Times’s new headquarters in Manhattan. Given the smiling, page-high cutout photograph of Mr. Ratner that accompanied the article, it was an especially inopportune time to fail to mention his ties to The Times.

But it appears to be an unusual lapse. The Sunday article spurred me to check on how the paper has been doing overall during the past two years. Mr. Ratner’s project with The Times was mentioned almost every time he had a substantive role in an article.

Consistent disclosure of the newspaper’s relationship with Mr. Ratner is especially relevant as he moves ahead with plans to build an arena for the Nets in Brooklyn as part of a broader real estate project there. There’s vocal opposition to the Brooklyn project — and The Times will have to cover it. All the while, work will be proceeding on The Times’s new headquarters across the street from the Port Authority.

The Times’s most important obligation, of course, is to make sure there’s no bias in any articles it does publish about Mr. Ratner. But avoiding the perception of any tilt toward Mr. Ratner in its pages is also essential. One of the best ways to avoid a perception problem is to make certain that substantive articles about Mr. Ratner and his real estate dealings include full disclosure about his business relationship with The Times.

Contact the Public Editor

Shouldn't the guidelines Calame set out for coverage of Ratner apply to the Times's coverage of Ratner's business partner in the arena, Mikhail Prokhorov?

The current Public Editor is Clark Hoyt:

Letter to the Public Editor
Dear Mr. Hoyt,

I write yet again about the New York Times's questionable coverage of Atlantic Yards.

Today, the Sports section produced a very flattering portrayal of prospective Nets owner Mikhail Prokhorov. Missing are several less-flattering details about Prokhorov's business practices.

Also missing is any disclosure of the Times's ties to Prokhorov.

What, you might ask, are those ties? Well, the Times regularly discloses its business relationship with Forest City Ratner, developer of the Atlantic Yards project and former partner of the Times on the Times Tower.

Prokhorov not only will buy most of the Nets, he'll buy 45% of the Atlantic Yards arena. In other words, the interests of Prokhorov and Ratner are intertwined.

If the Times's disclosure policy has any consistency, it should extend to Prokhorov.

And then it might lead to some caution regarding cheerleading articles such as the one published today.
(I forwarded the letter to Sports Editor Tom Jolly, as well.)

Response from Tom Jolly
Dear Mr. Oder,

The concerns you raise are not new, as you know. We've dealt with similar ownership issues relating to The New York Times Company's ownership of the Boston Red Sox and we've followed the same practice in regard to the Times Company's relationship with Bruce Ratner. If the story deals with real estate or business issues beyond the playing field (or court, in this case) and the Times's relationship is pertinent, we note it paranthetically.

The story you refer to is focused narrowly on how Mikael Prokhorov might use his money to improve the basketball team. He is not someone we have written about on only one occasion, nor are the Nets or Atlantic Yards. Given that, it's reasonable to expect that most of our readers have an understanding that there are other issues around him, the team and the community -- in no small part because of your efforts to keep those issues in the public consciousness.

As has been the case in the past, we will address those other issues, both in the sports and metro sections, as they become pertinent to a particular development or story. In fact, we are reporting another story that touches on one of the issues you raise about Prokhorov and, if the reporting leads to an article, I expect you'll see it soon.
My response
Dear Mr. Jolly,

Thanks for your quick response.

I understand how game coverage should exclude the ownership issue and I understand your general reasoning.

However, I think you should consider the broader picture, including Mikhail Prokhorov's goal to use the team and arena as a springboard for American business opportunities.

Coverage of Prokhorov as team owner cannot be disconnected from coverage of Prokhorov as arena co-owner. (After all, an improved team makes the arena a much more viable business.) And that can't be disconnected from co-owner Forest City Ratner, the NYT's partner.

While the story may be "focused narrowly on how Prokhorov might use his money to improve the basketball team," the portrait is wholly admiring, with the only reference to any warts a description of how Prokhorov "defused the tension with humor and an impish smile."

Disclosure, presumably, would serve as a caution to Times editorial staff and readers that the Times's coverage should be careful, rather than cheerleading.

In City Hall News article, Markowitz credits Chief of Staff Scissura for lowering the heat on AY; remember testimony to MTA?

From a City Hall News article headlined The 20 Most Influential Unelecteds: That most New Yorkers Have Never Heard Of

Chief of Staff, Brooklyn Borough President Marty Markowitz.

...“He said, ‘Here is how budgeting works, here is how to appoint community boards,’” said Brad Lander, the new Council member from Park Slope and one of Scissura’s luncheon companions. “He has a sense of how things work and he is willing to be helpful and share that knowledge.”

Scissura calls himself the “consigliere” to the colorful borough president, and says his job description is simply “everything.”

Markowitz credits him with helping reach out to communities affected by the Atlantic Yards and Domino developments.

“If we aren’t able to get everyone to agree all the time, Carlo is at least able to lower the heat,” Markowitz said. “Plus, I value his judgment. He has a great ability to present all sides of an issue.”

What's missing

Hold on. Scissura's surely an able aide and amiable fellow, but lowering the heat?

Remember his testimony last June before the Metropolitan Transportation Authority, channeling Markowitz?

One of the lines was so classic Markowitz that it deserves its own excerpt.

"As we all know, the Borough President would never support anything that is not in the interests of all of Brooklyn and all Brooklynites," Scissura declared.


Monday, April 26, 2010

Greg David of Crain's gets it very wrong: "New Yorkers, through their political process" decided "Atlantic Yards was in the best interest of the city"

In a column headlined An eminent name in domain debate, Crain's New York Business editorial director Greg David defends eminent domain for Atlantic Yards while, astonishingly, neglecting to acknowledge how local elected officials were ignored.

David writes:
In the aftermath of the 2005 U.S. Supreme Court decision on eminent domain—the famous Kelo v. City of New London case—I tried to explain my uncertain views on the topic in a Dec. 5 column:

“The once-esoteric legal doctrine of eminent domain has put me in the middle of an unusual lobbying blitz. On one side are people who support important development projects like Atlantic Yards in Brooklyn or the expansion of Columbia University, both of which will need to involve eminent domain. On the other is my daughter, who has taken up the issue as part of her American government class and is sure eminent domain needs to be outlawed. More and more, I think my daughter is right.”

At 9:30 that Monday morning, my phone rang. “Hold for Mayor Bloomberg.” Then came the voice, unmistakable and firm. “I couldn't disagree with you more,'' the mayor said. “Without eminent domain, we will get nothing accomplished in this city!”
Eminent domain for Atlantic Yards, however, is not a process overseen by local elected officials but rather the unelected, quasi-public Empire State Development Corporation. Forest City Ratner drew the very curious map it needed and the state dutifully found blight--"relatively mild conditions of urban blight,” according to the Court of Appeals--on the project site, while across the street businesses thrive.

Missing the point

David continues:
I always tell that story to my class on the New York City economy when we study commercial development issues. Then I explain how the indomitable Brooklyn gadfly Daniel Goldstein—who last week finally gave up his long fight to stop the Atlantic Yards project—convinced me the mayor was right.

Historically, eminent domain allowed governments to seize land for public purposes such as roads, schools, parks and airports. In Kelo, the Supreme Court said it was constitutional for states and cities to take private property on behalf of private interests for a public purpose such as improving the economy.

The complications are obvious. The government is putting the interests of one private party, in this case Atlantic Yards developer Forest City Ratner, above those of another, in this case some existing Brooklyn residents and businesses.

Critics of the Kelo decision say that the doctrine is unfair and creates opportunities for abuse by powerful interests and that developers like Forest City can and should use their resources to buy out the other parties.

But Mr. Goldstein wasn't interested in the money. He grudgingly sold his condo last week only because his choice was to accept a $3 million offer today and move out in two weeks or wait two months for a court to evict him and award him less money. He could have gotten much more months ago, maybe years ago.

He didn't do that because his mission was to impose his vision of what was best for Brooklyn, even though New Yorkers, through their political process, had decided that Atlantic Yards was in the best interest of the city.

Without eminent domain, he would have succeeded.
Hold on. Goldstein was reacting to the developer's vision, one the city supported from the start. There was no political process, no role for the City Council, no role for any local elected officials. In fact, Deputy Mayor for Economic Development Dan Doctoroff told the New York Observer in December 2007:
“I am a huge believer in the ULURP process. I think it makes sense. It allows the issues to be aired in an appropriate way. If it happened again, and the state were to ask if I would encourage them to take Atlantic Yards through the ULURP process, I would say yes.”
The project was approved by the board of the unelected ESDC and the state funding was upheld by the Public Authorities Control Board--the "three men in a room": the governor, Assembly Speaker, and Senate Majority Leader.

Goldstein's comment

Goldstein wrote in response:
Mr. David, your argument almost made some sense until the very end. I wasn't trying to "impose my vision on what was best for Brooklyn even though New Yorkers, through their political process, had decided that Atlantic Yards was in the best interest of the city."

There WAS no political process. Not a single elected official ever voted on Atlantic Yards. ULURP and NYC's zoning laws were overridden, and the unaccountable, unelected ESDC and MTA made all the key decisions. New Yorkers had no political process to make any decisions about Atlantic Yards.

That is the fundamental problem with Atlantic Yards that so many have been shouting and fighting about all this time.

Furthermore, all of the benefits of Atlantic Yards, including the arena and the housing, could have been built without using eminent domain, without taking my home. All of them. But that wouldn't have been the huge gift to Forest City Ratner that the use of eminent domain has been.

So while I and many others certainly have ideas of what would be good for Brooklyn and what urban planning ideas could work and wouldn't work, I didn't impose my vision on some publicly and politically approved project. I resisted, along with thousands of others and numerous politicians, the imposed vision of one developer.

Despite FCR's announced demolition plans, building at 752 Pacific may become developer's construction headquarters

Though Forest City Ratner executive Maryanne Gilmartin has said in court papers that the developer plans to demolish the building long owned by Henry Weinstein at 752 Pacific Street for parking, another court document suggests that the six-story building, renovated into office space, more likely will serve as offices during the construction phase of the arena.

That makes sense on two levels. First, it would be an expensive and lengthy process to demolish such a staunch building.

(Gilmartin, in paragraph 37 of the affidavit below that's part of the Order to Show Cause, says it would take "several months to perform the work necessary to prepare for an actual demolition" of 636 Pacific Street, the taller but much narrower warehouse-turned-condo building where Daniel Goldstein lives, and approximately five months for the actual demolition.)

Second, Forest City Ratner will be demolishing the similarly staunch Spalding Building, now home to project offices, at Sixth Avenue and Pacific Street, thus leaving a significant gap.

(Photo taken December 2008 by Tracy Collins)

Allegation in court

In a motion (below) filed last Wednesday on behalf of Weinstein to resist an eviction order, attorney Matthew Brinckerhoff wrote:
Almost no explanation is given for why the occupants of Block 1129, which is far from the arena site, must be evicted to make way for the arena other than the statement that the "prompt demolition of the buildings that remain on Block 1129 also is critical to construction of the arena," because "Block 1129 must be used ... for construction-related activities required by the Project's various contractors, for the storage of machinery and materials for the Project, and for parking for construction personnel." Gilmartin Aff. 40. Parking for construction personnel?
That paragraph has a footnote:
Although Ms. Gilmartin swears that Mr. Weinstein's six story building will be immediately demolished for parking should a writ of assistance ever [be] issued, that statement is difficult to reconcile with the participation of Ratner representatives when the Court inspected Mr. Weinstein's properties. On information and belief, Ratner's representatives inspected the building to assess how much work, if any, would be required to utilize the building for Project offices for the duration of arena construction.
Gilmartin's affidavit

As noted on p. 68 of the second document embedded below, according to paragraph 40, Gilmartin does say that "The prompt demolition of the buildings that remain on Block 1129 also is critical to construction of the arena."

That implies that 752 Pacific would be demolished. However, Gilmartin also said that "construction office and storage activities now located on Block 1127"--which includes the Spalding Building--"must be relocated to Block 1129" and that "construction trailers... cannot be located on Block 1121."

So, it seems, if Forest City Ratner uses only construction trailers it won't need 752 Pacific. But construction trailers aren't six stories tall, so there'd be an advantage in using the established building.

If so, why didn't they come clean?

Why so fast? Money

Brinckerhoff's motion stated:
This Court should not countenance the unprecedented acceleration of the forcible removal of condemnees simply because Petitioner and Ratner cynically conditioned the development of the arena upon vacant possession in order to leverage a result that will maximize profit to Ratner while at the same time providing convenient parking for construction personnel.
Even a cursory reading of this "compelling" presentation reveals the need to evict with alacrity is driven by the desire to protect the "Project's sponsors" from "enormous financial harm," by building the arena and moving the New Jersey Nets in time for the 2012-13 basketball season. Almost no mention is made of the fact that Ratner wisely inked a deal for the Nets to play at the Prudential Center in Newark, New Jersey for as long as three full seasons, 2010-11, 2011-12, and 2012-13.

Order to Show Cause ESDC, Atlantic Yards Condemnation Case

The denunciation of the ESDC's condemnation push that was never resolved, but surely influenced the Goldstein settlement

Why did Forest City Ratner settle with Daniel Goldstein last Wednesday for $3 million? The most obvious reasons were to save the alleged $6.7 million monthly cost of delay it alleged, and to pave the way for Russian billionaire Mikhail Prokhorov's purchase of the Nets, which was depending on vacant possession of the site.

Another reason--and a reason for Goldstein to settle--was that Kings County Supreme Court Justice Abraham Gerges pushed for a settlement. He didn't want to adjudicate the case, nor preside over an eviction that could easily have become a media event.

Given the Empire State Developmeny Corporation's initial and ridiculous lowball appraisal of his apartment, Goldstein had to calculate his vulnerability to pursuing the case and getting a check that was worth far less than a replacement apartment.

That said, it would have been of significant interest had the case continued, because, at least according to a response from Goldstein's attorney, the ESDC was way out of line.

Too fast

Wrote attorney Michael Rikon (disclosure):
The application by the condemnor brought by Writ of Assistance only a week after we appeared for condemnees, and only a month after Notice of Acquisition was served is unconscionable and unprecedented.

The application by condemnor marks a new low in eminent domain practice. It is violative of the statutory rights granted by the Eminent Domain Procedure Law and is based on pure vindictiveness and bad faith conduct. Further, it is not premised on accurate factual basis. Rather, what is submitted are affidavits containing generalizations which read more like public relations press releases than truthful statements or evidence to support the very drastic remedy of evicting a family from their home. The cost estimates provided by Forest City Ratner are wildly exaggerated. (See Atlantic Yards article by Norman Oder).
That was a citation to my post April 20 analyzing the ESDC's Order to Show Cause.

Accelerated timing

Remember, Gerges transferred title on March 1, upon which the ESDC asked everyone to leave by early April--and then filed papers seeking eviction by May 17. Wrote Rikon:
The agency (ESDC) is no stranger to the process. Normally fair and reasonable advance payments are made available within ninety or more days with interest. A condemnee is then accorded a reasonable period to find new premises and move out.
An accompanying affidavit by Goldstein detailed "a diligent effort to find a new home," including
visits to 48 dwellings since January 10, but the ESDC hadn't made it easy:
Not only is the search for a new home difficult, it is virtually impossible based on the bad faith offer made by ESDC which is lower than Goldstein paid for his home seven years ago. Further, any equivalent home that the family now lives in will cost at least twice as much as the alleged advance payment.

No writ should issue if the advance payment is on its face inadequate... Any application should be denied until there is a trial.
ESDC shortcuts

Goldstein pointed out:
The condemnor and the developer did not inform the court that the advance payment that has been authorized is $510,000. I have a three-bedroom, two bathroom, 1,295 square foot condominium in an architectural distinctive building with unobstructed south and west views. I paid more for my home seven years ago at the first offering. Obviously, this is a bad faith advance payment.

I have read the affidavit of Gary Curry of the Cornerstone Group. He states that he made twelve attempts to contact me regarding our relocation needs. I do not know what "an attempt to contact" means, but I never met with him. He never visited my home. His group only provided listings of five condos which we carefully examined. None were suitable or comparable. This is hardly effective relocation assistance.
Bad faith and vindictiveness

Rikon wrote:
There has never in my forty-one years of practice in this area of the law been a clearer example of bad faith and vindictiveness.

In her affidavit, sworn to on April 6, 2010, MaryAnne Gilmartin, Executive Vice President of Forest City Ratner, does little to hide the personal animus directed at Daniel Goldstein.
He noted that Gilmartin charged that Goldstein was delaying the demolition of 636 Pacific Street because it may take several months to perform the pre-demoliton work like an environmental assessment to determine whether asbestos or other hazardous materials are present:
I am not sure why Ms. Gilmartin swore to this under penalty of perjury. Forest City has controlled the building for over five years and has had environmental experts on its payroll for a longer period of time. it knows whether or not there is asbestos in the building. If if didn't, ESDC had statutory ability to conduct an environmental survey on the building before taking title. EDPL Sec. 404.
Strained argument

Rikon seemed on firm ground in the above argument, but strained in court and in the papers to argue that there should be a 90-day notice before condemnation, because there's federal money involved in the project.

There was no solid evidence of such funds, just evidence of federal lobbying, and potential federal grants for housing, as well as a community development grant to Forest City Enterprises, based in Brooklyn but with no clear evidence it was targeted for Atlantic Yards.

Demolition plans

Rikon said that it would take six months or longer to clear other buildings Forest City Ratner owns.

The developer stated it need to have the entire street closed to start digging, but there were no clear plans.

Affordable housing

While Gilmartin claimed that 2,250 affordable housing units were in jeopardy, Goldstein in his affidavit pointed out that "there are no available subsidies for the units now."

It would have been interesting, to say the least, to hear that argued fully in court. Rikon raised the issues in papers delivered that morning. The judge didn't provide the opportunity for much scrutiny.