Friday, December 31, 2010

Los Angeles Times architecture critic, aghast at a stadium proposal, thinks New York, by contrast, doesn't embrace developer-driven projects

Los Angeles Times architecture critic Christopher Hawthorne yesterday offered Critic's Notebook: Los Angeles needs a game plan: AEG's plans for a new football stadium in downtown Los Angeles point to bigger problems: The city follows, not leads, and allows developers to shape Los Angeles one mega-project at a time.

He lamented:
One is that City Hall finds itself in the familiar position of reacting to, rather than guiding with any real foresight, a major development proposal that seeks to rewrite the planning rules downtown.
New York leads the way?

Dismayingly, Hawthorne suggested New York offers a counterpoint:
By contrast, other cities, notably New York under Mayor Michael Bloomberg and Portland, Ore., have breathed new life into the public sphere not by chasing giant developer-driven projects but by tending carefully to transit, bike paths, parks and other human-scaled improvements.
I posted a comment:
That's ridiculous. Along with appointing an innovative director of the Department of Transportation and others concerned about human-scaled improvements, Bloomberg has backed to the hilt developer-driven megaprojects such as the West Side Stadium (killed), new stadiums for the Yankees and Mets, and the Atlantic Yards project (arena plus towers) in Brooklyn.

Distinguished planner Alexander Garvin said this past June, "Atlantic Yards: what kind of public realm is there? None,” he responded rhetorically. “A single site rezoned for a single owner with a set of towers and an arena. That's not a public realm. If you're going to increase what you can support on the site, you need to be able to support them with something, such as community facilities, mass transit, and streets, and I have a problem when the upzoning isn't related to that.”

More here.

Atlantic Yards in some end-of-year reflections: the Brooklyn Paper's slender round-up; awards from Curbed and Streetsblog

A couple of Atlantic Yards mentions in end-of-the-year round-ups.

From the Brooklyn Paper's 2010: What a crazy year that was:
March:

...Yards groundbreaking: Developer Bruce Ratner, Gov. Paterson and future Gov. Jay-Z break ground at Atlantic Yards while about 100 counterprotesters mostly break Borough President Markowitz’s chops. By year’s end, the first set of steel pillars were up and Ratner was already making production deals.

April:

...Freddy’s closes: Beloved dive bar Freddy’s is shut to make room for Bruce Ratner’s basketball arena, but not before after an epic final party that left us wondering how the hell we ended up in the Greenpoint Hotel handcuffed to Norman Oder and New Jersey Net forward Brook Lopez.

August:

...Name game: The New Jersey Nets’ new owner, Mikhail Prokhorov, told us that the team would change its name by the time it moves to Brooklyn. We’re still trying to find out the big secret, but we kind of like the Brooklyn Knights (get it?) or The Brooklyn Papers.
For the record, I left the Freddy's event early and never made it inside. And the last last night was actually May 1.

The Brooklyn Paper's "crack staff" managed to include an item about "our intrepid Editor Gersh Kuntzman, who added a caffeine suppository to his Day of Atonement," but left out a bunch of Atlantic Yards news, prompting my comment:
Just for the record, a lot more happened regarding Atlantic Yards than is included in this round-up, including an important court ruling slamming the Empire State Development Corporation and Forest City Ratner's astonishing effort to raise money in China from immigrant investors seeking green cards.

My roundup is here.
From Curbed

The number one in the Lost Neighborhood Landmarks of the Year, to Curbed, is:
1) Daniel Goldstein's Apartment: All it took was a few years, a few lawsuits and a few million bucks to finally topple the home base for anti-Atlantic Yards agitprop. Finally, some Russki revenge for Rocky IV.
Curbed's snarky tone suggests that all Goldstein and those supporting Develop Don't Destroy Brooklyn did was issue agitprop, rather than fight, as stated in a sign hanging from Goldstein's window during the groundbreaking, what might be a "corrupt land grab" and "taxpayer ripoff."

(Photograph Copyright 2010 Jonathan Barkey)

Curbed does offer an entertaining link to anchor Brian Williams declaring that 2010 was the year in which the New York Times discovered hipster, artisanal Brooklyn.

From Streetsblog

Streetsblog offered this Streetsie award:
Most Delusional Renderings: Forest City Ratner released drawings of shiny, happy people milling about the temporary plaza that will be situated between its new arena and the twin traffic sewers of Atlantic and Flatbush. Not pictured: The oceans of surface parking on the other side of the arena.
asdf

A kid with a balloon strikes up a conversation with a kid on a bike, in one of many chance encounters that will never actually happen on Forest City Ratner's arena plaza.

For the record, the surface parking will not be on the arena block--that would be interim open space, as suggested in the demure rendering below--but on the southeast block, Block 1129. Still, you can't have the arena without the parking, at least under the plan the state approved. After all, high rollers won't use public transit, will they?

Streetsblog also offered this hint of the road not taken with Atlantic Yards and many other developments:
Best Developer: Martin Dunn got an exemption from the city’s parking requirements so he could build the 458-unit Navy Green project without a single parking space.

Arena pitch in China: ESDC's Davidson shares a laugh with FCR executives; long-departed Net Vince Carter portrayed as part of the attraction

Who are these happy Americans? They're Forest City Ratner executives, in China in October, along with a few others, trying to sell would-be immigrant investors on the questionable Brooklyn Arena and Infrastructure Project, a project of FCR and the New York City Regional Center (NYCRC).

(Photo from web page of Wailian immigration consultancy, which is still promoting events in January. Click on graphics to enlarge.)

From right: FCR's David Berliner, Christopher Clayton [I believe], and MaryAnne Gilmartin; the Empire State Development Corporation's Peter Davidson; the NYCRC's Paul Levinsohn; and Miller Mayer attorney Nicolai Hinrichsen.


Below, from right, FCR's Bruce Ratner and Gilmartin. Near left is Miller Mayer's Hinrichsen.

Selling Vince Carter

Wailian also posted this advertisement for two events in Octobe, as reproduced on this news site, featuring a photo of former Nets star Vince Carter. He was traded in June 2009.

Thursday, December 30, 2010

A look back at 2010: definitive progress on arena, Prokhorov emergence, Chinese investors (!), same questions of accountability

In a year less tumultuous than 2009 (retrospective), but not without its own significant drama and surprise, Atlantic Yards moved forward in 2010, with street closings, a much-ballyhooed ceremonial groundbreaking, the demolition of longstanding buildings on the arena block, and the indelible physical signs of an emerging basketball arena.

After final victories in condemnation court, the Empire State Development Corporation, at the behest of Forest City Ratner, was able to remove the remaining occupants of Phase 1 properties without any theatrics.

(Photo copyright Jonathan Barkey of protest at groundbreaking)

However, as I wrote in my 2009 retrospective, questions of accountability lingered, and those questions not only remained--as will a surface parking lot on the southeast block, Block 1129--they have merely grown.

A judge gave project opponents and critics their first, partial victory, ruling that the Empire State Development Corporation, in "what appears to be yet another failure of transparency," had failed to study the impacts of a 25-year buildout, rather than the officially approved ten-year timetable.

But the impact of that victory was muted when the ESDC, relying on ubiquitous consultant AKRF, produced the requisite report that, however questionable, declared that impacts of such a build-out would not be significant.

Forest City reached a controversial $3 million settlement with uber-opponent Daniel Goldstein, who, after having lost title to his apartment, was a tenant of the ESDC. While Goldstein "selling out" became a talking point for project proponents, far less attention to the speculators who made quick money on buildings like the one housing Freddy's Bar or Bruce Ratner's astonishing claim that the ten-year timeline "was never supposed to be the time we were supposed to build [the project] in."

As for Nets majority owner Mikhail Prokhorov, any skeletons in his closet were generally brushed away, in several mostly laudatory profiles occasioned by his American debut. As I wrote, money cleanses.

With the dropoff in legal action and the dormancy, though not quite demise, of Develop Don't Destroy Brooklyn, the most obvious "news" regarding Atlantic Yards shifted to the Prokhorov debut and Forest City Ratner press releases regarding construction and plans for the arena.

However, with Atlantic Yards, controversy is never absent, and in the fall we learned of one answer to the lingering questions, as I noted a year ago, about the developer's capacity to fund the project. It's perhaps the most audacious attempt to leverage government help: the developer's effort to gain a no-cost (or low-cost) $249 million loan from immigrant investors via an obscure program that trades green cards for purportedly job-creating investments.

(At left, Bruce Ratner and MaryAnne Gilmartin greet ex-Net Darryl Dawkins, aka "Chocolate Thunder," helping promote the project in China.)

Forest City issued no press release about that one, and the marketing has mostly been in China, so no one other than myself has pursued the story--until last week, when a major Reuters investigation slammed the EB-5 immigration program and got the New York City Regional Center, which is marketing the Brooklyn Arena and Infrastructure project, to admit that its foreign affiliates mislead potential customers. (Reuters didn't figure out that the regional center's own reps make the same statements.)

Atlantic Yards became part of the historical record, as the documentary theater troupe The Civilians produced a much-praised show about the project, IN THE FOOTPRINT: The Battle Over Atlantic Yards. A documentary film, provisionally titled The Battle of Brooklyn, is close to completion, and I quit my job to work on a book about Atlantic Yards.

The Nets moved to Newark but fans were disappointed when the team got neither a top draft pick nor a top free agent. Still, Prokhorov already earned his investment by snagging profiles on 60 Minutes, Bloomberg, and the New York Times Magazine.

In my 2010 look ahead, I pointed out that a bond to stop construction would be a daunting challenge, and it was. The first residential tower, promised for six months after the arena, has not arrived as scheduled, but Forest City Ratner promises an architect will be chosen in early 2011.

While State Senator Bill Perkins re-launched the fight to reform state eminent domain laws and held one stinging hearing, he didn't get too far, and the surprising victory for plaintiffs challenging eminent domain for the Columbia University expansion ran aground, as expected, in the Court of Appeals.

I wrote last year about the stalled effort to set up a governance structure for a project that could easily last 25 years. No structure has been announced, so the question still looms: who's really in charge--Forest City Ratner? Still, a loyalist to Gov. David Paterson was named Project Manager for a job after no search, and with no particular expertise in development issues.

Local elected officials kept a somewhat lower profile on the project, and opponents like City Council Member Letitia James now must also speak for constituents concerned about jobs at the site, but James, state Senator Velmanette Montgomery, and Assemblyman Jim Brennan did sign on to the BrooklynSpeaks lawsuit challenging the project timetable.

Borough President Marty Markowitz, on the other hand, was willing to promise Chinese investors (on tape) something he'd never say back home: "Brooklyn is 1000 percent behind Atlantic Yards."

January

Conservative columnist George Will trashes the Atlantic Yards eminent domain decision, but he's way late, given the unlikelihood it will be reopened.

It turns out a Ratner relative from Cleveland has given a $10,000 campaign contribution to state Senate Republicans.

Forest City Ratner, unnamed and unindicted, emerges as a key beneficiary of chicanery leading to a federal corruption investigation involving its Ridge Hill project in Yonkers. The Times, improbably, claims FCR was "bilked."

At State Senate hearing called by Bill Perkins (right, photos by Tracy Collins), ESDC general counsel claims ESDC board, not consultant AKRF, finds blight. She's not sure she's on the Brooklyn Arena Local Development Corporation board. Perkins slams AKRF's conflict of interest. Criticism of current practices is rife, but reform elusive. Despite ESDC testimony, AKRF was hired to study AY blight, not neighborhood conditions.

The Carlton Avenue Bridge won't reopen until at least April 2012.

In preparation for a case challenging the legitimacy of the ten-year timetable, the ESDC asserts that a separate set of a agreements will require FCR to use "commercially reasonable efforts... to bring the Project to completion by 2019, with sanctions imposed for any failure to do so." In a packed court argument, community petitioners claim the term "commercially reasonable" is meaningless--but no one has seen that Development Agreement.

The Development Agreement emerges, along with other master closing document. It allows 12 years for Phase 1 and 25 years for the project as a whole. The ESDC claims an arm's-length negotiation of damages.

After a contentious hearing, Kings County Supreme Court Judge Abraham Gerges chooses not to rule on the motions and counter-motions filed in the last two days regarding transfer of title, but he's not unskeptical about the claims raised by property owners that changes in the project since 2006 approval were so significant that new findings are required.

February

Despite Gerges' non-order, digital signs announcing street closings remained up two more days.

Atlantic Yards gets a cameo in Brooklyn Borough President Marty Markowitz's State of Brooklyn address. Applause is light.

Atlantic Yards junk bonds are back on the market, with an 11% interest rate.

The Washington Post lets Forest City get away with claiming Atlantic Yards would create 8000 jobs--which is based on 2006 figures, with more office towers.

The Observer publishes an op-ed, Atlantic Yards-It Is Happening, by FCR Executive VP MaryAnne Gilmartin. It has no timetable for Atlantic Yards.

Gubernatorial candidate Andrew Cuomo claims he has the strictest campaign finance policy in the state. That doesn't mean he'll give back money from Bruce Ratner.

Who's in charge of AY at the ESDC? There's no project manager, just a team, says the ESDC.

A memo received via a Freedom of Information Law requests suggests that ESDC overstated project economic benefits by assuming a 10-year buildout, office space on track, and a full 8 million square feet. A plausible scenario involves a 50 percent decline in tax revenues.

The Nets sign a two-year lease at the Prudential Center in Newark, with a possibility for a two-year renewal.

ACORN has dissolved, succeeded in New York by New York Communities for Change.

March

Justice Gerges dismisses the challenge to condemnation. It may be that no court agrees to evaluate whether the changes in the benefits to the Atlantic Yards project are significant.

DDDB has $27,749 in the bank as of 6/30/09. Most legal challenges are over, but DDDB is in the process of winding down.

The Times Sports section covers a Nets promotion; the print Metro section ignores Gerges's decision.

Critic Alexandra Lange slams Nicolai Ouroussoff, with Atlantic Yards as the prime example. Critics should care more about the city than a starchitect's works.

More outrage about AEG video casino deal at Aqueduct than about AY, despite eerie parallels.

Dubious delays: ESDC was late on the master closing documents, and claimed pace doesn't affect nature of AY benefits.

The p.r. statements from the 2003 AY launch. A visual history.

Governor Paterson punts when asked about AY at a Borough Hall event, passing the buck to the courts.

Footprint renters explain why they've left, including life choices and the impact of blight.

Architect David Childs says Bruce Ratner wants to bring in different architects for each building--which is what Frank Gehry suggested, but was denied.

A pre-groundbreaking FAQ.

Despite citing the ESDC's "deplorable lack of transparency," Justice Marcy Friedman defers to the agency in dismissing challenge to the ten-year timeline. DDDB says it was try to reopen the case, given that the Development Agreement was withheld. She passes the buck to the political process.

Forest City is still claiming the $5.6 billion lie.

NY Magazine's Chris Smith: "The fight over Atlantic Yards was about community and democracy."

Daily News columnist Mike Lupica: "It was a hustle in broad daylight by Caring Bruce Ratner from the start."

Daily News columnist Errol Louis says that "nearly no one on either side of the debate...thinks the process was fair, balanced and rational."

The mystery of Ridge Hill: however FCR avoided indictment, does the developer remain (as per ESDC) "a good corporate citizen"?

Team hype: pomp and (questionable) promises, bitter (and near-final?) protest mark ceremonial groundbreaking for Barclays Center arena.

Did Brooklyn "do it again" or just get played? The endless marketing and unbearable banality of borough iconography.

Jay-Z, Markowitz, the cult of celebrity, and the oligarch behind the curtain. The rest of the columns.

Hacked traffic sign is huge news. Go figure.

Mikhail Prohorov gets buffed in 60 Minutes profile. Bloomberg TV interview lends more insight.

April

ESDC Chairman-designate Dennis Mullen jokes that Atlantic Yards is "a project that I would like to move off our portfolio."

Justice Friedman delays a challenge by some property to get the ESDC to issue new findings; the ESDC wants the case moved to Gerges.

Did Mikhail Prokhorov bust sanctions in Zimbabwe? Pascrell responds to Stern.

How the Development Agreement was gentler than the Modified General Project Plan: it offered a timetable for the third building, which doesn't have to start for ten years.

Freddy's makes a business decision to close; no "chains of justice" will be deployed.

ESDC/FCR say eviction delay past May 17 would "cripple" Atlantic Yards, but claims of continued losses and jeopardized benefits seem overblown.

Orwellian, almost: mayor claims commitment from Ratner to build affordable housing in first tower, but it's really the other way around.

DDDB's Goldstein settles for $3 million. Bertha Lewis in the Times, and her astonishing diatribe. Goldstein cites pressure from judge. DDDB issues statement of support. Goldstein says the pressure was on in time for Prokhorov to take over ownership. Daily News columnist Juan Gonzalez is sympathetic. Daily News editorial slams Goldstein. Daily News columnist Mike Lupica doesn't.

Greg David of Crain's claims, delusionally, that "New Yorkers, through their political process" decided "Atlantic Yards was in the best interest of the city."

The New York Times Sports sections calls Prokhorov a white knight for the Nets.

At a panel on eminent domain, a land use attorney defending the status quo ignores Norman Siegel's critique.

Freddy's prepares for its final night. A round-up.

May

The last official night at Freddy's. Photos by Tracy Collins and video from the last, last night.

ESDC discounts KPMG's lies about condo sales.

The Post gets tabloid-nasty toward Daniel Goldstein as he prepares to move. The Daily News is more sympathetic.

The Times Sports section offers an inconclusive analysis of Prokhorov. NBA approves him; Brooklyn officials are late in expressing concerns. Daily News offers unskeptical profile.

Battling effort to reopen timetable case, Forest City Ratner claims, "The Development Agreement changes nothing."

Sidewalk closure announced for Dean Street on arena block.

Prokhorov tops Ratner on the New York Observer's list of Most Powerful People in New York Real Estate. I disagree.

How temporary parking on Block 1129 increased.

Argument in property owners' case challenging Development Agreement concerns whether it should go to Justice Gerges, since he already decided similar issues.

Prokhorov era begins. A just-graduated J-School grad gets picked for a one-on-one interview. Coverage adds up to The Book of Laughter and Forgetting, as I call it. Photos of Prokhorov looking down at his domain, from Ratner's mall. The New York Observer salutes his p.r. strategy. New York magazine sketches the new global Russian.

Some Atlantic Yards echoes in Oren Safdie's play The Bilbao Effect.

AG candidates on the spot regarding Atlantic Yards; Richard Brodsky gets defensive.

Bruce Ratner calls Atlantic Yards project "more of a civic venture, really."

"Once it's built, you kind of have to focus on the positives," the Brooklyn Paper's Gersh Kuntzman says about the Atlantic Yards arena. The Brooklyn Paper's coverage has already tailed off.

June

The Dean Street Squeeze: widening the crosswalks won't help sidewalks never built for arena crowds.
New AIA Guide to New York City calls Atlantic Yards "ill-advised."

New office to monitor public authorities is hamstrung by funding shortfall.

Absolut recruits Brooklyn bloggers. Spike Lee promotes Absolut at Blogfest. The issue of authenticity. The controversy makes the Times.

The hidden history of Freddy's: real estate profits not for longtime bar operators but for the flippers--and the developer gaining a zoning override.

Forest City breathes easier at annual meeting after "de-risking the business."

Barclays/Nets Community Alliance now supports Brooklyn Public Library.

Planner Alex Garvin criticizes Atlantic Yards: “A single site rezoned for a single owner with a set of towers and an arena. That's not a public realm."

Ratner, in Times Sports section portrait, admits, “when a developer speaks it’s not always believed.”

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

Atlantic Yards governance bill re-emerges, but it's very different.

Court of Appeals, citing precedent in Atlantic Yards case, overturns lower court ruling blocking eminent domain for Columbia expansion.

In softball interview with hometown paper, Forest City Enterprises CEO Chuck Ratner stresses integrity, openness, and candor. Goldstein responds.

Is ten-year AY schedule reasonable? Judge puts ESDC on the defensive as Development Agreement is scrutinized in 75-minute reargument.

July

KPMG didn't just lie about Atlantic Yards, it plagiarized from Cororan.

CBAs are criticized by top lawyer at firm that works for Ratner.

LeBron mania peaks. Nets deemed losers. Daily News turns on a dime.

A Best Western Arena Hotel opens, but it's 1.5 miles away from the arena site.

CB 8 Chairperson tells Charter Commission: "Too often developers seek loopholes to avoid the input of the community they are attempting to infiltrate." Most invited panelists support status quo, but not Tom Angotti. Expert says "there's no real local government." The Citizens Union says security should be considered in planning.

Dan Doctoroff says Atlantic Yards emerged because the city "needed more of a center" to Downtown Brooklyn.

Amanda Burden tries to claim Robert Moses and Jane Jacobs; Roberta Gratz says it can't be done. DCP official suggests AY involved public participation.

NYC EDC cost-benefit analysis for AY emerges: certain costs finally calculated, but fundamental flaws remain, as revenues based on full buildout in 10 years. Seth Pinsky puts AY down the memory hole.

Subway monitoring plan finally emerges from MTA regarding arena construction less than seven feet from tunnel.

Wiggle room: In FEIS graphics, ESDC suggested Flatbush Ave. lane closures would be temporary, but text was ambiguous (& referred only to utility work).

August

If FCR doesn't build over the railyard, would "the vast majority" of benefits be realized, as the developer claimed last year to the ESDC?

AY timetable is "complete, utter fantasy," says attorney in case challenging eminent domain findings. In follow-up hearing, wholesale assault on AY, but before detached judge. Demolition on the arena block, with photos and video.

Potential Nets team name change gets a lot of buzz, but it's likely just a feint.

Yes, volunteer Susan Rahm was in charge of Atlantic Yards for the ESDC. Paterson loyalist Arana Hankin set to be Project Manager. Governor's Office defends her.

Forest City Ratner will use, not demolish 752 Pacific Street, despite plans to demolish it.

September

New York Civic's Henry Stern, silent on Atlantic Yards, criticizes a tower near Penn Station: "We believe that what happened in this case is a textbook example of unsound public policy, favoritism to a particular extremely well-connected developer... It is a top-down decision, clearly made at City Hall and not by the Planning Commission, which should have been embarrassed at the tricks they had to turn."

Some skepticism about the foundational Berman v. Parker eminent domain case.

Law review article I co-authored: "Urban Redevelopment Policy, Judicial Deference to Unaccountable Agencies, and Reality in Brooklyn’s Atlantic Yards Project."

Jane Jacobs did say something (in 2006) about Atlantic Yards: “What a shame.”

Forest City says sale of Nets crucial to the company's bottom line.

Chris Owens, Jo Anne Simon defeat machine in District Leader elections; Montgomery, Millman, Towns win easily.

Forest City Ratner seeks Chinese millionaires for capital bailout, with green cards as bait; the first of many stories.

First announcement of my book project.

Gerges dismisses longshot easement case. Gerges dismisses final eminent domain challenge: "alleged additional changes... even if factually true... do not change the public purpose." So much for the Atlantic Yards Development Agreement. Is there really no hope? Not so sure about that.

Bruce Ratner contradicts himself on Atlantic Yards timetable. Now he says ten years "was never supposed to be the time we were supposed to build them in.” In 2008, he said, "We anticipate finishing all of Atlantic Yards by 2018." Brinckerhoff was right.

Pushing back the first tower from 2010 to 2011.

Traffic-free plaza (left) unveiled. Post columnist blames Daniel Goldstein.

At public meeting on plaza, Gilmartin gets affordable housing wrong, says plaza will follow dubious mall policy on teens. More details, and video. Could plaza resemble Union Square?

My critique of KPMG's fuzzy Atlantic Yards math, in the Observer.

Markowitz will try to go to China to flack green cards for Ratner.

October

Daily News columnist Lisberg takes skeptical look at project benefits over delayed timeline.

EB-5 follow-up: Video: in China, NYCRC rep pitching green cards in exchange for AY investment makes astounding claims (10,000 jobs, "most significant in 20 years"). Also see coverage of a very misleading website promoting the project, the abdication of government, and the need for transparency on job claims. Markowitz pulls out of trip. ESDC admits to Daily News: no new jobs beyond forecast. Obfuscation in English, candor in Chinese. Gilmartin's going to China. The fundamental lie behind the project. Why is ESDC's Peter Davidson going? Calculating winners and losers. First HuffPost piece.


Construction jobs lag, Daily News reports.

Matt Taibbi slams Prokhorov: "Is American Sports Ready for a Real Gangster?" Village Voice calls Prokhorov "Best Oligarch." Times Sports section calls Prokhorov face of Nets. Times Magazine: An Oligarch of Our Own. Tickets still cheap.

Observer profiles me. I say they should be writing about the EB-5 scandal. All they do is a blog. No interest for EB-5 investors.

Justice Catterson, forced to defer to the condemnors, concludes that "there is no longer any judicial oversight of eminent domain proceedings."

Times sends Beijing bureau chief to write about Nets' visit.

Tracy Collins shows time-lapse video of the last two buildings on arena block.

Freddy's signs lease in South Slope, 1.6 miles away.

At MAS Summit, environmental review process slammed. The dominant role of the NYC EDC in planning.

State Comptroller criticizes ESDC for lack of transparency, no-bid contracts, including the murky role of the Job Development Authority.

Phoenix Suns owner Robert Sarver explains that arenas "get built through politics and political connections."

In promotional "Brooklyn Tomorrow," architect Gregg Pasquarelli hailed as Barclays Center savior; he says arena's in a "residential neighborhood."

November

ACORN files for bankruptcy; $1M owed to Forest City Ratner. ACORN founder loves that ACORN stiffed Ratner, thinks developer's still pleased.

FCR's lawyer gets it wrong on when Block 1129 parking was increased. More from the first Atlantic Yards District Cabinet meeting.

What revived Myrtle Avenue? Not eminent domain.

Justice Friedman slams ESDC for "yet another failure of transparency," says 10-year buildout wasn't justified, requires ESDC to make new findings. Light media response. FCR seems unnerved. My HuffPost roundup. The delay in open space.

FCR's lies about LEED at 80 DeKalb.

Village Voice warns Cuomo to steer clear of lobbyists, says closest firm to governor-elect is DKC (which works for Ratner).

My review of The Civilians' In the Footprint. The Brooklyn Paper's bizarre expanded review. Raves and mixed reviews from other critics.

Frank Gehry visits Pratt, doesn't talk about AY. Maybe it's in his contract.

Jay-Z's Decoded debuts. The unresolved "ethical pickle" regarding the drug game, the banality of "Brooklyn," and the curious notion of black capitalism.

NYC Regional Center feeling the heat? Lawyer for firm recruiting immigrant investors for AY project launches shallow attack on unnamed "blogger" (AYR).

Steel goes up at arena site.

"Sidewalk Sale": A critic's observant walk around the Atlantic Yards site.

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

In request for stay on Atlantic Yards construction, DDDB attorney charges ESDC and FCR with malfeasance, says their lawyers breached ethical conduct.

December

Seeds of Change, new history of ACORN, contains a fundamental myth regarding Atlantic Yards, Bertha Lewis hagiography, plus many AY misreadings.

Gentrification, race/class, the Atlantic Yards play, and just one half-basketball court for a 16-tower project.

The "Brooklyn buy-in" for the Aqueduct "racino" involves the Darman Group and the state minority contractors' group (and Forest City, tangentially).

Ratner and Marty at the MetroTech tree lighting.

My "Anatomy of a Shady Deal" series begins: arena block could take 19 years. Markowitz shills, Davidson stretches. My HuffPost summary. Shame on Marty. My FAQ and wrap-up.

Times critic lectures The Civilians on journalism.

AY highlighted in effort to get Supreme Court to hear Columbia eminent domain case.

Forum on traffic. Hakeem Jeffries criticizes ESDC's AY oversight.

ESDC will produce study on 25-year buildout. ESDC says no stay needed, 25-year outside date known.

New news: ESDC had signed a first Recognition Agreement, with Gramercy Capital, during the master closing at end of 2009.

ESDC approves findings saying 25-year buildout no problem. A gap regarding the impact of 470 Vanderbilt. Chairman Dennis Mullen's valedictory.

Gehry and cultural legitimacy.

BrooklynSpeaks response to ESDC. DDDB attorney denied documents. Petitioners say "illegal" actions shouldn't be rewarded. Request for stay withdrawn, new briefs due in January. What they might have discussed behind closed doors.

Arena goalposts moved back a month. Construction jobs should peak at 600.

In Reuters investigation of EB-5 program, NYC Regional Center principal admits lies in arena project pitch, but blames affiliates. That's not so.

Brodsky's final report on public authorities: still no AY.

Atlantic Yards and the meaningless of time.

Wednesday, December 29, 2010

The meaningless of time: how the ESDC claims that a buildout of 25 years, rather than ten, would not significantly affect benefits or impacts

Here's the question of the day: Does time have any impact on Atlantic Yards benefits and impacts?

No, says the Empire State Development Corporation (ESDC), thus perplexing anyone who's considered such mundane, time-related issues as compound interest or prison sentencing.

Being "reasonable"

Covering the latest ESDC board meeting, as I wrote 12/16/10, ESDC attorney Robin Stout (at 5:10 of the video), uttered what sounded like a zen koan:
"The agreements require the developer, as I said, to use commercially reasonable efforts to achieve a completion date of 2019, but perhaps more importantly, the agreements set a framework, where the market demand for the project's buildings can be expected to bring the project to completion as soon as it is commercially reasonable to do so. The documents separately set out the outside completion date of 2035."
So commercially reasonable means that the developer can get loans and make its profit.

OK, so if the ESDC would accommodate a reasonable situation for the developer, would it thus evaluate the reasonable impacts of that situation or the reasonable benefits that could be expected?

Not quite.

The issue of comparable impacts

Crucially, the ESDC acknowledges that neighbors of the project will bear the brunt--but say it doesn't make a difference:
Therefore, the impacts of the Project’s construction on neighborhood character with the Extended Build-Out Scenario would remain localized and be comparable to those described in the FEIS and the 2009 Technical Memorandum. As in the FEIS scenario, the construction activity associated with the Project would have significant adverse neighborhood character impacts in the immediate vicinity of the Project site during construction, but these impacts would be localized and would not alter the character of the larger neighborhoods surrounding the Project site.
(Emphases added)

They might remain localized, but if the significant impacts last twice as long as previously disclosed, how can they be comparable?

What about benefits?

As I wrote in March, it may be that no court evaluates whether the changes in the benefits to the Atlantic Yards project are significant.

Much of Justice Abraham Gerges' decision upholding condemnation regarded technical challenges, but he did address the contention that the public use, benefit, or purposes changed materially from what was described in the 2006 eminent domain Determination & Findings (D&F).

The ESDC countered that the issues were inappropriate for a condemnation proceeding, but, even if the modifications were subject to judicial review, the 2006 Modified General Project Plan (MGPP) and the 2009 MGPP are virtually identical, since they involve the same site, buildings, uses, a new railyard, a new subway entrance, etc.

Gerges summarized the ESDC's argument in response to concerns that a renegotiated agreement with the Metropolitan Transportation Authority (MTA) could mean a 22-year timetable to pay for the railyard:
Petitioner further argues that respondents' claim that the MTA agreement could allow FCRC to delay completion of the Project does nothing to diminish the validity of the D&F regarding the Project's public uses, since the benefits of the Project will be realized as the Project proceeds, i.e., blighted conditions in the area will be eliminated step-by-step, as substandard buildings are taken down and Project-related improvements are constructed in their place. It also notes that the many significant benefits afforded by the Arena, the LIRR yard and subway entrance will be provided at the earliest stages of Project construction and all the Project benefits will come to fruition at the point of Project completion. Whatever the pace may be for the delivery of the many public benefits of the Project, the nature of those benefits remains the same.
(Emphases added)

As noted, Gerges didn't attempt to measure the benefits, since the issue was moot.

But the ESDC's contentions, accepted by Gerges, deserve some pause.

Blighted conditions may not be eliminated as "substandard buildings" are demolished, since vacant lots still constitute blight, as does the railyard.

More importantly, can't the pace of the delivery of public benefits ultimately change their nature? In other words, aren't affordable housing and tax revenues delivered over a decade far different than such benefits delivered over 30 years?


Tuesday, December 28, 2010

Brodsky, in final report, warns of importance of further public authorities reform, "failure to receive value for investments," doesn't mention AY

Departing Westchester Assemblyman Richard Brodsky, the crusader for public authority reform who focused on the new Yankee Stadium rather than the Atlantic Yards project, has left with a valedictory report warning of the need for further reform, including this common-sense statement, "In an era when government is instructed to behave more like business, the failure to receive value for its investments is a crisis that can no longer be ignored."

Unmentioned in the six-page report (embedded below) is Atlantic Yards, nor the state's failure to receive any value for giving away arena naming rights.

Indeed, "the massive transfer of public property into private hands... not... accompanied by commensurate public benefits" hints at Yankee Stadium ("publicly funded sports facilities by IDA's") and the Columbia University expansion ("university construction using eminent domain powers") but not the equally controversial Atlantic Yards.

But Brodsky, who ran unsuccessfully for Attorney General, does get the politics:
To be sure, the rhetoric of job creation and economic development is powerfully expressed by elected officials, authority leaders and private sector beneficiaries of these transfers. But in the end the State has failed to protect its assets and interests.
And the issues he cites in the report, including added staff and increased power for oversight (the need for which I've previously reported), remain basic. Brodsky told City Hall News the future if very much up in the air:
Ultimately, ensuring that PARA is enforced is up to everyone in state government, he said, not just one legislative chamber or one governor.

“Everyone, the speaker, the new chair, the members, the governor, the comptroller. This is real and big and it has enemies,” Brodsky said. “Everyone is on the hook.”
The report

The Final Report Of the Committee On Corporations, Commissions, and Authorities, 2010, Recommendations For Continuing Legislative Reform Of Public Authorities, begins:
The historic Public Authorities Reform Act (PARA) took effect on March 1, 2010. This sweeping legislation builds on the reforms enacted in the Public Authorities Accountability Act of 2005 (PAAA), bringing long-needed reform and fundamental change to New York’s “Soviet-style bureaucracies,” improving the lives of all New Yorkers and the financial future of the state.

The legislation is a fundamental, top to bottom reform of New York State’s 700 public authorities. Members of public authority boards now have an explicit fiduciary duty to the authority and its public mission, and are no longer being beholden to or controlled by those who appoint them. State authorities must submit to the Comptroller all no-bid contracts costing over $1 million and those paid for with appropriated funds. They are required to follow MWBE, lobbying disclosure, and reporting requirements, and must create a whistle blower program to protect those who report authority misconduct.

Perhaps most importantly, the legislation creates an independent Authorities Budget Office (ABO) with powers of investigation, referral, and oversight. The ABO has already begun to ensure that authorities abide by all elements of the new law. Going forward, there are additional reforms that will ensure that New York State continues its leadership role in the effort to make public authorities more effective and accountable. The success of the authority reform effort is by no means assured. Vested interests, both within and without the network of public authorities are already seeking to weaken the new legal reforms, and to minimize enforcement of the law. It would be unfortunate and unnecessary if this were to occur. We have spoken with the ABO [and] the Millstein Advisory Task Force, held hearings and investigations on various state and local authorities and compiled the following recommendations we believe are most important to protect and enhance the reform mission going forward.
The recommendations

The recommendations include:
  • Dissolution of Unneeded Public Authorities
  • Ban “Bonuses” and Contingent Compensation
  • Increase Funding for the ABO (The ABO has been designed and approved for a staff of about 30. It currently employs only 7 persons. It should be budgeted for a staff of at least 15 in the next fiscal year.)
  • End Evasion of PARA and Other State Laws
  • Improve Enforcement of PARA (The Millstein Task Force has recommended that the Office of the Attorney General and the State Inspector General designate investigators and lawyers to assist the ABO with enforcement of the law, believing that collaborative enforcement is the key to keeping with PARA’s statutory intent. We concur. Three small statutory changes would enhance the enforcement powers of the ABO:
  • Expand and Clarify the Fiduciary Duties of Board Members
  • Require Public Authorities to Implement Risk Management and Oversight
  • Amendments to PARA to Streamline Reporting Requirements, and ABO Board of Directors
The conclusion

The report states:
Conclusion: The Continuing Public Authority Crisis

The reform of state authorities is well and truly begun. Transparency has already dramatically increased. Oversight by the Legislature, the ABO and most recently by the State Comptroller is regular and effective. Authority behavior has already improved.

These accomplishments are fragile. If the Governor and Legislature undermine the authority of the ABO, if adequate resources are withheld, if the ABO persists in its timidity in the face of wrongdoing, if state and local authorities continue to seek to evade PARA and other state laws, then the system will revert to its incarnation as a series of “Soviet-style bureaucracies.” The recommendations contained in the Report will go far in preventing that outcome.

But a larger problem remains unsolved, and lands squarely on the desks of the new Legislature and new Governor. Historically, authorities have flourished for good and bad reasons. They became vehicles for the provision of public services, for the insulation of elected officials from politically sensitive decisions, and for the issuance of public debt outside of existing legal requirements. But they also became vehicles for the transfer of billions of dollars of public wealth into private hands. It is this latter phenomenon which remains out of control. The State Constitution has provisions to prevent such transfers, including the gift and loans provision and the debt provisions. With the support of Governors, Legislatures and the Courts those protections have been eroded. In some areas, judicial erosion of the constitutional protections was a response to widely accepted arguments of necessity. There was a need for revenue backed financing, while the Constitution permitted only full faith andcredit debt, and for public/private cooperation and new financial strategies that fell afoul of previous Constitutional doctrine. The courts responded. But the massive transfer of public property into private hands that resulted was not foreseen and is not justified. It has not been accompanied by commensurate public benefits. Public authorities became the vehicle for such transfers, be they publicly funded sports facilities by IDA's, or an Empire Zone program run by ESDC, or university construction using eminent domain powers, or distribution of the public's below-market-value electricity and real estate, state authorities have been giving away public assets and receiving little in return. To be sure, the rhetoric of job creation and economic development is powerfully expressed by elected officials, authority leaders and private sector beneficiaries of these transfers. But in the end the State has failed to protect its assets and interests.

In an era when government is instructed to behave more like business, the failure to receive value for its investments is a crisis that can no longer be ignored. Why, for example, does ESDC refuse to seek an equity interest in entities in which it invests funds? Other sovereign wealth funds, including TARP, have learned well that public funds need the same protection and return as private funds. Why do authorities fail to assure adequate wage levels for jobs created with public funds? Why is there no effective way to measure and monitor job creation? What criteria are used to hand out tax preferences and reductions, and what is their total cost? As state government grapples with the cost of providing essential services, and reduces them, state leaders need to address and answer these questions. It is the great, unaddressed next step in authority reform.
Other coverage

Here's coverage on the Times Union Capitol Confidential blog, source of the document embedded below.

An AP article made it into the Wall Street Journal under the bland, misleading headline Local Nonprofits Face New Scrutiny
ALBANY—A committee of the New York state Assembly says the agency that oversees more than 700 public authorities in New York needs statutory authority to impose fines on the quasipublic entities that fail to report their borrowing, bonus payments or other activities.

In a report Monday, the Committee on Corporations, Commissions and Authorities says more than 100 authorities are essentially defunct and hundreds more are duplicative and should be shuttered.

The report urges applying technical analysis and common sense, noting a recent "disturbing trend" by local governments in establishing not-for-profit organizations that assert they aren't subject to the oversight.

Richard Brodsky, chairman of the committee, says the efforts to make changes under the Authorities Budget Office have begun.

Brodsky Report on Public Authorities

Ratner: construction is easier than "getting there"; Jay-Z's ad agency tapped to pitch Nets tickets starting in February

The news from the Sports Business Journal article 12/20/10 (embedded below, as reproduced on the Barclays Center web site), is not merely the effort to dispel confusion about whether the project is happening and how sports and family events are already scheduled, as noted in the headline Barclays Center pitch: We're here and have a lot going on.

It's an oblique reflection by the man behind the project:
"Construction is the easy part," assured Bruce Ratner, chairman and CEO of Forest City Ratner Cos., developer of the Barclays Center and the associated 16-building Atlantic Yards mixed-use project. "Getting there is hard."
It's also a statement from a Barclays rep that the naming rights agreement is "a fantastic opportunity to build our brand," a quote that might give pause to the state officials who simply gave away naming rights.

Enter Translation

And, more importantly, it's the presence of Translation, a new ad agency co-owned by Jay-Z and aimed at the multicultural, youth market. Sports Business Journal reports:
"We are building an identity," said John McBride, director of the strategy group at agency Translation, newly hired to coordinate marketing behind the Nets' move to Brooklyn and the new arena. "When we are interviewing [Nets'] season-ticket holders, there is still a question of 'Is it real?' There are still people confused as to whether or not this is going to happen."

...[Brett] Yormark said the building has eight of the 12 founding partners sold, with others being pursued in the airline, insurance and domestic car categories. Suites, which range from $295,000 to $550,000, are almost 40 percent sold, with some more sales help via the New Meadowlands Stadium being added for an expected push early next year. Translation, another commercial entity in which Jay-Z and Steve Stoute have an interest, has been hired to orchestrate the first pitch for "Brooklyn Nets" tickets, with initial ads expected in February
So, what's Translation?

An 8/25/08 profile in AdWeek described founder Steven Stoute, a former record executive:
Stoute, who earlier this year launched Translation Advertising with Jay-Z -- as a division of Translation Consultation & Brand Imaging -- has leveraged the increasingly smitten relationship between Madison Avenue and the entertainment business into a lucrative career. His matchmaking efforts over the years have paired Jay-Z with Reebok, Justin Timberlake with McDonald's and Gwen Stefani with Hewlett-Packard.
The New York Times, in a 2/8/08 article headlined A New Venture for Jay-Z, on Madison Avenue, noted that Translation is co-owned by Interpublic, the third-largest agency:
Interpublic owns 49 percent stakes in several agencies that specialize in multicultural marketing to primarily Hispanic and Asian-American consumers, among them Accentmarketing, the IW Group and Siboney USA.

But Interpublic has not been represented in the multicultural/African-American realm for several years, since selling a 49 percent stake in an agency named GlobalHue back to its managers.
Issues of authenticity

That AdWeek article suggested that the issue wasn't selling out, just selling right:
Celebrity endorsements, says Stoute, have changed since the time that smiling while holding the product and then receiving a check were the extent of the deal. Now, he says, "product endorsements are about product development and new-product creation all the way to a traditional endorsement model and everything in between."

And "selling out" today, he adds, means creating inauthentic relationships between pop culture and product. The most successful relationships, he says, come from brands and artists viewing themselves as true business partners. "Artists want to be more responsible for the final outcome," he says.
So Jay-Z, like Spike Lee, has an advertising business.

Barclays Center Pitch, Sports Business Journal, 12/20/10

Monday, December 27, 2010

HuffPost: Reuters Nails Promoters of Green Cards for Investments as Liars, Gets Dubious Excuses on Brooklyn Arena

Exclusive: New audio of arena project presentation shows NYCRC principals making same deceptive claims they admit their Asian affiliates should avoid

It's stunning how George Olsen, managing principal of the New York City Regional Center (NYCRC), could profess to be shocked, shocked that the firm's affiliates in Asia are deceptively marketing green cards in exchange for investments in Atlantic Yards.

As Reuters reported last week:
At a recent seminar in Seoul, an agent for the Kookmin Migration Consulting Co., working on behalf of the New York City Regional Center, told would-be investors if they invested in the company's latest project their permanent green cards were "guaranteed." He also implied the investors would be financing the construction of the new home for the New Jersey Nets NBA basketball team.
In a subsequent interview with Reuters, George Olsen, managing principal of the New York City Regional Center acknowledged the claims were "not accurate" - the investors will finance the rebuilding of a rail yard and some related infrastructure near the new basketball court -- and promised he would jump on Kookmin "with two feet."
"But that's what's frustrating," Olsen said. "You can't be at every seminar, you can't be at every meeting, you can't be in the room when one of these people is talking. To raise $100 million, you have to get 200 investors. That's a lot of people. So there's a certain amount of mass marketing that has to go on.
Nah. As I pointed out December 23, those same claims were made by Olsen's own point man in China, Gregg D. Hayden.

And those same claims were made in the official project video as presented to investors in China, the audio of which I reproduce below, with annotations.

Notably, in the video, several public officials endorse the "project," but they're talking about the larger Atlantic Yards project, not the smaller project in front of investors.

What else Reuters missed

Beyond that, I should note that it's too bad Reuters didn't go farther to investigate other issues regarding EB-5 and this project:
The audio (see bottom of this post for sourcing)






Enter Paul Levinsohn

Paul Levinsohn, one of the NYCRC's two Managing Principals, has a bit of a history as an operator, exploiting a legal loophole to get rich, as one of New Jersey's "Billboard Boys."

Levinsohn leads off the video for the Brooklyn Arena project, above, just as he does this NYCRC introductory video, embedded directly below.



The opening

In the audio above, Levinsohn begins by stating:
The New York City Regional Center is pleased to offer EB-5 investors another secure, job-creating project in conjunction with the government of both the state of New York and the city of New York. The $1.4 billion Brooklyn Arena and Infrastructure Project is one of the most important development initiatives under way in the city today, and one of the city's largest investments in job creation in the last 20 years.
Note how he uses the term in conjunction with, leaving the implication that the city and state are partners, even though they're not.

The morphing of project

More importantly, at 0:55, Levinsohn quickly elides the difference between the $1.4 billion Brooklyn Arena and Infrastructure Project and the larger $4.9 billion full Atlantic Yards project, a tactic common to the pitch as a whole.

Viewers are told this "once in a generation landmark project" is a "22-acre, 7.8 million square foot project." That's not true.

Levinsohn states:
This once in a generation landmark project will transform Downtown Brooklyn and become a center of commerce and culture for all of New York City. Located at Atlantic Yards, the 22-acre, 7.8 million square foot project includes the construction of the Barclays Center, a new 18,000-seat sports and entertainment arena, a new modern trainyard at one of New York City's busiest transportation hubs, and vital infrastructure work necessary to open the arena and build thousands of new apartment units in the future. The Brooklyn Arena and Infrastructure project is a vision of the government of the state of New York and the city of New York, as well as Forest City Enterprises, one of the the largest real estate firms in the United States, a publicly traded company on the New York Stock Exchange.
Continuing to conflate the proffered "project" with the overall project, he suggests that the state and the city envisioned something they called the Brooklyn Arena and Infrastructure Project. They did not.

Fudging the issue of jobs

The next speaker is developer Bruce Ratner, who speaks in generalities:
This project is one of the great job creators currently in New York City. There are thousands and thousands of jobs created by this project. The city, state, and various federal officials strongly support this project.
Then, at 2:06 of the audio, there's another shift, with a quote from the March arena groundbreaking from New York State Governor David Paterson:
The economic development opportunities here are undeniable. This project will yield 1.5 billion dollars in economic development for the state over the next 30 years and will have job creation the likes of which Brooklyn has never seen.
Paterson's numbers were way off base, but he was speaking about the larger Atlantic Yards project, not the yet-to-be unveiled Brooklyn Arena and Infrastructure Project.

Then comes a quote from Mayor Mike Bloomberg, again conflating the two projects:
We need these kinds of major investments more than ever before and, by all accounts, the Atlantic Yards is the largest private investment and job creator in Brooklyn history.
Enter Markowitz

At 2:36 of the audio, Brooklyn Borough President Marty Markowitz makes the first of three appearances (previously combined and analyzed), again conflating the projects:
Atlantic Yards is the largest development in decades in Brooklyn, USA and one of the largest in the entire city of New York. I want to say how excited how we are that, in two years, the Brooklyn Nets development will be completed and offer a new opportunity and a new way in life in our borough.
Breaking down the numbers

The narrator of the video--mostly Levinsohn, but possibly Olsen at times--then provides some numbers:
The cost of the Brooklyn Arena and Infrastructure project is 1.4 billion dollars. The 249 million of EB-5 funding represents only 17% of the total project costs. The balance of the funding comes from the following government and private capital contributions. 100 million from the government of the state of New York, 131 million from the government of the city of New York, 511 million of proceeds from New York State-sponsored municipal bonds, and 457 million from Forest City Enterprises.
At least in this case, the NYCRC, unlike Hayden in China, does not claim that it is the safest, most secure part of that investment total.

Job creation

The narrator states:
The project is structured to provide safety and security for the EB-5 investor, unlike any other regional center offering in the marketplace. The differences are simple, yet significant.

DIfference number 1, job creation. The project will generate 7696 jobs, a job surplus of 54% for the EB-5 investor, and 100% of the government and private capital used to calculate the jobs has either already been spent or already placed in a dedicated account ready to fund the project. So the job creation is extremely secure.
As I've reported, it stretches the spirit if not the letter of the law to credit immigrant investors credited for jobs based on money already spent, especially when their funding is not needed as seed money or "last mile funding."

Government role

The narrator continues:
Difference number 2, government involvement. The project is endorsed by and involves numerous levels of government, including the state of New York and the city of New York. The project is situated on land owned in the state of New York, and there will be 742 million dollars of government-related capital that is funded in conjunction with the EB-5 investment.
They have never formally endorsed this project, as opposed to Atlantic Yards, though they're certainly playing along. As I've noted, in conjunction with is among the weasel words and ambiguous language key to the pitch.

Investor security

The narrator continues:
Difference 3: investor security. The EB-5 investor community will have a first mortgage on land parcels containing over 3 million square feet of development rights, valued at over 542 million dollars.
That may be collateral, but no plan has been publicly announced to create revenues that would repay the investors. That casts doubts on the likelihood of getting paid back in full and on time.

The arena as cornerstone

At 5:01 of audio, the narrator describes the project:
The Brooklyn Arena and Infrastructure project includes three primary components: the Barclays Center arena, the Long Island Rail Road trainyard, and various infrastructure.

The cornerstone of the project is the construction of the Barclays Center, New York City's newest sports and entertainment arena. The Barclays Center is the first new arena built in New York City in over 40 years. The arena will be home to the Brooklyn Nets, a National Basketball Association team. The arena has been built to NBA standards, and will have a seating capacity of over 18,000. In addition to basketball, the arena will host hundreds of events a year: concerts, circuses, and ice shows.
The arena is already funded, and Olsen admitted to Reuters that investors wouldn't be funding it. However, if the NYCRC had been straight with investors, it would have had to abandon its entire basketball-centric promotional strategy.

(At left, potential investors gather at the conference registration desk for a mid-October session in Beijing, presented by the Kunpeng consultancy. On the banner, New Jersey Nets players Brook Lopez and Devin Harris flank a rendering of the arena. Photo from Kunpeng web site.)

The narrator continues:
Construction of the Barclays Center arena began in 2009. After excavation, already the permanent foundations for the arena are being placed. Completion of the arena is scheduled for 2012, in time for the Nets NBA basketball season
The next few speakers are mostly inaudible, but they include people related to the Nets, talking about the quality of the new arena and Brooklyn's love for basketball

The railyard

At 6:51, the narrator resumes:
The second component is the construction of a new modern trainyard for the Long Island Rail Road. The construction is needed to update services for one of New York City's major transportation hubs. Work on this part of the project has already begun, as the tracks of the railyard have been temporarily relocated to the western end of the project site.
Not exactly. While a temporary railyard has been created--not at the western end--the permanent railyard is supposed to start construction by 2012.

The narrator continues:
The new railyard will create additional employee facilities, provide a new signal system, and improve the overall functionality of the trainyard. A platform above the new yard will be built in later phases to serve both as a protective roof for railroad operations and as a base for future developments.
Infrastructure

At 7:36, the narrator, apparently on-site in Prospect Heights, states:
The third part of the project involves the completion of various infrastructure work necessary for the construction and operation of the arena, and the construction of thousands of apartment units in the future. The infrastructure work includes the demolition of buildings, the relocation of utilities, the paving of the surface parking lot, and the replacement of the Carlton Avenue Bridge. A significant portion of the work has already begun and is going on right behind me. The Barclays Center arena will be located adjacent to the Atlantic Terminal, one of New York's largest transit stations. Forty million people pass through this hub every year. The project will include construction of a new entrance for the Atlantic Terminal; an underground tunnel extension will be built from the existing station to an area within 100 feet of the arena's main entrance. Above the new entrance will be an outdoor public plaza and a new sidewalk… an innovative landscape.
This is work Forest City Ratner is already obligated to do in the most part and is supposed to fund. If the developer wants to substitute lower-cost financing, this may be prudent business, but how can it be considered job creation?

Ratner claims

Then we hear from Bruce Ratner again:
We started the project five or six years ago… The railyard work is already under way and three or four months ago, we started on the arena. The arena foundations are partially completed… So it is not only a project which is a vision… but the project has already begun... hundreds of millions of dollars has already been spent. An immense amount of that is our company cash.
If FCR has put in a lot of cash, it's also leveraged a lot of government help, both direct subsidies and tax breaks.

Job calculations

At 9:08 of the audio, the narrator--I believe Levinsohn--continues:
The EB-5 investment is 249 million dollars. The project will have 498 investors. And since each investor of 500,000 must create ten jobs, the total amount of new jobs needed for 498 investors is 4980 jobs. The Brooklyn Arena and Infrastructure project will generate 7696 new jobs. Therefore, the project creates 2716 excess jobs, for a job surplus of 54%.

There are many other EB-5 projects that have speculative job creation. Not this project. Job creation is secure, because 100% of the government and private capital used to calculate the jobs has either already been spent or already placed in dedicated accounts specifically to fund the project.
Again, it's questionable why immigrant investors should get credit for jobs based on money already spent.

Enter Gilmartin

At 10:05, FCR point woman MaryAnne Gilmartin sounds enthusiastic:
The city of New York, the State of New York and Forest City have already funded a combined 5o1 million dollars into this project, and an additional 698 million dollars in capital is currently in dedicated accounts specifically for project funding.
Who's the borrower?

The narrator states:
To borrow the EB-5 funds is an affiliate of Forest City Enterprises, one of the largest publicly traded real estate firms in the United States with approximately 11.8 billion dollars in total assets. Founded in 1920, Forest City Enterprises has been a publicly traded company for 50 years and is currently traded on the New York Stock Exchange. Forest City Enterprises' real estate portfolio includes over 34,000 residential units, 47 office projects, 46 retail developments, and five hotels. And Forest City is also part owner of the Nets basketball team.
There's no mention of majority Nets owner Mikhail Prokhorov--who is assiduously avoided during the project pitch--or a concrete plan for revenues to repay the loan.

Ratner returns at 11:08:
Our company is 90 years old. The company is known probably as one if not the largest developer in the country of public private partnerships-- partnerships which involve the government and the private sector.

Our company has operated in NYC for well over 30 years,… the dominant developer in Brooklyn, and over that period of time, we've built over 40 projects from the ground up, all the way from the well-known, beautiful New York Times building, to the just-completed Frank Gehry building called the Beekman Tower. And a large project that employs 22,000 workers, primarily from the financial sector, called MetroTech, and another 20 retail projects…
None of that explains how investors would be repaid, however.

Markowitz returns

Then Markowitz returns for another stretcher:
The largest company in Brooklyn is Forest City and I can assure you that their reputation is unbelievably reliable. They're a great company to work with; they've worked very closely with government. The most important thing: they make a promise, they keep it.
The completion guarantee

At 12:20, the narrator states:
Forest City Enterprises has signed a completion guarantee with the state of New York. This agreement with the government obligates Forest City to complete key aspects of the project, such as the Barclays Center arena and new subway entrance.
Those would be completed with or without the investors' money.

The collateral

The narrator states:
The Brooklyn Arena and Infrastructure project is structured to minimize risk for the EB-5 investor. Each investor will have significant collateral and security for their investment.

This security includes a first mortgage on land parcels containing over 3 million square feet of development rights. The state of New York has acknowledged this first mortgage in an official recognition agreement.

Forest City will construct seven residential towers and there will be 2400 apartment units, on 3 million square feet of land used as collateral.

An official opinion of value report has valued it at over 542 million dollars. The report was conducted by Massey Knakal real estate services, one of New York City's largest real estate services firms. The report has been certified by the Chinese embassy.
Actually, if the collateral goes to the investors, Forest City may not be building anything, as a new developer could be found. There are many reasons to question the value.

As far as I can tell, "certified" means simply that it's authentic, rather than the content has been verified.

Taking credit

At 13:33, the narrator states:
In addition, the EB 5 investor is investing in a project that began years before and has seen hundreds of millions of government and private investment.
That may be so, but why should immigrant investors get credit for job creation based on that investment?

Laughing at Markowitz

Markowitz returns at 13:45, with his biggest whopper--and a gets a laugh:
All I can say, Brooklyn is 1000 percent, 1000 percent behind Atlantic Yards, and we invite Chinese investors to join with us, because there's nothing better than China and Brooklyn together.
You can hear the immigrant investors chuckling through the subtitles. But do they know that Markowitz is lying?

In closing, meet the government

The narrator--Levinsohn, I believe--gets the final word:
Thank you for taking the time to learn about this landmark project, one of the largest job-creating developments in the history of New York City. We invite everyone to come to New York City and tour the project, and meet the government officials and principals involved. The New York City Regional Center looks forward to answering all your questions and working closely with you and your families to achieve permanent residency in the United States.
Again, he implies that government is formally involved in the EB-5 project.

He also suggests that the NYCRC can set up meetings with the Empire State Development Corporation (ESDC) to discuss the project. If the ESDC provides such service to would-be investors, perhaps they can invite the public, as well.