Monday, July 18, 2011

Looking at the Crain's coverage of Atlantic Yards economic benefits: another bad example of "he said, she said" journalism

As with The Real Deal's remarkable puff piece on Bruce Ratner, published last May, yesterday's article in Crain New York Business, Barclays Center takes shape at Atlantic Yards: Eight years after it was proposed, the arena is selling tickets. presents a dismaying example of what press scholar Jay Rosen criticizes as
“He said, she said” journalism, in which "No real attempt is made to assess clashing truth claims in the story" and "The means for assessment do exist, so it’s possible to exert a factual check on some of the claims, but for whatever reason the report declines to make use of them."'
The Crain's article, which I addressed in full yesterday, is a particularly bad example of that, since it positions the "he said, she said" claims about economic benefits in a rather illogical manner.

The impact of delays

Let's look more closely at the first two paragraphs at issue:
Foes say the economic benefits depend on unrealistic timetables for completing the 17-building project—which includes office and retail space for which there is currently no market.
"[All the positive] projections depend on Atlantic Yards being built in full within 10 years,” said Norman Oder, a journalist who is writing a book on the controversy and keeps tabs on his Atlantic Yards Report website. “We know that won't happen.”
Ok, what about non-foes? Wouldn't any reputable analyst agree that the timetables are unrealistic? Newsflash: Bruce Ratner said 9/28/10, “I would say it's really market-dependent as to when it will really be completed.”

WNYC's Matthew Schuerman at that point added a bit of skepticism:
But the 10-year-timeline was also used by the city, state and Ratner’s own consultant to determine that the financial benefits to the public outweighed the roughly $300 million in direct subsidies the project is receiving.
Not only that, the housing is delayed, and state documents give a 25-year timeline to complete the project.

So Crain's could have looked at the evidence, and tried to assess whether my analysis was correct. It didn't.

Whom do you trust?

The article continues:
A September 2009 study by the city's Independent Budget Office focused strictly on the arena. It showed the city losing $40 million over 30 years on its $170 million investment, with an additional $181 million loss of potential revenue, primarily from the arena's property tax exemption. But a 2010 study by the city's Economic Development Corp. showed a net gain of $411 million from the arena and other buildings.
“There are incredible community benefits—from the housing creation to the job creation,” Mr. Yormark said.
Crain's could have applied my general analysis about the timing of benefits--which would be shared by a number of neutral economic analysts--to the IBO and NYC EDC studies. It didn't.

It could have applied some scrutiny to the NYC EDC claims, as I've done, and Council Member Brad Lander has followed up.

It didn't. It quoted an enthusiastic generalization by Brett Yormark, who unlike "foes" earns his salary by promoting the arena.

Crain's could have analyzed whether the "housing creation" was an "incredible" community benefit. The housing has been steadily delayed, even though the first tower, still on the drawing board, was supposed not to be delayed.

Crain's could have could have analyzed whether "job creation" was an "incredible" community benefit, pointing, for example, to lowered numbers of construction jobs, the impact of modular construction on union jobs, and the indefinite delay facing the office tower, and thus the largest chunk of permanent jobs.

Crain's even could have tried to assess whether Brett Yormark is a credible source or, as I've documented, a regularly unreliable one.

The journalistic path not taken

The thing is, even with all that lousy journalism, Crain's could have become a wee bit skeptical about Forest City Ratner.

I was asked to respond to a claim from Forest City Ratner:
Atlantic Yards will be an economic engine for Brooklyn, New York City and the State generating more than $5 billion in new tax revenues over the next 30 years. In addition to tax benefits, the project will also create thousands of new jobs: upwards of 17,000 union construction jobs and up to 8,000 permanent jobs. 
Notice how Crain's didn't even quote the developer on that? Maybe because even Crain's realized that, as at the arena groundbreaking in March 2010, even Gov. David Paterson, who surely drew on official state projections, came up with a vastly different numbers: $1.5 billion.

That has its own questionable logic, but it should, at minimum have been a red flag regarding the developer's claims.

My response to Crain's

I was asked to be brief, so in my response to the Crain's query I bolded the sentences to consider for quotations, but provided more backing:
Forest City Ratner's numbers have no basis in reality. No one should take them seriously. The developer provides no documentation. And the numbers differ dramatically from city and state projections, which themselves are over-optimistic. For example, the state estimates $1.2 billion in net revenue (of $1.74 billion total) over 30 years, and 4277 permanent jobs.

(Forest City's $5 billion figure represents cumulative revenue, rather than the industry standard of "present value." In other words, their figure is like saying you have a home loan of $1 million rather than $400,000 because the cumulative total of your payments on your $400,000 loan is $1 million.)

This shouldn't be a "he said, she said" debate. It's possible to test their assumptions. All three projections depend on Atlantic Yards being built in full, within ten years. We know that won't happen. Atlantic Yards was last approved in 2009, and only one building of 17, the arena, is under construction. The Development Agreement signed with the state gives Forest City 12 years to build three towers around the arena, and 25 years to build the project, though they can build a project smaller than 16 towers without penalty.

Moreover, the state's permanent job estimates are based on the project including an office tower (which is indefinitely delayed) and Forest City's permanent job estimates are based on the project including three office towers (which is a configuration that has not been part of the plan since 2006). The city's fiscal analysis, oddly enough, assumes more office space than does the state's analysis.

As for the construction jobs, those numbers are job-years: 1700 jobs a year over ten years, or fewer over a longer buildout. However, as I and others have reported, they're way behind projections. And if Forest City chooses modular construction, as has been discussed, the number of construction jobs--and tax revenues--would go way down.

As for the Independent Budget Office's conclusions, note that Forest City Ratner in 2005 had no trouble embracing them, but in 2009 attacked the IBO's methodology.

Forest City will continue its fantasy math, but government agencies owe the public more than spin: they should have provided, and should be providing, a range of best-case and worst-case scenarios.
When a journalist does it right

In yesterday's New York Times Business section, reporter David Segal, in an article headlined Law School Economics: Ka-Ching! looked skeptically at claims by New York Law School (N.Y.L.S.):
For instance, although N.Y.L.S. is ranked No. 135 out of the roughly 200 schools in the US News survey, it asserts in figures provided to the publisher that nine months after graduation, the median private-sector salary of alums who graduated in 2009 — which is the class featured in the most recent US News annual law school issue — was $160,000. That is exactly the same figure cited by Yale and Harvard, the top law schools in the country.

[Dean] Mr. [Richard] Matasar stood by that number, but acknowledged that it did not give a complete picture of the prospects for N.Y.L.S. grads. He noted that the school takes the over-and-above step of posting more granular salary data on its Web site.

“In these materials and in our conversations with students and applicants,” he wrote, “we explicitly tell them that most graduates find work in small to medium firms at salaries between $35,000 and $75,000.”

Determining exactly how many graduates make even those relatively modest salaries isn’t easy. The information posted online by N.Y.L.S. about the class of 2010 says that only 26 percent of those employed reported their salaries. The nearly 300 students who reported being employed but said nothing about their salaries — who knows?

Like all other law schools, N.Y.L.S. collects this job information without anyone else looking at the raw data or double checking the math. Which gets to another dimension of the law school business that other companies might envy: a lack of independent auditing, at least when it comes to these crucial employment stats. It’s kind of like makers of breakfast cereal reporting the nutrition levels of their products, without worrying that anyone will actually count the calories.
Or like proponents of Atlantic Yards projecting economic benefits without worrying that anyone will actually do the math.

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