Thursday, August 04, 2011

A partial loophole in Forest City Ratner's plan to hire an Independent Compliance Monitor for the CBA, but the developer still hasn't fulfilled its obligation (and backers are quiet)

I should revise my analysis of Forest City Ratner's obligations under the Community Benefits Agreement (CBA) to hire an Independent Compliance Monitor (ICM).

I wrote 11/29/10 that Forest City Ratner lied about CBA, claiming it went into effect only when the arena broke ground, and avoided hiring an ICM. I stand by that overall critique. The CBA went into effect shortly after it was signed in June 2005.

However, in terms of hiring an ICM, a footnote in an RFP (Request for Proposals) gave the developer slack until shortly before the groundbreaking, thus contradicting the language (likely) and spirit (clearly) of the CBA.

Even with that slack, however, Forest City Ratner has evaded its obligation, leading to regular situations, as I've described, in which the developer publicly self-reports on compliance with the CBA.

The whole point of the ICM was to have an independent authority, rather than rely on the developer and its contractor, The Darman Group, led by the ethically compromised Darryl Greene and his daughter Yvette Dennis.

Securing all approvals

The RFP for an ICM (embedded below), was issued in March 2007. It includes this line:
The contract will become effective upon Developer securing all approvals necessary to commence the Project.
No contract was ever announced.

Those approvals were acquired, I'd suggest, in November 2009, when the New York State Court of Appeals dismissed the eminent domain lawsuit, allowing the developer and state to proceed to a Master Closing, and to the sale of tax-exempt arena bonds.

Or, to give Forest City Ratner even more slack, then the final approval came 3/1/10, when Supreme Court Justice Abraham Gerges dismissed a challenge to condemnation.

What FCR said

However, as I reported last November, Forest City Ratner officials weren't making such distinctions. Executive Jane Marshall claimed that the CBA itself--not merely the RFP for an ICM--had been put on hold.

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

What the CBA said

The CBA was signed 6/27/05. It clearly contradicts Marshall's claim:
TERM. This Agreement shall commence on the date hereof and continue until either (i) the Developers abandon their efforts to acquire or lease from the Metropolitan Transportation Authority and to obtain a rezoning of the Project site for large-scale development, or (ii) thirty (30) years from commencement of construction of the first residential building to be constructed by Project Developer or its Affiliates at the Project.
(Emphasis added)

In other words, it was supposed to govern site work that preceded "all approvals." After all, Forest City Ratner kept issuing press releases, such as on 2/20/07, touting its minority contracting and compliance with the CBA.

Beyond that, in several places the CBA indicates that implementation would begin soon after it was signed, rather than some unspecified later groundbreaking.

The ICM loophole?

So, what if Forest City Ratner waited to hire an ICM, as per the loophole in the RFP, until "all approvals" were secured--say, March 2010?

That clearly violates the spirit of the CBA; after all, if the developer was to tout its minority contracting it should have paid for the promised monitor.

And it sure seems to violate the language of the CBA, given that the ICM was part of the reporting process.

As per p. 41 of the document, the ICM was supposed to get quarterly reports on such things as number of people placed through CLE (Community Labor Exchange) program, construction and non-construction contracts awarded to "Community based, Minority and women owned businesses"; and notices of upcoming bids for contracts.

So that's further evidence an ICM should have been hired early not, and not until "all approvals" were secured.

Delay, and silence

But even giving Forest City Ratner the most generous interpretation, the developer is already late--at least 16 months late.

And none of the CBA signatories, the only parties with legal standing to ensure CBA compliance, have tried to enforce this provision. Nor have any of the elected officials who supported the project, citing the CBA.

RFP for Atlantic Yards Community Benefits Agreement Independent Compliance Monitor

Atlantic Yards Community Benefits Agreement (CBA)

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