Friday, October 28, 2011

Forest City Ratner project in Mill Basin, touched by corruption indictment, "has been withdrawn;" indicted developer had role in City Point, whose lead developer didn't pay bribes but made gifts to Markowitz charities

The mayor's office has quietly indicated (as per Queens Crap) the demise of Forest City Ratner's Four Sparrows project, once touted as housing a Wal-Mart:
The Four Sparrow Marsh Retail Center at Mill Basin project has been withdrawn as of September 2011.
It's unclear why, but the project has been tainted by corruption charges.

About 15 acres were to be retail, including an existing Toys 'R' Us, and 46 acres formally mapped as parkland. This fit into Forest City's m.o.: getting the inside track on potentially valuable public property and then getting the zoning changed.

Here's the Draft Scope for an environmental impact statement and here's the Environmental Assessment Statement. Here's a photo of the vacant city-owned site, by Adrian Kinloch, which shows why environmental and park advocates were alarmed. Here's some previous coverage of the issue.
Touched by corruption charges

Does "withdrawn" mean "dead"? Unclear.

Yesterday I queried the NYC Economic Development Corporation, source of the map, but didn't hear back. Their Four Sparrows web page has not been updated, as it says "Construction expected to begin in 2014.

But if the project comes back, there will have to be some new players.

Consider that state Senator Carl Kruger and developer Aaron Malinsky in March were both indicted on corruption charges that included, among several counts, the Mill Basin project. Malinsky was charged with bribing Kruger. Forest City was not charged, though it was enmeshed in an effort to wangle state funds from Kruger.

The Wall Street Journal, in a 6/6/11report, suggested a potential snag:
Also, a plan to develop a 15-acre swath near Four Sparrow March [sic] in Mill Basin, Brooklyn into a car dealership and retail center is working its way through environmental review. That long-delayed project, however, might run into further problems because it has been tied into the corruption case involving State Sen. Carl Kruger.
Forest City asks for money

According to p. 22 of the complaint (below), wiretaps revealed that Kruger and his Chief of Staff discussed three real estate development project for which "the Vice President of Real Estate Developer #1," aka Forest City Ratner's Bruce Bender, had sought state funding.

Bender wanted $2 million for Mill Basin; $9 million for the Carlton Avenue Bridge, part of the Atlantic Yards project; and $4 million for the Lakeside project, a project not connected to Forest City but to his wife's advocacy for Prospect Park. After Kruger told him to narrow his request, Bender eliminated Mill Basin--perhaps because it was years away--and eventually agreed on funding the park.

Kruger reported efforts to help

According to p. 26 of the complaint (below), wiretaps revealed that Kruger had helped Malinsky, another defendant, and his firm P/A Associates regarding the "Mill Basin Retail Center," aka Four Sparrows.

Malinsky wanted to develop a non-big-box store at the retail center, which was being developed by "Real Estate Developer #1," aka Forest City Ratner.

Malinsky and lobbyist Richard Lipsky, another defendant, discussed Malinsky's plans to "flip" the department store to Forest City. Kruger earlier had spoken to "the Vice President of Real Estate Developer #1," encouraging him to support Malinsky's plan.

Kruger had publicly stated that he supported specialty retail rather than big-box retail, thus furthering Malinsky's plan.

(To some degree, the debate over Wal-Mart was a sideshow, since the fundamental question is not the identity of the tenant--though big-box retail does have different impacts--but the change in site use and Forest City's inside deal. I have not seen documentation of the price for the land or whether it was ever put out for bid.)

According to one wiretapped conversation, when a Forest City employee referred to as "Debbie" told Kruger that Bender wanted Kruger to meet with him and Malinsky together, the Senator responded, "[O]h no, never. Never. I'd never do that." To the feds, that was portrayed as another effort to conceal the relationship Kruger had with Malinsky.

Kruger also spoke the project with (as per the FBI) "intimate associate" Michael Turano, who controlled the shell corporation through which Malinsky and others allegedly paid Kruger.

Michael Turano's mother, Community Board 18 District Manager Dorothy Turano, in 2001 opposed a proposed new mall at Belt Parkway and Flatbush Avenue--apparently the source of the now-standalone Toys 'R' Us--but this year expressed support for the Four Sparrows project as a whole but opposed a Wal-Mart. She was thus in congruence with Malinsky and Kruger.

Dorothy Turano, long described as Kruger's companion but now thought by some to have been a "beard," was not charged. The New York Times reported 3/20/11 on the curious relationship between Kruger and the Turano family:
Mr. Kruger vaulted the Turanos into his spheres of power and influence, prosecutors say, landing Dorothy a plum job and, later, funneling hundreds of thousands of dollars into her sons’ bank accounts to finance a $200,000 Bentley and pay down a $1.2 million mortgage.

The Turanos, in turn, provided the senator companionship, and prosecutors say the brothers helped conceal his growing payoffs from lobbyists and corporations.
The City Point contrast

As the Real Deal reported, after the charges surfaced in March, Malinsky's firm "was removed by Acadia Realty Trust as a partner at City Point, a mixed-use high-rise tower" in Downtown Brooklyn.

However, Acadia has spent big bucks, in a process that's questionable but apparently legal, to move City Point forward. As the New York Times reported this week, two years ago, Brooklyn Borough President Marty Markowitz went to bat for the project, supporting it among nearly 50 projects:
City Point received the financing, and around the same time, the lead developer on the project, Acadia Realty, gave $50,000 to a charity run by Mr. Markowitz.
That's not the same as (alleged) bribery, but isn't it in the same spirit? In both cases, money greases the wheels.
kruger-carl-et-al-complaint

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