Skip to main content

Wanting to ensure "we get the most out of every economic development dollar," de Blasio calls for more transparency and "the subsidy cost per job" (what about AY?)

“We have an unemployment crisis in this city that demands we get the most out of every economic development dollar," says Public Advocate Bill de Blasio, so he wants to make sure there's more transparency regarding projects funded by the New York City Economic Development Corporation (NYC EDC).

De Blasio said in a press release:
The new legislation to be introduced by Public Advocate de Blasio in the City Council would require EDC to report for each project site:
  • The number of jobs prior to receiving subsidies;
  • The projected number of jobs when subsidies end;
  • The current number of jobs; and
  • The subsidy cost per job.
The legislation is the first in a series of reforms to be proposed by the Public Advocate this month to spur job creation and expand opportunity for the middle class.
That's surely a worthy goal, but de Blasio is not exactly consistent, having not said a word about the failure to monitor the Atlantic Yards Community Benefits Agreement.

How many jobs have been created by Atlantic Yards subsidies, and at what cost?

Leveraging the IBO

As the Wall Street Journal reported yesterday, in Bill Focuses on Cost of Keeping Firms in City, the Public Advocate provided--um, leaked--a report that was to be released Tuesday by the New York City Independent Budget Office.

The IBO Fiscal Brief, Tracking the City’s Discretionary Economic Development Deal, analyzed 17 years of NYC EDC reports, but said they "do not allow us to produce credible estimates of the costs to the city of different projects or their effectiveness in creating or retaining jobs."

The Journal reported:
Some would like to see even more transparency. The EDC should do further analysis on whether subsides are even needed in the first place to lure or retain specific companies, said James Parrott, chief economist of the left-leaning Fiscal Policy Institute, a think tank.
"We don't really have the info needed to know whether the subsidies are necessary," Mr. Parrott said.
Parrott said in de Blasio's press release:
“This is an important step in clearly understanding City investments to spur job creation and economic growth. The public needs much better information on how the City subsidizes economic development and reliable data on the number and quality of the jobs being subsidized,” said James Parrott, Deputy Director and Chief Economist at the Fiscal Policy Institute. “The IBO wasn't able to assess whether city subsidies make any difference because the public doesn't have the information needed to make that determination.”
A NYC EDC spokesman told the newspaper:
"We fully enforce all reporting requirements, which include the change in number of jobs at a project site, projected employment growth and the amount of benefits a company has received to date."
However, de Blasio's press release seems to contradict that:
The law does not require EDC to disclose project site-specific employment data, making it difficult to gauge the effectiveness of subsidies, particularly for larger companies that employ workers at more than one site in the five boroughs.
The changing pattern and the Ratner angle

The report does not mention Atlantic Yards, for which the city--via the associated NYC EDC, a private agency contracted by the city and controlled by the mayor--provided a reported (by Forest City Ratner!) $205 million but then dialed back the total somewhat.

But it does mention Forest City Ratner's MetroTech project:
Changes in the Borough of Projects. The industries accounting for most of the larger projects—finance and information—are concentrated in Manhattan. As a result, Manhattan projects accounted for the lion’s share of new projects’ value each year for over a decade—in almost all but the earliest and latest years covered by the LL69/48 data. Prior to 1993, Brooklyn and/or Queens, or both, accounted for most of the value of projects being initiated each year. For example, with the initiation of projects benefitting Chase Manhattan Bank in Metrotech Center, 79.8 percent of new project value in 1990 was in Brooklyn. The following year, the start of a large project for American Airlines led Queens to account for 77.4 percent of new project value. Turning to the last few years, with the start of the two stadium projects, the Bronx and Queens together accounted for 74.9 percent of the value of projects begun in 2007. In 2008 through 2010 there were no new large-scale projects for finance or information firms, and the value of nearly all new projects comes from projects outside of Manhattan.

...Rather, Brooklyn projects accounted for 56.1 percent of the total value of Koch Administration projects, mainly because of large-scale projects for Chase Manhattan and Forest City (a real estate development company that developed Metrotech) in downtown Brooklyn.
In the Times

The Times's City Room coverage had the lame headline In Doling Out Economic Incentives, Bloomberg Looks Outside Manhattan, which was undermined by the text, which pointed to the more important issue of legitimacy:
Fewer than half of the projects – measured by their total value – have been in Manhattan during Mr. Bloomberg’s time in office, compared with almost three-fourths of the total under Mr. Giuliani and Mr. Dinkins, the report found.

And fewer than one-fifth of the economic incentives went to the finance and information industries under the Bloomberg administration, compared with about two-thirds under each of the two previous mayors.

But Bettina Damiani, who scrutinizes the city’s corporate incentives at Good Jobs New York, said that much of that shift was attributable to the generous deals the city gave to the owners of the Yankees and the Mets to build stadiums in the Bronx and Queens.

“The stadium stuff was such a blatant misuse of resources and did so little to address the unemployment crisis of the people in the Bronx,” Ms. Damiani said, referring to the Yankee Stadium incentives. “Subsidizing projects without a guarantee that it’s going to help low-income people is, to me, a problem.”
A Reuters article was headlined NYC firms got $898 million of aid but job data slim.

Comments

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…