Thursday, March 31, 2011

Nets start selling tickets for Brooklyn 2012; prices up; no PSLs (personal seat licenses), despite 2006 prediction; "Grand Opening Weekend" planned

The Nets are selling tickets for Brooklyn 2012, reports the Times:
Getting a full season’s jump on selling season tickets at Barclays Center, the Nets started their sales effort Wednesday. Available now only to current season-ticket holders are premium season passes, which include unlimited food, concierge service and other perks. They start at $99 per game and go up to $1,500.

The Nets’ chief executive, Brett Yormark, said the team started sales to gauge how many season-ticket holders would re-up for the move to Brooklyn. The passes will be offered in June to fans who do not hold season tickets, and the rest of the tickets will be available in the fall.

Higher prices

The Post adds:
Yormark said the average Nets ticket at Barclays Center would run $132 — more than double the $60 average for tickets to see the woeful Nets at Newark’s Prudential Center. In the 2006-2007 season, when the team was last a contender, the Nets’ average ticket ran $101.

The new Nets prices are expected to be among the NBA’s highest in their inaugural season in Brooklyn and comparable to what the Knicks will charge at Madison Square Garden.

Knicks tickets now average about $88, according to Forbes, but tickets are being jacked up an average of 49 percent next season following a three-year Garden renovation.
In 2006, when 170 suites were planned (as opposed to 104 now), the “blended average ticket price” was to go up 73% for regular-season games and 64% for playoff games by the 2009-10 season.

No PSLs, despite earlier plans

Notably, the Nets no longer plan Personal Seat Licenses (PSLs), which in both internal Forest City Ratner documents and a KPMG report from 2006 were supposed to bring $20 million in over two years in revenue from 4500 PSLs ($4444 each over two years).

That's likely a reflection of the recession, the drop-off in luxury spending, and the uncertainty of the product on the court.

Instead of PSL, three-year deal?

One commenter on NetsDaily observed:
Three year commitment = way out of PSL

I had my meeting on Monday at the Barclay’s Showroom and it was a great experience. Top notch, first class.

But the pricing is through the roof for the seats I’m in now. Like $300 more per game, per seat. Of course I’m sitting center court, 7th row, so I guess that will be expected.

In the end, I may actually be priced out of this place if I don’t want to be in the rafters. Think about the starting price of $99 for the All Access Pass ticket sections. That’s $99 per game, per seat so basically $200 per game x 44 games (3 preseason) = $8,800 × 3 year commitment = $26,400.

You are signing a contract to pay $26,400 for 2 seats for the next 3 years without knowing what the product will be on the floor.

To me, that’s just too much at this point. Maybe something will change, or I’ll have to get comfy with sitting upstairs.
Concerts coming

NetsDaily, with its pipeline to the promoters, reported:
In an interview with NetsDaily, [Nets CEO Brett] Yormark also said the arena will open in stages with the Nets Opening Night following a "soft opening" and a "Grand Opening". Not long after the Bruce Ratner-Mikhail Prokhorov partnership takes over the arena in the summer of 2012, it will be the site of the "soft opening," perhaps a reception; followed by a "Grand Opening Weekend" of concerts, the lineup of which will be announced in the coming weeks. Yormark declined to comment on who might be the opening act in the "Grand Opening" series of events, but Jay-Z joked at the Barclays Center ground breaking, "if that doesn't happen, then something's wrong. I'm not doing my job.
Suite sales rise slowly

Nets Daily reported that "[s]o far, 40% of the 104 suites have been sold." That's 41.6, or 42 suites.

If so, that's seven more suites sold since July 2010, nine months ago, when the total was 35.

The announcement

The Brooklyn Paper excitedly reprinted the press release (below), with a brief intro:
NETS All Access Season Tix For Barclays Center On Sale Today
All Access Season Ticket Buyers Also Receive First Rights to
Purchase Tickets for Non-NETS Events At the Barclays Center

–Unlimited Food with All Access Pass at NETS Games–
–No Personal Seat Licenses for NETS Tickets–

March 30, 2011

BROOKLYN, N.Y.—The first-of-its-kind All Access season tickets for NETS Basketball at the Barclays Center of Brooklyn are going on sale today for current season ticket holders. The team is distributing by mail premium-designed, five-panel ticket packages that showcases the NETS and the Barclays Center in preparation for the team’s relocation to Brooklyn for the 2012-13 NBA season.

Season tickets for these premium locations will feature the unprecedented NETS All Access Pass. This Pass will offer fans several distinctive elements, including the opportunity to purchase tickets before the general public to non-NETS events that will be staged at the Barclays Center. The All Access Pass can also be used for unlimited food, prepared by award-winning Levy Restaurants, at designated clubs and all fixed concession stands during NETS games; a first-time offering for a major New York metropolitan area sports team.

Additional All Access Pass benefits will include: a private entrance, dedicated VIP speed lines at all entrances, concierge service, early access into the Barclays Center, membership to the Barclays Center Business Alliance - a corporate networking program exclusive to sponsors and season ticketholders - and much more.

While All Access Passes are the first ticket offerings being made available, non-premium NETS season tickets for the Barclays Center will be implemented in different phases in 2011.

When all price points are unveiled, the NETS ticket prices will be available for everyone's budget. Two thousand tickets will be priced at $15 and under for each game, and an allotment of tickets for all events at the Barclays Center will be made available to the community, which was committed to in the Community Benefits Agreement of 2005.

Fifty percent of all season tickets will be priced at $55 or less per game, and lower level season tickets start at $65.

There will be no Personal Seat License (PSL) for NETS tickets.

All Access season tickets start at $99, with 20 price points overall. In an effort to give customers cost certainty amidst a trend of rising ticket prices, prices for the All Access premium season tickets will remain flat during the three-year required commitment.

“Our number one priority in pricing our tickets was to ensure that NETS games are accessible to everyone," said NETS CEO Brett Yormark. "As we unveil our first of many unique ticket options, our All Access Passes will provide our customers with unprecedented features and value in offering the finest experience in sports and entertainment worldwide. Brooklyn has long been an underserved sports and entertainment market, but we are excited to change that and launch the greatest ticket value for a major venue in the New York area. We look forward to an electrifying opening of the Barclays Center in 2012 and to being part of the continued renaissance of Brooklyn.”

Including NETS Basketball, the Barclays Center will have more than 200 events annually, including premier concerts, monthly major professional boxing cards, professional tennis, top college basketball and hockey, and family shows, such as Ringling Bros. and Barnum & Bailey Circus and Disney on Ice. To date, the Barclays Center has received commitments to host 149 events annually, and that list continues to grow.

Located atop one of the three largest transportation hubs in New York City, the Barclays Center will be directly accessible by nine subway lines and the Long Island Rail Road.

Current season ticket holder seat relocation is based on ticket holder tenure and current NETS game seating location in the Prudential Center.

About the Barclays Center
Scheduled to open in the summer of 2012, the Barclays Center will offer approximately 18,000 seats for basketball and up to 19,000 seats for concerts, and will also have 104 luxury suites, including 15 Brownstone Suites (16 seats each), 68 Loft Suites (10 seats each), 11 Cabana Suites, six Studio Suites, and four Party Suites. Suites are on sale. The arena will also include six clubs and restaurants.

Designed by the award-winning architectural firms Ellerbe Becket, (www.ellerbebecket.com) and SHoP Architects (www.shoparc.com), the Barclays Center will be one of the most intimate seating configurations ever designed into a modern multi-purpose arena, with unparalleled sightlines and first-class amenities.

In addition to Barclays, the naming rights partner, the Barclays Center currently has 12 major partners, including: ADT, Cushman & Wakefield, Stolichnaya, EmblemHealth, MetroPCS, MGM Grand at Foxwoods, Willis, Jones Soda, Haier America, Phillips-Van Heusen, Anheuser-Busch, and High Point Solutions.

Steel began to rise for the Barclays Center in November 2010, and currently portions of the upper concourse level are being constructed.

For more information on the Barclays Center,
log on to www.barclayscenter.com.

Forest City reports increased earnings, savings on Nets, small uptick on contracted arena revenue--and departure of Minieri

In a press release headlined Forest City Reports Fiscal 2010 Full-Year and Fourth-Quarter Results, Forest City Enterprises yesterday reported record earnings, though those earnings on a per share basis are down.

The parent of Forest City Ratner noted that the sale of the Nets was paying off, and that there was a modest increase in contractually obligated arena income.

The Real Deal also reported yesterday that Forest City Ratner president and Chief Operating Officer Joanne Minieri, with the company since 1995, had left for her own consulting venture. She also will continue to advise FCR.

Was Minieri nudged out in an effort to save a big salary--no replacement was announced--or was she simply itching to leave? It's tough to know, from the outside, but the developer has been trying to save on relatively small expenditures, such as $100,000 for an Independent Compliance Monitor.

Earnings results

From the press release:
EBDT (Earnings Before Depreciation, Amortization and Deferred Taxes) for the full year ended January 31, 2011, was $309.9 million, a new record for the company and a 2.9 percent increase compared with last year's $301.1 million. EBDT for the fourth quarter was $43.1 million, a 45 percent decrease compared with last year's fourth-quarter EBDT of $78.4 million.

EBDT for the fourth quarter and full year 2010 were impacted by a loss on early extinguishment of debt of $31.7 million ($0.16 on a fully diluted, per-share basis), related to inducement payments for the early exchange of a portion of the company's 2016 Senior Notes for Class A common stock, which occurred in the final week of the fiscal year.

On a fully diluted, per-share basis, full-year 2010 EBDT was $1.59, a 20.5 percent decrease from the prior year's $2.00 per share. Per-share EBDT for the fourth quarter of 2010 was $0.23, compared with $0.43 per share in the fourth quarter of 2009. Per-share data reflects new Class A common shares and the "if-converted" effect of convertible debt and convertible preferred stock issued in 2009 and 2010.
"With our fiscal 2010 results, we mark the end of our second full year of successfully navigating the worst economic and real estate market conditions most of us have ever experienced," CEO Chuck Ratner said. "As a result, we believe Forest City is a stronger company today, with a much-improved balance sheet, dramatically reduced development risk, and a fresh sense of optimism about the future."

He also cited the deal that closed a day earlier, selling 49 percent of retail properties in New York to Madison International Realty.

Net earnings were $58.7 million, or $0.34 per share, compared with a net loss of $30.7 million, or $0.22 per share, in 2009. Revenues for the year were $1.18 billion, a 4.4 percent decrease compared with prior year revenues of $1.23 billion.

Savings on the Nets

The company reported that the sale of the team to majority owner Mikhail Prokhorov is paying off:
The Nets provided a pre-tax EBDT increase of $62.9 million, primarily due to the gain on disposition of partial interest in the Nets of $31.4 million and decreased losses of $31.5 million due to a decrease in Forest City's share of allocated losses as a result of new operating agreements entered into upon sale of the controlling interest of the team on May 12, 2010.
Openings in 2010

During 2010, Forest City opened four projects, one of which, as noted below, relies significantly on governmental tenants:
East River Plaza, a 527,000-square-foot big-box retail center - the first of its kind - in Manhattan.

The East 4th and West 4th office buildings at the mixed-use Waterfront Station project in Southwest Washington, D.C. The two buildings total 631,000 square feet of office and ground-level retail space. The office component is fully leased to the District of Columbia for governmental offices, and 89 percent of the retail space is also leased.

The Village at Gulfstream Park, a 511,000-square-foot mixed-use retail center in Hallandale Beach, Florida.

Presidio Landmark, a 161-unit apartment project in the Presidio National Park in San Francisco. The project's two components are a 154-unit adaptive re-use of a historically significant former U.S. Health Service hospital, and a small number of new, three-story townhomes, all built to a high standard of sustainability.
Under construction
At the end of fiscal 2010, Forest City had four projects under construction with a total project cost of $1.7 billion at the Company's pro-rata share ($2.7 billion at full consolidation). Three of the projects are in New York: 8 Spruce Street (formerly Beekman), a 903-unit residential tower in Manhattan, Westchester's Ridge Hill, a mixed-use retail center in Yonkers, New York, and the Barclays Center arena, the future home of the NBA Nets in Brooklyn. The fourth is Foundry Lofts at The Yards in Washington,D.C.

...Work continues at the Barclays Center arena at Atlantic Yards, with steel now rising several stories above ground level at the site. With the building taking shape, the reality of major league sports returning to Brooklyn has helped generate additional momentum and enthusiasm for the project. Approximately 55 percent of forecasted contractually obligated revenues are currently under contract for the arena, which is expected to open in late summer 2012.
Six months ago, in September 2010, the figure was about 51 percent of forecast contractually obligated income for the arena, indicating a modest increase.

The L Magazine loves the new Freddy's Bar

Wednesday, March 30, 2011

Seeking cash, Forest City Ratner sells 49 percent of Atlantic Terminal/Center malls, other retail and entertainment properties

In an effort to "create liquidity" (aka raise cash), Forest City Ratner has sold a a 49% stake in "15 mature retail and entertainment properties" in the New York City area, including the Atlantic Terminal and Atlantic Center malls in Brooklyn.

The buyer, Madison International Realty, self-described as "The Leading Liquidity Provider to Real Estate Investors Worldwide," will invest $172.3 million in cash. The properties are valued by this transaction at $851.5 million, including $499.9 million of debt. Forest City will continue to own a majority 51% stake, and manage the properties.

Is that a good deal for Forest City? Did Madison get a bargain? The only context I see is from the Wall Street Journal, in a short article today headlined Ratner Sells Shopping-Center Stake:
The sale to Madison International Realty comes as Forest City has been hobbled by major development projects that were started at the market's peak, when prices and expectations were far higher than they are today.
Those "major" projects include Atlantic Yards, the Ridge Hill project in Yonkers, and the Beekman Tower in Lower Manhattan.

The press release
Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) and Madison International Realty, LLC today announced the creation and closing of joint ventures for ownership of a portfolio of Forest City's urban retail centers in the New York City metropolitan area.

Under the terms of the joint ventures, an affiliated entity of Madison International Realty will enter into existing partnerships in 15 mature retail and entertainment properties that are valued by this transaction at $851.5 million, including $499.9 million of debt. Madison will receive a 49 percent equity interest in the partnerships in exchange for an investment of $172.3 million in cash. Subsidiaries of Forest City will retain 51 percent equity interest, will serve as asset and property manager, and will manage leasing for the joint ventures. The transaction's implied valuation represents a 6.9 percent cap rate on 2010 net operating income for the properties.

"We're pleased to complete these joint ventures with Madison International Realty," said Charles A. Ratner, Forest City president and chief executive officer. "Today's announcement demonstrates both the significant value represented in our mature portfolio, and our continuing ability to create liquidity by monetizing select elements of that portfolio. This transaction also positions us with an experienced and well-respected real estate investor in Madison, and we look forward to exploring other mutually beneficial opportunities with them in the future. I want to congratulate our entire transaction team, led by Bruce Ratner and Andy Silberfein in our Brooklyn office, for their creativity and hard work in making these joint ventures a reality."

"These are high-quality, productive specialty centers in good locations in one of the strongest markets in the country," said Ronald Dickerman, president and founder of Madison International Realty. "We believe these assets have the ability to generate above average NOI growth in this under-retailed market. We are also pleased to establish this relationship with Forest City, a premier developer, owner and manager of commercial and residential real estate. They are committed to New York as a core urban market and are continuing to create value with great projects here and across the country."

The properties included in the transaction are: the 42nd Street Retail and Entertainment Complex and Harlem Center (retail component) in Manhattan; Atlantic Center, Atlantic Terminal (retail component) and The Heights in Brooklyn; Queens Place, Steinway Street Theatres and Shops at Northern Boulevard in Queens; Shops at Bruckner Boulevard, Castle Center and Shops at Gun Hill Road in the Bronx; Shops at Richmond Avenue and Forest Avenue Cinemas on Staten Island; and Columbia Park in North Bergen, New Jersey.

Federal agency stonewalls Freedom of Information Act requests on Forest City's EB-5 green card scheme, waits four-plus months to send denial letters

Will we ever find out how exactly federal authorities gave preliminary approval--and more--to the astounding efforts to get Chinese millionaires to invest in Atlantic Yards in exchange for green cards?

Not that likely.

During a crucial four-month period when developer Forest City Ratner and the New York City Regional Center successfully recruited immigrant investors in China and South Korea, the United States Citizenship and Immigration Service (USCIS) stonewalled my Freedom of Information Act requests in a a very odd fashion.

The USCIS responded to me in letters dated 10/22/10 and 11/2/10, as well as two undated letters.

However, it did not mail those letters until early March, some four months later, and gave no explanation for the delay.

(Was the belated contact made in anticipation of National Freedom of Information Day, held March 16 in honor of James Madison’s birthday?)

Moreover, the explanation given for three denials of my FOIA requests--that they were not of journalistic and public interest--seems belied by another letter that granted a request for expedited treatment, apparently because my request was of journalistic and public interest.

While that request was granted, I have not received the records at issue.

Little scrutiny

The denials essentially insulated the parties from another level of journalistic scrutiny by me, and potential scrutiny by others.

The story is juicy but complex, and while there have been quick hits in the New York Post and the New York Daily News, no news organization has dug into the story. The New York Times has virtually ignored EB-5, papering over the controversy in two paragraphs.

The Wall Street Journal scooped me in uncritical coverage apparently fed by the developer, then followed up by ignoring irrefutable evidence, raised not only by my reporting but also by Reuters, of deceptive marketing.

The background


In September, I began researching efforts by the New York City Regional Center (NYCRC), a federally-authorized investment pool working with developer Forest City Ratner, to recruit immigrant investors for purportedly job-creating projects under the EB-5 program.

The NYCRC, which had already been authorized to seek investors in several business sectors (and had recruited investors for projects at the Brooklyn Navy Yard), had successfully petitioned the United States Citizenship and Immigration Service (USCIS) to include the Atlantic Yards project.

They did not ask to include the "Brooklyn Arena and Infrastructure Project"--said to consist of the arena, infrastructure, and a new railyard--as marketed to immigrant investors.

Why? Perhaps because 1) there's no such thing and 2) the arena's already funded.

Documents sought


In September, I attempted to get documents from the USCIS under the federal Freedom of Information Act (FOIA).

My requests for documents, as well as expedited treatment and fee waivers, were filed in September and October 2010.

The specifics


In my first letter, dated 9/27/10, I made several records requests, all relating to the work of the NYCRC.

Knowing that the USCIS had earlier approved the requested designation of the NYCRC as a Regional Center under the Immigrant Investor Pilot Program, I sought a copy of the "June 18, 2008 business plan and job creation analysis and multipliers reflecting the development of various sample projects."

Given that developer Forest City Ratner and the NYCRC planned to seek immigrant investors to invest in the NYCRC to support the Atlantic Yards project in Brooklyn, I requested copies of updates to the NYCRC's business plan, and documents that explain the connection between that planned investment and jobs.

I also sought a copy of any representative Form I-526, and associated documents, filed by an immigrant investor regarding an investment in the NYCRC to support the Atlantic Yards project. I noted that I did not seek any personal information, which can and should be redacted, but rather sought "records that indicate the connection between such an investment and retention or creation of jobs."

I also filed a request for a waiver of fees, as is typically granted to journalists.

USCIS response

I got a quick response, in about a week.

My requests were divided by the USCIS into two parts--one regarding NYCRC documents in general and one regarding the I-526 request. Both requests were rejected, as was my request in each case for fee waivers.

I filed appeals on 10/5/10.

On 10/18/10, I wrote to update and amend my previous requests.

I noted that, according to a 9/23/10 letter from USCIS to the NYCRC, the latter had successfully requested to amend its designation as a regional center to include the Atlantic Yards project, having sent such documents as a business plan, job creation methodology, economic impact report and sample organizational documents.

I requested "copies of documents that help describe how the EB-5 investment is expected to create jobs, when combined with private and government funds."

The response


The USCIS responded to those requests--two for records, two for fee waivers--in four separate letters.

Two letters were undated, one was dated 10/22/10, and the other was dated 11/2/10. Presumably the undated letters were prepared at around the same time.

However, three of those letters were mailed 3/1/11; the other was mailed 3/3/11. (Click on graphic to enlarge, and also see below.)

The rationale: not of public interest


My appeal for access to records pertaining to I-526 forms was denied, according to the letter (below), because I did not sufficiently demonstrate that my request involves "an urgency to inform the public about an actual or alleged federal government activity (if you are a person primarily engaged in disseminating information)."

My request for a waiver of fees regarding records pertaining to I-526 forms was denied, as the agency stated, because "We are unaware of any significant public understanding of government operations or activities that would result from the release of the records you seek."

My request for a waiver of fees regarding NYCRC records was denied because, as the agency stated, "We are unaware of any significant public understanding of government operations or activities that would result from the release of the records you seek."

Very strange.

Request granted, not fulfilled

However, my request for expedited treatment regarding such records was granted in the 11/2/10 letter, "based on additional information obtained in reviewing your appeal."

The "additional information" implies that the USCIS did reconsider whether any "significant public understanding" was at issue.

(I had sent information about the controversy over the potential EB-5 funding, which had been covered in my blog, my Huffington Post coverage, the New York Post, and the New York Daily News. "As far as I can tell, no other EB-5 project has generated such public discussion and concern," I wrote.)

However, I have not received any records.

The bottom line

I was able to do a significant amount of reporting without the governmental records, as detailed in my Anatomy of a Shady Deal series and other coverage.

However, some information is still missing. How exactly are they calculating jobs? (We have some hints, from a web site set up by EB-5 marketers in South Korea.)

Indeed, the “urgency to inform the public about an actual or alleged federal government activity, if made by a person primarily engaged in disseminating information,” is greater than ever.

USCIS EB-5 letter C

USCIS EB-5 letter B

USCIS EB-5 letter A

EB-5 letters, mail dates

Reconsidering Jane Jacobs: a program tomorrow at the Museum of the City of New York

Tomorrow, Thursday, March 31 at 6:30 pm, the Museum of the City of New York will host a panel titled Reconsidering Jane Jacobs. The blurb:
Fifty years after publishing The Death and Life of Great American Cities, Jane Jacobs is perhaps the most widely read urbanist ever. She transformed urban planning and with it our cities and neighborhoods. And yet, we no longer live in the world of Death and Life, even as urbanists of all political persuasions claim Jacobs's mantle and all but deify her. Max Page, co-editor of Reconsidering Jane Jacobs (APA Planners Press, 2011), David Freeland, author of Automats, Taxi Dances, Vaudeville: Excavating Manhattan's Lost Places of Leisure (New York University Press, 2009); Mary Rowe, Urban Fellow, Municipal Art Society of New York; and Samuel Zipp, author of Manhattan Projects: The Rise and Fall of Urban renewal in Cold War New York (Oxford University Press, 2010) go beyond the usual discussion of Jacobs and take an unsentimental look at her continuing relevance—or lack thereof—to planning in New York today.
Reservations required: 917-492-3395 or e-mail programs@mcny.org
$6 museum members; $8 seniors and students; $12 non-members
$6 when you mention Atlantic Yards Report

Museum of the City of New York
1220 Fifth Avenue at 103rd Street
New York, NY 10029

Tuesday, March 29, 2011

Victory for the "Atlantic Yards" meme: even MTA spokesman inaccurately uses term to describe Vanderbilt Yard

From City Hall News:
"We are in contract to sell the development rights over Hudson Yards and Atlantic Yards, two of our biggest and certainly most valuable properties," said Aaron Donovan, a spokesperson for the MTA. "In addition, we are in the midst of a systematic investigation of our office space needs. We've issued a request for proposals to solicit the help of brokers who may be able to help us identify the sales potential of some of our office sites."

Actually, the Metropolitan Transportation Authority property, 8.5 acres, is called the Vanderbilt Yard.

By contrast, Atlantic Yards is the brand for a 22-acre site that includes formerly public streets, formerly private property, and some private property that neither the state nor developer Forest City Ratner controls.

Can a prefab skyscraper work well with the urban landscape? "You can, but it's not been done yet," professor tells Brian Lehrer

The biggest Atlantic Yards news this morning on the Brian Lehrer Show was the blunt statement by Rafael Cestero, Commissioner of the city Department of Housing, Preservation, and Development, that his department felt an additional housing subsidy request by Forest City Ratner "was not a good public investment."

But there were some enlightening moments in another segment, Pre-Fab At Atlantic Yards, notably observations that it's difficult to create an esthetically satisfying modular tower, and Forest City Ratner is working in uncharted territory.

Lehrer started off the discussion by pointing out that the developer is considering a 34-story modular tower, the tallest in the world. Modular construction is untested at this height and, while it could cut construction costs in half, unionized construction workers would lose many jobs they expected.

"Charles Bagli joins me now," Lehrer said. "He's the reporter at the New York Times whose been covering the many twists in this troubled development project."

Actually, Bagli's covered the project quite episodically, and was never seen to a court hearing or public hearing of the Empire State Development Corporation. (He did go to some hearings and meetings of the Metropolitan Transportation Authority.)



What's in the plan

"The steel is already rising for the arena, but there's another part of the project that people were promised, 6300 some [actually 6430] units of housing, at least 30 percent of which would be for poor, working class, and even middle class New Yorkers. They would be subsidized apartments," Bagli said.

"Ratner's had a difficult time getting the financing for even the first of those residential buildings," he added. "So, in the course of sorta scrambling around, he came upon this idea of doing a modular building, as a way of cutting down his labor costs, his construction costs, and making good on his promise to build housing."

"But it presents a number of challenge, both technology wise, and, on the other hand, this project was supposed to provide thousands and thousands of construction jobs. This is one of the reasons why state and the city agreed to provide the project with about $300 million in direct subsidies."

The city now calculates that at $279 million, though the numbers are questionable.

Fewer jobs

Lehrer asked how many fewer workers.

"It's hard to say, but it would be substantially fewer," Bagli said. "The 17,000 jobs, they add every year so many thousands of jobs, and it all adds up to 17,000. The actual number of workers at any one time is considerably less. "

First, it's job-years and second, it doesn't. The 17,000 figure is only if the project is built as proposed and even with that, the estimate may be way overoptimistic.

The modular construction jobs, Bagli said, might be union jobs, "but the rate of pay is much lower in a factory than it is out on a construction site... maybe $34 an hour in wages and benefits versus $84 an hour."

"I know that the Ratner team has looked at a variety of ways of doing this: one is do that sort of factory shop rate; another is to have a mix of workers--some would be on-site carpenters, construction workers, some getting in neighborhood of $80 an hour, and then a bunch of factory workers. They have not looked at doing it all on-site, construction rate."

The urban design perspective

Aseem Inam, associate professor of urbanism at Parsons The New School of Design, was asked about prefab.

"Prefab has been around for a very long time, including high rises... one of the first skyscrapers to be built with prefab elements was the Empire State Building," Inam responded. "The most famous prefab multi-story apartment building is from 1976, Habitat 76, in Montreal... so the question becomes, why has it not caught on? One of the reasons is because of a certain stigma to it, in terms of people wanting to actually live there."

"I think one has to be very cautious not to obsess only with the technology, but the design of it, both in terms of the people who will live there, and the neighborhood," he added.

Lehrer noted that the tallest current modular building is a 25-story dormitory (right) in England. "Are there structural concerns?"

Inam didn't answer the question but focused instead on the design: who's going to live there and what's the neighborhood going to look like.

"Can you make a good looking prefab skyscraper that works well with the urban landscape?" Lehrer asked.

"You can, but it's not been done yet," Inam responded. "The obsession with cost and technology, which is legitimate, is at the cost of the design." He noted that, with a student dormitory, the residents have no choice.

I'd point out that those seeking subsidized housing also often have no choice. The challenge for Forest City Ratner would be to rent market-rate units in the pre-fab buildings. Or maybe the rents would be so low--thanks to new construction techniques--that they'll draw people.

Ratner's record

Lehrer returned to Bagli and asked, "Politically, who trusts Bruce Ratner to be the first person to build an esthetically pleasing prefab tower that fits in with the urban landscape?"

"He definitely up to this point has not scored a lot of points on esthetics," Bagli responded. "Mr. Gehry, the world famous architect that started with the project, of course, is gone now. His arena was redesigned by another firm."

Note that that's Forest City Ratner's record in Brooklyn. In Manhattan, Frank Gehry designed FCR's Beekman Tower, and Renzo Piano did the Times Tower.

"In the abstract, the notion of building modular housing is a good one, because we're going to need more housing and theoretically, it could be more cost effective," Bagli added. "But I also wonder, as you were talking about the dormitory in England, I see how the steel frame system works for dormitories, or maybe even for one-bedroom apartments, but how do you start building two- and three-bedroom apartments with that? It really complicates the logistics, I'd imagine."

Subsidy issues

Lehrer asked if the city could reevaluate subsidies in light of the reduction in construction costs.

Bagli pointed out that the "cash subsidy of $300 million from the state and the city has already been delivered," but Cestero was referencing standard housing subsidies.

"At Atlantic Yards, Mr Ratner has tried to get an additional sum of money to make his project work financially, and the city has turned him down," Bagli said. "Who knows what will happen in the future."

Presumably, Bagli's "make his project work financially" referred to Ratner's perspective on desired returns; the city made its own evaluation. And Bagli's "who knows" statement leaves open the opportunity for Cestero's successor, nudged by Mayor Mike Bloomberg, to add new subsidies.

"He does have deadlines, the first building has to be started by 2013. They had told us earlier that they would start it by this time," Bagli added. "Now they're talking about starting the first residential building by the end of the year. But I think that's really still up in the air.

New modular business?

Lehrer asked if modular construction could be a locally-based export business.

Inam was skeptical. "One of the biggest costs of modular is transportation. So where the factory is located," he said, "there's a limitation of how far they can supply those modular units."

"The construction industry is changing, in terms of cost and technology," he added. "One of the things the union might consider is training the union members for these new kind of jobs. Some of them may be more high skilled: using computers to design and build these kind of units."

Betraying the unions?

"The construction unions were among the biggest supporters of the Atlantic Yards project when it was going through the approval process. because they were expecting all these jobs," Lehrer asked. "Has he sold the unions down the river with this new plan, and I know the opponents of Atlantic Yards are out there saying, if this is how he treats his friends, dot dot dot."

"Well, I think that, at least initially, there's a sense of betrayal there, you went to all these stormy Community Board meetings, that went on for years, you had the opposition with their chanting, and then you had the construction workers, these brawny guys, taking up a lot of chairs, and they're chanting jobs, jobs, jobs,' so there is a sense of betrayal, at least initially," Bagli responded.

Hold on. Most of those meetings were hearings sponsored by the Empire State Development Corporation, as the project evaded the city's land use review project, so Community Boards had no official role and a very light presence. Bagli himself never went to a meeting in Brooklyn, as far as I remember.

And the construction workers weren't just shouting about jobs. They were shouting nasty things about Atlantic Yards opponents like "[Daniel] Goldstein's got to go."

"On the other hand, when you're talking about building this, it is sort of an interesting opportunity for modular housing," Bagli said in closing, "because he's going to build, what, 17 buildings there, and he's looking for a factory in Long Island City, where you would be creating these steel-framed boxes that would be stacked on top of each other."

"He doesn't have to go out to Long Island, he doesn't have to go out to Jersey. That's if you can make this cost effective. The taller you go, the more you lose some of the gains as opposed to regular construction."

On Brian Lehrer, HPD Commissioner says FCR's request for additional housing subsidy "was not a good public investment"

Today on WNYC's Brian Lehrer Show, the host asked Rafael Cestero, who's leaving his post as Commissioner of the Department of Housing, Preservation, and Development (HPD), about the report that HPD had declined Forest City Ratner's recent request for an additional $10 million in additional subsidies--beyond the $14 million for 150 units--for the first residential building.

"One is, we have a set of programs that we use across the city... that fall within certain subsidy parameters that make sense for taxpayers and make sense for the city," Cestero responded. "We felt that the additional subsidy that Forest City was requesting... didn't meet those parameters and, frankly, that we felt was not a good public investment to go beyond what we have already committed."

"We want to see housing built there. We're all deeply committed to seeing not just the arena built, but to see... the affordable housing built," he added, "but we think the parameters that we've laid out, the program that we've laid out, allows that project to go forward."

Clearly, for Forest City Ratner, it doesn't. They want a better deal than other developers.

Modular means recalculation?

Lehrer asked if Ratner's costs would be much less, perhaps cut in half, would the city recalculate and withdraw some public subsidy?

"We would evaluate it at the right time," Cestero responded. "Our subsidy numbers are constantly re-evaluated in any deal we're negotiating, until the deal closes. If costs come down, and we're able to shift resources, then we'll do that... At this point, we don't have specific numbers on Tower 2, in the Forest City plan, to make that determination."

Believable? Feds told $249M in immigrant investor (EB-5) funds would create 3705 construction jobs, 350 in retail, 1786 in art/entertainment

How can Forest City Ratner and its partner, an investment pool called the New York City Regional Center (NYCRC), claim that 498 Chinese (and Korean) millionaires seeking green cards would create 7696 jobs by investing a half-million dollars each ($249 million total) in the Atlantic Yards project?

It's one of the most preposterous claims in the entire saga of Forest City Ratner's effort to gain a low-interest loan, saving perhaps $191 million, via the federal government's EB-5 program. Under the program, investors and their families gain green cards in exchange for purportedly job-creating investments, ten per investor.

Now there's new evidence undermining the claim, given that the claimed job total--including jobs in construction and entertainment--can't reflect how the money would be used.

Job totals

A graphic (left, and translated below) on the web site of Kookmin, a South Korean immigration agency working with the NYCRC, suggests, for example, that the investment would create 3705 construction jobs and 1786.5 jobs in "art, entertainment."

Those numbers defy common sense--the entertainment jobs, for example, would have to be tied to the arena.

But the money isn't needed for the arena.

I'll explain more below, but first let's review the concept of jobs for green cards.

Graphic from NYCRC.

The common-sense analysis

First, the way jobs are calculated under the EB-5 program can defy common sense.

After all, if $249 million could create nearly 7700 jobs, the full $4.9 billion Atlantic Yards project should create 20 times as many jobs--a preposterously enormous number.

(Last month, we learned there were 150 workers at the site.)

But the EB-5 immigrant investor program need not comport with common sense.

Avoiding common sense, part 1: commingled funds

Regional centers, private investment pools authorized by the federal government, can package immigrant investor funds with other funds and credit the total with job creation. That's what they're claiming in this case: $1.448 billion (including the arena, infrastructure, and a new railyard), not $249 million.

It's plausible to credit the total if the immigrant investor funds serve as seed money to get a project off the ground.

In this case, Empire State Development Corporation officials admit the nearly $1 billion arena--in which investors are told their money would go (see above)--would go forward with or without immigrant investor financing and that no new jobs would be created.

But federal guidelines are vague; lawyers for the New York City Regional Center (NYCRC) have written that "The amount is not restricted to EB-5 capital but may include other sources that will be invested roughly at the same time and for the same purpose."

If the NYCRC can claim job creation based on the entirety of the $1.448 billion "project" in which the would-be immigrants are investing, not simply the $249 million, that suggests a very dubious practice.

After all, what's to stop any developer from refinancing a land loan--as FCR is doing--and claiming job creation based on all the money in the larger project?

(Another Forest City Ratner executive said recently that "We don’t know where those proceeds are going to go.")

Avoiding common sense, part 2: no counting, generous methodology

A 9/17/09 memo from Empire State Development Corporation Chairman Dennis Mullen, estimated impacts from the full project over 30 years:
3998 permanent jobs in New York City and 4277 jobs in New York State, inclusive of New York City, as well as 16,427 new direct job years from construction and 25,133 total job-years.
Keep in mind that, over the official ten-year buildout, that's 1643/2513 construction jobs a year. Over 25 years, the number of construction jobs would be far fewer. And, as we know, the numbers at the site are far smaller.

With EB-5, there's no need for counting actual jobs.

In practice

It doesn't look to me that the Atlantic Yards arena bonds, for example, count as "roughly at the same time and for the same purpose" as the EB-5 funds. As noted, the ESDC acknowledges that the arena would proceed with or without the immigrant investor funds.

So the premise of bundling the EB-5 funds with the arena funds strikes me as bogus.

However, I was unable to get guidance from the United States Citizenship and Immigration Services (USCIS), the agency that oversees investment immigration.

Calculating the jobs

FCR and the NYCRC are claiming that the $1.448 billion "Brooklyn Arena and Infrastructure Project" would create 7696 jobs. And they need not count the jobs but simply can submit an economist's report.

It still defies common sense. There is no "Brooklyn Arena and Infrastructure Project." It's supposed to include the arena, related infrastructure, and a new railyard.

What they told the feds

But what are the official projections? As described below, in numbers I assume were submitted to the federal government, the regional center projected that most jobs "created" by the investment would be in construction as well as arts and entertainment.

There seem to be two possible explanations.

The less likely one is that the developer and the New York City Regional Center actually submitted the "Brooklyn Arena and Infrastructure Project" for evaluation.

If so, they're already violating their promise, because Forest City Ratner admits that the money wouldn't necessarily be used for the "Brooklyn Arena and Infrastructure Project" as pitched to immigrant investors.

More likely, they simply got the overall "Atlantic Yards Project" approved, and the job numbers are pro-rated from the job totals for the project as a whole.

If so, the economic report submitted to the federal government--part of a series of documents not publicly released--was generic, applying a "multiplier" to the entire sum of money estimated for the project. And that defies reality.

Crediting arena jobs to immigrant investors

Based on the chart, as translated below by a translator I hired, we have some clues.

According to the chart, "The economic report of the project incorporates the RIMS II method to measure job creation, and the job creation index is approved by U.S. Citizenship and Immigration Services as follows."

That includes 3705 construction jobs, 350 retail jobs, and 1786.5 jobs in arts and entertainment.

That sounds a lot like they're crediting the immigrant investor funds with jobs in concession stands and jobs in the circus.

That's ridiculous.

Muddying the "project"

The Kookmin web site also contains the following quote from then-Governor David Paterson: "This project will create thousands of new jobs. Together with the city, the state, and many other federal offices, we give our strong support to the project.”

His quote had nothing to do with the project as pitched to immigrant investors. It's yet another version of the weasel words and ambiguous language I described in December.

Rhetoric from Paterson and Mayor Mike Bloomberg supporting the Atlantic Yards project as a whole has been transposed to the "Brooklyn Arena and Infrastructure Project."

The modular complication

The chart, and the EB-5 pitch, were produced before Forest City Ratner's plans for potential modular construction of Atlantic Yards towers surfaced.

That would further reduce the number of workers at the site. But it wouldn't affect the economist's report, because it uses approved formulas that surely don't take into account reduced staffing as a result of modular construction.

Notes on the chart

Note that the chart in Korean identifies the second column as number of people, but no units were offered for Total Production, Total Income, and Production per capita.

As for the category of Waste Administration, it was translated from "Administration, waste disposal supervision." That sounds a bit like Sanitation, but the translator said no. So those 266 jobs remain unclear.

Also, the category Housekeeping was translated from "Housework."

On the Brian Lehrer Show today, "Pre-Fab At Atlantic Yards," with the Times's Bagli and a professor of urbanism

On today's Brian Lehrer Show, from 10-noon on WNYC, one of several segments, probably a later one, will be Pre-Fab At Atlantic Yards:
Economic savings, timeliness, and engineering safety are some of the issues surrounding the Atlantic Yards project in Brooklyn. New York Times reporter, Charles Bagli, discusses Forest City Ratner's plan to use pre-fab modular construction for some of their building at Atlantic Yards. Aseem Inam, professor of urbanism at Parsons, joins the conversation and discusses pre-fabricated construction from an urban design point of view.
My comment:
Beyond the economic savings to the developer, and the reduced numbers (and thus income) of construction workers, consider that modular construction also would have a significant impact on the projected tax revenues to the city and state from Atlantic Yards construction.

Those rosy projections of tax revenues have already been diminished by delays in the project, notably in the planned office building. They would be further diminished if Atlantic Yards is not built out to the size approved, as a significantly smaller project would pass state muster.

Those reasons are why City Council Members Letitia James and Brad Lander, at a committee hearing earlier this month, pressed NYC Economic Development Corporation President Seth Pinsky on the need for a new cost-benefit analysis. Pinsky resisted the idea.

More here.

Monday, March 28, 2011

So, the Prospect Park Alliance actually welcomed Bruce Bender's help to get state funding via Carl Kruger for a new skating rink

In a letter to the New York Post headlined Above board, Emily Lloyd, President/Administrator, Prospect Park Alliance, Prospect Park, writes:
“Kruger Crony Leaned on Me for Vote,” (March 17) states that Forest City Ratner Vice President Bruce Bender sought funding for the construction of a new skating rink in Prospect Park without having been requested to do so by the Prospect Park Alliance.

Alliance staff did ask Board Member Amy Bender to help advance our request for state funding for the skating rink, which is currently under construction. Bender’s husband, Bruce, was trying to assist the alliance in obtaining state-funding toward a major public project.

Alliance staff who are involved in public fundraising were informed about those efforts. All proposals for public funding are requested in an appropriate and transparent way.
Wiggle room

I'd point out that there's a little wiggle room there. Alliance staff asked Amy Bender for help. They didn't necessarily ask her to ask her husband. But perhaps that was implied. And it certainly was welcomed, according to Lloyd's letter.

Also note that the article cited, “Kruger Crony Leaned on Me for Vote”, doesn't actually say anything about the Prospect Park Alliance. Rather, a March 16 Post article, headlined Prospect Park group rage at 'Kruger' exec, began:
A top Atlantic Yards executive who requested state funds for Prospect Park's skating rink from embattled state Sen. Carl Kruger was never asked to do so by the park's fund-raising group -- and now park advocates are furious at being linked to the corruption scandal, sources told The Post.

"He has dragged our name through the mud," fumed a Prospect Park Alliance source about Forest City Ratner Vice President Bruce Bender, whose conversation with Kruger was featured in a federal criminal complaint against the Brooklyn Democrat.
The claim that Bruce Bender wasn't asked is not inconsistent with Lloyd's statement. Prospect Park Alliance board members may not have agreed to have Bruce Bender raise funds for them, though some might have recognized that asking Amy Bender would involve her husband.

Alliance looking bad?

No Land Grab's Eric McClure comments on Lloyd's letter:
We're not sure whether this makes it better or worse. The fact that the Alliance would ask the developer of New York City's most-controversial real estate boondoggle, which is soaking up hundreds of millions in those precious state funds, to lobby on their behalf doesn't show particularly good judgment.
I'd add that the Alliance might not want to be involved in dialogues like these, as described in federal charges.

"The Vice President said he needed a 'combo of two projects... the park and Carlton Avenue Bridge." Kruger said "the bridge is out," and asked Bender to choose:
The Vice President said that he did not know and that "this" was "bad." KRUGER said, "I guess the park, fuck the bridge." The Vice President said that "my dilemma is as you know, I don't mind fucking the bridge, I can't fuck it right now, I've got to leverage that bridge, what's my value?"

In the Record, Nets CEO Yormark says arena concert schedule coming soon; also, some lingering AY controversies lightly described

In the Record, Nets' new home moving forward, John Brennan quotes Nets CEO Brett Yormark, regarding a big announcement:
We’ve been talking to artists and promoters, and the biggest names in the business want to play here,” Yormark said during a tour of the arena site last week. “I think our opening-month celebration is going to be unprecedented. When we put out the artists’ names that are going to appear here. … Everyone sees the movement in Brooklyn. They understand that this is going to continue the renaissance in Brooklyn, and they’re embracing it. They want to be a part of it.”

Yormark has an ace in the hole when it comes to performers — music entrepreneur Jay-Z has a minor stake in the Nets franchise, and his wife, BeyoncĂ©, is a major recording star. The concert schedule that will serve as the “soft launch” for the arena, and the opening date for the Nets should be announced soon, Yormark said.
About those controversies

A sidebar, headlined Continuing controversy, mentions some of the clouds over the project:
  • the charges against state Sen. Carl Kruger and lobbyist Richard Lipsky, as well as Forest City Ratner executive Bruce Bender's supplication for subsidies with Kruger
  • potential plans for modular construction of housing, angering unions
  • Forest City Ratner’s EB-5 efforts
  • and an ongoing lawsuit regarding the project timetable
About EB-5

The EB-5 paragraph:
Forest City Ratner’s use of a federal program that attempts to lure hundreds of millions of dollars in investment to projects such as Atlantic Yards also has been criticized, because the investors — in this case, mostly from China — gain a fast-track toward obtaining green cards for themselves and their families. The program is supposed to reward those who create or save jobs in the United States.
Actually, it's been criticized, but not because investors gain a fast track. That's a fact of the EB-5 program, which, while not uncontroversial, is a legitimate response to similar efforts by other countries.

The EB-5 program has been criticized because no new jobs would be created, and it's highly dubious any would be saved, thus evading the spirit if not the letter of the law. Also, the marketing has been clearly deceptive.

Behind the Bloomberg administration's CityTime scandal: budget director Mark Page (who helped steer the revision of Forest City Ratner's MTA deal)

Also see Michael D. D. White's Noticing New York coverage.

In Behind Troubled City Payroll Project, Lax Oversight and One Powerful Insider, the New York Times digs into a black mark on the Bloomberg administration:
But the payroll automation project, known as CityTime, has instead become a major embarrassment for the Bloomberg administration, first ballooning to $700 million and then resulting in federal criminal charges and multiple investigations that could dog the mayor for years.

Last week, Deputy Mayor Stephen Goldsmith declared what had become obvious: the city cannot rely on outside consultants to monitor multimillion-dollar technology contracts, which it had done with CityTime. He added that the city would create a new office inside City Hall to do so.

An examination of the events that led to the CityTime scandal reveals lax oversight, mismanagement and a basic failure to control costs.

It also showed that much of the fervent drive to install the system could be traced to the determination of one powerful administration insider: the budget director, Mark Page.

...Mr. Page, a lawyer, had little familiarity with technology, but he believed CityTime would curb timekeeping abuses and save the city tens of millions annually. So, wielding his power over agency budgets, he persuaded reluctant commissioners to adopt CityTime. And, brushing aside criticism, he insisted year after year that the project was inching closer to completion.

...While Mr. Page pushed, few others inside City Hall paid attention.
Page and the Vanderbilt Yard deal

Page, it should be remembered, was one of the two Bloomberg appointees on the board of the Metropolitan Transportation Authority who pushed hard against any skepticism toward Forest City Ratner's requested June 2009 revision of the September 2005 deal for Vanderbilt Yard development rights, allowing the developer to save on upfront cash and a smaller replacement railyard.

As I wrote 6/25/09, as for the last-minute character of the deal, which had been aired only two days earlier, Page claimed unrealistically that, because MTA staff had been busy working on the deal, “it’s not as though it’s something that’s been dropped in our laps suddenly to consider.”

“I think that realizing value from railyard property that we own is something that we have learned over the last number of years, much of which has been in a boom real estate cycle, is extraordinarily difficult,” Page said. “Because we require the railyard function... we’re selling the space above it. To have an opportunity to actually realize value for the space above our land requires a tremendous upfront investment by the buyer to actually build the platform, an upfront, major investment before the buyer can then move on.”

However, I pointed out, there's no obligation that Forest City Ratner build the platform on the majority of the Vanderbilt Yard site.

“The other aspect of these yards is that they’re large, and you need a buyer who’s going to somehow incorporate what you’re offering into a large and elaborate development project. Large and elaborate development projects in New York City are extraordinarily difficult to pull off, in terms of the levels of government and public particpation, legal issues to be dealt with,” Page said.

“To get all the elements lined up so that you can get a transaction of this kind to move forward is extraordinarily difficult and time-consuming. We have arrived at a point where there’s not perfect assurance that this project will in fact take place,” he concluded. “But I think, as outlined before us, with the benefits that are available here to the MTA, assuming it goes forward as currently described.... I think that this is as good a deal as is going to be available to us for this property in the foreseeable future.”

What Page missed

As I pointed out, a rebuttal could be cited from the New York Times, which in 1994 editorialized regarding the Coliseum site at Columbus Circle:
The most sensible course now is for the city to find out anew the market value of this property, and that cannot be accomplished through negotiations with one bidder.
Also Page's phrasing, "assuming it goes forward as currently described," leaves a lot of wiggle room. The project at that time was still supposed to be completed in a decade. Even the Empire State Development Corporation agrees that won't happen.

Sunday, March 27, 2011

Daily News investigation of City Council Members points to (AY supporters) Dilan, Mealy as "the worst of the worst," also targets Sanders

The New York Daily News has been publishing a dismaying series on the ethical shortcomings of one-third of the 51 City Council Members.

An editorial yesterday, The City Council is a sorry spectacle, the Daily News investigation showed in sordid detail, highlights a few, including these two:
Two Brooklynites won the award for the worst of the worst. Erik Dilan and Darlene Mealy represent districts with large low-income populations, where families with limited resources face the tough challenge of finding decent places to live.

And what has Dilan, of Bushwick, chairman of the Housing Committee, done to help? He helped himself, of course. He moved into a subsidized apartment that is supposed to be for families with incomes of less than $114,000. He and his wife reported incomes $40,000 over the limit.

Mealy, of Bedford-Stuyvesant, is also squatting on housing that should be occupied by someone making a lot less than the $112,500 salary plus a $10,000 lulu she gets for her part-time Council job.

She and her sister bought a taxpayer-subsized three-bedroom co-op in Bed-Stuy in 1993, when Mealy worked for the Transit Authority. Their joint income was supposed to be less than $15,000. Two years later, they came up with a $14,000 down payment for a brownstone.
Mealy was one of the two members of the 16-member Brooklyn City Council delegation to show up at the March 2010 Atlantic Yards arena groundbreaking. Mealy's gotten campaign contributions from members of BUILD (Brooklyn United for Innovative Local Development), an Atlantic Yards Community Benefits Agreement signatory, and has supported BUILD with discretionary grants.

Dilan, as the graphic at left shows, was one of the earliest elected officials to support Atlantic Yards; the list is from the bid for the Vanderbilt Yard that Forest City Ratner delivered in July 2005 to the Metropolitan Transportation Authority.

What about Sanders?

Also note the presence on that list of Council Member James Sanders.

He presided over the notorious May 2004 City Council Committee hearing in which Forest City Ratner and its allies spoke all morning, before a full slate of committee members and the press, while project opponents faced empty chairs and a media blackout in the afternoon--a scene prominent in the upcoming Battle for Brooklyn documentary.

The Daily News pointed out that Sanders, while criticizing predatory lenders, had his own conflict:
He failed to mention that he had stopped paying his mortgage and his home was in foreclosure.
The no-money-down mortgages he got to buy a $588,000 two-family in Far Rockaway in 2006 proved overwhelming; Sanders quit making his $3,000 monthly mortgage payment by April 2009.
He calls himself a "victim" and represents himself in court, trying to avoid eviction and damning predatory lenders.
...Sanders declined to discuss his case, but predicted his final settlement will allow "other victims to learn that they, too, have a way to fight back.
That reasoning prompted an editorial scoffing at his excuse:
Identified by the Daily News I-Team as delinquent on his payments, Sanders countered that he was a victim of predatory lending rather than a plain old deadbeat.
It was the bank that lured him into a $588,000 mortgage on a Far Rockaway home in 2006.
It was the bank that made him believe he could afford $3,000-a-month payments.
It was the bank that got annoyed when he stopped sending in checks.
It was the bank that has insisted on foreclosing.
It was the bank that doesn't understand why he should be allowed to stay in the house payment-free after two years.
As Sanders pleaded in court, "My family and I were likely the victims of dishonest, deceitful and ... corrupt lending practices."
So here we have an elected official who purports to be smart enough to write laws while pleading that he was bamboozled into borrowing half a million dollars he could not afford.
How dumb is that?
New York Knucklehead dumb.

Noticing New York on "fictional job creation" and Atlantic Yards

Drawing on some of my reporting, Noticing New York's Michael D. D. White takes off from a story about fictional job creation nationally to dissect claims of job creation with Atlantic Yards:
In the case of Atlantic Yards we have two levels of AWOL government, each level with its own fictional job creation program that is not fulfilling its ostensible purpose: At the state level the ESDC (the “New York State Urban Development Corporation” doing business as the “New York State Urban Development Corporation”) does not monitor or pay attention to how many jobs are created at the megadevelopment and on the federal level (Congress again neglecting the declared core of a program) we have the non-job-creating EB5 program that we will get to in a minute. Perhaps what mightily facilitates the ease with which the EB-5 program is abused is that it is not known by any formal title, like the American Jobs Creation Act, leaving the New York Times to struggle as it refers to Ratner’s `enrollment’ of “498 Asian investors” in “an obscure federal program that grants [“sells” is a better word] green cards in exchange for a $500,000 investment in a job-producing American project,” thereby stumbling compliantly into having referred to `job-production’ which is, as discussed, actually nonexistent.
More here, including a list of six specific problems.

Saturday, March 26, 2011

In Our Time Press, the notorious Stephen Witt hails Ratner's modular plan, cites support from Caldwell of BUILD

The notorious Stephen Witt is now writing for the Bedford-Stuyvesant-based Our Time Press, but his m.o. remains the same.

In Build Atlantic Yards in Bedford-Stuyvesant (from this issue), Witt writes:
If developer Forest City Ratner (FCR) wants to prefabricate all planned 16 high-rise buildings in his $4.9 billion Atlantic Yards project that’s fine with me as long as most of the factory work stays in Brooklyn.

And a good place to start looking for a site to build modules components of the skyscrapers that will be trucked and bolted together on the 22-acre site starting at the Flatbush/Atlantic avenues intersection is in Bedford- Stuyvesant.
This is a version of an argument made by Crown Heights residents (and then-Daily News columnist) Errol Louis, as expressed at a forum in September 21006: "If they’re going to get a billion-dollar TIF [tax-increment financing] deal in Rensselaer County, I think where I live, in Kings County, if somebody wants to bring a billion-dollar deal there, with way too much paid per job, in my neighborhood, where there’s a lot of unemployment, personally, I would say, ‘You know what? I’ll take that.’”

In Bed-Stuy?

Witt writes:
The only sour note in Ratner’s announcement was that he was looking to locate the factory in Long Island City Queens, which would take jobs out of Brooklyn.

So I called Ratner spokesperson Joe DePlasco, who said the company, is also looking at sites in Brooklyn. A good place to start is northwest Bed-Stuy, which is currently zoned for manufacturing.

Another good spot would be in and around the Brooklyn Navy Yard – also zoned for manufacturing.
The only sour note? Didn't he notice that the number of jobs, and pay, for the construction phase would go down significantly, and that several unions are upset.

Note that Forest City would build the factory where it's cheapest to build, and where industrial synergies are available. That suggests they'd choose Long Island City or the Navy Yard over Bed-Stuy.

Cover from Caldwell

Witt finds his favorite source:
James Caldwell, president of Brooklyn United for Innovative Development (BUILD), one of the signatories of the Atlantic Yards Community Benefits Agreement (CBA) also hailed the move.

“If it creates jobs in manufacturing it will be a throwback to a different era with a new twist,” said Caldwell, whose non- profit organization is funded by Ratner.
As No Land Grab's Erid McClure comments, referring to Caldwell's most famous utterance:
It's like "An Angel sent from God II!"
Witt writes:
Caldwell said since signing the CBA, BUILD has put about 350 people to work either through Ratner or on other Ratner projects throughout the city.
If so--and we haven't seen the Independent Compliance Monitor report, because there is no ICM--most of those jobs are at Ratner's malls. In February, Forest City Ratner reported a total of 150 workers at the Atlantic Yards site.

Witt's warfare

The article closes:
The announcement came as the mostly wealthier and white opponents of the project continue to decry it. Interestingly, some of these people have made opposing the plan a cottage industry and have already benefited from the project.

Caldwell said he finds it interesting that opponent bloggers never even try to tell both sides of the story, and continue to demonize anyone that tries to see both sides of the coin.

“I was just at Cataldo’s Restaurant and Pizzeria on Dean Street and Vanderbilt Avenue and the owner told me how he is doing a great business from arena construction workers,” said Caldwell.

“The bloggers and people against the project don’t talk or write about the positive economic impact the arena has already had in the area,” he added.
As McClure comments:
Ouch. But we thought it was the wealthier and white proponents of the project who were benefiting from the project — that is, until the Feds swooped in.
The other night, as it happens, I was talking to someone who lives on the Prospect Heights/Crown Heights boundary. Nobody in her building--mostly poorer and black (to use the converse of Witt's term)--supports Atlantic Yards.

Maybe that's a limited sample, but Witt's sample is just as limited. And everyone he cites is making money from Atlantic Yards. Maybe he should consider the other side of that coin.

Regarding Edmonton arena deal, sports economist Zimbalist advises caution and careful bargaining

It's notable how sober sports economist Andrew Zimbalist sounds in his advice (as with his his previous advice) regarding an arena proposal in Edmonton, Alberta. CTV Edmonton reports:
A sports economist hired by Northlands thinks private developers should pay for overruns, and he's offering this advice to council:

"Once it's approved at the Spartan level, they start to say, 'oh we'd like to have this next to the locker room' and we'd like these bells and whistles. You've got to be deliberate, you've got to be cautious and you've got to be strong in bargaining in a deal that's good for the City of Edmonton," said Dr. Andrew Zimbalist.
With Atlantic Yards, his report, commissioned by Forest City Ratner, was used to help justify $100 million in direct city subsidies--and then, after the project was approved, those subsidies were doubled (and later shaved back somewhat to an official, if contestable, $179 million).

Friday, March 25, 2011

Getting ready for modular construction? NYC Building Trades Employers' Association asks unions to drop restrictions on off-site work

Modular construction, apparently, is one of the negotiating points between contractors and union workers.

Union radical Gregory Butler, on his Gangbox News blog, recently posted THE BUILDING TRADES EMPLOYERS ASSOCIATION'S 26 POINT ULTIMATUM TO THE NEW YORK BUILDING TRADES, from the Building Trades Employers' Association (BTEA), which represents "1,700 construction managers, general contractors and specialty subcontractor firms in New York City."

It included cuts in wages, no overtime for make-up work, a cut in overtime pay from double to time-and-a-half, and rule changes, but the key passages, at least regarding Forest City Ratner's plans for modular construction of towers at the Atlantic Yards site, are these:
6. No limitations on materials, supplies or equipment, regardless of their source or origin;

7. Elimination of prohibitions of or restrictions on work which is performed off-site on materials or products modified or fabricated for installation on the project;
The larger context

On March 19, in a front-page article headlined Trade Unions in City Confront a Rise in Nonunion Projects, the New York Times pointed to the BTEA's new Build Union Jobs web site (screenshot at right) and noted that "what may be their most tense contract negotiations in years" is imminent:
The employers have backed off an initial demand for wage cuts, but they are still aiming for a 25 percent cut in labor costs, by reducing benefits and changing some work rules. They say these changes would allow them to better compete with nonunionized companies, which are winning jobs from developers because their costs are 20 to 30 percent cheaper.
The Times article leaves the impression that some rules that clearly need changing--such as requiring three operating engineers in place when only one is needed--while others may be efforts to extract more profits.

The Times article mentions Atlantic Yards, but not the request for rule changes regarding off-site construction:
And this week, the developer of the Atlantic Yards megaproject in Brooklyn said it was seriously considering using a prefabricated method to build its residential high-rise. While most of the workers would be unionized, there would be fewer of them and they would earn less money because much of the labor would be done in a factory, where wage scales are lower than on the site.
The Northside Piers angle

The Times reportsd:
David Von Spreckelsen, vice president of Toll Brothers, said his company built the first of two towers at its Northside Piers project in Williamsburg, Brooklyn, with union contractors. But as construction costs escalated in 2008, Toll Brothers turned to a nonunion contractor for the second tower, prompting unions to protest with five giant inflatable rats. The company now has three apartment buildings under construction in Manhattan with nonunion labor.
That may not be the best example. As Williamsburg activist Phil DePaolo recently wrote in Williamsburg Greenpoint News+Arts, Luxury Living is Taking a Toll, Brother!, non-union workers were brought in on the first tower, as well:
So, it came as no surprise to me to learn that major problems now exist at Northside Piers...

Some units have had water infiltration which has resulted in the untenable condition of mold growth. In addition, many owners complained that the full-view windows that were installed, do little to keep wind and water out of their units which increases use of heat in the winter, and air conditioning in the summer, both of which run on electricity. This certainly makes our friends at Con Edison very happy, as I was shown the electricity bills for many residents averaging over $400 dollars a month.
This drew a follow-up in the New York Post, headlined Williamsburg waterfront condo residents complain of 'shoddy' construction.