Skip to main content

Forest City doing worse on M/WBE contracting for Atlantic Yards than previously reported: ESD says total is 15.4%, not 22.6%, because some firms aren't certified

By the state's measure, developer Forest City Ratner has a much lower M/WBE (Minority and Women's Business Enterprises) utilization figure than previously reported, which suggests it's doing less than previously assumed in reaching out to businesses that truly need a boost.

On January 31, I reported that, according to statistics released by Empire State Development (ESD), the state agency overseeing Atlantic Yards, the MBE awards total $91 million (about 16.3% of total purchases), while the WBE awards total $35.1 million (about 6.3% of total purchases).

Thus the combined M/WBE participation is apparently 22.6%, about three-quarters of the way toward the goal of 30% (20% MBE plus 10% WBE), as reflected in the Community Benefits Agreement (CBA).

Revising the numbers

Well, that was  true, but I've since learned that the statistics, while released by ESD, were not only prepared by Forest City Ratner--there was no indication on the document--they do not represent the ESD's own analysis of M/WBE figures.

Arana Hankin, Director, Atlantic Yards Project for ESD, explained:
ESD and the Atlantic Yards Project have a certified MWBE utilization contract goal of 20%. Firms must use “best efforts” to meet that goal. If they have not met the goal they must show that they have used their best efforts to retain MWBE firms through outreach and solicitation. ESD has calculated that Forest City has awarded 15.4% to MWBE certified firms to date. ESD does not count the MWBE firms that are not certified. If non-certified firms were included the percentage would increase.
Why wouldn't they be certified? I speculate that either 1) they are/were too fledgling to bother or 2) are too large and prosperous to qualify under the state's newly narrowed rules aimed to exclude M/WBE firms that are very large or led by businesspeople who are so wealthy as to be clearly not disadvantaged.

Whatever the reason, the discrepancy again points out the need for Forest City to not merely self-report but to hire the Independent Compliance Monitor required by the CBA.

What are the M/WBE rules?

State rules passed in 2010 require:
All firms seeking MBE or WBE certification must be at least 51% owned, operated and controlled by minority members and/or women.
The ownership must be real, substantial and continuing, and the minority members and/or women must exercise the authority to independently control the day-to-day business decisions.
In addition, each minority or woman upon which certification is based, must have a net worth which does not exceed 3.5 million dollars. This calculation should not include the ownership interest in the applicant firm, the primary residence of the owner(s), and $500 thousand of present cash value of any qualified retirement savings plan, or individual retirement account held by the individual less any penalties for early withdrawal.
The firm cannot exceed 300 employees, must be independent and authorized to do business in New York State. Generally, the business must be in operation for at least one year.
Discomfort with the rules

The Albany Times-Union reported 1/15/12, in Wealthy minority and women business owners work to keep contract edge:
Several representatives of minority enterprises and at least one controlled by a woman have been working behind the scenes to get the Cuomo administration to support changes in a law signed by Gov. David Paterson shortly before he left office in 2010, according to several people interviewed.
The law sets a limit of $3.5 million in personal wealth. Minority- and Woman-owned Business Enterprise certification cannot be conferred by the state on companies whose principals have amassed net worth exceeding the figure.
Consultants, lawyers and lobbyists for some former MWBE-certified businesses are trying to get the law changed to raise the limit or grandfather their clients in, or to make other considerations that will maintain their status, according to people who have been involved in private talks.
The certifications give MWBE businesses an advantage over other firms for a share of public contracts. Cuomo has directed state agencies to boost MWBE participation in state contracts and procurements to 20 percent, more than double current levels.
Note that ESD had the 20% goal already.

It's not clear to me which companies working on Atlantic Yards no longer qualify. For example, the venerable McKissack Group, selected to manage railyard reconstruction (see press release at bottom),  remains in the directory; it does not employ more than 300 people but is presumably led by well-off leadership.

MWBE Contract Awards as of December 2011


McKissack Atlantic Yards Railyard Press Release October 2005

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…

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…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.