Tuesday, September 18, 2012

The Culture of Cheating: Forest City gets the inside track with the MTA, then gets to revise the deal (though the MTA could have recognized its leverage)

The spanking new Atlantic Avenue-Barclays Center subway entrance is an undeniable asset to the Barclays Center, Brooklyn, and the city of New York. But in this public-private partnership, the subway station will serve arena patrons more than anybody--and Forest City Ratner won't pay for additional service.

Moreover, the key parts of the developer's transaction with the Metropolitan Transportation Authority (MTA), notably the payment for development rights over the Vanderbilt Yard, and the subsequent development thereof, still wait, thanks in part to FCR's ability to get in on the ground floor in 2003 with no competition for years, then renegotiate the deal in 2009.

Did it have to be that way? Maybe not.

Yes, there’s a “fundamental asymmetry” in complex projects that favors a developer, because it “can generally leave the project and even the city while politicians cannot,” as planning professor Lynne Sagalyn warned in Times Square Roulette, her epic 2001 epic analysis of redevelopment.

With Atlantic Yards, however, the public had more power: Forest City was desperate to move the money-losing Nets from New Jersey into a profitable new arena, larded with luxury suites and sponsorships enabled by the country's richest media market, and to get tax-exempt bonds sold by the end of 2009.

Instead, when Forest City asked to renegotiate, the MTA, controlled by the governor and mayor, complied. This is the Culture of Cheating from another angle: less deception than an inside deal from the start.

For the full article, click here.

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