Vicki Been, director of the Furman Center for Real Estate and Urban Policy at NYU, and Steven Spinola, president of the Real Estate Board of New York, discuss to what extent the city government should rely on private money for public amenities like affordable housing, more parks, and open space.Lehrer started with Atlantic Yards, pointing out that Democratic mayoral nominee (and overwhelming favorite) Bill de Blasio supported the project because it promised good jobs and affordable housing. He asked de Blasio the day before if the failure to deliver housing by now meant that promise was meaningless. (I thought it was a weak question, and an obfuscatory answer.)
A larger cautionary tale?
"Do you agree it had the right goals or wrong implementation and oversight," as de Blasio indicated, "or is there some larger cautionary tale about how the public sector shouldn't rely on the private sector?" Lehrer asked.
Been said she agreed the procedure was "deeply flawed" because it used a Community Benefits Agreement that's not enforceable by the city, and enforcement takes a lot of time energy and money. (I'd add that there's an inherent conflict, because the signatories are also financially dependent on Forest City Ratner.)
She agreed the goals of the project, in the abstract, were absolutely appropriate, but had the process gone through the city's Uniform Land Use Review Procedure, "we would have much more discussion about how much subsidy should go into those affordable units."
In other words, once the project was approved, it essentially (though, actually, not completely) locked in support for subsidies, even though they might go farther elsewhere.
Been left out the issue of whether the ULURP process might have delivered a project with a different scope, density, and urban design.
What's industry's take?
Lehrer asked Spinola if the real estate industry even wanted "to be leveraged by politics to provide public goods"?
Spinola said "the private sector has greater ability to build things less expensively, and more quickly." However, "you can't ask for things economically that are not doable."
He moved on to some talking points, saying, "we are seeing the dramatic change as a result of the arena" and Forest City Ratner "is committed to doing everything they can," including developing modular housing and finding a new financial partner to meet its commitment.
But developers can say financial conditions have changed and can back off.
So too can the government, said Spinola, who added, "I'm not a big believer in Community Benefit Agreements.. I think they are not enforceable...I think that anything required has to be directly tied to the impact of the project. you cannot expect developers to do things unrelated to what they're building."
The profit motive and the quid pro quo
Lehrer pointed out that, at least with the public sector, the profit motive is not there/.
Been agreed that the public sector also faces risks, but with project like Atlantic Yards, "if the stadium gets built, but quid pro quo doesn't get delivered, it' a different breach of a bargain than when government has to cut back on plans for infrastructure."
She said she didn't disagree that Forest City isn't making efforts to build, and is innovating, but the "central issue is how do you make sure that benefits that developer sought and benefits that community sought both get done in a timely fashion."
And they left it like that.
If you read the comments, there's a lot more skepticism. Peter Krashes from Prospect Heights
In 2006 and again in 2009 when the project agreements were modified, FCRC promised an arena, a specific number of new jobs, affordable housing, a new rail yard, and open space in exchange for roughly $300,000,000 in public subsidies, property control of 22 acres of land in the center of a revitalizing area, and even several public streets at a bargain rate. All of the subsidies and property control were based on the promise they would deliver the project in full in ten years.Michael D. D. White from Brooklyn Heights:
FCRC made these promises knowing affordable housing subsidies weren't sufficient given construction costs, and they didn't explain how they were going to build the platform over a rail yard that is key to the project. It has been everyone's assumption FCRC was going to pursue additional subsidies or reduce costs, and if neither of those things happens, delay. But the promise that the project would be complete in ten years with the provided subsidies has been useful for the developer because it skewed government decision-making: How does government evaluate options if the information it is relying on is insufficient or incorrect?
So on what terms is FCRC going to deliver the project now? They have already said they are going to build using modular construction to lower construction costs, but modular construction delivers lower paying construction jobs (and potentially few construction jobs). They have effectively shifted the risk of lower construction costs to the public.
FCRC has also delayed constructing the promised permanent rail yard and changed the project's construction sequence to enable delaying or not building the platform over the rail yard -- therefore also delaying the removal of the blighting influence on the project site the project is ostensibly designed to eliminate. They apparently hope moving forward they can reduce costs of constructing a new rail yard and a platform. Who benefits if they succeed? Does the savings go to the project's investors, or to the public through more open space, improved affordable housing, or less density. Who makes that decision? And if the delay in building over the rail yard continues, then the de Blasio's family's back yard will be larger than the permanent open space the project provides its first several thousand families and pedestrians will be walking in circles.
Atlantic Yards oversight is recklessly thin. There is little government staff dedicated to the project exclusively, there is no independent board, and almost all information the public relies on about the project comes from FCRC about jobs, the delivery of benefits, and the extent environmental commitments have been met. FCRC has refused to hire the independent compliance monitor they promised for the project to verify their claims. Future Mayor de Blasio, please stop using FCRC's talking points and get us an effective independent compliance monitor and governance reform for the project now!
One of the most overlooked problems with so-called “public-private” partnerships (which those in the know frequently refer to more often as “private-public” partnerships because of the way the private sector tends to take over making government participants subservient) is beautifully addressed by one of Jane Jacobs most overlooked, least read books: “Systems of Survival.”
In that book Jacobs points out that attempts to mix business enterprises with government and politics are inherently flawed, because the moral systems that apply to each (each working well when confined to their own respective contexts) must necessarily remain different and incompatible. Jacobs’ book is full of examples of what happens when realms that should remain distinct (together with their associated moralities) improperly intermix, so that one gets what she calls “monstrous hybrids.” That includes, the Soviet Union running businesses, police departments for sale (“Robocop”?- How about prisons?), the Mafia, etc.
For more see: Wednesday, February 13, 2013One-Stop Petition Shopping: Report On The Brooklyn Heights Association Annual Meeting, LICH and Libraries.