Monday, November 11, 2013

Fred Siegel: like Bloomberg, de Blasio supported Barclays Center "crony capitalism"; FCR adjusts explanation regarding Atlantic Yards delays

In Fred Siegel on the future of New York City under Mayor de Blasio: A Public Sector Inc.org Q&A, published 11/6/13, Fred Siegel, author and a senior fellow of the Manhattan Institute’s Center for State and Local Leadership, suggested that some things will change under new Mayor Bill de Blasio, and some won't.:
What won’t change under de Blasio is the sense of the city being run on a top-bottom basis. De Blasio has no more interest in the middle class than Bloomberg did. He has an interest in the well-to-do as a source of funds to tap to provide benefits to his core constituency on the lower end of the population. But neither of them have much concern for New York’s losing its middle class population. I think people are going to be surprised to the degree of similarities than they might expect. In both cases you’ll have considerable cases of crony capitalism. The outstanding example of crony capitalism in the Bloomberg years is the building of the Barclays Center in Atlantic Yards. That was a billion dollars in subsidies from the city and the state combined and that was supported by both Bloomberg and de Blasio.
Actually, if de Blasio is interested in replicating the subsidized housing planned for Atlantic Yards, that 50% market/30% moderate- or middle-income/20% low-income model would help the middle-class, and more than poor.

That illustrates a lesser-known aspect of the Atlantic Yards "affordable housing": though it was "negotiated" by ACORN and will be managed by successor group New York Communities for Change, likely more than half the subsidized units will go to households far better off than ACORN's long-time constituency.

Siegel's right that there's continuity regarding "crony capitalism" and Atlantic Yards. A billion dollars in subsidies? Well, no. According to figures revised from the Independent Budget Office report, the overall benefit--tax breaks and subsidies--approaches $700 million.

Then again, that figure omits the freebie of naming rights the state gave Forest City Ratner to sell--another $200 million. And it also doesn't count the enormously clever financing scheme which involves PILOTS (payments in lieu of taxes) directed to pay off the construction bonds rather than go to the city treasury.

Cause of Action's report gets TV exposure, new FCR explanation

Beyond the Real Deal, the only local news outlet to take on the Cause of Action report on Forest City Enterprises has been WPIX/11, which offered Barclays developer accused of taking taxpayer dollars, but not delivering on promises.

This is 1) true 2) not really new, and 3) not in violation of any of the loose deadlines set in state contracts. "We intend to meet all of our commitments, as we've been doing all along," said Forest City Ratner spokesman Joe DePlasco.

What's interesting is that DePlasco told WPIX that construction delays were "initially caused" by a lawsuit, then worsened during the economic crisis. That's a distinct shift from last week's explanation, which blamed only lawsuits.

Of course, Forest City itself made unrealistic plans and promoted unrealistic timetables. As I reported last week, CEO Bruce Ratner once said it would it will take probably another five or six years to complete all the housing" and deputy Jim Stuckey claimed "we hope to do better than" the announced ten-year timeline. Instead, Forest City negotiated a 25-year deadline.

The WPIX report ends with Gib Veconi of the Prospect Heights Neighborhood Development Council, who says, regarding the planned investment by Chinese government-owned Greenland Group, "this time we need written commitments that are enforceable," with oversight by local elected officials.

Tighe pushes AY

New York Post real estate columnist Steve Cuozzo today published Mayor Bill de Blasio’s real estate to-do list, which, among other people, quoted Mary Ann Tighe, Tri-state region CEO, CBRE:
There is no choosing between the World Trade Center, Hudson Yards and Atlantic Yards. Those ships have already been launched, and the de Blasio administration will benefit mightily from each.
Tighe, who regularly works for Forest City Ratner, might have a little bit of a conflict here, but of course that doesn't get pointed out. Yes, the Atlantic Yards "ship" has already been launched, but there's a lot of room for course correction, including the mayor's hand on the subsidy spigot, new oversight, and any role in approving the planned new Chinese investor.

Two de Blasio plans with AY implications

Crain's New York Business on 11/10/13 offered New mayor's to-do list, including two relevant to Atlantic Yards.
CREATE OR PRESERVE 200,000 AFFORDABLE-HOUSING UNITS: Mr. de Blasio's 10-year plan relies on zoning bonuses coupled with mandates for developers. He can simply direct his planning commissioner to require affordable housing with any zoning change. Industry insiders say forcing its construction will actually prevent it. Difficulty rating: 4 [Heavy lift]
I wouldn't be surprised if Forest City Ratner's modular factory, assuming no further snags, becomes a model for de Blasio's policy, and perhaps receives special subsidies or innovation grants.
MOVE MADISON SQUARE GARDEN: The city has already limited the Garden's land-use permit to 10 years. But that extends beyond Mr. de Blasio's maximum tenure. Finding a site and getting MSG's approval remain challenges. Difficulty rating: 2 [Just a matter of time]
de Blasio has been a steady critic of Madison Square Garden, less to enable a new Penn Station but rather to support the Communications Workers of America, who've been battling MSG owner Cablevision. The Garden's just been renovated and surely will put up a fight. If a new MSG is on the way, this might leave the Barclays Center--for an interim period or even longer--the city's leading arena.

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