Skip to main content

Atlantic Yards CDC "clearly not independent": two members overseeing themselves (so how can they criticize failure to review developer's monitor?)

Update 5 pm Feb. 13: Empire State Development tells me that the agency did review the scope of work for the monitor, and Marion Phillips misspoke. Thus there's no lapse, as the evidence suggested.

There may be more than two apparent conflicts of interest on the board of the Atlantic Yards Community Development Corporation (AY CDC), the subsidiary set up to monitor the project as part of an agreement to move up construction of affordable housing to 2025.

I already pointed to the red flag regarding the appointment of two signatories of the Atlantic Yards Community Benefits Agreement, but there's another concern: the 14-member board includes two Empire State Development (ESD) executives, who essentially would be advising and overseeing themselves.

That matters as a basic principle of good government.

It also matters because evidence already emerged that ESD did not review the scope of work for the developer's environmental monitor, though the agency's own document says they should do so.

In other words, the state authority is backing off its role in overseeing the project's environmental impact. Marion Phillips III, the state official who said ESD did not review the scope of work--the outline of tasks aimed to ensure the project does not impinge on neighbors--not only works for ESD but also is president of the new AY CDC. (He's an officer, not a board member.)

The ESD's lapse in looking at the scope of work makes it ever more important that the volunteer AY CDC perform its monitoring role thoroughly. But the presence of ESD staffers on the board make it less likely they would criticize their own agency.

The issue came up at the Atlantic Yards Quality of Life meeting Tuesday, after Sam Filler, Atlantic Yards project director for ESD, thanked residents for attending the first meeting of the AY CDC last Friday.

Filler noted that the ninth and final gubernatorial appointee should be in place by the next meeting, on March 23.

The meeting "will continue to be an orientation for the new board,” Filler said, citing review of the Memorandum of Environmental Commitments and the role of state consultants STV, which serves as owner’s rep, ensuring that the project gets built as planned, and HDR, the state’s environmental monitor.

(Greenland Forest City Partners, the developer, hired their own on-site environmental monitor, or OEM, a company called Remedial.)

Amending the rules

At the next full ESD board meeting on February 19, Filler said at the meeting Tuesday, “we’re going to request our board make a small change” to the AY CDC’s authorizing language, which says every member must be a New York City resident.

Because ESD CEO Kenneth Adams, a Brooklyn resident, is moving to Governor Andrew Cuomo’s tax and finance office, and will be replaced by Buffalo developer Howard Zemsky, the language will be changed to say the residency requirement is lifted in the case of the agency CEO.

“When we put this board together,” said Phillips, “we never contemplated” that the ESD president/CEO would not be from New York City. (A non-New York resident has headed ESD only a fraction of the time.)

Why are ESD decision-makers on the board?

"That seems like an issue," commented Peter Krashes of the Dean Street Block Association. The board is designed to create accountability to the public, and the community, he said, suggesting it “was about having people here who have knowledge of the project... a developer from Buffalo is not going to have knowledge of the project.”

The ESD CEO, Krashes observed, is “still the ultimate decision maker…. to be blunt, he’s not necessary on the [CDC] board.”

Others pushed further. “It's a conflict of interest, frankly, somebody who's a decision maker on the oversight board,” commented Fort Greene resident Susan Lerner, who was speaking personally but is a governmental ethics expert in her role heading Common Cause/NY.

“It would be a mistake on the part of the governor to appoint him, and it would definitely be a mistake to have that kind of waiver," Lerner continued. "The community is not going to support that.”

“We don’t have a choice when we look at our subsidiaries,” Phillips responded.

“That's why we have a problem with ESD,” muttered Lerner.

The same concern should attach to the presence on the AY CDC board of ESD Vice President Joe Chan, who also oversees Atlantic Yards/Pacific Park for ESD.

The CBA signatories

Later at the meeting, resident Steve Ettlinger articulated concern about the AY CDC that I had previously raised, given that two members of the board of directors—Bertha Lewis of ACORN (and now The Black Institute) and Sharon Daughtry of the Downtown Brooklyn Neighborhood Alliance—in their present or previous positions worked for organizations that received money from developer Forest City Ratner and other benefits from the Barclays Center.

(ACORN got a $1.5 million grant/loan from Forest City and Daughtry’s DBNA distributes free tickets to arena events and is also supported by Forest City. Both were signatories to the Atlantic Yards CBA. Successor organizations to ACORN are expected to be involved in marketing or screening for the affordable housing.)

“Is that a problem, in your eyes?” Ettlinger asked. “If I think it's a problem, to whom should I address my concerns?”

“Feel free to write ESDC general counsel, Liz Fine,” Phillips responded, providing her email address:

“We're not going to opine,” Phillips said, responding to Ettlinger's question. “We’re not attorneys… all the people who serve on the board are very qualified.”

“I don’t doubt that,” Ettlinger responded, but noted that the receipt of money, as well as the obligation on Lewis to speak in favor of the project—language on page 2 of the Affordable Housing Memorandum of Understanding signed with Forest City—raised concerns.

I'd add that Forest City Ratner never hired the Independent Compliance Monitor required by the CBA, nor did the CBA members--some of the eight, perhaps, wary of scrutiny given the inactivity of their organizations--took action to require that.

Lerner's concerns

I queried to Lerner after the meeting. "I am concerned about the make-up of this so-called oversight body. It's clearly not independent," said Lerner. "Because you have people from the board who are responsible for the management of the project. They're not going to criticize themselves. And you also have people on the board who are beneficiaries of certain agreements."

"I think the community needs to memorialize its concerns in a letter," she said. "I think this is very typical of the sort of oversight bodies that are set up in New York State."

As an example, she pointed to flaws in the oversight of ethics; Common Cause stated it was "deeply troubled by the failure to appoint an independent panel that will oversee the work of the Joint Commission on Public Ethics (JCOPE) and the Legislative Ethics Commission (LEC), as required."

(The Brooklyn Paper, in Many familiar faces in Yards watchdog group, nudged toward the conflict-of-interest issue, but didn't address it.)

Another structural question

The new AY CDC not only has a 14-member board appointed by elected officials, with nine from the governor, as indicated in the letter establishing the AY CDC. But there was no explanation that the AY CDC would also have several officers, all of them ESD staffers.

I've asked for the guidelines regarding the selection/appointment of officers for an ESD subsidiary.


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…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

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…