Skip to main content

Elected officials ask Empire State Development to intervene in sale of Barclays Center (operating company) to get guarantees for community benefits and responsiveness

Update 8/15/16: Here's the response letter (also at bottom) from ESD CEO Howard Zemsky, who said, unsurprisingly, that public review was not legally required because the transfer falls within the confines of previously approved contracts. Nor is the state a party to the Community Benefits Agreement. But he said ESD "will continue to enforce" obligations required of the Brooklyn Events Center, the arena tenant, and will encourage ownership to work with the community on quality-of-life and other issues.

See the with letter from the elected officials, at bottom. See also push for new protocols from the Barclays Center Impact Zone Alliance.

According to a letter leaked yesterday to Stephen Witt of Kings County Politics (and posted at bottom), five elected officials are asking Empire State Development, the state agency overseeing Atlantic Yards/Pacific Park and the formal owner of the arena, to intervene in the planned sale of the arena operating company to ensure that community benefits are maintained and arena operating impacts are addressed. They also seek an opportunity for public comment.

The officials are Assemblymembers Jim Brennan, Walter Mosley, and Jo Anne Simon, state Senator Velmanette Montgomery, and City Council Member Laurie Cumbo. As I note below, there's both merit and irony to both requests.

Developer Forest City Ratner, which with its parent Forest City Enterprises owns 55% of the arena operating company, plans to sell it (according to an unconfirmed but unrefuted Bloomberg report) to the minority owner, the Russian billionaire Mikhail Prokhorov, who currently owns the minority stake. Forest City also will sell the 20% of the Brooklyn Nets it still owns to Prokhorov's Onexim Sports & Entertainment.

Last week, at an Atlantic Yards/Pacific Park Community Update meeting, a state official said no board approval--just staff approval--was necessary for the arena transfer. The state owns the arena, thus allowing the issuance of tax-free bonds, and leases it to the operating company for essentially nothing. (The PILOTs, or payments in lieu of taxes, go not to public coffers but to pay for arena construction.)

At the meeting, Gib Veconi of the Prospect Heights Neighborhood Development Council and BrooklynSpeaks, requested that the Atlantic Yards Community Development Corporation (AY CDC), the advisory body set up last year to provide input on the project, review the sale.

The sale is not on the agenda for Thursday's ESD board meeting, though, given that it's not now subject of a vote, it might be subsumed in the ESD President's Report.

Community benefits?

“We strongly urge the Empire State Development Corporation (“ESD”) to review the terms and oppose of any such sale until assurances are made that the community benefits promised by Forest City Enterprises will be preserved. We ask that any such sale be subject to a fair, open, and timely public review. Public comment should be accepted and evaluated prior to ESD making any decision regarding the finalization of this sale,” according to the document cited by Kings County Politics.

It's interesting that the elected officials think that community benefits regarding the overall project are contingent on the arena. After all, most of the promised community benefits from the project are unenforceable in the first place, and most (such as affordable housing) are not connected to the arena or otherwise contingent on other governmental entities. 

And the promised Independent Compliance Monitor, which was supposed to guarantee the benefits in the Community Benefits Agreement (CBA) was never hired, an issue that has drawn minimal, intermittent scrutiny from such officials.

The CBA was signed by eight signatories, several of which had little if no role beyond advocating for the Atlantic Yards project:
  • All-Faith Council of Brooklyn, now Faith in Action (supposed to work on clergy-related programs, never did much)
  • ACORN (and now successors, responsible for affordable housing, which relies mostly on city agreements)
  • Brooklyn United for Innovative Local Development, AKA BUILD (responsible for job training, now defunct, part of a recently settled lawsuit)
  • Downtown Brooklyn Neighborhood Alliance, or DBNA (responsible for arena-related programs)
  • Downtown Brooklyn Educational Consortium, now Brooklyn Voices for Children (supposed to work on charter schools, never did much)
  • First Atlantic Terminal Housing Committee, now Brooklyn Endeavor Experience (supposed to work on environmental issues, never did much)
  • New York State Association of Minority Contractors (helping to ensure minority contracting goals, which are just goals, and also separately stated as goals in state contracts outside the CBA)
  • Public Housing Communities (didn't do much beyond helping recruit workers at housing projects, which could be done through other means)
The arena/CBA connection

So only the DBNA, founded by the Rev. Herbert Daughtry, does have a regular relationship with the arena and, perhaps not coincidentally, has had work--full-time and consultant--for three members of the Daughtry family.

The DBNA distributes at least 50 free tickets to nearly every arena event to community groups via a raffle, and this year for the first time gave out more than $100,000 via an arena-related foundation, the board of which is majority executives related to Forest City and the arena. This presumably would be at risk during a transfer to Prokhorov, who might recognize that it is a small expenditure to win friends, do some good, and keep community peace.

The DBNA said it has chosen the groups that would get low-cost use of the arena, another CBA promise, but no announcement of those events has been made, as far as I know.

Community responsiveness to arena impacts?

The letter also makes reference to the ongoing problems related to arena operations.

“We also request that if the sale is approved the new owners be legally committed to being responsive to the community with regards to the impact of arena related events and be able to response in real time to the public’s complaints about arena-related illegal parking, intersection delay, lighting, hygiene, noise, etc. by maintaining and enhancing the integration of response into both existing and planned oversight structure like the AY CDC [Atlantic Yards Community Development Corporation]," according to the letter cited by KCP. "Complaints and their responses are to be logged in a transparent and open way in order to facilitate dialogue about improvements with the adversely impacted community."

Those certainly are worth addressing, and could be part of a Neighborhood Protection Plan (proposed in 2012 but not fulfilled) that requires commitment of new funds for monitoring of vehicles, fan behavior, etc.

But only part of the problems can and should be solved by the arena, whose representatives typically respond with pablum and apologies.

Enforcement and fines by government agencies--the New York City Police Department, New York City Department of Transportation, New York City Department of Buildings, New York City Department of Environmental Protection, and others--surely would improve the quality of life for residents.

A missing issue: funds from hockey

None of the elected officials has pushed the state to fulfill the nonbinding 2/18/05 Memorandum of Understanding that Atlantic Yards developer Forest City Ratner signed with New York City and New York State, which said that, if Forest City wanted to bring a second sports team to the arena, it and the Public Parties would "negotiate and agree to additional rent and other terms before the Public Parties consent to use and occupancy of the Arena by the second team."

That never happened, even though the Islanders arrived this year.

I queried ESD multiple times about this, but never got an answer.

The unfinished arena
By the way, the Barclays Center is still on a Temporary Certificate of Occupancy, its 17th, expiring 1/21/2016. According to this page, there are 25 open items of of 140 required.

As I wrote in October 2013, an extended TCO is nothing new for sports facilities. Yankee Stadium got its Final Certificate of Occupancy after nearly three years, which is faster than Barclays, but Citi Field, which also opened in the spring of 2009, got its document in July 2013, more than four years later.

The Barclays Center, which opened 9/28/12, is nearly three years and three months old.



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.