Monday, September 19, 2016

When former state overseer of Atlantic Yards came clean: "There really is no accountability"

Hankin at 9/29/10 meeting re arena plaza. Photo Tracy Collins
To observers of Atlantic Yards, Arana Hankin, an aide to Gov. David Paterson who in August 2010 was named the first Project Director for Empire State Development, seemed a good soldier.

After all, Hankin at a public meeting unwisely declared faith in Barclays Center sound control measures—which later required a new green roof to tamp down escaping bass. She enthusiastically helped developer Forest City Ratner raise funds in China via the sketchy EB-5 visa program.

But after Hankin left in 2013 for a Loeb Fellowship at Harvard University, her qualms about the project--renamed in 2014 Pacific Park Brooklyn--surfaced in both a public lecture and a published article.

She criticized the absence of accountability, called promises of jobs and housing overblown, and suggested government officials were overmatched by the powerful real estate industry. She said it was difficult to reconcile both the interests of the private developer and community needs.

She also described economic development agencies as "quasi-private entities [that] function more like a private corporation [and] are not required to be as transparent as government agencies."

Neither her lecture (below) or her 2014 Harvard Journal of Real Estate article, tartly titled Megaprojects’ Exclusionary Benefits: the Case of Local Government Policy Benefiting the Privileged Few (bottom), have been publicly discussed in New York.

The culture of no accountability

So Hankin’s surprising reproach—partly validating what I've called the “Culture of Cheating”, though I both agree and disagree with her analysis—not only helps understand the tortured path of Atlantic Yards/Pacific Park, it remains relevant today.

"There really is no accountability,” declared Hankin in her lecture (video below; see 10:09), after saying public agencies like Empire State Development--which both oversees and shepherds Atlantic Yards--fail to assess whether estimated jobs actually arrived, though its mission is to promote economic growth.

Project agreements, she lamented, were “purposely drafted to be as complicated and obtuse as possible, to allow for multiple interpretations and maximum flexibility." One of her roles was to determine "how ESD should respond to developer requests for additional benefits, and there were many."

In her paper, she wrote, "The lifespan of megaprojects is long, often spanning 15 to 25 years. Their successes and failures are difficult to track, but no attempt is made to evaluate these projects. Neither tax revenue, nor job creation numbers are monitored."

Brooklynites were misled by “affordable housing” claims, she bemoaned (as I explain separately), and megaproject do too little to help the needy.

Hankin called the much-hyped Atlantic Yards Yards Community Benefits Agreement (CBA)  “constructed so poorly as to give the developer maximum flexibility in delivering benefits.” The government, she agreed, uses “blight” to push megaprojects amid gentrification.

When I interviewed Hankin in 2011, she disagreed with my contention that ESD’s role in both overseeing and promoting a project posed an inherent conflict. Two years later, by contrast, she told academic colleagues that managing Atlantic Yards was “a balancing act, making sure the project can progress, and also responding to community needs. And these interests typically were not complementary.”



Unpacking promises 

The state’s method to estimate jobs and tax revenue, Hankin said in her lecture, inflates expectations, because construction jobs, for example, are counted in job-years (something Atlantic Yards critics and opponents have pointed out for more than a decade). Some community members told her they felt "bamboozled."

To shape public perceptions of a project, developers have adopted CBAs, Hankin explained, citing not only Atlantic Yards but also ESD’s work on Columbia University's expansion into West Harlem.

Not only do CBAs serve “a small subset of the population,” Hankin warned, negotiators are overmatched, as developers aim “to quell the community, not to make sure the benefits they committed to delivering make the greatest impact.” There's "no long-term sustainable economic growth plan" for surrounding communities, but CBAs quiet some community leaders, because of gag orders or financial dependency.

That’s no radical statement. A Forest City-hired nonprofit consultant, Ritchie Tye, concluded that the developer compensated CBA partners for community support, not to fulfill programmatic goals, according to lawsuit filings I found. Indeed, in an email that surfaced in the litigation, a Forest City executive said of one CBA group, "THEY WORK FOR US."

Understandably, Hankin suggested that CBAs be executed with government oversight.

Splits in the community

So there's no one left “to advocate for the masses, not in any organized way,” Hankin said in her lecture. In her paper, she lamented how officials representing low-income populations lacked the resources to fight for equity but instead responded to those louder middle-class voices pushing for environmental mitigation.

That left the only critical voices what she dubbed "the new community leaders” not part of the CBA, who Hankin claimed were “not concerned with” job creation or with local businesses receiving contracts, and “only mildly care about affordable housing,” but rather focused on quality-of-life issues. (She also said they had the luxury to commit time to advocacy, not acknowledging  the considerable sacrifice it has taken for many.)

Hankin's take on the split in priorities is partly true, but it's more complicated. Sure, vocal nearby residents worry about construction noise and illegal parking, but that’s because the state allowed the building of 16 towers and an arena, in just 22 acres, encroaching on a residential neighborhood, while overriding city zoning.

Local activists actually split in 2014, with a large segment in BrooklynSpeaks focused on that new housing deadline (though not locking in affordability levels). And though Hankin said "no one is being held accountable," that ignores the constant reminders--from me and others--of the failure to hire the required Independent Compliance Monitor for the CBA.

It's also the state's fault. As Hankin wrote, "very little energy is exerted on projecting the long-term impacts on the citizens who live in the wider community surrounding megaprojects." That's a diss of an extensive environmental review that produces reams of paper but is aimed first to protect the state agency from litigation.

Quality of life oversight

Regarding quality of life issues, Hankin claimed that “New York has done well mitigating the environmental impacts of megaprojects.” That's dubious; a 2012 report prepared by an environmental consulting firm detailed the numerous violations of protocols during arena construction.

Last year, ESD belatedly agreed to install extra-large 16-foot fences around the southeast block of the construction site, aiming to mitigate noise and dust, and essentially conceding too little had been done previously. Regular social media posts detail incursions on the neighborhood from construction and arena operations.

A fatal relationship

Hankin pointed to a fatal alliance between developers and their governmental partners/overseers. Government inflates benefits and underestimates risks, she suggested, for the same reason it "neglects to hold private developers accountable,” that after approval “their political reputations” are on the line, and they can’t amend the deal.

That may be true in general, but I wish she'd considered how Atlantic Yards might have been different. In June 2009, when the Metropolitan Transportation Authority prepared to relax terms in its agreement to sell Forest City development rights to the 8.5-acre Vanderbilt Yard, the mainstream Regional Plan Association recommended—to no avail—that the MTA reciprocally request more long-term revenue.

Empire State Development then also amended project agreements at the developer’s request. But both agencies had leverage; Forest City was desperate to move the money-losing New Jersey Nets to Brooklyn and had a short, end-of-2009 window to float tax-exempt financing.

Long term oversight

Because megaprojects span multiple administrations, Hankin wisely observed that those who inherit a project “often do not feel an appropriate sense of responsibility.”

Indeed, that’s the pattern with Atlantic Yards. Hankin, whatever her flaws, got to know the project. Since she left, Empire State Development has had three nominal project managers for Atlantic Yards, as institutional memory diminishes.

It's also why the community coalition BrooklynSpeaks and some Brooklyn elected officials long sought an entity to provide project oversight. Instead, in 2014 they accepted a gubernatorially-controlled advisory body, the Atlantic Yards Community Development Corporation (AY CDC), which, while ventilating some issues, has been kept out of the loop on others and had relatively little impact.

Whose voice?

"It is a risk for the government to hold the developer accountable, especially when positive relationships with these developers are politically essential," Hankin said.

Developers and the real estate industry, Hankin observed, use lobbyists and the press to steer project momentum, leaving the mayor and/or governor overmatched “against an entire conglomerate,” with governmental leverage only prior to approval.

That seems partly true--private entities can concentrate spending and orchestrate media events--but I wonder. The city and state retain a huge bully pulpit, but only if deployed. With Atlantic Yards, I suspect, the top-down support from governors and mayors have hamstrung agency pushback.

Hankin, no longer in the more freewheeling academic world, didn't respond to my request for comment, and has password-protected her personal web site, where I initially found the video and article. Now Senior VP of the office space company WeWork, she recently provoked headlines for bundling the largest single contribution to Mayor Bill de Blasio’s re-election campaign. I can't blame her for not commenting.

Equitable policy, and what to do next

To achieve equity when megaprojects are built, Hankin intriguingly suggested that third-party advocates for local communities be required. That surely could help, but only if those advocates were truly empowered, not used as window-dressing. She wrote:
It is essential for government to take a proactive role overseeing implementation of benefits by mandating third party advocates for local communities and by rewriting economic development policy so that it contributes to the economic growth of a locality, not just the economic growth of big business. The CBAs executed in New York will not create any long-lasting positive impact locally. Other cities have been successful in delivering meaningful benefits to local residents while New York has failed miserably.
Hankin also suggested that megaprojects fund a “placemaking project,” such as a new cultural facility or a business incubator. That seems plausible, though the mutable nature of megaprojects would require such a commitment be locked in.

She wisely pointed to the need to ensure partnerships with less-established MWBE (minority- and women-owned business enterprises) contractors, not the “same handful of construction firms... used on every single project.”

Indeed, the developers of Atlantic Yards, which in the Community Benefits Agreement claimed to pursue "systemic changes in the traditional ways of doing business on large urban development projects," have worked for a decade with McKissack & McKissack, which calls itself "the oldest minority-owned professional design and construction firm in the United States."

Demanding more of government

Government should be conducting ongoing economic analyses of megaprojects, Hankin wrote, so such projects benefit all:
Policies that have dictated megaprojects have contributed to the widening economic gap in New York, speeding up the impacts of gentrification, displacing residents and local businesses, and supporting the growth of big business. Development in New York has a multitude of complexities. To be truly successful, policies will require a more holistic perspective that includes all of its citizens. New Yorkers should demand more of their government.
Who could argue with that? (Though Hankin, as her reflections indicate, was also sometimes frustrated by a certain slice of New Yorkers who were demanding more from their government.)

What's missing from her analysis, conducted at the end of her fellowship year, is a recognition of how politically difficult it would be. After all, New Yorkers can’t always get basic honesty from government. Consider: shortly before Hankin's tenure, ESD and its environmental monitor appeared to condone a cover-up of a Forest City contractor's falsification.

New ESD President Howard Zemsky was quoted in a June 2015 press release, likely prepared by the developer, that wrongly claimed the new Atlantic Yards/Pacific Park schedule meant housing would come “10 years earlier than originally predicted.” (Rather, it was 10 years earlier than the previously-extended "outside date." The project was originally predicted to be finished in 2013, not 2025!)

When I examined the state's monitoring of mold concerns at the modular tower, the documents I received from ESD in response to a Freedom of Information Law request were too redacted to provide answers.

Hankin surely knows that her own agency fell short. In March 2010, before she took the job, a state judge slammed the ESD for "deplorable lack of transparency" in its failure to acknowledge the possibility that Atlantic Yards might take 25 years to build rather than ten years. In July 2011, that judge, Marcy Friedman, ordered a new round of environmental review, calling an ESD legal claim "patently incorrect."

What's next

Today, Pacific Park faces a dramatic change that merits the skepticism Hankin lodged: the developers—now Greenland Forest City Partners, led by the Shanghai government-owned Greenland Group—seek to get ESD, her former agency, to amend project agreements. Their goal: a giant two-tower project across from the Barclays Center, nearly three times the bulk of the building previously approved.

This new approval process will be overseen by the unelected ESD board, controlled by Gov. Andrew Cuomo. A few members of the Atlantic Yards Community Development Corporation may raise concerns, but most are Cuomo appointees.

I've called Atlantic Yards not a "public-private partnership" but a "private-public" one driven by the developer. Indeed, as noted, Hankin called agencies like ESD "quasi-private entities [that] function more like a private corporation." 

So her reflections remind us it's unwise to bet against the combination of the developer and the state, unless, of course, New Yorkers demand more.

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