Saturday, December 31, 2016

When the state doesn't hold developer accountable, community frustrations emerge at NYPD meeting

The scheduled Dec. 13 Atlantic Yards/Pacific Park Quality of Life Community Update meeting, in which representatives of developer Greenland Forest City Partners and Empire State Development (the state authority overseeing/shepherding the project) answer questions, was postponed six weeks until Jan. 24.

So that meant, confoundingly, that the only times in the last six weeks the public could question a government representative about project impacts came at the end-of-month meetings of the New York Police Department's (NYPD) 78th Precinct Community Council, where a variety of precinct-related issues are typically addressed.

And cracking down on a project that has so little margin for error is surely not the NYPD priority.

On the morning of 11/28/16, as Dean Street resident Peter Krashes wrote on Atlantic Yards Watch, blocked crosswalks at Dean Street and Flatbush Avenue, caused by construction at both 461 Dean (part of Pacific Park) and 215 Flatbush (separate), caused pedestrians to walk on Flatbush rather than on a sidewalk. (See photo at right)

Other sidewalks on Dean were blocked, as well, and no flaggers were present.

At the very brief meeting last week, Precinct Commanding Officer Frank DiGiacomo, said, in response to Krashes' continued mention of problems at their intersection, that "one side [of the construction on Dean] went over their permit." It wasn't clear whether it was 461 Dean or 215 Flatbush.

DeGiacomo said that "we talked to Ashley [Cotton of Forest City Ratner] and her people" and they were working to move the scaffolding regarding 461 Dean back as the building progresses.

The situation deserved much more of an answer, but those responsible weren't there.

More frustration

At the November Precinct Council meeting, Krashes detailed some not-so-productive interactions with the police regarding construction violations that blocked bike lanes and sidewalks.

DiGiacomo, whose focus surely is on fighting crime (and Vision Zero), responded--in frustrated and not-so-receptive tones himself--that that the police did their best but felt hamstrung. "We're not stopping construction, and we have to make the community happy too."

"We need DOT [Department of Transportation] and NYPD to put pressure on the state and the developer to observe the law," Krashes said.

Krashes requested a working group. DiGiacomo, who said "I don't have the personnel to sit at construction sites," agreed to a project walk-through with community representatives. No representative of the state authority or the develoer was present.

"The developer is throwing you [NYPD] under the bus, and us under," commented Regina Cahill, a longtime neighborhood resident and president of the North Flatbush Business Improvement District.

Community enforcement

Krashes on 11/30/16 lodged a report on Atlantic Yards Watch, Smoke from tar boiler is one of many problems Monday; State employee eyes problem, regarding an episode during the morning of Monday, 11/28/16, where a smoking tar boiler continued for well over an hour--perhaps much longer--next to residences:
A truck with a tar boiler attached was parked in a bike lane on Carlton south of Dean Street. The tar boiler was smoking a great deal. I arrived at 10:09 am. When it was clear there was no other solution, I approached the contractor at 11:13. We had a very reasonable conversation and he was responsive. He apologized and turned the boiler off immediately.

I don't know when the boiler arrived, but construction work legally starts at 7 am. Certainly the boiler was smoking for the entire time I witnessed it. Given the start time of construction, it is possible that the smoke continued right next to residences for more than four hours. As is often the case, there was no air monitor present where it was needed, and it is not clear to me anyway that the monitors sample for fumes.
Ironically enough, though a state representative passed by the site, the boiler was turned off by the contractor only because of a conversation with Krashes. In other words, the community does the enforcement.

Friday, December 30, 2016

The Site 5 shimmy: absent from original Atlantic Yards map, but clearly visible in 2003 Gehry models

I recently took a look at the 12/10/03 original public relations packet for Brooklyn Atlantic Yards, and I realize I missed something when I scanned the hard copy version that I had been given in early 2004: it didn't contain all the images released four months earlier.

Maybe that was by design, maybe not, but a contradiction was staring people in the face when the project was announced. Consider the site plan, which at that point was 21 acres, without Site 5--long home to Modell's and P.C. Richard, indicated with the pink arrow directly below--as part of the project. (Also note how there was virtually no entrance to the open space from the south; that has been adjusted.)

Looking at the images

Then consider these annotated images that were part of that original p.r. packet. A large development at Site 5 was clearly on the table, as architect Frank Gehry had already created a massing model. See arrow below.

Only at a May 2005 City Council hearing was the plan formally announced, though it clearly had been on the table from the start, as shown in this other image of a Gehry model.

What's next?

Now developer Greenland Forest City Partners has slow-percolating but very ambitious plans for Site 5: the tallest, bulkiest development within Atlantic Yards/Pacific Park, a two-tower complex that could exceed 1.1 million square feet and reach 785 feet tall. See bottom image.

It's currently delayed by litigation regarding Forest City's purported guarantee to P.C. Richard that it could return to the new building. But if the history of this project is any clue, stay tuned for more twists, and more deception.

Thursday, December 29, 2016

Sunny Pacific Park? Remember, towers will cause extensive shadows (& state analysis was vague)

From New York Times; Pacific Park shadows not delinated
It was interesting to read last week's New York Times Upshot feature, Mapping the Shadows of New York City: Every Building, Every Block, which promised more than it delivered--yet still left some sobering observations.

The interactive map is based on slightly stale data. So "every building" does not include recently erected Atlantic Yards/Pacific Park towers or their shadows, much less the shadows long predicted on buildout. Rather, the project footprint comes off as a smudge, as shown in the screenshot at right.

But the article did send me back a decade to recall the estimates of the significant shadows that project buildings are predicted to cast.

Not only will those shadows darken the much-hyped "park," they will extend past the footprint. Remember, the architect of the ten-story Atlantic Terrace building just northeast of the arena block scrapped plans for solar panels, saying in 2007, "It’s just not an option for a building that will be in substantial shade all year round."

The 2006 visuals

Take for example the image at left of the project's Phase 2, east of Carlton Avenue, produced in 2006 for the Council of Brooklyn Neighborhoods (CBN), a coalition set up to respond to the environmental review.

CBN noted that, while state document portrayed the planned open space as green and unsullied by shadows, a shadow analysis suggested that in March, there wouldn't be much sun. (That also applies to September, six months later.) December is far worse, June much better.

And, as I'll describe further below, the language in the November 2006 Final Environmental Impact Statement (Final EIS) regarding shadows is vague and hedging, leaving it impossible to know just how much space would out of shadow and for how long.

However, Chapter 9 of the Final EIS, on Shadows, offers a seemingly un-rebuttable defense of shadows:
Were it not for the development of these buildings, this publicly accessible space would not be created. Therefore, the shadows on this public space would not be considered significant adverse impacts.
Promotional image, shadowless, from project web site
In other words, don't complain.

On the other hand, shouldn't the developers touting "Pacific Park" maybe acknowledge the shadows? Oh, no. That would hurt sales.

But maybe those who rhapsodized about the Atlantic Yards open space--remember the Rev. Herbert Daughtry's expansive invocation at the March 2010 groundbreaking, citing "blooming flowers, and decorative fountains of spouting water"--might have second thoughts.

The warning in the Times

A key passage in the Times article should serve as a warning:
But [architect and consultant] Mr. [Michael] Kwartler doesn't think the solution needs to be so binary. Sunlight can be saved if developers and planners grow more sensitive to how buildings are oriented. The biggest enemy of parks, and especially small parks near new development in Brooklyn, says Mr. Kwartler, is bulky buildings to the south end of parks. He says that much of the loss of sunlight in our public parks could be avoided if our tall, bulky buildings were simply positioned to the north, west or east side.
(Emphases added throughout)

Well, there will be four tall, bulky buildings along the southeast block of Pacific Park Brooklyn, furthering shadows on the public space--not a park--that's been so highly touted.

The bookend buildings on the southeast block, B11 (550 Vanderbilt) and B14 (535 Carlton) are under construction

Looking at the shadow studies

Chapter 9 of the 2006 FEIS explains, in part, how the open space is calculated to avoid shadows. But the winter is pretty much a disaster--as the state study showed, that long shadows at 9 am in the cold month of December not only cover the open space, but also large portions of Fort Greene.

The actual impact, according to the state, is not very clear:
The proposed project’s publicly accessible open space is designed to take into account the location and heights of the proposed buildings and the shadows they would create. Major landscape elements, such as the oval lawn, primary pathways, and water features, would be located to receive the maximum exposure to midday sun throughout the year. The location of other landscape elements, such as the north-south pathways and smaller passive use areas, would be sited and oriented to receive sunlight when other areas of this open space are in shade so that sizable portions of the entire open space would have access to sunlight during the late morning through early afternoon hours. The proposed project’s publicly accessible open space would receive shadow from Buildings 3 through 15 throughout the day in each analysis period. The incremental shadow would be greatest in the early mornings, when the shadows would stretch east and late afternoons, when the shadows would stretch west along the open space. During those times, most of the open space would be in shadow. Shadow is not generally expected to adversely affect active recreational uses such as volleyball, bocce, and the half basketball courts. The shadow would diminish the attractiveness of the passive recreation areas to their potential users. 
Ok, but what are "sizable portions"? Is that 20%, or 40%, or 70%?

And couldn't "late morning through early afternoon" be a rather brief period? Both of those descriptions have some flex in them, and could mean rather limited amounts.

The state's shadow study, issued in the July 2006 Draft EIS and then the November 2006 Final EIS, followed up on a study done by Pratt Institute Professor Brent Porter and his students, published in the 6/26/06 Brooklyn Paper, warning of severe winter shadows extending throughout Fort Greene.

The state analysis, as shown in the various shadow diagrams below, does not assess Fort Greene to the same extent.

And, of course, there are many more towers along/near Flatbush Avenue today, casting additional shadows. But it is clear, even from the state analysis, that the Atlantic Yards/Pacific Park open space will not be a sunny meadow.

Shifting shadows

The chapter offers this assessment on impacts, explaining that, the sun casts longer shadows in the early morning, and that winter sun, which is lower in the sky, casts longer shadows. And while summer shadows are the shortest, the sun travels farther, so summer sun "casts shadows in more directions than those seen in other seasons, and its late sunset and early sunrise creates shadows earlier in the morning and later in the evening than in other seasons."

[Note: the images below are blended from the Draft EIS and Final EIS in part because not all the images from the latter are available online. Not all the images from the Draft EIS were available either, so I later copied some images from a disc.]

The shadows in March and September

At the beginning of the analysis period, almost all of the proposed project’s open space would be in shadow cast from Buildings 5 through 15 (see Figure 9-44). Throughout the day, these buildings would cast shadow on the new, adjacent open spaces. However, from 9:00 AM to 3:00 PM, large portions of the open spaces would be in full sun (see Figures 9-45 through 9-47). These open spaces would be covered in shadow again at the end of the analysis period (see Figure 9-48).
As far as I can tell, large portions would not be in full sun, either.

The shadows in May and August

At the beginning of the analysis period, almost all of the project-created publicly accessible open space would be in shadow cast by Buildings 5 through 15 (see Figure 9-49). Throughout the day, these buildings would cast shadow on the new, adjacent open spaces. However, from 10:00 AM to 4:45 PM, large portions of the open spaces would be in full sun (see Figures 9-50 through 9-52). At the end of the analysis period, the open spaces would be covered in shadow again (see Figure 9-53).
Well, during that time, large portions would not be in full sun, either.

The shadows in June

Buildings 5 through 14 would cast almost all of the project-created publicly accessible open space in shadow at the beginning of the analysis period (see Figure 9-54). The adjacent open space would receive shadow throughout the day from these buildings. However, from 10:00 AM to 5:00 PM large portions of the open space would be in full sun (see Figures 9-55 through 9-57). When the analysis period ends the open spaces would be covered in shadow again (see Figure 9-58).
Well, large portions would not be in full sun, either. And it looks pretty shady by 4:15 pm, actually.

The shadows in December

Early in the analysis period, almost all of the project-created publicly accessible open space would be in shadow cast mainly by Buildings 5 through 14 (see Figures 9-59 and 9-60). Throughout the day, these buildings would cast shadow on the adjacent, new open spaces, but there would be some areas of sun in the midday (see Figures 9-61 through 9-62). At the end of the analysis period, these open spaces would again be covered in shadow (see Figure 9-63).
Yes, there would be "some areas of sun." Sure. Just not very many.

Wednesday, December 28, 2016

A quiet Dec. 30-31 at the Barclays Center (because Kanye canceled tour)

Well there was this:
And then this:

In de Blasio's new campaign ad-like video, "affordable housing" sounds like an achievement

Update: as Daily News columnist Harry Siegel put it 1/1/17:
"It’s not an ad. You can say it all day long. It’s not an ad.”
That was Mayor Bill de Blasio testily answering incredulous reporters’ questions about the, y’know, ad produced by City Hall with two Broadway stars literally singing his praises: “No matter what will be, we’ve got Billy d B.” The video was pushed out on his City Hall Twitter account days ahead of the city Campaign Finance Board’s ban on elected officials appearing in any taxpayer-funded — you guessed it! — “advertisement or commercial” during an election year.
Hey, what's going on here?

Well, as chronicled in multiple newspapers, Mayor Bill de Blasio's new communications team is getting the word out with videos that look ever so much like campaign ads, with Broadway stars volunteering on a new custom song hailing his successes.

Watchdogs are skeptical. But the mayor's office straightfacedly says they're not campaign-related.

In doing so, de Blasio is bypassing the press, a tactic used by various leaders and candidates--of both parties--who prefer producing their own media than letting someone else do so. So that leads to headlines like:
Slick City Hall videos touting Mayor de Blasio’s agenda strike some as taxpayer-funded campaign ads (Daily News)
Taxpayers foot bill for glitzy ad touting de Blasio (New York Post)
A Song for Bill de Blasio Sounds a Sour Note for Watchdogs (New York Times)
Bill’s song and dance (Daily News editorial)
From the song: "Affordable housing, & more to come soon"
Looking more closely

The full message/song is in a tweet below, but, as shown in the screenshot at right, one line of the song is "Affordable housing, and more to come soon," with a graphic as backdrop stating "Most New and Preserved Affordable Apartments in Decades."

Well, that sounds like an achievement. And it may be enough as a campaign message, unless a challenger drills down to details (and offers an effective alternative).

But "affordable" merely means "below-market" (well, not always) and "income-linked," rather than, as many believe, "low-income housing for the needy."

Last week, a de Blasio spokesman, curiously enough, defended some not-so-affordable Atlantic Yards/Pacific Park housing--skewed toward higher incomes than in the plan long promised--by saying it improved on market-rate housing.

Interestingly, the Daily News article, 16 reasons why 2016 was a horrible year for Mayor de Blasio mentions things like homelessness, investigations, and the loss of key personnel, while citing "bright spots" like record low crime, a strong economy, and his universal pre-K initiative. Does affordable housing fall in between?

The Post noted that the video appeared just when de Blasio sent out a separate fund-raising letter:
They even trumpet a two-year rent freeze for rent-stabilized apartments — which the mayor’s office has insisted was done without City Hall interference by a board that’s supposed to be independent of political influence.
On Twitter

Tuesday, December 27, 2016

Navy Yard EB-5 loan is retired (which should mean first Atlantic Yards loan still pending)

A 12/22/16 press release, New York City Regional Center Announces Repayment of $60 million EB-5 Loan in its Brooklyn Navy Yard Phase I Offering:
The New York City Regional Center (“NYCRC”) is pleased to announce the repayment of its $60 million EB-5 loan used to assist the continued redevelopment of the Brooklyn Navy Yard, New York City’s largest industrial park. The borrower of the EB-5 capital was the Brooklyn Navy Yard Development Corporation. The $60 million investment and resulting job creation enabled 359 individuals (investors and family members) to receive permanent residency in the United States under the EB-5 Immigrant Investor Program.

...The $60 million loan from the NYCRC provided much needed capital for the renovation of a 215,000 square foot industrial building in the Navy Yard. The building was previously used as a machine shop for the United States Navy during World War II but had sat vacant for decades. The project transformed the building, now named the Green Manufacturing Center, into New York City’s leading hub for green manufacturing and sustainable design. EB-5 capital was also used to assist with surrounding infrastructure improvements in the Navy Yard such as the building of new roads, water and sewer lines, and pile foundations and bulkhead walls to allow for the continued use of dry docks and adjacent berths to support maritime activity in the New York harbor.
This was one of seven (!) low-interest loans via the NYCRC, totaling $339 million, used for projects in the Navy Yard, including--new to me--the coming supermarket on what was Admirals Row.

The press release mentions various other NYCRC projects, for which it got cheap loans from immigrant investors seeking green cards-including a new cargo facility at JFK Airport, Fresh Direct’s new headquarters in the South Bronx, the City Point development in downtown Brooklyn--but somehow not the firm's highly questionable fundraising for Atlantic Yards.

Notably, since there's no announcement regarding the repayment of the $228 million (originally supposed to be $249 million) EB-5 loan brokered by the NYCRC in 2010 for Atlantic Yards, which I described as "Anatomy of a Shady Deal." (Still true!) It had a seven-year potential payback, so, I assume it's still pending.

Another intermediary, the U.S. Immigration Fund, has raised an additional $349 million for Atlantic Yards/Pacific Park

It was a refinancing

Do note that the EB-5 investors, who put up $500,000 and accept very low interest--the borrower pays low interest (about 3%-5% back then, more now, but intermediaries keep a good chunk)--haven't been repaid from Navy Yard revenues.

Rather, as the Real Deal reported 12/22/16, Brooklyn Navy Yard refinances $60M EB-5 loans:
The Brooklyn Navy Yard landed two loans from Sterling National Bank and Symetra Life Insurance Company to refinance $60 million in EB-5 debt.
The $30.75 million loan from Sterling carries a 15-year term, and the $31.68 million Symetra loan has a 21.5-year term.
That covers the original loan plus financing costs. The seven-year EB-5 loan was likely interest-only.

The interest rates on the new loans were unmentioned, but surely they are higher than that paid under the EB-5 program, as investors care far more about green cards and getting their money back than earning much return.

The question then: what will be the terms on the Atlantic Yards refinancing.

Monday, December 26, 2016

On reforming EB-5: raise the price tag or auction off visas; then put money into infrastructure

Y'know, the Center for Immigration Studies (CIS) is labeled right-wing and intolerant, and I don't defend their overall agenda. But analyst David North, one of the few people who looks critically and incisively at the EB-5 program, makes a lot more sense than the program's defenders, who keep claiming that cheap capital from immigrant investors actually creates jobs.

Writing 12/20/16, We Can Preserve the Flow of EB-5 Funds While Cutting the Number of Visas, North suggests some plausible reforms (though he'd prefer to kill the program).

First, he notes that, while the program involves 10,000 visas, investors bring their families, so this means some "4,000 new investments a year, bringing the annual total of EB-5 funds to about $2 billion."

His proposals, plus my comments:
--raise the price for investors to $750,000. 

Industry advocates are ready for $800,000, so this isn't much.

--auction the visas, with a $1 million floor, and stopping the auction when $2 billion is raised, thus maintaining the current flow, but with fewer investors/immigrants.

This would be interesting, because surely people would pay more, but it also would be a windfall for the few projects that would lure the investments, so I'm not sure this would "be a considerably better system," North says.

--put the funds, at $750,000 per investment, into infrastructure, rather than private projects.

"The industry middlemen, of course, would scream," writes North, but he's right that much of the value of the visas gets creamed by middlemen.

--run the auction, and then put the money into "infrastructure projects, like roads, bridges, and maybe a big fence at the southern border."

Perhaps, as he writes, the Trump White House would love this, since it would build a wall and make "rich Chinese pay." Of course, that suggests that the wall should be a priority, and there's strong argument to the contrary.

Generally, however, public infrastructure should serve the public at large, not well-positioned real-estate developers. Indeed, North's generally reasonable suggestions are not like those floated 2/22/13 in U.S. News by Dartmouth business professor John Vogel, who wrote Why Is the U.S. Government Selling Green Cards? and concluded:
One of the oddities about the EB-5 program is that the U.S. government is giving out the green cards, but the entrepreneur who puts together the investment gets the money. This scheme seems inefficient and open to corruption. If our government really believes that it is a good idea to sell green cards, maybe we should drop the pretense that this is a job creation program. It might be more efficient to have the money go directly to the U.S. Treasury and reduce the deficit by billions of dollars a year. In fact, the U.S. government could auction off these green cards and perhaps raise even more money.

Forest City, with partner, seeking $60M in EB-5 funds for Downtown Brooklyn office tower (model for Site 5?)

As Eliot Brown of the Wall Street Journal first pointed out, Forest City Ratner, in partnership with JEMB Realty on a planned office tower in Downtown Brooklyn, is seeking $60 million in below-cost loans from immigrant investors under the federal government's dubious EB-5 program, which trades visas for investors and their families in exchange for a $500,000 investment that purportedly creates ten jobs.

The tower, variously known as 420 Albee Square and One Willoughby Square, was initially planned by JEMB, which was nudged by the city to build office space, and which earlier this year brought in Forest City as a partner, with an unspecified percentage.

Presumably Forest City's experience with Brooklyn office space at MetroTech, as well as with EB-5, was a selling point.

Presuming this is successful, and the EB-5 program is renewed, surely Greenland Forest City Partners will go back to EB-5 investors for the planned--though not yet approved--two-tower complex at Site 5, slated to be the single largest development within the Pacific Park project.

Drilling down on current project

The $60 million in EB-5 funds is only about 15% of the new office tower's total budget, but under the yet-to-be-reformed program rules, project developers can claim job-creation credit based on the entire pool of money.

In other words, a multiplier calculating job creation is applied to the entire $398 million invested, not just the immigrant investors' $60 million. That's legit only if the EB-5 funds were absolutely necessary to get the project off the ground, and there's no proof of that.

This fund-raising, by the way, is via CanAm Enterprises' New York Metropolitan Regional Center, not the other two regional centers (New York Immigration Fund, New York City Regional Center) that served as intermediaries for the $577 million raised in three tranches for Atlantic Yards/Pacific Park. Despite those official-sounding names, all are privately-run investment pools.

The pages below, from the Chinese migration agency Wailan, are translated into English via Google Translate, so very unofficial.

So, 461 Dean has blue (?) to "help the high-rise blend in with surrounding buildings"?

461 Dean in rear, blending in
Ok, now we know. According to Architectural Digest, 11/17/16, The World's Tallest Modular Skyscraper Welcomes Its First Residents, "Designed by SHoP Architects and located next to the Barclays Center, 461 Dean Street was built to blend into its historic Brooklyn neighborhood."

Oh really? Here's more explanation:
It just so happens that the firm behind the record-setting tower is the New York–based SHoP Architects, the same that designed the Barclays Center. This fact is significant, since cohesive aesthetics are increasingly important to many Brooklynites. To that end, SHoP used multiple exterior colors to help the high-rise blend in with surrounding buildings (red for historic brownstones and blue for the modern skyscrapers).
Well, given that 461 Dean (aka B2) has black and silver panels, as well, I'm not sure that's fully thought-out (or, maybe, fully explained). Let's put it this way: nobody thinks 461 Dean blends in.

Even SHoP architects, in its designs for three towers on the arena block, is not aiming at blending in.

Sunday, December 25, 2016

Lipsky's afterlife: an exemption for ex-cons advising unions (and a question about rehabilitation)

Richard Lipsky, the former lobbyist convicted of bribery, got a break.

(Remember, Lipsky lobbied for Forest City Ratner, and paid bribes to corrupt state Senator Carl Kruger, another Atlantic Yards supporter, though none of the admitted crimes involved the project. Kruger was caught on tape having very chummy conversations with Forest City External Affairs VP Bruce Bender, who requested state money for Atlantic Yards but instead got it for a Prospect Park project.)

The New York Times told us 12/22/16, in Ex-Prisoners Get an Advocate From Their Own Ranks, that Lipsky, who's advocated for criminal justice reform since his guilty plea and brief three-month sentence, won the battle for an exemption from a law that bars those guilty of crimes including bribery, from advising unions until 13 years later.

Federal Judge Jed Rakoff, who gave Lipsky such a short sentence in light of publicly unexplained cooperation with prosecutors (see sentencing memo), agreed to the exemption, despite opposition from the U.S. Labor Department, which (according to the Times) said the former lobbyist had failed to “clearly demonstrate” rehabilitation and thus couldn't be “trusted not to endanger the organizations in the position he seeks.”

Rakoff wrote that, by waiting, that would cost the 69-year-old Lipsky the time he'd have to work.

Lipsky has already worked for a foundation on criminal justice reform, and would advise the United Food and Commercial Workers International Union on such policy issues.

Big bribes, but acknowledgement?

Well, it's good that Lipsky aims to work constructively on these issues, and is no longer slinging criticism and contempt toward Atlantic Yards opponents and critics. And I don't know all the details.

But Lipsky did pay Carl Kruger between $120,000 and $200,000 in bribes in less than three years. That's not chump change.

But Lipsky's public presentation, at least in two examples, seems to have soft-pedaled the crime. In an op-ed for Crain's last April, What I learned after my arrest for bribery: Our system is broken, Lipsky made some cogent points. But he also wrote:
I speak from personal experience. For more than 30 years, I lobbied on behalf of the under-represented in New York—often neighborhoods and small businesses. Along the way, I upset plenty of power brokers. But my decades of professional achievement were forever tarnished four years ago when I was arrested for conspiring to bribe New York state Sen. Carl Kruger in return for him lending support to some of my clients.
Yet, eight months after I was arrested and threatened with a 20-year prison sentence, a remarkable about-face took place. On close examination of what I had done, prosecutors told my lawyers that they didn’t believe I belonged in prison. I eventually did serve 90 days.
Yes, as Lipsky wrote, his "career was ruined at an extreme emotional and financial cost." That's significant.

But I don't think prosecutors' leniency stemmed from rethinking the wrongness of Lipsky's underlying acts, but rather his willingness to offer what they called "substantial assistance" in this and other prosecutions. Also, he pleaded guilty not just to conspiring to bribe Kruger, but to actually bribing him.

In January 2015, Lipsky wrote an op-ed for the Daily News, Prosecutors like Preet Bharara are politicians, too.

Those observations were wise, but Lipsky's self-description as "someone who was himself caught up (and eventually pled guilty in the Southern District) in the grinding gears of the prosecutorial state" sounds like he thinks he was wrongly prosecuted.

Similarly, the biographical note--"Two years ago, he spent 90 days in a federal prison camp"--almost sounds like Lipsky spent time investigating as an anthropologist rather than as a prisoner serving a sentence.

By the way, Crain's reported in October 2012 that "Lipsky will get to spend his short stint in the cushiest federal prison in New York," Otisville. Kruger's still there. Forbes called it one of the country's ten cushiest prisons.

OK, now the Nets payroll is the league's lowest

A very interesting factoid about the Brooklyn Nets from Filip Bondy in the 12/22/16 Times:
Money and cap space are not the problems. The team’s owner, Mikhail D. Prokhorov, is a Russian oligarch, and its payroll, about $58.7 million, is the lowest in the league. By contrast, the Warriors’ is $107 million. The Nets’ next opponent, Cleveland, owns the league’s highest payroll at $131.3 million, well above the soft $94.1 million league cap and the $113.3 million luxury-tax limit.
It was not so long ago when the Nets had the league's highest payroll and a crushing luxury tax.

Saturday, December 24, 2016

Is 461 Dean a sign of "Brooklyn's Continued Ascent"?

9. Brooklyn's Continued Ascent
Every year feels like a milestone for a borough seeing unprecedented development and investment. This one had a lot. Forest City Ratner opened 461 Dean St, its modular tower in Pacific Park next to Barclays Center, after washing its hands of its nascent modular construction company....
Well, though "washing its hands" hints that things didn't go all that well with Forest City's claim to have "cracked the code" regarding high-rise modular construction, the building is hardly a milestone--unless "unprecedented" means "things went badly."

461 Dean took nearly twice as long as promised, experienced leaks and mold, lost money for its developer, and faces continuing litigation. The building has "opened" but by no means has moved a large fraction of residents in. The sticker price on at least one market-rate unit is below that on "affordable" units in a separate Pacific Park tower.

Flashback May 2006: "A Super Design for a Great Project"

Remember that 5/15/06 Daily News editorial headline, "A Super Design for a Great Project", regarding Frank Gehry's newly-released renderings?

Those were the days, weren't they? (Remember, the project was supposed to be done in 2016! Gehry was supposed to design every building!)

That boost for Atlantic Yards (now Pacific Park). It sure was useful for developer Forest City Ratner (now Greenland Forest City Partners).

Barclays sued by DOJ for fraud in sale of mortgage-backed securities

Barclays PLC, whose subsidiary bought naming rights to the Barclays Center, has a history of sketchy behavior, including civil and criminal penalties that, as I argued, should have stripped the arena of the Barclays name.

Now there's more to stain the bank's name, a civil complaint that seems destined to lead to a major fine, if not necessarily the sum sought by federal authorities.

A 12/22/16 U.S. Department of Justice press release, United States Sues Barclays Bank to Recover Civil Penalties for Fraud in the Sale of Residential Mortgage-Backed Securities:
The United States Department of Justice today filed a civil complaint in the Eastern District of New York against Barclays Bank PLC and several of its United States affiliates (together, Barclays), alleging that Barclays engaged in a fraudulent scheme to sell residential mortgage-backed securities (RMBS) supported by defective and misrepresented mortgage loans. As alleged in the complaint, from 2005 to 2007, Barclays personnel repeatedly misrepresented the characteristics of the loans backing securities they sold to investors throughout the world, who incurred billions of dollars in losses as a result of the fraudulent scheme. The suit also names as defendants two former Barclays executives: Paul K. Menefee, of Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, of Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions.

The detailed allegations in the complaint describe Barclays’, Menefee’s, and Carroll’s misconduct in connection with RMBS securitizations Barclays underwrote between 2005 and 2007. The complaint alleges violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the gain to the violator or the losses suffered by persons other than the violator.
...“The widespread fraud that investment banks like Barclays committed in the packaging and sale of residential mortgage-backed securities injured tens of thousands of investors and significantly contributed to the Financial Crisis of 2008,” said Principal Deputy Associate Attorney General Bill Baer. “Millions of homeowners were left with homes they could not afford, leaving entire neighborhoods devastated. The government’s complaint alleges that Barclays fraudulently sold investors RMBS full of mortgages it knew were likely to fail, all while telling investors that the mortgages backing the securities were sound. Today’s complaint makes clear that the Department of Justice will continue to hold financial institutions, and the individuals who work for them, fully accountable for harming investors and the American public.”
(Emphases added)

More from the press release:
As alleged in the complaint, from 2005 through 2007, Barclays, through Menefee and Carroll among others, fraudulently sold tens of billions of dollars of RMBS, and repeatedly misled investors about the quality of the mortgages backing those deals. The alleged scheme involved no fewer than 36 RMBS deals, securitizing over $31 billion worth of subprime and Alt-A mortgage loans. The complaint alleges that in publicly-filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals.
A negotiation, but not close enough

Bloomberg summarized it 12/23/16 as Barclays Dared U.S. to Sue Over Mortgages, a Faceoff Long Coming, noting that the bank had negotiated with prosecutors on a settlement, but couldn't come to agreement--and that the complaint quotes "consultants who privately called the underlying loans 'craptacular.'"

Bloomberg noted that Deutsche Bank had agreed on a "preliminary $7.2 billion deal with the Justice Department" and Credit Suisse will pay $5.28 billion, while Barclays has set $2 billion as its ceiling. (Those sums include civil penalties and consumer relief.)

The Barclays strategy? Bloomberg suggested that either the incoming administration will be more lenient or that the current one might compromise as it finally winds down.

Friday, December 23, 2016

Forest City's 80 DeKalb, advertising for tenants, also not immune to price pressure

The Forest City Ratner rental tower 80 DeKalb near Fort Greene Park, also known as DKLB BKLN, is-along with Pacific Park's 461 Dean, among others--seeking out tenants with ads in the Downtown Brooklyn area.

I took the photo at right on Adams Street near Fulton Street, near the Shake Shack.

Apparently this tower, which leased up fast when it opened in 2009 and was seen by the developer as testing the market for Atlantic Yards, is not immune to the glut of units in the area. (Forest City sold 49% of the building in 2011.)

To be sure, StreetEasy indicates that only 10 of the apartments (292 market-rate units, plus 73 low-income ones) are available, but a closer look suggests some price pressure.

Part of that may be the developer's own seeming strategy of raising asking rents in the summer, when more people move, and lowering them in the winter, when fewer seek to sign leases. But surely another part is the current competition.

Yesterday, I look at a few units.

One bedroom, 11-a

As of last May, the developer sought $2,875, then upped the asking rent to $3,250 and $3,495. Now the ask is back to $2,830.

One bedroom, 23-j

As of July 2014, it was listed at $3,033, and then presumably was rented for a year, because it was listed at $3,225 in September 2015. That ask has fluctuated:down, then up, then down to $2,995, which is below the rent achieved two-and-a-half years ago.

Two bedroom, 28-f

Listed at $4,500 in March 2014, it came back on the market two years later, listed at $5,450 in June 2016. That ask has steadily dropped, and is now $4,695, not far off the rent nearly three years ago.

One bedroom, 28-k

This was listed at $3,350 last March, went down all the way to $2,750 a month later, went up to $3,450, and was last priced in September at $3,250, when presumably it was rented.

Thursday, December 22, 2016

Selling 461 Dean: a "brand-new 8-acre park" (which is unbuilt)

Just take a look at the screenshot below from the 461 Dean web site: a "brand-new 8-acre park."

Except it doesn't exist. As of early November, the best-case scenario for that "park"--actually, publicly accessible, privately managed open space--was 2025.

Since then, after unspecified project delays were announced, who knows? And the below-grade railyard, the purported major contributor to blight, remains uncovered ever longer.

Should affordable housing be aimed at the middle-class? What about a credit for poor renters? (Rich get most housing subsidie$)

Now that it's clear that so many Brooklynites are at risk of homelessness, it's worth reflecting on Do NYC’s Middle-Class Families Really Need Affordable Housing?, which City Limits asked 11/1/16:
With the de Blasio administration seeking to rezone neighborhoods across the city to promote the development of both market-rate and affordable housing, many local advocates have expressed concerns about a lack of units for families making the lowest incomes.
In some areas, however, there are also stakeholders arguing that their neighborhoods already have too much low-income housing and need families with higher incomes to support economic growth. They assert that it’s the middle class that’s stressed, with families unable to afford market-rate housing or qualify for low-income programs.
...Census data pulled by the Association for Housing and Neighborhood Development (ANHD) for eight neighborhoods that have received, are slated for or could possibly be in line to get a rezoning shines a light on which families really have the greatest need for affordable housing. In general, the data shows that households making less than $35,000 suffer far greater rent burdening than moderate-income households making between $75,000 and $100,000 a year. A family is considered rent burdened when they pay more than 30 percent of their income on rent.
(Emphasis added)

The article notes that in Brooklyn Community District 6, nearly half (48 percent) of the moderate-income households are rent-burdened. Then again, a large chunk of the Atlantic Yards/Pacific Park affordable housing--in the next two, "100% affordable" buildings--is for middle-income households earning  more than $100,000 a year. So much for a project pitched as rescuing the borough.

Who has it tougher

That's not to say that middle-income households have it easy, but... City Limits points out that many extremely low-income families are severely rent burdened, paying more than 50% of their income in rent:
In this regard, the data offers a new way to assess the final plan for East New York approved by City Council last April, revealing both good news and bad news. On the one hand, the final plan went farther than prior administrations’ rezoning efforts to encourage the creation of housing for families making between 30 and 40 percent AMI, or about $24,500 to $32,500 for a family of three. In East New York, roughly 85 percent of households in this income-bracket are rent-burdened. Assuming that the city’s current policy of allocating 50 percent of units to families in the local community district survives a court challenge, units created by the rezoning could help to alleviate this existing need. 
On the other hand, the plan does not include a significant number of units for families in the lowest income bracket, making below 30 percent AMI.
The de Blasio administration aims to dedicate 8% of units--as opposed to 2% under the Bloomberg administration--to families with incomes below 30 percent AMI. That can't move the needle too much.

A warning

Then again, as Brentin Mock wrote 11/3/16 in CityLab, In Search of Answers on Gentrification, citing the latest report from New York University’s Furman Center for Real Estate and Urban Policy:
There is no proven blueprint on how to fix this somewhat intractable problem. Perhaps the most important takeaway from the Furman paper is that its authors can’t vouch for any of the strategies they list as actually being totally effective in the long run: The report is clear to point out that it is only a collection of responses to gentrification, not a testament of what are the best practices.
A tax credit for renters

Next City reported 11/3/16 on a new plan to reverse the too-little-discussed paradox in which homeowners--most earning at least six figures--get more than double the subsidies that renters do:
A new paper from the Terner Center for Housing Innovation at UC Berkeley considers using the tax code to ease renters’ burden as well. The paper suggests the Federal Assistance in Rental (FAIR) credit might be structured in one of three ways, all of which aim to alleviate or eliminate rent burdens for households making 80 percent or less of area median income.
The most ambitious option, Rent Affordability, would provide a tax credit to ensure that renters pay no more than 30 percent of their income in rent, with the average monthly credit at $457. Presumably that figure would be much higher in New York City.

While this would cost an estimated $76 billion, it could save money on homelessness and other poverty-fighting measure--and it's close to the cost of the mortgage interest deduction.

Two other variations would cost less but potentially reach more people, albeit with lower benefits.

Wednesday, December 21, 2016

Now rent for one market-rate studio at 461 Dean less than most "affordable" studios at 535 Carlton

Ok, remember how I wrote that a market-rate studio at 461 Dean was renting for $2,298, just 7% more than a $2,137 affordable studio at 535 Carlton, another building in the Pacific Park Brooklyn project?

Not any more. That unit is now $2,134, which is less than the sticker price on 36 of 66 studios at the "100% affordable" (aka subsidized and income-linked) 535 Carlton, which should accept tenants early next year.

Yes, I know that affordable units are stabilized for at least 30 years, and thus offer protections over time.

But my point stands: a good (and disproportionate, compared to promises) chunk of so-called "affordable housing" is way too costly for those who rallied for it.

It also raises questions about how easy it will be to get tenants for those 36 (near-/over-market) studios at 535 Carlton (and commensurate studios at 38 Sixth, another "100% affordable" building).
From StreetEasy

In EB-5 hype (for Trump-branded tower), Jersey City gets inflated to NJ's capital and "Manhattan's Back Garden"

In the course of some research on EB-5 investor visas, I came across some glaring deception on the page of the New Jersey Regional Center, the private investment fund that has raised $50 million from green card-seeking Chinese millionaires for Trump Bay Street, the Trump-branded (but not developed) tower in Jersey City.

The tower, once known as 88 Kushner-KABR, is built by Kushner Companies, run by the president-elect's son-in-law Jared Kushner. Jesse Drucker of Bloomberg Politics last March pointed out the use of EB-5 funds.

OK, we know it's hypocritical for luxury towers to use EB-5, but that for now is industry practice, as Eliot Brown of the Wall Street Journal has described. That practice may be reformed when EB-5 is reauthorized next year.

Even so, I'm not sure how much impact Congress can have. After all, the push for profit leads to so much deception, and government agencies do too little to police it.

As shown in the graphic, potential investors were told that the capital of the state of New Jersey is Jersey City, with "nearly immediate access" to Manhattan. Perhaps New Jersey Gov. Chris Christie, whose office is in the capital, Trenton, might want to correct that.

And would you believe that Jersey City is known "as Manhattan's Back Garden"? I didn't think so. Nor does Google. Well, maybe that's why EB-5 is a racket (and has been called "legalized crack cocaine").

The NJRC is one of the business wings of the U.S. Immigration Fund, run by Nicholas Mastroianni II, who Peter Elkind of Fortune in October 2014 described as perhaps the hottest money-raiser in EB-5, despite his questionable business record.

He's been used by Forest City Ratner and Greenland Forest City Partners for two rounds of questionable fund-raising for Atlantic Yards/Pacific Park, Atlantic Yards II and Atlantic Yards III.

Apparently his firm remains willing to push the envelope.

DNAinfo: NYC's affordable housing lotteries skewed to young singles

DNAinfo's Shaye Weaver reported 11/16/16 City's Affordable Housing Lotteries Favor Young Single People, Stats Show. This isn't necessarily true of all units, but was based on analyzing 2013-15 statistics from the Department of Housing Preservation and Development, Weaver wrote:
But new data shows that the lion's share of the affordable apartments are going to singles ages 25 through 34.
More than half of the 48 housing lotteries for 1,470 units across the city put out by HPD from January 2013 through the end of 2015 were made up of one-bedrooms and and studios, according to the agency.
Forty-one percent of winners in those lotteries were ages 25 through 34, 50 percent of them were single, 36 percent are Hispanic and 27 percent of winners are black, according to data obtained by DNAinfo New York through a Freedom of Information Law request.
Only 4 percent were 62 years old or older, and 11 percent were under the age of 25.
That may in part be that units--especially 80/20 buildings--in certain areas, like Manhattan's West Side, skew toward smaller households that would rent studios and one bedrooms. It also may reflect age and Internet savvy, given that most people apply for affordable housing online.

And the racial mix may reflect the fact that a certain number of lotteries were held in Manhattan, where black or Hispanic residents may not be eligible for the 50% Community Board preference.

So it's unclear that these statistics can be directly extrapolated to all affordable housing lotteries, including those for Atlantic Yards/Pacific Park. But it does suggest that we could use more transparency.

Tuesday, December 20, 2016

Completely misleading: de Blasio spokesman defends affordability skewing upward (while low-income units lag)

My coverage yesterday of the narrowed gap between market-rate and affordable housing at Pacific Park Brooklyn got some wider discussion--and a curious defense from a de Blasio administration spokesman, who didn't acknowledge how affordable units have skewed toward middle-income households.

To recap, the most expensive studio apartment at the "100% affordable"--alternatively subsidized, income-linked housing--535 Carlton, at $2,137, is just 7% less than the least expensive market-rate studio at the sibling 461 Dean, at $2,298. (And there are "affordable units" at another building, unrelated to the project, that are more expensive.)

After the Daily News's Erin Durkin tweeted that, the issue got some pushback from Wiley Norvell, the mayor's Communications Advisor for Housing and Economic Development, (though writing in his personal Twitter account).

Atlantic Yards, he wrote, "has mix of low, moderate and middle income. Actual income diversity." That's true, but as I responded, that diversity is far different from what was promised in the 2005 ACORN agreement with developer Forest City Ratner.

Notably, in that agreement, only 20% of all affordable units were supposed to be in that highest income "band," or category. But in 535 Carlton, aka B14, 50% of the units are in that band, and thus geared to households earning six figures.

Norvell's response: "That same 50% in B2 is straight market rate. We tugged market to middle, mid to mod and mod to low."

Drilling down

That may seem an achievement at first blush, but it's quite misleading.

Let's back up. Atlantic Yards/Pacific Park is supposed to have 4,500 rentals, of which 50% are subsidized/affordable, and 1,930 condos. Let's put the condos aside.

The 4,500 rental apartments were long supposed to be in so-called 50/50 buildings that contained 50% market units and 50% affordable ones. More precisely, as with 461 Dean (aka B2), they were supposed to be 50/30/20 buildings, with 30% middle- and moderate-income units, and 20% low-income units. (The latter were the apartments that most of those rallying for Atlantic Yards affordable housing were seeking, which is why the term "income-linked" should be used more.)

The agreement developer Greenland Forest City Partners signed in June 2014 to change the construction schedule, assigning a 2025 deadline for affordable housing (after it had previously been extended to 2035), also included a pledge to build two "100% affordable buildings." That didn't change the numbers of subsidized units, just reallocated them.

Among the two "100% affordable" buildings is 535 Carlton. Yes, the 50% upper middle-income apartments in that building are more affordable than the 50% market-rate units in 461 Dean. And the 30% low-income apartments do represent a greater percentage than the 20% low-income units in 461 Dean.

But that's not the proper comparison, because 461 Dean is a 50/50 building.

The decision to create 100% affordable rentals means that other rental buildings, rather than offering the 50/30/20 model, will have 100% market rate units. So, as I wrote to Norvell, the 100% affordable building will be twinned with a future 100% market building: "Then blend & compare."

B2 = 461 Dean; B14= 535 Carlton
In the graphic above, based on a tentative (and by no means reliable) August 2014 timetable, a red arrow points to 461 Dean. Other red arrows point from the 100% affordable B14 (aka 535 Carlton) and B3 (aka 38 Sixth) to potential counterpart 100% market rental buildings.

The bottom line

In other words, the overall allocation of affordable units seems to be well off the original pledge: 15% low-income units among the pair of buildings, rather than 20%. (See the graphic in my Bklynr article.) And that means that, among "affordable" units, low-income units are behind schedule, while middle-income units are ahead of schedule.

Moreover, instead of having 10% of a 50/50 building devoted to the upper band of middle-income units, the current pattern means that 25% of the total units in a pair of buildings will be in that band. (Divide that 50% among two buildings.)

That's way off the pledge. Then again, that likely will be a problem for the next administration, not de Blasio's administration, since those 100% market rentals might not be built for a while. They kicked the can down the road. But they might be able to get away with it.

Another argument

Norvell also wrote: "Market will go up and down. Aff housing will still be so 30 years from now. Affordability = cost + stability."

That's true, in part, and I did mention the advantages of rent stabilization. The problem, though, is that the affordable housing will begin to disappear in 30 years, as I wrote.