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Atlantic Yards/Pacific Park graphic: what's built/what's coming + project FAQ (pinned post)

Brodsky: Atlantic Yards not ready for evaluation

An influential Democratic Assemblymember said yesterday said there was too little information extant about Atlantic Yards financials to make any evaluation of the project.

Richard Brodsky, a Democrat from Westchester, had just finished putting Empire State Development Corporation (ESDC) officials through the wringer on a number of issues, including a brief but intense foray into Atlantic Yards.

What would he tell Assembly Speaker Sheldon Silver, who controls one of three votes on the Public Authorities Control Board (PACB) and could stall the project until the incoming administration of Governor Eliot Spitzer, a fellow Democrat?

Brodsky, who chairs the committee that oversees public authorities, said Silver addressed the issue on his own, since he doesn't sit on the PACB--which oversees financing for certain state projects--as a legislator.

But Brodsky offered his own opinion: “As of right now, I need to know more of the facts that we sought and didn't get today, and we’ll get those by the end of the year.” (Later yesterday, NY1 reported that Silver had stalled the project.)

Only one staffer knows?

Though Chairman Charles Gargano and more than a half-dozen top agency officials appeared yesterday to testify before Brodsky’s committee, none could answer certain questions about a fiscal impact analysis that the ESDC publicly released on Friday. The memo attempted to explain new calculations behind a nearly half-billion dollar decline in net new tax revenue, a cut of about one-third.

That’s because staffer Kathy Kazanas, who prepared the memo, was unable to attend the hearing, held yesterday afternoon at an auditorium at New York University.

Brodsky focused on financial issues, asking why the discount rate—the interest rate used to calculate the expected rate of return for the project—had been changed from 6% to 3% from the predecessor memo prepared in October. (The December memo offers no explanation as to why.)

“I thought it was 6% too,” acknowledged Ann Hulka, the senior VP for real estate development who was named as the recipient of the memo. “But I haven’t had a chance to talk to Kathy.”

Effect on cut?

Brodsky queried whether the change in the rate was a factor in potentially inflating the already truncated total of tax revenue.

Gargano shrugged it off. “Number one, I don’t know if it’s 6% to 3%,” he said, attributing the nearly one-third decline in revenues to an 8% cut in the project size that disproportionately affected office space, which, if filled, offers more of a fiscal bang for buck.

But that didn’t explain (and Brodsky didn’t ask) why such a decline caused a projected 18% decrease in construction workers--more than twice an 8% cut.

John Bacheller, another ESDC executive, assured Brodsky that the change in the discount rate wasn’t responsible for the fiscal impact.

Despite reference to a 3% discount rate in the memo, Hulka said, "I don't believe the discount rate changed," though she said she had to confirm that with Kazanas.

A bit later, Brodsky again got granular, asking questions about the relationship between construction jobs and tax revenues, and getting himself—and the ESDC staffers—confused. “We are clearly swimming in water that we don’t understand,” Brodsky observed.

He got a nod from ESDC Chief Operating Officer Eileen Mildenberger.

“We will get answers at an appropriate time,” Brodsky continued.

More to learn

One set of answers may regard a more stringent review of the project’s financials. While the agency has twice released brief memos summarizing the project’s fiscal impact, Hulka revealed that an outside consultant, the firm KPMG, conducted an independent financial analysis of the project.

“We had some issue with regard to confidentiality,” she said, alluding to the ESDC’s reluctance, as of yesterday, to provide Brodsky with the document. “Have they given us clearance?”

An ESDC lawyer responded that they were still “working on it.”

Brodsky opined later that, given the “remarkable changes” in the calculations regarding Atlantic Yards, there was “not enough to tell you: is this a good deal or a bad deal.”

As for the KPMG document, “they said there are confidentiality issues. I have agreed to listen to their claims.”

Grading ESDC

Brodsky, who spent most of the hearing questioning ESDC staffers about other issues, such as the sale of state office space and its record in minority contracting, was asked how he’d grade the authority’s record in transparency and accountability.

“Not well,” he declared. He has been critical of the performance of the ESDC, which has been led by appointees of departing Governor George Pataki, a Republican. "This final hearing, I think, gave us an opportunity to show where there are major problems."