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A (somewhat speculative) FAQ on the Atlantic Yards news

Here are some questions raised by Bruce Ratner's admission yesterday that Atlantic Yards is stalled, and my answers, some more speculative than others.

Why did the New York Times run the article at this time? Was it pitched by Forest City Ratner, as Brooklyn Daily Eagle columnist Dennis Holt suggested was likely?

It was time for the Times to do an update. (Front page of national edition at right.) After all, it was more than six months after architecture critic Nicolai Ouroussoff was predicting a redesign for Phase One of the project. Crain's New York Business was predicting the project had only a 50% chance.

The Times had not covered various "smaller" news stories about the project, including the decision, announced at the end of February, that the appeal in the case challenging the environmental review would not be heard until September, despite requests by Forest City Ratner and the Empire State Development Corporation that it be heard in May.

Did Forest City Ratner use the Times as much as it has previously?

Not quite. The developer did get its message across without being met with sufficient skepticism, notably the claim that the arena would open in 2010 and the statement that this was Bruce Ratner's first admission of delay. (Front page of local edition at right.) And Ratner got the last word; as I noted, Ratner's claim that “This is a good project,” could have been countered by fellow executive Chuck Ratner's more investor-oriented statement, "It’s a great piece of real estate."

On the other hand, FCR couldn't have been happy that reporter Charles Bagli knew that the developer was cold-calling potential office tenants to gin up interest in the speculative Miss Brooklyn office tower. The developer's circulation of a letter signed by Frank Gehry was, WNYC (and former New York Observer) reporter Matthew Schuerman said on All Things Considered yesterday, "a rare and desperate move." Bagli's discovery probably provided leverage to get a rare interview with Bruce Ratner.

Is the arena on track, as the Times suggested in a headline? Will it open in 2010?

On this issue, the developer was met with insufficient skepticism. As I commented on the New York Times's CityRoom blog, the Nets arena may be the developer’s current priority but it is not necessarily on track. It may be “said to be on track.” So a more precise headline would have read “NETS ARENA IS ‘ON TRACK.’”

However, the arena can’t be built until lawsuits are cleared and/or the state condemns needed property. Also, given the history of misleading claims–the developer originally said the arena would open in 2009, but now says 2010–any current timetable claim should be taken with a major grain of salt. The three-year bridge reconstruction clock points to 2011 as a likely best-case scenario.

What about the 50% prediction by Crain's?

As I wrote on Wednesday, the project has a much less than 50% chance of being built as proposed, and in the announced ten-year timetable. However, the Atlantic Yards arena does indeed have a greater than 50% chance of being built. The project, as others have pointed out in the past day, is hardly dead, just delayed, perhaps for a very long time.

What's up with the New York Times giving the developer and its allies the last word in major articles about Atlantic Yards?

In this article, the closing line was “This is a good project,” he said of Atlantic Yards. “Good things sometimes take a long time.” The infamous 10/14/05 "modern blueprint" article ended with a self-serving quote from Ratner flack Joe DePlasco. The 11/6/05 Routine Changes, or 'Bait and Switch'? article ended with a quote from ACORN's Bertha Lewis. An intermittently skeptical 7/5/06 article on blight nevertheless ended with a quote from the Empire State Development Corporation.

Weak journalism? Fair assessment? Some extra help for FCR, the business partner of the parent New York Times Company? I don't know, but I'll stand by my contention that, given the business relationship between the developer and the Times Company, the news coverage should be exacting, and it's not.
How long might this project take?

Nobody knows. “It’s not going to happen in a nanosecond,” Bruce Ratner told the Times in a masterpiece of understatement. (Remember, when the project was announced in December 2003, the arena was supposed to be up and running by 2006. Here's DDDB's comment about multiple promises.) Remember, Chuck Ratner of parent Forest City Enterprises said last year, “We are terrible, and we’ve been a developer for 50 years, on these big multi-use, public private urban developments, to be able to predict when it will go from idea to reality."

Project landscape architect Laurie Olin said it could take 20 years. That might be a working baseline.

Did Forest City Ratner know what it was doing in its AY plans? How much was it hurt by the credit crunch?

Well, there's significant evidence that the announced plan for 2 million square feet of office space (and thus 10,000 jobs) was overpromised from the start, and that some condos were planned from the start. Officials should have recognized that. The switch of most office space to condos was dictated by both the market and, apparently, an effort to gain Assembly Speaker Sheldon Silver's support and not compete with a rebuilding Lower Manhattan.

But FCR couldn't have predicted the downturn in the condo market.

Should the Empire State Development Corporation in December 2006 have approved a project with its announced ten-year timeline, expected to be concluded in 2016?

Given that the timeline was already out of date, no. (Much more from DDDB here.) A state judge, however, didn't think that was a legitimate reason to challenge the environmental review. An appellate court will get another chance to weigh in.

Did this article deserve front-page, lead-story (in local editions) treatment?

Yes, and it also reminds us that the 9/5/06 lead article (headline at right) predicting a six to eight percent cut in the size of the project was way overplayed.

Was "the promise" affordable housing, now "on the back burner, while the arena has been moved to the front burner," as Develop Don't Destroy Brooklyn's Daniel Goldstein told the New York Times?

Well, the arena was always the developer's priority, given the urgency of moving the money-losing Nets from New Jersey, and the towers around the arena couldn't be built without the arena first.

But the political support for the project derived significantly from the affordable housing, and the larger the gap between arena and housing, the more supporters should take a second look.

What about Brooklyn Daily Eagle columnist Dennis Holt's statement that "the arena was always on the front burner -- everything else revolved around it. Its construction, along with the associated buildings around it, would make possible much of the affordable housing planned for the project elsewhere."

Well, from the perspective strictly of architecture, the arena would make possible the affordable housing. However, without sufficient bonding capacity, the affordable housing can't be built, so an extant arena wouldn't be enough.

Is affordable housing "still... on the front burner," given state bonding for Forest City, as the Eagle's Holt has claimed?

No. That money is for a separate Forest City Ratner project, 80 DeKalb Avenue.

Should the credit crunch and the slowing economy be blamed for the stall in the project, as Borough President Marty Markowitz and ACORN have suggested?

Only partially. A significant component is the longer-standing limit of a too-small pool of affordable housing bonds.

How long until the confidence that Markowitz and ACORN have in Forest City Ratner seems misplaced?

Good question. After all, the public subsidies and spending going into this project might have paid off with a significant slice of affordable housing a lot sooner had they been directed elsewhere and/or toward a different or modified project at and/or around the Vanderbilt Yard. Right now, ACORN and Markowitz are showing loyalty. ACORN, for example, hasn't criticized the developer despite a retreat from the 50/50 pledge.

At a certain point, their position becomes less tenable. Let's see what other affordable housing supporters, like Assemblyman Hakeem Jeffries and City Council Member Bill de Blasio (a candidate for Borough President) have to say.

When did the lack of bonding capacity for affordable housing become clear?

In early 2007.

Was that constraint obvious in late 2006 when the project was approved?

No, but that's partly because city and state officials were unwilling to reveal the subsidies required for the housing component of the project. It deserved a lot more scrutiny.

Was it reasonable to expect the benefits from the Community Benefits Agreement when it was signed in 2005? Does the CBA offer sufficient guarantees?

"Unfortunately, the CBA doesn't give the community any real redress," writes CBA expert Amy Lavine. Ratner, she suggests, "also probably can't be blamed for misrepresenting the terms of the contract, since the prospects for the development looked a lot better in 2005."

Yes, but it's still worth looking back at whether expectations for affordable housing bonds were reasonable at the time.

Could elected officials propose more subsidies for the project?

Quite likely. Forest City Ratner can make the case that conditions have changed, and subsidies are required for the public benefit. And if officials think something is better than nothing, they might pony up. The counter-argument is that Forest City Ratner should not be rewarded for proposing something that wasn't tenable in the first place.

Look for a proposal for subsidies with some sort of compromise attached to it. A commenter on Brownstoner suggested, "As it is, he'll be back to the city and state for more subsidies for the arena in exchange for giving up ownership or part of it, and the arena will be a public auditorium for which the use of eminent domain is not controversial."

Actually, the arena would be publicly-owned (but "generously leased" for $1, as a federal appellate court acknowledged), so some other deal might be in the works. Could the state have any leverage to get a piece of the arena's enormous upside: the $400 million Barclays Capital naming rights deal, as well as all the other sponsorships that Forest City Ratner would reap?

Will the Nets move to Newark in the short or long term?

To move from the money-losing Izod Center in the Meadowlands to the new Prudential Center in Newark would require the Nets to pay a significant penalty ($12 million.).If New Jersey officials want to sweeten the pot, they could renegotiate that penalty. Even with the penalty, the increased potential revenues--from more seats sold and a share of the suite revenue--certainly provide an argument to move to Newark in the interim. [Updated 3/24] Neil deMause calls the penalty "chump change;" still, the suites at the Atlantic Yards arena would be very lucrative.

The longer the Brooklyn arena is delayed, the stronger the argument for a short-term Newark move. Surely Forest City Ratner has plugged the numbers in a spreadsheet. (Updated: A commenter on NetsDaily suggests that it's more likely the team will go up for sale.)

Does Forest City Ratner have a "successful track record of development through all economic climates," as Markowitz suggested?

Yes, but that basically means waiting for the developer to decide when and if to commit (and borrow and get government-subsidized) funds and resources.

How much blight might there be?

The prediction that "interim surface parking" on the Ward Bakery site could last for decades is becoming more credible. And empty lots, rather than buildings, bordering the arena are hardly what Frank Gehry had in mind.

Should the litigation challenging the project also be blamed? Did DDDB try to kill the project by stalling? Are the lawsuits "frivolous," as the Eagle's Dennis Holt suggested?

The litigation deserves some but hardly all blame (or credit, depending on your perspective). DDDB has tried a variety of tactics to kill the project because it doesn't think the project's legitimate.

Well, U.S. Magistrate Judge Robert M. Levy a year ago wrote that the eminent domain case raised "serious and difficult questions regarding the exercise of eminent domain under emerging Supreme Court jurisprudence."

As for the state lawsuit challenging the environmental review, as I wrote, the judge acknowledged that, had the defendants responded to some of the plaintiffs' concerns, it might have been better public policy, but that the court's role in reviewing such decisions was limited. Maybe some think that's frivolous, but that's still an important acknowledgment. And that case isn't over.

Does the delay actually help Forest City Ratner?

Well, sort of. Any delay in the arena means the developer keeps losing money on the Nets. And there is a carrying cost to all this property. However, as a commentator on Brownstoner noted, "Imagine if he had started construction a year ago and finished in a collapsing market. He'd have lost a mint."

Should the Public Authorities Control Board take a second look at the project, as Develop Don't Destroy Brooklyn contends, given that, when the PACB approved it 15 months ago, the arena was to cost $637.2 million, but it now would cost $950 million?

I don't know the law on this. But the change certainly is an argument for greater public scrutiny of some kind. A commenter on NetsDaily stated, "I really do not understand how a specific proposal gets approved and then Ratner can turn around and alter it without having to go through the process again. That is a betrayal of public trust."

That deserves a lot more discussion.

Does the failure to deliver the public benefits--affordable housing, blight removal, open space--mean that the eminent domain case has another shot, since a federal judge and appellate court both cited those expected benefits in their dismissals of the case?

Not necessarily. The courts only rule on what state officials at the Empire State Development Corporation might have reasonably believed. If the case goes to trial, the plaintiffs will have to prove that the ESDC's belief was unreasonable. There is an argument for that, but that requires looking at the ESDC's due diligence in assessing the benefits claimed at the time, not the ESDC's capacity to predict the changing market. For example, the ESDC predicted new tax revenues without weighing many public costs and subsidies. Should the ESDC have known that funding for affordable housing was questionable? Quite possibly.

Will architect Frank Gehry walk away from the project, as New York Times architecture critic Nicolai Ouroussoff has proposed?

Well, it's quite likely that Gehry has already walked away from most of the project, given that all but the arena is on hold. And, given that the man is getting on in years, it was unreasonable to expect him to work on the whole project, as required by Forest City Ratner, at least in its public statements.

However, even though Atlantic Yards wouldn't provide Gehry a chance to "build a whole neighborhood practically from scratch," it still must be tempting for him to build his first arena. Perhaps the question is whether he can retain any component of his original vision of the arena wrapped in towers.

Are Atlantic Yards foes really "stickin' it to the lil' guys," as Daily News columnist Errol Louis wrote February 7, referencing the opponents request for sufficient time to prepare their appeal in the state lawsuit?

At that point, Louis was suggesting that "100 employees at the site, mostly laborers, could be in trouble," but "There's no danger of a full halt right now."

Well, the latter remains true, but all the "lil' guys" expecting work on a major project have a lot more waiting to do. In other words, the credit crunch, as well as the longstanding limit on affordable housing funds, are to blame as well as any litigation.

If the project was once to cost $4 billion, but the arena cost has gone up 50% (as I was the first to point out, given the Times's lack of context), what's the new price tag?

We don't know. The New York Post, in its follow-up story today, noted "The developer's firm declined to estimate what the entire project will now cost."

Does the New York Post like giving credit to other publications?

No. Today's story cites only a "published report" rather than acknowledge a front-page story in the Times. Then again, the Daily News didn't even cover the story today.

Is Atlantic Yards a project, or a place?

The former, but the colloquial usage, as the headline in the Times's CityRoom at right suggests, favors the developer. Gothamist described "plans to build a Nets arena at the Atlantic Yards." New York Times columnist Clyde Haberman yesterday described "developers with eyes on... the Atlantic Yards in Brooklyn."

However, as I wrote when describing how AY was used to describe the railyard, "They falsely conflate the developer's commercial branding--a project called Atlantic Yards--with a much smaller piece of publicly-owned land." Similarly, Atlantic Yards is a site or a project, not a place.

Should BrooklynSpeaks be pursuing a proposal for a new governance entity?

Well, if Atlantic Yards goes forward, there's certainly an argument for a governance entity. But BrooklynSpeaks, as well as local elected officials, might be more productive in the short term just getting some clear answers about the project. And they might start focusing on some interim uses for the inevitable vacant lots.

Was the resignation of ESDC Downstate Chairman Patrick Foye connected to Atlantic Yards, as a commenter suggests?

Unlikely. Foye was a friend of departing Governor Eliot Spitzer, as the Times reported, and his resignation was more likely connected to that personal tie. Avi Schick, acting chief executive, sure seems to be an Atlantic Yards supporter.

Is this project being "built on the come" (a poker term) and the ESDC sponsored a marketing scheme, as a commenter suggests?

There's certainly evidence for that. If Miss Brooklyn, which always was to contain office space, wouldn't be built without an anchor tenant, and if the market for office space in Downtown Brooklyn had been tanking for years, shouldn't the ESDC have evaluated that?


  1. Is it a coincidence that ESDC head Foye resigned days before the revelations? I think not. He knew it was coming, told Patterson, and the new governor showed him the door. Seems to me that using eminent domain for a project that is so speculative - e.g. requiring an anchor tenant as a prerequisite to building Miss Brooklyn - but telling no one, is malfeasance. Every piece of AYP litigation could and should be reopened in light of these revelations. The arena will never be built because Atlantic Yards now has as many friends in high places as did our former governor Spitzer after his fateful news conference.

  2. this AYP collapse seems less related to the immediate credit crunch than the fact that the entire project was to be built on the come, ESDC knew it, and thus sponsored not a bricks and mortar project, which is the intent of the UDC Act, but rather a marketing scheme - how can such a speculative and uncertain business plan be treated as a legitimate public purpose so as to justify use of eminent domain?

    watch - this will get litigated

  3. Why does Markowitz still think we should build an arena in the most inappropriate location possible if there's no affordable housing attached?

    Wasn't that the pretense he used to support the whole overblown project? What is his pretense now?

  4. first of all I want to congratulate you on the best summary of the current state of AY that I have seen.
    People seem to forget that this is an approved ESDC project and pulling the approval is not only not easy its probably impossible. Litigation won't be reopened because of these changes. Courts leave this to political decisions but once a contract or agreement is made, government entities can't just end it without incurring costs unless they reserved rights to do so and no document I have seen contained such a reservation. The "deal" was signed under the previous governor before Spitzer took over(although its clear he approved of it). Brooklyn Speaks of which I participate has been trying to do what you suggest and at the same time go forward on the governance as we(as pretty much any thinking person thought) assumed there would be changes and time table modifications which someone should oversee and not just rubber stamp.
    The NY Observer originally reported that Foye would stay and then came his resignation. If anything Avi Schick is closer to ex-governor Spitzer as Foye was. I am still curious of what the internal dissension that was occurring at ESDC was or is.

    If the City and the State had allowed this to go through the City's ULURP procedure, which many of us suggested, the project would have been approved(in some modified format) and the building would have begun. It was Ratner himself who refused to go through that proceedure..cause he knew that he wouldn't have gotten what he wanted...



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