Reading The Real Deal on Bruce Ratner: a "strange twist of fate," housing doubts, and big arena profits
"Ratner's refute"? Real Deal claims "Developer insists Atlantic Yards is moving forward"Beyond the initial coverage (linked above), let's take a longer look at The Real Deal's cover article headlined Ratner's refute: Developer insists Atlantic Yards is moving forward.
"Ratner's refute"? Real Deal claim of "largely favorable PR" deserves some footnotes
Bruce Ratner, once "humble, winsome" to a supporter, becomes "affable, rumpled" to a journalistic sycophant (but what about the grim photo?)
The article begins:
For a developer who prides himself on building with a "social mission," the bruising battle to break ground on the mammoth Atlantic Yards project has not been easy -- to say the least.Maybe it's not such a strange twist of fate. As Chris Smith wrote in New York magazine nearly five years ago:
Over the last eight years, Bruce Ratner has been repeatedly excoriated by community activists and Brownstone Brooklynites, attacked in the press, and called everything from a "liar" to a "serial eminent domain abuser and corporate welfare queen."
If you type the words "Bruce Ratner" and "scumbag" into Google, you get 567 hits.
It's a strange twist of fate for the affable, rumpled Cleveland native, who spent his summers at Columbia Law School working for the NAACP Legal Defense Fund, and the rest of his 20s and 30s as a consumer advocate, defending the poor from the scams of small-time hucksters and corporate con men.
Ratner declines almost all interview requests and usually appears only at staged promotional events. He’s described himself as “an old lefty.” But old lefties in middle age are often the most voracious capitalists. For all his devotion to progressive causes, Ratner can play rough.So why did Ratner agree to this interview? Because, I'd bet, his handlers had arranged it and were sure it would be sympathetic.
Affordable housing abandoned?
The Real Deal reports:
The controversy has thickened Ratner's skin so much that if you ask him today about the latest wave of headlines -- which implies that Forest City is about to abandon the affordable-housing portion of the plan -- a frown flickers for just a second, like he's just bitten into a lemon. Then, just as fast, he simply shakes his head.That article, relying on boilerplate language to the SEC, was alarmist, but the fact of the matter is that Forest City will build the housing, and the affordable housing, at its own pace, and, most likely, with either greater subsidies or costs decreased because of experimental modular construction.
An article in the New York Post last month -- headlined "NBA Deal Is 'Net' Loss for B'klyn" -- stated that after "some 800 residents and businesses were dispossessed and city and state taxpayers kicked in $305 million, it's looking like all Brooklyn will be left with is one of the worst teams in the NBA -- playing at a new, nondescript facility."
The article states:
For his part, Ratner responded wearily when asked if there were any chance Forest City Ratner would abandon the residential portions of the project.Or maybe start the first tower when planned.
"No," he said. "We spent a lot of equity on the land. And we did this project for the housing as much as -- if not more than -- [for] the arena. It's one of the best locations left in New York City for housing, and it's ready to go."
Of course, the only way for Ratner to truly silence his doubters will be to finish the project.
While Forest City did spend considerably on land, it also got $100 million from the public. And Chinese investors seeking green cards could get control of seven building sites should Ratner not pay them back.
Also consider that Forest City kept promising that Frank Gehry had not been dropped from the project. And then he was.
The article provides clues to Ratner's motivations:
But in 1982, at 38 years old and with a young family to support, Ratner was making $52,000 and decided he wanted a more secure financial future. He gave himself eight years to earn enough money to produce $125,000 a year in "passive income" (not such a modest goal; in today's dollars that's about $500,000), figuring he could then focus on whatever he wanted.To produce a half a million dollars in "passive income," at a 10 percent return, you have to have $5 million in the bank. At 5 percent, you have to have $10 million in the bank.
Update: Actually, $125,000 in 1982 dollars might be well less than $500,000, according to this calculator.
MetroTech and jobs
The article provides back story on Polytechnic University's plans for MetroTech, for which it partnered with Forest City Ratner:
It was not the kind of project that New York real estate magnates were jumping to get a piece of. At the time, Brooklyn was crime-ridden and depressed, and no new office space had been built in close to 25 years. But Ratner was interested.There's no way MetroTech produced that many jobs. It preserved many of them leaving Manhattan for New Jersey.
...Ratner approached his cousins with a detailed plan to develop an office complex that would later grow into 11 buildings, with 3.7 million square feet of office space, and produce more than 20,000 jobs. And a new venture was born: the New York City-based subsidiary of Forest City Enterprises, named, appropriately enough, Forest City Ratner.
Kathryn Wylde is a smart person, so it's dismaying to hear her party line:
Kathryn Wylde, president and CEO of the Partnership for New York City, credited Ratner with "literally, over the course of almost two decades, dragging Brooklyn into the 21st century."First, they're not trying to "close the door." Second, gentrification and investment proceeded from the 1960s onward in the neighborhoods ringing Downtown Brooklyn, despite crime, as Francis Morrone recently pointed out.
"When Bruce and Forest City made a commitment to Downtown Brooklyn, there were no other private investors interested," she said, noting that the new investment also brought funds for subways and other infrastructure.
There's an irony, she noted, in that "the people who are now trying to close the door" on new development at the Atlantic Yards, and protect their turf, "wouldn't have anything worth much if it wasn't for Ratner's investments over the years."
The irony is that Ratner was taking advantage of the increase in housing values created by people more risk-taking than he, and he was anointed the site from the start.
The creation story
Borough President Marty Markowitz repeats the story that he went to Ratner--though Ratner's firm had long looked at the Vanderbilt Yard:
But when he suggested Ratner construct an arena on the vacant Atlantic rail yards, "[Bruce] saw something much greater than me. He saw a possibility of a major development that Brooklyn needed."What Ratner and Markowitz saw was a valuable piece of land, a "great piece of real estate," in the words of Ratner's cousin Chuck Ratner. And it wasn't vacant; it was and remains used by the Metropolitan Transportation Authority.
Neither Ratner nor Markowitz foresaw the level of opposition that would ensue. What they saw, Markowitz said, was an "eyesore" in need of transforming.
However, Council Member James -- one of the most vocal politicians in the fight against Ratner -- said in a statement that the site he controls is "too big and too important to be held hostage and kept barren for decades by the developer."
James is the only critic to be quoted in the article:
She said the government should "take back the land" and divide it into "manageable parcels." She also demanded that officials initiate a "transparent, competitive bidding process to award the parcels to multiple developers, making it financially feasible in a way that Atlantic Yards is not and never was."Big profits
The article states:
In the end, however, Ratner estimates that the profits from the arena "are going to equal or surpass where I thought they would come out."And who should he thank for that? The state, which gave away naming rights used to pay back the financing, as well as providing an opportunity to sell luxury suites and sponsorships.
He estimated the arena will generate annual net income of about $110 million to $120 million, cost $30 million to operate, and require about $45 million to $50 million a year to pay off financing, leaving the company with about $35 million a year in profit -- which will generate a roughly 10 percent return on the $350 million invested by Forest City to build the stadium.
"That is pretty good out of the box," Ratner said. "It will increase as time goes on."
Jobs and revenues
There's a bit of a missed opportunity here:
As for the rest of the project, there's currently a better outlook for the residential portion of the project than the commercial.Translation: the jobs and tax revenues will be much less than promised.
The reporter and the back story
While I don't take pleasure in criticizing a fellow reporter, I have to recount some of the back story. The writer, new to Atlantic Yards, contacted me in mid-April.
He was obviously typing sloppily: "Everybody talks about how Ratner entered development with a social conscious, which seems ironic, givcen all the opposition he has engendared with Atlantic Yards. I'm wondering what your thoughts are on that."
So I sent him some things to read, notably a piece on Ratner's campaign contributions and links to an essay headlined Democracy Now? Ratner Plays Hardball When It Counts and excerpted significantly here.
I sent links to six more pieces, including The Mystery of Ridge Hill. His response: "ei yi yi. I just want some quotes not a dissertation."
He didn't bother much with what I'd written, obviously, nor did he contact me again.
It was a dismaying example of what press scholar Jay Rosen criticizes as “He said, she said” journalism, in which "No real attempt is made to assess clashing truth claims in the story" and "The means for assessment do exist, so it’s possible to exert a factual check on some of the claims, but for whatever reason the report declines to make use of them."
(In this case, the article departs from Rosen's formula, since there's no "symmetry of two sides" leaving the reporter in the middle but rather an approach sympathetic to Ratner. Maybe it's not fair to blame the reporter, since surely Forest City Ratner cooperated knowing it would be a sympathetic story.)
By the way, I tried to post a comment hours ago on The Real Deal's web site, linked to my first post in reaction to the article.
As in the past, my comment was rejected, even though I used my real name. There is one critical comment posted, from Anonymous.