Skip to main content

In Times series on "United States of Subsidies," a glaring gap: no mention of Atlantic Yards or Forest City Ratner, which should lead the pack in New York State

The New York Times today begins a three-part series, UNITED STATES OF SUBSIDIES, A series examining business incentives and their impact on jobs and local economies.

The first installment, which dominates the front page, is headlined As Companies Seek Tax Deals, Governments Pay High Price.

Surprising, though Brooklyn-based developer Forest City Ratner has collected hundreds of millions of dollars in subsidies and other support for the Atlantic Yards project, neither the firm nor its parent, Forest City Enterprises, appears among those company that have received more than $100 million.

In fact, as I explain below, Forest City Ratner, rather than being absent from the list of firms taking advantage of subsidies in New York State, should be at the top of the list, as it gains far more than the $157 million attributed to JP Morgan Chase.

(Here's my posted comment, which responded to another commenter's statement that "Atlantic Yards is a perfect example of the worst kind of corporate welfare..."

The Times summary of the article:
A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.
The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.
“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
The Times analyzed more than 150,000 awards and created a searchable database of incentive spending. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.
A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them.
Who benefits?

The Times reports:
Far and away the most incentive money is spent on manufacturing, about $25.5 billion a year, followed by agriculture. The oil, gas and mining industries come in third, and the film business fourth.
Location is crucial:
Even big retailers and hotels, whose business depends on being in specific locations, bargain for incentives as if they can move anywhere. The same can be said for many movie productions, which almost never come to town without local subsidies.
This recalls the New York Yankees' threat to leave the Bronx, the Bronx Bombers' storied location. And it puts into perspective Forest City Ratner's desperation to move the money-losing Nets from an antiquated arena in New Jersey to a new arena in the country's media capital.

However, oddly enough, there's no reference to Forest City Ratner in the database, and only a piddling mention of parent Forest City Enterprises, below.

Fuzzy data, including on New York


According to the Times, the leading beneficiary of subsidies in New York is JP Morgan Chase, which gained $157 million in a property tax abatement. The Yankees and the Mets, via their corporate entities, each gained about $100 million in a property tax abatements.

The Times reports:
Collecting data on property tax abatements is the most difficult because only a handful of states track the amounts given by cities and counties. Among them is New York, where businesses save an estimated $1.1 billion a year in property taxes. The American International Group, the insurance company at the center of the 2008 financial crisis, continued to benefit from a $23.8 million abatement from New York City at the same time it was being bailed out with $180 billion in federal money.
Since 2000, The New York Times Company has received more than $24 million from the city and state.


What about Atlantic Yards?

The best summary, though imperfect, regarding Atlantic Yards, comes from the New York City Independent Budget Office's (IBO) September 2009 report, titled The Proposed Arena at Atlantic Yards: An Analysis of City Fiscal Gains and Losses.

The IBO delineated $169.4 million in direct costs to the city budget, and $104.3 million in costs to the state budget. Beyond that, for example, it counted $146 million in city costs for the arena property tax exemption and $193.9 million in federal costs regarding tax-exempt financing.

(As I described, because the IBO predicted $678 million in tax-exempt financing rather than the ultimate $511 million, the savings on such financing should be cut by about one-fourth. Thus the IBO's assertion that the net gain to Forest City was some $726 million should be dialed back by at least $50 million--one-fourth of the $200.3 million in projected savings on the financing. Then again, as noted below, Forest City achieved other savings unmentioned in the report.)


The methodology

The Times describes its methodology:
The Times included incentives of many types: cash grants, corporate income tax credits, sales tax exemptions or refunds, property tax abatements, low-cost loans or loan guarantees and free services like worker training. The database does not reflect the savings businesses receive in states with minimal or no corporate income tax or sales tax.
The $80 billion figure is based on more than 100 records requests to state agencies nationwide and on an examination of numerous government reports. The Times identified 1,950 incentives programs and compiled figures on benefits used by businesses in the most recent year available.
Since many state programs The Times examined did not identify the names of specific beneficiaries, examples of companies were obtained from several sources, including Investment Consulting Associates and Good Jobs First, a non-profit policy center that focuses on economic development. (For some of those examples, the dollar figures reflect the initial award; it is not known whether the entire benefit will be used.)
Apparently because Atlantic Yards benefits come from rather unusual "pots" compared to most other corporate incentives--they're absent from databases regarding the NYC Industrial Development Authority nor state PILOTs (payments in lieu of taxes)--they didn't show up in the Good Jobs First/Good Jobs New York database the Times consulted.

Even so, among the "numerous government reports" could have been that from the IBO, which would have been a good start.

I don't think the Times was trying to protect Forest City because it was the newspaper company's partner in the Times Tower. However, as I've said before, I think the newspaper has an obligation to cover Forest City Ratner exactingly, and it has often fallen short.

More Atlantic Yards savings

And that IBO report, for example, doesn't even get to the giveaway of arena naming rights, worth more than $200 million, or the state and city help in getting Forest City Ratner low-cost loans via the federal government's EB-5 program of investment immigration, likely saving more than $100 million.


Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

This graphic, posted in November 2017, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

The previous graphic, from August 2017 (without the ghost B1)

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …