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

Ten years later, the promises at the MTA meeting: "Imagine what this project will do over ten years to put people back to work, to give union jobs."

Ten years ago, on 6/24/09, the board of the Metropolitan Transportation Authority (MTA) voted 10-2 to approve a last-minute deal allowing Forest City Ratner to stretch payments for the Vanderbilt Yard, and to build a smaller railyard worth $100 million less than originally promised.

As described below, one of the most fervent supporters justified the deal because of the purported huge job-creation in ten years. Today we can see the flaws in that prediction.

Remember, Forest City did not want to commit $100 million for railyard development rights, as promised in 2006, but instead negotiated just $20 million down for the part of the railyard needed for (part of) the arena parcel.

The developer would then pay only $8 million through the end of May 2016, then face 15 annual payments of $11 million, with the final payment in 2030. (That implied 6.5% interest rate was pretty gentle.) That, critics observed, that the project would likely take well more than the promised ten years, and that was right.

Project support: vague benefits, developer momentum

Part of the justification for the MTA relaxing its deal was that the project would still be great. The Rev. Herbert Daughtry--whose daughter would run the Community Benefits Agreement (CBA) organization he founded, the Downtown Brooklyn Neighborhood Alliance--praised the "state of the art” health facility and “intergenerational facility” that had been promised. That child care/senior center is years away, and the health facility, well, nobody can say how it fulfills the CBA.

Mark Page, director of the city Office of Management and Budget, gave a more practical justification, that Atlantic Yards was so complex they had to work with their partner. "To have an opportunity to actually realize value for the space above our land requires a tremendous upfront investment by the buyer to actually build the platform," he said, "an upfront, major investment before the buyer can then move on.”

That was right, though perhaps not exactly the way he meant. In other words, had the MTA--as well as Empire State Development, the state authority overseeing/shepherding the overall project--accurately predicted the length of the project, the likely ownership changes, and the future deal revisions, maybe they would not have, in 2006, decided to negotiate only with the low cash bidder for the development rights.

Rival bidder Extell offered more cash, $150 million while Forest City's $50 million bid was claimed by the developer to be more valuable, because of transportation improvements and other factors--plus an arena!--so the MTA chose to negotiate only with Forest City, which raised the cash bid to $100 million. Of course, if Forest City's bid was really more valuable, the MTA could've just taken it, right?

Markowitz's support, via his aide

Let's recall testimony from Brooklyn Borough President Marty Markowitz, who sent Chief of Staff Carlo Scissura to present several questionable arguments.

"Although it has faced several years of challenges during the approval process, we are confident that when it's completed, it will serve as a model for all cities in the United States," Markowitz said, via Scissura. "Atlantic Yards is the type of development that Brooklyn needs now; it needs the affordable housing, it needs the union jobs, it needs the permanent jobs."

Now, it's hardly a model, except what to avoid.

Much of the income-linked  housing hasn't been that affordable, and the jobs have been far fewer than predicted.

Scissura continued, "It needs Brooklyn to be put on a national stage, and with having the Nets come into Brooklyn, that will do so."

That, partly, has happened, more to some big events than the Nets, though Brooklyn was already on the upswing.

"This is a historic opportunity to join many neighborhoods of Brooklyn, to create a city center for all of Brooklyn, and for all of New York City to enjoy."

The below-grade railyard, yet undeveloped, remains "blighted." The neighborhoods are not joined. Even when complete, Atlantic Yards/Pacific Park won't be a city center. And the fractional open space, eight acres, surely will be dominated by the 13,000-plus residents, with perhaps some use by neighbors. There will be far less use by Brooklynites at large, much less city residents.

"Yesterday's job numbers were startling: almost ten percent of Brooklynites are out of work," he said. "Imagine what this project will do over ten years to put people back to work, to give union jobs."

As I wrote, any large construction project creates jobs and yes, people need jobs. But the same time, public officials had the obligation to weigh the cost of creating jobs against other alternatives.

In the end, the jobs have depended on market cycles and the developers' decisions. The union jobs were jeopardized by the modular plan--given that salaries in the factory were far lower--and since then diminished by the slow buildout.

Scissura then started on some fuzzy math: "Atlantic Yards will create billions of dollars in tax revenue over the next decades. And I think as we look at this proposal, even though it's a little less than what was previously anticipated, in the long run, the tax revenue that will be generated by Atlantic Yards will be incredible, for the city, for the state and of course, for Brooklyn."

Billions? The New York City Independent Budget Office already estimated that the arena would be a money-loser for the city.

In these ten years, the tax revenues have likely been pretty paltry--otherwise we would've heard a lot more about them.

"I'll give you another perfect example of why this project is important," he continued. "There are many graduations of large high schools in Brooklyn that cannot take place in Brooklyn because there is no venue for them. Imagine what an arena like the Barclays Center will do for children, for high school sports, for teens, for everything. Why do Brooklynites have to travel everywhere and not have things go on in a borough of almost 2.6 million people?"

Well now, several colleges hold graduation ceremonies there, but Brooklyn Tech has been the only high school (as far as I know; the arena doesn't announce it). There's been almost no high school sports. The arena has been a boost for those teens and children who get tickets to events--a limited group.

Critics offered warnings

At the hearing, Danny Serrano, director of public policy for state Senator Bill Perkins, who headed the committee overseeing the MTA, declared presciently, “It is clear that the project no longer resembles the project that was originally approved. It will not and cannot provide anywhere near the level of public benefits that were originally planned.”

“I’m here to discuss your duty not to squander your assets and your duty to be a good neighbor,” said Assemblyman Jim Brennan. “The Public Authorities Accountability Act of 2005, which applies to the MTA, requires an independent appraisal,” he said, noting no such appraisal was part of the agreement.

A court ruled against that, as the MTA argued that conditions were worse, and thus an appraisal would be lower. That may have been so, but an appraisal also could/should have estimated the costs of delay, in terms of delayed public benefit, and the potential shift in costs and benefits for the developer.

That would have led to multiple scenarios. But it would've counterweighed the hubris and excess optimism of supporters.

The RPA's suggestions

Perhaps the wisest testimony came from Neysa Pranger, public affairs director for the Regional Plan Association (RPA), which had backed Atlantic Yards, albeit with reservations.

“While there has been little time to digest the proposal, several considerations are clear,” she testified, suggesting that project had become far different from the one approved in 2006, with “greatly diminished” public benefits.

Pranger also said that “it is likely to be years before the market recovers enough to attract new developers”--a statement that I though was worthy of debate. As of 2013, there was a new investor, Greenland USA, though Forest City was negotiating out of weakness, not strength.

She also said it “is almost inevitable that it will need to be redesigned and renegotiated over several business cycles before it’s complete." It has already been redesigned slightly--remember the change in B4?--and a pending change at Site 5 could be huge.

“Does this new agreement retain enough benefits for the MTA and the city to proceed with a scaled-back plan?” Pranger asked. “Based on the information available, the answer is no."

Rather than open up the site to new bids, the RPA made four recommendations for any revised deal with Forest City Ratner, including granting the MTA more future project revenues, conducting a new cost-benefit analysis and creating a new ESDC subsidiary to oversee the project and review design elements.

None of that happened as part of the deal, though in 2014 the Atlantic Yards Community Development Corporation (AY CDC) was created to advise on the project, not oversee it. The AY CDC has mostly been toothless. And the lessons from 2009 have not been learned.