Skip to main content

Featured Post

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

Former NYC EDC executive "jokes" (in 2018 podcast) that he learned about negotiation by watching how Forest City's Gilmartin "was screwing me" on Atlantic Yards

There's a very intriguing passage about Atlantic Yards in the 5/16/18 Hey BK podcast hosted by Ofer Cohen, founder of TerraTRG. (Transcript here. More about the podcast here.)

Cohen's guest was David Ehrenberg, who served as Executive Vice President of the New York City Economic Development Corporation (NYC EDC) from 2006 through 2013, before leaving that year to lead the Brooklyn Navy Yard Development Corporation. Go to 5:56.

Host Cohen narrates:
David Ehrenberg is Brooklyn, born and raised. He knew he wanted to lead the Navy Yard even before the job was open and he put himself in the running. It was the tail end of the Bloomberg Administration and David was working for the city on some of its biggest projects.
Guest Ehrenberg speaks:
And at my level, I became just, you know, the kind of the fix-it person. So when a project got off the rails, I went in and had to solve it, which, y'know, is great learning experience and I've got to say--I learned most of what I know about negotiating by negotiating Atlantic Yards across the table from [Forest City Ratner executive] MaryAnne Gilmartin very early in my career. 
I like to say I learned a lot by just watching how MaryAnne was--was screwing me--[both the host and guest laugh]-- how she was setting me up in the negotiations and then kind of going home that night and saying, 'hm, what did she do right, and what did I do wrong in that situation?'
(Emphasis added)

Cohen's comment: "Right. Interesting."

Interesting, indeed.

Ehrenberg's comment: "a good natured joke"

I queried Ehrenberg and asked if he would amplify his comments. His response:
That conversation with Ofer was a friendly chat and that comment you pulled was a good natured joke. I am not at liberty to discuss the project as I don’t work at EDC anymore. However, if you are going to use that quote in your reporting, I believe it would be appropriate to note that I indicated it was made as a joke in an informal conversation with a colleague.
Sure, it was a lighthearted, friendly conversation, but to me Ehrenberg sounded both jokey and ruefully candid. In other words, sometimes a joke can accompany uncomfortable truths.

But others can listen and draw their own conclusions.

How did New York get screwed?

So I wonder: how might Gilmartin--who rose to Forest City Ratner/Forest City New York CEO, then left for L&L MAG and now MAG Partners (and Mack-Cali Realty)--have "screwed" Ehrenberg and, by extension, the NYC EDC and the public interest?

I can only speculate.

It might relate to the 2007 City Funding Agreement, which allowed 12 years to build just the project's first phase, with 1.5 million square feet, rather than the ten years long professed for the full project buildout.

It might relate to the 2009 City Participation Agreement, which governed under what circumstances--very unlikely, it seems--the developer would pay the city for transfer of city-owned properties.

Or it might relate to the increase in direct city subsidies for Atlantic Yards: originally $100 million, then increased to--take your pick--$205 million or $185 million or $179 million.

Whatever the number, that allowed for the reimbursement of Forest City's seemingly generous payments to property owners to avoid eminent domain and speed clearance of the arena site, which prompted that Daily News headline above. The total for those payments was ultimately $131 million.

Or it might relate to all these, and more.

A fundamental asymmetry

Ehrenberg, accounts suggest, is doing a solid job at the Navy Yard, and the podcast interview is overall quite interesting.

But it's no knock to suggest there's a fundamental asymmetry between city/state economic development bureaucrats and a private real estate developer.

For one thing, those bureaucrats answer to political leaders--the mayor, the governor--who want to see an already approved project make progress. For another, the developer has a more intense focus, and better information.

As I wrote in September 2016, Arana Hankin, who oversaw the project for Empire State Development (ESD), the state economic development authority, lamented that project agreements were “purposely drafted to be as complicated and obtuse as possible, to allow for multiple interpretations and maximum flexibility."

One of her roles, Hankin said, was to determine "how ESD should respond to developer requests for additional benefits, and there were many." That, presumably, was a challenge faced at the counterpart city agency, NYC EDC, where Ehrenberg worked.