On WBAI's CityWatch, lessons from Atlantic Yards: the need for sober predictions, the cost of delay, the "rational basis" advantage, & the project's big winners

I was invited on WBAI's CityWatch yesterday (link) to talk about Atlantic Yards, which also touched the Atlantic Avenue rezoning and the plans for Brooklyn Marine Terminal in Red Hook

The conversation, with former Council Member Carlos Menchaca, starts at around 9:12 in the audio below and goes about 21 minutes.

One takeaway: don''t trust projections for ambitious plans. All scenarios should be offered in a range: best-case to worst-case.

With Atlantic Yards, market-rate housing was supposed to cross-subsidize affordable housing and--I didn't say explicitly--the costly infrastructure, a platform or deck, over the MTA's Vanderbilt Yard. (One block was used for the arena parcel, below grade, without a platform; the other two blocks await platforms.)

However, the plethora of new market-rate housing from the Downtown Brooklyn rezoning, which was relatively under the radar, cut into the market for Atlantic Yards housing. The Downtown Brooklyn rezoning didn't require the same infrastructure nor--I didn't mention--affordability, which made it more attractive to builders.

Meanwhile, KPMG produced a study that projected a sunny future for the Atlantic Yards housing market. That was ill-advised and obvious when released, and even more so in retrospect. 

The Council of Brooklyn Neighborhoods sponsored a competing, more sober study that offered prescient warnings.

Jeff Simmons · WBAI's City Watch featuring Norman Oder

Alternative plans

I also noted that Develop Don't Destroy Brooklyn (DDDB)--actually, Council Member Letitia James, with DDDB's support--sponsored an alternative plan for the MTA's Vanderbilt Yard, the UNITY plan, which would've had substantial, though smaller development, at the railyard, without an arena.

DDDB later recruited a developer, Extell, to bid on the railyard after Atlantic Yards developer Forest City Ratner had an inside track. Extell bid more, but the gubernatorially controlled MTA decided to renegotiate exclusively with Forest City. This is covered in the 2011 documentary Battle for Brooklyn, screening Feb. 28. 

A smaller plan might deliver less housing, and thus spin off less cross-subsidized affordable housing. So bigger is typically promoted as better.

The cost of delay

However, there's a significant cost to delay. The below-market affordable housing in Atlantic Yards, touted as stemming gentrification, has been delayed, and attenuated.

Meanwhile, the baseline to calculate affordability, Area Median Income (AMI), keeps rising, so a "low-income" unit becomes ever more costly.

That means a smaller project, on a faster timeline, offers significant value.

Relevance to the BMT

The impetus to the film screening is local organizing around the city's ambitious plans for the Brooklyn Marine Terminal, a 122-acre site running south from Atlantic Avenue, the southern border of Brooklyn Bridge Park, through the Columbia Street waterfront area down into Red Hook.

The process is questionable and rushed--more on this separately. (Here's a NYC announcement, coverage by The CITY, and the Brooklyn Marine Terminal Neighbors Alliance, urging the city to "reset, slow down, and listen."

It's confusing, as I said, that, while this is now city land, swapped with the state, the city wants to go through the state land use process, a General Project Plan, to avoid the city's land use process, which involves a voice for community boards and leaves the local Council Member--as Menchaca was during the Industry City rezoning, which he killed--as a key decisionmaker.

Also, it's a stretch to argue that market-rate housing is needed to upgrade port infrastructure. After all, if port infrastructure is a public good, figure out other funding streams that are less precarious.

The lesson of Atlantic Yards was that market-rate housing was not enough to support affordable housing. In Red Hook, they want it to support both affordable housing and port infrastructure.

Meanwhile, as I discussed with Menchaca, the location is not so opportune. It's far from the subway, and there's the trench of the Brooklyn Queens Expressway separating it from the adjacent Cobble Hill and Carroll Gardens.

 "Rational basis"

The problem with going to court in New York State to challenge such governmental actions is that judges will uphold them if the government has a "rational basis," which is a far lower bar than the "beyond a reasonable doubt" standard for criminal cases and the "preponderance of the evidence" standard for civil cases.

So a questionable study constitutes "rational basis."

Who got rich with Atlantic Yards

I mentioned that Bruce Ratner bought the New Jersey Nets to Brooklyn to make money, notably (unmentioned) to leverage an inside track on publicly owned land and to get government help to acquire property under the threat--and usage--of eminent domain.

However, Ratner's firm and successor Greenland USA lost money on the residential project.

The big winners, though, were the owners of the Brooklyn Nets and the arena operating company, Russian oligarch Mikhail Prokhorov and then Joseph Tsai, the current owner, Chairman of the Chinese behemoth Alibaba.

I noted that one reason Tsai invested is because the NBA has what he called a "socialist type setup" in which teams share TV revenues. If Atlantic Yards/Pacific Park were thought of similarly, well, those profits could cross subsidize the missing public goods.

Instead, the project is facing renegotiation, with the next developer likely to seek increased bulk--free vertical "land"--to make it economically worthwhile. Forest City and Extell previously had to bid for the development rights.