Thursday, April 30, 2009

The NBA money crunch, trading empty seats for advertising, and keeping Coach Frank

ESPN columnist Bill Simmons thinks that the NBA's fiscal troubles, about which he's written already, are becoming ever more apparent:
Q: What was the defining No Benjamins Association moment of Round 1?

A: The Pistons e-mailing Cleveland season-ticket holders before Game 3 and offering them deals on tickets for Games 3 and 4 in Detroit. When teams are ENCOURAGING opposing fans to come to playoff games, we are headed for financial disaster. And we are. Nobody believes me. There will be a lockout in 2011.

Advertising instead of fans

Facing the recognition that they're not about to fill the aging Izod Center, especially while promising a ever-long goodbye in favor of Brooklyn, the Nets now plan "sky banners" to display advertising in the four corners of the arena.

Sports Business Journal gave it a positive spin:
The New Jersey Nets have created new advertising space in the far reaches of the Izod Center seating bowl, and team officials think it could generate an additional $400,000 to $500,000 in revenue next season.

Well, "additional" compared to what? Wouldn't a full house, with the fans paying for concessions, bring even more revenue? Otherwise, they could put up advertising anywhere.

Keeping Coach Frank

And then there's team president Rod Thorn's decision to keep Nets Coach Lawrence Frank after leaving him dangling for a couple of weeks. To Fred Kerber of the New York Post, it was a basketball decision:
"In my mind, he's a good coach," Thorn said yesterday of Lawrence Frank.

And that is why Thorn is bringing back Frank for the final year of his deal at $4.5 million. Not the endorsement of the owner. Not any financial consideration. Not the input of players.

Al Iannazzone wasn't so sure, writing in the Record:
Money likely played a part in Thorn’s decision. Nets’ ownership is losing millions, so it would be difficult to eat the $4.5 million Frank is owed next season and pay another coach.

I'm voting with Iannazzone.

In debate about the future of news, AY and AYR become a case study

In the UK's Prospect magazine, the cover story, an epistolary debate between author (and founder) Steven Johnson and Princeton professor of communications and public affairs Paul Starr, is headlined Will the coming age of news be better than the old?

Interestingly enough, both the optimistic Johnson and pessimistic Starr cite Atlantic Yards and AYR to buttress their arguments.

I think that any discussion of the media ecology around Atlantic Yards needs several explanatory footnotes, which I offer below, but I believe that the volunteer media response to Atlantic Yards is an unusual phenomenon, not easily duplicable, which places me much closer to Starr's camp.

Someone has to do the work of journalism--reading documents, showing up at meetings, asking questions, making analytical connections over a period of time--and it's not easy.

Background articles

Johnson's piece in Prospect draws on his recent speech titled Old Growth Media and the Future of News, and followed up with a blog post headlined Old Growth Media, the Aftermath. Starr draws on a New Republic cover story headlined Goodbye to the Age of Newspapers (Hello to a New Era of Corruption)

(Update: I should add Harvard Law Professor Yochai Benkler's response to Starr, which suggests reasons for optimism, including the growth of small-scale commercial media, new nonprofits, and individuals in networks. But even Benkler acknowledges that none of these necessarily will cover local politics well. And here's Jay Rosen's list of articles that follow up on the arguments raised by Starr and Johnson.)

Johnson: new model emerging

Johnson sets out some shared ground, that newspapers have been essential to healthy democracy, that newspapers are in economic trouble and going through enormous change:
The question is whether a new model will emerge 
to provide the public goods that the newspapers previously supported 
through their high-margin local monopolies (at least in the US). I think there is
 good reason to believe that the news system that is currently evolving
 online will actually be an improvement on the newspaper model that
 we’ve been living with for the past century. 

His examples from the recent past are technology coverage, which has become much richer (and augmented by talented amateurs via blogs), as well as political news. But I think he already starts mixing things up when he cites web sites like Talking Points Memo and Politico, both of which are professional sites supported by investors and advertisers.

Johnson acknowledges the complaint that bloggers are parasitic, but says it's not the case, citing the example of a quote that came from the Huffington Post. Fine, but that's just one example.

His conclusion: the first and second wave--tech and politics--will be followed by new ways to cover everything else: sports, business,
movies, books, restaurants, and local news.

Starr's pessimism

Starr responds pessimistically:
I agree that a new model of news and public controversy is emerging online and that in some respects, particularly the range of opinion it accommodates, the online environment has advantages over the traditional world of print. But the reality is that resources for journalism in the United States, especially at the metropolitan and regional level, are disappearing faster than the new media can create them.

The profits newspapers made cross-subsidized public service journalism--which, I'd observe, has varied significantly among newspapers. The result: a loss of trained observers: in New Jersey, the number of statehouse political reporters has gone from 50 to 15.

Starr acknowledges that nonprofit news web sites have emerged, but they're far smaller than daily newspapers:
There are really three separate problems here: the production of professionally reported news; the production of an engaged public; and the production of effective political accountability. While the internet unquestionably offers a diversity of opinion and access to new sources, it is not sustaining general-interest professional journalism at its previous levels.

Starr thinks that both government policy and philanthropy must be "spurred to support independent journalism in new ways."

But he sees the loss of a newspaper as diminishing the "creation of an engaged public."

(He doesn't mention the role of alternative sources like public radio; in New York City, at least, WNYC does a good job with its combined news coverage and interview shows.)

Johnson cites AY

Johnson offers a concrete example:
For the past three years, the dominant civic issue in Brooklyn has been a controversy over the Atlantic Yards, a big urban redevelopment project. On the page for the Atlantic Yards brings together news, reporting, commentary and chatter. There are 30 stories from the past five days. The New York Times print edition ran exactly one story mentioning it in the past month.

What does that mean, 30 stories? is just aggregating my posts, NoLandGrab, the Brooklyn Paper, and other sources you can all find on NLG.

Looking to the future, Johnson offers this:
How much richer will coverage of an important civic issue like Atlantic Yards be in five years? As you say, it’s risky to guess, so let’s imagine a future based entirely on existing enterprises and websites. Here’s what I think it will look like. Big bloggers, like the Brooklyn real estate blog Brownstoner, will break stories, comment on events, and even make money. Data platforms like Everyblock will make people aware of new filings by property developers. Muckrakers with a passion—like the feisty Atlantic Yards Report blog—will show up at every hearing with tough questions, and post annotated transcripts. Local amateurs will scour public documents for revealing details, while parents at hearings will blog about the impact on specific schools in the shadow of the project. And then sites like will circulate their remarks to readers who live in that school zone, while new charitable organisations like will fund investigative articles into the background of the developers. If they are smart, New York newspapers like the Times and the Post will draw upon this coverage, share it with their readership, use it to sell local ads, and sometimes put one of their trained reporters to develop new stories. The latter will, in turn, add immense value to the information chain, and the whole cycle will start over again.

Really? Brownstoner's one guy (plus freelancers), and he's too busy writing about real estate to go deep with original reporting on any one story. Everyblock isn't going to deliver the AY data that must be extracted via Freedom of Information Law requests. Aggregators like the volunteers behind, who analyze and comment on AY news with bite after having been immersed in it for years, do so at significant personal sacrifice.

Muckrackers like AYR--again, one guy--depend on a full-time job to pay the bills and endure a punishing schedule incompatible with lifestyle changes like parenthood. (Something like, a framework for community-funded reporting, could help, but an upward bound for one-shot projects seems to be about $1000. That wouldn't take the AY story far.)

As for local amateurs stepping up, consider that Tuesday night the new Times blog The Local sponsored a panel discussion on the past, present, and future of Fort Greene and Clinton Hill. According to, Clinton Hill is supposedly the "bloggiest" neighborhood in the country and, while that's not true, a bunch of local blogs are linked from The Local. None of them covered the panel beyond AYR and The Local itself. surely has its uses, but it's essentially irrelevant to the Atlantic Yards debate. Even Forest City Ratner officials go to NoLandGrab.

And the New York Times surely isn't going to link to or "curate" content that takes them to task, like my post on the newspaper's failure to report on Forest City Ratner's bailout of ACORN.

Starr: need for new investment

Starr honed in by criticizing Johnson's AY example, nothing that does no original reporting nor even analyzes what it collects. Starr asked me to comment, and I confirmed that it aggregates coverage, "piggybacking notably" on AYR and NLG.

Starr added that doesn't pay me or anyone else and relies on others to pay for original reporting.

His conclusion:
Nothing that you have said addresses this decline in reporting and its implications for political accountability, and your site is certainly no solution—you can’t aggregate stories that aren’t being written. Solving that problem is going to demand new investments in journalism by nonprofit organisations, new business models that finance reporting, and new public policies that allow news organisations to capture more of the revenue from the public good they produce. And while we’re on the subject of revenue, how about paying Norman Oder and others for the work that you’ve been touting as if it were your own site’s contribution to public debate?
(Note the British spelling of "organisations")

Johnson's response

Johnson acknowledges that doesn’t do original reporting and cited Atlantic Yards "to show the volume of information already created about a civic issue in Brooklyn."

However, in provoking a sophisticated and sustained online response, Atlantic Yards is probably an anomaly. 1) It's a very controversial project (basketball arena + 16 towers). 2) Brooklyn is vastly undercovered. 3) Atlantic Yards impacts neighborhoods with a critical mass of well-educated people, of whom there are a few with enough free time and feistiness to look closly at the controversy, both via blogs and via organizations like Develop Don't Destroy Brooklyn. 4) The local weekly Brooklyn Paper aggressively covered Atlantic Yards for years.

Shouldn't some bloggers have dissected the equally-controversial deal to build a new Yankee Stadium? But the South Bronx was not about to spawn such blogs.

Johnson suggests that connects people to hyperlocal news:
We organise and amplify those voices. We help newspapers connect to bloggers, and help bloggers to get their stories onto “old media” sites. Eventually, we’ll help businesses to run geographically-targeted ads. And when we do, if Norman Oder at Atlantic Yards Report wants to run our ads on his pages, we’ll be delighted to write him a cheque every month. Our business succeeds if newspapers are profitable, and if bloggers quit their day jobs.

Wait a is already selling ads against my and others' work, as shown at right. (Btw, three of the five stories at the top of the page are mine, though two were repurposed elsewhere.)

Johnson agrees that traditional reporting skills are needed "for the macro issues, but on the hyperlocal level the true experts are people on the streets."

Atlantic Yards is both hyperlocal (and thus too fine-grained in its iterations for daily print coverage) as well as macro (encompassing a wide range of beats, including real estate, public policy, sports business, law, and local politics). So traditional reporting skills are necessary. It's very hard to become an expert on that stuff.


Which is why the mainstream media still plays an important role. While I have broken stories by covering events and reading documents, only the New York Times, it seems, can get developer Bruce Ratner to talk.

When Ratner talks, sometimes the Times--because its reporters can't devote longitudinal time to Atlantic Yards--misses part of the story. And when Ratner wrote an op-ed in the New York Daily News--which the Daily News treated as gospel in its news pages--I quickly dissected it.

So the withering away of newspaper journalism, however inadequate, would give us less to analyze.

The future

Starr, who got the last word in the debate, reminded Johnson that nonprofit organizations and philanthropy will have to play "a new role financing investigative and other kinds of reporting" and that regulatory policies could strengthen local news.

But he doesn't think that either the market or technology will offer the answer, and predicts that "the new media environment will probably lead to a wider gap between the small minority who take an intense interest in public life, and the considerably larger number who drop out of the public sphere altogether."

I can see how the digital divide might exacerbate that; people without computers obviously aren't following web reporting and commentary. On the other hand, mobile devices are going to get cheaper.

And I do think that ordinary people can be engaged. One of the things that struck me when I briefly lived in South Africa some 18 years ago was how engaged everyone was in politics--it was a necessity.

So if newspapers continue to fade, new models of credible coverage must emerge from all the experiments. And sustainability will have to rely on more than [fixed 5/7] a supremely ornery response to a bigfoot real estate developer.

Wednesday, April 29, 2009

In discussion about Fort Greene and Clinton Hill, history, transition, gentrification, and, yes, Atlantic Yards

It’s hard to do justice to the sometimes compelling, sometimes disjointed, wide-ranging panel discussion concerning Fort Greene and Clinton Hilll presented last night by the New York Times’s blog The Local at the Brooklyn Public Library’s Dweck Center at Grand Army Plaza.

But the session, titled “Yesterday, Today, and Tomorrow,” did touch on the important and sometimes fraught intersections of neighborhood transition, development pressure, and race/class relations. (Of the panelists, two were black and two were white.)

And, despite some overlong monologues (from both panel and audience) or off-topic questions, it left people longing for more, for the messy humanity of in-person dialogue, in contrast with often-anonymous online interaction. (More from The Local, source of Nicole Nelch's pic.)

An audience of about 135, racially mixed though predominantly white, attended the event, and moderator Andy Newman of The Local said that, for a future event, he’d look to a space within the two neighborhoods. (The Times and the library have an ongoing relationship regarding events; hence the choice of the Dweck.)

Old like new

Writer/performer Carl Hancock Rux reminded the group that the new may not be so different from the old. He read from a 2005 article he wrote for the Brooklyn Rail, tracing class and race tensions all the way back to 1858.

While the condition of Fort Greene Park, worn down in part today by soccer players, has occasioned much debate on The Local, Newman found a Brooklyn Daily Eagle clip from 1888, in which those playing lawn tennis and croquet were criticized for tearing up the turf.

Author, filmmaker, and memoirist Nelson George recalled how dangerous Fort Greene was in his youth. He showed part of a clip (sans audio) from the 1974 film The Education of Sonny Carson, in which a kid goes through a brutal initiation, on the bleak turf outside the park’s Prison Ship Martyrs Monument, to join a street gang.

DK Holland recalled how the publication she founded The Hill, served to bring people together beginning in the mid-80s, a time when the neighborhood had boarded-up buildings and gangs on the streets. It still serves to build and celebrate community, highlighting neighborhood heroes, businesses, and history.

(In a sign of the times, The Hill, a nonprofit enterprise produced by volunteers--the only costs are for printing/production--is feeling the downturn in advertising; the next issue may not emerge “unless some angel appears,” Holland said. Council Member Letitia James, who was in the audience and received moderate applause, is helping with fundraising.)

The era of black artists

As he’s written, George in the mid-80s joined a burgeoning community of black artists in Fort Greene, one building on the neighborhood “pre-history” of musicians like Betty Carter and Cecil Taylor.

The names of residents and visiting performers is impressive: Branford and Wynton Marsalis, Terrence Blanchard, Larry (now Laurence) Fishburne, and Wesley Snipes.

‘“I happened to meet this little weird guy in 1985 called Spike (Lee),” George recalled, observing that “She’s Gotta Have It” was not merely a hugely successful film but also a magnet for the neighborhood. Lee, of course, set up shop in Fort Greene, and some of his ensemble--both in front of and behind the camera--came to the neighborhood.

George identified another era, in the early 1990s, the “Brooklyn Moon wave,” involving artists associated with spoken word and music: Erykah Badu, Common, Mos Def, Kevin Powell, and Sarah Jones.

Now, he said, it’s a time of transition, as wealthier (mostly) white residents move in, and, as he wrote in the Times, he also feels the inevitability of aging.

The AY effect

The growth of new residential towers, mainly at the neighborhood’s edges--and in several cases the unexpected consequence of a Downtown Brooklyn rezoning aimed to produce new (but ultimately unnecessary) office space, provoked dismay from George, who linked them to the planned Atlantic Yards project, which would be built just across the border in Prospect Heights.

George, a member of the DDDB advisory board, criticized at Borough President Marty Markowitz and developer Bruce Ratner for bringing a huge increase in the number of residents and visitors, via the arena and 16 towers. “And forget the night [Brooklyn-born rapper] Jay-Z does his ‘Return to Brooklyn’ concert,” George warned.

George was rebuked, mildly, by Rux, who said he didn’t necessarily like the new towers sprouting, and he loves brownstones, but, “at the same time, I recognize it belongs to a time and belongs to a moment.”

Questions of density

Later, George said he wasn’t uncomfortable with older white or black homeowners making a profit from selling their houses, but "the issue really becomes the high-rises.”

Again, Rux offered some perspective, reminding George of the mansions torn down on Clinton Avenue for apartment buildings.

Holland noted that when she moved to Clinton Hill, it needed greater density, to have people on the street and shopping in its businesses.

The discussion did not get to the question of what exactly is the neighborhood’s carrying capacity and whether the government had sufficiently studied the impact of new buildings. After all, urban areas near transit are supposed to support increased density--the question is how much.

Other towers

Unmentioned was the parade of generic towers along and near Clinton Avenue that are the Clinton Hill Houses, once civilian workforce housing during World War II, which look not unlike housing projects.

One audience member said public housing had been ignored during the discussion and on the blog; he pointed out the role of FUREE and its film about gentrification, “Some Place Like Home.”

And even the term “housing project” drew some debate, when Council Member James suggested the phrase was not preferred by current residents. George, who grew up in a “project” (in Brownsville) shot back that he used that term.

George noted that the Ingersoll Community Center, serving those in public housing, has long stood unopened. James said it will finally open in July or August. (She blamed the delay on the federal government’s failure to support public housing. While the latter is undeniable, the delay lasted far longer than ever predicted, so someone in the New York City Housing Authority should take some heat.)

One audience member, referencing the hop-skip version of neighborhood history packed into the event, reminded the audience of the role of the Pratt Area Community Council (PACC) in renovating and managing housing, as well as the efforts of the late Council Member Mary Pinkett, crucial to the neighborhood’s revival.

Feeling welcomed--and not

One relative newcomer, a white woman who said she’s a social worker, said she mostly felt welcomed, but sometimes she didn’t. (On blogs, I've read reports of people throwing pebbles and other unpleasantness.) What, she asked with sincerity, can she do?

Holland suggested she join some local organizations. (Then again, the Fort Greene Association members are not the type to toss pebbles. She did also mention churches.)

Rux suggested a psychological, cultural approach, “about not making people feel it was nothing before you came.” (Earlier, taking off from the not uncommon perception that the neighborhood didn't arrive until new restaurants sprang up, Rux cordially reminded the audience that, yes, there were restaurants in the 1980s.)

How do you hold onto the neighborhood? Some of the nurturing is organic, if accidental, part of what George called “a magical quality,” a feeling of connection.

George titled his onetime column in the Village Voice “Native Son” well before he learned that Richard Wright, who wrote the novel of that name, lived in Fort Greene while he wrote it. (A slide show George produced for The Local was played at the event; it shows the Richard Wright memorial bench in Fort Greene Park, with its plaque already vandalized.)

Looking forward

In closing, Newman asked the panelists to briefly predict what they’d think of the Fort Greene and Clinton Hill in a decade.

“As my neighborhood,” Rux said succinctly.

“I think it’ll feel very much the same,” said Jonathan Butler, founder of the popular blog Brownstoner, who got relatively little microphone time (and has a more brief history in the community, though his blog has provoked much discussion, as noted in this New York magazine cover story). “Hopefully ten years of talking some of this stuff out will make it even better.”

“I’m not certain,” George said. “If they build a sports arena, and they build those other things, I think it will change the nature of the neighborhood. You can’t build a sports arena and not have fast food restaurants, not have souvenir shops, not have strip clubs.” (I haven’t seen any new strip clubs near the Prudential Center in Newark, though.)

More conversation

“I think what you mentioned about talking--and blogs are a big part of this,” Holland mused. “We need more people engaged in the conversation, coming to it with well-thought out ideas.”.

The Hill, she said, could also be a forum for the conversation. Then again, The Hill comes out twice a year. Newman said an intern from The Local is working with a community organization to get more people, notably those without computers, engaged in the blog.

That might democratize the discourse. But The Local, a worthy experiment, doesn’t yet have a business model.

Second thoughts from a former state official; could Times Square have been reclaimed without eminent domain?

The recently transformed Times Square area is a poster child proffered by city officials like Mayor Mike Bloomberg in defending the use of eminent domain. But what if eminent domain really didn’t work?

Consider the analysis by William Stern, former CEO (1983-85) of the state Urban Development Corporation (UDC), precursor (and formal name) of the Empire State Development Corporation.

Largely reprising an Autumn 1999 article he wrote in the conservative Manhattan Institute’s City Journal) headlined The Unexpected Lessons of Times Square’s Comeback, Stern offers a report for the libertarian Institute of Justice titled The Truth About Times Square

His argument: government should have eschewed eminent domain and gotten out of the way.

Eminent domain opponents like DDDB naturally seized on it. But Stern's argument is worth a closer look, since some other close observers--a critic of eminent domain, Julia Vitullo-Martin, and a scholar who studied Times Square, Lynne Sagalyn--have come to different conclusions.

The discussion should continue, and turn into a direct debate.

Stern’s take

Stern writes:
Our extravagant plans actually retarded development. The changes in Times Square occurred despite government, not because of it. Times Square succeeded for reasons that had little to do with our building and condemnation schemes and everything to do with government policy that allowed the market to do its work, the way development occurs every day nationwide. By lowering taxes, enforcing the law, and getting out of the way instead of serving as real estate broker, the government incentivized investment and construction and encouraged the rebirth of Times Square to what it is today.

The UDC’s power

As planner Alexander Garvin has commented elsewhere, the UDC, set up to build low-income housing in the wake of urban riots, had extraordinary powers. Stern's summary:
By statute, it had been given powers that, at the time, were unprecedented for a governmental development agency. It could override local zoning, issue bonds, serve as its own building permit agency, supervise construction and, most importantly, condemn property for reasons of “economic blight,” a term the UDC used for areas it felt were underperforming economically.

Blame Carey

Who’s responsible for the UDC’s transformation? Governor Hugh Carey. Stern writes:
Seeing its enormous power, Governor Carey’s administration transformed the agency from its original purpose of building low-income housing (a purpose that the agency had used to drive the state and city into a very serious fiscal crisis in the 1970s) to a full-blown economic development agency that co-opted the functions of the private market, engaging in real estate speculation and procurement (instead of focusing on creating an inviting environment for private development without government assistance or subsidy). For that reason, the UDC played a central role in planning the redevelopment of Times Square, which had reached its absolute nadir in 1981.

The UDC in Times Square

What did the UDC do? A lot.

Stern writes:
Working closely with Governor Cuomo, the UDC board and representatives from the city, I approved or opposed developers for the project, directed the various UDC departments and subsidiaries involved in the work (such as the legal and engineering divisions) and approved all property condemnations contained in the plan. The latter made my agency a particularly powerful player, since the city had to rely on the UDC’s exclusive condemnation authority. Indeed, this role was one of the key reasons the city wanted to make this a joint effort with the state —we could fast-track the development process and condemnations and offer tax abatements. This city-state partnership was a unique alliance that other large-scale development projects throughout the country did not have.
(Emphasis added)

Sounds a bit like Atlantic Yards.

Infighting and the Times

Stern explains how different factions jockeyed for power, given that the city and the New York Times favored one team for part of the project, while the state disagreed.

In pointing to the potential for unfairness, Stern targets the Times, serving as both newspaper and business (a role it played more recently in reaping the benefits of eminent domain for its building and then having trouble writing about it):
It was then that I began to see the negative implications of government-directed projects like this—the influence peddling, cronyism and corruption, especially when eminent domain is involved. Using eminent domain for private development gives the private sector the opportunity to wield public power—which is more or less for sale—in order to benefit privately. One of the more prominent yet untold players was The New York Times, a private company that was deeply involved in this public project. As the newspaper of record in New York, they would naturally cover the project closely—but their involvement transcended journalistic scrutiny.

For example, Jack Rosenthal, then deputy editorial page editor of the paper, was the Times’ point man in representing their interests about the redevelopment. He acted not as a journalist covering a story but as a decision maker, dictating public policy. Rosenthal was speaking for the paper, and the paper was part of the New York Times Corporation. The Times Corp. had decided it should have as much decision power as city or state government with regard to 42nd Street.

They did so in many ways. One of the primary methods was to use their close relationship with important city officials, such as city planning commissioner Herb Sturz (the city’s point man on the project and my equivalent for the city), who later went to work for the Times after he left city government. An incident that demonstrates Sturz’s relationship with the Times occurred at a city-state meeting to discuss the project. At the meeting, Sturz announced, “Punch [Arthur Sulzberger, former publisher of the Times] wants 1 Times Square down.” At other times it was unvarnished attempts at pressure. In a private meeting, Rosenthal made it very clear to me that the Times wanted Klein to develop the garment wholesale mart and grew increasingly upset at my opposition to the idea.

What surprised me most was that nobody at the Times seemed to care that they were compromising their journalistic integrity by assuming the dual roles of political reporting and pure politicking when it came to 42nd Street.

Indeed, while there’s a difference between news coverage and editorial page commentary, this shows an extension of editorial page influence that is remarkably blatant.

The contrast to the east

Stern think there’s a simple contrast:
The failure of heavy-handed government strategies to cure the economic downfall experienced in Times Square is even more pronounced when taking into account the east side of Manhattan during the same time, which, without the plagues of Times Square and the government’s intervention competing to condemn the area to perpetual economic decline, enjoyed a remarkable period of building and development from 1981 until 1988. Between 1981 and 1983, three new towers were completed and two more began, with construction beginning on yet another the following year. In 1985, 77 projects were under construction south of 96th Street—70 percent of which were on the East Side.

I don’t know if the comparison is as cut and dried, but it’s worth debating going forward.

Eminent domain unnecessary

The heart of Stern’s argument:
In fact, about the only thing the plan accomplished was something it never needed to do in the first place—use eminent domain to take the property of private parties and give it to other private parties for the latter’s use. From 1984 on, drawing on the UDC’s special condemnation powers, the redevelopment project began taking businesses in a purported attempt to cure “economic blight.” This condemnation binge kicked out businesses of all types and sizes. To implement the project, the plan called for the demolition of 20 buildings and the displacement of 400 existing businesses, only a little more than 40 of which were adult bookstores or peep shows. In other words, although the sex businesses represented an economic drag on the area, our goal was to remove not only these establishments but all businesses that did not fit into the government’s master plan.

By 1990, after a hugely expensive six-year condemnation process and with no anchor tenants, the UDC had taken title to nine acres of the 13-acre project area. The cost reached nearly $300 million, a sum advanced by the developers, who would be reimbursed through tax abatements.

In hindsight, eminent domain was not merely unnecessary; eminent domain was destructive and counterproductive to the aim of achieving redevelopment. The properties surely could have all been bought out by the mega-developers. After all, that is how mega-development traditionally has taken place in the United States. It used to be called an “assemblage,” and good developers know how to do it without eminent domain. That kind of process would have been fairer and less costly. It also would have helped assure from the start that the buildings ultimately constructed on the site had the best chance of meeting the market’s demand—rather than government officials’ caprice. It was the way, after all, that Times Square had been developed in the first place. During my time at the UDC, developers approached me privately and said eminent domain was not needed. They had previously implemented large-scale development without eminent domain and were confident they could do so in Times Square. 
(Emphasis added)

That’s a very interesting argument. One of the strongest arguments for eminent domain is the “holdout” issue, the property owner who refuses to sell. Julia Vitullo-Martin of the Manhattan Institute wrote in May 2006:
Brooklyn is not cursed with porno theaters, whose profitability in Times Square was so great that no "market" offer would ever be accepted by owners.

But Stern says that developers thought they didn't need eminent domain. I wonder if that was a consensus.

The harm of eminent domain

Stern thinks the use of eminent domain had short-term impacts and set a bad example:
While eminent domain may have made it easier two decades later to build (since the property was already condemned), the city lost far more than what it could ever gain from the lands’ new uses. It destroyed legitimate local businesses that create the patchwork of unique attractions that bring tourists from across the country to any major city. It delayed any resurgence of Times Square, as property owners and government officials remained in limbo and tax dollars were lost.

Our efforts ignored the root causes of the problems in Times Square, blinding us to any true cures and setting a dangerous precedent for future projects in New York City. Property owners who were anticipating massive buy-outs as a result of the West Side’s upzoning were shocked when they learned this simply ushered in a plan that effectively wiped them out, with “fair” market value in place of negotiation. This unfair, unjust and unconstitutional treatment led to ten years of legal challenges. What’s worse, none of the developers we condemned property for ever realized our collective vision.

(Emphasis added)

Indeed, it's quite likely that if Atlantic Yards goes forward, what emerges will look very different than the project as sold to the public and approved by the ESDC in 2006.

An unfair process

Stern says that eminent domain picks winners during a situation of uncertainty:
When government is given the power to take property from one private owner and give it to another, an inevitable and very ugly political process begins. Instead of competing in a marketplace where outcomes are determined by who has the best innovative ideas, strong financing, creative marketing and capable management, developers compete for political influence. 

...Times Square was bursting with investment and renewal, but it was not because of the 42nd Street Development Plan, since it had built nothing, nor even because the nation had entered into an economic boom. Forty-Second Street kept rotting away through the economic booms of the 1960s and 1980s. Instead, the market began to work because government took actions that all governments can and should to incentivize development in troubled areas—take public safety seriously and lower taxes to draw businesses into the area.

Stern's lessons

Stern concludes by arguing what he considers three universals:
The lessons I learned from the 42nd Street Development Project in New York are true for cities and small towns across the nation. First, public safety is essential if there is to be civil society... Second, states and cities should rethink using condemnation power to take property from one private owner and give it to another private owner. To use that power is to open a Pandora’s Box filled with influence peddling and power brokering, which is always sleazy and often corrupt... 

Third, tax policy is important, and to have development, local governments must have a competitive tax structure... can anyone honestly identify a logical, empirical, non-political reason why the new headquarters of The New York Times, which is located in the project area, required every tax break and government subsidy imaginable, while the myriad restaurants, shops and small businesses required no tax relief?

An AY example

In a sidebar in the IJ’s report, Stern picks up the story:
Unfortunately, the most atrocious aspects of the Times Square redevelopment have been embraced as a grand tradition in New York City development, as the unique city-state alliance forged through our efforts in the 1980s paved the way for future massive intervention at both levels of government. Influence peddling is still as prevalent as ever, as billionaire developer Bruce Ratner’s buddies in office have helped him seize private homes and businesses for his Atlantic Yards project in Brooklyn—despite massive public outrage.

The argument in 1999

In The Unexpected Lessons of Times Square’s Comeback, in the Autumn 1999 issue of City Journal, Stern made his point, without hammering as hard on eminent domain:
Government began to do three things—two of them with the plan's help, though the city could have done them more effectively on its own—that ignited Times Square's revitalization: it started to fight crime, it kicked out the sex industry, and it lowered taxes selectively for big businesses willing to locate in the area.

Getting rid of the sleaze

Stern suggests zoning, rather than eminent domain, might have worked:
But through the state's Urban Development Corporation, the redevelopment plan did play a key role in the second thing government did that helped to revive Times Square: kicking out the sex businesses.

...Instead of condemning, why didn't the city just zone out the sex businesses? After all, throughout the nineteenth century—and indeed, for most of the twentieth—cities freely applied tough zoning regulations to the sex industry, viewing it, apart from any moral objection, as poisonous to other economic activity.

...To apply zoning restrictions to sex businesses was henceforth different from applying them to, say, a slaughterhouse or a chemical plant, since now to do so supposedly violated the First Amendment. It also would invariably incur the wrath of the cultural left, loudly decrying censorship and the imposition of puritan values. The redevelopment plan allowed the city and the state to escape these invented First Amendment restrictions... 

...Yet condemnation might not have been necessary after all. As early as 1976, the Supreme Court started to allow municipalities to subject "adult" businesses to zoning regulations for reasons of "secondary effects" on neighborhoods, with economic blight leading the list—the Fiorello La Guardia argument, we could call it.

Picking winners

Stern gives a concrete example to back his preference for across the board tax relief as opposed to targeted reductions:
This favoring of the old and the well-connected over the new and the as yet unknown—it's really a form of state—directed capitalism, where government substitutes its bureaucratic thinking for the market's invisible hand—means that New York squanders enormous economic possibilities. Imagine a 29-year-old college dropout named Bill Gates coming to us in 1984 and asking for a tax abatement to build a 42nd Street office for his new computer-software company.

A scholar’s take

In her epic Times Square Roulette, Lynne Sagalyn sees the redevelopment effort as defensible but certainly worthy of debate. She writes:
Relying on eminent domain to assemble the project’s 13 acres of land, city and state officials were following the conventions of urban renewal as commonly practiced in the Untied States during the decades following World War II. That process coupled government’s sovereign power to seize private property--for a ‘public purpose’ with payment of ‘just compensation’--with its police power to control what and how new land uses would be put in place, and it packaged those powers in a special-purpose entity such as UDC designed to facilitate public-private development ventures. 

For urban redevelopment, government is often redistributing property rights among private interests. The political power to do so comes form an evolved legal system that countenances a broad standard as to what constitutes ‘public purpose’ and bestows judicial deference to agency execution of public/private endeavors. While government tends to prevail in contests of condemnation, the process is not without its legal and political costs. 

Better compensation?

Sagalyn sees the alternative not as the absence of eminent domain but a better compensation system to reward owners with the fruits of the redevelopment:
Though relied upon repeatedly, compulsory purchase--condemnation is an American term--employed for urban renewal and economic development remains fraught with political controversy. The policy arguments for the use of eminent domain were relational, proven, and, given the ambitions of the 42DP, practical. The ‘taking’ was also within the scope of UDC’s statutory authority , as attested to by the project’s successful rebuff of all legal challenges. 
(Emphasis added)

Yet continuous litigation laid bare the risks of this second strategic policy decision. Given that the condemnation process is so cumbersome and costly, inherently litigious, and full of political risks, was there another way to effectuate comprehensive redevelopment? [Carl] Weisbrod, for one, kept positing this question in a series of private interviews in the mid-1990s. What realistic and workable alternatives might offer potentially greater efficiencies and expanded equity under a standard that gives existing property owners potential long-term economic rights beyond those of ‘sure and certain compensation’?

Consider a system in which the public sector creates a legal-entity to redevelop land within a defined project area, some kind of joint-stock corporation whose shareholders include cash investors... and existing property rights interests... who are issued shares in property to the value of their property rights as determined by a fair and just system of valuation...

Such a broader sharing of benefits has been suggested, as has "supercompensation."

Sagalyn suggests there was a goal beyond economics:
Taxpayers always had a stake in the revival of Times Square, but economics was never the policy driver for the 42DP... From start to end, the cleanup-turned-transformation aimed to restore civility--real as well as symbolic--to New York’s most public of public spaces.

Stern on zoning

In an essay headlined Why Gotham’s Developers Don’t Develop, in the August 2000 issue of City Journal, Stern argued for streamlining the city’s building process:
Of course, he can't help being a wheeler-dealer if he wants to build in the city. That's because complying with New York's Kafkaesque zoning code and its banana-republic process for approving building projects requires first and foremost a Herculean exercise in politics. It is hugely time-consuming and very expensive, not only because time is money, but because a developer has to schmear people, both publicly and sometimes not so publicly, every step of the way. One high-powered city developer put it bluntly: "You have to be a conniver to get things done."

Everything changed in 1961, however, when Mayor Robert Wagner and Faustian master builder Robert Moses imposed a new zoning code that swapped the market's invisible hand for the vision of central planners, dictating every jot and tittle of what a developer could build and where he could build it.. These three principles they enshrined in a code of stupefying complexity.

Then came further tweaks. Stern writes:
...To make matters even worse, beginning in the mid-seventies, the developer now had to go through a heavily politicized process for approving any building proposal that needed re-zoning—in other words, almost any significant proposal. Called the Unified Land Use Review Process (ULURP), it forces the builder to seek level after level of city-government approval before getting a final pass on his project. One real-estate lawyer likens it to "a Minotaurian maze"—take a wrong turn and you're dead.

The ULURP completed the transformation of the builder into the politician....
Thanks to a 1976 state law, the developer must also submit his proposal (if it requires re-zoning) to the most exhaustive environmental review in the nation, which typically takes 18 months to complete. It looks at a project's potential impact on everything from population concentration and noise to smog and endangered species. The review, or Environmental Impact Statement (EIS), is as costly to the developer in consulting and legal fees as it is time-consuming. Says environmental lawyer Michael Gerrard, "A good-size EIS will cost several hundred thousand dollars, but it could be more than a million.

In the case of AY, it cost much more--and that was by avoiding ULURP.

Playing the game

Stern cites some developers who bought into it:
Normally, you'd think builders would be waging an all-out battle to overturn the barriers that make it so hard to build in Gotham. But the major-league New York developers have learned how to thrive in this climate.

...In fact, this complex system has turned New York's big developers into a de facto cartel. The system keeps the competition out. It makes it hard for national developers and newcomers, who lack the political know-how and the right political connections, to get a foothold in the city.

A nod to Ratner

And some who didn’t:
...Not all developers oppose shaking things up, however. Two years ago, Douglas Durst and another city developer, Bruce Ratner, complained publicly about the need to make huge political contributions in order to construct anything in the city.

Ratner, however, learned other ways to steer contributions, and then got back in the game.

Some UDC history

In the Winter 1995 issue of City Journal, Stern offered some unflattering reflections on his old agency, in a piece headlined Empire State Perestroika.

He wrote:
The Urban Development Corporation, which I ran from 1983 to 1985, was formed to build low-income housing after the riots of the late sixties. It has the power to override zoning ordinances and condemn property, and it is exempt from local property taxes and building inspections. It practically bankrupted the state and helped precipitate the fiscal crisis of 1975. Then it got into subsidizing developers. Today it's a huge patronage mill, with fortunes being made, and nobody knows who's really running things. There are organized crime figures roaming around. When I first got to the UDC, I thought my mother would be proud of me. But my second meeting there was with a pair of pretty well-known mob figures.

I don’t think--but can’t be certain--that mob figures have the same role, but the question of favoritism persists.

On the Legislature

Stern got way ahead of the left-leaning Brennan Center, which in 2004 called the New York Legislature the country’s most dysfunctional.

He wrote:
The most dramatic, complete impediment to change is the State Legislature. It is the worst governmental institution of the Western world. It has more employees than California's Legislature, even though California's population is half again as big as New York's. It is filled with conflicts of interest. Members are allowed to practice law on matters that come before the committees that they sit on. There has been no post Watergate ethics reform of the New York State Legislature. Many other legislatures have instituted reforms—including the U.S. Congress—but New York has a completely unreconstructed Legislature, presiding over a blown-up welfare state.

Tuesday, April 28, 2009

Finance Commissioner Stark resigns, but the Yankee Stadium issue is ignored

New York City Department of Finance Commissioner Martha Stark has resigned, in the wake of questions about conflict of interest and concerns about her significant outside income.

There's a brief mayoral statement. But none of the coverage so far--see, for example, the Times, Daily News, and Crain's--raises any questions about what may be the most significant cloud over Stark and her former subordinate (and current consort) Dara Ottley-Brown: their role in the swift and curious reassessment of the Yankee Stadium site.

Lessons from Times Square redevelopment: even after legislative approval, financial accountability is needed

(This is one in an irregular series of articles about issues that a State Senate committee might address when it holds a hearing on Atlantic Yards.)

City Hall has published a partial transcript of the April 8 Q&A with Empire State Development Corporation (ESDC) CEO Marisa Lago. I already reported Lago's acknowledgment that the project would take "decades," and her equanimity regarding an attenuated time line.

I also reported Lago's statement about the aggressive governmental commitment to the project, but the full quote is worth a look: "I think the important thing is the commitment that the government has, that the city/state government has in working with Forest City to drive the project forward."

But what does that commitment mean? Could it mean additional direct subsidies, tax breaks, or indirect subsidies? And, though no real cost-benefit analysis was conducted by the state, isn't one in order, drawing on new data?

Lessons from Times Square

I took a look at Lynne Sagalyn's 2001 epic analysis of redevelopment, Times Square Roulette, and saw both warnings and guidance.

Sagalyn writes:
The essence of public development is the open-ended nature of the commitments--financial and political--necessary to keep a project moving forward, especially once large amounts of money have been invested. Each side may have to make new commitments or follow through with existing obligations when, if operating unfettered and independently, its economic interest would be best served by not doing so....

In regard to Atlantic Yards, how open-ended is the government's stated commitment?

Fundamental asymmetry?

What happens when a project hits a rough spot? Sagalyn writes:
The fundamental asymmetry, however, is that the developer can generally leave the project and even the city while politicians cannot. When a project-threatening crisis emerges, the politics of pragmatism commands that public officials search for a solution by finding ways to recast a deal, amend a plan, or take on additional risk by investing more dollars (directly or indirectly) to salvage a project in the hopes of moving forward. As developers rather than regulators, public officials cannot afford to be passive. Waiting for a market-driven revival of private development is not a politically feasible option because neither mayor nor governor can risk the charge that he failed to act to achieve the promises of a high-priority project.

Again, she suggests that the developer has the upper hand. In the case of Atlantic Yards, I think it's more complicated. Sure, both developer and government have invested significant sums, and thus have a certain amount of professed momentum. And both the governor and mayor presumably would like to cut a ribbon opening the arena.

Then again, should Forest City Ratner leave the project, that means the basketball Nets would continue to languish at the aging Izod Center in the Meadowlands, where the profusion of unsold seats this season prompted another piece of creative marketing: "sky banners" to hang advertising in front of empty seats. And FCR needs a new arena to raise the value of the team.

Passing the "smell test"

Sagalyn continues:
The political imperative is the bottom line and forces the search for a solution. With many technical sources of camouflage, public officials generally have options for restructuring a deal. From a policy perspective, what matters is whether the solution afforded some protection for the taxpayer, or whether the gamble of political and economic resources is discoverable, and, if so, passes the "smell test" when challenged by opponents....

Well, it can't pass the "smell test" until it passes the transparency test, and we so far don't know the contours of the deal being discussed.

We don't even know the timetable or the project cost, though the ESDC says such information is coming. And we sure don't know about additional subsidies.

Closer evaluation

Sagalyn argues that, given the lengthy project buildout and economic changes--situations that have recurred in the case of AY--further analysis was warranted:
This context of review intensifies the accountability issues attached to public deal making, as does the task of coping with a changing economic context and its implications for already-cut deals. Both issues make apparent the need for financial accountability of public deal making, after initial legislative approval. By the conventional norms of public policy, this means some type of review of the public’s financial commitments, an ex-ante evaluation of a deal's costs and benefits or an ex-post audit of financial transactions or both. That the public resources in question may be in the form of off-budget foregone revenues (rent credits or tax abatements) or long-term contingent commitments (ESAC) rather than direct cash grants or loans does not change the logic. It only complicates the tasks of analysis and explanation.
(Emphasis added)

Need a cost-benefit analysis

Sagalyn suggests that the up-front process can be improved, as well:
Greater accountability can, however, be built into the current process in a number of ways. Improving the quantity and quality of information on the city’s financial commitments is key. Disclosure of the essential terms of leases, for example, offers a technical glimpse of contrasts, but this sheds little light on the underlying economic fundamentals of a complex deal and how its many parts fit together. The present process of review should be augmented with an economic evaluation of the business terms of a deal--written in clear, nontechnical terms and available to all interested groups--including an assessment of the risks faced by the city. Such an analysis should clarify the nature and extent of benefits derived by the private sector--including their timing, as well as any costs associated with the delivery of public improvements and other components of the public-benefits package. On the public side of the ledger, it should account for the full set of costs--the present value of projected tax expenditures as well as direct spending by all participating public entities--set against the present value of projected municipal revenues from the project. Even though quantifying some of the costs and benefits presents challenging analytical problems the current state of affairs leave much room for improvement.

Accountability needed

Sagalyn concludes:

If deal making is to progress as an effective and politically sustainable strategy in the took kit of development officials and city planners, the protocols for democratic accountability need to be further refined.

Perhaps that refers to legislative oversight, as well.

Monday, April 27, 2009

Waiting for the judges to rule in both major AY cases (and watching Forest City Ratner repeat a discredited lie)

Within a matter of weeks, if not sooner, two important but not final rulings should emerge from two departments of the Appellate Division of the New York State court system. The cases challenge eminent domain and the Atlantic Yards environmental review.

Should the defendants, predominantly the Empire State Development Corporation (ESDC), prevail, that would suggest further momentum for the wounded Atlantic Yards project.

Other obstacles

Still, even victories in court may not affect the financial obstacles facing the Atlantic Yards arena, for which tax-exempt bonds must be issued by the end of December, unless the Internal Revenue Service extends a deadline.

Indeed, while Forest City Ratner, in legal papers regarding the second case, asserted that the project would have important public benefits (and maintained a previously-discredited lie that AY would bring $4.4 billion in new tax revenue), a lawyer for the appellants responded that the “supposed public benefits” are “grossly overstated,” given reports by even project proponents that AY would be significantly delayed.

Eminent domain

On February 23, more than two months ago, the Appellate Division, Second Department heard oral arguments in the long-shot case challenging the use of eminent domain for Atlantic Yards.

The case had been filed originally in federal court, where plaintiffs and lawyers anticipated an opportunity to cross-examine witnesses and gather documents during the discovery process--but it was dismissed at the trial court level. That dismissal was upheld by an appellate court, and the U.S. Supreme Court refused to hear an appeal.

A new version of the lawsuit was in state court, with the argument that the state constitution requires a stricter evaluation of public use than does federal constitution. The judges of the Second Department--where eminent domain cases are heard (as opposed to the state Supreme Court, a trial court) in the interests of expedience--seemed skeptical, as case law gives great deference to decisions made by condemnors.

Still, the legal process did show the ESDC backing off one point. While in legal papers the ESDC claimed (without foundation) that a document quantified the private benefit to developer Forest City Ratner, an ESDC lawyer conceded no such analysis comparing private and public benefit was performed, but quickly argued that no such analysis was required.

Should the plaintiffs lose, plaintiffs’ attorney Matthew Brinckerhoff said in February, the plaintiffs will appeal to the Court of Appeals, the highest court. That’s likely discretionary, but Brinckerhoff expressed confidence the court would want to clarify the issues. If so, that step could last from two to seven months

Environmental review

In an effort to reverse an appeals court’s February decision rejecting an appeal of a trial judge's dismissal of the environmental review case, Develop Don’t Destroy Brooklyn (DDDB) and 25 co-plaintiff community and civic groups on March 30 asked the Appellate Division, First Department, to allow the state’s highest court to review the decision.

I previously wrote about the plaintiffs’ arguments. Below I look at the responses by the ESDC and Forest City Ratner, as well as the plaintiffs’ response.

Note that, in this case, the arguments have been made before the court that issued the ruling. Should the request be denied, the plaintiffs will directly ask the Court of Appeals to consider accepting the appeal. They will have 30 days to file that appeal, and the process should take several weeks longer.

If the case does go to the Court of Appeals, that would push the timetable for briefing and argument to the fall, further delaying the developer's stated plans to break ground this year and open the arena in 2011.

James Catterson, one of the four judges on the panel, filed a concurring opinion that read like a dissent, and the petitioners relied significantly on this, arguing that Catterson’s inability to formally dissent, despite major misgivings, was a reason the Court of Appeals should step in and “determine the boundaries of judicial review.”

Standard of review

The appellants note that the court relied heavily on two cases that required it “to afford a high level of deference” to the ESDC’s decision. 

The ESDC responded via an affirmation by attorney Philip Karmel. None of the five questions identified by the appellants, he wrote, warrant review, as none identify any decision by the Court of Appeals that conflicts with the unanimous Appellate Division decision. “Appellants simply disagree with this Court’s application of well established law to the record in this case,” he wrote.

One question regards the standard of review. The appellants argued that the court’s “highly deferential” standard of Kaskel v. Impelitteri was wrong, but the ESDC said that Court of Appeals has consistently applied those principles to blight determinations, and that the appellants’ contention that Kaskel is applied only in taxpayer actions is wrong.

The ESDC said that not only has the appellate court found that the Blight Study “adequately establishes the substandard and insanitary conditions of the project site,” so have judges in the federal system.

“Appellants decry the Blight Study as biased, deficient and even corrupt... but these wild allegations spring from desperation rather than the record,” Karmel stated. “Each and every objection made to the Blight Study during the course of this appeal was thoroughly answered and rebutted by ESDC in its brief to this Court.”

“In essence, Appellants would like the Court of Appeals to conduct yet another review of the same Blight Study,” Karmel argued

Baker responded that ESDC mischaracterizes the appellants’ motion as seeking another review of the Blight Study; instead, they seek review and clarification of the legal standards of review of ESDC’s findings and determinations.

Economic trends

Another question involves whether the ESDC was biased and corrupt in denying economic conditions and trends in the project area--and in ignoring the market study it apparently commissioned.

The ESDC, argued the appellants, was “purposefully disregarding the contrary economic conditions and development trends which it asked its own consultant, AKRF, to study; knowingly misrepresenting the effect of the Vanderbilt Rail Yards on the non-ATURA [Atlantic Terminal Urban Renewal Area] portion as impeding development, while the non-ATURA portion and adjacent areas were enjoying substantial, desirable private redevelopment and rapidly rising property values; and knowingly misrepresenting the crime rate in the non-ATURA portion as higher than surrounding areas, while its own data showed just the opposite.”

“Appellants misrepresent what is ‘uncontroverted’ in this matter,” Karmel responded. “Although Appellants allege, without probative record evidence, that the area is experiencing a ‘housing boom,’ the Blight Study documents extensive, longstanding blight on the project site and significant impediments to the site’s redevelopment.”

Issue of study a “strawman”?

What about that study? “This question is a strawman,” the ESDC responded, explaining, “An area may be ‘substandard and insanitary’ based on its present and longstanding blighted condition, regardless of whether a market study would show that market forces might some day eliminate the blight. No ‘market study’ of the kind Appellants have demanded is required in such cases. By contrast, when ESDC is engaged in a project at a site that is not presently blighted but which is predicted to deteriorate, a market study to predict the future might be appropriate, because in such circumstances, the issue is not whether the property is blighted today but whether it might become blighted tomorrow.”

“In the instant case, ESDC found that the Atlantic Yards project site is presently blighted and that these conditions have existed for many years,” Karmel concluded. “Under such circumstances, no study of future trends is required by UDCA [Urban Development Corporation Act].”

“Appellants seek to bolster their argument by citation to the consultant’s initial scope of work for the preparation of the Blight Study, but this scope of work preceded the preparation of the Blight Study and does not reflect its analysis or conclusions,” the statement continued. “Since ESDC made the requisite statutory findings, the only issue is whether the record is adequate to support them.”

Baker responded: “Incredibly, ESDC continues to deny that the neighborhood in and around the Project site experienced rapid, desirable, private residential development both before and after the Project was announced even though, as this Court plainly acknowledged at oral argument, and as Justice Catterson discussed in his concurrence, the evidence of the redevelopment trends in the blocks in and around the non-ATURA portion of the Project site is obvious and insurmountable. ESDC knew its repeated statements proffered as justification of the Project, that ‘blighted conditions... are unlikely to be removed without public action,’ were false when it made them, and Appellants submit that ESDC’s knowing reliance on false justifications for the Project renders its findings impermissibly biased....”

Dollar-a-year arena

Another questions is whether a sports arena leased for one dollar per year to a private, for profit entity to be operated as a professional sports facility, with de minimis civic benefits, may be a “civic project.”

“This question is premised upon multiple errors of fact and a mischaracterization of the record,” the ESDC responded. “The Arena will not be leased for ‘one dollar per year.’ The tenant will be required to pay tens of millions of dollars to pay off the tax-exempt bonds to be sold by ESDC’s Local Development Corporation to finance the Arena’s construction. Nor will the facility be used exclusively as a sports arena,” given that basketball games would be some 41 events out of 225 a year.

Supreme Court Judge Joan Madden did not find the arena’s civic benefits to be de minimis, but rather used that term to refer to the commitment to make the arena available to community groups for ten events a year.

Moreover, a commercial lessee can carry out a “civic purpose” if operated as a recreational, sports, and cultural facility.

Karmel’s affirmation concluded with a nod to the original language of the Urban Development Corporation Act, set up to help clean up the ghetto. Land use improvement projects like AY set up to address blighted conditions “are not only encouraged but required to ‘afford [] maximum opportunity for participation by private enterprise, consistent with the sound needs of the municipality as a whole.’”
(Emphases added by ESDC)

Baker responded, “Regardless of whether a professional sports arena can rationally be deemed to serve a civic purpose under the UDCA, ESDC’s plan to lease the entire operation of the Barclays Center Arena to a private, for-profit entity with no obligation to carry out any ‘civic purpose’ violates the plain language of the UDCA.”

FCR: “enormous” judicial resources

Forest City Ratner attorney Jeffrey Braun filed a separate affirmation ("under penalties of perjury") that both agreed with the ESDC arguments but added “two practical considerations that we ask this Court to bear in mind in its deliberations: first, that the Atlantic Yards project at issue in this litigation is intended to achieve important public purposes; and second, that the petitioners in this case already have consumed an enormous amount of judicial resources, and have received an enormous amount of judicial attention, in this and other litigations with which they have bombarded the courts in a thus far unsuccessful campaign to defeat this project.”

Baker responded, “Regarding FCRC’s contentions set forth in Mr. Braun’s affirmation, I submit that it is grossly in appropriate [sic] for FCRC to try to disparage Appellants’ exercise of their right to seek judicial review, given that FCRC has utilized its special relationship with ESDC, as Justice Catterson stated in his concurrence, to turn the UDCA into its own private redevelopment tool.”

Public purposes

As for public purposes, Braun listed what’s in the record: eliminating blight, bringing an arena to Brooklyn, remediating environmental contamination, building mass transit facilities and improvements, creating 2250 units of affordable housing.

A lie, redux

Braun also asserted that AY would serve as “a powerful engine of economic growth,” claiming that that the environmental impact statement (EIS] estimated that the project would create 15,000 construction jobs and between 1300 and 6400 permanent jobs, as well as “$4.4 billion in net tax revenues for the City and the State over 30 years.”

Except the EIS said no such thing. In January 2008, Braun used the same language, then, after AYR and Baker called him out on it, admitted he was “mistaken.” (See graphics below, by Abby Weissman.)  It's time for him to amend the affirmation he filed in court earlier this month.


Braun also states that, ‘pursuant to an innovative Community Benefits Agreement [CBA],” the developer’s affiliates “are contractually bound to provide a wide array of far-reaching benefits.”

Unmentioned is that, should the project be sold, the CBA is not mandatory.

Emergency demolitions establish blight?

Braun also argued that the court’s previous decision to allow Forest City to proceed with emergency demolitions “by itself demonstrates that, contrary to DDDB’s contentions, there was substantial blight in the project footprint.”

Public benefits overstated

“Moreover, the statements by Mr. Braun touting the supposed public benefits of the project are greatly overstated and largely no longer operable,” Baker argued, citing the recession, lack of market demand, and “inability to obtain sufficient financing.”

In arguing that courts should prevent “the prolonged pendency of litigation from aborting projects that should proceed,” Braun cited a case known as Society of Plastics Industry Inc. v. County of Suffolk.

Baker argued that the cases are different, given that “Appellants are not pursuing this case to obtain an economic benefit. Rather, Appellants are striving to preserve the character of their community against a state agency which has usurped the local approval process and the protections of local land use laws. Having had the political process taken away from them, Appellants, all neighborhood organizations, should not have the door to the courts also barred, simply to assist the economic needs of a private party which is facing obstacles of its own making.”