Tuesday, June 30, 2009

State's highest court accepts eminent domain appeal; oral arguments in October, thus complicating AY end game

The Atlantic Yards end game just got a whole lot more complicated.

Despite claims May 15 by Forest City Ratner CEO Bruce Ratner that the unanimous dismissal of the state eminent domain case in May "is really the last hurdle," the state's highest court, the Court of Appeals, has accepted (PDF) an appeal in the case and won't hear oral arguments until the middle of October.

While eminent domain law still tilts significantly to the advantage of the condemnor, in this case the Empire State Development Corporation (ESDC), the court's willingness to hear it indicates that it believes the originating court, the Appellate Division, did not address some aspect of the legal argument.

Also, as Develop Don't Destroy Brooklyn (DDDB) noted, last year half of all civil appeals were affirmed, and the other half were either reversed (about 40%) or modified (about 10%).

The case is brought by nine residential and commercial tenants and property owners in the AY footprint, and is organized and significantly funded by DDDB.

Delays in groundbreaking, arena bonds

At the very least, the appeal delays Forest City Ratner's announced plans to begin construction by October and severely narrows--but does not close--the window of opportunity to have crucial tax-exempt bonds issued by the end of the year.

"We are gratified that the State’s High Court will hear this important case about whether our State’s Constitution protects the homes of its citizens from the wrecking ball of greed wielded by influential developers and the public officials who do their bidding," said Matthew Brinckerhoff, the lawyer representing the appellants, in a press release. "This case provides an opportunity for the New York Court of Appeals to continue its proud tradition of interpreting this State’s Constitution in a manner that affords more protection to individual rights and liberties. We look forward to the argument in October."

ESDC spokesman Warner Johnston initially offered no comment, then said, "We do not comment on pending litigation but can confirm that the Court of Appeals has granted our request for expedited review. ESD is pleased that the Court recognized the importance of resolving this matter quickly."

The ESDC had previously asked for the appeal to be dismissed or, if accepted, to be heard no later than the first week in September. The October date, Johnston said, "is still an expedited review. They typically take much longer to schedule." (Last year, the Court of Appeals decided all of its October cases by December 2, according to WNYC.)

Forest City Ratner spokesman Joe DePlasco, ignoring the decision to accept the case, told the Observer, "The Appellate Division ruled unanimously in May in favor of the use of eminent domain because of the public benefits associated with Atlantic Yards. We’re confident that the Court of Appeals will come to the same conclusion. We are moving forward aggressively following last week’s approval by the MTA and authorization by the Empire State Development Corporation. We intend to be in construction before the end of the year."

For those listening to Charles Bagli and Andrea Bernstein on the Brian Lehrer Show today (after about 17:15), note that they seemed to be confusing the July public hearing on the project held by the Empire State Development Corporation with the October--not September--hearing held by the Court of Appeals. Nonetheless, Bagli offered this observation about Ratner's quest for tax-exempt bonds: "He’s got a very small window of opportunity here, which just got even a little bit smaller today."

Briefing schedule

The appeal, which is scheduled for argument during the Court's October schedule (Oct. 13-15 or Oct. 20-22), is subject to the following briefing schedule: appellants' brief filed by July 31; respondent's brief filed by September 10; and appellants' reply brief filed by September 25.

Constitutional question at issue

The Court's letter states:
In addition to the merits, the briefs should address the Court's subject matter jurisdiction with respect to whether a substantial constitutional question is directly involved to support an appeal as of right, which the Court will consider with the arguments on the merits. The parties shall be prepared to address the jurisdictional issue at oral argument.

The ESDC had asked the Court not to accept the case because it did not raise a substantial constitutional question. Rather than doing so, the Court preserved that question for the briefs and oral arguments.

On June 22, I sketched the arguments on the merits of the case.

Constitutional argument #1: slum clearance

The first constitutional question raised by the petitioners is whether the public use requirement in the state Constitution "imposes a more stringent standard for takings" than does the federal Constitution, a question not yet considered by any state court.

The ESDC responded:
[N]otwithstanding any asserted difference between State and federal takings law, it is well settled under both New York and federal law that slum clearance is a valid public purpose for the exercise of eminent domain.

Slum clearance? Forest City Enterprises CEO Chuck Ratner calls it "a great piece of real estate."
Not only would the AY project eliminate blight--a sufficient public purpose unto itself--it would accomplish "numerous other valid public purposes," as noted in the Appellate Division decision, ESDC lawyer Philip Karmel wrote.

That decision cited:
creating an arena publicly accessible open space, affordable housing, improvements to public transit, and new job opportunities... The petitioners' argument that some of these public benefits may never actually be realized is conclusory and speculative.

Isn't the argument becoming less speculative now--especially given the uncertainty in the revised Modified General Project Plan issued last week, which essentially guarantees only an arena and one tower ?

Constitutional argument #2: cost-benefit analysis

The second constitutional question raised by the petitioners is whether the state Constitution's public use requirement can be satisfied when the condemning authority does not examine whether the public benefit "is not incidental or pretextual in comparison with benefits to particular, favored private entities."

The ESDC responded:
To our knowledge, no condemning authority... has ever included this type of information in the EDPL record. In fact, this Court's opinion in Yonkers Community Dev. Agency v. Morris expressly held that once the land at issue is found to be blighted, no further inquiry is required."

The ESDC added that the case cited by the petitioners, Aspen Creek Estates, Ltd. v. Brookhaven is not on point because it concerned eminent domain for economic development rather than for removal of blight.

That may be so, but it's curious that the ESDC in legal papers claimed that it had examined the quantity of private benefit, though it cited a document that didn't perform such a measure. In court, the ESDC lawyer said it wasn't necessary, and the court agreed.

Constitutional argument #3: low-income housing

The third constitutional question raised by the petitioners is whether the project violates a clause of the state Constitution which requires that subsidies for reconstruction of blighted areas must be restricted to "persons of low income."

The ESDC responded that this claim was never mentioned in federal court, and that it would "hamstring the State's ability to advance important capital projects across the State and is utterly meritless, for the reasons explained in the Appellate Division decision."

If this is "utterly meritless"--and it probably is, I suggested--then are the other elements of the appeal with some merit? The Court of Appeals apparently thinks so. And the acceptance of the appeal is another challenge to claims by the New York Daily News's Errol Louis (and others) that the Atlantic Yards litigation is "frivolous."

Read the fine print: Investment analysts in bed with Forest City look positively on post-dealmaking Forest City

A New York Observer piece yesterday, headlined Analysts: New Atlantic Yards Deal A 'Significant Positive' for Forest City Ratner, brought highly unsurprising news.

From the report by investment firm Keefe, Bruyette & Woods (KBW):
While many of the details have not been completely outlined publicly, we believe staging a takedown of the land and paying for the air rights portion starting in 2012 is a significant positive for Forest City. While the stretched-out takedown and payments will require a higher total outlay (implied 6.5% annual interest rate) over the 19-year period starting in 2012, this reduces current cash outlays in 2009 and near term. In addition, this means that Forest City's takedown of the additional parcels (or air rights) will be more closely matched with vertical development of stages of the project."

What's ironic

I suspect analysts Sheila McGrath and Bill Carrier have absorbed some Forest City Ratner talking points:
The irony at this juncture is that the opposition is citing the delays in the project and a change of architect that should be considered as a negative to vote against Forest City and the project. If this project had not been tied up in litigation for years by the opposition, the MTA would have closed on the land for an upfront payment of $100 million several years ago, and affordable housing would already have been under construction. The litigation has increased the cost of the project and dragged timing of closing into one of the deepest recessions in decades and certainly a most difficult financing environment.

It wasn't litigation that increased the cost of the Frank Gehry arena 50% in less than a year-and-a-half. More likely it was the need for security improvements.

Despite the analysts' claims about "irony," the chief irony goes unmentioned: the State Funding Agreement signed in September 2007--well before the economic downturn--gave Forest City Ratner 12 years to build Phase 1 (after the delivery of property) and no deadline for Phase 2. Nor has there been any documentation that money would've been available for affordable housing on the schedule promised.

Who does KBW work for?

Consider analyst McGrath's concern for the public interest, when she chortled with approval when learning that FCR's Beekman Tower would, in the words of Forest City Enterprises executive Bob O'Brien, take advantage of "the beauty of the Liberty Bonds, tax-exempt rates and all market-rate units."

The report also states:
KBW either expects to receive or intends to seek compensation for investment banking services from Forest City Enterprises Inc. during the next three months. During the past 12 months, KBW acted as a manager or co-manager in an offering of equity securities of Forest City Enterprises Inc.

That's not an unusual entanglement for an investment firm, but it also gives reason to think KBW isn't inclined to be tough on Forest City.

Total sponsorships: $500 million?

The Observer notes:
Also noteworthy in the report was a statement that the arena now has $100 million in sponsorship commitments beyond the naming rights, which Barclays Bank previously agreed to purchase for $400 million over 20 years.

While it is significant that the arena has an additional $100 million, can we sure the Barclays deal remains unchanged? Surely the loss of Frank Gehry's participation, and the switch from an arena promised to be iconic to one promised to be a copy was not greeted with unalloyed joy.

The Partnership for New York City's evolving (and misleading) support for Atlantic Yards

The Partnership for New York City (PFNYC), which exemplifies the business community, is sure straining in its support for Atlantic Yards, dropping previous enthusiasm about Frank Gehry and affordable housing to focus on the goal of building an arena, while misleadingly suggesting that the project as it stands would generate many permanent jobs.

The PFNYC is essentially the city's Chamber of Commerce, a nonprofit membership organization with some 200 CEOs (“Partners”) from New York City’s "top corporate, investment and entrepreneurial firms."

Given that Forest City Ratner, Nets Sports & Entertainment, and Barclays Capital are among the partners, it's hardly surprising that the PFNYC supports Atlantic Yards, but testimony from PFNYC President Kathryn Wylde opening the June 22 Metropolitan Transportation Authority (MTA) Finance Committee meeting was notably thin, clocking in at half the allotted two minutes.

The testimony

Wylde said:
I'm Kathryn Wylde, president of the Partnership for New York City, and I'm pleased to be here today to testify today in support of Atlantic Yards. It's a project that we have supported for a number of years. We consider this to be an important step, particularly now, in a faltering economy and with the credit crisis, the fact that we have some key projects that can move forward, particularly across the five boroughs at this point in time, is more important than ever.

We understand and have reviewed some of the re-designs in the project. The changes in terms which I think are reflective of the realities of today's economy but keep this quality project and will bring the Nets to Brooklyn. We see something that can help further diversy our city's economy and create a new source of revenues and jobs that goes well beyond Wall Street. We think it's an important project and we hope you're able to support it.

The critique

Wylde chose to disregard Independent Budget Office testimony at the May 29 state Senate oversight hearing that the arena would be a money-loser for the city. And, while implying that Atlantic Yards would be part of a new business district or at least bolster a significant sector of the economy, her testimony disregarded the fact that no office space is currently planned.

The rebuttal Monday came from Noticing New York's Michael D.D. White.

White said:
You notice the economy has changed. In a situation like this, this is the time we look to get better deals from the developers and contractors that we deal with. It's something that Forest City Ratner is reportedly doing with its own contractors. We hope you are aware that other state and local governments are finding ways to get more for their money when dealing with developers in this economy. And yet, we are proposing a bailout for a financially weak developer, a deal that is in every way worse for the public and in every way better for the developer.

A project of less value under the rubric of value engineering. Less money from the developer for the MTA in its time of financial need. Less will be done by the developer up front. And the delivery of public benefit is being postponed. So much has changed... Kathy Wylde says she's been supporting this project from the beginning. Not
this project, I'm sorry. But one thing has not changed. The idea that, no matter how much about this project changed, it still needs to be voted for, because this is a wired deal.

As I wrote Friday, the MTA has revised and reduced the goals of the project, dropping a "state-of-the-art" arena and railyard, and no longer describing housing as "critically needed."

PFNYC testimony 2006

In testimony at the 8/23/06 Empire State Development Corporation hearing on the Draft Environmental Impact Statement, Wylde offered more extensive testimony, citing three reasons for support.

Here are excerpts:
First, the density, design and exciting mix of uses planned for Atlantic Yards creates a new anchor for the Downtown Brooklyn business district that will be visible across the borough and the region. Similar to the way that Newport City established the New Jersey waterfront as a prestige destination in the 1980's, Frank Gehry's signature buildings will signal to all who pass within fifty miles, whether by ground or air, Brooklyn's emerging status as the region's most vibrant, 21sl century community. Unlike many other developing areas of the city, the transportation infrastructure needed to accommodate Atlantic Yards is largely in place and the importance of the development ensures that it will rise to the top of priority funding for the additional public facilities and services required to make it successful.

Now, however, there's no Gehry. Nor would there be a business district, as four once-planned office towers, became one office tower, with no plans to build it until an anchor tenant emerges. Well before that hearing, I contended that the office jobs were overpromised from the start.

Second, Atlantic Yards provides desperately needed new housing at a scale that will have a meaningful impact on redressing the imbalance between housing supply and demand that has sent Brooklyn rents and home prices through the roof. Over the past 25 years, the Partnership sponsored development of several thousand of affordable homes and apartments in Fort Greene, Park Slope, Clinton Hill, Crown Heights, Prospect Heights, Windsor Terrace and Bedford Stuyvesant. These were low-rise developments that stabilized fragile neighborhoods and allowed working people to contribute to and enjoy the benefits of Brooklyn's renewal. The density of these developments, however, was never great enough to impact a tight housing market in a meaningful way. Atlantic Yards will do that.

Now, probably not. There are firm plans at this point to build the arena and exactly one tower.

Finally, the Nets and the Nets Arena are important new assets that will greatly contribute to the city's sports and entertainment industry — an increasingly important source of jobs, tax revenues and diversity in the city economy... New York City tends to have a boom and bust economy, but an attraction like the Brooklyn Nets is one of those investments that will attract fans and stimulate business activity even during the down times, helping to insure Brooklyn's long term economic vitality.

Again, such new revenues must be compared to the cost of the subsidies the city and state are putting in. And, as even Forest City Ratner consultant Andrew Zimbalist acknowledged, "The general conclusion that has come out of the academic literature on this subject is that a city, county or state should not anticipate a positive economic or fiscal impact from a new sports facility." He said in 2005, "The idea of supporting a sports arena is similar to supporting a public park. You don't do it because it's going to raise per-capita income."

PFNYC testimony 2004

In testimony before the City Council on 5/4/04, the PFNYC's MarySol Rodriguez said:
First, we want to congratulate the project developer, Bruce Ratner – who is a member of the Partnership – for his successful effort to win a major league franchise for Brooklyn. The acquisition of the Nets is a big deal for the city and a substantial contribution to the borough. The presence of an NBA team will help to galvanize additional private investment in economic development, housing and badly needed recreation facilities throughout Brooklyn.

As noted, the housing's mostly on hold.

Second, we want to express confidence that Forest City will do the right thing by the neighborhoods surrounding Atlantic Yards and the residents and businesses located on the site itself. This is a developer who has remained dedicated to Downtown Brooklyn for more than two decades, long after he could have pulled up stakes and focused exclusively on Manhattan projects.

Does the PFNYC endorse gag orders on those selling their property in the face of eminent domain? As I once wrote, Ratner Plays Hardball When It Counts.

Atlantic Yards will create the critical mass of housing, commercial and entertainment activity needed to firmly establish Downtown Brooklyn’s status as a pre-eminent urban center. The project is a great example of what urban design experts label “smart growth” – that is, a development that capitalizes on the public transportation hub and other urban infrastructure to create a vibrant live-work community. Atlantic Yards will be a destination for residents, visitors, sports fans and workers – not just a bedroom community. It is an example of how we can diversify our city’s economy beyond the Manhattan business districts. And it should be a model for similar projects in Queens, the Bronx and Upper Manhattan.

No one's calling Atlantic Yards a model any more. In fact, former Municipal Art Society president Kent Barwick wondered if Atlantic Yards will be "this generation's Penn Station," an event which galvanizes a more rational and transparent process for development.

Monday, June 29, 2009

In "Why Atlantic Yards matters" editorial, Crain's ignores inconvenient facts

In an editorial headlined Why Atlantic Yards matters: Mr. Ratner must act quickly, or it will be too late, Crain's New York Business goes to bat for Forest City Ratner.

I've bolded sections for emphasis.

The editorial states:
Amid an outcry that the state and the MTA have given Forest City Ratner a sweetheart deal to keep alive its Atlantic Yards project, it's time to recall how this scheme originated and why it has such steadfast backing from responsible city and state officials. For those who are optimistic about the city's prospects, Atlantic Yards is crucial for realizing New York's potential.

Was the sweetheart deal necessary? Couldn't Forest City Ratner, whose parent company raised $300 million-plus in a stock offering, have been challenged to come up with more cash than $20 million?

The creation myth

The editorial continues:
It all began with a phone call from Brooklyn Borough President Marty Markowitz to Forest City's Bruce Ratner. “You have to buy the New Jersey Nets and move them to Brooklyn,'' said Mr. Markowitz. He argued that Brooklyn needed a professional sports team for the prestige it would bring and the economic benefits that would result.

At the time, Mr. Ratner admits, he was clueless about professional basketball, both on the court and as a business. Yet he was the go-to person for Mr. Markowitz because he was the driving force behind the construction of the MetroTech office complex in downtown Brooklyn in the 1980s. It is not an exaggeration to say that MetroTech saved the borough's economy.

The creation myth is a tad disingenuous. Remember that Chuck Ratner, CEO of parent Forest City Enterprises, called the land "a great piece of real estate" and said:
I will confess that it was less than two or three years ago we were sitting around in New York wondering where the next deals were going to come from. We had finished a whole bunch of office and we completed MetroTech and we didn't have the next great site in Brooklyn. That was one of the reasons we got so aggressive and creative, Bruce and his team did in this Atlantic Yards project. We saw that land sitting there for this last 10 years, realizing it would be a great opportunity if somebody could turn it on. We hope we've found a way to do that.

Mostly a rail yard?

The editorial continues:
Mr. Ratner was intrigued by the borough president's plea because it fit with his belief that the Atlantic Yards area, consisting mostly of a rail yard, was the perfect place to continue Brooklyn's revival. The infrastructure costs for building on the site were simply too high for a private company to assume. Only if Mr. Ratner could find a public benefit to justify the public dollars required would development be possible. The basketball team provided that, just as new baseball stadiums did in the Bronx and Queens.

Less than 40% of the 22-acre site consists of a rail yard. The basketball arena has hardly been touted as the main public benefit; the main benefit was "affordable housing," plus open space, transportation improvements, and the removal of blight--all of which are in question.

If the infrastructure costs were simply too high for a private company, why didn't the city and state invest in a platform, then bid out the property?

Best location for density?

The editorial continues:
The city has been in Mr. Ratner's corner because, if you believe the mayor that a thriving New York will attract 900,000 new residents in the coming decades, the transit hub at Atlantic Yards makes it the best location to build a new residential neighborhood with Manhattan-like density. All those new New Yorkers will need someplace to live.

Well, yes and no. There's surely an argument for increased density, and the UNITY Plan proposes significant density, as well. Much of the AY site is well beyond the transit hub and in fact closer to other subway stops.

The "Manhattan-like density" of the project, at least as approved, would be "extreme density." There are other ways to accommodate density, through a development-oriented transit and a better process.


The editorial continues:
Nothing has changed in that equation since Mr. Markowitz's phone call, but everything else has changed in the world of development and finance. Gone is the soaring design of world-renowned architect Frank Gehry, delayed for who knows how long is the completion of the entire project, and scaled back is the amount Forest City will pay the MTA.

So Crain's, unlike government officials, acknowledges that the project's completion and thus benefits would be delayed.

Crain's does not, however, follow the AY-supporting Regional Plan Association (RPA) in suggesting that maybe the MTA could've asked for a bit of the upside in exchange for the concessions it offered.

FCR's "black hole"

The editorial continues:
It is worth noting that while Forest City may wind up with a bonanza, up to now it has been a black hole. Stuck in New Jersey, the Nets lose around $20 million a year. Architecture and legal fees for the project total more tens of millions. Delays have been interminable.

Are taxpayers supposed to bail out Forest City for its business risks? If architecture and legal fees total more tens of millions, subsidies--$305 millions in direct subsidies, and hundreds of millions more in indirect ones--dwarf them.

No bonds, no project?

The editorial continues:
Time is running short. Mr. Ratner must sell bonds for the project and break ground soon after, or the project will have to be abandoned.

Ratner must have bonds sold for the arena, not the project, before an end-of-the-year deadline to get $100 million-plus in federal subsidies. Last year, a company spokesman told the New York Daily News that they would build the arena even without tax-exempt bonds.

It's all a bet

The editorial closes:
New York can continue to support Atlantic Yards, realize what is economically possible now and bet that the entire project can be built in the future. Or it can abandon Mr. Ratner and the project, in which case it is certain that Atlantic Yards will remain an open sore for decades to come.

Why does Crain's, tribune of the business community, not endorse free market practices--an appraisal, an effort to seek new bidders--but rather embrace a "market of one"? Why does Crain's not even endorse the RPA's desire to harness the upside?

And why does Crain's call a working railyard "an open sore," and treat the railyard as a substitute for the site itself, which just happens to be bounded by a new historic district?

Public hearing set for July 29 & 30; arena due 2012, 25 years to get Phase 2 started

A Empire State Development Corporation (ESDC) legal notice (below; click to enlarge), which takes some three-quarters of a page in today's New York Post announces a public hearing on the Atlantic Yards Modified General Project Plan to be held from 2-5 pm and 6-8 pm on July 29 and July 30.

The location: the Klitgord Auditorium (285 Jay Street) of New York City Technical College, where the epic 8/23/06 hearing on Draft Environmental Impact Statement and General Project Plan was held.

Speakers will be limited to three minutes. (Let's see if that's strictly enforced.) Comments will be accepted for 30 days after the close of the hearing. That suggests that the ESDC board will vote to approve the plan in early September.

The schedule is related to developer Forest City Ratner's need to tax-exempt bond financing for the arena by the end of the year. The financing would last approximately 33 years.

Time limits: 6 years, 12 years, 25 years

The hearing notice, for the first time, imposes a 25-year deadline on the project as a whole, though I read that as 25 years to get construction started, not completed. So AY indeed would take "decades," as ESDC CEO Marisa Lago has predicted.

It states that the developer "shall use commercially reasonable efforts to construct the Arena by 2012." (I've written previously that Forest City Ratner's announced 2011 opening date is dubious.) However, as stated in the State Funding Agreement, the developer has six years without penalty to complete the arena after vacant possession of the arena block.

The State Funding Agreement says the developer has 12 years without penalty to complete the buildings on the arena block after vacant possession. The legal notice states that the interim leases for the arena block will expire no later than the 12th anniversary of vacant possession. I read that as saying that construction must have begun, but not necessarily completed.

(Interim leases permit demolition, infrastructure construction, and foundation construction, but not above-ground improvements without the consent of the ESDC.)

Similarly, the legal notice states that the interim leases for the rest of the project site east of Sixth Avenue will expire no later than the 25th anniversary of vacant possession of the arena block or any other properties taken by eminent domain in the first stage. Again, I read that as requiring construction to begin, not necessarily completed.

The deadlines are subject to extension for force majeure.

MIA again: The Times editorial page on the MTA's bailout of Ratner (except for the naming rights deal)

It wasn't surprising that the New York Daily News, whose editorial page supports Atlantic Yards without question, published a erroneous and disingenuous editorial on Saturday that justified the MTA's bailout of Forest City Ratner, allowing the developer to defer payments of $80 million over 22 years, at a generous interest rate, and to build a replacement railyard that would cost $100 million less.

It was surprising that the New York Post, whose editorial page has generally supported the project, editorialized on Wednesday, the morning of the MTA's vote, that the board should reject the proposed compromise and accept only the original deal.

It was not surprising that the newspaper editorial pages, faced with an important public policy issue, felt obligated to weigh in.

What about the Times?

And it was not surprising, alas, that the New York Times editorial page was again missing in action regarding the deal as a whole, though today it offered a critical but essentially tangential editorial opposing the deal to add the name "Barclays Center" to the Atlantic Avenue/Pacific Street station.  

More on that below, including the Times's erroneous assessment of $200,000 a year as a "goodly sum."

Past silence

Remember, in December 2006, as a vote by the Public Authorities Control Board on AY approached, the Times punted.

The Times editorial page generally favors Atlantic Yards, but three times has argued that direct city and state subsidies were unnecessary, and that developer Bruce Ratner should pay his own way; in March 2007, after the city subsidy more than doubled, the Times passed on a timely opportunity to restate its stance.

Of course, the Times is unlikely to write anything that would fundamentally threaten the interests of Forest City Ratner, business partner of the parent New York Times Company in the Times Tower. After all, as editorial writer Carolyn Curiel has said, "Our goal is to reflect the spirit of the Times and the opinion of the publisher, Arthur Sulzberger, Jr."

The same thing occurred last week.

In doing so, the Times went against the interests of not merely the Atlantic Yards opposition but the Straphangers Campaign, which represents a broad cross-section of New Yorkers and warned of a "rush to judgment," and even the AY-supporting Regional Plan Association, which, while not denouncing a dubious process, at least made the reasonable point that the deal should be retooled to give the MTA a greater share of future revenues.

Contrast in the past

And the Times's silence was glaring, when contrasted with a somewhat parallel situation in 1994, when the newspaper repeatedly editorialized against renegotiating a deal with a developer:
After so many years of delay, there is no need to rush into a sweetheart deal. The property will still be there in a few years. A rebounding economy will likely increase its value. It is wiser to walk away than stumble into a giveaway.

The naming rights deal

In an editorial today headlined Where Geography Matters, the Times opines:
We know that is a goodly sum and times are very tough for the M.T.A. But there’s reason to be skeptical about all of this, which probably explains why it took so long to sell even this one.

When you get off the train at a subway station, you want to know where you are, not who your sponsor is. Names aren’t as easily changed as all that, especially when they correspond — as the names of subway stations do — to the actual geography of the city.

The names of subway stations are beautifully utilitarian just as they are, shifting only as rapidly as the streets above them shift. The names of their sponsors are likely to shift with the economic climate, and somehow adding a name like Barclays to what is, after all, a public transit station — in Brooklyn — feels even more dissonant. So when it comes to selling naming rights, we’d like to urge the M.T.A. to take another approach: sell the naming rights to individual subway cars.

(Emphasis added)

As for whether it's a goodly sum," Michael D.D. White points out:
We believe that if the MTA were truly behaving like an agency that was cash strapped it would have negotiated a far higher sum, one that should probably escalate each year.

He pointed out that, while the 20-year deal has been described as being worth $4 million, the present value is far less, likely below $2 million, and the MTA had discussed selling ads in a short tunnel for $95,000 a month.

I'd add that naming rights deals tied to sports facilities--at least the sports facilities with corporate names (e.g., Barclays Center) versus team names (e.g., Yankee Stadium) --are inherently fragile, given that sports facility names often change. After all, the Izod Center in New Jersey, current home of the Nets, used to be the Continental Airlines Arena and the Brendan Byrne Arena.

Video: MTA official says FCR's arena plans were "principal driver" of "cramped" timing for board to vote on revised deal

I now have video of a remarkable exchange during the Metropolitan Transportation Authority (MTA) Finance Committee meeting last Monday, about which I wrote on Tuesday. 

The transcript below is more precise, and includes MTA Chief Financial Officer Gary Dellaverson explaining that if the board members felt cramped because they had less than 48 hours to evaluate a more generous deal with Forest City Ratner for the Vanderbilt Yard, well, "There's not much I can do about it. That is what it is."

Board member Doreen Frasca said, "I guess just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," Dellaverson responded. "It's entirely at the board's discretion to accept or reject, to send back to the negotiating table, or to simply warehouse. I think that, the way that I would describe the timing to you--I think that the feeling cramped--there's not much I can do about it. That is what it is. That's a function of the--I came back to you and reported to you last month on what it is that I thought was going to happen in the contours of those negotiations, and it has happened consistent with that time frame.

I think that, in terms of why must it be now in the summer versus in the fall, I think that really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]. If the structure... is not such that allows for the marketability of the bonds, then the financial aspect of the transaction, as it relates to arena construction expenses that Forest City Ratner would incur, become less viable and perhaps not viable. That's not something that I'm prepared to say from my own knowledge... but I would be remiss if I suggested anything other--that's the principal driver of the timing."

"The arena?" Frasca followed up.

"Sure," Dellaverson responded.

The Times's "arena glut" story suggests Barclays Center is on the way, marginalizes IBO's analysis as the work of "critics'

An article in today's New York Times, headlined As Arenas Sprout, a Scramble to Keep Them Filled, makes some valuable points, including the money-losing (Newark) Prudential Center's need to attract the Nets and/or have the Izod Center close down, but deserves several footnotes, since it in some places frames the Barclays Center too generously.

The article begins:
In the inaugural season for the new ballparks for the New York Yankees and Mets, the teams have been embarrassed by television shots showing vast areas of premium seats going unsold.

But those who study sporting facilities say empty seats may become even more commonplace here, as New York faces a glut of sports arenas.

Five major complexes — four existing and one planned — will soon be slugging it out within an area 30 miles wide.

At least two of the existing arenas already lose money, and experts say further casualties are almost guaranteed.

“Five arenas is not going to work,” said Mark S. Rosentraub, a professor of sports management at the University of Michigan. “I don’t think four works, even in a market as large as New York. There’s competition in every direction and there aren’t enough events.”

...By the time the arena in Brooklyn, which will be called Barclays Center, is built, there will be a total of nearly 100,000 seats to fill, 365 days a year.

(Emphases added)

The passages highlighted above are conclusory, given that we don't know if the Barclays Center will be built.

The federal role

The Times skates over an important issue:
The competition in the New York area is not just for fans and performers, but also for public subsidies, corporate sponsors and well-heeled tenants for luxury suites.

More importantly, the Times neglects to question whether, given the glut of arenas, federal tax-payers, via tax-exempt bonds, should subsidize a new arena to tune of $100 million-plus.

Overestimating the Brooklyn arena

The Times reports:
No one questions the Garden’s stature as the most venerable and busiest of arenas. It routinely books 275 hockey and basketball games (the Garden is home to the Rangers, Knicks and Liberty), circuses and concerts a year; most operators say arenas need to fill 200 dates to generate an operating surplus.

This would've been a good time to point out a fundamental flaw in the report for Forest City Ratner by sports economist Andrew Zimbalist, who agreed with the developer's projections that it would "host 224 events during the year (assuming the eventual closing of CAA, no new arena in Newark, no NHL and no minor league hockey events at the Atlantic Yards arena.)"

While the CAA (Continental Airlines Arena, now Izod Center) may or may not close, a new arena in Newark opened in 2007. As Jung Kim and Gustav Peebles pointed out in their critique of Zimbalist, his assumption was inherently flawed because it provided no place for the New Jersey Devils to play.

"Critics" claim losses

The Times, which had neglected to report on the Independent Budget Office's (IBO) conclusion that the Brooklyn arena would be a money-loser for city taxpayers, offers this inadequate reference:
Still, Mr. Ratner’s arena would be the most expensive in the country, and his company has already sustained $111.9 million in pretax losses on the Nets. And critics contend that the tax revenues generated at Barclays Center will fall short of the $300 million in cash and tens of millions of dollars in tax breaks the state and the city have pledged to the arena and a related housing development.

It's not critics, it's the IBO. By using the term "critics," the Times downplays the seriousness of the issue.

And how did the Courier-Life's Witt twist last week's news? With a head count

So, after three board meetings (with opportunity for public comment) in which state agencies advanced Atlantic Yards, how would the Courier-Life's notorious Stephen Witt sum it up?

Well, his main story, headlined Bruce Ratner seals sweetheart deal with MTA, was better than the worst of the coverage, since it mentions the deferred payments and the generous interest rate, while ignoring the approval of a truncated permanent railyard that would save developer Forest City Ratner $100 million.

Most of the article, however, consists of boilerplate description of the project, with no mention of the Empire State Development Corporation's acknowledgment that most of the project--and thus most of the announced benefits--might be delayed.

Counting heads

However, a companion article, headlined Yards supporters outnumber foes, showed Witt's uncanny ability to twist the news:
The Empire State Development Corporation and MTA public meetings last week regarding the Atlantic Yards project highlighted once again how Brooklynites in support of the project far outnumbers opponents.

At the ESDC hearing before the vote to approve a modified General Project Plan, 40 members of the public gave comment with 31 speaking in favor of the project.

This group represented all ethnic and socioeconomic backgrounds, while opponents were mainly white and⁄or property owners.

The numbers were similar at the public comment session before the MTA approved an air rights deal worth over $100 million with developer Forest City Ratner so the 22−acre arena and mixed market⁄affordable housing project rate⁄housing can move forward.

Witt somehow treats the decision of 31 people, most associated with organizations that profit from (or stand to profit from) the alliance with Bruce Ratner/Atlantic Yards arena, to testify at one board meeting--not a public hearing--during work hours as a definitive indication of community sentiment.

He neglects the fact that the issue before the MTA board was not the project itself, but whether it should renegotiate the sale of the Vanderbilt Yard into what even his own newspaper calls a "sweetheart deal."

In other words, their testimony about the virtues of the project was irrelevant. Sure, development brings jobs, but the MTA is a transportation agency.

Also, no elected officials (other than a rep for) Borough President Marty Markowitz spoke in favor of the MTA bailout, while four spoke against it. Also calling for caution were the Straphangers Campaign, the Regional Plan Association, and the Permanent Citizens Advisory Committee to the MTA--all organizations that represent far more people than the individuals/groups Witt cites.

Looking at some testimony

As for the testimony, consider that Carpenters Union official Ray Brugueras testified that the MTA should offer Forest City Ratner a sweetheart deal because Bruce Ratner "has the monies available" to get through economic hard times. (If so, shouldn't Ratner have paid the original pledged price?)

Also consider that James Caldwell of Brooklyn United for Innovative Local Development (BUILD) scoffed at the question of the value of the land and likened the Ratner bailout to the federal stimulus package (which, I'd point out, was not directed at one recipient). 

Why did President Obama produce the stimulus package, Caldwell asked rhetorically: "Because everyone was suffering. So Mr. Ratner may fall in that same category too."

If Mr. Ratner truly were suffering, shouldn't he be willing to answer questions in an open forum? After all, he claimed last month that no more subsidies were needed.

Public support vs. governmental oversight

Witt also offers a notable non sequitur:
This outpouring of support did not stop opponent organization Develop Don’t Destroy Brooklyn and its spokesperson Daniel Goldstein from offering up a threats of new litigation.
(Emphasis added; there's little evidence of editing at the Courier-Life)

There's no connection between the "outpouring of support" and the threat of litigation. The threat of litigation reflects on the MTA board's willingness to seal the deal without opening the valuable publicly-owned site to new bids, to get a new appraisal, or to consider a last-minute bid from DDDB.

Witt neglects to point out the questions raised by elected officials like Assemblyman jim Brennan and State Senator Bill Perkins, both of whom questioned the failure to seek a new appraisal for the site and warned the MTA might be violating the Public Authorities Accountability Act.

Sunday, June 28, 2009

When the MTA's Hemmerdinger called the AY arena a "public good," he was fantasizing

"And I think, in this economy, jobs and an arena in Brooklyn is a public good.”--Metropolitan Transportation Authority Chairman Dale Hemmerdinger, June 24

"On Thursday, we made some critical personnel decisions to secure financial flexibility for player moves now and in the future in order to give you the best product on the court."--Nets president Rod Thorn, e-mail to season ticket holders, June 28 (via NetsDaily)

(Emphases added)

Defining a "public good"

I suspect Hemmerdinger meant that an arena in Brooklyn was a "good thing for the public," rather than a public good.

The latter, as economist Paul Samuelson defined it, is "[goods] which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good..."

In other words, like national defense, or air, or (free) television.

Not an arena with a finite amount of tickets and a "product on the court."

The Bloomberg and Ratner dodge on indirect subsidies for Atlantic Yards

It was last December when the New York Observer broke the news that Forest City Ratner was seeking additional direct and indirect subsidies, the latter including a delay in paying the Metropolitan Transportation Authority the $100 million it pledged to pay for the Vanderbilt Yard.

This week, after 48 hours after the deal surfaced, the MTA approved it.

Noticing New York's Michael D.D. White points to Mayor Mike Bloomberg's public claim last month, via the Brooklyn Paper, that "We’re not putting money in" to Atlantic Yards.

White writes:
What did Bloomberg really mean? He meant that he was about to ram through a deal to give his friend Bruce Ratner more than another $180 million out of the public till.

(I'm not sure everyone would agree on $180 million, nor is it a direct subsidy, but the value to Ratner is well over $100 million, given that he'd save $100 million alone on the replacement railyard.)

What about Ratner?

That same Brooklyn Paper article includes this claim from Forest City Ratner CEO Bruce Ratner:
“We don’t need anything more [from the city and state],” he said.

Dishonest, as well.

Flashback, 2004

Shortly after the project was announced, in January 2004, Bloomberg, asked about government support for the project, claimed:
Fundamentally, the answer to your question is: this will be done with private money, and any city monies of any meaningful size will be debt issues financed by the extra tax revenues that come from this. So, we’re not going to have to divert money from education, or police or fire or any other part of the city to do this. No. It is private money in that sense.

Along with "police" and "fire," he might have mentioned "mass transit."

Saturday, June 27, 2009

Daily News disses straphangers, endorses Ratner bailout

The Atlantic Yards-loving Daily News editorial board, in an editorial headlined Build, Bruce, build: Developer Ratner presses ahead on Atlantic Yards, ignores the economic impact on straphangers in its uncritical endorsement of the Metropolitan Transportation Authority's (MTA) bailout of Forest City Ratner, as well as the MTA board's unwillingness to negotiate from a position of strength.

(See my coverage, with video of that MTA board.)

The newspaper editorializes:
Bully to the Metropolitan Transportation Authority for making a deal that keeps the Atlantic Yards development alive in Brooklyn. And bully to builder Bruce Ratner for hanging in there to get the project done.

It doesn't keep the development alive. It keeps the arena (and one building) alive. Ratner, who was willing to pause construction on the Beekman Tower in Lower Manhattan to renegotiate more favorable terms with unions, was not so much "hanging in there" but gaining the benefit of an agency run by a governor and mayor unwilling to challenge him.

The editorial continues:
After five years, the defeat of 23 lawsuits and an economic meltdown, he is pushing to start the $4 billion development's first component: an 18,000-seat arena, home to the Nets and a major entertainment venue.

Or, alternatively, he's desperate to start before the December 31 deadline for tax-exempt bonds. (See DDDB's dissection of the facts here: there have been six lawsuits, and the project would cost $4.9 billion.)

The editorial continues:
The plan then envisions construction of 6,400 apartments (35% of them deemed affordable), a school and a health care center, amid 8 acres of open space. This good stuff would be located primarily on land that has been vacant for decades, including a Long Island Rail Road yard.

"Primarily" is a weasel word. The railyard has always been used as a railyard--and still would be used as such. Only recently did the rise in property value make it feasible to deck over railyards. As for the rest of the properties, most haven't been vacant for decades. Some have been vacant only since Forest City Ratner bought them and razed them.

The school would be built by the School Construction Authority. 

The editorial continues:
But financing is not as available as it was a few years ago. The MTA board wisely voted to let Ratner pay $100 million over time for the rights to build above the yards, rather than demand a lump sum. With interest, the agency comes out whole.

Comes out whole? What about the generous 6.5% interest rate? The $100 million loss (and savings to Ratner) on the new permanent yard? The temporary yard that would linger twice as long as projected?

The editorial closes:
Ratner will now seek private financing for the arena. His bankers hope to raise the money by the end of the year. Wouldn't that be nice for Brooklyn?

"Private financing" would be tax-exempt financing, with Ratner likely saving more than $100 million thanks to federal subsidies. The "end of the year" deadline drove the breakneck pace for this deal, in which the MTA board had all of two days to consider it. The newspaper somehow ignores that the New York City Independent Budget now says the arena would be a money-loser for the city.

(Also see The Brooklyn Paper: It is a Bailout; The New York Post: THE ORIGINAL DEAL--OR NONE; Post columnist Nicole Gelinas: AN OUTRAGEOUS GIVEAWAY; and Queens Crap: The Daily News editorial board smokes crack.)

"Fair market value," from 2004 to 2009

[F]or the land, the public land, the MTA land, is that, what we have agreed to is that we will lease or buy that land at the fair market value... by whatever independent process that they normally use.
--Forest City Ratner executive Jim Stuckey, New York City Council hearing, 5/4/04 (transcript)

Below are some quotes from the MTA board meeting on Wednesday in which the Metropolitan Transportation Authority (MTA) agreed to let Forest City Ratner pay $20 million down for the Vanderbilt Yard, and pay the rest of the pledged $80 million over 22 years, at a generous interest rate.

The developer also would save $100 million on a cheaper permanent replacement railyard. There was no consideration of a last-minute offer of $120 million by Develop Don't Destroy Brooklyn, no attempt to get an appraisal, no effort to test the market, and not even an acknowledgment of the Regional Plan Association's (RPA) proposal that the MTA get a cut of future project revenues.

“The market is what the market is.”--board member Jeff Kay, an appointee of Mayor Mike Bloomberg

“How can you sell off a valuable public asset without considering market value?”--City Council Member Letitia James

“It is likely to be years before the market recovers enough to attract new developers.”--Neysa Pranger of the Regional Plan Association

"I believe the only issue facing me as a board member is whether or not I believe... whether MTA was getting fair market value for its property."--board member Mitchell Pally, representing Suffolk County

“But there is no other market. No one else has come forward with a credible proposal at this time, and we should take advantage of that.”--Jeff Kay

"The most sensible course now is for the city to find out anew the market value of this property, and that cannot be accomplished through negotiations with one bidder."--New York Times editorial (1994)

Friday, June 26, 2009

Nets for sale? SI says rumors explain Carter trade; deal contingent on Brooklyn move

So, Sports Illustrated reports that the Nets might be for sale, but not to an ownership group--as Newark Mayor Cory Booker contends is in the wings--that would keep them in New Jersey.

Rather, the sale is contingent on the move to Brooklyn, which certainly makes sense. Should a new arena be built, there would be new revenues and the value of the team would go up. I just thought the [added: increasing talk about a] sale would happen closer to the opening of the new arena.

Sale allowed by state

A clause in the Empire State Development Corporation's General Project Plan, as I wrote in December 2006, states, in part:
In addition, in the event the Nets professional basketball franchise is sold to another entity prior to the completion of the Arena, Project Sponsors may transfer their interest in the Arena to the purchasing entity or its affiliate, provided ESDC and the City are reasonably satisfied that such entity can satisfactorily complete the development of the Arena or if such entity retains the Project Sponsors to develop the Arena.

Potential owners

The potential owners include minority owner and native Brooklynite Vinny Viola (profile via NetsDaily's Net Income/Bobbo) but also a group headed by the Russian oligarch Mikhail Prokhorov owns Euroleague champion CSKA Moscow. And there are two other potential groups.

The salary dump

SI explains:
The potential sale of the Nets helps to explain the big move they made on draft day. They unloaded Vince Carter's remaining three years and $51 million to Orlando in exchange for three players, among whom only Courtney Lee will remain on the Nets' payroll in 2010-11 at a low rookie-scale salary of $1.4 million. Their payroll going into that season couldn't be more sparse, and they still have a 26-year-old All-Star point guard in Devin Harris. Coach Lawrence Frank will also be in the final year of his contract this season.

The Nets have long been rumored to be on the market. If a team is to be sold, then this often is how it's done: Remove as much furniture as possible so the new owner can remodel the place to his liking.

WNYC, following the Times, gets conclusory: "basketball arena... will soon be built"

WNYC apparently read the New York Times story Wednesday about the naming rights deal signed by Barclays, but not the corrective comment posted on the online article or on my (and others') blogs.

So, just as the Times could declare "There will, however, soon be a Barclays Center," so an WNYC reporter could reference (starting at about 1:38 of the report) "the Nets basketball arena that will soon be built along Atlantic Avenue."

There are no shovels in the ground yet, and while governmental approvals this week certainly have made the arena more likely, it's conclusory to say it "will soon be built."

Crain's : blame Amanda Burden for the leaked "hangar" renderings

From Crain's Insider, under the headline Fixing Atlantic Yards:
Forest City Ratner is hoping changes to its Brooklyn basketball arena will stop people from likening it to an airplane hangar. Renderings were leaked—by Planning Commissioner Amanda Burden, sources say—prompting ridicule. But the leak was early enough to allow time to amend the design. Forest City needs to break ground this year.

The leak was early enough? That sounds like Joe DePlasco-esque spin. The leak was not early enough to allow time to get a new design in the revised documents issued this week by the Empire State Development Corporation.

But yes, there's always time to tweak.

As for the leak, yes, I'd heard the same rumor. But sometimes I'm more reticent about rumors than the MSM.

James loses labor endorsement

Crain's also reports:
The Central Labor Council, a politically influential coalition of labor unions, left 10 Democratic City Council members off its list of endorsements this week. Thirty-three were endorsed without going through the formal interview process... [Council Member Letitia] James opposes Atlantic Yards.... [which] will create union jobs.

Still, Crain's does not count James in the category of the unendorsed incumbents appearing vulnerable to defeat in September

AY goals 2006 vs. 2009: elimination of blight, "state of the art" arena and railyard, "first-class" office space all have vanished

Has the Atlantic Yards project become far less ambitious? There are some curious and telling differences between two documents that describe the goals of the project, one issued by the Empire State Development Corporation (ESDC) in December 2006 and the other by the Metropolitan Transportation Authority (MTA) after the board voted on Wednesday to approve a revised Vanderbilt Yard sale with more generous terms for developer Forest City Ratner.

Even though the language is nearly the same, the MTA board resolution--not read aloud or made public before the vote--does not mention the removal of blight, perhaps because government officials recognize that persistent empty lots for "decades" might constitute the exacerbation of blight.

No longer is the term "state-of-the-art" applied to the planned arena or the permanent railyard, perhaps because starchitect Frank Gehry has left the project and both elements of the project have gone through value engineering. The railyard now would merely be "upgraded.'

The housing is no longer described as "critically needed," perhaps because it could take "decades," and the State Funding Agreement imposes no deadline for Phase 2. The promised office space is no longer even "first-class." And there'd no longer be a hotel.

There are some other changes as well. 

Does any of this have legal import? I'm not sure, but it does suggest that the estimated benefits of the project--always open to question--have diminished. 

(Note that the MTA in 2005 and 2006 passed other resolutions regarding the project, but none attempting to mirror the language in the General Project Plan. See Record Parts attached the MTA's legal papers in the lawsuit over the AY environmental review.)

ESDC document

The excerpt below and right comes from the ESDC's Modified General Project Plan (GPP). I've bolded language that does not appear in the MTA document.

(Click on graphics to enlarge.)

The principal goal of the Atlantic Yards Land Use Improvement and Civic Project is to transform an area that is blighted and underutilized into a vibrant, mixed-use, mixed-income community that capitalizes on the tremendous mass transit service available at this unique location. In addition to eliminating the blighting influence of the below-grade Yard and the blighted conditions of the area, the Project aims, through this comprehensive and cohesive plan, to provide for the following public uses and purposes:
• a publicly owned
state-of-the-art arena to accommodate the return of a major-league sports franchise to Brooklyn while also providing a valuable athletic facility for the City's colleges and local academic institutions, which currently lack adequate athletic facilities, and a new venue for a variety of musical, entertainment, educational, social and civic events;
• thousands of critically needed rental housing units for low-, moderate- and middle-income New Yorkers, as well as market-rate rental and condominium units;
first-class office space and possibly a hotel to ensure that Downtown Brooklyn can capture its share of future economic growth and new jobs through sustainable, transit-oriented development;
• publicly accessible open space that links together the surrounding neighborhoods;
• new ground level retail spaces to activate the street frontages;
• community facility spaces, programmed in coordination with local community groups, including a health care center and an intergenerational facility, offering child care as well as youth and senior center services;
• a
state-of-the-art rail storage, cleaning and inspection facility for the LIRR that would enable it to better accommodate simultaneously its new fleet of multiple-unit series of electric propulsion cars operated by LIRR which are compliant with the American with Disabilities Act (the "MU Series Trains") and other transit improvements;
• a subway connection on the south side of Atlantic Avenue at the intersection of Atlantic and Flatbush Avenues, with sufficient capacity to accommodate fans entering or leaving an event at the Arena, eliminating the need for pedestrians approaching the Transportation Hub from the south to cross Atlantic Avenue to enter the subway, and thereby enhancing pedestrian safety;
• sustainability and green design through the application of comprehensive sustainable design goals that make efficient use of energy, building materials and water; and
• environmental remediation of the Project Site.

The MTA document

The excerpt below and right comes from the MTA Resolution approved Wednesday by the board. I've bolded new language and use [] to indicate where language has been dropped. 

The principal stated goal of the Atlantic Yards [] Project as stated in the GPP is to transform the [] area of the project [] into a vibrant, mixed-use, mixed-income community that capitalizes on the tremendous mass transit service available at this unique location. [] The Project’s stated aims, [] include a number of significant public uses and purposes:
creation of a publicly owned [] arena to accommodate the return of a major-league sports franchise to Brooklyn while also providing a valuable athletic facility for the City's colleges and local academic institutions, [] and a new venue for a variety of musical, entertainment, educational, social and civic events;
the construction of thousands of [] rental housing units for low-, moderate- and middle-income New Yorkers, as well as market-rate rental and condominium units in close proximity to mass transportation;
the erection of commercial [] office space [] TO PROMOTE FUTURE economic growth and new jobs through sustainable, transit-oriented development;
• publicly accessible open space that links together the surrounding neighborhoods;
• new ground level retail spaces to activate the street frontages;
• community facility spaces, programmed in coordination with local community groups, including a health care center and an intergenerational facility, offering child care as well as youth and senior center services;
• sustainability and green design through the application of comprehensive sustainable design goals that make efficient use of energy, building materials and water; and
• environmental remediation of the Project Site.

Note there's an additional section that addresses transportation issues that were part of the ESDC's list:
Whereas the project provides for important transportation improvements, namely, (a) the construction of an upgraded [] rail storage, cleaning and inspection facility at the Vanderbilt Yard for the LIRR (the 'upgraded yard') that would enable the LIRR [] to better support service enhancements planned in connections with the MTA's East Side Access Project[] and other transit improvements; and (b) the construction of a subway entrance [] on the south side of Atlantic Avenue at the intersection of Atlantic and Flatbush Avenues, with sufficient capacity to accommodate fans entering or leaving an event at the Arena as well as new residents and workers inhabiting the project's planned commercial and residential buildings, eliminating the need for pedestrians approaching the Transportation Hub from the south to cross Atlantic Avenue to enter the subway, and thereby enhancing pedestrian safety;

Thursday, June 25, 2009

Barclays naming rights agreement: $200K/yr.; NLG analysis: priceless

Booker still optimistic about Nets in Newark, but weak on specifics (as well as promised date of Brooklyn move)

After a week in which governmental approvals--one final, one preliminary--fell into place to hasten the building of the Atlantic Yards project and thus move of the New Jersey Nets to Brooklyn, Newark Mayor Cory Booker is sounding only somewhat less optimistic than he did five weeks ago, when he declared, “I think there's going to be a comeuppance very soon where the team is going to go up for sale.”

That could mean a move, as Booker hopes, to the Prudential Center in Newark, where the Nets this October will play two of three preseason games. But Booker’s optimism should be taken with an extra grain of salt, given that he claimed that the Nets are slated to move to Brooklyn in 2014, not 2011, as developer Forest City Ratner claims, or 2012, as New York government officials and documents suggest.

Opening the WBGO radio show Newark Today with Mayor Cory Booker tonight, host Andrew Meyer pointed out that “it seems like [Nets principal owner Bruce Ratner] is getting his way. Last month you were certain the Nets’ deal was going to fall apart, putting Newark in a good position to get the team. Do you still feel that way now?”

Booker: "Unequivocal"

“Unequivocal,” Booker responded. “I’m still a believer. I still think they have a lot of hurdles to go through. But look--the Nets are planning to play there in 2014, I think, is the year right now. I’m much more focused on creating a one-state solution to the two arenas we have. We’re meeting on a continuous basis."

"There may be opportunities for the Nets to play in Newark well before 2014, and before those issues are settled, I’m still very dubious about their ability, in this economy, to build a structure that large," Booker said.

"I was out in Los Angeles talking to Frank Gehry, the original architect. Everyone that I have talked to who’s been close to this deal has told me that it is such a long-shot, especially now, given the economy. Despite some victories that they’ve had, it’s a very long road... with a lot of hurdles."

The arena battle in New Jersey

Booker then referenced the battle between the aging Izod Center, home of the Nets and a successful run of concerts, and the newer facility in his city, home to the Devils but less established in booking other events.

"For the immediacy, I'm focusing on creating a relationship between the Izod Center and the Newark Prudential Center, to help us stop cannibalizing each other but really have one solution for our two regions," he said. "I’m also focused on getting the Nets to play here even if they end up in Brooklyn, which again I think is not likely, but I’d like to see them play here soon."

Ratner in Newark? Nah

Meyer then asked a question I’d posed via email: whether a Newark solution would only involve Ratner selling the team, or whether it could involve making Ratner a developer in the city.

Booker’s answer indicated that Ratner is unlikely to cross the border. (After all, Ratner’s got a track record in Brooklyn, and would have to learn a new city and establish ties with a whole new groups of elected officials and lobbyists.)

“Look, that’s the great thing about Newark right now,” Booker said. “The development opportunities around the arena are still there." (Others might say things are stalled.)

"I’ve been in conversations for everything from some of the most famous restaurateurs both locally and nationally. Talking to developers about building residential, office space, new city facilities," he said. "There’s a lot of plans on the table, some of them are moving forward rapidly, like a hotel."

"There could be a deal that way," Booker said,"but frankly... the most likely thing that I see that happens is that the team goes up for sale, that it is competed against by Seattle, by Kansas City, and by a New Jersey group. And that I hope that New Jersey is able to keep the team, win the bid, and you see the Nets playing here not just in the short term like I think is a possibility to happen, but in perpetuity."

The Prospect Heights Historic District passes, will wrap around block designated for AY parking

The Prospect Heights Historic District, subject of a hearing last October, has been OK'd by the Landmarks Preservation Commission, the largest landmark district created since 1990.

The map below is courtesy of photographer Tracy Collins. Note how two fingers of row houses would bookend the southeast block of the Atlantic Yards site, slated to be a staging area for arena construction, and also a massive parking lot for workers and visitors, ultimately with 2070 spaces.

Blight and the Ward Bakery

The Atlantic Yards site, according to the Empire State Development Corporation, is blighted. I wonder how many blighted areas are abutted by historic districts.

NoLandGrab's Eric McClure points to the loss of the Ward Bakery--mention of which unsettled the LPC last October--on that southeast block, and the role of the Municipal Art Society of New York (MAS) and the Prospect Heights Neighborhood Development Council (PHNDC) in advocating for the historic district.

NoLandGrab: While MAS and PHNDC are to be commended for their efforts, had the two groups been more vociferous in their opposition to Atlantic Yards — both are members of the "mend-it-don't-end-it" BrooklynSpeaks coalition — one has to wonder if the Ward Bakery, too, could have been saved from Bruce Ratner's wrecking ball.

Nets trade Carter in "salary dump"; all three stars from time of 2006 approval are gone

The last of the three Nets stars (circa 2006 Atlantic Yards approval) is now gone, as Vince Carter has been traded to the Orlando Magic in which Star-Ledger writer Dave D'Alessandro calls "another salary dump," thus saving the team his $16 million salary next year and $17.5 million a year later

That sum just happens to be 80% of the payment Forest City Ratner would make for the portion of the Vanderbilt Yard it needs for the arena block. (The Nets' principal owner is Bruce Ratner, not FCR.) 

Two new players the Nets got will earn $11 million-plus in the final seasons of their contracts. (The Nets also traded Ryan Anderson, whose contract offsets the third player, Courtney Lee.) So the total savings could be more than $20 million.

But it's not about land. The ultimate goal is to save cap space for 2010, when the Nets, like many other teams, will be shopping for big-name free agents.

(At right, a page from the new defunct Atlantic Yards site featuring Carter; a year ago, that page was edited to erase the just-traded Richard Jefferson.)

Golden's rhetoric

As I wrote in February, one of the more overblown pieces of rhetoric during the Atlantic Yards approval process came from State Sen. Marty Golden, an ethically-challenged Bay Ridge Republican.

Upon the legislature's approval of $100 million in subsidies to the project, Golden declared, according to a 4/14/06 Courier-Life article:
“It is the chance of a lifetime to have stars such as Jason Kidd, Vince Carter, Richard Jefferson and all the others have their home court based in Brooklyn. I am proud to have championed these efforts for the future of Kings County,” said Golden. 
(Emphasis added)

Trading away the stars

Well, Kidd's gone.

So is Jefferson.

And now Carter is gone, too. This isn't Dodgerland anymore. It's not about continuity; it's about money.

(New York Sun photo of Carter and Kidd at8/23/06 press conference before the public hearing on the AY Draft Environmental Statement.)