Saturday, October 31, 2009

Would the AY arena, like the new Yankee Stadium, suck retail inside?

WNYC radio this week reported on a curious phenomenon: how the new Yankee Stadium gets Yankee fans to spend more money inside the ballpark rather than on the streets around it.

Develop Don't Destroy Brooklyn suggests that's a cautionary tale for boosters of the Atlantic Yards arena.

Is it? Surely in part. After all, the official arena web site proclaims:
The Barclays Center concourses are designed to be wide, graciously active and accommodating with well distributed food and beverage locations... Prominent, active retail spaces are integrated into the main public concourse so as to contribute to the street life and activate the internal space.
Beyond the arena block

On the other hand, only some people would be arriving directly to the arena block by train or subway. Others would be taking buses or driving to parking lots, such as the interim parking lots sketched in the Atlantic Lots scenario created by the Municipal Art Society.

So those visitors would have the opportunity to go to retail outlets nearby on Vanderbilt Avenue, Dean Street, Atlantic Avenue, and Flatbush Avenue--likely a very mixed result, pleasing some retailers yet frustrating those in the relatively quiet residential district of Prospect Heights.

Changes coming?

Should the arena be built, major changes in the retail profile near the site are likely in the offing, such as at the building once housing Bergen Tile at the corner of Dean Street and Flatbush Avenue.

It's still available.

(Photography by Jonathan Barkey).

"Eminent Decision for Brooklyn": Freddy's Brooklyn Roundhouse captures some key exchanges in Court of Appeals argument

Most of Eminent Decision for Brooklyn, the 25-minute episode of Freddy's Brooklyn Roundhouse concerning the October 14 Court of Appeals hearing in the Atlantic Yards eminent domain case, consists of plaintiffs and supporters speaking at a press conference.

But the producers have deftly chosen some of the most telling exchanges from the argument, leading off with the astonishing exchange--reminiscent of Supreme Court Justice Sandra Day O'Connor's fiery dissent in the 2005 Kelo v. New London case, in which Empire State Development Corporation (ESDC) attorney Philip Karmel admits, in response to a question from Judge Robert Smith about "a perfectly nice house," that such a house is vulnerable to taking via the state's loose eminent domain laws.

Then, a little after 21 minutes in, the video returns to some key moments in the hearing: Smith asks if the area was gerrymandered; Chief Judge Jonathan Lippman points out there's a great deal of public subsidy behind the project; and Smith asks when exactly blight was designated as the rationale for the use of eminent domain.

Of course, there was a lot more to the hearing, including significant skepticism of the plaintiffs' arguments. But the video surely does the job of seeding criticism of the state's action, and the yet-unreformed state laws that would enable it.

Friday, October 30, 2009

Forest City gets $55M in federal tax credits (corrected), but they're not for arena bonds

Forest City Community Development Entity, LLC, a Brooklyn-based subsidiary of Cleveland-based Forest City Enterprises, has been awarded $55 million in federal tax credits for "real estate retail development projects located in highly distressed low-income communities." (See pages 7 and 72 of this PDF.)

Do the tax credits "seem to be for Atlantic Yards," as Develop Don't Destroy Brooklyn suggests?


Updated: While I initially wrote that I doubted that the credits would be predominantly used for AY, Empire State Development Corporation (ESDC) spokeswoman Elizabeth Mitchell confirms that the description below is "a summary of the State's agreement to allocate $55 million of State bond volume capital to the Atlantic Yards project. It is not the State providing money – rather it is the State allowing some of the capital for this project."

(The state only has a limited amount of "volume cap" for tax-exempt funding. It's unclear whether the bonds would be used for the arena, for housing, or associated retail.)

Updated November 2: Empire State Development Corporation (ESDC) spokeswoman Elizabeth Mitchell offers a correction:
ESDC is making $55M worth of bond volume capital available. It was merely a coincidence that this was the amount allocated to Forest City Community Development Entity, LLC from the federal Community Development Financial Institutions Fund. The $55M of federal New Markets Tax Credit Allocation are entirely unrelated to the Arena bonds.

Other projects eligible?

While Atlantic Yards--as DDDB notes--may be Forest City's only new project, it's not like other projects aren't ongoing, such as East River Plaza. Hence the mention of New Mexico, home of the ongoing Mesa del Sol project, or so I thought.

Then again, wouldn't it be tough to argue that Atlantic Yards--unlike, say, East River Plaza--would be located in a "highly distressed low-income communit[y]"?

I've asked the ESDC how exactly AY qualifies. (Remember, $1217/sf condos in 2015!)

Tax credit program

More than 90 organizations are gaining $5 billion in tax credits, according to a press release from the Treasury Department. The official description:
The New Markets Tax Credit (NMTC) Program is intended to spur the investment of private sector capital into low-income areas by permitting taxpayers to receive a credit against Federal income taxes for making qualified equity investments (QEIs) in designated Community Development Entities (CDEs).
The credit provided to the investor totals 39 percent of the investment in a CDE and is claimed over a seven-year credit allowance period.
The Forest City tax credit
Forest City Community Development Entity, LLC
Controlling Entity Name: Forest City Enterprises, Inc.
Headquarters (city, state): Brooklyn, NY
Allocation Amount: $55,000,000
Principal Financing Activity: Real estate financing: retail
Profile: Forest City Community Development Entity, LLC’s (“Forest City”) business strategy is to provide financing for real estate retail development projects located in highly distressed low-income communities. Forest City will make qualified low-income community investments which will either 1) increase the community impact of new investments by incorporating additional local, social service, and community-specific businesses at below-market rents; or 2) support investments of a scale which will initiate neighborhood revitalization. Forest City intends to offer gap filling equity investments and/or subordinate debt facilities exhibiting favorable characteristics, such as below-market interest rates, greater than market loan-to-cost ratios, and low upfront fees.
Service Area: Multi-State [Connecticut, District of Columbia, New Jersey, New Mexico, New York, Pennsylvania]
Percentage of major urban vs. minor urban vs. rural:
Major Urban: 95%
Minor Urban: 5%
Rural: 0%
Percentage of required activities in non-metropolitan areas: 0%
Contact Person:
Matthew L. Messinger, (718) 923-8404,

Well, maybe the Atlantic Yards arena bonds won't be sold on the week of November 16

A Reuters article yesterday suggested they might. A Bond Buyer article today says it's up in the air.

And Michael White is very, very skeptical.

Pechefsky challenges 39th CD frontrunner Lander on AY, but differences are small; will Council hold the AY hearing Lander seeks?

David Pechefsky (right), the Green Party candidate for the 39th City Council District, may be a long-shot, but he's run a lively campaign, most notably challenging Democratic frontrunner Brad Lander (below, left) on the role of the Council and, secondarily, on Atlantic Yards.

Indeed, while Pechefsky critiques Lander for not having a plan to stop the project, neither does Pechefsky, though he contends that, should the City Council be able to block additional or approved-but-not-delivered funding, the project could be hampered.

Rather, Pechefsky's candidacy speaks more to reforming the City Council budget process (including member items), thus challenging a candidate like Lander who would represent a mostly progressive constituency but must also play nice with the power structure.

Indeed, both say Atlantic Yards should be scrapped (see position statements below) though Lander long took a more Brooklyn Speaks-ish position on AY, initially stating on his web site that "we should use the opportunity to either fix the flaws or reconsider the project."

Under pressure from primary rival Josh Skaller, Lander in May toughened his position. He also said he supports recent lawsuits against the project organized by Develop Don't Destroy Brooklyn and has financially supported DDDB. (Pechefsky participated in the recent DDDB walkathon; Lander had another commitment.)

City Council hearing?

Given that Lander likely will win, perhaps the bigger question is whether he can get the City Council's Economic Development Committee, which previously held hearings on Atlantic Yards, to hold an oversight hearing, as he seeks, on city spending regarding the project.

"It is reasonably likely that--working together with Letitia James (and any other council members who might be interested)--we would be able to arrange for a hearing," Lander told me, after acknowledging that the fate of the project might be resolved by the time new Council Members take office. "Circumstances have, as you know, shifted dramatically since City funds were first committed. City residents and taxpayers have a right to know how their money is being spent (or is planned to be spent, or if there aren't clear plans for how it will be spent), and I believe we will be able to have such a hearing."

That, of course, would have to get the blessing of the Speaker, likely Christine Quinn, who's an Atlantic Yards supporter. Pechefsky, who called the oversight hearing "a good idea," suggests Lander should use his vote for Speaker as leverage to ensure that that hearing happens, even though he acknowledges it may not be prudent to go public about their negotiation strategies.

Pechefsky's challenge

In an advertisement in the Courier-Life last week (right) and a press release, Pechefsky said the Council could have refused to vote for a budget that included $200 million for AY.

Actually, it was $100 million one year and $105 million in an other, with no opportunity to vote on specific elements of the budget.

The first $100 million was allocated to land purchases, while the rest was dedicated to infrastructure, with much but not all is in the process of being spent, though, given $7 million for the Sixth Avenue Bridge that no longer needs reconstruction, there's certainly room for oversight.

Pechefsky, who worked in three stints as an analyst for the Council, thinks the budget should be disaggregated, and Lander--who said he opposes any additional city funding for AY--agrees.

Not that there's a consensus in Council--or a push from good-government groups--to do so. Pechefsky goes further: "This is why Brad should make reform a priority. If you had a vote in committee on EDC's capital budget for example (even non-binding), you would have a chance to lobby your colleagues to support you. It might turn out that you could get a majority of the committee to side with you or even a significant minority and then the Speaker would have to respond."

"But as it stands, the question was never called," he said. "There was no real opportunity for the Council Members to show whether they supported Council Member James in her opposition to AY or not. Or whether they thought that the best way to use a $100 million in capital $ was to subsidize AY or not. "

Then again, Pechefsky's run into his own roadblocks. In the fall of 2006, he said, he looked at the real estate investment analysis for the project and found it dubious, given overoptimistic assumptions about rental rates and condo prices, but "it went up the foodchain, and the decision was not to go further." (He wasn't involved in the Atlantic Yards opposition until recently, Pechefsky said, because of his work at the Council.)

In the debate

In a recent televised debate moderated by Brooklyn Paper editor Gersh Kuntzman, Pechefsky praised Lander's achievements and resume but said anyone running as a Democrat represents the status quo, given the need to reform such things as the process for delivering member items.

There was very little discussion of AY, until the end, and no mention of the project in the Brooklyn Paper article.

Disagreeing with de Blasio

At about 60 minutes in, the candidates were allowed to ask each other questions, and Nardiello asked Lander what current Council Member Bill de Blasio did wrong.

While Lander said he'd agreed with de Blasio on several topics, he said, "I disagreed with him on development issues," citing Superfund for the Gowanus Canal and Atlantic Yards.

Moderator Gersh Kuntzman, pressed for time, tried shorthand: "He supported Atlantic Yards."

"And I did not," responded Lander, which, while true--he never supported it--doesn't capture the nuance. "Broadly, he has had too much of a pro-development approach."

But de Blasio has not been pro-development because, like Mayor Mike Bloomberg, he thinks like a developer (to quote his biographer, Joyce Purnick). Rather, de Blasio has been pro-development because his supporters in unions and the affordable housing community, like ACORN, have been pro-development.

Lander, endorsed by the Working Families Party, has some of the same supporters. (Then again, the WFP also endorsed anti-AY Council Member Letitia James.) So he likely will feel some pressure if he maintains his stated agenda on Atlantic Yards.

Pechefsky on AY

From Pechefsky's web site: What is your position on Atlantic Yards?
The project proposed by Forest City Ratner should never have been supported by the City and State to begin with. In general, public subsidies for sports stadiums are a bad idea and this is just one of the issues in this case. When I was working at the City Council, I looked at the numbers on the affordable housing component of the project and they didn't add up then, in 2006. Even with just a cooling down of the real estae market let alone the kind of downturn we are experiencing, based on the information I had it looked like the affordable housing was unlikely to get built without additional and wasteful public subsidies. The fact that a rigorous real estate investment analysis was never done, or least not made public, is part of the problem.

When the City Council is faced with projects of the Atlantic Yards type it needs to push for the Mayor to truly justify the project on a cost-benefit basis and to substantiate the projects viability. The Council also needs to have independent analytical capability to question the Mayor's numbers.

The Council could have stood up to the Mayor and made it clear that it would vote against a City Capital Budget including funding for Atlantic Yards unless a substantially different approach to the planning and implementation of development in the area was taken. That it did not speaks to the need to reform the Council's budget process.

But putting that aside, what do we do with Atantic Yards now? In short, I think we need to start over. The government deals with Ratner should be cancelled and city government needs to show leadership in supporiting a community planning process that is as inclusive as possible.

I put this entry under "Neighborhood Life" because the City's land use and economic development policy must not be made without consideration for the existing character of neighborhoods. Questions about what makes a neighborhood and who speaks for a neighborhood are complicated, but they are ones that policy makers must grapple with and money should not be allowed to do all the talking.
Pechefsky elsewhere on his web site states:
On the capital side, was it better to put money in the capital budget for Atlantic Yards ($200 million) or Yankee Stadium ($150 million) than for MTA capital projects? There remains no clear plan in place to meet the MTA’s projected capital needs. In its 2008 -2013 capital plan the cost of station rehabilitations was budgeted at an average cost of around $30 million per station; so, by way of comparison, the AY and Yankee Stadium subsidies could have gone to rehab about 10 – 12 stations. The benefits of the projects in the Mayor’s capital budget should be evaluated in comparison to the benefits of public transportation projects.
Lander on AY

Lander places his AY comments under the rubric "Preserving Livable Neighborhoods: Atlantic Yards":
Brad was one of the earliest critics of the proposed Atlantic Yards development. In 2005 he co-authored one of the first planning analyses of the project, criticizing its massive scale, its poor urban design that creates a barrier between neighborhoods and privatizes the open space, its wanton overreliance of subsidies, its failure to plan for traffic and transportation impacts, and its skirting of the City's land use review process.

In 2007, Brad helped to find and close an additional $100 million loophole that Forest City Ratner was seeking through changes to the City’s 421-a property tax program.

Now, the timeline is delayed and the project's future is uncertain. It is unclear whether the project will include the promised affordable housing or the office space (which is the main generator of tax revenue). We still do not have a genuine public assessment of the subsidies, costs, and benefits of the project. The NYC Independent Budget Office has suggested that changes in the project may make it a money-loser for the taxpayers, and has raised questions about whether the land value of the site is being manipulated to generate phantom taxes that Forest City Ratner can use to pay their debts.

That is why it is time to go back to the drawing-board. The Empire State Development Corporation, the MTA, the City, and the State should cancel their deals with Forest City Ratner for non-compliance. The site is appropriate for significant development with mixed-income affordable housing, commercial and retail space, and good union jobs. But we must get there by respecting and building on the strengths of the surrounding communities ... not by locking them out of the process and ignoring their concerns.
Debate discussion

During the Brooklyn Paper debate, at about 47:25, Pechefsky talked about land use policy as part of a discussion of economic policy: "You look at the Atlantic Yards site, and there's one model there that's being pushed, in terms of towers and office space and chain stores, and then there's an alternative model, which would be smaller scale, mixed use, allows for some manufacturing. So certainly on land use the council also has a role to play, in promoting good jobs."

Lander said that all three candidates (including Republican Joe Nardiello) agreed that the city should do more to strengthen and preserve manufacturing: "[W]e've rezoned too much potential manufacturing space to allow condo development."

What's a Prospect Heights condo worth? ESDC low-balls Goldstein (who once walked away from $500K profit) and overpromises the public

If you go by what the Empire State Development Corporation (ESDC) offered Develop Don't Destroy Brooklyn spokesman Daniel Goldstein for his condo in the Atlantic Yards footprint, and compare that to the values projected by ESDC consultant KPMG, you might suffer some vertigo.

After all, KMPG agrees that Forest City Ratner could get $1217/sf for condos in 2015, a figure that represents more than double the $600/sf price that consultant (for AY opponents) Joshua Kahr thinks is currently realistic.

KPMG says that the current condo market in Prospect Heights is $470-$1225/sf, though the latter seems a major stretch, limited perhaps to a few units in the Richard Meier-designed On Prospect Park, which isn't doing well and surely must be dropping prices.

And it's more than two-and-a-half times--by my calculation--what the ESDC is offering Goldstein.

Both extremes, I suspect, are unrealistic: the ESDC is low-balling Goldstein and KPMG (and Forest City Ratner) are overly optimistic. Whether Atlantic Yards proceeds or dies, it's unlikely Goldstein would ever (nearly) double his money, as Forest City Ratner once offered. (To be precise, his gain would've been 83%.)

Moving toward condemnation

Let's recap. On September 30, Goldstein called the Brian Lehrer Show to say that the ESDC, which aims to use eminent domain to take his and other remaining Atlantic Yards footprint property, had made its pre-vesting offer.

"They don't offer you just compensation," Goldstein declared, using the phrase derived from the Constitution (which, in the Fifth Amendment, says nor shall private property be taken for public use, without just compensation.)

"They don't even offer you fair market value. What they have offered is below the market value, any real estate agent would tell you that," he said. "It is even below what I paid for the place... over six years ago, and everybody knows the market is not lower.

City records show that, in May 2003, Goldstein paid $590,000 ($600,767.50 with closing costs), or $457.36 $465.71/sf for his 1290 sf condo. (A 2/27/05 New York Times article headlined HABITATS/Brooklyn; Battling A Developer's Mammoth Plans described the size at 1280 sf, but Goldstein confirmed it was 1290 sf.)

So let's assume the ESDC is offering him--to pick a round number--$450/sf. The ESDC is offering only $395/sf.

Fluctuating values

In 2005, Forest City Ratner offered everyone in his building $850/sf for their apartments, as noted in the DDDB response to the ESDC's Blight Study.

That wasn't exactly the market, because Forest City Ratner was paying for more: it not only got additional air rights, it removed potential opposition--remember the gag order?--and also could portray itself as trying to avoid condemnation.

The New York Daily News reported in a May 2004 front-page story:
That means people who paid about $600,000 for a swank three-bedroom, 1,300-foot condo just last year are being offered a cool $1.2 million to flee.

Of course, as I pointed out, not only would Forest City Ratner gain the opportunity to build much larger than current zoning, the land purchases were all funded by taxpayers--a relevant piece of information the Daily News chose to ignore.

Looking at the price per square foot

$457466: what Goldstein paid in 2003
$850: what Forest City Ratner paid in 2005 in one building
$850: what FCR estimated in 2006 it would get for Atlantic Yards condos
$600: what Joshua Kahr estimates is the current Brooklyn condo market
$470-$1225: what KPMG says is the current Prospect Heights market
$395$450: what (I estimate) Goldstein has been offered

The Voice's Robbins: thin press means little scrutiny of Bloomberg (and what about AY?)

Village Voice columnist Tom Robbins, in a piece headlined The Mayor's Press Pass, provides some context about Mayor Mike Bloomberg and, I'd suggest, Atlantic Yards:
One reason for the remarkably charmed life of Mike Bloomberg's administration as he sails toward re-election has been the waning of the city's news business.... When this city enjoyed four fat daily newspapers, editors clamored for strong, tough copy to fill them.

...These days, the papers are onion-skin thin, and exposés are catch as catch can. Newsday, which once gave rival editors panic attacks every morning, doesn't even have a city edition anymore... Nowadays, to fill their meager space, editors prefer colorful yarns to investigations. Until this month, one newspaper carried an entire column about empty rooms. We have the Web, with all of its many hardworking blogs, but most of these spend their energies keeping political scorecards with all the obsession of fantasy baseball addicts: Who's on first, and what coaches are in the dugout? The business of government and its many failings goes largely unexamined.
Yes, largely unexamined, but Robbins at least could have noticed the Atlantic Yards issue, which has generated an enormous amount of homegrown media in response. And he might have mentioned a notably obtuse Voice cover story last month, which proclaimed How New York City's Seven Newspapers Are (Nearly) Surviving.

Multiple examples

Robbins offers several examples of press inattention:
  • Brooklyn Assemblyman Jim Brennan's reports on mayoral control of schools
  • the Daily News's Juan González's report that "the mayor's billion-dollar plan to relocate the city's emergency 911 call system has become a fiasco"
  • the Voice's report on a scandal at the city's NYC-TV operation
  • the mayor's praise for the Stuyvesant Town sale, ignored (well, not initially) in coverage of "the stunning court ruling on the illegal Stuyvesant Town rent hikes"
I'll suggest some other un-covered or undercovered stories:
  • the Empire State Development Corporation's (ESDC) new concessions to Forest City Ratner upon re-approving Atlantic Yards in September
  • Forest City Ratner's bailout of ACORN
  • New York University's questionable absorption of Polytechnic University
The issue: "critical mass"

Robbins offers a general observation:
It's not that there's no investigative spadework being done. What's missing is critical mass.
Indeed, that's true on both a citywide and boroughwide basis.

In the pre-Murdoch days, the Brooklyn Paper would amplify most bits of critical news about Atlantic Yards. Now, the shorthanded Paper's prolific editor, Gersh Kuntzman, spends a good deal of energy writing about food, and couldn't get a staffer--or even a stringer--to attend that the ESDC board meeting in September.

The Post and the Brooklyn Paper

But there is progress: the Brooklyn Paper will now be an insert in selected editions of the New York Post. "[P]erfect together," proclaims the Paper.

Remember, Kuntzman told Gothamist on 2/11/08, "Brooklyn needs us too much right now, what with local papers being snapped up by billionaire moguls who have no interest in local news except maximizing classified ad sales. Has Rupert Murdoch even BEEN to Brooklyn?"

Stern's lament

Former Parks Commissioner Henry Stern, writing under the rubric of his New York Civic (which has mostly steered clear of AY, given Stern's ties to Bruce Ratner, whose company contributes to the organization), observes of Robbins's column:
The irony here is that, because of the very condition Robbins laments, his article is unlikely to gain traction and will shortly disappear from public attention.
But Stern knows it's worthwhile:
The strength of a democracy is based in part on how much its citizens know.

On the projected arena opening day, construction schedule proves to be a fantasy

Remember--today was supposed to be opening day for the Atlantic Yards arena, at least according to the construction schedule attached to the December 2006 approvals of the project by the Empire State Development Corporation (ESDC)

(Click to enlarge)

The headline on my 4/30/07 post was:

Reference or fantasy? The (projected) ten-year Atlantic Yards timeline

I wrote that "time will tell whether it's a valid reference or a fantasy," though I noted there was much evidence for the latter.

Indeed there was.

Graphic by Abby Weissman, who combined elements of the construction schedule with the Atlantic Yards site plan.

Thursday, October 29, 2009

ESDC has a planned bond sale on the week of November 16 (before any court decision comes down)

Not only is the next Empire State Development Corporation (ESDC) meeting on November 19, the week of November 16 is when the ESDC will be issuing bonds, including (apparently) bonds for the Atlantic Yards arena, Reuters reports:
Frances Walton, chief financial officer of the Empire State Development Corporation, told reporters after a Citizens Budget Commission conference that she did not expect lawsuits filed by opponents of the multibillion dollar Atlantic Yards project would block the debt issue by a local development corporation.

"The expectation is that they will be issued," she said. This would not be first time that bonds have been issued despite "legal challenges," Walton said.

"We have begun discussions with ratings agencies," she said.
In other words, they're not waiting for the resolution of the eminent domain case, nor do they think any other lawsuits could stymie the project. The driver is a December 31 IRS deadline.

Bond buyers and the bond insurance company, however, had better calculate some risk, as Michael D.D. White pointed out.

With a (presumptive) new owner, is "Brooklyn Nets" name still up in the air?

Just about two years ago, Nets CEO Brett Yormark told an interviewer that, while "Brooklyn Nets” is the team's "working title," and “most people assume it’s going to be the Brooklyn Nets," owners still must "validate that” with some "research in the field."

Now reports NetsDaily's NetIncome, a consultant for presumptive Nets owner Mikhail Prokhorov is going over the same ground, asking people:
After the team’s move to Brooklyn, which NAME would you choose?
A) Brooklyn Nets
B) NY Nets
C) Brooklyn “other”
D) NY “other’
Could Prokhorov want the New York moniker? Maybe. But isn't Brooklyn still a brand with huge potential (if the project ever gets over the legal and financial hurdles)?

And if Brooklyn were dropped, Borough President Marty Markowitz would positively plotz--not that the name is his call. And Forest City Ratner would have to explain away that flier they sent back in 2004.

My Little O debuts, underwhelms

Following in the footsteps of, oh, Brownstoner (sort of) and the New York Times's blog The Local, a new blog, My Little O, has launched to cover (and network) the vastly ignored neighborhoods of Fort Greene & Clinton Hill.

As The Local reported in August:
Because he is not a journalist himself, [founder] Mr. [Michael] Locke has hired two area freelance writers, Jeca Taudte and Nicole Caldwell, whose work will be interspersed with citizen journalism that he eventually hopes will become the bulk of his site.
Well, I got an announcement today that the site was now live.

The latest piece of breaking news is nine days old, from October 20, headlined Car Accident at Atlantic Yards. Um, that's the Vanderbilt Yard.

Noticing New York: many clouds over the planned bond sale for the Brooklyn arena

Michael D.D. White, in his Noticing New York blog, offers a must-read, warning So Many Unchecked Approval Boxes: Why Any Sensible Bond Buyer Should Probably Steer Clear of Buying Atlantic Yards Nets Arena Bonds.

Atlantic Yards is a project with many, many moving parts, and the Wall Street Journal has reported major questions about whether the bonds could get crucial insurance, given questions about the arena's revenue-earning potential.

White suggests there's much more to worry about and, despite his curious use of the word "we," he knows whereof he speaks:
We used to oversee the legal aspects of bond issuances for six agencies that were the state’s largest issuers of municipal bonds. This is NOT the kind of show we ran. Far from it.
PACB approval?

The whole article is well worth a read. Surely the Empire State Development Corporation (ESDC) has considered and written off most of the concerns in White's checklist, but they don't go away that easily.

I'll point to White's observation about the smaller arena the ESDC didn't actually approve, and the questions it raises for the Public Authorities Control Board (PACB), which did not re-approve the state support for the project.

He writes:
The public is getting a lot less for what it is putting into the deal and the current transaction is much more likely to be headed for a default. In the original transaction that the PACB approved, each square foot of arena (850,000 square feet total) had to generate income to support a cost of $749 p/s/f of construction and financing costs ($637.2 million total). In the new transaction, each square foot of arena (675,000 square feet total) now has the much more onerous burden of supporting the cost of $1,378 p/s/f of construction and financing costs ($930 million total). That’s almost double the burden. Doesn’t that sound like a deal that has become much more financially precarious?
What, he muses, if they keep the bond sale down:
$700 million would be almost exactly a 10% increase over the originally authorized $637.2 million in bonds. Keeping the bond amount down so that it doesn’t exceed the originally approved amount by 10% could create an argument that a new PACB approval for the revised deal is not required but that argument would carry only if one ignored (the way the ESDC board did) the decrease in the arena size and all the other aspects of the financing deal whereby the public is getting much less for the funds it is putting into the project. It would carry only if one were willing to be completely blind to the escalating risks the transaction is facing. That’s exactly what the PACB is NOT supposed to do.
Predictions in doubt

White points to a New York Times Dealbook column (tied to an article) on June 25 which suggested bonds would be issued "possibly in early October," a sale which "bankers say... should go smoothly."

Well, whether they sell smoothly or not when issued remains in question, because no bonds have been issued yet.

Undoubtedly there are some very busy bankers at Goldman Sachs trying to move the deal before Thanksgiving, there are also some serious clouds--lawsuits that the ESDC does not consider material but which have to give bond buyers and insurers pause or, at least, pose higher interest rates.

Why at least $7 million from New York City's Atlantic Yards budget doesn't belong

On 9/2/08, I reported on the rather incomplete information released by New York City in response to my Freedom of Information Law (FOIL) request seeking information about the city's willingness to devote an additional $105 million to Atlantic Yards, on top of the original $100 million pledge.

The city stated that the additional $105 million "represents capital projects to support infrastructure and other capital needs in the area, some of which are independent of, but in the area of the planned Atlantic Yards project."

As I wrote, most of those capital projects did not seem independent of Atlantic Yards. Among them was $7 million for reconstruction of the Sixth Avenue Bridge. However, given changes in the plan for the arena block, the bridge will not need reconstruction, as noted on page 4 of the June 2009 Technical Memorandum produced by the Empire State Development Corporation (ESDC).

Where's the money?

So, what happens to that $7 million? Is it simply redeployed or funneled to developer Forest City Ratner? I asked the ESDC, which told me to query the New York City Economic Development Corporation, which I did late on Tuesday, with no response as of yet.

Now $7 million may seem rather small in the context of a $4.9 billion project. But it surely would mean a lot to Forest City Ratner. And it could also help a lot for parks, or playgrounds, or libraries, or public transit.

The Times takes on stalled development: barely a mention of AY but questions about the Downtown Brooklyn Partnership

The photo attached to today's front-page New York Times article, headlined A Stalled Vision: Big Development as City’s Future, is of the CityPoint site at the Fulton Street Mall in Downtown Brooklyn, but it could just as easily have been of various parts of the Atlantic Yards site.

But Atlantic Yards--well, a segment of it--might get going, so maybe it wasn't the perfect poster child.

Still, the development deserves significant mention because it has been enormously delayed: when Atlantic Yards was announced in 2004, the arena was supposed to open in 2006; when the project was approved in 2006, the arena was supposed to open in 2009; and now it's supposed to open in 2012, though uncertainties abound.

Little mention of AY, but possible DBP malfeasance

In fact, Atlantic Yards gets barely a tangential mention in an article that touches on Downtown Brooklyn, Hudson Yards, new baseball stadiums, Willets Point, and more.

The mention follows up on an investigation by the Attorney General's office into apparently illegal lobbying by lobbyists for Willets Point, with a revelation that there may be similar questions concerning the Downtown Brooklyn Partnership (DBP) when it comes to AY.

The Times reports:
That [Attorney General's] investigation has expanded into the activities of the Downtown Brooklyn Partnership, which the city helped create in 2006 to help push through development plans following a broad rezoning of the area.

The city awarded the group a $6 million three-year no-bid contract. The group raised another $1.1 million in private donations, tax records show. And Mr. Doctoroff installed a top aide, Joe Chan, to run it. The partnership has become a key voice for the development of Downtown Brooklyn, inserting itself, critics say, into the debate over a plan to build a Nets area and high-rises at the Atlantic Yards. It has spent some $200,000 on lobbying expenses.
(Emphasis added)

Inserting itself? That's what any lobbying group does, so the Times doesn't need to quote phantom "critics."

It's not clear whether the DBP has spent $200,000 specifically on AY, but it's definitely been lobbying, as described below.

And, for the umpteenth time, there's no at the Atlantic Yards. Atlantic Yards is a project, not a place. The plan is to build an arena and high-rises at the Atlantic Yards site. It's nearly six years later and they can't get it right.

DBP testimony

Numerous DBP officers and staffers testified on behalf of Atlantic Yards at various meetings and public hearings held by the Metropolitan Transportation Authority (June 22, June 24) and the Empire State Development Corporation, or ESDC (June 23, July 30, July 31).

"I don’t want to be standing here... 50 years from now talking about how we lost the Nets like the Dodgers were lost in 1957,” testified Chan on July 31 at an ESDC public hearing.

Mixed record?

The article concludes by giving Bloomberg a bit of a pass, one that would've been much harder to award had Atlantic Yards been added to the tally:
In July, when scores of other new condominiums were not selling, and developers risked default, Mr. Bloomberg and the Council stepped in to announce a $20 million pilot program to buy the empty units and use them as affordable housing.

“Private developments that sit vacant or unfinished could have a destabilizing effect on our neighborhoods, but we’re not about to let that happen,” said Mr. Bloomberg.

Actually, Mr. Bloomberg most likely fostered some of the real estate speculation with policies that invited development. But even those who say the mayor’s development record is mixed credit him for taking a long view.

“For good or bad, the rezonings will probably be his most significant development legacy,” said Jonathan Bowles, director of the Center for an Urban Future, an independent research group. “They’ve never got as much attention as the large-scale development projects he was pushing, like the Olympic stadium, but the rezonings are what will ultimately transform a large chunk of the city. Developers will be rebuilding on these for years to come.”
D'ya think Bloomberg "most likely fostered" Atlantic Yards with his decision to let the Empire State Development Corporation shepherd the project without any role for the city's Uniform Land Use Review Procedure (ULURP)? After all, it was a decision that even former Deputy Mayor for Economic Development Dan Doctoroff in hindsight agreed was a mistake.

And whatever Bowles says, it doesn't apply to Atlantic Yards, which was not and is not a rezoning, but a state override of zoning for a particular plan and a particular developer. That's not the long view.

From City Hall

From City Hall's The Gamble: Weighing the risks and rewards of a Bloomberg third term
Many people have called for Bloomberg to seek and get control of development at Ground Zero, but to date, he has given no indication that he wants that particular albatross. Still, his frustrations at past failures simmering just below the surface, he does not seem content to have his biggest contributions to the skyline be whatever has grown out of his administration’s comprehensive rezonings over the last two terms and the new Bloomberg LP headquarters on the Upper East Side.

“We have to do the big projects,” he said at a recent press conference, his face scrunched in a grimace as he addressed the current condition of Atlantic Yards.

Wednesday, October 28, 2009


Shocker! From a press release from City Council Member (and presumptive Public Advocate) Bill de Blasio:


NEW YORK – The New York City Council today is expected to pass a zoning proposal sponsored by Councilmember Bill de Blasio which will protect a residential Brooklyn neighborhood from high rise development. The proposal imposes height limits on buildings in Carroll Gardens, capping them at 70 Feet or approximately 5-6 stories.

“For the past two years, we have been fighting to preserve the character and context of a unique Brooklyn neighborhood. Today, I am proud to announce that the Council will vote to legally protect residential blocks in Carroll Gardens from being transformed by out-of-scale development. This victory would not have been possible
without the many community organizations and activists who demanded that the voice of their neighborhood was heard,” said Councilmember Bill de Blasio.

“I applaud the City Council for adopting the Carroll Gardens rezoning proposal that was developed by the Department of City Planning in consultation with Community Board 6 and local community organizations. I am also pleased that, with few exceptions, the resulting zoning change largely reflects the community's desire for limiting building heights to fifty feet. The rezoning will go a long way in achieving the community's objective to preserve the unique ambience and character of the neighborhood,” said Brooklyn Borough President Marty Markowitz.
Atlantic Yards, and the transition between a border zone and a historic district, has not gotten the same attention from de Blasio.

FOILed: waiting for responses from ESDC (and comparing their practices with other agencies)

I suspect some staffers at the Empire State Development Corporation (ESDC) think I'm a bit of a pest, though they're professional and don't say so explicitly. After all, I file regular Freedom of Information Law (FOIL) requests, sometimes a couple each month.

And it usually takes a long time to get responses from the ESDC, especially compared to more responsive agencies such as the Metropolitan Transportation Authority (MTA).

(The ESDC's public affairs office, by contrast, generally responds promptly to my queries, though the level of detail, um, varies.)

Seeking info on affordable housing

Last December, I filed a FOIL request for records explaining whether the ESDC considered the availability of tax-exempt financing for affordable housing when it was approving Atlantic Yards.

For months, I got a certified letter each month explaining that they were still looking, given that my request was broad. That's hard to judge, but it sure seemed like a long time.

In a brief public comment during the last desultory moments of the July 30 public hearing on Atlantic Yards, I mentioned the lingering request and asked for it to be resolved. I finally got a response in August. Coincidence or result? I can't be sure.

The KPMG report

After the ESDC board meeting September 17, ESDC Senior Counsel Steve Matlin said that the KPMG market study mentioned at the meeting might have some proprietary information, but said staff would look at the issue--and presumably decide about releasing the document--"in the next few days."

I and others finally got it on October 7, a day after I'd published a video of Matlin's statement.

Coincidence or result? I can't be sure. Eliot Brown of the New York Observer had filed a FOIL request, and wrote that he received the report in response to that request.

Certified mail

I file my requests via email but I get the responses via snail mail, certified, at $5.54 a clip for the thinnest of envelopes.

This adds up.

First, I get an acknowledgment that they've received my request. Someday, perhaps, I get the response to my request.

In between, however, I typically get a monthly letter indicating that they're still searching for responsive records.

Compounding the problem

So, I get a lot of mail, and I'm almost never home to receive it. If I didn't live alone, or designated someone to accept my mail, this wouldn't be a problem.

Instead, I must go to my local post office, wait on line, then wait for the postal worker to find the particular letter at issue. It's a 20-minute round-trip for me to walk to the post office, but that's only the first step.

The wait on line can be ten to 30 minutes, while the wait at the counter for the postal worker to retrieve the piece of mail can take three to 20 minutes. Twice I've waited 20 minutes only to learn that the letter cannot be found.

All this for a piece of mail, which, more often than not, is a merely administrative formality rather than one containing information requested.

I know ESDC can't be blamed for this, but I see it as karmically balancing the perceived frustration on both ends of the transacton.

A better way?

Other agencies manage with greater efficiency and lower cost. The New York City Economic Development Corporation responds by email.

The Metropolitan Transportation Authority and the New York City Department of City Planning send both email and snail mail (at $.44/letter, right), but don't certify the latter.

If other agencies can manage, couldn't the ESDC do so as well?

Spokesman Warner Johnston responded, "We maintain the highest standards when it comes to following the provision of FOILs and utilize certified mail as it is the most reliable method to ensure that FOILs are received by the time set by law."

Sure, certified mail is the most reliable method to ensure that a delivery attempt is made by the time set by law. Actual receipt, as I've discovered, is another matter.

Allocating costs

Johnston added, "We spend exponentially more tax dollars and staff hours in researching and gathering information for broadly worded FOIL requests than we do in postage expense."

Similarly, as noted in the 10/14/09 letter at right, in response to a 4/20/09 request, the ESDC FOIL officer told me:
ESDC continues to sort and review a large number of documents for potentially responsive information at considerable agency time and effort.
I don't doubt that in-house effort costs more than postage, though I suspect that the ESDC also has spent exponentially more paying environmental consultant AKRF--the tab neared $5 million in May 2007--and outside counsel for the lawsuits the project has engendered.

Also, some of that cost responding to FOIL requests might have been obviated had the ESDC been more transparent from the start.

And the ESDC has not exactly been penny-pinching; after all, as the New York Post reported in September, former agency head Avi Schick was paid his $213,000 annual salary for eight months after his resignation.

That $142,000 could pay for a lot of transparency.

Saving time

I'd note that the process of sending a certified letter takes more time than email.

It's not a huge issue, but, if and when some agency or consultant takes a broad look at FOIL practices, it's worth consideration: why have other agencies decided they need not maintain such high (and somewhat more costly) standards?

City responsiveness

While some city agencies have been somewhat more responsive than the ESDC, that doesn't prove true across the board. Last year I tried to figure out how the city decided to add $105 million to Atlantic Yards subsidies.

At first, I was stonewalled. Then I didn't get a real answer.

In City Limits, Jarrett Murphy reports on the Bloomberg administration's very mixed record regarding transparency:
Over the past eight years, Bloomberg's City Hall has put an unprecedented amount of public information online. Most agencies have become more accessible to the press, even if getting city officials on the phone can be difficult.

But some parts of the Bloomberg administration—some of the rooms in the house—are as or more impenetrable as they were under Giuliani. And according to watchdogs, researchers and reporters, gaining access to some agencies' documents through the Freedom of Information Law has been unjustifiably difficult.

Tuesday, October 27, 2009

Thompson criticizes Bloomberg on MTA, ignores AY

From a press release from Democratic Mayoral candidate Bill Thompson regarding remarks today on the MTA:
Thompson said, “Our City’s economic health and quality of life depend on leadership at City Hall that speaks up for transit riders. Unfortunately, New Yorkers haven’t had that advocacy under Mayor Bloomberg. The Mayor’s top-down decision-making approach has led to two fare hikes in 15 months, service cuts, and crumbling subway stations. As fares have gone up, the Mayor and his MTA appointees have been largely silent.”

During Bloomberg’s eight years in office, the city's financial contribution to the Metropolitan Transportation Authority has remained relatively stagnant -- even while the city had surpluses.

Addressing the MTA’s mismanagement, Thompson said, “I will appoint MTA Board members who are transit activists and more representatives of the riding public—unlike the Bloomberg Administration’s loyalists who have no special knowledge or even prior familiarity with transit. And my appointees will be instructed that raising fares will not be the silver bullet solution to the MTA’s mismanagement and bloated budget.”
Unmentioned: the leadership of Bloomberg's MTA appointees in revising the deal for the Vanderbilt Yard at Forest City Ratner's request--now the subject of a lawsuit.

Nets Are Scorching interview with me on lawsuits, press coverage, and the unclear AY endgame

I was interviewed via email by Mark Ginocchio of the blog Nets Are Scorching.

His intro:
As the Atlantic Yards saga has unfolded, the Atlantic Yards Report has served as a well-researched watchdog, analyzing details that were being overlooked by the mainstream press. The blog is run by Norman Oder, a journalist with more than 25 years of experience. Oder is not shy about the fact that he’s a critic of the Atlantic Yards proposal by Forest City Ratner, which would include a new arena for the New Jersey Nets. But he also prides himself of the amount of sourcing that goes into his posts.

With two new lawsuits recently filed against the project, NAS thought this was a good opportunity to talk to Oder about his recent research, and where he believes this project, and the Nets potential move to Brooklyn, may be headed.
1. Develop Don't Destroy Brooklyn (DDDB) has already lost several rounds in the legal fight challenging the Atlantic Yards project. What makes the latest suits--challenging the Metropolitan Transportation Authority (MTA) and the Empire State Development Corporation (ESDC)--any different?

DDDB has filed--or organized/funded--five major lawsuits, plus a sixth:
1. Blocking planned demolitions--lost. (This is the minor case.)
2. Challenging environmental review--lost at two levels of state court, request for appeal pending at state Court of Appeals.
3. Eminent domain #1--lost at two levels of federal court; request for appeal to Supreme Court denied.
4. Eminent domain #2--lost at first level (Appellate Division) in state court; appeal to Court of Appeals heard on October 14.
5. Challenge to MTA revision of deal--just filed.
6. Challenge to ESDC re-approval of deal--just filed.

I’m not a lawyer, I’m a journalist (who sometimes talks to lawyers), so don’t consider this definitive.

All of the cases are uphill challenges, given that, in none of the cases the plaintiffs/petitioners have been able to call their own expert witnesses and challenge defense witnesses under oath or proceed with discovery to extract new information. In other words, the courts evaluate the case based only on the administrative record. They generally defer to the administrative agencies if the agencies acted on a "rational" basis--a very low bar, as opposed to a higher level of scrutiny. Other states make it easier to challenge the government's determination in eminent domain cases, though cases challenging environmental review are always tough.

That said, as I've written regarding the newest suit against the ESDC, there are some very inconvenient facts regarding the announced and promised 10-year construction timeline, such as the MTA deal that structures payment over 22 years and proposed ESDC leases that allow 25 years for construction.

And the suit against the MTA raises some very interesting questions, since the Public Authorities Accountability Act of 2005, the basis for the case, has not—to my knowledge—been invoked previously in this way. And, at least as far as my Freedom of Information Law request showed, the MTA board members got no written legal advice--other than a check-off on a Staff Summary--stating that their action was appropriate, even though board member Jeffrey Kay told fellow board members on June 24 that the MTA's "legal department has advised us that this is a legal transaction."

Some people say these cases are only efforts to delay the project and throw a wrench into the effort to sell tax-exempt bonds. While they certainly might have that effect, they raise some important issues that no other oversight body has been willing to pursue. That's why, whatever the uphill challenge, it's valuable--from my POV--to see the cases ventilated in court, with the government agencies required to respond to some tough questions.

2. You yourself speculated that the media might be experiencing some "lawsuit fatigue" based on their recent coverage. Why do you think some outlets are moving slower to this story as the December 31 deadlines to break ground approaches?

Right--I can only speculate. Part of it is simple shorthandedness--the dailies, at least, have a limited print newshole and very few reporters assigned to Brooklyn, with more than enough to cover and not enough personnel to do so. Also, I suspect, their editors think that another lawsuit is more of the same. A couple of the reporters who've followed this most steadily--Eliot Brown of the New York Observer and Matthew Schuerman of WNYC (and formerly of the Observer)—did think the latest case was worthy of coverage.

Sure, the parade of lawsuits probably makes some editors’ eyes glaze over. They don’t have the time—or the interest—to read the filings, and that’s understandable. And the lack of consistency in coverage means that the dailies don’t have a reporter who’s followed the story steadily. That said, the New York Daily News did cover the latest lawsuit—a day late—and has been trying harder recently.

But the suits, as I said, deserve a close look. And there have been some fascinating arguments in past court cases that got little or no coverage in the dailies. See for example the case challenging the environmental review and the first eminent domain case.

3. Supposing that DDDB and project opponents are the "David" in this "David and Goliath" story, how important is it for the petitioners to have the support of the media?

The petitioners have never had the support of the editorial pages. All three dailies have supported the project in editorials, with the New York Times, I'd contend, somewhat compromised in its editorial stance by the parent company’s business relationship with Atlantic Yards developer Forest City Ratner.

The weekly Brooklyn Paper, before it was bought by Rupert Murdoch's CNG Group, opposed the project editorially--though it published an editorial shortly before the sale that supported the arena. Since then, the Brooklyn Paper has not maintained its editorial page opposition; this past week, however, it did publish a curious editorial chastising the state but not the developer.

How important? Clearly it helps a “David” to have regular news coverage, but I can’t quantify that. Actual investigative work--highly unusual in the daily press--makes more of a difference.

The unusual aspect of the AY saga is that it involves so much homegrown media of various stripes--something the Times noticed (and exaggerated somewhat) in 2006. That includes DDDB's own blog/press releases; the NoLandGrab blog that catalogs (and often critiques) almost every scrap of info related to the project, from a critical perspective; and photographers like Jonathan Barkey, Tracy Collins, and Adrian Kinloch, who shoot photos and videos of events that others either ignore or cover more briefly.

And there's my own watchdog blog, which, while generally critical of AY, is produced by a veteran journalist who aims at professional standards of evaluation and who's dug much deeper than other reporters on the project. I try to link to supporting documents as much as possible to bolster my credibility. My goal is not “he said, she said” objectivity, but fairness, as defined by former NYTimes Public Editor Daniel Okrent: "Fairness requires the consideration of all sides of an issue; it doesn't require the uncritical reporting of any."

One quick recent example of the media ecosystem: I believe that it was criticism in online media--coverage in NoLandGrab, my blog, and most graphically DDDB--that nudged Assemblyman Hakeem Jeffries to clarify his stand on Atlantic Yards last week.

4. With the number of active lawsuits being filed regarding the project, do you see any possible way for Ratner to legally break ground by the end of the year?

I'm not sure he has to legally break ground or that he plans/hopes to break ground more than ceremonially. He has to sell the bonds by the end of year—or get alternative financing by March 1. He can put the bonds in escrow until the cases are resolved.

But I suspect that only a few people in state government and the developer’s office understand the nitty-gritty details of the endgame—for example, what happens to the Barclays naming rights deal if the project lingers without resolution. I don’t claim to fully understand the endgame myself.

5. Do you believe this story ends by December 31? Do project opponents have the resources to continue fighting beyond then if necessary?

I think it's highly unlikely the story ends by December 31, though we should have much more clarity by then, including a resolution to the eminent domain case. If the plaintiffs win, the project folds. If the plaintiffs lose—and eminent domain challenges are very tough to win in New York—then the question is how much the other lawsuits affect the sale of arena bonds and/or construction.

Similarly, we should know before December 31 if Mikhail Prokhorov is approved by the NBA to buy the Nets; so far, Commissioner David Stern and owners quoted publicly seem positive about the transaction.

Keep in mind that, when AY was announced in December 2003, the arena was supposed to open in 2006. (In April 2006, state Senator Marty Golden declared, "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." They're all gone now, as you know.)

When the project was first approved, in December 2006, the arena was supposed to open in 2009. So Atlantic Yards is a "never say never" project.

Nets CEO Brett Yormark has expressed certainty about an arena opening date but also has kept shifting the goalposts, so I compiled some audio of those statements.

Do project opponents have the resources? I don't have access to their ledger, nor have I discussed this recently with DDDB, but I wouldn't count them out. This isn't a repeat of the West Side Stadium controversy, where deep-pocketed Cablevision made the difference. Still, opposition to the project is centered in neighborhoods with a good number of relatively well-off, politically active people, so presumably a fundraising campaign could generate additional funds if needed.

Google Maps' satellite photos play catch-up with Atlantic Yards site

Photographer Tracy Collins has been uploading Atlantic Yards site photos from Google Maps and adding some helpful information.

Above is one example. Go to Collins's annotations to learn, for example, his estimate that the photo was taken sometime in August 2008, given that the Ward Bread Bakery is half demolished--its top (Pacific Street) side seemingly intact, its bottom (Dean Street) side gone. Now it's all gone except for a (still handsome) segment used for storage.

How 2005 fudge from the mayor's office on AY affordable housing led the Times into a 2009 error it won't correct

So, what happens when a newspaper relies on a governmental statement that's just not true, or is significantly overstated? Shouldn't that be worthy of a correction?

Last month I wrote to New York Times Public Editor Clark Hoyt about the newspaper's straightfaced reprint of an erroneous quote--from a spokesman for the New York City Economic Development Corporation-- that the Atlantic Yards site was "a site that is now an open railyard without any public benefit."

And now the Times claims that city officials were "signing off" on an "agreement" to help finance the Atlantic Yards affordable housing, even though the Housing Memorandum of Understanding (MOU), excerpted at right, involved only Forest City Ratner's subsidiary Atlantic Yards Development Company and the advocacy group ACORN, not the city.

The error, as noted below, apparently was derived from a mayoral press release that inaccurately announced the deal as a fait accompli.

Bottom line

The bottom line: an error reprinted is an error, even if it can be attributed to a seemingly reliable source.

The larger context: the amount of time the Times spent in responding to me--and rather defensively denying that readers could be misled--could better have been used to print a correction or clarification regarding the article at hand.

Better yet, the Times could report on the gulf between the promises and probabilities of AY affordable housing, as noted in a lawsuit filed last week, which points out how the Empire State Development Corporation acknowledges that affordable housing is contingent on government subsidies. Or the Times could report on ACORN's unquestioning role in supporting the project.

My complaint

On October 20, I sent New York Times Senior Editor/Standards Greg Brock excerpts from that day's post, questioning the Times's description the previous Friday--in an article about ACORN and former city housing official Shaun Donovan, now the nation's top housing official--of "[t]he city’s agreement to help finance the [Atlantic Yards housing] plan."

As I wrote, that overstates the city's commitment, which was no more than conceptual, and should be corrected, given that it could mislead readers into thinking that the affordable housing--the major source of political support for the project--is guaranteed.

First Times response

Brock responded promptly:
I have looked at all this material and I see no reason for a correction. [Reporter] Mr. [Jim] Rutenberg was quite careful in his phrasing. I also ran this by Karin Roberts, who has become intimately involved with this overall issue, and she found no reason for a correction either.

We are always happy to correct our errors -- we have published more than 30 corrections on Atlantic Yards -- but this reference does not require one.
My first response

I wrote back:
Can you explain why you see no reason for a correction? Do you consider rhetorical or conceptual support for the Atlantic Yards housing plan the same thing as "[t]he city’s agreement to help finance the plan," especially given that there's no documentation?

I think those mean very different things to people who are hoping to live there or anyone trying to estimate whether the affordable housing would be built as proposed.

I'll point to the [Times's] Guidelines on Integrity, not because I believe you are unaware of them, but because the passage highlighted below speaks to the bottom line: informing (or misleading) the readers.

Corrections. Because our voice is loud and far-reaching, The Times recognizes an ethical responsibility to correct all its factual errors, large and small. The paper regrets every error, but it applauds the integrity of a writer who volunteers a correction of his or her own published story. Whatever the origin, though, any complaint should be relayed to a responsible supervising editor and investigated quickly. If a correction is warranted, fairness demands that it be published immediately. In case of reasonable doubt or disagreement about the facts, we can acknowledge that a statement was "imprecise" or "incomplete" even if we are not sure it was wrong.
(I've added emphases throughout this post.)

Second Times response

Brock wrote:
As I said, I read all the material. So I assumed you understood that to include the extensive correspondence Jim had with you during the weekend. And he and I talked further. I agreed with his explanation to you, so I saw no reason to repeat it.

Had this been your first correspondence with us on this particular point, I would have given a fuller explanation. (I am relatively well-versed in our corrections policy since I am the editor who enforces it.) So the reason for no correction is the explanation Mr. Rutenberg had already given you.

I am sorry you do not agree with this decision. But we are not always wrong and every reader who complains is not always right. One of the challenging parts of my job is that I have to explain to hundreds of readers each month why they are wrong about our having made a particular error. Fortunately, they understand that sometimes we have to agree to disagree.
My second response

(I had had a cordial off-the-record conversation with Rutenberg about a number of things, and had sent him some material, but did not have an "extensive correspondence" with him, other than several exchanges setting up a time to talk.)

I wrote to Brock:
Thanks for your response, but that's not quite fair. I sent Jim some back-up info but we did not speak on the record. Nor did I get any on-the-record written statement.

So I cannot report his--and thus the Times's--explanation.

If you can provide me with that I won't bother you about this matter further.
Third Times response

Brock wrote:
Here is a summary of the main points Jim gave me, based on his reporting and from his telephone discussions with you. Based on this, I see no need for a correction.

The article was about the frequently mutually-beneficial relationship between ACORN's local housing arm and HUD Secretary Shaun Donovan when he was Mayor Michael R. Bloomberg's commissioner for Housing, Preservation and Development. Its reference to Atlantic Yards captured a specific moment in time when Mr. Donovan and other city officials worked directly with ACORN officials -- and, in this case, Forest City Ratner officials -- before signing off on the affordable housing plan that the city, the developer and ACORN introduced with much fanfare in May, 2005.

As the city press release put it at the time: "Mayor Michael R. Bloomberg, Forest City Ratner Companies President & CEO Bruce C. Ratner and Association of Community Organizations for Reform Now (ACORN) Executive Director Bertha Lewis today announced that approximately half of the 4,500 new rental units in the proposed Atlantic Yards development will be set aside for low- and moderate-income households using financing tools created by the Bloomberg Administration's New Housing Marketplace plan."
Looking more closely

I don't disagree with Rutenberg's characterization of the subject of the article. Nor do I disagree that the Atlantic Yards reference captured a specific moment in time. Nor do I disagree that Donovan and other city officials expressed support for Atlantic Yards.

I do, however, dispute that, as Rutenberg characterized it, the city, ACORN, and Forest City Ratner were "signing off on the affordable housing plan."

The city press release was issued 5/19/05, to accompany the public unveiling of the Housing Memorandum of Understanding (MOU), which was signed two days earlier only by Forest City Ratner and ACORN.

The MOU said the parties agreed to work with governmental authorities "in order to secure necessary modifications to existing affordable housing programs." That appears to be prospective.

The city press release, however, was both prospective and definitive:
Mayor Michael R. Bloomberg, Forest City Ratner Companies President & CEO Bruce C. Ratner and Association of Community Organizations for Reform Now (ACORN) Executive Director Bertha Lewis today announced that approximately half of the 4,500 new rental units in the proposed Atlantic Yards development will be set aside for low- and moderate-income households using financing tools created by the Bloomberg Administration's New Housing Marketplace plan. As part of the City's $3 billion housing plan to build and rehabilitate 68,000 affordable housing units, programs were designed to spur the creation of mixed-income housing. The current proposal for Atlantic Yards follows the model employed by the Mayor's Housing Plan, and establishes a new standard for income diversity that is a result of an innovative collaboration among the City, Forest City Ratner and ACORN.
It also stated:
As part of the plan, the Administration worked with Forest City Ratner and ACORN to increase the amount of financing provided in order to construct larger buildings with more units and to make the apartments as affordable as possible to families with a range of incomes.
That certainly sounds like the financing had already been provided, so I can see how a reader of the press release could have been misled. And it certainly sounded like the city had agreed to help finance the plan, as the Times reported.

What's missing?

But the city had not formalized an agreement to finance the plan. Similarly, Mayor Mike Bloomberg, according to a city press release, "signed" the Community Benefits Agreement even though the city was not a party to it.

In both cases, the city press releases overstated the commitment made by the city, which was conceptual rather than formal.

This is hardly the worst error the Times has made regarding Atlantic Yards. But this is, at the least, a "case of reasonable doubt or disagreement about the facts," so the Times could, as its policy allows, acknowledge that a statement was "imprecise" or "incomplete."

What's the difference?

Is there a difference between a rhetorical or conceptual agreement to finance the housing plan and a formal agreement to do so?

Surely. The latter could be used to predict, with much greater certainty, the likelihood of the affordable housing being built.

As I reported in August, an early draft of the Atlantic Yards General Project Plan (GPP), dated 4/10/06, shows that the approval process was to include city and state approval of funding for affordable housing financing.

A later draft excised that procedural requirement, though documentation released this September, after the approval of the 2009 Modified General Project Plan said the housing depended on subsidies.

There's no "agreement"--nor was there--despite the Times's language.

Note on timing

The correspondence with Brock took place a week ago. Why'd I wait a week to write about it? Because, despite little optimism that the Times would use the precious real estate on its Letters page to publish a letter from me, I tried:
Re "Acorn’s Woes Strain Its Ties to Democrats" (A1, Oct. 16), the Times cited "[t]he city’s agreement to help finance the [Atlantic Yards housing] plan."

At that time, in May 2005, New York City offered only rhetorical or conceptual support for the subsidized housing promised in the Atlantic Yards project. The housing Memorandum of Understanding was signed only by developer Forest City Ratner and the advocacy group Acorn, though the agreement was "announced" by the city.

Nor has the city since signed such a document; many questions have been raised about the whether the housing would be built in the quantity and time frame promised.
No, it hasn't been published.

Monday, October 26, 2009

Number of projected Brooklyn arena events declines to 200, but the state couldn't have adjusted revenue estimates

A 9/16/09 Barclays Center press release about suite sales slipped in some new information:
In addition to NETS Basketball, most suite buyers will receive access to other Barclays Center events, anticipated to include world-class concerts, college sports, the circus, ice shows, and much more. Overall, the arena will host over 200 events annually.
(Emphases added throughout)

That number represents a small but steady decline in Forest City Ratner's official projections and an implicit acknowledgment of a competing arena in Newark.

It also suggests that the economic projections by both Forest City Ratner consultant Andrew Zimbalist and the Empire State Development Corporation (ESDC) were overstated, since they based sales tax assumptions on about 225 events.

And, even though the projection of 200 events obviously can't be confirmed, that number backs up the more conservative estimates made by the New York City Independent Budget Office (IBO).

2004 projections

Zimbalist, in his 5/1/04 report, wrote:
FCRC projects that the arena will not host an NHL team and that it will host 224 events during the year (assuming the eventual closing of CAA [Continental Airlines Arena, now the Izod Center], no new arena in Newark, no NHL and no minor league hockey events at the Atlantic Yards arena.) FCRC projects out three scenarios over time based on aggressive, moderate and conservative assumptions. I use the estimates from their moderate scenario.
As Gustav Peebles and Jung Kim pointed out in their 6/21/04 critical analysis of Zimbalist's report, the number of events, and thus sales taxes, was likely overstated:
The problem with this scenario is that it allows no place for the New Jersey Devils to play ice hockey... His analysis also fails to account for inter-arena competition for non-sports events.
Indeed, the Prudential Center is now open in Newark, and looking to coexist with the Izod Center in the Meadowlands.

2005 projections

From the May 2005 Forest City Ratner bid to the MTA:
The arena is expected to host approximately 250 events a year. The Arena will also be made available for local schools and universities for athletic events, and per the CBA, ten days will be set aside for "community uses" to be programmed with CBA partners.
I read that as indicating that the arena would host 250 events plus local school athletic events and "community uses."

From the 5/26/05 FCR presentation (right) to City Council:
Approximately 235 events per year in the arena.
From Zimbalist's June 2005 report:
Many of the numbers used in this report concerning Nets attendance, ticket prices, construction costs and other items come from projections done by or for the Nets. I have discussed these estimates with the Nets and they seem reasonable to me. The Nets project that the arena will not host an NHL team and that it will host 226 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.) The Nets project out three scenarios over time based on aggressive, moderate and conservative assumptions. I use the estimates from their moderate scenario.
The IBO report

The September 2005 Independent Budget Office Fiscal Brief was a bit more cautious:
In addition to the Nets’ 41 regular season games, preseason games and potential playoff games, FCRC expects that more than 150 other general admission events would be held at the new arena, including 40 concerts, 35 other sports events such as high school basketball games, and about 80 family-style entertainment shows.
That actually adds up to less than 200 events.

Comments to ESDC in 2006

As the Empire State Development Corporation (ESDC) considered the project in 2006 (as I wrote 12/5/06), Brooklyn resident Kate Galassi commented:
The economic benefits from the arena are based on the assumption that the arena will be hosting events 224 days a year. [Economist Andrew] Zimbalist’s report estimates this number assuming the closing of the Continental Airlines Arena and no new arena in Newark. If these assumptions do not hold true, then the estimated benefits of the arena will be substantially reduced.
The ESDC responded:
The analysis reflects the expected programming of the arena. If there were fewer events and lower attendance at the arena, fiscal benefits associated with the arena (sales tax on tickets, parking, and concessions) would be lower than those reported in the EIS. If the number of events and attendees were higher, the fiscal benefits would be higher... Andrew Zimbalist’s report on the economic benefits of the proposed project was not prepared for ESDC and is not included, relied upon, or referenced in the DEIS.
Though the ESDC didn't rely on Zimbalist's conclusions, it surely seemed to project the same number events, almost surely from the same source: Forest City Ratner.

A 12/8/06 ESDC press release announced approval of Atlantic Yards:
The project build out will occur in two phases. The first phase, anticipated to be completed by 2010, will include the new rail yard and the arena and developments on the western portion of the site. At least 30 percent of the housing developed on the arena block in the first phase will be affordable housing. The arena is expected to be in use for approximately 225 events per year (inclusive of 41 home games for the Nets.)
And in 2009

The 6/23/09 ESDC 2009 Modified General Project Project Plan maintained the same numbers:
Based on the current schedule, the Arena would open during the 2011 – 2012 NBA season and is expected to be in use for approximately 225 events per year, including 41 regular season home games for the Nets.
However, less than three months later, and one day before the ESDC approved the plan, the developer said there would be 200-plus events, as noted at top. Maybe that's why the ESDC's 9/17/09 press release did promise any specific number of events.

But it certainly calls into question ESDC Senior Counsel Steve Matlin's assertion in July that the agency's economic analysis was "constantly" being updated.

The IBO, in its September 2009 report, did not specify a number of events, but that number had not changed from 2005. The IBO's George Sweeting explained:
For our 2009 analysis of ticket, food, and concession sales at the arena we did not develop specific estimates of the number of events (Nets or other). Instead, we started from FCRC’s estimates of revenues for those items shown in their 2006 Atlantic Yards Financial Projections, adjusted for inflation. The estimates for non-Nets events were already aggregates which is what we needed for the analysis. Therefore, there was no need to take a step back and calculate the number of events underlying the reported amounts.