Thursday, December 31, 2015

Atlantic Yards: Helping Solve the (Wealthy) Chinese Housing Crisis

Remember how Atlantic Yards, according to a promotional flyer produced by Forest City Ratner in 2006 (before the project was trimmed slightly) was to supply "over 6,800 units of badly needed mixed-income housing for Brooklyn"?

Remember how Atlantic Yards was, as the flyer said, "Helping Solve Brooklyn's Housing Crisis"?

Maybe it's the housing crisis faced by rich Chinese.

The Wall Street Journal reported 12/29/15, Chinese Developers Build in America, but Look for Buyers at Home, describing a tutorial in Shanghai regarding American Thanksgiving, aimed at Chinese buyers:
Instead, the attendees were being sold new condos in the U.S. being built by Chinese developer Greenland Holding Group, coupled with a culinary and cultural lesson on the autumnal holiday.
Greenland is in the process of building two large apartment projects, one in Los Angeles and the other New York, and is turning to its standard client base—Chinese investors—to help fill them up...But in many projects Chinese make up a third or more of the buyers, particularly when condo units are priced competitively to cities like Shanghai, fetching up to $1.5 million to $2 million apiece, brokers say.
(Emphasis added)

Greenland, of course, is based in Shanghai, which means it has a base of buyers who see New York as a relative bargain.

And in Brooklyn

While the article focuses more on Los Angeles, "where at least 10 Chinese developers have purchased large development sites," including Greenland and its Metropolis project, it also describes how:
Greenland has marketing suites for the building in a downtown Los Angeles high rise and in Shanghai, where an American flag is perched next to models of Metropolis and a $5 billion New York project named Pacific Park Brooklyn.
And a Columbia University (graduate?) student, Roy Guo, is cited as having paid $600,000 for a studio apartment in Pacific Park, obviously the 550 Vanderbilt tower. 

That building has 278 luxury condos, among 1,930 Pacific Park condos, with likely only 200 below market, with the letter well out of the range of most Brooklynites. If Chinese nationals buy one-third of the condos, that's 643 units.

Among the 4,500 rentals, 2,250 will be below market, but again, a good chunk of those will be unaffordable to most Brooklynites.

Wednesday, December 30, 2015

Atlantic Yards/Nets/DBNA Community Foundation emerges, with $100K+ of awards for community groups; board revealed; questions/qualms

Borough President Adams bestows proclamation, via DBNA
This is late, but let's look at the inaugural round of donations--more than $100,000--to community groups in underserved areas of Brooklyn, by the Atlantic Yards/Nets/DBNA Community Foundation. The money surely does good, but also represents part of the developer's community strategy.

The donations were announced in a ceremony at Brooklyn Borough Hall on 7/30/15, with Borough President Eric Adams and bestowing a proclamation.

The DBNA is the Downtown Brooklyn Neighborhood Alliance, led by the Rev. Herbert Daughtry, largely (if not exclusively) funded by Atlantic Yards/Pacific Park original developer Forest City Ratner, and long a vigorous cheerleader for the project.

Since the Barclays Center opened, the DBNA has distributed free tickets to arena events via community groups, promised in the Atlantic Yards Community Benefits Agreement (CBA). Last year, it was to finally begin a CBA-promised program in which community groups got lower-cost access to arena spaces. (I've not seen confirmation that went forward.)

The DBNA, founded after the Atlantic Yards project was announced, also might be seen as an extension of the Rev. Daughtry's House of the Lord church and his family. Board members of the foundation are listed as "c/o" the church. His daughter Sharon Daughtry runs the DBNA. Another daughter, Leah Daughtry, was tapped to work on the community events. Grandson Lorenzo Daughtry Chambers runs the Invictus Youth Initiative (which offers arena tickets as prizes for youth achievement).

Questions, and qualms

The foundation reflects a promise from the CBA that has mostly been fulfilled, albeit a few years late. The recipient groups, which work in areas like youth development, prisoner re-entry, and health support, significantly in Central Brooklyn, expressed great appreciation for the $5,000 grants.

Sharon Daughtry, with the Rev. Herbert Daughtry next to her
 & Forest City Ratner's Elizabeth Canela at far left (DBNA FB)
Still, the program leaves me with some questions and qualms.

First, it comes with relatively little transparency.
There's no information on the DBNA web site about who oversees the foundation--dominated by the developer and Nets, as I explain below.

Nor do we learn why the foundation's mission has changed, in part, from that stated in the CBA, which was to support sports programs in disadvantaged communities.

We don't know exactly how the foundation is funded, for how long, and how many grants will be given out.

The grants, in Forest City's view, are surely a complement to lobbying or campaign contributions--an expenditure aimed to win friends in certain constituencies, just as elected officials like to distribute grants/earmarks to neighborhood organizations.

They allow Forest City to selectively appear a good corporate citizen, while ignoring other issues. For example, despite promises in the CBA, Forest City failed to hire (for a similar six-figure sum) the required Independent Compliance Monitor, and the Rev. Daughtry gave them a pass.

So larger issues like the workers who get too few hours for benefits, or the failure to provide job training that led to new careers, get less attention.

In this case, Adams both adds an imprimatur, and also gets some benefit from his association with the effort. It makes him less likely to be a watchdog over the project, such as joining the call for more benefits and responsiveness from the arena operator.

From DBNA newsletter, Oct. 2015
Sharon Daughtry also was named to the board of the Atlantic Yards Community Development Corporation (AY CDC), which was set up to monitor the project, though she proudly calls herself a partner of the developer, setting up what surely seems a conflict.  (She only attended one of five board meetings this year.)

On video

A DBNA video (below) about the ceremony starts out with an interview with the Rev. Daughtry, who, as clergy are wont to do, makes a corporate calculation sound lofty.

"I think that is so fundamental, to the human family... is the fundamental question, what do I give to the universe? How do I make the human family better? So i said if I were ever in a position to accumulate any kind of resources," the Rev. Daughtry said, he'd use "God's approach, starting with the most disadvantaged."

Later, he expressed gratefulness to Forest City executives Bruce Ratner and MaryAnne Gilmartin and staff "for a marvelous, marvelous, marvelous demonstration of commitment, skills, and creativity, and most of all, of love."

The awardees include Arab-American Family Support CenterBridging Access to CareBrooklyn Art IncubatorBrooklyn Perinatal NetworkChildren of Promise, Inc.Digital Girl, Inc.Families United, Inc.Imagine Me Leadership Charter SchoolImani HouseLove Fellowship Tabernacle
Noel Pointer FoundationNot Just HoopsP.S. 11 PTAResearch Foundation/CUNY-NYC College of TechnologyWhat About the ChildrenOur Communities, Our Children.

DBNA Polestar Awardee: Chillin' on da Corner & Beyond Series.

DBNA Capacity Building Grant Program awardees are Hall of GameNeighborhood Work Play Kids TheatreOne Hundred Seniors, Inc., Re-entry Rocks, Strategically Positioning Lives in Technology (SPLiT).

The ceremony was previewed in the black-oriented Amsterdam News. I'm not sure how many other news outlets were sent the press release.

Who's on the board?

There's no information on the DBNA web site about the foundation's board, but an initial Form 990 filed with the Internal Revenue Service for 2014--a year in which no funds were distributed--reveals that information (see bottom).

Board members include four people (including DBNA founder the Rev. Daughtry) associated with the church (which houses the DBNA), three executives from the Brooklyn Nets, and four executives from Forest City Ratner.

It's hardly surprising that the foundation is controlled by its funders. (Note that Forest City was then a minority owner of the Nets, but now the team is owned completely by Russian billionaire Mikhail Prokhorov.)

Actually, according to the Community Benefits Agreement, as I wrote, the foundation is supposed to be funded by "the Arena." Given that the Forest City and Nets board members are also connected to the Barclays Center, it's possible that the foundation funding does come from "the Arena." But there's no information about that.

After Prokhorov bought Forest City's share of the team and majority share of the arena (operating company), he pledged that all previous commitments will continue, but they were unspecified.

Tuesday, December 29, 2015

EB-5 reform stymied by Schumer (and allies); most investors' capital simply bolsters profits, doesn't jump-start projects

In a 12/22/15 article, How Efforts to Overhaul Visa Program Failed on Capitol Hill: Sen. Grassley, allies pushed hard for reform, but developers’ lobby prevailed, the Wall Street Journal's Eliot Brown explained how even relatively modest reforms of the EB-5 investment visa program failed:
For more than a year, U.S. Sen. Charles Grassley had been pushing to overhaul a controversial program that gives green cards to foreigners who invest at least $500,000 in certain businesses. So when congressional leaders last week moved forward with a 10-month extension of the so-called EB-5 program without any changes, the Iowa Republican was less than pleased.
“Maybe it is only here on Capitol Hill—an island surrounded by reality—that we can choose to plug our ears and then refuse to listen to commonly accepted facts,” he said in a 33-minute diatribe on the Senate floor Thursday. The program, he said, is “riddled with flaws and corruption.”
Despite broad agreement that EB-5 is in need of changes amid mounting allegations of fraud and abuse, lawmakers last week failed to reach an accord over just how to go about reform. Among the contested issues was a change—urged by Mr. Grassley and strenuously resisted by real-estate developers—that would have made it harder for luxury projects to benefit from a provision meant for economically ailing neighborhoods. In addition, developers worried about a provision that would have disrupted some EB-5 financed projects already under way, people briefed on discussions said.
Though industry leaders agreed on tightening rules regarding the so-called Targeted Employment Area--the oft-gerrymandered map (as with Atlantic Yards and the "Bed-Stuy Boomerang") used to designed a "high unemployment" area--big money, and influence with legislators like Sen. Chuck Schumer, preserved the status quo.

For now, there's only a 10-month renewal, leading to--potentially--further discussions of reform. Or, if Grassley's diatribe left him permanently soured--I doubt it, given the assistance reform would give to projects in his state, Iowa--the end of the program.

“Now I’m not so sure reforms are possible,” Grassley said. “It may be time to do away with EB-5 completely.”

Unlikely reforms, but reasons remain

I don't see that as likely, given the gravy train for developers, lawyers, migration agencies, and the intermediaries/loan packagers known as regional centers. But if/when there is some true national leadership, maybe we can rethink a program that I think is riddled with dishonesty and should go.

As I wrote earlier this year, perhaps the clearest summary of the lure and sketchiness of the program--in which developers/entrepreneurs get cheap loans if they dangle a purportedly job-creating investment--came in a February 2012 quote from an EB-5 fundraiser to The Daily: “It’s just a way of being able to get free money, basically, to build all sorts of projects.”

Or, to quote an essay/editorial in the 5/27/15 Immigration Daily, an online newspaper for the immigration law field:
As best as we can estimate, currently the bulk of the EB-5 investment (85%) is taking place in the "Extra Profits" category of projects where only a small sliver of EB-5 capital is used to lower the overall cost of capital. Remaining 15% is distributed evenly between the category of projects that would not be built but for EB-5 capital, Hands on investments and pooled direct investments. The EB-5 program was originally conceived to be focused on the "But For" and "Hands on" projects and has expanded radically to include these four different flavors.

Monday, December 28, 2015

Daily News visits "swanky new West End Club" at Barclays Center; Draft Ops branding forgotten

From the New York Daily News today, Barclays Center’s swish West End Club offers luxury to New York Islanders fans:
He sits, he scores!
As journalistic assignments go, it’s hard to top getting an offer to take in the view of a New York Islanders game from Barclays Center’s swanky new West End Club, with all the perks that come with the most exclusive seats in the venue.
...It’s a luxury item, for sure, with seats going for $300 and up per game as part of season ticket packages. All West End Club season tickets also come with unlimited food and non-alcoholic beverages at concession stands.
If they actually paid for that luxury item, I would be very, very surprised. Might put a different spin on the enthusiasm.

Also, an important detail is missing.

It sure seems the "swanky new West End Club" is a rebranding of the Draft Ops Ice Club, which was claimed to have the "best seats in hockey" when announced last July.
Barclays Center press release
Could it have been rebranded because Draft Ops, signed as a three-year sponsor, since early November stopped operating in New York, as daily fantasy sites have been targeted by the state Attorney General?

If so, it's Yormarkian legerdemain on part with rebranding The Vault as the Billboard Lounge without acknowledging the past.

Crowd before Islanders game snakes arena down plaza, blocking pedestrians, with no ushers or cops

A post on Atlantic Yards Watch, No crowd control for Islanders game, shows the scene on the Barclays Center plaza yesterday at 4:35 pm, nearly 90 minutes before the start of the New York Islanders game.

"Long line of ticket holders blocks pedestrian traffic across the plaza. No ushers or police in sight."

It shouldn't be that hard to manage that line better. But it does show how the arena plaza is a key safety valve for the operation of the building.

After the game, I walked by, and there was a notably large crowd down in the bowels of the subway waiting for a chance to buy MetroCards. I suspect that basketball fans are already habituated to the rather simple challenge of buying their MetroCards beforehand.

Sunday, December 27, 2015

Not job-creating: Schenectady casino project would like to raise EB-5 immigrant investor funds, but it's not required

The EB-5 program is reduced to its astounding essence in the 12/18/15 Albany Times-Union article headlined Visas are lure for China casino cash in Schenectady, subtitled "Schenectady's Rivers casino using popular EB-5 program in which foreign investors get visa preference."

Rick Karlin wrote:
The planned Rivers Casino & Resort project in Schenectady wants to tap Chinese capitalists through a Texas firm that uses a growing but controversial visa program designed to foster foreign investment in the U.S.
While the primary owners of Rivers are affiliated with the Chicago-based Rush Street Gaming company and the Rotterdam-based Galesi Group developers, the casino's developers have teamed up with Houston-based Great Texas Regional Center, one of more than 700 companies nationwide that raise money from overseas through the federal government's EB-5 immigration program.

Created in 1990, the EB-5 program allows foreign nationals to get preference for visas if they commit to investing at least $500,000 in U.S.-based businesses. While seen as an effective vehicle for raising foreign capital, EB-5 has also been criticized as a "visa-for-sale" program.
Rush Street stressed that EB-5 money is not needed to get the project built: "Rivers Casino & Resort's financing is in place and upon receiving our license from the New York State Gaming Commission we are ready to begin construction on our facility," the company said in a statement. "We are currently considering an EB-5 financing, however it is not required for this project."
If they don't need the EB-5 money, then 1) it's just margin for the developer and 2) it makes a mockery of a program that is supposed to create jobs.

The Daily News and the Brooklynettes

News you can use: an article headlined Brooklyn Nets dancers, the Brooklynettes, went to Barbados to shoot 2016 swimsuit calendar is near the top of the Daily News home page, below.

Note that one photo from the calendar shows a plane from JetBlue, which is a Barclays Center sponsor. Synergy! (Oh, and the Daily News is/was a sponsor of the arena plaza.)

Brooklyn "again has a hometown team": how Brooklyn Historical Society hockey exhibit advances the narrative

The Brooklyn Historical Society is well worth a visit, with a strong permanent collection and a varied lineup of temporary exhibits.

However, like a lot of museums, it's not averse to pandering a bit. So it's hard not to sense a whiff of expediency--toward the audience, toward funders--in the slim but much publicized small exhibit Brooklyn Americans: Hockey's Forgotten Promise, which is on view through March 27.

The exhibit concerns the justifiably little-known episode in which a team wore the name Brooklyn on its jerseys, practiced in Brooklyn, and played in Manhattan's Madison Square Garden--all in one season, 1941-42, before suspending operations. And when World War II ended, the grand plans for a Brooklyn-based franchise were killed by the New York Rangers.

“With the [New York] Islanders coming to the Barclays Center, it is the right time to tell a story most people have never heard before,” exhibit organizer Marcia Ely told the Brooklyn Paper. “And this is a great family-friendly exhibit to experience before catching an Islanders game.”

It was also a move that generated more publicity than the average Brooklyn Historical Society exhibit, given coverage in several sports sections. (I'm waiting for more coverage of the museum's affecting exhibit on hunger in NYC.)

Connections to the powerful

The hockey exhibit also has gained "generous support" from several funders, including the developer of the Barclays Center, Forest City Ratner, and the arena itself, as shown in the graphic above right.

The guy behind the exhibit is lawyer and hockey aficionado Steve Cohen, who, as a former aide to Gov. Andrew Cuomo, probably has a little more juice than most.

So the general rah-rah spirit extends to the text of the exhibit, which claims, as shown in the panel above left, "Now with the New York Islanders' move from the Nassau Coliseum to Barclays Center, the borough once again has a hometown team to cheer. (And the Rangers once again have a crosstown rival to fear.)"

Similarly, the panel at right states, "In September 2012, the Barclays Center opened not far from the site where Red Dutton had wanted a rink for the Americans, finally realizing Brooklyn's long-held dream of a world-class sports arena. And with the Islanders now skating in Brooklyn, the borough is once more able to cheer its very own professional sports team."

That's junior high school-level analysis of the complex world of sports entertainment corporations, who manage to leverage the
gossamer concept of "hometown team" for various forms of public assistance.

Public assistance for the team

As I've written, true corporate citizenship would mean the arena operator and/or team would pay additional fees to Empire State Development, the public agency that formally owns and leases the arena, for the right to have a second professional sports team, after the Brooklyn Nets.

That clause was in the 2/18/05 Memorandum of Understanding that Atlantic Yards developer Forest City Ratner signed with New York City and New York State, public parties involved in the Atlantic Yards deal.

But it was nonbinding.

And Empire State Development refused to answer my queries about it.

And public officials have kept mum.

It was plausible for the public parties to ask for more, because it implies that the arena would gain additional revenue from another team, eased by the significant public contribution--direct subsidies, tax breaks, giveaway of naming rights, override of zoning, inside deal on railyard development rights--that allowed arena construction.

That's Brooklyn History, too.

Saturday, December 26, 2015

So, even the much-praised Los Angeles CBA had its problems (and AY CBA a "borderline calamity")

Thanks to NextCity's 12/24/15 What One L.A. Development Deal Says About the Future of Community Benefit Agreements, we now know that CBAs--even the one promoted as the template for "good" agreements--don't work as promised.

The essay points to Nicholas Marantz, a scholar at the University of California at Irvine, who wrote a study, What Do Community Benefits Agreements Deliver? Evidence From Los Angeles, for Journal of the American Planning Association about the CBA, negotiated in 2001, regarding the development of the Los Angeles Sports and Entertainment District (LASED) around the Staples Center

His takeaway:
Although CBAs may not fulfill all the claims that advocates make on their behalf, they can play important roles in community development by directing public and private spending to under-served neighborhoods. But collecting and verifying the relevant data may be challenging, even if reporting requirements are clearly spelled out in the CBA. As the complexity of a CBA increases, so do the challenges of assessing outcomes and assigning responsibility for those outcomes.
Of course, that's if CBAs actually represent under-served neighborhoods. With Atlantic Yards, the evidence has been murky and, of course, the absence of a promised Independent Compliance Monitor means we don't know exactly how the developer money has spent.

The Atlantic Yards CBA, writes NextCity's Oscar Perry Abello, is considered a "borderline calamity."

The outline

The L.A. CBA summary, according to Marantz:
It includes wage and targeted hiring goals, as well as guarantees requiring developer contributions to affordable housing projects, parks, and recreational facilities. Both the CBA and a separate agreement between the developer and the city require the developer to provide annual public reports detailing its compliance with the CBA; the CBA also funds a non-profit organization to oversee a targeted hiring program and provide annual public reports.
The research questions:
I ask two questions: first, have the parties to the LASED CBA complied with the provisions concerning jobs, housing, and parks and recreational facilities? Second, even if so, did the developers of the LASED provide benefits beyond those required under existing laws and regulations?
The results:
Based on analysis of relevant documents and interviews with participants in the LASED CBA, I find that the multiple developers subject to the CBA have technically complied with many, although arguably not all, of the CBA's provisions. But it is not clear that the benefits provided by the LASED developers exceeded the contributions that would have resulted from pre-existing laws and regulations. For example, a nearby project that did not involve a CBA included the same proportion of affordable units as required by the LASED CBA, but imposed even more stringent income targeting requirements. Moreover, the LASED developers may request credits against otherwise applicable impact fees for funds spent on parks and recreation pursuant to the CBA, and the CBA obliges the coalition to support such requests.
It is difficult to identify the independent impact of the CBA for four reasons. First, the CBA requirements overlap with other contracts, such as employer-union agreements, and with laws related to job quality and affordable housing. Second, as a result of the CBA, the developers may not be required to pay some pre-existing impact fees, although I have been unable to determine the amounts involved. Third, some provisions of the CBA are not legally binding. Fourth, the required living wage reports do not distinguish outcomes specifically attributable to the CBA, and I have been unable to obtain the required targeted hiring reports despite extensive efforts.
Yet, as noted in the takeaway, he's still optimistic.

Some details

One reason the coalition emerged and sought an independent means of obtaining a range of benefits was that the City of Los Angeles and its Community Redevelopment Agency were unable to enforce the city's living wage ordinance or ensure that "units created for low to moderate income housing [were] actually being used for that purpose," to quote an article cited in the paper.

The 29-member coalition, far larger than the eight groups (most of them fledgling) in Brooklyn, "gained leverage from a threat to challenge the project under the California Environmental Quality Act," as opposed to the situation regarding Atlantic Yards, where they were supporters from the start. (The paper notes that tensions within the coalition lessened the threat.)

The coalition had "[s]easoned negotiators and experienced legal counsel," as opposed to the situation in Brooklyn.

Writes Marantz, "Under the Cooperation Agreement, coalition members promised to support the project by, for example, providing testimony at public hearings and waiving legal claims, including certain claims involving the California Environmental Quality Act." In Brooklyn, there was no need for such an agreement; it was inherent to the deal.

Regarding jobs

Marantz writes:
The CBA required AEG to submit an annual report to the city indicating the status of the 70% living wage goal, and it also indicated that the non-profit administrator of the targeted hiring program would submit annual reports to the city, providing detailed information about the employment of targeted job applicants in the LASED. AEG did not comply with its public reporting obligation until 2014.8 The 2014 report, summarized in Table 3, indicates that the project attained the 70% living wage goal by 2013, but it does not indicate whether the project was in compliance prior to 2013. Despite repeated inquiries, I was unable to obtain the targeted hiring reports from the non-profit entity responsible for submitting those reports to the city, and neither the city clerk nor AEG had any record of such reports.

Although the living wage goal was reportedly attained by 2013, the role of the CBA in attaining that goal is ambiguous for three reasons. First, many employers in the LASED were probably covered by the city's living wage law, independent of the CBA.
Regarding housing

Though the CBA required residential developers to either develop or subsidize one affordable unit for every five housing units. “Ambiguous language in the CBA ultimately allowed the LASED developers to fulfill the latter requirement in a way that covered only a fraction of the development cost for each required affordable unit,” Marantz concludes. Worse, most affordable units wound up as part of a college dorm!

In Brooklyn, the language was inherently ambiguous and non-binding. There will be units for families, though fewer than proposed, and units are already aimed at households with a higher income than long promised.

Another lesson is to be wary of changes. As Marantz writes, originally the city "would not issue building permits for more than 250 market-rate units in the LASED without proof that at least forty affordable units had been constructed in compliance with the CBA," but after selling some of the land, the Development Agreement with the city was revised, limiting "the developers' future contributions to $40,000 for each affordable unit required by the CBA, with no adjustment for inflation."

Regarding parks

Writes Marantz:
The LASED CBA, overall, appears to have succeeded in the goal of directing funds to parks and recreational services in under-served communities near the LASED. At the same time it may not have produced a net increase in spending on parks and recreation. Nor did it ensure the timely completion of one of the two funded projects, even though the CBA included a strict timetable for project completion.

AY down the memory hole: arena's green roof cited among NY Mag's Reasons to Love New York

The lead-in paragraph to New York Magazine's Reasons to Love New York 2015 states:
Because New York is the heart of political ambition. Because we’re gourmands (and our rats are, too). Because our galleries travel on wheels. Because Zingsanity is upon us. Because the Mets had better hair than the Royals. Because a Citi Bike is going across the country, and a boat full of Williamsburgers is going around the world. Because you don’t need a ticket to see the cast of Hamilton live. Because, from a miniature underground Eden to a lawn on the roof of Barclays Center to a farm at JFK, we make imaginative use of our space, and our jostling, dizzying, possibility-filled crowds of new and old New Yorkers remake the city all over again every day.
(Emphasis added)

The print magazine, as shown in the excerpt at right, categorizes the Barclays Center's green roof as part of the 34th reason.

Well, the stonecrop sedum ain't a lawn.

More importantly, this glib characterization--as with New York Magazine's Approval Matrix--ignores that the green roof emerged, in part, by the need to tamp down bass escaping from the arena during certain concerts.

As I wrotethe green roof, however a cosmetic and operational improvement, is also a p.r. effort, and a way to recover from some unusually bad acoustic design,

Friday, December 25, 2015

de Blasio's defense of donations from developers = "the ends justify the means" (which sounds like Markowitz)

Let's take a deeper look at a very telling exchange during Mayor Bill de Blasio's 12/21/15 roundtable with reporters. The summary from Newsday:
He was also asked about the ethics of limit-less contributions by real estate groups and other special interests to a nonprofit group that backs his administration’s priorities.
“The bottom line is that the resources go to promote a progressive agenda,” de Blasio said. “That’s what matters.”
The summary from the New York Times:
In the interview, Mr. de Blasio said he had no qualms about accepting contributions for his political fund from real estate developers and groups with business before the city, saying that he needed resources to advance liberal causes in an era of big-money politics.
“We’re in an environment where a lot of very wealthy, powerful people will use their money to reinforce the status quo,” Mr. de Blasio said. “We’ve seen it directed against me and directed against other progressive leaders around the country.”
In other words, the end justifies the means.

Notably, de Blasio is using the status quo in one dimension of his mayoralty--accepting contributions from developers to his Campaign for One New York--to change the status quo in another dimension--causes like universal pre-K education.

And that's why Political NY in September noted that The transactional mayor returns.

But he has not necessarily followed a "progressive agenda" regarding real estate development, though, with projects like Atlantic Yards/Pacific Park, he has tried to make it look progressive, touting "affordable housing" without acknowledging how much of it serves the middle class.

Looking more closely

If you look at the video and transcript, it becomes more clear.

At 24:46, a reporter asked:
Do you find that you [inaudible] – obviously the buck stops with you, but for political questions and assessing this political [inaudible] – are you – do you find that you mostly rely on yourself for advice in that area or are there other [inaudible]?
de Blasio responded:
The folks that I listen to are the same folks I came in the door with – a mixture of folks who, you know, are in the administration, starting with Chirlane McCray, and through, you know, deputy mayors and other senior members of the administration, and then there’s a group of outside advisors I’ve been working with for many years that I value greatly. But the buck stops with me – I think you’re right. The mistakes are mine. I mean, I want to be very clear – I have to composite all the information and make decisions. And some of the times, it’s also me reflecting on whether I want to, you know, change the status quo or accept it the way it is. And, you know, I think it was clear in 2013 that my mission was to change the status quo in this city. Sometimes, you know, if you create a strategy and communicate it right, you can make those changes more easily, but other times, it’s harder. It – you know, I’m going to change my level of belief that a lot of things have to change in this city, that a lot of things should not continue this way, but I also understand the status quo doesn’t always yield so easily.
(Emphases added)

At 57:17, a reporter asked about accepting donations from developers and others doing business with the city:
[inaudible] you talk about revisiting that, do you have any thoughts on [inaudible]?
de Blasio responded:
I’m comfortable with that approach because it’s – it’s entirely legal and it’s disclosed – in fact, disclosed more than the law requires. And in this day and age, until we get a constitutional amendment reversing Citizens United, which is an imperative, and I commend Secretary Clinton for calling for that – and it’s something I’ll certainly work to support – we’re in an environment where a lot of very wealthy, powerful people will use their money to reenforce the status quo. We’ve seen it in my case and we’ve seen it in plenty of other people’s cases – we’ve seen it directed against me and directed against other progressive leaders around the country. That’s the reality of the times we’re living in – we’re talking about a huge amount of money. If progressive organizations want to fight back and defend the progressive agenda and do it in a legal manner that is fully disclosed, that makes sense to me given, unfortunately, the legal environment we’re working in. When those laws change, entirely different discussion.
A reporter followed up:
Do you think those [inaudible]?
de Blasio responded emphatically:
The bottom line is that the resources go to promote a progressive agenda. That’s what matters.
In other words, no more discussion of tactics. It reminded me of Brooklyn Borough President Marty Markowitz's defense of fundraising for his nonprofits from developers like Bruce Ratner, as quoted in 2008.
  • "My job is to bring money and services and programs to Brooklynites, and services and resources require money and it's [as] simple as that."
  • "I'm an activist and like to get things done, and that's what I'm about, period."

Thursday, December 24, 2015

Outside arena last night: illegal parking (in three places), a plaza scuffle, and a Jose Cuervo "souvenir"; ESD mealymouthed about VIP parking

On Monday morning, I queried Empire State Development, the state agency overseeing/shepherding Atlantic Yards, to ask about the blatant use of public space for private parking at the Barclays Center the day before.

Yesterday afternoon, some 2.5 business days later, I got a response from ESD: “We have spoken with Forest City/Greenland about this issue. We will add it to our log and report the neighborhood’s concerns to NYPD and DOT.”

That wasn't particularly helpful, because when I walked by the arena last night at about 8:30 pm, nearly halfway into the game between the Brooklyn Nets and Dallas Mavericks, I saw 13 vehicles parked in the "No Standing" zone, plus a sign indicating "Lyft Zone," presumably a drop-off for those using the ride-hailing app.

I approached the yellow-coated Pedestrian Monitor from Sam Schwartz Engineering, who seemed to be overseeing the space. "How," I asked, "can you get to park around here like this?" He ignored me and turned away.

It was the first of three examples of public space being turned into private space near the arena, with no enforcement.

A buffet of trouble

A short walk around the arena site disclosed a buffet of trouble.

Jose Cuervo/on bollard
On the plaza were a particularly aggressive gaggle of ticket scalpers, who were either trying to give tickets away or place them in a potential tickeholder's hand before demanding modest payment.

At one point, two guys--at least one who was a scalper--got into a fight. They knocked over some of the metal barriers before being separated by acquaintances, and before arena security approach. (No cops were in evidence.)

Walking down Flatbush Avenue toward Dean Street, in a passage narrowed by construction fencing for the B2 modular tower, an empty bottle of Jose Cuervo tequila had been placed on a security bollard.

(Litterbug? Homage of some sort? Art installation?)

More public space turned private

Turning left on Dean Street and walking toward Sixth Avenue, I saw multiple vehicles blocking the turn lane on Dean, as shown in the photo below. The truck in the front of the line was emblazoned Getaway Sports.

A missed opportunity for enforcement

After turning right on Sixth Avenue and going to Flatbush Avenue,  I saw a humongous SUV stretch limo occupying a good part of the northbound bus stop on Flatbush Avenue just west of Bergen Street. It didn't have lights on, but did have a driver inside.

After a small, vehicle-sized gap behind the SUV limo, two smaller vehicles were parked, one with lights on, the other without. That left a small "parking space" for various drivers to use when getting out to make purchases across the street.

It also meant that people getting on and off the B41 and B67 buses had to go into the street or exit into the street. In the hour I observed the situation, at least a couple were seniors for whom the exit/entry for the bus would certainly have been easier had they had a curb.

I called 311 at 9:02 pm, and hung around for an hour. (The weather was nice, and I had reading material. But my phone cut out as I was waiting to write down the 311 number.)

No police arrived, though the 78th precinct is about five minutes away by foot. Yes, I know they have crime-fighting priorities.

But about 40 minutes in, a blue and white police car going north on Flatbush pulled up next to the stretch limo. Could this be enforcement?

The car was part of the traffic enforcement division, whose job it is to summons illegally parked vehicle. But it was merely paused at the end of a line of vehicles backed up at a light. And when the light changed, the police car moved on, leaving the three illegally parked vehicles unmolested.

Wednesday, December 23, 2015

Deal for Nets/Barclays completed, now valued at $1.7B; arena seemingly a loss; Moody's reveals dangerously low debt coverage; Prokhorov pledges community continuity

See my update on arena finances and valuation.

Upon formal announcement of the deal to sell Mikhail Prokhorov's Onexim Sports & Entertainment the 20% of the Brooklyn Nets and 55% of the Barclays Center (operating company) controlled by Forest City Enterprises, the arena deal appeared to be a loss [see below for questions about that] and a bond rating agency revealed that the past year's debt service coverage ratio--the net revenue available to pay back the construction bonds--was dangerously low.

Prokhorov also vaguely pledged community continuity in the wake of local concerns, stating that existing Forest City Ratner staff would remain as interfaces with the public. 

That makes strategic sense, given the difficulty in finding new people, but also means that the Forest City staffers will be conduits, with no clear power to implement policy changes.

The new value

According to the Forest City press release, "The transaction values the team at approximately $875 million and the arena at $825 million, inclusive of debt for each asset." (All press releases at bottom.) Prokhorov must contribute $285 million in cash and notes, with a gentle interest rate of 4.5%, payable in 5.5 years.

That $1.7 billion, Bloomberg reported, is "about 10 percent lower than the $1.9 billion previously reported by Bloomberg." Or the $1.9 billion previously attributed to an unnamed source, a figure one savvy observer, Mike Ozanian of Forbes, questioned.

Arena sale a loss?

The Wall Street Journal's Eliot Brown, who's followed the issue more closely than most, put it pointedly:
The Prokhorov deal marks a loss for real-estate developer Forest City Enterprises Inc.,which banded together with a group of investors to buy the Nets in 2003 in a bid to build the Brooklyn arena and a giant surrounding housing development. While it sold most of the team to Mr. Prokhorov in 2009, it kept a 55% stake in the arena, which it hoped to turn into a cash cow.
Instead, it has been a financial disappointment, trading to Prokhorov at a value of $825 million—well below the roughly $1 billion construction cost. Profits from the various concerts and other events at the arena have proved thin, and last year, it brought in about $40 million a year in operating income, compared with the more than $75 million the company previously projected, according to Forest City securities filings.
The sale came largely because Forest City is converting its tax status to a real estate investment trust—one that requires the bulk of its income come from properties—not teams or arenas.
Here's where the much ballyhooed "$1 billion arena" figure bites back. Forest City in 2012 said the $934 million cited "covers the cost of this building, the transit connection, the site work, etc." So the numbers are somewhat murky.

Then again, $825 million may be close to the value of the arena without transit connection and site work, but the latter don't deliver revenue, so Brown's assessment should stand until it faces more granular rebuttal.

Update: note the commenter who takes strenuous issue with the loss assessment. I agree that the analysis should be more subtle, because there are various slices of financing. Let's see what Forest City says in its next quarterly results.

The revenue was to come from arena profits, but profits have been hard to come by, with operating income--at least until now--offering relatively small clearance above debt service.

Barely making debt service

Indeed, as Moody's reported in a little-noticed release, the arena's "decline in concert and events revenue contributed to the lower debt service coverage ratio (DSCR) of 1.29x in fiscal year 2015," which is well below the "stress case" of 1.5 for an established facility, much less the 1.75 "stress case" for a new facility, according to the 2010 book The Business of Sports, the Fitch ratings agency.

This past February, I reported that the DSCR was originally judged by Moody's at a comfortable 2.85, but had declined to 1.61 in fiscal year 2014.

Now Moody's reports that it went down to 1.29x in FY 2015, itself down from 1.62x in FY 2014, but should go up to 1.7x in the current fiscal year ending June 30, 2016, thanks to the arrival of the Islanders. Now Moody's is not Fitch, but even 1.7x is below the Fitch "stress case" ratio. Oddly enough, Moody's now claims that the initial DSCR forecast was 2.0x.

Nets a gain?

It should be noted that the valuation of the team represents a gain of some sort, given that Forest City's remaining share of the Nets was valued at $175 million (20% of $875 million), while Prokhorov committed nearly $450 million for 80% of the team. Wrote Nets Daily:
Tuesday's deal will permit Prokhorov to sell a minority stake, as much as 49 percent, in the team and/or arena. As NetsDaily noted Monday, Prokhorov has been in a buying mode for months. Prokhorov bought his 80 percent stake in the Nets and 45 percent of Barclays Center in May 2010 for $223 million, the assumption of $160 million in team debt and $60 million to cover operating expenses the last two years in New Jersey. He's also lost hundreds of millions since purchasing the team. But if the valuation is accurate, that deal was as good as any he's made since
Community continuity?

As I wrote, both neighbors concerned about arena impacts and local elected officials concerned about community benefits and impacts asked the state agency that formally owns the arena, Empire State Development, to intervene in the sale of the arena operating company. It didn't, and did not even vote, saying that all the deal needed was a staff sign-off.

A press release seemingly responds to those issues:
Under the agreement, Barclays Center will continue to work with the surrounding communities on quality of life issues. It will also continue to implement the portions of the Community Benefits Agreement and other community programs applicable to Barclays Center that were established as part of the development. Select FCRC staff will also continue to serve as liaisons for community and quality of life meetings, and will work with arena staff and Greenland Forest City Partners, the developer for the larger Pacific Park project, to coordinate construction activities.
Of course, "continue to work with the surrounding communities on quality of life issues" does not mean anything specific, and most recently arena-related activities have blatantly taken up public space on Atlantic Avenue and Dean Street for parking and idling.

Also note that the once-named Quality of Life Committee meetings have become developer-driven Community Update meetings, despite requirements in the arena's liquor license.

As to the portion of the Community Benefits Agreement, that likely applies to the distribution of free tickets via the Downtown Brooklyn Neighborhood Alliance, distribution of foundation funds to nonprofits via that group, and, presumably, continued fiscal support for that group, chaired by the Rev. Herbert Daughtry and led by his daughter Sharon Daughtry.

But nothing has been released in writing.

Will Prokhorov invest? Sell team?

In Forbes, Ozanian wrote:
I recently ran into a former employee of the Nets and asked him if he thought Prokhorov would keep the Nets or sell them after he bought out Ratner. His response: “One day he wakes and wants to sell. Another day he wakes up and wants to keep the team,” he said not for attribution.
He then added: “I don’t believe for a minute that he (Prokhorov) is going to bring in $400 million in cash to invest in the team as some have written. Not with what is going on geopolitically. And I can tell you his other businesses are hurting.”
Note that the $400 million referred to Prokhorov's purported investment to get the team and arena. He has to pay $285 million in cash and notes, so he has time--up to 5.5 years--to decide whether to pay in full and/or refinance/sell.

The Brooklyn Nets press release (emphasis added)
ONEXIM SPORTS AND ENTERTAINMENT SIGNS AGREEMENT WITH FOREST CITY FOR FULL OWNERSHIP OF BARCLAYS CENTER AND THE BROOKLYN NETSBROOKLYN (December 22, 2015) – Onexim Sports and Entertainment Holding USA, Inc. today has signed an agreement with Nets Sports and Entertainment, LLC, an entity controlled by Forest City Enterprises, to consolidate a 100 percent equity interest in Barclays Center and the Brooklyn Nets. The transaction was approved unanimously by the NBA’s Board of Governors earlier this month. 
In 2010, Onexim acquired 80 percent of the team and 45 percent of the arena. Since the arena opened in 2012, Brooklyn Sports & Entertainment has managed the team and the arena and will continue to do so under the new structure.

Mikhail Prokhorov, owner of Onexim, said, “Today’s deal brings the ownership structure of the Brooklyn Nets and their state-of-the-art home in line with NBA guidelines and comes at an opportune time for all involved. We have enjoyed a wonderful partnership with Forest City and Bruce Ratner and worked together to open one of the most successful arenas in the country and to bring professional sports back to Brooklyn. We will continue to support arena management to provide a high level of service to our fans and the best sports and entertainment experience in the world. We also remain fully committed to community programs that were created as part of the arena. We believe a successful arena must be a destination, but also be part of the communities that surround it and more broadly the collection of neighborhoods that represent Brooklyn.” 
Bruce Ratner, Executive Chairman of Forest City’s New York subsidiary, Forest City Ratner Companies (FCRC), added, “The development of Barclays Center enabled the return of major league professional sports and world-class entertainment to Brooklyn, and in just over three years of operation, it has become one of the top-grossing arenas in the country. As an anchor for the continued development of Pacific Park Brooklyn, Barclays Center stands as an iconic landmark for the borough.” 
Under the agreement, Barclays Center will continue to work with the surrounding communities on quality of life issues. It will also continue to implement the portions of the Community Benefits Agreement and other community programs applicable to Barclays Center that were established as part of the development. Select FCRC staff will also continue to serve as liaisons for community and quality of life meetings, and will work with arena staff and Greenland Forest City Partners, the developer for the larger Pacific Park project, to coordinate construction activities. 
“It’s a seamless transition due to the incredible partnership between Onexim and Forest City over the years,” said Brett Yormark, Chief Executive Officer of Brooklyn Sports & Entertainment. “Exciting times are ahead for our fans, partners, and employees as we continue to improve and grow all of our businesses.” 
The parties expect to complete the transaction either late this year or early in 2016.
The Forest City press release

Forest City reaches agreement with Onexim for sale of Barclays Center, Brooklyn Nets
- Onexim to become 100 percent equity owner of arena, team 
CLEVELAND and BROOKLYN, N.Y., Dec. 22, 2015 /PRNewswire/ -- Forest City Enterprises, Inc.(NYSE: FCEA and FCEB) announced today that its subsidiary, Nets Sports and Entertainment (NS&E), has executed a purchase and sale agreement with Onexim Sports and Entertainment under which Onexim will become the 100 percent equity owner of the Barclays Center arena and the Brooklyn Nets basketball team. The NBA's Board of Governors unanimously approved the transaction earlier this month.

The transaction values the team at approximately $875 million and the arena at $825 million, inclusive of debt for each asset. NS&E currently owns a non-controlling 20 percent equity interest in the team and a 55 percent equity interest in the arena. Forest City owns approximately 62 percent of NS&E. NS&E expects to receive proceeds from the transaction in a combination of cash and notes receivable of approximately $285 million at closing. The notes receivable are expected to approximate 75 percent of the total proceeds, bear annual interest at 4.5 percent, and be payable in three to five-and-one-half years from the date of closing. 
"As we continue to focus our portfolio on core retail, office and apartment assets in strong urban markets, and transition to REIT status, this transaction is a significant milestone," said David J. LaRue, Forest City president and chief executive officer. "I want to thank the NBA for their support and I salute our New York team, led by Bruce Ratner, MaryAnne Gilmartin and David Berliner, as well as our partner and our associates and advisors involved in making this deal a reality." 
Bruce Ratner, executive chairman of the company's New York subsidiary, Forest City Ratner Companies, added, "The development of Barclays Center enabled the return of major league professional sports and world-class entertainment to Brooklyn, and in just over three years of operations, it has become one of the top-grossing arenas in the country. As an anchor for the continued development of Pacific Park Brooklyn, Barclays Center stands as an iconic landmark for the borough."
The parties expect to complete the transaction late this year or early in 2016. Evercore ISI advised Forest City and NS&E on the transaction and provided a fairness opinion.
The Moody's press release
Moody's affirms Barclays Center Project's Baa3 with stable outlook
Approximately $537 million of rated debt outstanding 
New York, December 22, 2015 -- Moody's Investors Service affirmed the Baa3 rating with a stable outlook on the PILOT Revenue Bonds, Series 2009 (Barclays Center Project) issued by the conduit Brooklyn Area Local Development Corporation. Original bond proceeds were used to partially fund the construction of the Barclays Center, an approximately 18,000 seat capacity arena in Brooklyn, NY. The arena is the home facility of the NBA's Brooklyn Nets and the NHL's New York Islanders, and is a venue for other live entertainment and sporting events. The arena opened in September 2012. 

The rating reflects the cash flow predictability supporting the debt that comes from contractually obligated income (COI) in the form of medium to long-term contracts for naming rights, sponsorships, premium seating, minimum team rents, and concessions. The rating also reflects the security afforded by the PILOT bond structure, the strength of New York City as a media market, the non-relocation agreement with the Nets, the Owner's Operating Support Agreement, the large equity component of the financing structure and the strong liquidity. The rating also considers the challenges presented by the demand risk associated with concerts and other events, which declined in the fiscal year that ended June 30, 2015.

The decline in concert and events revenue contributed to the lower debt service coverage ratio (DSCR) of 1.29x in fiscal year 2015, which was below expectations and down from 1.62x in fiscal year 2014. This one year decline is viewed as temporary as management forecasts an improvement in the DSCR to 1.7x in the current fiscal year ending June 30, 2016, which Moody's views as reasonable due to higher event revenues year to date and greater revenue certainty with the addition of 44 known hockey sporting dates with the New York Islanders, which are new in the current year. Moody's believes new management forecasts are relatively more conservative compared to past forecasts that included growth. There is some certainty around the near-term forecast as COI is anticipated to comprise approximately 85% of 2016 fiscal year revenues.

For further details on the ratings rational and the structure of the deal, please refer to our credit opinion on, which will be posted separately.

The stable outlook reflects our expectation of more stable financial performance with DSCRs in the 1.7x range for the next couple of years due to the significant portion of contracted and more predictable cash flows.

What Could Change the Rating -- Up
The rating could face upward pressure if actual performance exceeds forecasts with higher annual DSCRs closer to the initial forecast of 2.0x on a sustained basis.

What Could Change the Rating -- Down
The rating could face downward pressure if anticipated DSCR improvements in the revised forecast do not materialize and the DSCR continues to fall below 1.45x on a sustained basis, or if the financial state or performance of the Nets and Islanders were to negatively affect premium seating or sponsorship revenue.

Tuesday, December 22, 2015

How Barclays Center got aggressive alcohol policy for hockey games past potential overseers; what happened to required Quality of Life committee?

Everybody missed how the Barclays Center got sneaky in 2012, getting a more aggressive--and profit-seeking--alcohol service policy for NHL hockey games than the nationwide norm, with no public discussion.

Now, after an altercation, the arena has dialed back. It now cuts off service after the second period of New York Islanders games rather than, as previously, only after the 8th minute--"no later than 12 minutes prior to the end"--of the 20-minute third period.

That's what it should have been in the first place, according to experts. (Also, that's the policy at Madison Square Garden for the New York Rangers and was the policy at the Nassau Coliseum.)

As IslesBlog notes, the altercation occurred during the second intermission. Others have noted that drinking is already an issue on LIRR trains before the game.

The initial plans

In 2012, when the Barclays Center applicants, Levy Premium Foodservice and Brooklyn Events Center, sought a liquor license, they told involved community boards that they'd cut off alcohol sales after the third quarter at Nets games, as per NBA policy, and an hour before the end of other events, except for NHL games.

Residents concerned about the policy raised other issues. The controversy involved the arena's effort to keep after-hours liquor service open until 2 am, which was not initially disclosed, and later dialed back by the State Liquor Authority (SLA) to 1 am.

Update: I spoke with Gary Reilly, who then chaired the Community Board 6 Permits and Licenses Committee. He confirmed that hockey was not on anyone's radar.

At the SLA hearing, Peter Krashes of the Dean Street Block Association noted the history of cutting corners and lack of community responsiveness. "This is the pattern with Atlantic Yards, and what we fear will be the pattern with the Barclays Center," he said.

Danae Oratowski of the Prospect Heights Neighborhood Development Council commented, "You have to plan for the worst-case scenario."

They were right, but no one noticed or questioned the policy regarding National Hockey League games. Arena operators disclosed it, but no one paid attention.

Hockey on the horizon?

In 2012, of course, hockey seemed no big deal: only a preseason game was publicly on the horizon.

But arena developers, by the summer, surely were already in talks with Islanders owner Charles Wang to move them to Brooklyn, which was formally announced in October 2012. After all, one summer change order involved "revised dasherboards," aiming to bring the rink to NHL standards.

So they knew. And while they said they'd adhere to NHL policies if more stringent, the league doesn't have a policy. However, there were--and are--recommended standards and norms.

Today, the TEAM Coalition (Techniques for Effective Alcohol Management), an alliance that includes the NHL, has recommended policies, approved by member organizations, including alcohol cutoff for NHL games after the second period.

The policies "represent the mode (most frequently reported value) for all sports venues representing TEAM Coalition member leagues," the coalition says.

As of 2012, the TEAM Coalition used slightly different language, reporting that a second-period cutoff "represent[s] the average of all sports venues participating in TEAM."

In other words, the Barclays Center policy was an outlier. We should've noticed, and they should've told us. But that's not how they roll.

License re-approved

In 2014, with no comment or controversy, Community Board 6 recommended re-approval of the arena liquor license, after being told all stipulations had been adhered to.

Perhaps when the license comes up for renewal in the summer of 2016 this issue will be addressed, and the second-period cutoff will be formalized. (License #1263192 expires 8/31/16.)

Update: Reilly, who now chairs CB 6, said, "All of the issues that were previously on the table are reasonable things to talk about at the next renewal."

What happened to Community Advisory Task Force?

As noted in the excerpt below, one mollifying promise made in 2012 by the license applicant was to create a "sub-committee on quality of life issues," as part of the existing Atlantic Yards District Service Cabinet structure, which involved various governmental agencies.

Indeed, that District Service Cabinet, which met during business hours, upon arena opening morphed into a Quality of Life Committee, which met in the evening and treated residents as equal participants.

That didn't last. Last year, the Quality of Life Committee became a top-down Community Update meeting, aimed to dispense information about construction projects. See screenshot below.

It's sometimes called--rather confusingly--a Quality of Life Community Update meeting, but there's no longer anything resembling a committee or a task force.

An official from Empire State Development, the state agency overseeing/shepherding the project, recently deemed it "a developer meeting." Maybe, but it doesn't look like they should get away with it. The liquor license requires more responsiveness.

Monday, December 21, 2015

During Nets game, vehicles block Dean Street turn lane; limo blocks pedestrian path

Ok, what's wrong with these pictures, taken during the Brooklyn Nets game yesterday and posted on Atlantic Yards Watch by resident Peter Krashes?

Short answer: public space on the south side of the Barclays Center becomes private space, just as it does on the north side of the arena. And it's dangerous

First, a pedestrian walking east of Flatbush Avenue on the north side of Dean Street (see annotated photo below) had to walk in an improvised pedestrian lane caused by the construction fence outside the B2 modular tower, aka 461 Dean Street.

But, as shown in the photo, a truck was wedged in near the area where the road was cut off, and an SUV used as a limo narrowed--if not blocked completely- the pedestrian passage around the B2 construction site and the bicycle lane.

So the pedestrian would be forced into the street. According to the report, the limo driver as well as Flyte Time International limo employee talking with him (same company?) acknowledged that they use that area until police shoo them away. According to the report, the police were sent over, so we don't know how long that situation persisted.

On video

A longer look at Dean Street shows many more vehicles occupying public space. According to the report:
The turning lane included a bus, an emergency response vehicle and multiple limos. It is hard to know if this is the bus the NBA apparently requires, but may not allow to be dependent on the loading dock elevator. The below grade portion of the arena was reduced in 2009 and has never had enough capacity to support arena operations. Likewise, to save money the developer delayed building the below grade parking adjacent to the arena which was supposed to be opened around the time the arena opened. As a result, arena operations that was meant to be below grade continues to spill out into the neighborhood and its public spaces

Carlton Avenue outside B14 site closed for utility work, with no notice

Sometime during the late afternoon yesterday, Carlton Avenue between Dean and Pacific streets closed for utility work, apparently related to the 535 Carlton Avenue (aka B14) construction.

This closure was not announced in either of the two most recent Atlantic Yards/Pacific Park Construction Updates, 12/7/15 and 12/21/15, nor, as far as I know, in any interim announcement. It's now open, I'm told. But still that seems an other example of inadequate disclosure.

Why is VIP parking (and Lyft Zone) in "No Standing" area outside Barclays Center?

The violation is blatant--again.

As shown in the photo at right, posted on Atlantic Yards Watch Sunday afternoon by Gib Veconi, a "No Standing" zone on Atlantic Avenue next to the Barclays Center was filled with parked cars, just before a Nets game.

(Just like it was last week.)

He wrote:
The attendant in the yellow jacket, who worked for Sam Schwartz Engineering, told me that the area was being used for VIP parking for the arena. The "no standing" sign is clearly visible at the right.
It's ironic that an employee of the consultant that authored Barclays Center's Transportation Demand Plan is guarding an amenity encouraging people to drive to the arena (including several cars I noticed with out-of-state plates).
This problem was also reported in a separate ticket filed last Sunday.
DropCar, Lyft, and more

Evidence had suggested that this area was being used for DropCar, a valet service.

But, as the attendant said, it's being used for VIP parking.

Some of that parking may be for vehicles involved in the ride-hailing service Lyft, as shown in the photos below.

After all, Lyft announced 11/19/15 (screenshot above) it had added a Lyft zone in an "easily accessible spot" for all Nets home games this season.

The question public officials and agencies must answer is why a public street has been turned into private parking, in violation of posted rules.

Are the Nets and Barclays Center really worth $1.9 billion? An expert's doubts

Let's remember, in keeping with the opacity regarding the sale of the Brooklyn Nets and the Barclays Center operating company, there is exactly one, unnamed source--originally telling Bloomberg News--that the team/arena are worth $1.9 billion together.

Mike Ozanian of Forbes expressed doubt:
And given the apparent complexity of the deal–loan forgiveness, relatively little cash exchanging hands, a minority interest in the team with a majority interest in the arena rights–the purchase price allocation for this transaction will be fascinating.
Ozanian said he had verified a previously reported valuation of the team at $700 million (which, I'd add, is well below the $1.5 million that Forbes previously estimated). If so, that values the arena least at $1.2 billion.

But the Nets lose money--that could/should stop with a new payroll and coming TV deal, I'd add--and the arena, at least according to past reports, was making a relatively small profit. 

Ozanian "really doubt[s] Prokhorov could turn around sell the Nets and arena rights for anything close to $1.9 billion next week. But then again, I also doubted anyone would pay anything close to $2 billion for the Los Angeles Clippers. And we all know how that turned out."

In other words, all it takes is another billionaire to buy them.

Note that there are lots of moving parts here. The Nets should make money at some point reasonably soon. The arena might make more profit too.

But the echo chamber of reporting/blogging cascades thinly-sourced numbers, and we should remember to take them with a grain of salt.