New Limits on Builders in an Area of Brooklyn

...Ms. Burden said the change in the Carroll Gardens zoning rules demonstrated the Bloomberg administration’s commitment to preserving neighborhood character.

That's excepting Prospect Heights, West Harlem, Willets Point, Queens West, Coney Island, the Bronx's Macombs Dam Park area, Jamaica, the Lower East Side, Downtown Brooklyn, etc. etc...

Representative Anthony Weiner, a mayoral hopeful, gave his support for a string of large development projects in the city today, saying they're important in a time of economic uncertainty.

"New York needs to continue to grow–I'm a pro-development guy," he said, speaking at a Crain's breakfast. "If you look at downtown, you look at West Side, you look at Penn Station, you look at Ratner, you look at these things–I think that you're going to see that I'm going to be advocating. I want them to be successful, particularly in this time of slow economic growth."

Then, hitting on his favorite theme, Mr. Weiner said the middle-class does not always see a clear, tangible benefit from the projects, adding, "It does create challenges that we have to solve." ...

In these tough economic times, there's nothing more important than shoveling scarce tax dollars at a basketball arena. Is it any wonder that middle-class New Yorkers — and upper- and working-class NYers, too — are having trouble seeing "a clear, tangible benefit" in that?

Today in Atlantic Yards Report, Norman Oder takes a look at the letter DDDB sent last week to the IRS arguing against reopening the tax loophole that would allow Federal tax-exempt bonds for the project.  As Oder notes:

“….the specific criticisms in the letter likely had not been raised previously in direct communication to IRS and the Department of the Treasury.”

Indeed.  What the IRS had heard previously is a May letter from the New York City Industrial Development Agency (IDA) and the Empire State Development Corporation (ESDC), putting the happiest possible face on the stalled and floundering project.  At stake: an estimated $165 million in Federal tax breaks on the arena financing, effectively roping in tax payers all across the country to help fund the Ratner project.  Oder summarizes:

Some of those criticisms were first reported in this blog: the [IDA and ESDC] letter overstates how much land Atlantic Yards developer Forest City Ratner actually controls and it fails to point out that, at least according to available evidence, the foregone property tax might be much less than the anticipated PILOT payment. Also, DDDB points out that the city and state overstate the amount of progress achieved on the project.

…the reason the Nets assessment is missing is…because it is that only after FCRC calculates the arena construction cost and the tax-exempt bond financing it requires, will it be able to make up a PILOT value necessary to pay the debt service BUT call it “Annual Estimated Taxes” as in Exhibit D of their letter.

Were ESDC to provide for you today the estimated taxes, the developer would be boxed into a corner from which it would have trouble removing itself when the arena cost increases again as it is certain to do.

The last time we checked, the IRS tended to discourage the concept of making up numbers based on how you want your taxes to turn out.  The FCRC approach just sounds like a slightly more sophisticated version of that technique, one that presumably, in these tough times, the IRS will find not in the taxpayers' interests.   

Bloomberg said he thinks sports "should stand on its own" and "can stand on its owner" when it comes to owners such as the Steinbrenner family in the Bronx footing the bill for a new Yankee Stadium, Ratner in Brooklyn, and the Wilpon family in Queens picking up the tab for a new Mets ballpark. But the city (and state) is still heavily subsidizing the two new baseball parks and the Brooklyn arena with significant tax breaks, tax incentives, and funding for infrastructure (Bloomberg declined to comment on city subsidies).

It's been a bit of a slow news week for Atlantic Yards watchers, but as underground radio legend Scoop Nisker used to say, "if you don't like the news, go out and make some of your own."  And the interesting news event over the past two days has been watching the multimedia dust-up between Smith College sports economist Andrew Zimbalist (one-time sports arena critic and author of the laudatory FCR report on Atlantic Yards) and Norman Oder from Atlantic Yards Report, who needs no introduction in this space.  The exchange has also been enlightening for students of the changing dynamics of the media landscape.

For Prof. Zimbalist it started innocently enough, with an appearance on the Brian Lehrer show in this All-Star week ostensibly to discuss the economics of baseball.  But early on host Lehrer began to home in on Zimbalist's apparent new enthusiasm for the tax-exempt financing that the Yankees (and the Nets) are seeking, finally saying with some surprise "So you’re really a defender of the Steinbrenners, on these various controversies?"

Zimbalist began a quick verbal tap dance but it was too late.  A few minutes later, this exchange occurred:

Lehrer: ...somebody just wrote on our comments page… Zimbalist opposed tax-exempt bonds for stadiums in his 2003 book May the Best Team Win but hasn’t raised that point in the debate over Yankee Stadium and Atlantic Yards.

Zimbalist: Now, wait a minute--I didn’t realize that my entire writings from the last 20 years on stadiums was going to be the subject of this conversation.

deMause: I think there are a fair number of people who don’t take him seriously any more. There are certainly people who will talk to him and cite him and refer people to him. He’s still a smart economist, but the fact that this is someone who has said, oh, consulting reports paid for by sports team owners are worth crap and then went and did a consulting report paid for by a sports team owner [Bruce Ratner]--that doesn’t make him look very good.

Oder: It was not peer reviewed.

deMause: Yeah. I don’t think it's destroyed his reputation by any means, but I think there are a lot of people who don’t take him as seriously as they used to. I certainly don’t. I used to think he was somebody who you could go to and would give you a straight answer based on his years and decades of study. I’ve just seen too much work by him that seems to be bending over backwards to make a project look good. His response, when I ask him about it, is What do you know, you’re not an economist.

I’m like, Yeah, I know I’m a journalist. That’s why my job is to question the economists. So, if the numbers don't add up, I’ve got a calculator. So it’s been very difficult. Andy has always been a prickly guy in the best of times and he’s never taken kindly to people disagreeing with him on stuff.

We find the Nets’ policy of not signing players for more than two years a bit rigid… and some of us are skeptical that it’s all about Lebron. We suspect it’s about cutting back on salary commitments just in case Brooklyn falls through and the team is put up for sale. Whenever any business with poor growth prospects starts cutting back on long-term commitments, selling assets, investors believe that company is “in play”, meaning up for sale.

Although sports entertainment corporations have an entire section of every day’s newspaper devoted to them, the Yankees and the Mets are, we must always remember, privately owned entertainment corporations. It’s discouraging that officials are confusing teams with public goods like parks, water and transit that are essential to the city’s public health and economic vitality.

This has become the week of the Great Reassurance, as Nets spokespeople ramp up a vigorous campaign to convince the world that the Nets are really coming to Brooklyn.  Both No Land Grab and Atlantic Yards Report have excellent rundowns on the action, ranging from wooing 40 fans at the Barclays Center showroom in the The New York Times building, to a press conference in which  Bruce Ratner seemed to slide the actual opening date a bit further out into the next decade. 

One additional note, thanks to the wonders of blog commenting, comes the above-linked NetsDaily blog item, which includes this optimistic public relations statement: The team anticipates that at least 35% of the Nets’ New Jersey season ticket-holders will move with the team and to facilitate that is considering shuttle bus service from New Jersey to Brooklyn once Barclays Center opens. 

That's of course a crucial bit of the argument for why the Arena will be good for Brooklyn--all that extra money flowing over from New Jersey.  But a reader named Trenton immediately questioned the math:

35%??

Come on.

I’d say if anything, the courtside people and some of the very low lowers would consider that, pending that they can get the same seats at the same rate.

That would represent about 12% of the arena (guessing) and if that is the case I would not broadcast it.

Personally, I would not drive up to the Meadowlands, hop on a bus, then ride to the game, hop on the bus again and drive home.

NEW YORK, NY- Late yesterday, twenty-six co-plaintiff groups filed their appeal in New York State Appellate Court seeking to overturn Supreme Court Judge Joan Madden's January 11th ruling. Their appeal challenges the Final Environmental Impact Statement (FEIS) and approval of Forest City Ratner's Atlantic Yards proposal. The appeal alleges that the FEIS submitted by former Governor Pataki's Empire State Development Corporation (ESDC) was fatally flawed on substantive and procedural grounds. Annulment of the FEIS would require the undertaking of a new and credible environmental impact analysis by Governor Paterson's ESDC, and a new vote by the Public Authorities Control Board (PACB) for the 22-acre real estate development project proposed in Prospect Heights and Park Slope, Brooklyn. Defendants on the suit include the ESDC, the PACB, the MTA and Forest City Ratner Companies (FCRC).

The plaintiffs believe that the case, DDDB et al. v ESDC et al., was wrongly decided, on a number of grounds, by the lower court. The appeal focuses on the plaintiffs' charge that the lower court erred in numerous respects, including the following:

• The State's determination that the project site is "blighted" was illegitimate, and manufactured by the developer to take valuable private property via eminent domain.
• The State had no authority to approve the Barclays Center Arena because it is not a "Civic Project" as defined under the Urban Development Corporation Act (UDCA) .
• The State violated the State Environmental Quality Review Act (SEQRA) by failing to consider the possibility of terrorism and other security breaches on the Project.
• The State violated SEQRA by grossly misrepresenting the project's construction timeline, thereby minimizing the project's impacts, and not requiring adequate mitigation.
• The State violated SEQRA when it failed to adequately study alternative locations for the proposed Project, including locating the arena in Coney Island.
• The PACB violated SEQRA by approving the project without considering its environmental impacts and failing to make its own SEQRA findings.

"The ESDC's rush to reach the pre-determined outcome of its Atlantic Yards review before the end of the Pataki administration led to a fatally flawed environmental review, and violations of its statutory procedures and responsibilities," said lead attorney Jeffrey Baker of Young, Sommer, Ward, Ritzenberg, Baker & Moore. "Our appeal seeks to overturn the Supreme Court ruling from January, and annul the environmental review and approval of 'Atlantic Yards' by Charles Gargano's Empire State Development Corporation, the Public Authorities Control Board, and the MTA, necessitating an urgently needed fresh look from Governor Paterson, his new ESDC and MTA, and the PACB, which has two new members on the three-member board since the approval of the project in December, 2006."

The legal appeal has broad support from the community with co-plaintiff groups representing all of the communities surrounding the project site, and well beyond, including: Develop Don't Destroy Brooklyn (DDDB), the 41-member coalition Council of Brooklyn Neighborhoods (CBN), New York Public Interest Research Group/Straphangers Campaign (NYPIRG), Sierra Club, Central Brooklyn Independent Democrats (CBID), Fort Greene Association, Society for Clinton Hill, Boerum Hill Association, Crown Heights North Association, Park Slope Neighbors, Fort Greene Park Conservancy, and Friends and Residents of Greater Gowanus, as well as fourteen other community organizations and block associations.

All legal papers filed can be found here: www.dddb.net/FEIS/appeal
A summary of the original complaint can be found at: www.dddb.net/FEIS/summary.php

It's interesting that among mainstream New York newspapers, it's often the sports writers who have most pithily summed up the Atlantic Yards and Yankees deals for the corporate welfare exercises they are.  As noted below, city columnist Juan Gonzalez of the Daily News deftly skewered the Yankees job promises last week.  And then in the Sunday Daily News, sportswriter Michael O'Keeffe followed up  with this observation about the state of big-money sports in the City of New York:

But given how Bloomberg has consistently put the greed of the sports teams - especially the Yankees, Mets and Nets - over the needs of ordinary citizens, you don't need a weatherman to know which way the wind blows.

As Daily News columnist Juan Gonzalez pointed out last week, City Hall is backing a Yankee request for $366 million in additional tax-exempt financing to complete the new Yankee Stadium - a very expensive handout for a private business that employs a tiny number of New York residents.

Lawyers for Willets Point businesses, meanwhile, say the city has refused to provide even basic services to the neighborhood for years. So is it coincidence or conspiracy that the city has decided to use eminent domain to throw out the junkyards and body shops just as the Mets are putting the finishing touches on their nearby new stadium?

Bloomberg, meanwhile, has been a shameless cheerleader for Bruce Ratner's Atlantic Yards project, which has become an international synonym for a shameless corporate land grab.

Yesterday's  Assembly hearing regarding tax-exempt bond financing for the New York Yankees, as narrated by Norman Oder, featured one aspect familiar to those who have frequented Atlantic Yards hearings:

The hearing, at 250 Broadway in Lower Manhattan, was packed with construction workers who came on at least four buses more than 45 minutes before the 10 am start time, thus crowding out some others who didn’t expect a full house. The hearing room holds fewer than 150 people.

“I dislike public benefits for private parties when the public at large is being starved in so many ways.” And if that’s a description of sports facility finance, he added, “so be it.”

At the groundbreaking in August 2006, Bloomberg announced that the new stadium would "result in about 1,000 permanent jobs."

The actual job figures the Yankees submitted in their application to the IDA told a far different story.

They show the Yankees had only 104 full-time permanent employees in 2005. Included in that total were all team executives, ballplayers, office workers and maintenance personnel. Barely half were city residents.

The number of full-time permanent jobs, the Yankees projected, would increase to 140 by 2009, the year the new stadium will open. That's a gain of just 36 permanent jobs.

Oder: Why aren’t naming rights counted as subsidies or value? Forest City Ratner's deal with Barclays is worth a reported $400 million over 20 years.

(Imagine a mocking tone to the first sentence of his response.)

deMause: Because it’s industry standard, don’t you understand? That’s the only answer--the teams always said: we always get the money for this, so therefore it’s private money. There’s no reason for this to be private money. If the public is building the stadium, if the public is owning the stadium, why should the team get to slap a name and get the money from it, or consider the money from it that pays off the stadium as paying off their share.

Y’know, I rent; if I decide to put a giant billboard on the roof of my house here--if my landlord lets me do it, I really don’t think he could let me keep all the money from it. If I say, I’d like to move into your apartment, but in order to pay my rent, I have to put a big billboard outside, he’s going to look at me as if I had two heads.

Bruce Ratner, the Nets’ principal owner, has denied reports that he is interested in selling the team or moving it to Newark. Booker, though, says otherwise.

“I’m going to work very hard to make it happen,” Booker says. If the deal were to go through, the team would play at the Prudential Center, the newly built Devils’ home arena. Both teams played at the Izod Center, the former Continental Arena, in East Rutherford, N.J., before the Devils moved to the new facility in Newark last season.

“I don’t think there’s going to be a fight,” Mr. Booker said. “I think it’s going to be settled in an amicable way.”

Ratner's Atlantic Yards block party cancelled

..."We wanted to be sensitive to the community that the decision came down Monday," said Hunley-Adossa, who works with both the developer and the community.

Daniel Goldstein of community group Develop Don't Destroy Brooklyn, a plaintiff in several lawsuits against the project, said that flyers were first emailed out Monday afternoon, soon after the Supreme Court's decision.

"The flyer was emailed out at 4:30 p.m. on Monday," Goldstein said. "The decision came out after 10 a.m. I believe that it was scheduled because of that decision and I believe it was canceled because somebody realized it was a really bad, offensive idea."

Goldstein said the block is full of rent-stabilized tenants, including some families who have lived there for generations, and all of the homes are threatened by the project.

"We work to prevent displacement due to gentrification," Hunley-Adossa said. "We're getting 2,250 units of affordable housing [in the Atlantic Yards project]. For all of what has been done, the commitment is where it should be."...

Full article

Must have been a lack of interest and Forest City Ratner's realization that this was a bad idea.

The balance of power?
The Brooklyn Paper. Editorial

So much for checks and balances.

We are disappointed that the United States Supreme Court declined to hear a case brought by 11 slated-to-be-evicted property owners in the Atlantic Yards footprint.

While we sympathize with some of the arguments made by the plaintiffs in the case, Goldstein v. Pataki, our irritation with the High Court stems more from our belief in a fundamental American principal: each branch of government must balance the power of the other branches.

At its core, the issue in this case is New York State’s insistence that Bruce Ratner’s basketball arena, office and housing mega-project will bring about a “public benefit.” The declaration of such a “public benefit” enables the state to use its eminent domain power to seize the 11 properties from their owners and give them to Ratner.

The Supreme Court has repeatedly ruled that when states condemn private property for a public benefit, they do not violate the Constitution’s Fifth Amendment.

But in its most-recent ruling on such takings — the 2005 Kelo decision — the High Court declared that the “public benefit” cannot merely be a pretext for handing over one person’s land to another person.

In a word, the benefit must be real.

But who determines if the public actually benefits from a development? In its brief to the High Court, state officials said that only the state itself has the power to make that determination.

The 11 plaintiffs in Goldstein v. Pataki allege that a corrupt and cronyism-riddled Empire State Development Corporation simply used the pretext of public benefit to hand over properties so Ratner could make millions. Two federal courts have declined to examine this claim, saying that judges have no role in hearing challenges to a state’s determination that a project is a “public benefit.”

So, if a state agency says that a project is a “public benefit,” it is, de facto, a public benefit.

But what if the so-called “public benefit” isn’t a benefit at all?

At the very least, plaintiffs should be able to take their case to a presumably impartial judge who would be empowered to determine whether the state cooked up a “public benefit” merely to justify a land grab for a wholly private benefit.

The Empire State Development Corporation argues that judges have no business meddling with the back room dealings of state officials and the developers with whom they conspire — and the Supreme Court, in not taking up Goldstein v. Pataki, let this argument stand.

“The role of the judiciary in determining whether [eminent domain] power is being exercised for a public purpose is an extremely narrow one,” state lawyers wrote.

In other words, there are no checks and balances when eminent domain is involved.

EYES ON BROOKLYN
JERSEY CLEARS ROOM FOR LEBRON IN 2010

...By my count, the Nets are the 23rd team to set their sights on the free agent Class of 2010.

Clearing cap room two years ahead of time on the belief James' outwardly magnetic bond with Nets' minority owner Jay-Z (it's not as if he rhymes as tight as Biggie Smalls) will influence him to forsake his home state of Ohio is like building an elaborate spec house just across the Brooklyn Bridge in today's saggy, baggy real estate market.

Yet here we have intrepid Nets' owner Bruce Ratner (from Cleveland), no less doing both!
...

Full article.

Congressman offers unskeptical endorsement of Zimbalist's dubious AY study

In Congress last year, Andrew Zimbalist's dubious study of Atlantic Yards for Forest City Ratner got a mindless endorsement from the ranking minority member of the Subcommittee on Domestic Policy of the Committee on Oversight and Government Reform of the House of Representatives, even though an expert witness warned that accepting studies that were not peer-reviewed was akin to federal drug regulators embracing reports created by the drug companies themselves.

It was during the 3/29/07 hearing called "Build It and They Will Come: Do Tax Payer-Financed Sports Stadiums, Convention Centers and Hotels Deliver as Promised for America's Cities?"
...

Fluffing Zimbalist

Still, later in the hearing, some non-peer-reviewed research, albeit with an academic gloss, was promoted by Rep. Darrell Issa (R-CA), the ranking minority member. He declared (see p. 123):
Mr. Chairman, I would also like to put into the record an economist's study from the Robert A. Woods professor of economics at Smith College in Massachusetts. It is from May 1, 2004, and it specifically deals with Atlantic Yards, estimating that the total of $2.93 billion over 30 years or a net present value of $1.08 billion would be the advantage for that operation. Although it may not be the one that is going to carry the day, it certainly seems that independent bodies such as university economist very much believe that there can be a net economic benefit, and I ask that be placed in the record.

Except that Zimbalist was a consultant "retained" by the developer, not an "independent body," his study was deeply flawed, and it was never peer-reviewed (nor the subject of journalistic scrutiny).

Read Full Article

Q: There seems to be an explosion in the number of stadiums New Yorkers may soon see built, including for the Jets on the West Side, the Nets in Brooklyn, and now possibly the Yankees and the Mets. What will this mean for New York taxpayers?

A: The governor and I have made it clear for nine-plus years that no taxpayer money will go to build a sports arena.We will consider helping with infrastructure improvements, like a platform over the rail yards on the West Side or new subway stations, which helps the public at large. The Yankees are now taking that road, which I am very happy about because they are a great ball club that brings a lot of revenue to the city and their stadium is too old. They are offering $700 million to build a new stadium, with the state and city pitching in to improve roads and other infrastructure. Similarly, the Jets have agreed to build the Sports and Convention Center and we will build a platform and the retractable roof. This discussion of sports arenas is not out of the blue. The fact is, they have been talked about for a long time, but after September 11 these ideas were shelved. Now, almost three years after that terrible day, they are starting to think about this once again.

Q: Your agency is putting in a lot of money to develop Downtown [sic] Brooklyn. How important is the stadium in this area’s development?

A*: The Brooklyn development has 2.1 million square feet of commercial space, 300,000 square feet of retail space,and 4.4 million square feet of residential. It is a $2.1 billion project, and only $500 million is for the arena. Our support is primarily for the commercial, retail, and residential development — not the arena. We don’t care about the arena. We aren’t opposed to it, but our assistance is primarily to provide support for the other parts of the plan.
(Full color emphasis added)

“It [the slowing economy] may hold up the office building,” the developer, Bruce C. Ratner, said in a recent interview. “And the bond market may slow the pace of the residential buildings.”...

The developer did say he was confident about starting construction on a $950 million basketball arena for the Nets by the end of the year.

1. There will be 50% affordable housing in Atlantic Yards. (LIE, do the math: 6,430 units, 2,250 so-called "affordable")
2. There will be a public open space on the arena roof. (LIE)
3. There will be a private green roof on the arena. (LIE)
4. Ratner spokesman Loren Reigelhaupt: “When it comes to sharing information with the public and governmental bodies, there’s no such thing as too much, as far as we are concerned."
   (LIE)
5. Atlantic Yards will take 10 years to build. (LIE)
6. Atlantic Yards went through a rigourous public process. (LIE)
7. Atlantic Yards will create 15,000 construction jobs. (LIE)
8. Atlantic Yards will create 10,000 permanent jobs. (LIE)
9. "The $6 Billion Lie." (LIE)
10. Liar Fliers: Liar Flier 1, Liar Flier 2, Liar Flier 3
11. Arena will open in 2006.
    "Arena development to begin at the end of 2004, with completion set for summer of 2006." (LIE, see page 5)
12. Arena will open in 2007.
    Ratner flack Joe DePlasco claimed, "There’s no reason to think the team is not moving to Brooklyn for the 2007 season." (LIE)
13. Arena will open in 2008. (LIE, see page 14)
14. Arena will open in 2009. (LIE)
15. Arena will open in 2010. (LIE)
16. Ratner says bid to MTA for Vanderbilt Yards more valuable than Extell Development Company's bid. (LIE)
17. Bruce Ratner said that Atlantic Yards would “not touch the existing tax base.” (LIE)
18. Mr. Ratner said that the project ''will be almost exclusively privately financed..." (LIE)
19. Ratner told the Times in 2003 that only one block in the footprint had apartment buildings, with about 100 residents.(LIE, each non-rail yard block has apartments and residents--still!--with about 400 residents when he said this.)
20. Ratner's website said Frank Gehry was born in Brooklyn. He wasn't. (LIE)
21. Ratner said he'd build a "new 21st Century Brooklyn Tech High School." (LIE)
22. Ratner says he is "progressive." (LIE, he isn't.)
23. Ratner repeatedly says that they've won "20 court decisions." (LIE)
24. Ratner said "I have never, ever seen a project get less protest than this." (LIE)
25. Ratner attorney Jeffrey Braun admits $5.6 billion lie in court affidavit. (LIE)
26. Ratner attorney Jeffrey Braun: “This is not Times Square, the crossroads of the world,” Braun said, referencing a previously-cited eminent domain case. “This is completely derelict." (LIE)
27. Ratner spokesman shows misleading rendering to NY Times, exaggerting arena setbacks from street. Spokeman later gives precise setbacks. (Not quite a LIE but misleading enough to be close.)
28. (EXTRA CREDIT, an alleged lie.) From The Brooklyn Paper:
    Bruce Ratner is a money-grubbing liar who tricked a well-connected businessman into investing $6 million of his own money to help Ratner acquire the New Jersey Nets with promises that he “never had any intention of fulfilling,” a bombshell lawsuit charged last week."
    
    Eugene Greene contributed the hefty sum — and rounded up another $25 million from other investors — to help Ratner buy the Nets in 2004, but now claims that the Atlantic Yards developer reneged on his promises to make Greene “the glue that helps run this team.”
    
    Ratner made “repeated promises and representations of ever-increasing perquisites to Greene,” according to the businessman’s lawsuit, which was filed last week in Manhattan Supreme Court, and seeks $20 million in compensatory damages and $10 million in punitive damages.
    Ratner, said Greene, “never had any intention of fulfilling” the promises, which included making Greene a member of the Nets’ Board of Governors, where he could “interact with other high-worth investors … for further and ever-increasing business and financial gain.”
    
    When Greene confronted Ratner with the alleged breach of contract at the end of 2004, Ratner told him, “I don’t remember what I said. As you know, I have a memory problem,” the court papers said...