"I don’t know... how long we could delay": A look forward at Atlantic Yards in 2009

After a tumultuous 2008, Atlantic Yards faces multiple uncertainties.

The developer is closemouthed, the public is under-informed, and no one in government seems particularly up to speed. In his resignation letter yesterday, Empire State Development Corporation (ESDC) Downstate President Avi Schick notably declined to say anything about Atlantic Yards progress.

Sometime this year, the fate of the Atlantic Yards arena, at least, should be more clear..

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the legal cases, stalled construction, the still-in-New Jersey Nets, bond financing, affordable housing subsidies, the political supporters, Payments in Lieu of Taxes (PILOTs), and how much more self-inflicted abuse one cash-strapped development company can take.

90 to watch in ‘09!

8. Atlantic Yards: So far, court cases, economic turmoil and his own ineptitude has stalled Bruce Ratner’s Atlantic Yards project for five years — and in 2009, two more cases could drastically alter the project once and for all. A decision is expected sometime in January on a lawsuit over the state’s weak environmental review. And early this year, Brooklyn appellate judges will hear a case that challenges the constitutionality of the state’s use of eminent domain. In financing news, Ratner’s $177-million bridge loan is due in February, but sources say the developer is trying to refinance the money in the meantime.

“It’s not going to happen in a nanosecond": a look back at Atlantic Yards in 2008

The year 2008 was chock full of Atlantic Yards news; below, I look back chronologically at some memorable issues, moments, and quotes, including the understated prediction by Forest City Ratner CEO Bruce Ratner that the project is "not going to happen in a nanosecond."...

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Norman Oder looks back at the Atlantic Yards news from 2008, including major stories that he broke. Many items seem like they happened just yesterday, while others are like a broken record:

Click here to read about lawsuits, protests, counter protests, renderings, demolitions, construction delays, lawsuits, financing, lobbying, lies, damn lies, subsidies, blight, Nets to Newark, lawsuits, more demolitions, liar fliers, Atlantic Lots, green roof, balance sheet blues, even more subsidies, ground breaking delays, more ground breaking delays, the resurrection of Jim Stuckey, construction halt, lawsuits, Barclays Bank, Ward Bakery RIP, Nets for sale, Nets not for sale, layoffs, $1.5 million to ACORN, free Nets tickets, Forest City stockwatch, and the Atlantic Yards deathwatch.

Mayor needs an economic plan
Crain's (Subscription only)

While no one would suggest the mayor can solve all the local economy's ills, he needs to come up with new programs that offer immediate aid and support. He should start with the city's vital tourism trade, as well as small businesses and emerging industries. He must rethink his affordable-housing plan, which can't succeed unless there is more new construction, and he has to explain how he will keep such crucial projects as the redevelopment of the West Side rail yards, Atlantic Yards and Willets Point on track.

Massive Projects At Massive Risk Award
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1) Atlantic Yards/Hudson Yards. We sort of always knew, given all the hype and press and controversy and weeping and wailing and gnashing of teeth surrounding our twin yards, that neither one of these projects would ever happen in their proposed form. Predictions for 2009: Hudson Yards disappears from the public agenda altogether, while Bruce Ratner brings the Nets to play in a 3,000-seat replica of Ebbets Field. It's called compromise, people!

Off-the-Field Losses Crimp Team Owners
Prestige of Owning Sports Franchise Is Lost When a Principal Business Struggles Along With Athletes

By Matthew Futterman. The Wall Street Journal

For all the talk of slumping ticket sales and sponsorships, the most troubling scenario for the sports industry is the growing trend of team owners beset by financial problems in their principal businesses.

The issue crystallized last month when Tribune Co., owner of the Chicago Cubs, filed for bankruptcy-court protection. The problems have been spreading as the souring economy diminishes the fortunes of team owners. That jeopardizes the essential ingredient of the sports business: rich people who can afford a really expensive hobby.

"The willingness or tolerance for future losses is very, very low," says Allen and Co.'s Steve Greenberg, an investment banker to the sports industry and former deputy commissioner of Major League Baseball. "More owners are looking to operate at break-even or better. The problem is, it's hard to turn a $15 million to $25 million loss into break-even in a short period of time."

Unlike other recessions, this one threatens to wipe out sports owners who were recently willing and able to put up with meager profits or annual losses because of rising team values and the perks of the investment, such as the celebrity status.
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The Cubs and Red Sox are profitable. For owners of franchises that are unprofitable, slumping team revenue and the recession are a discouraging combination.

"The 401(k)s and their equivalents that belong to these owners are cut in half like everyone else's," says David Carter, director of the sports-business program at the University of Southern California. "Their ability to secure financing and continue operating is going to get hurt."

Also feeling the crunch is Forest City Enterprises Inc., the real-estate developer behind Bruce Ratner, principal owner of the National Basketball Association's New Jersey Nets. The company said last month it was ceasing all development projects, after its stock price fell from $60 in 2007 to under $6.

Forest City, which owns 23% of the Nets, pegged losses for the team at $30 million through the first nine months of 2008. The Nets have lost more than $100 million since Mr. Ratner acquired the team in 2004, forcing him to slash payroll.

Forest City still wants to develop a $950 million arena in Brooklyn for the Nets, but the project is stalled amid legal wrangling and financing problems.

NBA Commissioner David Stern says Forest City's ability to secure financing for the arena is hampered now, adding: "Our hope is that will improve in 2009."
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Full article.

Vanderbilt Villainelle

For Bruce:

Will Ratner's scheme now falter?
With his feat of clay now crumbling,
Has Miss Brooklyn abandoned the altar?

Which plans will fate now alter,
As the dominoes go tumbling?
Will Ratner's scheme now falter?

Economic woes assault her
Her suitors now are grumbling
Has Miss Brooklyn abandoned the altar?

Though the politicians palter
The earth beneath them is rumbling
Will Ratner's scheme now falter?

Have the nattering neighbors appalled her
With their brownstone bourgeois bumbling?
Has Miss Brooklyn abandoned the altar?

Sure as Whitman's name was Walter
This rhyme's reason is jumbling
Will Ratner's scheme now falter?
Has Miss Brooklyn abandoned the altar?

1) The Boom Goes Bust.
Parts of Brooklyn–Downtown, Williamsburg and Greenpoint–to name a few, will turn out to be Ground Zero of the spectacular Development Crash of 2008. The city’s awful failure to plan for growth will be replaced by its failure to deal with the wrecked urban landscape of abandoned and bankrupt projects that its policies encouraged.

2) The Atlantic Yards Meltdown.
Who could have predicted that by the end of 2008 the discussion would center around whether the mega-project would ever be built? During the year we saw talk of a “stall” and a “halt.” There was a dramatic scaling back of Miss Brooklyn. The timetable for building affordable housing slipped. Landscape architect Laurie Olin left the project. And Architect Frank Gehry laid off people working on the project. Our prediction: Developer Bruce Ratner will have difficulty obtaining financing for a nearly $1 billion Gehry arena and the arena will either be scraped or a new version from an off-the-rack firm for $500 million will be built. There are also significant odds the entire project will be canceled if the tanking Nets are sold and go to Newark. We now give the project odds of 50-50 at best. And, by “project,” we mean an arena surrounded by seas of parking. A pox on the officials that allowed demolition to go forward and decimate part of Prospect Heights, including destruction of the historic Wards Bakery.

Last year, we went out on a limb and predicted the Gowanus Whole Foods project wouldn’t happen. It hasn’t. Yet. This year there are oh-so-many projects that one can predict will be scaled back or do the Dance of Death. Here are a few to chew on:

1. Atlantic Yards. We think there is a good chance most of the project will choke on its own excess, including the arena, because of the credit crunch. Unless, of course, Forest City Ratner succeeds in getting a taxpayer bailout to make it happen. If the arena does happen, we predict a crappy Prudential Center-like structure that would be built at half the cost of Frank Gehry’s work. So, maybe it’s not an entirely dead and rotting corpse, yet, but the thing is already on life support.

Marty Markowitz: And I know that, as you go down the line and you begin the first phase, y’know, the community is much more involved, I must tell you, in a systematic way. And I would not be surprised that Forest City Ratner, as they move ahead on it, would be... There’s now--Gib Veconi, I happen to like and respect very, very much, what is that [group], Brooklyn Voices?

Gersh Kuntzman: BrooklynSpeaks.

MM: BrooklynSpeaks. Listen, they’re not crazy about Atlantic Yards, for sure. But they’ve got some valid, viable ideas, they’re reasonable people, they are. You don’t know, as things go ahead and as plans adjust and amend, whatever, as they move forward, that here and there, you tweak it here, you tweak it there.

...While the Brooklyn Paper's transcript is extensive, the comments on BrooklynSpeaks and other matters are not included, so I listened to the podcast and augmented the excerpts quoted below. The relevant passage starts at about 16:30.
...

BrooklynSpeaks, among other things, suggests that the project "be substantially reduced," that Pacific Street (except under the arena) and Fifth Avenue be left open, that new streets be created to connect surrounding neighborhoods, and that existing buildings "such as the historic Ward Bakery" should be reused. (That last one is a little too late.)

Does Markowitz think those are reasonable?

BrooklynSpeaks hasn't posted anything new since June.

MM: ...We’ll see what the future brings. I am confident that [Atlantic Yards] is going to happen. I really am. I really am. I was hoping it would have happened in 2006, 2007, 2008, 2009, so if it’s 2011, it’s 2011, as long as I know it’s on track.

GK: Is it on track?

MM: I hear that. The train is at the station. It’s moving very slowly. We have to see what the future brings. … It was always going to be over the course of 12 years or 16 years.

A New Year’s Revolution List (Starting 2009 Off Clean: Pull the Plug On Atlantic Yards)

It is time to pull the plug on Atlantic Yards, go back to the drawing board and get going with a better designed, fairer, clean-slate project that can proceed faster at less public expense and greater benefit. We’d soon be most of the way there by bidding out a version of the UNITY plan proposal to multiple developers. The proposed Atlantic Yards developer, Forest City Ratner, is clinging to a strangely formulated circumlocution that it is using to string along its investors: That FRC has an “entitlement” to decades of undefined development in the proposed Atlantic Yards footprint. Forest City Ratner’s “entitlement” is a just a made-up term. It stands for nothing legal and, at best, is a claim upon politicians not the public. (Honestly, what more does anyone thinks it means than, "We gave campaign contributions?")
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Governor Paterson, Mayor Bloomberg or even the City Council each have the independent ability to initiate the action of extracting Forest City Ratner from the picture. Let’s consider how they are going to do it.

Consider this a wiki-piece. We are throwing out ideas in the list below that consists of various thoughts about ways to terminate Ratner’s “entitlements.” We invite anyone to contribute additional ideas to the list. How good an idea does one need to send Ratner and his “entitlements” packing? It probably won’t take much to bid adieu to Forest City Ratner. Remember that even were Ratner to protest, the courts are going to be sympathetic to the government seeking to follow a good government course of action.

1. Entitlements? Where would they come from? There was no contract to begin with. There is no such thing as a legally enforceable "agreement to agree." A contract has to be reasonably specific from both ends about what is going to be done in order to be enforceable.

2. Next, the project is no longer what was approved. For instance, there should be no obligation to do a $950 million arena when what was approved was a $637.2 million arena.

3. It is easy to simply note that more approvals are needed and that they won't be forthcoming. An example: the Public Authorities Control Board approval taking the arena up to $950 million.

4. Housing subsidies should not be given unless there is a competitive bid for the parcels of project being financed. That knocks Ratner totally out of the box. The housing agencies have not contracted to give (non-bidding) Ratner subsidy and they shouldn’t.

5. Then there are the various breaches on Ratner's part.

6. It is also possible to throw Ratner out based on misrepresentations.

7. If all else fails, terminate and give Ratner damages. The courts will never allow him substantial damages. (Among other things, think back to the misrepresentations and no-bid aspects of his project.)

8. To get out of financing the arena, bond counsel can observe that they don't consider that proper legal opinions can be issued on the bonds. (It could be the current bond counsel or there might even be a reason to switch to bond counsel as a first step, given everything that has gone on with Yankee Stadium and a history of odd real estate assessments on these deals.)

9. Ratner’s so-called “entitlements” can be voided for public policy reasons.

10. Eminent domain could be used to wipe out whatever “rights” Ratner thinks he has.

11. Then there is the simple expedient of just settling the law suits- Why? Because the state knows that there is plenty in its files which would cause the litigation to be lost if it is divulged.

12. Because of various bait and switches, what was contracted for was never properly approved. There are therefore no valid “contracts” because they would all be ultra virus. An ultra vires defense can also be asserted to the extent that authorizing legislation has been exceeded.

13. Rescind city and state appropriations. Take advantage of the fact that this project is being done over the course of so many years that appropriations for it can always be recaptured because the City Council and/or the state legislature this year doesn’t have to spend what once upon a time a prior City Council and/or the state legislature decided it wanted to spend.

14. Have the city rezone the entire area for something more appropriate. Override ESDC’s zoning override. (And don’t re-override it back again.)

The above is not intended to be inclusive. Nor have we ordered ideas, putting the best first. Pretty much any one idea would suffice in itself though there is always the option of using ideas in combination. As we said, consider this a wiki-endeavor, so we are soliciting additions.

One place the ideas should be coming from is Empire State Development Corporation (ESDC). As has been reported, there was a meeting the beginning of this week where gathered legislators were presented with the status of the dreadful mess that ESDC and Forest City Ratner have made of things. (See: Wednesday, December 24, 2008, Details on AY housing point to 80/20 rentals, not condos, in a smaller Phase and Developer of Atlantic Yards project delays condo plan, by Jotham Sederstrom, Tuesday, December 23rd 2008.)

The way the meeting should have concluded is that ESDC Chairwoman Marisa Lago should have asked the Forest City Ratner people to leave the room and she should have thereupon addressed the assembled legislators to say, “Here are our favored options for terminating our relationship with Forest City Ratner.” If this did not happen, upon Marisa Lago’s initiative, the request for the Forest City Ratner representatives to leave the room should then have come from the legislators present. Our legislators should have then asked Ms. Lago to present the termination options.

If neither of the above happened, each of the legislators involved in the meeting should be contacting Ms. Lago in follow-up, asking for a detailing of the preferred termination options. All it takes to get moving is for people to decide that pulling the plug on Atlantic Yards is what we are going to do and for the government lawyers to get creative because this is the time we are going to do it.
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Our Reasons to Love New York Magazine and Elected Politicians

We are going to start this piece by saying a few appreciative things about New York magazine and the proceed with a segue to discuss what will be necessary for us to say appreciative things about our New York politicians.

New York Magazine: Loving Something They Love

In one of its end-of-the-year-round-up special issues New York magazine just featured 59 “Reasons to Love New York.” As has been widely reported, one of those reasons, (#14- the Valentine Numbers?) is the non-building and non-success of the proposed Atlantic Yards megadevelopment. (For the original NYM piece see: 14. Because Sometimes Immense, Gratuitous, Noncontextual Acts of Real-estate Ego Don’t Pan Out . . . by Robert Kolker Published Dec 14, 2008. For some of the reporting on it the article see: No Land Grab: December 15, 2008, Reasons to Love New York 2008, New York magazine, by Robert Kolker, Tuesday, December 16, 2008, NY Mag: "Because Sometimes Immense, Gratuitous, Noncontextual Acts of Real-estate Ego Don’t Pan Out…" and The Brian Lehrer Show / December 18, 2008 / He (Hearts) New York. )

Some of New York magazine’s thoughts about why this is a reason to love New York:

They say New York is the place where your greatest dreams can come true. Of course, it’s also a place where those dreams can die on the vine. Take Atlantic Yards. Lending new meaning to the term noncontextual, Bruce Ratner’s $4.2 billion, 22-acre combination of residential towers and office buildings, anchored by a basketball arena for the Nets, was supposed to completely transform downtown Brooklyn—with seemingly little thought given to what it might do to the already paralyzed intersection of Atlantic and Flatbush Avenues.

* * * *

. . . Ratner has reportedly laid off workers, and he’s admitted he won’t build anything other than the arena without an anchor tenant for the tallest building. Five years ago, Gehry said what he really wanted was the chance “to build a neighborhood from scratch in an urban setting.” At the moment, the old neighborhood is winning. Score two points for entropy.

Pursuing all the 59 reasons to love New York, this was the only one we could spot that was based on something that is NOT happening.
...

We can’t write about the value of New York magazine without writing about the cover story they did on Atlantic Yards for their August 7, 2006 issue, with their “Ratzilla” “Battle for the Soul of Brooklyn” cover. (See: Mr. Ratner’s Neighborhood, Manipulative developers, shrill protesters, and a sixteen-tower glass-and-steel monster marching inexorably forward. What the battle for the soul of Brooklyn looks like—from right next door, By Chris Smith Published Aug 7, 2006.)

This cover story was where some people, including ourselves, were introduced to our first credible account of the Atlantic Yards tale. I was still responsible for legal affairs at the state finance authorities. We subscribe to New York magazine (basically since it was in its fledgling incarnation as part of the World Journal Tribune) but I had not read the story. It was brought to my attention in the office by other agency professionals. It was brought into my office noting that I would almost certainly find it a cause for alarm. Even then I did not read the story right away. When I did, I was quite concerned. It got may attention.
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While there was some alarm on the part of professionals at the agency, there was another point of view available. From a technical standpoint the project seemed so harebrained that it could be predicted that it would never succeed. Harebrained, yes, but I think this pont of view could have been more of a protective denial mechanism against ever having to worry that, as a public servant, one might become responsible for something so publicly damaging. I, for one, suffered enormous angst and hoped that a new gubernatorial administration would come in with greater sense to put things on track. Thankfully, the project never came before the staff of the agencies before I left public service and we never had to deal with the project as public servants.
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This Monday evening we had another conversion with David Yassky about Atlantic Yards when we ran into him. We told him that we want to do a Noticing New York interview with him on the subject of how people can make up for the fact that the City Council term limits extension vote is a net negative and setback in terms of properly ending Atlantic Yards. Yassky with his affirmative vote on the term limits extension is importantly among those responsible for this setback. (Our mention of an interview was actually a reminder because we had previously left a message with his office to this effect.) As it was, we began to discuss the subject right then and there.

Councilman Yassky suggested that some confidence could be put in the notion that Atlantic Yards was no longer a threat because the economy was killing it. I expressed concern that until it was truly killed there was continuing concern and that the developer, Forest City Ratner, would no doubt be trying to lure the Obama administration into the grave mistake of finding funding for this project. (We think that the Atlantic Yards megadevelopment is representative of the kind of thing that caused the current economic crisis and is certainly not its cure. More on this later in another piece.)

Yassky asked us why we thought the term limits vote was a problem for Atlantic Yards. We said because Bloomberg is a problem for Atlantic Yards. (We didn’t mention Marty Markowitz, who is less of an issue compared to Bloomberg.) Yassky suggested that Bloomberg had little to do with it. He suggested that Governor Paterson should be exercising his ability to pull the plug on the project. We disagreed that Bloomberg is not central to the problem. We pointed out that, if Bloomberg were not supporting the project the plug would already have been pulled. For instance, the project can’t go forward without housing subsidies. I noted that the state agencies (where I used to work), while they are state not city agencies, would never give subsidies to a project to which the mayor was opposed. The same is true about the Empire State Development Corporation (ESDC) the agency accountable to Paterson that can now easily pull the plug on Atlantic Yards.

What Yassky should have told me is that earlier that morning he was at a meeting where Forest City Ratner was making a plea to a collected group of elected officials for a redirection of housing subsidies in order to shift affordable housing to earlier phases of the project. (Developer of Atlantic Yards project delays condo plan, by Jotham Sederstrom, Tuesday, December 23rd 2008.) The housing subsidies Forest City Ratner wants can also come from the city housing agencies such as the New York City Housing Development Corporation. In fact they may probably come from the city agencies if they are awarded. The mayor has substantial control over what those city agencies do. Ergo, back to our original point. The term limits extension vote and Bloomberg are a problem in putting the stake in the heart of Atlantic Yards. (BTW: A “delayed” building of the condos doesn’t mean that fewer condos and more rental housing would be built, only that in a poor economy Ratner wants to more subsidy diverted to him sooner.)

We still want to do the interview with Councilman Yassky about how the negative effect of the term limits can be countered. (Bloomberg is a problem on other things too: Not only on the 30-35 acre monopoly Bloomberg wants Forest Ratner to have in the Atlantic Yards area, but also the swaths of the city Bloomberg is handing out in other areas like Willets Point and the West Harlem Neighborhood being given to Columbia.)
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Atlantic Yards Report ran a story today about how Forest City Ratner is speaking in terms of its being entitled to build Atlantic Yards (and by definition being entitled to a decades-long 30+ acre monopoly on this section of Brooklyn). (See: Wednesday, December 24, 2008, Who's in control? Forest City and the indirect subsidy value of its "entitlements.") Fact is, no one is proposing to build what was ever “approved,” there are no commitments from Ratner and there are no entitlements. (In fact, “entitlements” is a just a made up term. It stands for nothing legal and, at best, a claim upon politicians not the public.) The plug ought to be pulled now and the public funds should be retrieved just as Mr. Yassky says. Then perhaps Mr. Yassky can, as a candidate for City Comptroller, subsequently as City Comptroller Elect and then as City Comptroller start plugging those figures back into the city budget so they can be spent appropriately.

Forest City fights back

Firm rebuts negative stock assessment
-- Michelle Jarboe, Plain Dealer

Forest City Enterprises Inc. on Wednesday strongly disagreed with a recent Morningstar Inc. article, saying the author's opinion that Forest City's stock is worthless was based on flawed assumptions and inaccurate interpretations of the company's debt obligations and its construction costs.

"We disagree in the strongest possible terms with Morningstar's opinion," spokesman Jeff Linton wrote in a statement. "Further, we are astonished and appalled that Morningstar would issue such an opinion without having made contact with Forest City."

Linton said no Morningstar representative has contacted or spoken to any senior-level executive at Forest City in two years. In a recent article, Morningstar analyst Matthew Coffina named Forest City among five stocks that he considered to have a fair value of zero. Five analysts who regularly cover Forest City have taken a neutral stance on the stock or expect it to perform slightly better than the market...

Developer of Atlantic Yards project delays condo plan

BY JOTHAM SEDERSTROM. DAILY NEWS STAFF WRITER

The crumbling economy has forced the developer of the controversial Atlantic Yards project to indefinitely delay as many as 900 condominiums and the project's glitzy centerpiece.

With the condo market tanking, Forest City Ratner officials told city and state officials at a private meeting on Monday it would shift focus away from pricey condominiums in favor of rental apartments during the first phase of construction.
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The new plan calls for creating approximately 900 rental units in three towers formerly planned for condominium and commercial space, said several officials who attended the meeting at the Empire State Development Corp. office in lower Manhattan.

A combination of affordable and luxury rental apartments would be offered under the new plan, the officials were told.

It was unclear what will happen to the $4.2 billion project's original call for a total of 1,950 condominiums.

A Forest City Ratner spokesman declined to comment on the shift to rental apartments or details of the meeting.

But at least one official saw the delay as an opportunity.

"The project is caught up in a perfect financial storm and therefore an opportunity has been created to emphasize the affordable housing component of the project," said Assemblyman Hakeem Jeffries (D-Fort Greene), who told Forest City Ratner executives to build the low income housing before going forward with a proposed NBA basketball arena.

Jeffries said Forest City Ratner officials didn't respond to his request.
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The tumble has left some elected officials balking at the developer's continued use of public subsidies.

"I don't believe the project approved by the state is going to be going forward anytime soon," said Yassky. "Forest City Ratner should return the taxpayer dollars, and start talking about what actually can be built."

“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."

...It was unclear what will happen to the $4.2 billion project's original call for a total of 1,950 condominiums.

A Forest City Ratner spokesman declined to comment on the shift to rental apartments or details of the meeting.

..."The project is caught up in a perfect financial storm and therefore an opportunity has been created to emphasize the affordable housing component of the project," said Assemblyman Hakeem Jeffries (D-Fort Greene), who told Forest City Ratner executives to build the low income housing before going forward with a proposed NBA basketball arena.

Jeffries said Forest City Ratner officials didn't respond to his request.

· Deviating from regular IDA calendar: The IDA’s hearing on proposed financing for the projects is being held outside the normal monthly public hearing calendar. The regularly scheduled IDA public hearing for January is on the 8th (where a separate project will be presented), while the board meeting originally slated on the 13th has been cancelled.

· Weak board attendance: Since few IDA board members attend the agency’s required public hearings, it is unlikely that the majority of the board will have heard public testimony prior to voting on these two projects. Those members not in attendance must rely on copies of testimony submitted and the IDA staff’s reporting, as there are no stenographers at IDA hearings.

Not Worth the Paper They're Printed On
The Washington Post by Steven Levingston

Morningstar tried to put it delicately and hedged enough to say things could change, improving the companies' fortunes, but in the end there was no polite way out: "If we think a stock is worthless, there's no point in saying otherwise," the investment research company said in a recent report.

The company presented five stocks that its team of analysts deemed to have a fair value of zero. Morningstar stock analyst Matthew Coffina pointed out that the company made similar calls on several stocks in mid-2005, with mixed results. Back then, two companies whose stocks it targeted, Delphi and Delta Air Lines, filed for bankruptcy protection. Three others, Great Atlantic and Pacific Tea, Elan and AK Steel, soared afterward before plummeting again. "I'd ... like to emphasize the perils of making $0 fair value calls," he writes.

That said, he also says it's important to point out that if shareholders can sell what Morningstar deems a worthless stock now for, say, 50 cents, they have gotten themselves a good deal. In introducing the worthless stocks, Coffina said, "We think equity holders in the following companies would be better off investing in dinner and a movie, as a break from this wretched economy."
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Forest City Enterprises: Severe financial distress, slowing operating cash flow, may need to refinance debt at high rates.

Despite Forest City Enterprises' precarious financial state, New York State and New York City elected officials still seem intent on throwing precious public dollars at the company's Atlantic Yards project, while paying lip service to the need for drastic belt-tightening.

Jay it ain't so
NY Daily News.

Saying Jay-Z is a confident dude might be an understatement. (Wouldn't you be confident with Beyonce on your arm?) But the hiphop mogul and minority Nets owner might have jumped the gun when he bragged about relocating the team to Brooklyn on his new single, "Brooklyn Go Hard."

On the track, Jay-Z rhymes: "I father, I Brooklyn Dodger them/I Jack/ I Rob/ I sin/Ah man, I'm Jackie Robinson/ except when I run base, I dodge the pen/Lucky me, Luckily they didn't get me/Now when I bring the Nets I'm the black Branch Rickey."

Slow down, there Z. Of course Rickey was the Major League Baseball executive, who signed Jackie Robinson to break MLB's color barrier.

But Jay-Z might have spoken too soon.

This past Wednesday, officials with Nets owner Bruce Ratner's company conceded that the Atlantic Yards project in Brooklyn has been put off indefinitely for financial reasons. At least Jay-Z still has Beyonce.

DDDB Holiday Party
Sunday, December 21st
4 p.m. – 7p.m.
Freddy's Bar & Backroom
485 Dean Street (corner of 6th Avenue)
Prospect Heights, Brooklyn
Cash Bar
[Directions/Map]

We hope you'll join us to celebrate our incredible community.