Journalists vs. bloggers: new book "Say Everything" dissects the debate

The gap between journalists and bloggers is increasingly porous, and Scott Rosenberg's new book Say Everything: How Blogging Began, What It's Becoming, and Why It Matters, offers a useful chapter on the question of Journalists vs. Bloggers, excerpted below.

The New York Times's City Room blog only includes news from the three dailies, plus other "professional" publications, so its "Morning Buzz" round-up of the Metropolitan Transportation Authority's June 24 vote excluded my more comprehensive report (like, um, which had video). (My report did make Blogtalk, along with several pieces on biking.)

The gatekeepers of Google News, which deems "news" anything produced by an official, multi-employee news organization, no matter how secondhand (right) or boilerplate (below). So my blog has been rejected from appearing in Google News.

I understand the challenge. A blogsearch on "Atlantic Yards" invariably turns up blogs that simply reproduce press releases. (Actually, a news search does that too, to a lesser extent.) And Google should--but doesn't--have the personnel to make an examination.

As NYU professor Clay Shirky recently told Brooklyn the Borough, "the idea that there is a mainstream media and an alternative media on the internet – you know, that was looking like a fantasy even a couple of years ago – that’s done now."

Except not everybody knows.

Below are some excerpts from Say Everything, with my added reflections on the Atlantic Yards saga.

An unlimited supply of space

Rosenberg writes about how, as newspapers began losing longstanding ad revenue to new web-based forms, they found their authority questioned by bloggers, but this time the battle was different.

He writes:
There was an old saying that advised, “Never pick a fight with someone who buys ink by the barrel.” But this was something new: a fight between those who bought ink by the barrel and those who published without any ink at all. That meant there would, practically speaking, be no limits to how long the argument might last. In one lengthy public correspondence between blogger Jeff Jarvis and New York Times editor Bill Keller, Keller, apparently exasperated by Jarvis’s dogged, detailed replies, distilled his sense of frustration with the open-ended nature of the Journalists-versus-Bloggers dispute: “There seems to be no end to any argument in your world.”

Of course, editors are busy people. And one prerogative of an editor has always been the ability to declare, “This argument is at an end.” The job of a news editor is to say, “And now this.” The news cycle has turned! Time to move on. The trouble was, bloggers were under no obligation to pay attention to such marching orders. If you ran a blog that obsessively tracked the fluctuation of oil prices or the rise and fall of hemlines — or, for that matter, the arguments between bloggers and journalists — then nothing was going to stop you from continuing to post about it. You followed your own news cycle — just as Josh Marshall and his peers did in keeping the Trent Lott story alive after the newspapers and networks had left it behind. This characteristic of blogging became a profound irritant to editors who were accustomed to being able to set the agenda of public dialogue. The bloggers had said their piece, and the editors had responded; couldn’t everyone just move along now?

In other words, for example, the story of the MTA vote on June 24 was a minor issue; the Times, in print, chose to concentrate on the financing challenges facing Forest City Ratner. Except the justifications for the vote by MTA board members were stunningly dubious (video), and deserved attention. So AYR did not move on.

“Is blogging journalism?”

Rosenberg sensibly demolishes the question, oft-raised by the mainstream media, of “Is blogging journalism?”

He writes:
The answer has always seemed simple and obvious: writing a blog neither qualified nor disqualified you for the “journalist” label. Blogging could be journalism anytime the person writing a blog chose to act like a journalist — recording and reacting to the events of the day, asking questions and seeking answers, checking facts and fixing errors. Similarly, journalists could become bloggers anytime they adopted the format of a blog as a vessel for their work.

A blog is just a format, which anyone can use. Some try to apply the standards of journalism--what New York Times Executive Editor Bill Keller calls "the journalism of verification." Most don't, but more should, especially since fact-checking is much easier on the Internet.

Rosenberg points out that the usefulness to news sources of knowing who's a "professional":
Journalism has long straddled the line between craft and profession. ...we have instead are ad-hoc rules for the rationing of scarce resources — primarily, that of access to powerful people and important events. For instance, political reporters who work for major media outfits get press passes to cover presidential trips and press conferences, while small-town papers and bloggers usually don’t. So journalists didn’t have much of an answer to “Who appointed you?” beyond “My boss.”

He also notes that expertise can arise anywhere:
Most journalists view themselves as quick studies and generalists; part of the job’s appeal is that you’re always in a position to be learning something new. Good journalism required a variety of skills, from speedy research and source evaluation to interviewing technique and explanatory storytelling. Certainly, mastery of these skills often gave seasoned veterans and ace investigative reporters a valuable edge over less well-trained competitors. But these skills weren’t exactly particle physics. And now anyone who started a blog had at least the opportunity, if so inclined, to try to practice them.

Indeed, didn't we learn a lot from an architect's BrooklynViews blog (suspended since 2007)?

Citizen journalism?

Rosenberg points to the growth of the term "citizen journalism” to encompass the work by ordinary people:
Walt Mossberg, the Wall Street Journal’s popular personal technology columnist, liked to make fun of citizen journalism by likening it to “citizen surgery,” and the joke always won him a laugh. But it was a poor analogy. It suggested that journalism was a field like medicine, one that required an elaborate training regime and rigorously policed professional standards. That has never been the case. And if it were, if our lives really did depend on the quality of journalists’ work, then in recent years much of the profession lay open to charges of malpractice.

Actually, independent blog journalism also increasingly involves journalists with professional experience either working on the side or starting a new venture after a layoff.

Frustration from all sides

Rosenberg points to a history of discontent with the media, and for some good reason, notably regarding the Iraq war:
The judgments American journalists passed on themselves, like this conclusion from a report on a 2008 panel at Harvard’s Nieman Foundation, were often as harsh as the attacks of the most livid bloggers: “Covering one of the most important stories of our time — the run-up to war in Iraq — our nation’s top reporters and editors blew it. Badly. Their credulous, stenographic recitation of the administration’s deeply flawed arguments for war made them de facto accomplices to a war undertaken on false pretenses.”

There's criticism from the left:
...Many liberal Democrats already believed the press had helped deliver the White House to George W. Bush in 2000 by relentlessly focusing on trivial blemishes in Al Gore’s record; they blamed the media for abandoning its adversarial role. Their view was summarized by blogger Glenn Greenwald: “Propaganda thrives — predominates — in our democracy for many reasons, the principal reason being that we don’t have the sort of journalist class devoted to exposing it.”

And from the right:
If anything, conservatives’ belief in “liberal media bias” was more deeply entrenched than any equivalent belief on the other side of the political spectrum. For many conservatives, the watershed moment for giving up on the media came not during the Iraq debate, but later, during the 2004 election cycle, with the event they came to call “Rathergate.”

What if the media's wrong?

Rosenberg writes:
...Just as the Iraq story confirmed liberals in their belief that the conservative White House held the media in its thrall, the Rather story confirmed conservatives in their belief that the press promoted a liberal agenda. The newsroom was taking flak from both ends of the political spectrum. That’s a situation that actually reassures many newsroom veterans. Everybody’s mad at me, goes the thinking, so I must be doing something right! But there’s always another plausible explanation: you could be wrong all around.

He suggests that the web has meant a ratcheting up of expertise:
It was painful for dedicated journalists to contemplate this possibility, but the more you looked at the field in the middle of the decade of the 2000s, the less confidently you could dismiss it. No matter what your beat was, if you were writing regularly about any topic, you now had to contend with a welter of competing voices on the Web. Some were ill-informed and unlikely to threaten a professional journalist’s standing. But many others were experts or self-taught obsessives who were willing to post about their fields around the clock and in far greater depth than any commercial publication would ever provide.

...Many journalists, content in the penumbra of respect and entrée conferred by the institutions that employed them, had complacently accepted an ex officio basis for their authority. Now they faced discomforting challenges to that authority in a new environment where who you worked for mattered less than how good you were, and how good you were had become a question anyone could argue. “A passionate amateur almost always beats a bored professional,” wrote Chris Anderson (the professional who edited Wired magazine). Here and there, of course, you could still find passionate professionals, and they were priceless. But the bored pros found themselves outclassed and outgunned as never before.

Rosenberg's prime example is the polling analysis web site Fivethirtyeight.com:
Something similar was happening across the board: in field after field, the new brigades of blog-based specialists were offering devastating, and in many cases unimpeachable, critiques of mainstream media coverage, exposing it as at best shallow and at worst entirely unreliable.

Indeed--while the New York Times's coverage of Atlantic Yards has been highly variable, it's misses have been spectacular.

Time for original reporting

Rosenberg points to the potential of online journalism:
The world of the newsroom is a world of constrained resources — there are only so many reporters on staff, so many hours in the day, so many column inches to fill — and editors spend their workdays making choices within those limits. But bloggers lived outside these constraints... And they were just beginning to disprove the charge that bloggers only offered opinion or commentary and never pounded the pavement to provide original reporting.

When Scooter Libby, Vice President Dick Cheney’s lieutenant, went on trial in January 2007 for his role in the leak of classified information about CIA operative Valerie Plame, among the reporters who descended on the Washington courthouse was a small swarm of bloggers. The controversy was one that liberal bloggers had helped fan in the first place, and their readers were hungry for more than the occasional terse summaries they were going to get from newspapers and broadcast outlets. So Firedoglake, a liberal blog operated by former Hollywood producer Jane Hamsher, sent a half-dozen volunteers to the trial and tag-teamed their coverage. The result was something new: a national event where the best on-the-scene reporting came not from professional press articles but from blog posts by volunteers.

For the Atlantic Yards story, I'd point, for example, to my lengthy coverage of the May 29 state Senate hearing.

Lacking standards?

Rosenberg points to criticisms posed by "curmudgeons" like Pete Hamill, who said blogging had no ethics and standards. But the author points out:
The curmudgeons’ arguments all shared a starting point in the tenets of professional journalism as practiced in mid-twentieth-century America: political impartiality; on-the-one-hand-but-on-the-other “balance”; impersonal voice. The whole bundle of “objective” attributes — what Jay Rosen called “the view from nowhere” — was etched into the journalism school curriculum. These values were held out as timeless verities, but in fact they were of relatively recent vintage.

...But the curmudgeons often got their facts wrong, which tended to take the air out of their arguments.

His examples, an embarrassing attack on Talking Points Memo by journalism professor Michael Skube in the Los Angeles Times and an on-HBO meltdown by veteran sportswriter Buzz Bissinger (in the midst of a piece that cites some truly nasty blog comments from sports fans).

Indeed, I've questioned the standard goals of objectivity and neutrality in covering Atlantic Yards, suggesting it can lead to the "mushy middle."

Can blogging replace journalism?

The curmudgeons, Rosenberg observes, have moved on to the argument that “Blogging can never replace real journalism!” He calls it a straw man, given that most bloggers have a symbiotic relationship with the traditional media.

He cites three arguments about the value of traditional journalism:

First, they asked, without media companies subsidizing it, who would undertake the expensive and politically perilous work of investigative journalism? Next they suggested that the proliferation of online news sources and the multiplicity of partisan blogospheres meant the triumph of the “echo chamber,” in which we only learn what we already know about, and only hear those with whom we already agree. Finally, they argued, the collapse of big media would cause the very unity of our culture to disintegrate, leaving us without a central narrative for our national life. Each of these arguments, unlike the most nostalgic carpings of the curmudgeons, was serious and substantive. And each provoked an important debate online.

However, Rosenberg suggests, the old media model didn't deliver all that much investigative journalism, and maybe the nonprofit sector is the solution. As for the echo chamber, he suggests that the web, "far from banishing serendipity, actually generated an oversupply of fascinating novelties and distractions." As for polarization, he suggests that "[t]his 'loss of a single national narrative' sounds grievous indeed, until you realize that such unity, if it ever did exist, represented only a short interlude in U.S. history."

Local reporting

What's missing from his critique? Analysis of who'll provide solid local reporting, the expertise that come from showing up and knowing the territory. I've seen the "citizen journalists" recruited by Brownstoner and The Local make errors or miss news, though surely something is better than nothing.

I do believe that journalists using blogs and citizen bloggers can help fill in many gaps in local information. Whether unpaid or low-paid locals, with professional backgrounds or not, can provide true "watchdog journalism" is another question.

The "Ratner Unit" and the "Brooklyn Nets of New Jersey"

In New York magazine, some (partly) misplaced regret for the lost Gehry design

Longtime critics of Atlantic Yards know that the removal of architect Frank Gehry is part of a pattern of not-so-trustworthy behavior by developer Forest City Ratner (whose reps swore for months that Gehry was still the architect), but New York magazine architecture critic Justin Davidson, like some other architecture aficionados, treats it as the ultimate betrayal.

In a recent article headlined The Unbuilding of Frank Gehry: Has New York lost its great chance with an architectural legend? Gehry speaks., Davidson offers the following observations about Atlantic Yards:
Atlantic Yards evolved from an exciting ideal to a battleground for the soul of Brooklyn to a sinkhole of betrayal and mediocrity.

By far the worst disappointment is Atlantic Yards. For years, opponents of the project, appalled by its scale and hostile to the developer Bruce Ratner, warned that Gehry was providing a fig leaf of avant-gardism to cover a real-estate magnate’s obscene greed. A project so debased couldn’t generate good architecture, they insisted. In 2007, the author Jonathan Lethem wrote an open letter pleading with Gehry to walk away. “These buildings,” he wrote, “have emerged pre-botched by compromise, swollen with expediency and profit-seeking.”

But for Gehry, Atlantic Yards represented an irresistible chance to do for an urban district what he had done for the museum and the concert hall: establish a new archetype.

I think Davidson grants Gehry a little too much credit here. The architect was spending most of his time on the arena, his first, and came up with the (much-praised by some) solution--given the enormous site constraints--of nestling the arena within four towers.

Gehry did not exactly walk around Prospect Heights--or talk to locals--to try to suss out a new urban archetype.

Trusting Ratner

Davidson continues:
In his desire to believe, he made the mistake of trusting Bruce Ratner, or at any rate got himself so enmeshed that the developer’s company, Forest City Ratner, once represented 35 percent of Gehry’s business. When I visited the architect at his Los Angeles studio in April, he described Ratner as “a decent guy. He goes to concerts, buys art, can quote from Joyce. He wants an architectural legacy.” Gehry insisted to me that he has a nose for cynics, and that Ratner wasn’t one. “We turn work down if it’s not real, or if people have a warped image of what I do. This stuff works only when there’s a true partnership between client and architect. If they’re trying to build a monster on the landscape and they’re just using me to get more approvals, I usually opt out.”

A few weeks after that conversation, Ratner scrapped six years’ worth of design work. Pleading financial straits, he fired Gehry from the whole project and replaced his arena design with a graceless Cow Palace knockoff by the journeyman stadium-builder Ellerbe Becket. To judge by early renderings, the new offering isn’t simply inferior; it’s insultingly bad. Yet Gehry has served Ratner well. His involvement helped strong-arm the city and the state into delivering tax breaks, permits, and the power to evict holdouts. It helped beat back opposition, secure $400 million in naming rights from Barclays, and win over the architectural press. Ratner didn’t just toss Gehry into the drink; he betrayed the city, blighted a neighborhood he promised to transform, validated his opponents, and blew a colossal opportunity to bring great architecture to a city that badly needs it.

Opportunity blown in 2007

Oh, come now. Wasn't the whole thing blown in September 2007 with the State Funding Agreement, which allowed Ratner six years (after the delivery of property by eminent domain) to build the arena without penalty, 12 years for Phase 1, and no timetable for Phase 2?

That agreement, which came to light in March 2008, meant that building four towers around the arena within a tight time frame was unlikely, and thus Gehry's design was unlikely. It also meant that blight--in the form of surface parking lots and/or cleared land--was likely to persist for decades.

The conclusion

Davidson concludes:
The completion of Beekman Tower keeps Gehry yoked to Ratner for now, and the normally unguarded architect has retreated into silence, broken only by a single boilerplate press release. ("We remain extremely proud of our work," etc.) Even if he were never to work again, he has transformed enough pockets of the world to make him a Paul Bunyan among architects. He just hasn’t had a chance to change New York, which loved him too timidly and too late.

Well, Gehry, who was barred by his client from attending any community meetings to answer questions, didn't love New York that much himself.

Some critique

A seemingly informed observer posted an interesting critique on the magazine's web site:
The issue with the Atlantic Yards site is another matter. Neither the developer nor the architect are qualified to deal with the demands of this site/program. Let's get real here- Gehry's design for the site is a hot mess. There's a kernel of a good idea- To bury the arena into the urban fabric- but he has no business designing residential buildings. His strength lies in the monumental gesture, not the dense, complex fabric of urban residential. As for Ratner- he's a total hack builder. He fancies himself on a steep learning curve, but look at his built work: The atrocious Atlantic Center Mall, and the not much better Atlantic Terminal Mall. Why is this man given the privilege of building another thing in Brooklyn when his track record is so abysmal?

Gehry lays off staff

From a 6/29/09 Architectural Record article headlined Gehry Trims Staff As Projects Hit Snags:
Gehry Partners, like many firms, has been pounded by the recession. The Los Angeles-based architecture practice recently lost one of its largest commissions, an arena in Brooklyn, and had another project—the Grand Avenue complex in L.A.— sidelined due to financing problems.

The setbacks have led the company to lay off half its staff: Today, it has 112 employees, down from 250 a year and a half ago. “Every economic cycle brings with it a unique set of challenges and opportunities,” explains Frank Gehry, FAIA. “We’ve worked hard over the years to build a firm that is nimble enough to adapt quickly to changing circumstances, and that is able to produce and embrace consistent innovation. These qualities are serving us well right now.”

Not looking back

A reader commented on the magazine's web site:
Apart from the relative architectural merit of Frank Gehry's buildings, I would think that any architect who had to resort to cutting half of his staff in a horrible recession would feel some pangs of conscience and remorse. So over a hundred people, many perhaps with children and dependants, are forced to seek work in a barren work climate. Gehry spins this as a testament to how his firm is "nimble." In his shoes, I would be ashamed to make that comment.

It's reminiscent of Gehry's behavior captured in the film Sketches of Frank Gehry.

As I wrote, Gehry in the film shows an impressive capacity to turn on a dime, with little apparent regret about the collateral damage. After he designed the Santa Monica Place, mall for the Rouse Company, he invited the company president to his unorthodox home.

Why’d he work on the mall, so different from his house, Gehry was asked. “Because I had to make a living,” the architect recalled saying. “He said ‘Stop it’… I said ‘You’re right.”

So Gehry and the Rouse official decided to part ways. “It was like jumping off a cliff, an amazing feeling," Gehry reflects. "And I was so happy from then on.” On camera, Gehry expresses no qualms about the 45 staffers in his office laid off without notice, but maybe he wasn't asked.

In the film, Milton Wexler, Gehry’s longtime therapist, recounts how Gehry was in limbo with his wife, and advised him to make up his mind, to either commit to work it out or to leave immediately. Gehry instantly moved to a hotel. “I had two daughters and a wife,” he says with a mildly incredulous laugh, but without remorse.

MediaStorm's "Hold Out" and a bit of fact-checking

Don't expect the brief video Hold Out, by the multimedia company MediaStorm, to provide a full sketch of the Atlantic Yards development, and don't even expect main character David Sheets (right), a crusty and compelling Dean Street resident and regular at Freddy's Bar & Backroom, to have all the facts.

Backed by an ominous soundtrack, Sheets, a rent-stabilized tenant and plaintiff in the eminent domain case, offers his incredulity at the plans for Atlantic Yards, his deep frustration at the utility and other work that made life on Dean Street hell last year, his lament at the community lost, and his commitment to fighting the project until the end. It's a highly sympathetic portrait.

Tracy Collins comments, "I feel that it does put a much needed human face to those directly in the path of the developer Forest City Ratner’s wrecking ball."

Some fact-checking

Do note, however, that the overview text asserts that, when announced in 2003, Atlantic Yards would cost nearly five billion dollars. That's the tab now, but it was $2.5 million when announced.

Also note that, at 22 acres and nearly 8 million square feet, Atlantic Yards would not be "three times the size of Rockefeller Center," as Sheets asserts, but rather just about the same size. The key difference: AY would be mostly housing, while Rock Center is mostly commercial space.

Nor would the arena be twice the size of Madison Square Garden, as Sheets states, but, at 800,000 square feet, would be fractionally smaller than MSG's 820,000 sf.

Others shown

Also pictured (clockwise from top left in graphic; click to enlarge), though not fully identified, are some other holdouts, some of whom are also eminent domain plaintiffs:

• Donald O'Finn, manager at Freddy's
• Daniel Goldstein, Sita, and Shabnam Merchant, residents on Pacific Street (Goldstein is the spokesman for Develop Don't Destroy Brooklyn)
• Joe Pastore, a Dean Street resident (who's actually agreed to move)
  
• David Sheets
• Jerry Campbell, owner of two houses on Dean Street
  
• Henry Weinstein, an owner of property on Pacific Street and Carlton Avenue
  

Eminent domain

O'Finn declares, "If you own something, somebody else shouldn't be able to take it if you don't want to give it to them. Bottom line. Bottom line."

The unspoken rebuttal, of course, is that eminent domain for "public use," a term that has devolved to "public purpose," is legal. And whether Atlantic Yards would truly represent a public purpose remains a debate pending in court--and, no matter the resolution, a debate likely to last well beyond the court's decision.

Lawyer for footprint owners says ESDC effort to move tenants is premature

I wrote Wednesday that tenants and property owners in the Atlantic Yards footprint have received letters from the law firm Berger & Webb, which represents the Empire State Development Corporation (ESDC) in its pursuit of eminent domain, telling them it'll be time to move soon.

Attorney Michael Rikon, who represents some footprint property owners, sent a letter of complaint to the ESDC, saying the process shouldn't begin until eminent domain is completed:
My client forwarded a copy of a letter dated June 26, 2009 in which you inform that the New York State Urban Development Corporation relocation consultant, Cornerstone Group Real Estate Services will start conducting initial visits with each occupant in the effected business buildings. Please be advised that no one is permitted to enter the premises to speak to any tenant on the property with respect to relocation until title has vested. We will view any such visit as trespass and further as an “affirmative value depressing act.” No relocation effort may begin or contact with the tenant with respect to relocation until title vests.

In a comment to me, Rikon added, "ESDC has absolutely no right to talk to tenants about relocation before it acquires title. This is totally improper as it invariably leads to tenants vacating and often not paying rent. Cornerstone is only doing what they were instructed, but have been informed by me that they may not speak to anyone in the properties that we represent."

ESDC response: not sure

I asked the ESDC what the rule was, and whether Cornerstone would continue with such visits or pull back. The answer was that they're not sure.

Spokesman Warner Johnston responded:
We are evaluating the situation to determine how to proceed. By contacting residents and offering assistance, we are doing what the law requires us to do, while making every effort to minimize the disruption of peoples' lives by assessing their relocation needs and providing assistance to those residents who will be displaced by the condemnation.

ESPN The Magazine says Bruce Ratner is second-worst owner in pro sports

ESPN The Magazine via (NLG, which notes that the worst owner is bankrupt and is trying to sell his team to a guy who plans to move it out of the country!). The fans on NetsDaily are not optimistic.

From the entry:
Developer Bruce Ratner is starting to resemble that college friend who just wasn't ready to move on after graduation. Hey, Jersey, we're hitting snafus with that planned move to Brooklyn, so, ummm, ya mind if I crash here a while longer?

For the record, when Atlantic Yards was announced in December 2003, the Brooklyn arena was supposed to open in 2006. When the project received governmental approvals in 2006, the arena was supposed to open in 2009. Now Ratner projects 2011, though government agencies say 2012--and that's before lawsuits get resolved, bonds are sold, and shovels in the ground.

Behind the state Senate turmoil: the real estate industry (with an AY angle)

In an article headlined Senate Coup Plotters' Hidden Agenda: Tabloids call it a circus, but the lobbyists' goal is to squelch reforms, the Village Voice's Tom Robbins connects the state Senate's dysfunctions not to no-good legislators but to the real estate industry's desire to stymie long-awaited reforms in the city's rent regulations.

Also jeopardized are efforts at campaign finance reform and gun control. And, yes, a further look at Atlantic Yards.

Robbins writes:
Democratic control of Senate committees also brought the power to shine a spotlight in places Republicans had preferred to leave dark. On May 29, 10 days before the coup shut everything down, Harlem Senator Bill Perkins, new chairman of a committee overseeing state authorities, held the Senate's first public hearing on the massive $4 billion Atlantic Yards project.

The Forest City Ratner deal was made possible by an official sleight of hand that allowed it to skirt city land use regulations. Under Republican control, the Senate asked no questions. Even at the hearing, they still offered protection. Brooklyn's lone GOP senator, Marty Golden, burst into the hearings late and, backed by cheers from building trades workers, proceeded to mock Perkins and Montgomery, in whose district the project sits, for "holding the project hostage."

Efforts at inquiry stymied

Note that Perkins sent follow-up questions to Metropolitan Transportation Authority Acting Executive Director Helena Williams, but he did not get answers.

While the Republicans might be blamed for not wanting to pursue scrutiny of Atlantic Yards in the state Senate, the Democrats control the Assembly, and surely Brooklyn Assemblymembers Jim Brennan, Joan Millman, and Hakeem Jeffries support a closer look at the project.

But all-powerful Assembly Speaker Sheldon Silver, an AY supporter (and recipient of Forest City Ratner largesse) has kept the lid on. With Democratic control of the Senate, local Senator Velmanette Montgomery could then push Perkins to hold a hearing. Perkins said he wanted to hold follow-up hearings on AY and other issues, but now that's in doubt.

Atlantic Yards, 2010: the push for a second round of stimulus funds (I speculate)

Last week, the Metropolitan Transportation Authority approved a new deal with Forest City Ratner for the Vanderbilt Yard and the Empire State Development Corporation took a crucial first step toward approval of a revised Modified General Project Plan.

If the project does survive pending lawsuits, what then, given the uncertainty about any part of Atlantic Yards beyond the arena and one tower, might Forest City Ratner be saying to government officials in reassurance?

Perhaps (I speculate) it's this: We'll get things done with stimulus funds.

The D'Amato connection

Despite the statement by ESDC CEO Marisa Lago at a May 29 state Senate hearing that no federal stimulus funds had been sought for Atlantic Yards, the developer is still actively lobbying in Washington. 

In 2006 and 2007, Forest City Ratner paid $200,000 a year to former Senator Alfonse D'Amato's firm, Park Strategies, to fight against restrictions on the use of eminent domain, as the Observer reported.

In 2008, FCR paid D'Amato only $80,000. This year, FCR is on pace to pay D'Amato double that sum, $160,000, at least based on the first quarterly filing.

And, as the Observer reported, the target is stimulus funds. If a new round of federal funds becomes available next year--and the Obama administration is keeping an open mind--Forest City Ratner might be arguing that the public should help with the infrastructure it promised.

Bloomberg's selective disgust at "pulling strings"

In 2004, remember, D'Amato was hired by Cablevision, owner of Madison Square Garden, to lobby against the West Side Stadium. 

Mayor Mike Bloomberg, who backed the stadium plan, called it a "disgrace" for Cablevision to hire "everybody that thinks they can get things done by pulling strings in the state and the city."

Bloomberg, needless to say, hasn't decried such string-pulling for AY.

The Times low-balls the total subsidies and tax breaks for Atlantic Yards

From a New York Times article yesterday headlined State’s Top Court Will Hear Appeal Against Atlantic Yards:
Landowners and the group Develop Don’t Destroy Brooklyn challenged the state’s plan to use eminent domain to acquire private property at Atlantic Yards on behalf of Mr. Ratner, who has received more than $300 million in cash subsidies and tax breaks.
(Emphasis added)

"More than $300 million" is like saying the average NBA basketball player is taller than three feet.

The total amount of cash subsidies, according to Forest City Ratner, is $305 million. A New York Post article came up with a figure of $2 billion; while the total is questionable, I think any reporter could estimate "hundreds of millions in tax breaks."

And that's leaving out the $400 million in naming rights reportedly secured by Forest City Ratner--all for an arena under nominal public ownership. Why don't governments keep all or part of naming rights?

I know the $300 million was not the focus of the article. Still, such a sloppy estimate reinforces my argument that the Times should consistently disclose its parent company's business relationship with Forest City Ratner.

Such disclosure should--though I can't say it does--prompt reporters and editors to be more exacting in their coverage.

Right of way: ESDC letter warns AY footprint tenants/owners that relocation consultant will be knocking on the door

Tenants and property owners in the Atlantic Yards footprint have received letters from the law firm Berger & Webb, which represents the Empire State Development Corporation (ESDC) in its pursuit of eminent domain, telling them it'll be time to move soon.

One complication: the letter offers only services of a real estate agent and a modest $5000 stipend for residential services, not mentioning the offer by Forest City Ratner--which was part of the General Project Plan (GPP) and Modified General Project Plan--to those in residence for at least one year to "return and to rent a comparable unit within the Project Site at a comparable rate to what they are currently paying."

The absence of an offer to relocate tenants into the project--as state law recommends but does not ensure--prompted a protest by George Locker, who represents eight rent-stabilized residential tenants in the project footprint and has filed a number of lawsuits on their behalf.

(Click on all graphics to enlarge)

ESDC response

But Empire State Development Corporation spokesman Warner Johnston said, "The letter is just intended to alert occupants that representatives of The Cornerstone Group, our relocation consultant, will be in the neighborhood and contacting them soon, and it includes the basic parameters of the relocation assistance that ESDC is providing (essentially verbatim from the General Project Plan), such as referrals to alternative housing, provision of moving services, etc. The General Project Plan also references some additional assistance that FCRC has been and will continue to provide for residential tenants, such as relocating residents back on the Project Site as soon as feasible (if that's what residents desire) and providing interim rent subsidies. The referrals to alternative housing to be provided by Cornerstone (mentioned in the letters of introduction) will include coordination with FCRC as necessary with respect to this assistance."

From the letter

The letter states, in part:
Beginning shortly, representatives from ESDC's relocations firm Cornerstone Group Real Estate Services ("Cornerstone") will start conducting initial visits with each occupant in the affected buildings in order to introduce themselves and to briefly explain the relocation advisory services and relocation assistance that they will provide.

Cornerstone will interview you to determine your space and location requirements and concentrate on identifying suitable replacement space for our consideration. Cornerstone will be your point of contact for issues associated with finding potential relocation sites and will facilitate discussions with the brokers and/or the landlords of these sites on your behalf. In addition, Cornerstone will process claims for moving costs and reestablishment expenses.

Cornerstone looks forward to meeting with you and working with you to provide all available relocation assistance and benefits to achieve a smooth relocation for you.

Who's Cornerstone?

Cornerstone, which has a placeholder web site (listed here), is a member of the International Right of Way Association (IRWA).

About IRWA:
Since its inception as a not-for-profit association in 1934, IRWA has united the efforts of its members toward professional development, improved service to employers and the public, and advancements within the right of way profession. IRWA is the unsurpassed source of right of way educational programs and professional services worldwide.

IRWA includes "multi-disciplined professionals employed by private industry and government agencies": acquisition agents; appraisers; environment professionals; engineers; lawyers; property managers; relocation assistance agents; surveyors; and title experts.

The relocation offer

The letter states:
Referrals to alternative housing will be provided to displaced residential occupants. Cornerstone will meet with the Project's residential occupants to assesstheir particular housing needs and to assist them in finding replacement housing. Real estate brokerage services will be made available at no charge to the occupants.

Moving services and expenses will be provided. This will include payment for the costof the physical move, including the cost of transporting personal property to thereplacement housing location, labor and material, insurance and storage as necessary ("Moving Costs"). ESDC or Cornerstone will bid out all moves and selectthe lowest reasonable and responsible bid. The occupant either may use the selected mover or may conduct a "self-move" and receive the amount of money that ESDC would otherwise have paid to the selected mover. No Moving Costs will be paid until the premises are vacated. Moving Costs will be uncapped as to amount.

A relocation assistance payment will be made to each vacating occupant. A one-time payment of $5,000 per household will be made available to each vacating residential occupant or family to assist in meeting additional expenses encountered in establishing new living quarters, such as telephone and other utility hook-up charges, new return address labels, etc. This stipend is also intended to compensate occupants for the inconvenience of having to move, and to encourage them to vacate their units as quickly as possible.

(Commercial tenants would get up to $20,000 to re-establish their businesses, a sum that, for some businesses, wouldn't go very far.)

What's missing

The new letter, however, lacks this language from the GPP:
The above described residential relocation program is the minimum assistance that will be provided. The Project Sponsors have entered into a Community Benefits Agreement whereby they agreed to provide certain enhanced benefits to occupants who were in occupancy of their residence for at least one year. Such benefits include the right to return and to rent a comparable unit within the Project Site at a comparable rate to what they are currently paying.

Locker complained that the letter did not match the statutory requirements of the New York Urban Development Corporation (UDC) Act, which states:
(g) in the case of all projects, that there is a feasible method for the relocation of families and individuals displaced from the project area into decent, safe and sanitary dwellings, which are or will be provided in the project area or in other areas not generally less desirable in regard to public utilities and public and commercial facilities, at rents or prices within the financial means of such families or individuals, and reasonably accessible to their places of employment. Insofar as is feasible, the corporation shall offer housing accommodations to such families and individuals in residential projects of the corporation. The corporation may render to business and commercial tenants and to families or other persons displaced from the project area, such assistance as it may deem necessary to enable them to relocate.
(Emphases added)

Grounds for challenge?

Locker complained that ESDC is required to offer residential condemnees displaced by the Atlantic Yards Project relocation into the completed Atlantic Yards Project and interim rental housing into affordable and desirable rental apartments in the project area.

"At this time, I do not know whether ESDC is simply trying to rip off displaced residential condemnees who are unaware of their statutory relocation rights, or whether ESDC is ignoring the UDC Act entirely," he asserted. "As matters stand, ESDC’s stated relocation program is unlawful on its face."

As noted by the bolded language, the UDC Act seems to offer wiggle room--though Locker contends that relocation into the project is feasible, given that it would include housing, not simply commercial space.

Locker previously filed suit challenging the relocation plan, charging that it was illusory, given that it would hardly guarantee similarly affordable housing to rent-stabilized tenants--paying rents well under $1000--in today's real estate market. An appellate court upheld the relocation plan, but Locker said this week he would challenge it.

He asserted that not only is the process unlawful under the UDC Act and contrary to the GPP, the eminent domain process is not final--given the pending appeal--and "relocation is premature as a matter of law."

As for whether it's premature, I asked the ESDC's Johnston if timing of the relocation effort would be delayed because of the appeal in the state eminent domain case newly pending before the state Court of Appeals. I didn't get an answer.

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

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

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

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

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

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

Delays in groundbreaking, arena bonds

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

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

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

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

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

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



Briefing schedule

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

Constitutional question at issue

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

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

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

Constitutional argument #1: slum clearance

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

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

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

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

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

Constitutional argument #2: cost-benefit analysis

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

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

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

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

Constitutional argument #3: low-income housing

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

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

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

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

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

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

What's ironic

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

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

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

Who does KBW work for?

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

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

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

Total sponsorships: $500 million?

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

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

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

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

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

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

The testimony

Wylde said:

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

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

The critique

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

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


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

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

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

PFNYC testimony 2006

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

Here are excerpts:

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

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

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

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

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

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

PFNYC testimony 2004

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

As noted, the housing's mostly on hold.

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

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

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

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

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

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

I've bolded sections for emphasis.

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

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

The creation myth

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

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

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

Mostly a rail yard?

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

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

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

Best location for density?

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

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

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

Delays

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

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

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

FCR's "black hole"

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

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

No bonds, no project?

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

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

It's all a bet

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

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

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

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

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

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

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

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

Time limits: 6 years, 12 years, 25 years

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

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

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

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

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

The deadlines are subject to extension for force majeure.

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

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

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

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

What about the Times?

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

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

Past silence

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

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

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

The same thing occurred last week.

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

Contrast in the past

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

The naming rights deal

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

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

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

(Emphasis added)

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

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

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

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

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

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

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

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

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

"The arena?" Frasca followed up.

"Sure," Dellaverson responded.

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

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

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

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

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

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

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

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

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

The federal role

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

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

Overestimating the Brooklyn arena

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

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

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

"Critics" claim losses

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

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

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

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

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

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

Counting heads

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

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

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

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

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

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

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

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

Looking at some testimony

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

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

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

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



Public support vs. governmental oversight

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

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

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