Tuesday, March 20, 2007

Forest City Ratner’s spending on lobbyists: large, but small—and with a big payoff

Compared to other organizations and companies lobbying in New York State, Forest City Ratner stands out. After all, as announced yesterday in a state report, the developer spent $2.1 million last year, ranking third in the state but far outpacing any other organization involved in real estate projects.

The Yankees were a distant eighth, at $1.1 million. The leaders were the Healthcare Association of New York State and Verizon; rounding out the top ten were two medical groups and four unions.

It’s also notable that the largest single lobbying contract, $656,520, went to law firm of Fried Frank Harris Shriver & Jacobson, representing Forest City Ratner.

Coming in second, with a $527,875 contract from Columbia University, was the law firm of Kramer Levin Naftalis & Frankel, which also represents Forest City, though not as a lobbyist. Columbia also has a dicey land use project involving eminent domain.

Also, Forest City Ratner ranked second, tied with the American Lawyer Media Company, behind Verizon in retaining the largest number of lobbyists: 8; up from 7 in 2005. And it’s worth mentioning that the amount of money spent on lobbyists for real estate and construction rose more than 48% over 2005.

$105 million = 5000% payoff

On the other hand, $2.1 million isn’t much. It represents barely .05% of a $4 billion project, though a significantly higher fraction of the money Forest City would put up itself. Then again, should the project work out as expected, $2 millon should be easy to recoup—it’s revenue from the sale of two condos or perhaps ten of 172 arena suites in just one year.

The language concerning topics lobbied --"acquisition of Altantic Avenue railyards from MTA" and "acquisition of city-owned property at Atlantic Yards"—provoked some scorn from Matthew Schuerman in the New York Observer’s blog The Real Estate, who observed that those two goals had been in a February 2005 Memorandum of Underestanding: “Apparently, Mr. Fried and Mr. Frank persuaded Forest City that it needed their help persuading the state and the city to do things that they pledged.”

However, if the lobbyists actually persuaded the city to more than double its contribution from $100 million to $205 million—enough to cover the developer’s bid for the 8.5-acre Vanderbilt Yard, as Develop Don’t Destroy Brooklyn points out—well, they certainly earned their keep.

After all, $105 million represents 5000% of $2.1 million.

News coverage--and not

The New York Sun and Newsday both picked up the Associated Press article that listed the top spenders on lobbying:
After HANYS, Verizon Communications Inc. spent the second most on lobbying — $2.2 million. Forest City Ratner Cos., the company behind the Atlantic Yards project in Brooklyn, spent $2.1 million.

Metro even made Forest City Ratner's spending the focus of its brief piece, headlined Report: Ratner among state lobby leaders, with a quote from DDDB.

The New York Post offered a host of statistics, including that regarding Fried Frank's contract, with no analysis.

The Journal News, which serves Westchester, Rockland and Putnam counties, noted Ratner's spending and offered this obvious but useful observation:
Government-watchdog groups said there's nothing inherently wrong with lobbying. But too often the big-spending special interests set the agenda at the Capitol.
"The ones who are getting heard in Albany are the ones who spend the most," said Rachel Leon of Common Cause.


The Binghamton Press, owned by the same parent (Gannett) as the Journal News, offered the same story, as did the Utica Observer Dispatch, the Rochester Democrat and Chronicle and several other papers in the chain.

The New York Daily News covered the story, even mentioning that "Real estate and construction came in second by sinking $15.9million into lobbying," but didn't see fit to cite Forest City Ratner in the text of the article. (Update: The developer was mentioned in an accompanying chart.) The New York Times is so far AWOL on the lobbying story. (There's a brief mention on their blog.)

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