Tuesday, July 05, 2011

Revisiting that 7/4/04 Times editorial, The Brooklyn Nets, seven years later: parking, subsidies, cost/benefit analysis, and the dubious promise of 3,000 cheap seats

Seven years ago, in a 7/4/04/ City section editorial headlined The Brooklyn Nets, the New York Times published its first, and most skeptical, editorial about the Atlantic Yards arena and project.

The editorial begins:
The idea of bringing a professional sports team to the city almost always sounds great - and then the calculation of cost versus benefits begins. It seems a new team requires a new sports facility, and for some reason, owners of these lucrative franchises are seldom willing to build anything without enormous infusions of public money. That is one of the major concerns about the proposal to place the Jets football stadium on Manhattan's far West Side at a cost to taxpayers of $600 million. It is also an issue when it comes to the Nets and Brooklyn. While the plans to bring professional basketball to Atlantic Avenue are in many ways more attractive than the football proposal, the scale of public investment needs closer examination.

The amount the city and state will be asked to contribute to help the developer Bruce Ratner build the arena as part of a $2.5 billion, mixed-use 21-acre complex over Brooklyn's Atlantic Yards and on adjacent land is still being negotiated. But the public may be asked to guarantee hundreds of millions of dollars in bonded debt if the government helps pay for the arena and for significant infrastructure improvements to allow construction - including moving Long Island Rail Road tracks two blocks. The tab also could include some 3,000 new parking spaces, which will help, if only a little, to manage the influx of cars in an already-clogged corridor.
Such new parking would less likely manage the influx of cars as enable it.

The public was not asked to guarantee bonded debt for the arena, but the state contributed $100 million and the city contributed at least $179 million in direct subsidies.

But the costs to the city, state, and Metropolitan Transportation Authority would be much higher if opportunity costs are factored in, as the Independent Budget Office (IBO) calculated in September 2009.

Such opportunity costs--foregone gains thanks to tax exemptions and other below-market benefits--were not fully calculated in the IBO's 2005 report.

Beyond that, the IBO calculated (graphic below) that developer Forest City Ratner would have total savings of $726 million from "the mix of special government benefits." Consider, however, that that calculation was very conservative, given that the IBO focused on the arena, not the project as a whole. Also see the Empire State Development Corporation's response to the IBO, and the IBO's response 

Fair market value

The editorial continues:
Both proposed sports facilities in Brooklyn and Manhattan would be built over rail yards owned by the cash-short and debt-ridden Metropolitan Transportation Authority, which should not be pressured to give away its assets. The state-run authority - which lacks other new sources of revenue - should demand and get a fair market price for any land and air rights the developers at either site need.

A study commissioned by Mr. Ratner (who is a partner of The Times in constructing its new headquarters building) shows that the government would more than get back its investment in the Brooklyn project, based on 30 years of projected new tax revenues from team salaries and new office and residential occupants, among other factors. Another study, endorsed by opponents of the development, maintains that taxpayers could lose half a billion dollars in the deal. We would like to see a third, truly independent examination.
However, no Times editorial has addressed the IBO's second study.

A November 2005 editorial mentioned the first one, arguing against direct subsidies (a position the Times later ignored) and concluding, gingerly:
The Nets arena is not destined to be a cash cow, but the borough deserves a sports team, so long as the price is not too high.
That price has not been addressed.

Local objections

The editorial continues:
Local objections to the Atlantic Yards development need to be addressed, particularly concerning the thousands of additional cars and cabs that can be expected on game nights. While some residents will be dislocated and inevitably wind up feeling pushed around, the mere threat of change is not a reason to oppose the project. Neither is the use of the state powers of eminent domain, as long as the people involved are compensated fairly. Mr. Ratner seems to have been generous in buying out homeowners and moving renters.
Sure, "the mere threat of change is not a reason to oppose the project," but many other things--from environmental impact to an undemocratic process--animated opposition. Does "feeling pushed around" include the "rat tsunami"?

As for eminent domain, the requirement is not merely just compensation but also "public use," long redefined as "public purpose." The Times could have done a much, much more stringent job assessing the public purpose of the project.

Ratner's seeming generosity, of course, was funded in large part by city taxpayers, we since learned. And the Times could have mentioned at the time that the buyouts were accompanied by gag orders (see graphic at left).

Promises of public benefits

The editorial continues:
Community residents have also been promised that the development around the arena will include 4,500 housing units, half slated to go to low and moderate income earners and the elderly.
Those promises need to be unpacked. Half of the 4500 housing units--now 6430--would go to "low and moderate income earners and the elderly," but only half of those 2250 units, or 1125 units, would go to the working-class constituency represented by ACORN, which signed a housing agreement with Ratner.

And only half of those 1125 units, or 562.5, would go to "community residents," of those are defined as residents of the three surrounding community boards.

How many cheap seats?

The editorial continues:
To address another longstanding complaint about sports projects, Mr. Ratner says 3,000 of the 19,000 seats for Nets games at the new Frank Gehry-designed arena will be sold at levels many neighborhood residents could afford - around $15.
As for 3,000 low-priced seats, that promise didn't last long. Usually the developer was vague, for example promising at a 5/4/04 City Council hearing the "maximum number of affordable tickets." On 6/7/04, the Daily News reported that FCR executive Jim Stuckey promised 3,000 "screecher" seats. However, in a September 2004 Urban Land article, Forest City executive Bruce Bender claimed "we’ve got 3,000 to 5,000 cheap seats selling for $15 to $20."

In a 5/26/05 presentation to City Council, Forest City promised "approximately" 3,000 such seats.


A month later, a 6/27/05 city press release, upon signing of the Community Benefits Agreement, promised at least 2,000 such seats, not 3,000. (The arena would now hold 18,000 people, not 19,000.)

Who's in charge of the jump-start?

The editorial continues:
A basketball arena near downtown Brooklyn is basically a more attractive proposition than a football stadium in Manhattan. The building is less overwhelming and more likely to see regular use. Both the proposed sites need economic development, but the most important need of the far West Side of Manhattan is a subway line, not a monstrous sports center. The proposed Brooklyn site, at Flatbush and Atlantic, is already perhaps the best transportation hub in the city, but the area clearly needs an additional jump-start if it is going to thrive, and Mr. Ratner's project might provide that.
Sure, the arena looks better than the West Side Stadium, but maybe that's not the best comparison. It's specious to call Brooklyn a better transportation hub than Times Square or Grand Central Terminal, but that's no the issue.

The issue, as the Times should have suggested, is whether the city and state should have embraced Ratner's take-it-or-leave-it project, or actually put the valuable railyard out to bid, as it never did.

Brooklyn's luster?

The editorial concludes:
There is also, of course, the dream of giving back to Brooklyn some of the luster it lost when Robert Moses killed Walter O'Malley's vision of building a domed stadium for the Dodgers at the same site nearly 50 years ago. That dream, the housing, the cheap tickets and all the other good things are not worth risking hundreds of millions of dollars in public money and dooming Brooklyn to impassible streets on every game night. But if those issues can be properly addressed, the idea of the Brooklyn Nets is tantalizing.
Brooklyn had and has generated all sorts of luster on its own since then. O'Malley did not seek the same site, but the Times hasn't corrected that error.

So, it it worth "risking hundreds of millions of dollars in public money"? The Times in November 2005 actually opposed direct subsidies, saying "those costs should be absorbed by the builder. Since then, the Times has forgotten that critique.

What about addressing the issue of impassible streets? That hasn't been done, either, but the Times hasn't kept up with the issue, for example not covering a contentious meeting last week on traffic and parking.

Meanwhile, the Times did cover another meeting on the "rat tsunami," but did not see fit to put it in print. By contrast, a Ratner-fed press release about programming help from the Brooklyn Academy of Music made the front page of the Arts section.

No comments:

Post a Comment