Thursday, May 17, 2012

Building the Next New York: the RPA's recommendations for mega-projects implies avoidance of Atlantic Yards pattern, though report suggests no verdict yet on project

The Regional Plan Association has just issued Building the Next New York: Recommendations for Large Real Estate Projects, which offers some sober criticisms of Atlantic Yards while analyzing a range of large development initiatives in order to propose some recommendations.

The business-oriented, rational RPA--self-described as "America's oldest and most distinguished independent urban research and advocacy group--says it's too soon to come to a verdict on Atlantic Yards, a project it offered support mixed with suggestions for reform.

However careful in not making such a judgment, the RPA surely learned some lessons from Atlantic Yards. "These projects are enormously complex and can take a generation or more to build," said RPA President Robert Yaro. "This makes it essential to maintain both flexibility and a public stake throughout the life of the project."

That sounds like an acknowledgment that the significant changes in Atlantic Yards should not have been surprising--but that the government agencies approving those changes should have done more to represent the public interest.

(The only coverage I've seen so far of the report, outside of the RPA's press release, is a glancing mention in the Wall Street Journal, tacked on to an article about drastic changes in the Willets Point plan.)

The recommendations

Indeed, the RPA's recommendations in many ways run directly counter to the AY pattern:
  • Establish policy goals and measurable benchmarks to maximize and balance economic, social equity and environmental benefits;
  • Clarify the maze of state, city and federal requirements early in the process;
  • Obtain public input at the beginning of the planning process to develop greater consensus;
  • Lead with public-realm improvements such as parks, streets and plazas to lay the groundwork for private development;
  • Connect real estate and transportation improvements;
  • Promote long-term revenue sharing among public land owners and private developers;
  • Implement district-wide sustainability practices such as green infrastructure and renewable energy;
  • Maintain continuing public oversight to guide development and maintenance.
Were policy goals and measurable benchmarks established? No.

Was public input obtained at the beginning to develop consensus? No.

Did the public-real improvements--as with Battery Park City--come first? No.

Has there been continuing public oversight to guide development and maintenance? No, but there's still a chance, depending on whether the state allows more than a toothless advisory body.

Were real estate and transportation improvements connected? Questionable. Yes, a new subway entrance is being constructed, and train and subway service surely will be increased to serve arena attendees. But the report warns that Atlantic Yards is among "large projects that have done little to improve the accessibility or capacity of existing transit services," despite being a large auto trip
generator."

Reforms recommended

The study suggests:
  • Land use and environmental review procedures should be assessed and overlapping or excessive regulations should be modified. Protections that are too weak need to be strengthened.
  • An independent entity, such as New York City’s Independent Budget Office, should monitor project costs and benefits over time to provide greater transparency.
  • Value recapture mechanisms such as tax-increment financing, in which the cost of new infrastructure is subsidized by anticipated higher real-estate tax revenue generated by the redevelopment project, and co-development of projects between public and private entities, should be promoted. 
Neither the first nor the third of these reforms were implemented in the case of Atlantic Yards; indeed, the public sector does not seem to have been robust enough to try "co-development."

And in a sign of how politicized cost-benefit analyses can get, in the case of Atlantic Yards, the city and state have disparaged the IBO's analysis while issuing their own, questionable analyses, for example premised on the untenable notion that the project would be built out in full over a decade.

The first AY mistake

You'd think that the RPA, a sophisticated organization, would not make a mistake like this in the main report:
Rail yards such as Atlantic Yards in Brooklyn, Hudson Yards in Manhattan and Sunnyside Yards in Queens have large footprints in attractive locations but present daunting challenges in building over active transportation facilities near residential areas
Atlantic Yards is a project, not a place. The rail yard is less than 40% of the site.

The Appendix to the report, as noted below, is full of errors in its AY summary.

The RPA and AY

The RPA, which opposed the West Side Stadium but has generally supported major development, has had a rather checkered history with Atlantic Yards.

In 2006, the RPA announced its support for Atlantic Yards, given that the project would bring significant density near a transit hub and a new destination, but the organization lamented the undemocratic process and suggested that a transportation plan that included bus rapid transit and congestion pricing--neither implemented--was needed to make the project work.

In 2007, Atlantic Yards prompted the RPA's reflections that there was too little government planning and public input as the project was developed, and too little public oversight going forward.

When Forest City Ratner went back to public agencies in 2009 to save money, the RPA essentially endorsed it, with its leader, Robert Yaro, saying, “The horse is out of the barn on this one.”

The RPA then advised the Metropolitan Transportation Authority (MTA), which was set to revise its deal with Forest City, to seek more future project revenues, and said the project deserved both a new cost benefit analysis and a new ESDC subsidiary to oversee it. Those recommendations were ignored.

Getting AY wrong

The report's Appendix aims to serve as a summary guide to the various projects discussed, but the description of Atlantic Yards--full text below--contains numerous errors and omits some needed information.

From the Appendix:
Atlantic Yards
With its arena under construction and much of its planned housing deferred, it is too early to pass a final judgment on the Atlantic Yards project. However, the controversy it generated and the considerable changes that the development is likely to see by the time it is completed demonstrate the need for a robust public process and a flexible development framework with continued public oversight to both establish and maintain public priorities.
Atlantic Yards is a 22-acre mixed-use project in the Prospect Heights neighborhood in Brooklyn, NY. The developer, Forrest [sic] City Ratner, plans to build a $4.9-billion project on land purchased from the Metropolitan Transportation Authority. One of the largest components of the plan is the amount of residential units that will be constructed. The City of New York has committed $14 million in subsidies for affordable units. Currently the development plan includes:
• 16 residential and commercial towers
• Eight acres of public space
• A public school
• A community center
• An 18,000-seat arena
• Approximately 6,300 units of housing, 30% of which will be set aside for low-, moderate- and middle-income tenants.
(Emphases in bold added)

Actually, the project site is 22 acres, including an 8.5-acre railyard. Thus, even if Forest City had purchased the land, the project would not be built, as implied, solely on MTA land.

But Forest City has only paid for the fraction of the railyard, less than one-third, needed for the arena. It paid $20 million of the $100 million pledged, with the option to pay for the rest over 22 years, at a gentle interest rate.

Nor has the city committed merely $14 million for affordable units. Rather, it has committed $14 million for the first of some 15 housing towers. Moreover, the city has committed at least $171.5 million in direct subsidies for the project. The state has committed $100 million. Beyond that, the developer relies on significant tax breaks as well as low-interest financing gained through the federal government's EB-5 program.

The Appendix continues:
The Atlantic Yards development has a checkered history. The site known today as Atlantic Yards is composed of the Vanderbilt Rail Yards as well as some of the surrounding neighborhood that was declared an Urban Renewal Area in 1962. For the next twenty years the area surrounding Vanderbilt Rail Yards was used for subsidized housing and office space. During the 1970’s there was a proposal, subsequently abandoned, to move Baruch College of the City University of New York to the site.
Actually, the site includes two-plus blocks that were not part of the Atlantic Terminal Urban Renewal Area (ATURA), but were grafted on by the developer.

Nor was "the area surrounding" the railyard used solely for subsidized housing and office space. Parts of it were. Other parts were residential and manufacturing.

Nor was there a proposal to move Baruch to the irregular Atlantic Yards site but rather to the Vanderbilt Yard.

The Appendix continues:
In 2003, with the support of Mayor Michael Bloomberg [and] Governor George Pataki, Forest City Ratner announced a plan to move the New Jersey Nets to Brooklyn, making the arena the centerpiece of a development that would also include housing and commercial office space. A community benefits agreement was negotiated, albeit with considerable controversy over the legitimacy of the coalition representing community interests. There were alternative plans developed by community and civic coalitions, one of which was the basis for a competing proposal by Extell Development Corporation. However, as a New York State sponsored project, there was no public planning process for the site that established priorities and benchmarks against which alternative proposals could be evaluated.
Indeed, there was considerable controversy over the Community Benefits Agreement, but the latter was used as a p.r. tool given the absence of a public planning process.

The Appendix continues:
Frank Gehry was brought onto the project team to design the arena, and in 2005 Bruce Ratner and Frank Gehry unveiled the master plan for the entire development which included the arena as well as residential and commercial space. After several years of negotiations, numerous design changes and considerable controversy, Forest City Ratner purchased the land from the Metropolitan Transportation Authority for $100 million. With Empire State Development Corporation (ESDC) as the lead agency, approvals were granted under New York State’s General Project Plan process, which has far fewer opportunities for public or legislative review than New York City’s ULURP.
Actually, the master plan was unveiled in December 2003. And Ratner never purchased the land for $100 million but rather signed a contract pledging to do so--a contract the firm renegotiated in 2009.

The Appendix continues:
In 2009, due to the declining economy, rising construction costs and a drop in available financing, Ratner brought on Ellerbe Becket to value-engineer the arena. Later that year Ellerbe Becket replaced Frank Gehry as the project’s designer. Following the community backlash to the revised design as not distinctive enough, Ratner added SHoP Architects on the team to create a more innovative structure. In addition, much of the housing was scaled back or deferred in response to the weak real estate market.
Ellerbe Becket was not brought in as the project's designer; the firm specializes in sports facilities. The cost-saving was not driven merely by rising construction costs but by the need to decouple the arena from the four towers surrounding it, which were supposed to share mechanicals.

Unmentioned is that Forest City Ratner also renegotiated its deal with the MTA, saving money not only on the deferred payment but by getting the agency to accept a smaller railyard than originally promised. The developer also renegotiated with the ESDC, gaining the right to defer payment for land it needed for the project.

The Appendix continues:
A key challenge to building on the site was the complexity of erecting a deck over a functioning rail yard. Forest City Ratner constructed a $50 million temporary railroad yard east of the original yard which it then turned over to the Metropolitan Transportation Authority in 2009.
Unmentioned is that the railyard function had been in the western end of the Vanderbilt Yard. No deck was needed to build the arena, which is below grade. No deck has yet been built.

The Appendix closes:
There has been a considerable amount of opposition to the Forest City Ratner plan in terms of project scale, environmental impact, schedule, and the use of eminent domain. The project endured years of delays and lawsuits over the legality of the State of New York using eminent domain to condemn private property. Ultimately in 2009, the New York State Court of Appeals ruled that it was legal for the state to seize the property for the development.
Indeed, the Court of Appeals ruled it was legal. But the ruling ignored many objections raised by the petitioners and the dissenters on the court. Since then, Forest City and the ESDC have lost a case in state court--which the defendants are seeking to appeal--regarding the state's failure to assess the community impact of a 25-year buildout, another renegotiations unmentioned in the RPA's summary.
RPA Building the Next NY


RPA Building the Next NY Appendix

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