Atlantic Yards Report

A tougher road than expected for expanding Barclays; no implications (yet) for Brooklyn promotional efforts

2012-02-19T08:00:00.000-05:00

So, the banking firm plastering its name on the Brooklyn arena is hitting a rough patch, at least in Europe. In a 2/9/12 article headlined Barclays Falls Short of Big Dreams, the Wall Street Journal reported:

In June 2009, top Barclays PLC executive Robert Diamond laid out an ambitious plan for the venerable British bank "to be the premier global investment bank," a goal he hoped to achieve "over the next couple of years."
More than three years after Barclays absorbed Lehman Brothers' North American operations in a cut-price deal that represented a critical moment of the financial crisis, Barclays has yet to achieve the lofty goals set out by Mr. Diamond, now the bank's chief executive.
Despite making progress, the investment-banking division, called Barclays Capital, is making less money than executives predicted. In Europe, which Barclays targeted as a key growth area, it has struggled to win investment-banking assignments in the crucial areas of equities and mergers and acquisitions. It has fallen short of a goal to become a top-three player in those categories.

The strategy in the U.S. may be on more solid ground, but it's just the key part of the business, according to the firm's report of 2011 results, issued 2/10/12.

Still, if Barclays doesn't do better, who knows, maybe it will want to renegotiate, yet again, the naming rights agreement. Or place a greater priority on using the Barclays Center arena to boost its profile. Stay tuned.

The results

On 2/10/12, the Journal reported:

U.K. banking group Barclays PLC (BCS) Friday said it would cap investment banker bonuses as its 2011 full-year net profit slumped on a sharp drop in investment banking revenue.
The London-based bank said net profit for 2011 fell 16% to GBP3 billion. Adjusted return on equity, a closely watched metric among investors and analysts, fell to 6.6% from 6.8% a year earlier, well below the bank's 2013 target of 13%. Chief Executive Bob Diamond said the bank's 2011 return on equity was "unacceptable" and warned that the 13% target might not be achieved by 2013.

Diamond wouldn't comment on whether he would receive a bonus, though other UK bankers--at least those where the government has a stake--have given them up.

Guardian columnist Nils Pratley slammed Diamond in a column that day:

Would a boss who describes his firm's financial returns as "unacceptable" then accept a bonus?
In the case of Bob Diamond, we'll have to wait to find out. The Barclays chief executive is refusing to talk about his own rewards on the day of the bank's annual results. Those results, however, are dominated by a single statistic: a return on shareholders' equity of 6.6% for 2011, down from 6.8% last year. That outcome is miles away from Diamond's target of 13% by 2013. Indeed, the man himself concedes the race is as good as lost already. The target has been downgraded to an aspiration "over time".

What's up with the "mountain of soil" on Block 1129? A dust hazard and a violation of environmental protocols, apparently

2012-02-18T06:56:00.001-05:00

Atlantic Yards Watch offers another disturbing dispatch, Mountain of soil grows on block 1129, creating dust hazard and violating environmental protocols:

A 2 1/2 story tall mound of soil, described as backfill in the last two construction alerts (January 30 and February 13), has been uncovered on an ongoing basis since it was first created over two weeks ago. The mound is located in the staging area on block 1129 and continues to grow. The mound has a base of about 150 by 100 feet. The photo above on the left is the view from Vanderbilt Avenue toward the west. The photo to the right is the view south from the third story of a residential building on Dean Street.
Although the mound has never been covered, both construction alerts describe it as covered. They state, "the pile will be completely covered with filter fabric and additional measures will be used to prevent run off of soil onto Pacific Street." All stockpiled dry materials are required to be covered, water misted, or sprayed with non-hazardous suppression agent in the Amended Memorandum of Environmental Commitments (MEC).
In addition, the mound continues to grow without water spraying during the loading of dry materials as is required in the MEC. Regardless of the season, dust is a common by-product of construction at Atlantic Yards.

For more, including a description of a similar episode int he past, speculation on reasons contractors may resist covering piles, and a failure in enforcement, go to Atlantic Yards Watch.

I'll check with Empire State Development, the state agency in charge of Atlantic Yards, to see if they have a comment.

Arena facade work, as predicted, resumes on east side of structure

2012-02-18T06:50:00.000-05:00

A week ago, on 2/11/12, I wrote how there's a new schedule to install the pre-weathered lattice panels for the Barclays Center exterior, necessitated by the temporary shutdown of contractor ASI Limited.

And on 2/13/12 I noted that, according to the latest Construction Alert, façade panels at the uppermost elevation would be installed during "this reporting period and taking place on second shift."

Indeed, that's what's happened, according to photos and videos taken yesterday looking west at the arena from Pacific Street. The work is taking place on the east side of the structure, along Sixth Avenue between Atlantic Avenue at the north and Pacific Street (halfway down) at the south, extending all the way to Dean Street, the southern border.

A video

Ridge Hill trial opens, but mystery persists regarding Forest City Ratner's role in compensating accused consultant who paid accused Council Member

2012-02-17T06:36:00.000-05:00

According to the opening statements yesterday by defense lawyers in a federal corruption trial, there are explanations for why Yonkers Council Member Sandy Annabi was given money by her distant cousin, Yonkers Republican Party Chair Zehy Jereis, and why she changed her vote to enable Forest City Ratner's Ridge Hill development.

Jereis was infatuated with her, and Annabi believed that changes in the Ridge Hill project--retail, residential, and more--finally made it worthwhile.

The question is whether those arguments--presaged in pretrial papers--is whether they add up. After all, Annabi has denied the romantic relationship purported (or perhaps merely pursued) by Jereis. And, as previously reported, those changes in Ridge Hill were small beer.

Defense lawyers went after the go-between regarding the second project, Longfellow, Anthony Mangone, who already pleaded guilty to funneling cash to Jereis to pay off Annabi.

The question is whether and how they will go after Forest City, three of whose former staffers are expected to be mentioned or to testify in the trial, which is expected to resume Tuesday.

From the Times

In an article today headlined Prosecutor Tells How Ex-Yonkers Councilwoman Got Secret Payments, the New York Times reported:

A lawyer for Ms. Annabi, William I. Aronwald, said in his opening remarks that Ms. Annabi had changed her vote, but only after Forest City Ratner agreed to improve its deal with Yonkers, paying it an additional $10 million, as well as $500,000 more for a traffic mitigation study.
Whatever Mr. Jereis was hoping that his payments to her would accomplish, Mr. Aronwald said, “it had absolutely nothing to do with her vote.” He said there was “no quid pro quo” for Ms. Annabi “to vote for either one of those two projects.”
Mr. Jereis’s lawyer, Anthony J. Siano, suggested to the jury that much of the government case would come from a disbarred lawyer, Anthony Mangone, who had pleaded guilty in the conspiracy and was cooperating with the government. Mr. Siano explained his client’s payments to Ms. Annabi as resulting from his romantic feelings for her. Mr. Siano said that Mr. Jereis had “spent a lot of money pursuing Ms. Annabi, not for her vote but for her body” and that he had appeared to have been “enthralled, infatuated, bewitched” by her.
Forest City Ratner has not been accused of wrongdoing in the case. It has said that it “cooperated fully with the U.S. attorney’s office during the course of its investigation and will continue to do so.”

Does cooperation mean they got a deal--testify and avoid prosecution? The developer may not have been accused of official wrongdoing, but the actions--giving Jereis a no-show job after Annabi changed her vote--sure look fishy.

From the Journal News

The Journal News described, in an article headlined Ex-councilwoman Annabi accused of 'repeated betrayal' of public trust as Yonkers corruption trial opens, what might be called a "stream of payments theory," which does not require proving that specific bribes be connected to specific actions:

The prosecution contends that, beginning with her election to the City Council a decade ago, Jereis made frequent payments to Annabi and on her behalf in an effort to control her conduct on the City Council.
There were $60,000 in downpayments on two homes Annabi bought and the monthly utility and maintenance payments for a third she had to buy because the others were not in her district. He helped her pay off student loans and gave her $10,000 for lease payments on a Mercedes-Benz....

Will Forest City representatives describe bribes? The defense said no:

The defense went much further, and insisted jurors would hear about bribes from the mouths of only three witnesses, Mangone and the Milios, who themselves just pleaded guilty to evading taxes on $2.1 million.

That could be because Forest City, in its thinking, was not paying bribes, just rewarding Jereis.

The Journal News's coverage provided some rebuttal for Aronwald's defense of Annabi's actions:

Aronwald said Annabi had opposed the project because the city would give away too much in tax abatements and the developer was not willing to budge on the traffic and environmental concerns surrounding the project. Annabi changed her mind when the developer agreed to pay an extra $10 million to the city and $500,000 for a traffic mitigation study.
[Assistant U.S. Attorney] Halperin said those fgures were a pittance to the developers and that the concessions were conceived as political cover for Annabi.

NYT columnist Powell: FCR's Bender, Cantone (who just left) could testify or be mentioned in Ridge Hill trial

2012-02-16T16:27:00.004-05:00

Times columnist Michael Powell, who's been writing about Forest City Ratner's curious role in both Brooklyn and Yonkers--unindicted but behaving questionably--this morning offered this tweet:

That would be Bruce Bender and Scott Cantone, who just left the company because--as one associate airily spun--it's "simply time to go." Richard Pesin, who oversaw the Ridge Hill project as head of retail, left in January 2011.

Did Goldman, Sachs try to run the Brooklyn Arena LDC? It appeared so, but then an Investor Update call for today was canceled.

2012-02-16T06:00:00.000-05:00

Well, we knew that the Brooklyn Arena Local Development Corporation (BALDC), the entity set up to issue tax-free bonds for the arena, was little more than an alter ego of the Empire State Development Corporation (ESDC), even though it is officially a "creation" of the Job Development Authority (JDA), another ESDC alter ego.

I was recently alerted to an Investor Update Call scheduled for today, apparently to alert arena bondholders on the progress of construction. The document, issued via the Municipal Securities Rulemaking Board, stated:

The Brooklyn Arena Local Development Corporation invites you to participate in an Investor Update Call related to the above-captioned transaction.

The RSVP went to a staffer at Goldman, Sachs.

Very curious

That sounded odd, given that the BALDC is a publicly created body, with board members appointed by public officials.

How could this be delegated to Goldman? Was the ESDC (also known simply as Empire State Development) involved?

Never mind

I inquired to both the ESDC and to Goldman, and got a response from the former:

The referenced Update Investor Call notification was neither sent or authorized by the Brooklyn Arena Local Development Corporation. We have been advised that the call has been postponed until further notice.

So maybe Goldman, Sachs is not in charge of the governmental fig leaf that is the BALDC. They just thought they were.

City Limits package on Atlantic Yards: Bertha Lewis accepts Forest City's failure to live up to housing promises, still thinks AY will live up to its billing

2012-02-16T05:30:00.002-05:00

City Limits, via its new Brooklyn Bureau, has published a package of stories on Atlantic Yards. While the package serves as a reasonable overview, recognizing considerable uncertainty about neighborhood impacts and jobs/reveneus, the publication--with some contributors new to the project--misses the chance to dig in some ways.

Take Traffic, Noise & Hope: Atlantic Yards Still Elicits Mixed Views. Of course it does: residents living near the arena are understandably alarmed by the prospect of a surface parking lot and traffic, while business owners, however dismayed by construction, understandably welcome new crowds.

That's not the issue. The issue is whether the state, in overriding zoning to squeeze this project into the northern section of Prospect Heights, bordering--at least on two edges--a residential district, bent over backwards too much for developer Forest City Ratner.

That's what the battle February 14 in court--unmentioned in this package--was all about.

False framing on housing issue

The article headlined Opinions Harden Over Atlantic Yards Housing could better have been framed, perhaps as "Forest City Ratner Reneges on Promises, Maintains Support from Advocate Lewis (Who Owes Them)."

This issue is not "opinions" but accountability.

Without citing my initial coverage, the article points out that, only 12 percent of the units planned for the first tower would be two-bedroom units, though Forest City, in the Affordable Housing Memorandum of Understanding (MOU) signed with New York ACORN, promised 50 percent of the affordable units (in square footage) would be two- and three-bedroom units.

The article states:

Critics are opposed to the plan because it threatens to set a precedent of perpetual transience.
“You have a significant number of families with children in our community,” says City Councilwoman Leticia James, a staunch opponent of the project since the beginning. “And if you build studios and one-bedrooms, that’s geared toward single adults, not families. What we need is stability and families that will have a nexus to the community.”

That's another example of what Jay Rosen calls the "View from Nowhere," the false middle. Why must "opponents" say Forest City Ratner is not living up to its promises, "guaranteed" (in the developer's lingo) in the Community Benefits Agreement?

Why not point out that it shouldn't be "critics" who have to explain the developer's failure to live up to their promises but the Independent Compliance Monitor required by the Community Benefits Agreement?

Why not point out that ACORN's Bertha Lewis, who signed the MOU, said in a May 2006 Courier-Life article that the CBA calls for an independent monitoring body that “does not have a dog in this fight"?

Shouldn't CBA signatories, citizens, and the media at large try to hold the developer accountable? Why does it have to be "critics"?

Lewis defends Ratner

The City Limits article states:

Supporters of the project seem resigned to the fact that the housing will be dramatically different from what was initially promised. Rather than cast aspersions on the community benefits agreement, former ACORN head Bertha Lewis blames economic conditions and litigation for reshaping the Atlantic Yards deal.

Rather than cast aspersions on the community benefits agreement? The aspersions shouldn't be cast on the CBA, but the failure to enforce it--and the failure of CBA signatories such as Lewis to enforce it.

Also, consider that, when Bruce Ratner announced the modular plan last November, he acknowledged that Atlantic Yards--with high-rise towers, and union-built affordable housing--had never been viable as proposed.

Lewis is now president of The Black Institute, but the MOU she signed required her to publicly support the project. And national ACORN, which Lewis headed after leading the New York chapter, was bailed out by Forest City with a $1.5 million grant/loan.

Both those obligations go unmentioned in this article.

The bottom line

The article states:

Lewis says she speaks with Ratner two or three times a month. She sometimes frames the housing issue in racial terms, claiming that some who opposed the Community Benefits Agreement privately lambasted the idea of having a “high-rise ghetto.” She remains convinced the project will live up to its billing.

How can she be convinced that it will live up to its billing, if Forest City has failed to honor its promises so far?

If Forest City does revolutionize building in the city by using modular construction, maybe it will live up to its billing--but not in terms of construction jobs and new tax revenues.

Maybe the lesson is: next time, get an affordable housing commitment up front, including the developer's financial contributions.

And lobby for changes in infrastructure and building methods/rules that will create more lower-cost housing than relying on a single developer.

ESDC asks appellate court to deny full study of 25-year Atlantic Yards impacts (and alternatives); some judges skeptical, others wonder what harm it would do

2012-02-15T08:15:00.000-05:00

It was a somewhat uphill battle yesterday for the Empire State Development Corporation (ESDC) and developer Forest City Ratner (FCR), asking a state appellate court panel to overturn a lower court’s order that the agency study the impact of a 25-year Atlantic Yards buildout, solicit public comment, and conduct a public hearing.

A couple of the five judges were clearly skeptical of the state, with one citing the ESDC's "obstinate adherence" to the long-professed ten-year buildout.

Others, taking in the objections from the defendants, questioned whether a Supplemental Environmental Impact Statement (SEIS)--which would analyze those extended impacts and even consider alternatives to Phase 2, since as revising the project to diminish impacts or welcoming new developers--would really cause any harm.

Then again, questions from the bench do not necessarily indicate how a court will rule after analyzing the legal papers.

Atlantic Yards was approved in 2006, with a ten-year buildout, then revised in 2009, as Forest City reopened settled deals with the ESDC (regarding the timing of condemnations) and the Metropolitan Transportation Authority (regarding the payment of railyard development rights and the configuration of a replacement railyard), in order to save money.

As part of the 2009 approval, as the defendants stressed, the state did analyze the impacts of 15-year buildout (in the 2009 Technical Memorandum). In response to a lower court ruling by Supreme Court Justice Marcy Friedman, the state produced a document (the 2010 Technical Analysis) arguing that a 25-year buildout would not create any impacts not previously disclosed.

But that document was inadequate, argued the lawyers for the petitioners, community coalitions led by Develop Don’t Destroy Brooklyn and BrooklynSpeaks.

At the heart of the 35-minute argument before the Appellate Division, First Department, in Manhattan was whether an intense buildout of the 17-building project over a decade would be worse than an extended, if less intense, buildout over 25 years. The state says yes, the petitioners say no.

The legal dispute does not affect the building of the arena, nor the towers around it, but does address plans for and impacts of Phase Two of the project: the eleven towers east of Sixth Avenue, including those to be built on a platform over the Vanderbilt Yard.

A decision is expected in about two months. An appeal is not automatic unless two of the five justices dissent.

(The Local, edited by ex-Brooklyn Paper editor Gersh Kuntzman, called it a "bombshell that "[t]he lawyers don’t know when Bruce Ratner’s Atlantic Yards project will be completed — if it will be completed at all." I think everyone, from Bruce Ratner on down, has acknowledged continuing uncertainty about the project timetable.)

SEIS happening, but order unwelcome

While fighting the lower court's decision to order an SEIS, the ESDC has nonetheless begun conducting one, with a $1.7 million budget, as a spokeswoman explained last September, "to ensure that the impacts to the surrounding community are minimized to the maximum practicable extent."

Perhaps, the agency is hedging its bets; if the appellate court does not overturn the lower court's decision, at least an SEIS will be in place.

And if the decision is overturned, there may be no need to hold the public hearings associated with it (though attorneys for the petitioners said yesterday that they would).

So why have the state and FCR appealed, especially since a SEIS conducted by the ubiquitous environmental consultant AKRF would likely return results the ESDC wants?

Maybe it's precedent, maybe it's pride; they don't want to let stand Justice Friedman's series of decisions questioning the agency's transparency and candor.

And they also fear additional litigation that would cause further delays.

In the room

In the handsome courtroom at Madison Avenue and 26th Street, with elegant chandeliers, marble walls, rich wood fixtures, and wall paintings illustrating such concepts as "Justice," several veteran Atlantic Yards combatants were in the audience, in their respective clusters.

Among those backing the defendants were ESDC officials Arana Hankin, Rachel Shatz, and Robin Stout, and Forest City executive Jane Marshall. Among those backing the petitioners were Daniel Goldstein and Candace Carponter of DDDB, and Jo Anne Simon and Danae Oratowski of BrooklynSpeaks.

Opening flurry, and a questionable claim

No sooner did ESDC lawyer Philip Karmel begin his argument than he was interrupted by Justice Rolando Acosta.

“Can you explain what is the reason for your client’s obstinate adherence to this ten-year plan when evidence on the ground is different?” asked Acosta, pointing to the 2009 agreement Forest City signed with the Metropolitan Transportation Authority, allowing for 22 years to pay for development rights over the Vanderbilt Yard, casting doubt on the likelihood the project would be done in a decade.

“Yes, Your Honor,” replied Karmel, forced to dial back his usually hard-charging style. “We were not obstinately insistent on that schedule. What we did in 2006 was recognize considerable uncertainty....”

Justice Helen Freedman interjected to point out that the original EIS covered ten years.

“The original EIS recognized uncertainty in the construction schedule but identified ten years as a reasonable worst-case scenario” for the environmental review, asserted Karmel.

That sounded like a novel theory, since the Executive Summary of the Final EIS is pretty clear:

All construction is expected to be completed over a 10-year period; the number of construction activities would vary over time, and are divided, for purposes of the analysis, into two phases.

“The original EIS said there was uncertainty in the construction schedule,” Karmel repeated a few moments later. “There continues to be uncertainty.”

Practical impacts

What would be the practical impacts of doing an SEIS, asked Freedman.

The issue, said Karmel is whether new information would be developed that would determine that an extended construction schedule would identify new impacts--and ESDC has already done so.

Justice David Friedman pointed out that there were much less diminished penalties for Phase 2:

“There are significant penalties,” maintained Karmel, though that’s doubtful.

The “hard look”

Karmel tried to steer the argument back to his essential point: the issue is not whether the project timetable may have changed, it’s “whether ESD took a ‘hard look” at impacts, as required by state law.

“What is your empirical evidence," asked the skeptical Acosta, "to conclude that a buildout over a longer period of time results in less intense impacts?”

Karmel explained that the worst impacts would concentrate impacts like construction noise and traffic over a decade--and that they’d be attenuated if the project took 25 years.

“That sounds like a logical argument, but I’m not an expert,” Acosta followed up. “Did you do any empirical analysis?”

Karmel again pointed out that the agency looked at the duration of several impacts--though his adversaries contend that was not done in a holistic, cumulative way.

Practical impact

Friedman asked if the project would be delayed if the court does not overturn the decision, as requested by the state and FCR.

Karmel said no.

What about doing an SEIS, asked his colleague Freedman. What would be the cost?

“Certainly in excess of $1 million,” Karmel said.

Would there be any other consequences, asked Acosta.

“It introduces a degree of uncertainty about the project,” responded Karmel.

“Wouldn't it depend on the result?” chimed in Justice Angela Mazzarelli, the presiding justice.

Karmel indicated that it likely would prompt additional litigation.

Freedman asked about the Technical Analysis the ESDC conducted in 2010, in response to the lower court’s order.

“It’s a very high-quality analysis,” Karmel said, noting it was about 100 pages.

How big was the Final EIS?

Some 2000 pages, said Karmel, but it covered much more ground.

FCR case

After Karmel’s eleven minutes, Forest City Ratner attorney Jeffrey Braun took the podium. Braun can be bombastic, but in this case he was modulated, apparently having taken the temperature of the bench.

The lower court’s decision, he argued, can’t be reconciled with a case called Wilder, “one of several appellate decisions that have shown great skepticism about efforts to reopen environmental reviews.”

There have been no material changes in the physical components of the project, Braun said. The petitioners used business changes to force reconsideration of environmental impacts, he added.

Acosta queried him: doesn’t he think the increased time to obtain MTA air rights changes anything?

“I really don’t, Your Honor,” Braun replied.

Back to impacts

Friedman returned to the question of the impact of an SEIS.

A required SEIS, he said, would be “a distraction, it’s very expensive. It creates a cloud: ‘what’s the back end of the project?’”

Friedman countered the project has already been uncertain.

“There’s always an element of uncertainty,” Braun allowed, noting that case law does not require certainty by the state, just a “hard look.”

Petitioners’ case

As BrooklynSpeaks attorney Al Butzel, a wiry veteran of the Westway wars, took the podium, Friedman followed up: did ESDC take that required “hard look”?

No, replied Butzel in his low voice, citing the failure to analyze “long-term cumulative impacts of a construction process.”

Butzel cited affidavits from experts--derided by the opposition--about the impact of delays surrounding other projects in New York and Boston.

If construction continues, asked Mazzarelli, what would be the benefit of an SEIS?

“We expect that ESDC, properly directed by this court, will act in good faith” and mitigate the impacts of the rest of the project, Butzel said.

Freedman again pressed for details. It could identify new mitigation, Butzel repeated, or could find ways to accelerate construction.

“Your claiming they didn’t take a ‘hard look,’” Friedman asked.

“I certainly am,” Butzel responded. “They stuck to the ten-year schedule because they had financing coming up. If they agreed to do an SEIS, that opportunity might well have been lost.”

His point, as argued in legal papers: the state wanted to make sure the project was approved in 2009 to ensure the arena’s eligibility for tax-exempt bonds. An SEIS would have taken too long.

DDDB case

“There was no ‘hard look,’” added Butzel's co-counsel Jeff Baker, projecting at another level beyond Butzel. “There was a charade created.”

In 2009, he said, “on its own, Forest City Ratner decided to make a major change” in the project.

“But it’s not material, I heard them argue, to the environmental consequences,” responded Acosta.

“It was material enough for them to go through” the Urban Development Corporation (UDC) Act and produce the Technical Memorandum, Baker said.

Justice Sheila Abdus-Salaam asked Baker to again identify impacts not addressed if an SEIS were not granted.

“It’s multiple,” Baker said. “It goes under the rubric of community character.” He cited issues like noise and dust.

He reminded the court that the project was justified as eliminating the blight caused by the Vanderbilt Yard, but it was instead prolonging it.

Freedman asked about the remedies.

“The heart of an EIS is an alternatives analysis,” said Baker. He noted that the state had chosen a single developer but had never considered the consequences if FCR doesn’t have the wherewithal to go forward.

“Maybe it should be divided up,” he said.

It hearkened back to a claim parent company Forest City Enterprises made in November 2008, counting Atlantic Yards as among "Active Large Scale Projects Where We Control the Pace."

“They can’t get the benefit of misrepresentation,” Baker said in closing, referring to the discrepancy between the Development Agreement and the ten-year timetable.

In rebuttal

Karmel got a few minutes for rebuttal, but as he began to cite the 2009 Technical Memorandum, Freedman interrupted him twice, suggesting at one point, “Maybe the project should be changed.”

“We made a discretionary decision” that no more study was necessary, Karmel maintained.

“We already have taken a 'hard look' at neighborhood character,” he insisted.

Doesn’t a switch from ten to 25 years, asked Mazzarelli, have an impact on such things as neighborhood investment, whether people decide to buy or sell next to a project.

Karmel said the agency had proceeded thoroughly: “The type of issue that is being presented is not amenable to further analysis."

Acosta suggested that the 2006 FEIS and the 2010 Technical Analysis were “worlds apart.”

Karmel, a bit exasperated, replied, “We are not required to do an SEIS-level analysis to determine whether to prepare an SEIS.”

He acknowledged that impacts would be significant, but said the state agency had decided that a project of greater duration and less intensity would not be the worst case.

“That discretionary decision,” he declared in closing, “is entitled to deference by this court.”

Comments afterward

While the ESDC and FCR lawyers gathered across the street before dispersing, Butzel and Baker answered a few questions from reporters on the steps of the courthouse. (Video by Jonathan Barkey)

If they're obligated to do a Supplemental Environmental Impact Statement, Butzel said, they'd have to examine modular construction. "You'd probably see a very significant Supplemental EIS." (His statement that $4 million had been appropriated was in error.)

Baker noted that there was no opportunity for public comment on the 2010 Technical Analysis, while there would be such comments in the case of a SEIS.

Is the Wilder case different? Butzel said yes, as "people weren't arguing about the length of the construction... We have a much stronger argument: the elongation of construction itself has very significant impacts."

If the state does an SEIS, said Baker, and change Phase 2, then that should invalidate the parts of the Development Agreement regarding Phase 2.

FCR can't rely on the Development Agreement, he said, "because that agreement was premised on a n illegal analysis that predated it." Will there be a fight about that? "I'm sure there will be."

Are there time pressures to getting the SEIS done? No, said Baker, because the Development Agreement doesn't impost such pressure on Phase 2.

"Their time pressures, which they're having trouble meeting, is their deadlines under Phase 1," he said. "Are they going to get all the infrastructure in place before the arena opens in September? It doesn't look like it, or they're only doing it by increasing the impacts on people. Are they going to get the buildings built that they have to, by the various dates."

Forest City has until the middle of next year to get the first tower started.

New twists in Ridge Hill corruption trial: Forest City consultant Pirro said to claim job for defendant Jereis would get defendant Annabi to flip her City Council vote

2012-02-15T08:06:00.001-05:00

In pre-trial decisions yesterday by U.S. District Judge Colleen McMahon, the contours of the Yonkers corruption trial, which begins today, became more clear, with confirmation that Forest City Ratner officials would indeed testify and new evidence of a central role by a Forest City Ratner consultant.

The case involves bribes allegedly paid by Yonkers Republican Chair Zehy Jereis to Council Member Sandy Annabi to greenlight two projects, the Longfellow (by Milio Management) and Ridge Hill (by Forest City). Attorney Anthony Mangone has already pleaded guilty in the Longfellow case.

The Pirro connection

The New York Times reported, in With Action by Judge, Details in a Yonkers Corruption Case Emerge, that Albert Pirro, Jr., husband of Westchester District Attorney Jeanine Pirro (and former federal prisoner on tax charges), was working as a consultant for Forest City Ratner:

During a meeting with one council member, Mr. Pirro turned the conversation to how others on the Council might vote, according to a prosecution account described in a judge’s ruling released late Tuesday; when it came to assessing one member, Sandy Annabi, he showed no hesitation, the account continued.
He was confident, according to the same account, that he could win her vote by giving a job to one of her friends, Zehy Jereis, then the chairman of the Yonkers Republican Party.
“I am not worried about Sandy Annabi,” Mr. Pirro was quoted as saying to Dennis Robertson, then a councilman. “We will just give Zehy a consulting contract, and we will get her vote.”

Federal charges indicate that's what happened, that Jereis got a no-show job from Forest City after Annabi changed her vote. The Times reports:

Mr. Pirro declined to comment. Forest City Ratner said it “had no knowledge of what Mr. Pirro may have said.” The company said it had cooperated fully with the inquiry and “at no point was there any indication or suggestion that they behaved in a way that was inappropriate.”

Prosecutors may not have suggested that Forest City behaved illegally, but the developer has never explained or justified the no-show job. Doesn't that qualify as inappropriate or unethical?

More corroboration

According to the judge's order:

The Government proffers the following "independent, non-hearsay evidence" as independent corroboration for Pirro's statements: (1) testimony from FCR officials that in or about early June 2006 before Annabi announced her vote flip on the Ridge Hill Project, Jereis asked FCR for a job; (2) testimony and documentary evidence that the day after Annabi announced her vote flip in a press release (but had yet to officially vote in favor of the project) Jereis sent FCR an email attaching his own resume and a cover letter; (3) testimony and documentary evidence that Jereis repeatedly pressed FCR for a consulting contract in or about June 2006; (4) testimony that Jereis and FCR reached an agreement in principle about two weeks before the July 11, 2006 vote that FCR would give Jereis a consulting contract sometime after Annabi officially voted in favor of the project; (5) proof that Annabi did, n fact, flip her position.... (6) proof that FCR subsequently gave Jereis a $60,000 consulting contract. According to the Government, at least two of its witnesses will testify that they participated in separate conversations with Jereis in which the issue of Jereis's obtaining a job with FCR as discussed.

The Jereis-Annabi relationship

According to a decision by McMahon, yesterday, Annabi's attorney William Aronwald produced "a series of approximately 22 purported emails allegedly written" by Jereis to Annabi, between 5/1/05 and 12/11/06, explaining "that he has loved Annabi for the past five years and claims that he had given her certain gifts (which correspond to the payments described in the Indictment) as manifestations of that love."

Annabi, however, has denied she had a romantic relationship with Jereis. Prosecutors have questioned the authenticity of the emails and asked the judge to rule them as inadmissible hearsay. The judge agreed that a defendant, unlike the prosecution, cannot use his own out-of-court statements:

If Jereis, the author of the emails, wants to make this point to the jury, he will have to get on the witness stand and testify.... the emails are not reliable evidence of Jereis' state of mined... They set out an ex post facto justification for payments that were made to Annabi months or years before.

Mangone and Jereis

The Wall Street Journal reported, in Judge Allows New Claims in Bribe Trial:

Prosecutors said in court papers they intend to show Mr. Jereis and another Spano associate, disbarred attorney Anthony Mangone, participated in a 2006 scheme to bribe a potential challenger to the senator with $10,000.

The unidentified candidate was to run against Mr. Spano in the Independence Party primary, according to court papers. It isn't clear from court documents if the alleged bribe was paid.

They also allege that Mr. Spano arranged a no-show consultant job for Mr. Jereis with the Yonkers Chamber of Commerce [COC] between April 2006 and June 2007. Prosecutors claim the job was set up after Mr. Mangone told Mr. Jereis "he would have to leave the senator's government payroll because Jereis had become too controversial," according to court papers.

The first scheme, according to the judge's order, is not direct evidence of the scheme alleged in the indictment, since Annabi was not the recipient of the funds, and the evidence is not admissible against her:

The Government's principal argument is that evidence about the second bribery scheme qualifies as direct evidence because it shows the nature of the relationship between Jereis and Mangone... it argues that evidence about a second bribery conspiracy between the two men, occurring at more or less the same time as the events that are the subject of the instant indictment, helps to explain the mutual trust inherent in that relationship--trust that might have led Mangone to feel comfortable taking money for the purpose of bribing Annabi and giving that money to Jereis to deliver to Annabi.

As for the no-show job, the judge writes:

The Government argues that Jereis's conduct with the COC consulting contract is remarkable similar to his conduct with the $60,000 no-show consulting contract he obtained from Forest City Ratner ("FCR") that began paying him in August 2006 after Annabi voted in favor of the Ridge Hill Project in July 2006. According to the Government, the evidence at trial will show that, although Jereis was required under the FCR contract to file monthly reports to explain what work he was doing for FCR, Jereis never filed any monthly reports until after news of the instant investigation broke in or about March 2007 when he then filed a slew of backdated monthly reports. The Government alleges that Jereis engaged in the same conduct at COC.

..It is the Government's position that Jereis filed these reports in both instances to conceal that he performed virtually no services for the payments he received. The Government represents that the FCR officials and the COC officials will both testify that Jereis added little, if anything, of value to their organizations.

McMahon agreed that the evidence is admissible, not as direct evidence of the crimes charged but as "common scheme or plan evidence, and to a lesser extent as evidence of intent."

Betting on slow eminent domain and instant retail potential, investor buys Atlantic Avenue building destined for second phase of Atlantic Yards

2012-02-15T07:07:00.000-05:00

This is a bit of a head-scratcher: real estate investors apparently believe the second phase of Atlantic Yards--notably the element that involves construction over the Vanderbilt Yard and adjacent properties that bump into the railyard--is so far off that they're buying property slated for eventual condemnation.

In an article today headlined Brooklyn Arena Pulls More Retail, the Wall Street Journal reports:

A real-estate investment company has closed on the purchase of a 105-year-old industrial building near the site of the new Barclays Center sports arena in Brooklyn.

Waterbridge Capital is considering turning the 40,000-square-foot facility at 700 Atlantic Ave. into a retail center, a person familiar with the matter said. Waterbridge bought the property for about $7 million, this person said.

Retail rents in the area may double from the current $50-$60/sf when the arena opens.

Location and timing

The building is in the area indicated in blue on the map (from DDDB) above right.

Phase 2 of the project, located east of the arena block, has an unclear future, but could take at least a decade to get started.

(Map at left from Empire State Development Corporation.)

Forest City Ratner has a decade to start building on the southeast segment, Block 1129, site of an interim surface parking lot.

The developer has indicated that it's much easier to start building on that southeast block, given that it's terra firma.

To construct a tower on the parcel that includes 700 Atlantic Avenue, Forest City would have to build a costly deck over the relatively narrow railyard segment.

Firm history

The firm occupying 700 Atlantic Avenue, Global Exhibition Services, made trade-show exhibits and was last in the news last June, when the Empire State Development Corporation went to court to force it and an adjacent owner to allow access to a Forest City Ratner affiliate working on a new permanent railyard adjacent to those properties.

Eminent domain coming?

The Wall Street Journal notes the site's potential future:

But Forest City hasn't begun any residential construction because of the financial downturn. The company expects residential work to begin on the first phase of the project by the end of the year. The second phase of construction, however, is still years away.

Waterbridge hasn't ruled out selling the property to Forest City at a later date, the person familiar with the Atlantic Avenue property said.

They'll have to, if the state condemns it.

Crain's: DOB Commissioner LiMandri touting FCR's modular plan

2012-02-14T11:14:00.000-05:00

Last November New York City Department of Buildings Commissioner Robert LiMandri was endorsing modular construction, saying, "you also have to figure out how to build bigger, and better, and modular."

And, according to today's Crain's Insider, Modular Construction’s Savings, he's still saying that, with specific reference to Atlantic Yards:

If Forest City Ratner succeeds in its effort to build modular housing for Atlantic Yards off-site, the work could probably be done more efficiently, but the greatest savings would come from wages. Off-site workers cost union builders $36 an hour versus $90 for on-site labor. Total project savings might be about 20%. Just one local firm, at the Brooklyn Navy Yard, constructs housing units off-site but only for low-scale buildings, and adds the façade in the field. Forest City plans to do high-rises, including façades, in factories. Its unions’ approval is needed. City Buildings Commissioner Bob LiMandri has been touting the proposal around town. Supporters say it would reduce truck traffic, debris and noise at construction sites as well as improve work quality.

The flip side? Not only would Atlantic Yards workers earn much less (definitely), and they would be fewer in number (probably), but also the projected tax revenues generated by the project would decline.

Brownstoner: six-story building planned for old Bergen Tile site on Flatbush at Dean opposite arena

2012-02-14T10:21:00.000-05:00

Well, some people thought it might be a hotel, but Brownstoner reports that a permit application has been filed for a six-story rental apartment building, with some 50 units and ground-floor commercial space (quick serve food, anyone?), at the Bergen Tile site at Flatbush Avenue and Dean Street.

The developer has to get a variance to get out of parking requirements, another sign of their ridiculousness.

Way back in 2008 the site was being promoted as a potential retail site.

(Photo copyright Tracy Collins)

Daily News: complaints about overnight jackhammering, railyard lights backdrop for today's court argument

2012-02-14T08:06:00.001-05:00

On the eve of today's oral argument over the Atlantic Yards environmental review, the Daily News offers Atlantic Yards project causes sleepless nights in Prospect Heights: All night jackhammering driving Dean St. residents crazy.

There are actually two sets of concerns, with the headlined one involving overnight "jackhammering for utility work" conducted by Con Edison needed for the arena:

“It’s horrible,” said Gary Wiebke, 52, who lives on Dean St. “The noise levels are astounding. Our building shimmies, it shakes.”

Residents said the work on the electrical upgrades goes on until 6 a.m. - and about an hour later, construction work on the arena starts... Wiebke said a tenant who rented the apartment across the hall from him moved out after less than a week because he couldn’t take it."

What's not clear is whether there's an alternative: either daytime work, or work using equipment that better attenuates noise, as the state and contractors have promised following other complaints.

(Note that Dean Street near Fifth Avenue is actually in Park Slope.)

Flood lights through the night

Now that Forest City Ratner is on an accelerated schedule to finish the Carlton Avenue Bridge by September, flood lights at the Vanderbilt Yard are on til 3 am:

Wayne Bailey, 57, who lives across from the yard, said as bad as the noise are the blinding flood lights that make it bright enough to read a book at midnight. “It is so extreme, it’s so glaring, it’s such light pollution that kids can’t go to sleep,” he said.

“This is a circumstance they created for themselves," Peter Krashes of the Dean Street Block Association. They shouldn’t be let off the hook.”

But they can be, unless there's effective oversight.

Today's case

The Daily News says "ongoing noise problems will be one of the issues on the table" today at the court hearing.

Maybe, maybe not. The case essentially covers the need for additional review of the project's second phase. However, the issue of the state's mitigation plans has been raised by the petitioners, coalitions led by Brooklyn Speaks and Develop Don't Destroy Brooklyn. Their lawyers wrote:

ESDC lays considerable emphasis on the mitigation plan that it is required to implement, suggesting that this will work to mitigate any additional impacts of the extended build-out. But that plan does not address such impacts as long-term cumulative effects, since these were never identified, nor does the plan consider mitigation that might offset or reduce the loss of open space or the extended duration of surface parking on Block 1129. Furthermore, while not a matter of record, the current mitigation plans as set forth in the Amended Memorandum of Environmental Commitments are not being effectively enforced.

So current mitigation plans--or the ineffectiveness thereof--are "not a matter of record." But they may have some bearing.

Times columnist Powell again tracks the connection of "politically wired developer" Ratner to the Yonkers corruption trial involving Ridge Hill

2012-02-14T07:21:00.000-05:00

In Tracking the Tentacles of Corruption, New York Times Gotham columnist Michael Powell writes again (as he did last month) about the upcoming Yonkers corruption trial and the connections to developer Forest City Ratner:

But the trial is tantalizing for where its tentacles extend — linking political corruption in Westchester to that in Brooklyn, and touching on the curious fashion in which real estate developers pursue their chosen game.

(Where was Powell, say, at the March 2010 arena groundbreaking, or the August 2006 hearing on the Draft EIS, both of which were prime fodder for columns? Well, he's been a columnist since only May 2011. But no other columnist had a clue? Shame.)

The "politically wired developer"

Powell writes:

All of which brings us to the role of the politically wired developer, whose projects are catnip to politicians. No prosecutor has implied that Mr. Ratner or his aides played a corrupt role. In Brooklyn, where he has a 22-acre development known as the Atlantic Yards, he was mentioned in the corruption case last year that toppled a Brooklyn Democratic power, State Senator Carl Kruger. Prosecutors called Mr. Ratner “Developer No. 1.” In Yonkers, he appears in Ms. Annabi’s indictment as “Developer No. 2.”
After I wrote last month of Mr. Ratner’s entanglements, several left-liberal sorts, not least former Public Advocate Betsy Gotbaum, wrote to object that I had besmirched a fine fellow. The developer is a patron of liberal causes. He has set aside a significant number of apartments in his Atlantic Yards project for working-class tenants.
Much of this is true, as is this: Mr. Ratner wrangled $726 million in subsidies and benefits from the city and state, and he fights for even more by the week. (He was the developer of The New York Times building.) His willingness to tuck affordable apartments into his gleaming towers is perhaps a reasonable political tradeoff rather than a testament to his character.

Powell may be a little too generous, since Ratner's "willingness to tuck affordable apartments into his gleaming towers" has been called into question by the delays in getting the first building started and his failure to meet the promise that 50% of the subsidized units (in square feet) would be devoted to larger apartments.

And I'll suggest that, while "[n]o prosecutor has implied that Mr. Ratner or his aides played a corrupt role," that doesn't let Forest City off the hook regarding unethical, if not illegal, behavior, which should be tested in court.

I'll note that the $726 million represents city, state, and federal subsidies and benefits for the arena, as calculated by the New York City Independent Budget Office in 2009. It's likely overstated by some $50 million, given that it's based on $678 million in tax-exempt bonds, rather than the $511 million ultimately sold. But the overall subsidies for the project, including not-yet-allotted housing bonds, surely would lift the total well over $726 million.

Read the column for more, including reflections on the departure of "fixer" Bruce Bender.

Yonkers corruption

Powell mentions the tax evasion plea last week by powerful Yonkers pol Nick Spano to the corruption trial, which starts tomorrow (today's a pre-trial conference) in federal court and involves two developments, one Forest City Ratner's Ridge Hill.

The operatives in Yonkers seem to know each other. Former Spano aide Anthony Mangone was indicted along with former Council Member Sandy Annabi and lobbyist Zehy Jereis, and has already pleaded guilty to bribery regarding the other project, Longfellow.

Mangone use to work for Spano, and both were connected to lobbyists for Forest City, including Spano's brother Mike, now the mayor of Yonkers.

Note that the Journal News, in an article this morning headlined Annabi lawyer criticizes feds for timing of Spano charges, quoted William Aronwald as suggesting the pleas was a "deliberate attempt to prejudice the jury."

Annabi is charged with taking money from Jereis for changing her vote, enabling the approval of Ridge Hill. After Annabi's vote, Jereis got a no-show job from Forest City, which the developer has never explained or justified. Aronwald says no one will testify that Annabi solicited the alleged bribes.

The Journal News notes that Franco Milio and Anthony Milio, who developed the Longfellow project, pleaded guilty to tax evasion last week in federal court.

A 52-story tower planned for Flatbush Avenue, near BAM and just north of the Williamsburgh bank building, extends skyline south toward AY site

2012-02-14T06:59:00.001-05:00

Yesterday, the Wall Street journal reported, in Brooklyn's Shifting Center:

New York's Steiner family is planning a 52-story rental apartment tower on a gritty block in downtown Brooklyn in what would be the latest expansion of residential development in the borough beyond its traditional boundaries.

The family, which is best known for developing a Hollywood-scale studio in the Brooklyn Navy Yard, is moving forward with a building that would include about 720 units and 50,000 square feet of store space. The Steiners acquired the bulk of the site, at the intersection of Schermerhorn and Flatbush avenues, for $30 million in November, and plan to break ground early next year at the latest.

The boxy building, called the Hub, would benefit from subsidies to include 20% low-income housing, under the state's 80/20 program.

(Graphics via Wall Street Journal)

Location

As the headline and rendering indicate, this represents another example of the march of towers down Flatbush Avenue from the Manhattan Bridge, where Avalon Fort Greene and Toren, among others, are already established.

And, joining 80 DeKalb and 230 Ashland Place in nearby Fort Greene, this would fill in the march of skyline toward the bank building and then the Atlantic Yards development.

So, from one angle, the north, tall buildings at the northwest and northeast borders of the arena block, bordering broad Atlantic and Flatbush avenues, may seem less jarring.

However, the other two buildings, facing low-rise Dean Street, would still represent a discontinuity. The first tower, not yet started, is slated for the corner of Flatbush and Dean.

The cost

The Wall Street Journal reported:

Mr. Steiner said he plans to rent his market-rate units in the range of $40 to $50 a square foot. Under those rates, a 1,000-square-foot apartment would rent for $3,333 to $4,166 a month.

According to an 8/31/09 market study conducted by KPMG for the Empire State Development Corporation, Forest City Ratner was expecting $45/sf for the market-rate rentals in the first two buildings, which were supposed to be completed in September 2011.

Whatever the expectation, Forest City is now trying to control costs through either modular construction or union concessions gained via the threat of modular.

Appeals court argument Tuesday: should state have systematically examined impact of 25-year Atlantic Yards buildout? Is another public hearing needed?

2012-02-13T22:00:00.000-05:00

In an argument tomorrow afternoon lasting no longer than 30 minutes, lawyers for the Empire State Development Corporation (ESDC) and developer Forest City Ratner will argue to a state appellate court that a trial judge overstepped her boundaries in ordering the agency to systematically examine the environmental impacts of a 25-year project and to reassess the second phase of Atlantic Yards.

In turn, lawyers for two community coalitions, led by Develop Don't Destroy Brooklyn and BrooklynSpeaks, will argue that the decision by Justice Marcy Friedman--which came after a skein of rulings--should be upheld, and a public hearing must be held. (Legal papers are here.)

The case will be heard during the 2 pm session Tuesday at the Appellate Division, First Department, at 27 Madison Avenue in Manhattan. Given that this appeal argument is eighth on the calendar, it may not be heard until 3:30 or later, though those attending probably should get there by 3 pm.

The legal dispute does not affect the building of the arena, nor the towers around it, but does address plans for and impacts of Phase Two of the project: the eleven towers east of Sixth Avenue, including those to be built on a platform over the Vanderbilt Yard.

On a broader note, the case, addresses whether the state agency essentially cheated to ensure that Atlantic Yards would move forward--and whether judges, who generally defer to state agencies if they display a mere "rational" basis for their decisions, are willing to more aggressively protect the public interest.

How bad is extended construction?

One big question is whether it is worse for neighbors to experience extended, if intermittent, construction or, as the state contends, a more concentrated ten-year buildout.

DDDB and BrooklynSpeaks criticize the latter position:

The Appellants argue that the “intensity” of construction impacts at a particular point in time is a more appropriate measure of worst case impacts than the duration of the impacts. But there is nothing in the record to support this position or the asserted choice, which clearly was made only in response to the Petitioners drawing attention to the CEQR Technical Manual directives.

In the final round of legal papers, Forest City Ratner, however, says the courts should stay out of it:

ESDC’s determination as to what represented a reasonable worst-case scenario is entitled to deference and “must be viewed in light of a ‘rule of reason.'"

The history

The case was initially argued 1/19/10 and decided 3/10/10 (a day before the arena groundbreaking). In that decision, Friedman criticized the ESDC’s “deplorable lack of transparency” and acknowledged that the ESDC’s use of a ten-year timeframe for the project buildout in the Modified General Project Plan (MGPP) was supported “only minimally.”

In that case, the main ammunition against the decade-long promise was an agreement with the MTA that allows 22 years to pay for Vanderbilt Yard development rights.

However, there was much more reason for skepticism. The Development Agreement, signed in late December 2009, was not released until January 25, after oral argument in the case.

Friedman did not allow it to be entered into the record for the case. It showed a clear contradiction with the professed time frame. So, both sets of petitioners asked Friedman to reopen the case, which she did, acknowledging a misapprehension--though not quite a mistake on her part--about the Development Agreement.

In November 2010, Friedman remanded the proceedings "to ESDC for findings on the impact of the Development Agreement and of the renegotiated MTA agreement on its continued use of a 10 year build-out for the Project, and on whether a Supplemental Environmental Impact Statement (SEIS) is required or warranted."

The ESDC responded by issuing findings that said no such SEIS was needed. Friedman, after hearing oral arguments on 3/15/11, issued her ruling 7/13/11.

The court ordered ESDC to prepare an SEIS “assessing the environmental impacts of delay in Phase II construction of the Project” and make “further findings on whether to approve the MGPP [Modified General Project Plan] for Phase II of the Project.”

Friedman wrote that the ESDC's Technical Analysis does not provide technical studies of the effects of "significantly prolonged construction" but "appears to take the position that it is a matter of common sense that less intense construction will result in lower impacts for conditions such as traffic, noise, and air quality. "

Last September, an appeal was announced. I wrote last month about the ESDC/FCR briefs and then about the DDDB/BrooklynSpeaks response.

SEIS is happening

While fighting Friedman's decision to order an SEIS, the ESDC is nonetheless conducting one, as a spokeswoman explained last September, "to ensure that the impacts to the surrounding community are minimized to the maximum practicable extent."

Or, perhaps, the agency is hedging its bets; if the appellate court does not overturn the lower court's decision, at least an SEIS will be in place.

And if the decision is overturned, then there will be no need to hold the public hearings associated with an SEIS or to reexamine the MGPP.

Was ESDC arbitrary and capricious?

The ESDC says there are two fundamental issues. Were the ESDC Directors were arbitrary and capricious in determining not to prepare an SEIS when they re-approved the project in September 2009 and, after Friedman ordered a Technical Analysis, in December 2010. Did the agency take the required “hard look” at new environmental impacts not previously disclosed?

The ESDC says no, arguing that the petitioners "do not address this bottomline question until the last eight pages of their 64-page brief, and even then they do not identify errors in ESDC’s environmental review."

Nor, says ESDC, "do Petitioners identify in concrete terms what new environmental analysis an SEIS for Phase II of the Project should include that is not already contained in the completed in 10 years."

I suspect the phrase in concrete terms will be in dispute.

The alleged cover-up

The ESDC asserts that the petitioners allege a “cover up” to “suppress” disclosure of the 25-year outside date for construction, but says the "conspiracy theory falls apart upon a review of the record."

The issue is murky. Yes, the 2009 Modified General Project Plan looked at a delayed schedule, but not a 25-year one, just a 15-year one.

And while Project Lease Abstracts that indicated 25-year terms for project parcels were included in documents placed before the ESDC board, there was also the claim that documents to be negotiated later--the Development Agreement--would require "commercially reasonable" efforts to get the project done in ten years. And the penalties are very gentle.

The “reasonable worst case”?

It was, according to ESDC also reasonable for ESDC to focus much of its attention on a 10-year build-out, since the FEIS, found that timetable to be the “reasonable worst case” for assessing those impacts.

ESDC slams the allegation that ESDC “never considered … whether the longer build-out would be the reasonable worst case for the purpose of assessing construction impacts,” noting it had concluded that concentrated construction activities would be most painful.

That goes to the question, as argued in the petitioners' brief, whether it was appropriate for ESDC to conclude that "intensity" of impacts is a better way to measure the worst case than the duration of those impacts.

Was the work enough?

The ESDC states that it covered its bases:

Thus, the asserted “eerie resemblance” between this case and the “Westway debacle” does not exist. The delayed build-out analyses in the 2009 Technical Memorandum and 2010 Technical Analysis, along with the multiple disclosures discussed above, make clear that there was no “cover up” of either the outside dates for Project completion or the potential for construction to extend beyond 10 years. Petitioners’ inflammatory accusations are little more than a recycling of their motion before the lower court for sanctions, which the court denied in a short-form Order entered July 14, 2011. They should not distract the Court from the real issue: whether ESDC’s environmental analysis – presented in the 2009 Technical Memorandum and 2010 Technical Analysis, and informed by the FEIS and the comprehensive mitigation measures previously imposed – provided a rational basis not to prepare an SEIS.

It adds:

Petitioners may disagree with ESDC’s conclusions regarding such impacts, but a difference in opinion is no basis for overturning ESDC’s determination that no SEIS is required. Nor is ESDC required to undertake its environmental analysis using Petitioners’ preferred methods, as the lead agency has “considerable latitude in evaluating environmental effects.”

What about the 2010 Technical Analysis?

The petitioners had said the 2010 Technical Analysis “could not cure the failure of the ESDC Board to have had such an evaluation before it at the time it approved the MGPP” in 2009. However, according to the ESDC, it "was a critical component of the enlarged record upon which the Directors made the December 2010 findings required by the Remand Order."

And if that determination is upheld, then any challenge to the ESDC's decisionmaking in 2009 is moot, because the agency had cured any potential defects by doing the study it was asked to do.

Can prolonged construction work?

The brief takes aim at affidavits filed by the petitioners' experts, academic Ron Shiffman and policy analyst James Goldstein:

Moreover, while Petitioners’ experts may suggest otherwise, many multi-building projects with prolonged construction periods – including Battery Park City and ESDC’s 42nd Street redevelopment project (the subject of Jackson and Wilder v. N.Y.S. Urb. Dev. Corp.) – have been resounding successes, even during the lengthy period in which they have been under construction. There is nothing in their affidavits to indicate that the projects they discuss were to be developed like the Project at issue here – on a parcel-by-parcel basis with each building separately financed and constructed and with a comprehensive construction mitigation program in place. Thus, they provide no reason to conclude that the experience in this case would resemble the situations they describe.

Then again, neither of the projects mentioned above were nestled adjacent to a residential neighborhood like Prospect Heights.

Response to specifics

ESDC says the petitioners' claims of issues neglected are insufficient to carry the case, since judicial review "requires application of the 'rule of reason,'" a study within limits.

One issue is whether the ESDC studied the long-term cumulative impacts "on the health of the surrounding neighborhood." The ESDC says it did so, under the heading of "neighborhood character," a synthesis of impacts, noting that "construction would have localized neighborhood character impacts in the immediate vicinity of the Project site, but that the adverse impacts would not affect the character of the larger surrounding neighborhoods."

The petitioners suggest there are broader elements, such as the willingness of residents to stay in the face of extended construction, or to make improvements or renovations. And they note there's no analysis that supports the conclusion, citing studies regarding the cumulative impacts of long-term construction on adjoining neighborhoods.

While petitioners said the state didn't look sufficiently at delays in open space, ESDC notes that it would "be made available to the public incrementally as Project buildings are constructed," and if there's a delay in construction, that means "the Project-generated incremental demand for open space resources will also be deferred."

However, the open space was also offered as a public amenity for the area at large.

As for the parking lot, the pedestrian and vehicular traffic "would be less than that anticipated in the FEIS upon Project completion, because the surface parking lot on Block 1129 is limited to 1100 parking spaces, while the below-grade facility that will be in place upon Project completion will have 2070 parking spaces." The noise impacts were not studied, according to the petitioners, but "[t]he record establishes that stackers do not generate significant noise."

There will be traffic noise, ESDC admits, and now we know that Forest City is worried, too. What's unclear, however, is whether the noise mitigation--double-paned windows and air conditioners--is sufficient. People do want to go outside.

Beyond that, ESDC says, it did look at a delay in underground parking, and any concern about the impact of multiple events in one day affect Phase 1 of the project, the arena opening, not Phase 2.

FCR brief

FCR's lawyers state:

Petitioners have not refuted FCRC’s showing that the motion court’s determination improperly expands the scope of SEQRA by using the approval of minor changes to the Project to require a supplemental EIS that examines the impact of changes in economic conditions. Similarly, petitioners have not refuted the showing by both FCRC and ESDC that ESDC took the required “hard look” at the environmental impacts of the 2009 MGPP and made reasoned elaborations of its decision not to prepare a supplemental EIS – first, in the 2009 Technical Memorandum and then, after remand, in the 2010 Technical Analysis, which thoroughly considered the potential environmental impacts of an attenuated 25-year construction schedule for the Project, and thus cured the alleged deficiency in the 2009 Technical Memorandum. Significantly, petitioners’ opposition brief is devoid of any suggestion of what sorts of studies supposedly were omitted from the 2010 Technical Analysis...

FCR argues that the court erroneously required "the reexamination of a previously approved project on the basis of what are really global economic conditions."

As for expert affidavits about the impact of extended construction, from Shiffman and Goldstein, both "consist for the most part of anecdotal assertions about other projects that have no bearing on whether the environmental analysis of potential construction impacts for this Project was adequate."

Even if they have a point, say FCR attorneys, courts are not supposed to resolve disputes between experts.

Moreover, it's improper to criticize ESDC for having no indication that the 2010 Technical Analysis was prepared by experts, because it was prepared by the agency with the "preeminent" environmental consulting firm in the city, AKRF.

The Development Agreement

FCR says the Development Agreement should not be key:

The document did not exist when the 2009 MGPP was finally approved. Furthermore, it is unprecedented for a court to use business contracts completed after the conclusion of an environmental review to impeach the build-year that was used for the environmental review. Petitioners are unable to cite a single other case where this was done, but conclusorily assert that the failure to consider subsequently concluded business contracts “would sanction fraud and lack of disclosure.” This assertion is false. Business agreements governing a development project, such as agreements for construction financing, construction contracts and leases with major tenants, typically are not finalized – and cannot be finalized – until the parameters of the project have been fixed in a regulatory approval process that will include an environmental review if required by SEQRA... Here, moreover, petitioners nowhere address the significance of – and the motion court’s unwarranted denigration of – FCRC’s obligation under the Development Agreement to use “commercially reasonable efforts” to complete the Project by 2019.

From the latest Atlantic Yards Construction Alert: work til 3 am weekdays, trench dug this weekend at Sixth Avenue and Pacific Street

2012-02-13T14:09:00.001-05:00

The latest two-week Atlantic Yards Construction Alert (below), dated 2/13/12, was distributed today--rather than, as is typical, a day late--by Empire State Development (after preparation by developer Forest City Ratner).

The big news was already announced 2/9/12 in a Supplemental Alert, indicating work til 3 am weekdays through September to ensure the reconstruction of the Carlton Avenue Bridge.

Also, a trench will be dug at Sixth Avenue and Pacific Streets, with associated sheeting, for stormwater discharge work February 17-20, Friday through Sunday. "Traffic will be limited until it is plated," according to the alert, which does not specify how long that would go.

Missing transparency

In an oddity, the alert states that "transformers are scheduled to be delivered to the arena site on 02/11/12," which was presumably already accomplished.

It also states that the "emergency generator was delivered to the arena site 02/02/12," which happened in the last reporting period but had not been announced in the previous alert.

What's new

The text below is excerpted from the latest document (bottom), with the bolded text indicating what's new compared to the previous alert.

Construction at the Arena Site

• Façade panel delivery will continue through this reporting period. • Precast concrete delivery to 752 Pacific Ave lots will continue this period.

Steel Erection and Stadia Installation

The de-shoring of the primary roof trusses will be done during this reporting period. The de-shoring program has been reviewed with engineer of record and with DOB.

Façade Installation

• The installation of façade panels at the street level and up to the Upper Concourse levels on Atlantic Avenue has been substantially completed. Contractor will return to install the façade panels at the uppermost elevation and in the area of the material hoist at a later date, projected to begin this reporting period and taking place on second shift.

Waterproofing & Fireproofing

• The waterproofing of the interior walls of the east stormwater retention tank will continue this reporting period. This work may be performed on a second shift. The application of interior waterproofing at the west stormwater tank may begin this reporting period.

Mechanical, Electrical, & Plumbing

• The boiler is being piped and electrical service to the boiler is being installed during this reporting period. The initial boiler permit inspection has been performed. At the inspector’s direction, several small revisions are to be performed in time for a second boiler inspection. Revisions and inspections are to be performed during this reporting period so as to secure approval for the use for temporary heat during this reporting period. The revisions required were completed – The boiler is scheduled to be fired on 02/08/12.

• The transformers are scheduled to be delivered to the arena site on 02/11/12.

• The emergency generator was delivered to the arena site 02/02/12.

[BOTH AFTER the fact]

Subway Transit Canopy

Tile work has started. The steel stair nosings and stair tile work at the main entrance stair will follow the completion of the MEP work, painting and canopy ceiling installation. MEP work will progress over the next 2 months and will be followed by the canopy ceiling.

Railard Work

Drainage System
• Posillico/Tully is working from west to east to install deep drainage piping in the yard. They will also continue excavation for the associated stormwater manholes. This work will be ongoing for the next 2 months. Through this period, Retention Basins “A”, “B” and “D” have been completed and back-filled. Work will now move t to Basin “C”.

Yards Lights

• During the week, to facilitate early start and late finish of work, Yard Flood Lights will be turned on at 6am and from dusk to 3:00 am, during double shifts through the completion of the Carlton Avenue Bridge replacement, as needed.

Replacement of Adjacent Water Mains and other Utility Work

Stormwater discharge at Flatbush Avenue is complete but has not yet been inspected. Work on the discharge at 6th and Pacific Streets is scheduled to be performed the weekend of February 17th through 20th. The work will include a trench and associated sheeting or lagging approximately 17 to 20 feet deep to reach the bottom of the existing sewer main which the storm system will connect to. Because the main is almost in the center of the road and traffic will be limited until it is plated, and subject to DOT and OCMC approval, the trenching can be cut off at grade and plated over. This work will be coordinated with DOT, NYPD, FDNY as well as the arena contractor.

Anticipated Nighttime & Weekend Work

During this reporting period the following work will be performed either at night or during the weekend as noted. All work will be done pursuant to approved permits:
• Long Island Rail Road/Vanderbilt Yard/ Carlton Avenue Bridge:
o All weekdays all locations in the yard: 6:00AM to 3:00 AMo Saturdays as required: 7:00 AM to 12:00 AM, as needed
o Sundays and Holidays as required: 8:00AM to 12:00AM, as needed
[in both cases extended form 11 PM]
o The weekend work being performed could be in any area of the yard, and within MPT areas for which permits are on hand.
o The work hours will remain in place through the completion of the Carlton Avenue Bridge replacement, as needed.• Arena Site:
o Arena weekend work will be scheduled no later than close of business on the preceding Thursday, where make-up work due to weather or other delays makes it necessary. Saturday work is expected to continue for this reporting period.
o Subject to receipt of permits, a second shift shall be continued throughout this reporting period, from 3 – 11 PM, Monday-Friday only. Also subject to receipt of permits, a third shift may be instituted during this reporting period, from 11 PM – 7 AM, Monday –Friday only.
o Hunt has been granted a permit to allow for deliveries from 6 AM to 7 AM to the Arena site from the dispatch center. This work allows for an additional hour of deliveries to take place outside the neighborhood peak traffic patterns and reduce congestion and interference with the local traffic.
o The second shift arena contractors are noted within the arena summary above.
• NYC Transit Improvements:
o Temporary concrete road decking has now been removed. In the future, if any additional work is required it will be performed at night per DOT regulations. Traffic will be restored every morning according to DOT stipulations.
Work related to the BMT structure and below grade concrete, steel and MEP work may be conducted on Saturdays, February 18th and 25th, during this reporting period.
• Arena Site Work:
o Underground utility work may occur within the site at the main plaza. Work will be conducted during the hours of 8 A.M. to 4 P.M., subject to NYCDOB permits.
• Block 1129 – staging area:
o Contractors conducting night work may have cause to enter and exit this area as it serves as a staging and material/equipment storage area.

Atlantic Yards Construction Alert 2/13/12

The peril of car stackers on the arena parking lot, Forest City's modular alternative, and delays in (and questions about) the transportation demand management plan

2012-02-13T07:30:00.000-05:00

Just before an oral argument tomorrow in the appeal of a state judge's decision to order an additional environmental review for the second phase of Atlantic Yards (I'll have more on this tomorrow), the New York Post reports, in an exclusive:

Stack-parking spaces — which use hydraulic lifts to stack anywhere from two to four cars atop one another — are expected to fill roughly half of an 1,100-spot parking lot going up next to the NBA Nets’ arena in Prospect Heights, according to renderings commissioned by project critics based on approved plans.
With nearly a square block— bordered by Carlton and Vanderbilt avenues, and Dean and Pacific streets— designated to be the only on-site event parking lot for many years, the renderings show what many feared: It’s mathematically impossible to fill a state-mandated 1,100 spots there without stacking spaces.

And if spaces are stacked, that slows things down, and that "major undertaking that’s never been studied,” said Gib Veconi of the Prospect Heights Neighborhood Development Council, one of three civic groups that commissioned the renderings.

From Atlantic Yards Watch

Atlantic Yards Watch offers an illustration of how the parking lot with stackers might look, and how a parking lot following city design standards for trees and medians--not required in this case because of a state override of zoning--would look.

With required landscaping--one tree for every eight cars--and no stackers, the lot would be reduced to approximately 500 spaces.

Base photo and arena illustration: Jonathan Barkey and Tracy Collins

Forest City's response and the modular solution

The Post quoted Forest City spokesman Joe DePlasco as saying that reducing on-site parking is “important," and they are “conducting an analysis" to try to avoid stackers.

Translation: use a modular system that's never been tested. And that was discussed more than eight months ago, though no formal plans have never been announced.

According to an October 2011 report to Empire State Development, the state agency overseeing Atlantic Yards, HDR, the agency's Atlantic Yards mitigation monitor, met with Forest City's transportation consultant, Sam Schwartz Engineering (SSE), and reported:

On-site parking on Block 1129 was discussed in detail, in particular the use of strategies of avoiding extensive vehicle queues on the local street network due to the use of vehicle stackers for parking. Concern was raised especially for the post-event period, when potential excessive wait times would be experience by many event attendees as event staff retrieved vehicles parked in the stackers. To mitigate this concern, SSSE recommended investigation of the feasibility of constructing the use of a temporary parking stucture sold by MORE PARK, LLC, in lieu of the stackers. The temporary parking structure would consist of standard structural steel and precast concrete members and would be installed over a paved surface, without a foundation. SSE is to perform a detailed queue analysis utilizing the MORE PARK system to ensure optimal performance. FCRC and its consulting engineers will study code compliance with NYC Department of Buildings and FDNY.

I wrote last August that More Park was said to have been chosen for the arena lot, but it was unclear whether the company's modular model had been tested in the United States, though it has been used in Europe.

Recommended changes

Atlantic Yards Watch suggests a planted median, street trees on the perimeter, an a "green wall" for screening:

With these steps, the compliant lot has the advantages of absorbing most stormwater on site, taxing city sewers less and reducing the Heat Island Effect. In addition, the landscaping helps planners control pedestrian crossings and make the lot safer. Finally, aesthetics are improved for residents who live nearby, visitors to retail businesses on Vanderbilt Avenue and arena patrons.

The lot, however, would have to be smaller, which means Forest City Ratner would have to move parking--designed for VIPs and High Occupancy Vehicles--elsewhere. VIPs, at least, would not want that.

Atlantic Yards Watch recommends some additional "improvements to lessen the lot's environmental impacts and integrate it more into the community given its interim status":

No mid-block curb cuts on Dean Street, Carlton Avenue or Vanderbilt to enter or exit the lot, just on Pacific Street mid-block, rather than at the Carlton and Vanderbilt intersections
A small building or pavilion for retail at Dean Street and Carlton Avenue
The opening of Pacific Street "to restore a lost connection for the neighborhood for pedestrians, bicycles and vehicles"
"Green walls" along Dean Street and Carlton Avenue to provide more dense screening, lower the Heat Island Effect, and improve sound absorption
Use of permeable pavement is used to reduce stormwater runoff

Note that Pacific Street, according to current plans, is needed not only for the promised open space serving future apartment towers but also for construction staging.

Delays in the transportation plan

The Post reported:

Although the arena is set to open in September, the developer has yet to reveal a transportation management plan, causing neighborhood groups to fear the worst and lobby for permit parking.

The Transportation Demand Management (TDM) plan was supposed to be released in December 2011, then bumped back to February 2012, and now is due in May 2012--delays that cut into the credibility of both Empire State Development and Forest City Ratner.

Changes in the TDM plan and concerns over its extent

According to the report from HDR, which I examined after a Freedom of Information Law request:

On May 23, 2011, SSE presented a detailed overview of Forest City's process for developing the Travel Demand Management (TDM) plan, based on the Mitigation chapter of the FEIS. Working with the New Jersey Nets basketball organization, FCRC compiled a travel survey from current season ticket holders focusing on travel mode share, and also interviewed fans within focus groups, and shared these results with ESD and HDR. Considering the results of these surveys, SSE has proposed to modify some of the recommendations put forth in the FEIS and also presented a more detailed analysis of the travel and parking projections that would be expected for a typical basketball game at the Barclays Center. Some of the notable findings presented by SSE include specifics on assigned parking for season ticket holders in off-site parking garages, on-site parking for high-occupancy vehicles (HOVs) and VIPs, remote parking with free shuttle bus service, the possible removal of bus service from park and ride lots in Staten Island (a TDM element identified in the FEIS), transit fare incentives, on-site bicycle parking, and cross-marketing of area businesses to reduce peak travel surges. For non-NBA games, FCRC stated that some of the TDM measures intended for Nets games could be utilized, depending on the type of event.

(Emphases added)

So it seems that Forest City may have recognized that not many people want to drive to Staten Island and take a long bus ride.

More importantly, the report leaves ambiguous a concern raised by organizations representing Prospect Heights and other neighborhoods: will the TDM plan apply to other events at the arena?

The answer is maybe, and that's an obvious concern, since certain large events, notably concerts, would fill the arena as much as a basketball game would.

The mystery of Ridge Hill: as Yonkers corruption case heads for trial, what will we learn about Forest City Ratner, its lobbyists, and Bruce Bender?

2012-02-13T07:10:00.000-05:00

A complicated corruption case involving two real estate development projects in Yonkers goes to trial in federal court in Manhattan tomorrow, February 14, and could last a month.

(Update: tomorrow is a pre-trial conference; jury selection should begin Wednesday, February 15.)

The results should illuminate the dubiously ethical behavior of Forest City Ratner, which gained a huge benefit for its still-in-process Ridge Hill project, but emerged officially unscathed.

One of the three defendants, Anthony Mangone, has already pleaded guilty to giving bribes, resolving some but not all questions about a different real estate project, known as Longfellow.

However, numerous questions linger, mostly about Ridge Hill, an 81-acre project east of the New York State Thruway that includes a giant mall and condos, plus perhaps office space and a hotel.

The largest development in Yonkers history, the cost is estimated at nearly $700 million, a vast change from the site's previous use as a center for drug treatment and defense contracting R&D.

Ridge Hill was enormously controversial, given Forest City Ratner’s request for special zoning and other benefits, the creation of a shadowy (slammed by the Times and now defunct) development corporation, and traffic concerns.

So it raised eyebrows that City Council Member Sandy Annabi (photo from Yonkers Tribune), not long after she said the developer was “robbing the city blind,” changed her vote in 2006 to approve the project.

Annabi, who according to charges had a taste for luxury goods and apparently lived well beyond her means, was charged in early 2010 with accepting bribes regarding Ridge Hill and Longfellow.

Her cousin, Zehy Jereis, then chairman of the Yonkers Republican Committee, was charged for giving the bribes regarding Ridge Hill and, regarding Longfellow, with connecting Annabi to Mangone.

The Forest City connection

FCR, which shortly after Annabi’s vote hired Jereis (image from Yonkers Republican Journal) for an apparent no-show job as a “real estate consultant,” was not indicted and issued a statement that federal prosecutors said that neither it nor its employees was a "target" of the investigation.

FCR has never explained or justified that no-show contract, but it benefited significantly. Given the developer’s apparent cooperation with federal investigators, it will be interesting to see who will say what on the stand.

As I wrote, the developer's actions, if true, seem to violate the corporate Code of Conduct.

And if Forest City got immunity from prosecution, how will it look for an executive--say, Bruce Bender, FCR's Ridge Hill point man, now departing in somewhat curious timing--explaining in court exactly how business gets done. (There's also a question of whether consultant Melvin Lowe, who worked for the developer and has close ties to Senate Democratic leader John Sampson, will be mentioned.)

Even a mostly positive Westchester Magazine profile of FCR executive MaryAnne Gilmartin last November had to acknowledge, of Ridge Hill, "Less easy to shrug off is the bribery scandal that tainted the project last year." But Gilmartin wasn't asked to explain that no-show job.

Ripples in Yonkers

The case likely will have ripples in Yonkers, the state’s fourth-largest city, a place of byzantine politics that’s no stranger to corruption.

Former FCR lobbyist (and longtime Assemblyman) Mike Spano was elected mayor last year, despite his opponent John Murtagh’s efforts to tie him to the unresolved charges regarding Ridge Hill.

Spano connected Jereis to Forest City Ratner, specifically introducing him to Bender--the same executive involved in some unsavory (but not charged) deal-making with now-convicted state Senator Carl Kruger.

And Spano's brother Nick, a former state senator with longtime ties to Jereis, last week pleaded guilty to tax evasion, which may or may not be connected to his potential testimony in the Ridge Hill case.

Murtagh has further said that Bender was with Zereis when the latter pressured him to change his vote on Ridge Hill, given that Annabi had turned.

(New York Times columnist Michael Powell, who wrote last month about Forest City’s role in the Kruger and Ridge Hill cases, nonetheless didn’t mention Bender’s role in Ridge Hill.)

The charges and the trial

Annabi, the former Democratic Majority Leader of the Yonkers City Council, is charged with conspiracy, bribery, extortion, false statements, and tax crimes. Jereis is charged with conspiracy, bribery, and extortion. A superseding indictment added a charge of conspiracy by Annabi and Jereis to deprive city of Annabi’s honest services.

On 11/29/10, Mangone (image from Yonkers Tribune) pleaded guilty. “I told my client that he would have to pay this cash to Councilwoman Annabi to get her to change her vote on the project,” he stated in court, according to a transcript.

“I gave tens of thousands of dollars in cash to Zehy Jereis, who said he would take care of Annabi so Annabi would switch her vote in favor of the Longfellow project,” he said.

“I made these payments to Jereis with the understanding that he would pass the money on to Councilwoman Annabi to influence or reward her for official action.” (Mangone was once Nick Spano's chief of staff and campaign manager, according to the Journal News.)

The stream of payments regarding Ridge Hill, apparently, will not be so simple. According to a 12/03/11 article in the Journal News, it could take up to a month for the prosecution to put on some 50 planned witnesses, for both the Longfellow and Ridge Hill aspects of the cases against Annabi and Jereis.

Annabi's defense

What’s the defense? “Ms. Annabi never directly or indirectly sought or received any money or other thing of value, to influence her vote on any matter before the Yonkers City Council including the Ridge Hill and Longfellow Projects,” her lawyer, William Aronwald, stated in a legal filing.

“The case against Sandy Annabi is as weak a case as I’ve ever seen the government bring,” Aronwald told the 5/28/11 Journal-News, a comment that prosecutors considered inflammatory and led them to (unsuccessfully) seek a gag order, as they contended he was prejudicing the potential jury pool.

Aronwald stated that “the prosecution recognizes that they cannot tie any of the alleged “payments” specified in the Indictment to Ms. Annabi’s allegedly changed votes in favor of the Longfellow and Ridge Hill projects.”

“Both projects had been substantially revised in significant respects,” he stated, offering an explanation for Annabi’s changed votes.

However, as the New York Times reported 5/5/08:

In a news release at the time of her vote switch, Ms. Annabi cited 11th-hour negotiations with Ratner over property taxes, in which she said she was able to wring out millions of additional dollars. Later, it became clear that some of the promised riches had little chance of being paid because of fine print in contracts that Ms. Annabi said she never saw.

For Jereis’s part, his lawyer said in legal papers that the defendant and his cousin had a social relationship since at least 2001, and he often gave her money and loaned her funds.

A personal “friendship,” responded prosecutors in legal papers, does not excuse such conduct.

The "stream-of-payments" theory

Was there a specific bribe for a specific action, a quid pro quo? Not necessarily. Prosecutors describe “an overarching stream-of-payments bribery scheme engaged in by these defendants and not two separate and discrete bribe transactions.”

In other words, “the Government contends that Jereis made these secret payments to Annabi to keep her on retainer, allowing him to call in favors when the opportunities presented themselves.”

Thus, one online commenter--and there are many in the Yonkers political world, mostly anonymous--suggested that Forest City’s hiring of Jereis might be termed a “success bonus.”

One December 2010 blog post in Yonkers suggested that Jereis was cooperating with the FBI, and that a plea deal had been offered to Annabi. Well, that led to an indignant denial from Aronwald, and there has been no plea.

No cooperation from FCR

Last year, Annabi’s lawyer Aronwald sought additional discovery, asking for identification of individuals not named in the indictment, such as “representatives of Developer No. 2” who met with Annabi at various times, drafted a press release for her, and met with Jereis. (That could mean staffers, or lobbyists.)

Aronwald stated that “it is unreasonable to expect that we will be able to prepare a defense to allegations concerning meetings and discussions with, and payments made by unnamed ‘representatives’ of the two developers.”

“I have been unsuccessful in my efforts to speak to either Developer No. 1 or No. 2 concerning this case,” he added, in a legal filing.

Aronwald further asked the Court to “direct that the government disclose any statements or materials from Forest City Ratner agents, principals or employees that Sandy Annabi never solicited, accepted or agreed to accept any money or financial benefits from, or on behalf of, Forest City Ratner, and that there were no discussions with Sandy Annabi concerning payment of money or financial benefits with respect to the Ridge Hill development project.”

He noted that the developer of the Longfellow project, Milio Management, denied giving cash payments to any public official.

Will we hear from Forest City?

“[I]t is unclear whether the Government intends to call either Developer at trial,” Aronwald wrote in a legal filing last year. We’ll learn soon enough.

Seeking additional safeguards to block public disclosure of discovery materials, prosecutors cited, among other things, documents produced by FCR.

Those included phone logs, calendars, expensive reports, consulting contracts, and emails,, which contain “sensitive business information” and information about “business strategy.”

The judge, however, deemed existing rules sufficient to prevent pre-trial disclosure of sensitive materials. Again, we’ll see soon.

Jereis defense raises questions about FCR

According to a memorandum from Jereis’s lawyer, Anthony Siano, the omission of Forest City is curious: “In effect, the developers of Ridge Hill appear to form no part of the substantive violations against defendant Jereis. This appears to be so despite the recitations as to Ridge Hill in the conspiracy count.”

He suggested that Forest City Ratner case is quizzical: “In regard to the Ridge Hill development, the Indictment does not allege who, if anyone, made corrupt payments to Jereis and does not even identify whether any such corrupt payments were bribes or extortion payments."

"The defendant is entitled to any information the government has that negates the allegation that there was a ‘bribe giver’ or an ‘extortion victim’ of any kind in connection with the approval of the Ridge Hill project," he added. "Likewise, if the government is not alleging that the developer was a bribe giver or an extortion victim, such information is clearly material and exculpatory of Jereis.”

What if prosecutors argue that Jereis bribed Annabi not on behalf of Forest City but on his own behalf? If so, Siano stated, "the defendant is entitled to rebut that allegation by placing before the jury such information that the government has which establishes that the developer was neither solicited for a bribe nor extorted.”

“The grand jury chose to omit any allegation that the developer of Ridge Hill was neither a briber nor an extortion victim," he noted. "If the grand jury did so because the developer refuted the bribery or extortion allegations, the defendant Jereis is entitled to obtain such information well in advance of trial."

Continued jousting

The jousting in court continues. According to a 1/26/12 scheduling order issued by Judge Colleeen McMahon, “From the 404(b) [criminal] disclosure that was made last week, it appears to be the Government’s intention to try to broaden the scope of the present trial well beyond the parameters of the Indictment. I am serving notice that we will be trying the charges outlined in the Indictment--which are, frankly, not overly broad in scope--and not matters not indicted or persons not indicted. I intend to run a tight trial.”

Help from a disbarred lawyer?

One sideshow--which got significant discussion in Yonkers--was the assistance offered by disbarred attorney Samuel Abady. The government charged Abady was improperly practicing law. Aronwald said he offered voluntary assistance, and his public comments--that Annabi was being persecuted because of gender and (Arab) ethnicity--came in his capacity as a journalist.

For example, Abady commented 9/3/10 that Annabi “never received funds from Jereis to change her vote on the Ridge Hill development project. The feds have not produced a single intercepted E-mail, voice recording or telephone call to or from her about a bribe of any kind.”

Yonkers politics and FCR lobbyists

One pseudonymous commenter, “Yonkers Confidential,” has suggested that the feds “sorely want Annabi’s testimony against other, more ‘high-value’ targets” in other cases.

As noted last week, “Yonkers Confidential” described ties between former Assemblyman Mike Spano, an FCR lobbyist, his brother Nick Spano, and the developer.

The mayoral race

Last year, mayoral candidate John Murtagh challenged Assemblyman Mike Spano, the frontrunner:

During a live debate on News 12 Westchester last night, I asked Spano to explain his role as a highly paid lobbyist for a major developer -- who was caught bribing Spano’s Assembly Counsel Anthony Mangone -- as well as offering long time Spano confidant Zehy Jereis a $60,000 no-show job in exchange for his delivering the deciding vote for the approval of the Ridge Hill project.

Note: this is not correct. Forest City had nothing to do with Mangone, since the latter was involved in Longfello, not Ridge Hill. But Spano did connect Jereis to Forest City Ratner's Bender.

A Lipsky sideshow?

Well after the 2006 vote at issue in this trial, Forest City Ratner’s former lobbyist, Richard Lipsky, was paid $23,000 in 2008 to lobby the Yonkers City Council and then-mayor Phil Amicone regarding Ridge Hill.

In 2009 and 2010, Lipsky was paid $10,000 a year to lobby on behalf of Ridge Hill, but only in the first of 12 disclosure reports filed with the state did he state a lobbying subject: “GRASS ROOTS SUPPORT FOR RIDGE HILL VILLAGE.”

Lipsky, of course, pleaded guilty in January to other corruption charges linked to state Senator Carl Kruger. Ridge Hill was not part of the case, so it's unlikely his name will come up in the case beginning tomorrow.

Another connection

Questionable dealings have long surrounded Ridge Hill. The New York Times reported 3/21/05:

Some of the [Ridge Hill Development] corporation's directors are allies of Mayor Philip A. Amicone and former Mayor John R. Spencer, and sit on the boards of at least two other local development corporations in Yonkers. Tax documents show that in 2003, Mr. Spencer's brother-in-law, Chris Spring, had a $100,000-a-year job with the corporation, but a storm of protest followed and by 2004 he was on the developer's payroll instead

Forest City's alleged actions in Ridge Hill corruption case, if not illegal, seem to violate corporate Code of Conduct

2012-02-13T05:00:00.000-05:00

Somehow the Forest City Enterprises Code of Legal and Ethical Conduct didn't bar the corporate behavior--noncriminal, apparently, but ethically questionable--alleged in the Yonkers corruption case that goes to trial tomorrow in federal court and will surely mention the role of subsidiary Forest City Ratner.

By my reading, if the code bars not merely bribes but also direct or indirect "improper" payments, it should have barred such behavior.

That means either 1) the allegation isn't true or 2) Forest City's Code of Conduct is toothless.

An executive at the center of the allegations, Bruce Bender, kept his job, only to announce his departure last week, in what may be--but can't be confirmed--timed to the upcoming trial.

The allegation

In the part of the case involving Forest City Ratner's Ridge Hill project, Council Member Sandy Annabi, a longtime opponent of the project, is alleged to have changed her vote because of a bribe. That bribe allegedly came from her cousin Zehy Jereis.

At the meeting and while he was helping secure Annabi's support, Jereis asked representatives of FCR for a consulting job. They reached an agreement in principle in which FCR agreed to give Jereis a job after Annabi formally voted in favor of Ridge Hill.

That happened on or about 7/11/06. Around October 2006, Jereis signed a consulting contract with FCR to serve as a "real estate consultant," even though he was not a broker and had little or no relevant experience.

The contract was backdated to 8/1/06 and he began receiving his $5000 monthly payments retroactively starting with August 2006. Only until 3/12/07, after news reports about the federal investigation surfaced, did Jereis submit required monthly reports, dating back to August 2006.

From the Code

Here's the relevant excerpt from the code of conduct:

2. No bribe, kickback or other improper payment or promise of same shall be authorized, approved or made, directly or indirectly, by or on behalf of FCE in connection with any of its business.

That's a pretty blanket statement.

Not merely a bribe, or a kickback, but "improper payment or promise of same."

It seems to cover the actions alleged in the case. We should, in the next few weeks, know more.

Consultant Melvin Lowe: another Forest City Ratner connection who may be mentioned in Ridge Hill corruption case

2012-02-13T04:30:00.000-05:00

Forest City Ratner executive Bruce Bender's name is expected to come up during the Yonkers corruption trial beginning this week, which includes the developer's Ridge Hill project. Bender might even testify.

What about Melvin Lowe, a consultant connected to Forest City, who's had a surprisingly central role in state Democratic politics, thanks to his links to Brooklyn powerbrokers?

It's unclear whether he'll be mentioned in the trial, but it's worth a quick look back at his history with Ridge Hill, Forest City Ratner, and local politics. There are a lot of seeming connections.

Consulting work for FCRk

As I wrote 8/31/09, Liz Benjamin of the Daily Politics pointed to Lowe, a new staffer for the fianlly-in-the-majority Democratic Senate Campaign Committee (DSCC) staffer, who "has provided consulting services to developer Bruce Ratner on the Atlantic Yards project in Brooklyn."

That was a role I haven't seen confirmed elsewhere.

A 5/6/08 article in the Journal News, headlined "Forest City Ratner lobbying campaign for Ridge Hill," described a somewhat limited role for Lowe:

The latest subpoenas sought... e-mails sent and received by Councilwoman Patricia McDow related to Ridge Hill, Forest City Ratner, consultant Melvin Lowe, and another development, the Longfellow project.
McDow, D-1st District, a supporter of Ridge Hill, described Lowe as a lobbyist for Forest City Ratner whom she had met with individually and with other representatives of the developer. McDow said she had assumed that Lowe had been assigned to lobby her because they are both black.
Several current council members and one former member yesterday said they either did not know Lowe or said he did not play a major role in their meetings with developers.

Sampson, Boyland, Ratner?

I pointed out 7/22/10 an article in City Hall News headlined Largely Unknown DSCC Consultant Cleared $300k In Last Year:

The Democratic State Senate Committee and Conference Leader John Sampson have spent over $300,000 with two companies run by the same consultant, a shadowy operative named Melvin Lowe who had worked on only a few campaigns prior to being brought on in the wake of the Senate coup last year.
...Several people familiar with the DSCC and Lowe have expressed mystification at what his position entails to justify being paid this sum, and the DSCC itself declined to provide details.
Lowe, who was brought on to provide oversight for the DSCC, is the principal of both Prestige Strategic Communications and G&L Consulting, which, as reported on Wednesday by Liz Benjamin on the State of Politics blog, share an address at 350 West 110th Street...
Before the massive influx of money to the campaigns in the last 12 months, Lowe had retained only a handful of clients... $16,000 paid to him by former Council Member Tracy Boyland in her 2006 race against State Sen. Velmanette Montgomery that was paid to Prestige...
Immediately before starting with Sampson and the DSCC, Lowe was a lobbyist for Forest City Ratner Companies, helping lobby on behalf of the Atlantic Yards. While at that job, Lowe got involved in the Ridge Hill development in Yonkers and is among the people mentioned in subpoenas that came out of the local U.S. Attorney’s office related to the passage of that project.

Keep in mind that in October 2009, a lobbying firm hosted a fundraiser for Sampson at Forest City's headquarters.

And why was Boyland--for whom Lowe worked--running against Montgomery, an opponent of Atlantic Yards? Unclear, since she hardly campaigned, but there was circumstantial--and more--evidence of a Ratner connection.

She used the same consulting firm--Knickerbocker SKD--that FCR used for its deceptive Atlantic Yards mailers. A push-poll from Pacific Crest Research, which had conducted a previous push-poll on Atlantic Yards, seemed to steer listeners to Boyland. Crain's reported that Forest City executive Bruce Bender was helping Boyland raise money.

Lowe's state campaign contributions

Below are some contributions from people named Melvin Lowe, from different addresses, including Conyers, GA, which makes it difficult to assess for sure whether it's the same person.

However, it's interesting to see the Georgia-based (or Harlem-based) Lowe contributing to a Southern Brooklyn politician like Alan Maisel. The latter came out of the powerful Thomas Jefferson Democratic Club, as did Sampson.

Lowe, FCR contributions to Maisel

As noted in the disclosure report below, Lowe's contribution to Maisel came on the same day contributions were received from Forest City Ratner CEO Bruce Ratner, his wife Pam Lipkin, and FCR executives Bruce Bender and Joanne Minieri (click to enlarge).

The Recchia connection

Melvin Lowe and Deborah Lowe of Conyers, GA, were among the largest contributors to City Council Member Dominic Recchia's putative 2008 run for Congress.

It turns out they gave the maximum contribution on 12/28/07, one day before a maximum contribution from Dorothy Lipsky of Nanuet, NY, who just happens to be the wife of lobbyist Richard Lipsky, who worked for, among others, Forest City. (Lipsky last month pleaded guilty to corruption charges.)

Lowe's city campaign contributions

It's interesting to see how Lowe gave such a large contribution to City Council Member Darlene Mealy, an Atlantic Yards supporter.

Atlantic Yards Watch gets results: signs nailed to trees are removed

2012-02-12T20:05:00.000-05:00

A day after Atlantic Yards Watch reported that there were temporary "No Parking" signs nailed to trees on Pacific Street, they were removed.

Post: Ratner bundled contributions for de Blasio, but both made efforts to downplay it

2012-02-12T08:30:00.000-05:00

New York Post Inside City Hall columnist David Seifman reports, in Mayor-bid $ecrets: Ratner pals’ mystery cash, that mayoral candidate and Public Advocate Bill de Blasio reported $4,000 from three individuals via developer Bruce Ratner as intermediary, but failed to report another $4,500 from three more construction executives.

That's a relative pittance, given de Blasio's $1 millon haul, but it looks kind of fishy. Beyond that, Ratner's not supposed to be listed as the “intermediary,” since the total was actually solicited by FCR construction executive Bob Sanna, Seifman was told.

Seifman writes:

In that case, why change the name of the intermediary from Ratner to Sanna?

There’s no way Sanna would do any of this without direction from Ratner, who has made no secret of his support for de Blasio. In December 2010, Ratner wrote a check for $4,950 to help close out debts from de Blasio’s 2009 campaign for the public-advocate job. Last year, Ratner hosted a birthday party/fund-raiser for de Blasio.

One political insider speculated that the developer wanted to play down his role so as not to antagonize other candidates.

Added reason for raised eyebrows: on de Blasio's filing, Ratner is listed as "Forrest City Ratnor Companies CEO."

That's a double spelling error, since it should be Forest City Ratner. Are those filing so dumb they don't know how to spell? Or so Mickey Mouse they think that misspelling the firm's name, as well as the last name of the CEO, could stymie those doing keyword searches?

A visit to Ridge Hill: an upscale mall still very much in progress, and "New Urbanist" condos that aren't

2012-02-12T08:00:00.000-05:00

So, what's “Westchester’s Ridge Hill", the Forest City Ratner project that's the subject of a corruption trial beginning February 14, really like?

Well, it opened in October, and it's hardly finished, so any observations are preliminary. Still, during a visit to the retail and residential development two Fridays ago, shortly before lunch hour, it was very quiet.

No, we didn't hit the magnet of Whole Foods and, as the signage pictured at left shows, there's room for more stores. But in most places there were more construction workers than shoppers, rendering the omnipresent muzak a bit odd.

Forest City Ratner expects occupancy to hit 70% in time for the official grand opening in April, according to an article, headlined, Yonkers finally starts to draw a crowd, in today's Crain's New York Business. (There's no mention of the federal trial.)

With clear branding--it's not “Yonkers’ Ridge Hill”--the project is trying to appeal to the more affluent segment of Westchester beyond Yonkers.

(Photos copyright Jonathan Barkey)

To journalist Marek Fuchs, writing 1/30/12 in the Daily Darien, there's an initial pattern of weekend bustle and weekday quiet. That suggests that Ridge Hill it is neither the promised economic booster nor the feared traffic disaster.

And yes, he noted, former project opponents are now shopping at Whole Foods.

The "Brand Opening"

As described in a 10/19/11 press release from Ridge Hill:

“Brand” Opening at Westchester’s Ridge Hill Nears:
October Openings Include: The Cheesecake Factory, Desigual, Gap, H&M, L.L.Bean, Old Navy, Orvis, Sephora, Whole Foods Market, and Yard House
Weekend Celebration – From Thursday, Oct. 20 through Sunday, Oct. 23 – Features Live Entertainment, Disney’s Muppets’ Giveaways and More
Yonkers, NY – October 14, 2011 – Westchester’s Ridge Hill, the New York metropolitan area’s largest mixed-use outdoor shopping center, will celebrate the first in a series of “brand” openings next week, unveiling brands never before seen in the area, coupled with an unrivaled shopping experience.
Located in Yonkers, N.Y., Westchester’s Ridge Hill, which spans more than 81.4 acres and will include 1.3 million square feet at full build-out, will change the shopping habits of tens of thousands of New Yorkers. Best of all, this exceptional destination is conveniently situated just off the New York State Thruway I-87 at Exit 6A, and the Sprain Brook Parkway Tuckahoe Road West Exit, making it easily accessible to New Yorkers and tourists alike.
To commemorate the opening of many exciting restaurants and retailers, Ridge Hill will host a four-day celebration, complete with live music, street performances and interactive characters. The festivities are scheduled for Thursday, Oct. 20 through Sunday, Oct. 23.
Ridge Hill will soon boast delectable food options such as a 50,000-square-foot Whole Foods Market; New York State’s first Yard House, with its award winning selection of over 150 beers on tap and American cuisine; and The Cheesecake Factory, with seating for 295 guests. The complex will also welcome popular national retailers L.L.Bean, H&M, Old Navy, Sephora, Orvis, Gap and Desigual — all slated to open their doors this month, with more new store openings to follow in November and December.

The second wave

An 11/23/11 press release described a second wave of store openings:

Amid phenomenal feedback from the community, Westchester’s Ridge Hill recently added Gap, GapKids, Charming Charlie and Sur La Table – with resident chef Michael Proietti, who appeared on Food Network"s Chopped and Food Network Star – to its retail mix. Brazilian-style steakhouse Texas de Brazil and Guitar Center will be open for business before the year ends.

There is still, however, a lot in process, as the photo at left indicates.

Getting hired

By the way, to get a job at the retail outlets, you don’t have to, as with the Atlantic Yards project in Brooklyn, go through a Community Benefits Agreement partner like BUILD, Brooklyn United for Innovative Local Development.

You just go to the City Of Yonkers Office of Workforce Development. Quaint.
On video

A look from the northern end

Condos near the mall

What about the new apartments? The first of five 12-story condos is up, according to today's article in Crain's New York Business, with 500 units planned..

Westchester Magazine reported last October:

The first residents are now moving into Monarch at Ridge Hill, a 1.3-million-square-foot hilltop complex located just across the way from Stew Leonard’s in Yonkers. Still under construction, the complex, developed by The Horizon Group, is being completed in four phases, with condominium units available ranging from the mid-$300K to $700K for a one-bedroom to between $500K and $1 million for a two bedroom.

As the promotional text reads:

Steps from your front door is Westchester's Ridge Hill, a neighborhood of shops and restaurants where you'll find everything you want and more within walking distance. It's good to be king.

Well, it's not quite steps in the way most people would think of it, since there's a service road to cross, and the development is otherwise bounded by a highway.

Is Monarch at Ridge Hill at the forefront of the New Urbanist movement, as claimed? It is "New Urbanist" in only the most brazen sense of the term. According to the Congress of the New Urbanism:

We stand for the restoration of existing urban centers and towns within coherent metropolitan regions, the reconfiguration of sprawling suburbs into communities of real neighborhoods and diverse districts, the conservation of natural environments, and the preservation of our built legacy.

That does not describe condos near the mall.

The condos in context

The Monarch slogan: Long Live Excess

Forest City executive in charge of Ridge Hill, and his successor, both leave company within one year

2012-02-12T06:00:00.001-05:00

It's not just the Forest City Ratner executives working on Atlantic Yards who've departed.

Two top executives, each in turn overseeing the Ridge Hill project (among others), left the company in the past year to go to mall operator General Growth Partners, which declared bankruptcy in 2009 but emerged more than a year later.

Maybe the moves were simply sign of good news, finding a better offer after getting work accomplished. Or maybe there was a desire to leave a project that was having a longer gestation than anticipated.

Pesin departs

Reuters reported 1/6/11:

Richard Pesin, executive vice president and director of retail development for Forest City Ratner Cos, part of Forest City Enterprises Inc (FCEa.N) will become its new executive vice president of anchors, development and construction, the memo said.

According to Pesin's biography, he spent 15 years at Forest City, serving as executive VP and director of Retail Development, "directly responsible for more than 4.5 million square feet with a cost of more than $1.5 billion of new development."

A10/31/09 Chain Store Age article headlined Up on the Ridge described how Forest City got a "a two-year extension and modification of the $557 million construction financing" for Ridge Hill and the project, originally predicted to open in 2008, would, according to Pesin, open in 2011.

“Forest City is a long-term player, and banks understand and appreciate that,” Pesin told the publication. “They also understand that Ridge Hill is a project that is long term, a great asset in a great location.”

A 7/30/09 article in the business publication Westfair Online described the Ridge Hill site as "a dusty hotbed of activity":

Pesin, executive vice president and director of development for Brooklyn-based FCRC, said Ridge Hill will borrow from the classic town center, with a landscaped town square and a pedestrian-friendly streetscape. The public space that will be created, Pesin said, will allow for community events such as Christmas tree lightings, farmers markets and so forth.

Westchester County, he declared, was "under-retailed for billions of square feet"--some of the same logic Forest City pursued in Brooklyn.

Pesin's successor Silberfein departs

Forest City executive Andrew Silberfein, originally Executive VP of finance, added retail to his portfolio after Pesin left, and continued to shepherd Ridge Hill.

As Reuters reported 11/17/11, Silberfein was named President and CEO of Rouse Properties, a division of General Growth.

A month earlier, as described in a 10/19/11 press release from Ridge Hill presaging the "Brand” Opening beginning the next day, Silberfein was to join CEO Bruce Ratner and Yonkers’ Mayor Philip. Amicone, among others, in greeting the expected crowds:

“This project will serve to invigorate the greater Westchester area bringing local jobs and tax revenue at a time when they are greatly needed,” said Andy Silberfein, executive vice president and director of retail and finance for FCRC. “We are proud to have partnered with Yonkers Workforce Development to connect people with retailers and jobs and to promote hiring from the local workforce.”

New schedule issued for fabrication and installation of weathered steel exterior panels, but it's unclear how much it's delayed

2012-02-11T06:00:00.000-05:00

While Forest City Ratner official has acknowledged a delay, due to a temporary shutdown of the fabricator, in the delivery of pre-weathered steel panels for the Barclays Center exterior, you don't quite get that from the 2/6/12 Site Observation Report by Merritt & Harris, the real estate consultant to the arena PILOT Bond Trustee.

The report, excerpted at right, indicates that Merritt & Harris was told on 1/5/12 that ASI Limited, the Indiana firm "fabricating the curtain wall and pre-weathering the lattice panels," had shut down.

Because the insurer took possession of all inventory, equipment, and materials," the plant reopened on 1/7/12, with 80% of the workers.

However, the plant shutdown was actually around 12/22/11, according to a class-action lawsuit filed by workers who seek unpaid wages and benefits.

There's a new schedule, as indicated in the screenshot at right, which establishes 5/30/12 as the date for final assemblage of such panels, and 7/15/12 as the date for the final installation of such panels.

What was the old schedule? Unclear.

When ACORN endorsed Republican Spano in 2006, was Forest City Ratner a factor? Worth pondering, though plea deal suggests no ties to Ridge Hill

2012-02-11T05:00:00.000-05:00

The byzantine world of Yonkers politics, revealed in part by a federal investigation into corruption, has shed light on the relationship between lobbyist/elected official Mike Spano and developer Forest City Ratner.

With the guilty plea by his brother Nick Spano to tax evasion just before the larger corruption trial involving Forest City's Ridge Hill project, there was reason to wonder about connections to Ridge Hill, but the actual plea details released yesterday cast some doubt.

Yes, Nick Spano had a close relationship with defendant Zehy Jereis--who got a no-show job from FCR after allegedly bribing Council Member Sandy Annabi to change her vote on Ridge Hill. Did Nick Spano have any connection to Forest City and Ridge Hill? Unclear, and unclear.

Two of the three Assistant U.S. Attorneys prosecuting the corruption case signed Spano's plea agreement. However, Journal News columnist Phil Reisman, in a column today headlined Sole Spano count seems like swing, miss, thinks that a one-count tax charge was not enough to take out "the political fixer and the big macher of Yonkers," who will still keep his "lucrative lobbying business":

They went after a whale, and it seems all they harpooned was a minnow. It’s hardly a stretch to think that the Ahab-like mission was to somehow tie Spano to the bribery scandal surrounding the $630 million Ridge Hill project in Yonkers. But failing in that, the U.S. Attorney’s Office did what all investigators do when they can’t get the solid goods on somebody: They nail them on taxes.
What’s more, they issued Spano’s crime sheet less than a week before the Ridge Hill trial is scheduled to begin. It may only be a coincidence, but the timing suggests guilt by association.

Spano's connection to ACORN

If there is a Forest City Ratner connection, it might add some gloss to the unusual support that Spano, a Republican, got in the 2006 election, after the 2004 election, which he won narrowly in a Democratic-dominated district.

In an 8/25/05 Nation article headlined The Power of Fusion Politics, Alyssa Katz reported on the 2004 election:

The Working Families Party gave Spano its ballot line--and with it the race. It turned into a contest so close that it had to be sorted out in court. Spano prevailed against Andrea Stewart-Cousins, a progressive African-American Democratic county legislator. He got 1,800 votes on the WFP line, and held on to his seat by just eighteen votes. This, in a state where Democrats have been laboring to retake the majority in the State Senate.

Wrote Micah Sifry in a 12/7/04 blog post:

And I certainly didn’t care for [WFP's] endorsement of my local state senator, Nick Spano, a Republican stalwart, over an upstart Democrat named Andrea Stewart-Cousins, because the party felt it had to reward Spano’s vote for the minimum wage hike–even though he is terrible on other issues and Stewart-Cousins is a stand-out.

Fast forward to 2006, and WFP was sitting out the rematch between Spano and Stewart-Cousins, but ACORN, after apparently backing Stewart-Cousins in 2004 (which would've meant it was separate from WFP, of which it's a component), was backing Spano.
As Liz Benjamin reported on the Capitol Confidential Blog 10/12/06 under the headline Political Oxymorons:

According to a press release from the re-election campaign of state Sen. Nick Spano, R-Yonkers, ACORN Executive Director Bertha Lewis, UFT President Randy Weingarten and members of their respective unions will endorse the Republican incumbent at a rally in his hometown Saturday.
That means these unions are going to be working against Democratic Westchester County Legislator Andrea Stewart-Cousins, the candidate of choice for Spitzer, who has himself been endorsed by both ACORN and UFT’s parent union, NYSUT.
Lewis also co-chairs the Working Families Party, which was the first political party to endorse Spitzer back... The WFP, which endorsed Spano in 2004, has no candidate in the 35th SD this year.
UPDATE: ACORN has flipped in this race, I’m told. The union endorsed Stewart-Cousins in her first challenge to Spano two years ago, and worked hard for her.
According to Spano’s campaign, the reason for the change is, in large part, because this year Spano championed the daycare workers bill, which would have let some 52,000 providers become unionized, quasi-public employees, and led the push for the successful override of the governor’s veto of the measure. (The Assembly has yet to follow suit).

A Ratner connection?

OK, maybe there was reason to reward Spano. But wouldn't Stewart-Cousins have done an overall better job?

But in 2006, ACORN's Lewis was talking regularly with Forest City Ratner.

Pictured at bottom left next to Bruce Ratner at an 8/23/06 press conference before a crucial hearing on the Draft Environmental Impact Statement, Lewis actually hosted the press conference.

The relationship back then was hunky-dory. It's not out of the question that a corporate desire to help Spano was communicated to Lewis.

From Atlantic Yards Watch: Temporary construction regulation nailed to two trees on Pacific Street

2012-02-10T14:01:00.001-05:00

This is illegal. More from Atlantic Yards Watch.

Exclusive: the Carlton Avenue Bridge is delayed one month, setting up breakneck pace to achieve completion before arena opens; officials have not acknowledged delays

2012-02-10T01:30:00.000-05:00

Though neither Forest City Ratner nor city/state officials have said so, the reconstruction of the Carlton Avenue Bridge, a crucial connector between Prospect Heights and Fort Greene, is lagging a month behind schedule, state documents confirm.

The delay has sparked a breakneck construction pace to meet the new completion date of late September 2012, just before the first official Barclays Center event, a sure-to-be-sold-out Jay-Z concert on 9/28/12.

Just yesterday, Empire State Development, the state agency in charge of the project, announced that work to finish the bridge could go as late as 3 am on weekdays through September.

That means that painfully bright (to some) floodlights will illuminate the Vanderbilt Yard until 3 am--and, as experience has shown, likely even longer. And if the bridge doesn't get done in time, nearby streets would face confusion and chaos on event days, at least initially.

(February 2010 photo by Tracy Collins)

Key connection

The bridge, closed since January 2008 to enable renovation work in the below-ground Long Island Rail Road's Vanderbilt Yard, not only offers a key artery, it borders the planned surface parking lot, a magnet for up to 1100 vehicles.

The $40 million bridge reconstruction is an Arena Opening Condition, a requirement in a document Forest City signed with Empire State Development, the state agency overseeing the project.

It's a practical one too. The artery's absence could plunge area traffic into chaos, especially given the inevitable shakeout period in which arena-goers and area drivers learn to regulate down their vehicle use before events.

It would put an intense burden on narrow Sixth Avenue, which borders the arena and was made two-way upon the closure of the Carlton Avenue Bridge. No wonder previous intimations of delays have provoked concern and consternation among elected officials.

That contractual requirement, however, is essentially toothless, by my reading. A failure to finish the bridge would not stop the arena from getting a crucial Temporary Certificate of Occupancy or from hosting events.

Rather, it would freeze Forest City's ability to pursue new development on the Atlantic Yards site. However, if the developer by then has gotten B2, the long-delayed first tower, off the ground--and that's not unlikely--the stall would be meaningless.

(Could this be what soon-to-depart Forest City executive Bruce Bender meant when, during his wiretapped conversation with disgraced state Senator Carl Kruger, he declared, "I don't mind fucking the bridge"? Bender tried unsuccessfully to get $9 million in state funds to defray Forest City's tab.)

ESD consultant warns agency

The bridge delay has been documented in weekly reports to Empire State Development, the agency supervising the project, from its consultant STV, which serves as the "owner's representative"--the agency's "eyes and ears"--at the site.

For example, in STV's 9/23/11 report, excerpted at right, the consultant reported that the project was one month behind schedule, with a forecasted completion in late September 2012.

In fact, STV reported that "the schedule had slipped an additional week" and was being reworked, though it also noted that the pace "has generally picked up in the last two weeks. A week later, STV again reported that the pace had picked up.

That one-week slippage may have been recovered, but there's been no budging on the overall timetable, apparently. (I reviewed the reports after filing a Freedom of Information Law request.)

Forest City steps up pace

Forest City has been feeling the heat. As construction chief Bob Sanna said at the 11/3/11Atlantic Yards District Service Cabinet meeting, the schedule had been accelerated to a "premium time program... five days a week, ten hours a day,” with an eight-hour day on Saturdays. “We're watching that schedule carefully to be complete in anticipation of the arena opening."

They soon began pushing even harder. Forest City's contractors began an accelerated, double-shift pace, as announced in the 12/19/11 Construction Alert.

That hasn't made a huge dent. The most recent report I saw, dated 1/20/12 and excerpted above, again stated that the bridge project was "officially one month behind schedule and is forecast to be complete in late September."

The report did allow for potential "time savings" from use of a temporary pier. But that couldn't have been enough, given yesterday's announcement of work until 3 am.

Forest City: "early" September

Officials' statements to the public have been less than candid. Six days after the STV report referenced immediately above pointed to "late September" as a completion date, Forest City's Sanna, appearing at the 1/26/12 Atlantic Yards District Service Cabinet meeting, declared that "the projected completion of the bridge... is the early part of September."

Maybe Forest City had made remarkable progress in the previous week or, more likely given yesterday's announcement, Sanna was spinning a bit. Either way, he didn't mention that the bridge was behind schedule.

Frustrating history of delays

Before I saw the STV reports, I suggested 1/9/12 that the available evidence--including a delayed start and a search for funding--suggested that the bridge reconstruction was behind.

The delay in the bridge is part of a frustrating history. The bridge, which connects Pacific Street to Atlantic Avenue and thus Prospect Heights to Fort Greene, closed in 1/23/08. In January 2009, the city Department of Transportation (DOT) said the work "is scheduled for completion January 2010.

That was subsequently nudged back to January 2011, April 2012, and, as the DOT currently states in rather vague terms, "estimated for completion summer 2012." (The end of summer is September 21.)

At the 11/3/11 Atlantic Yards District Service Cabinet meeting, Council Member Letitia James asked the DOT's Chris Hrones if the agency was tracking progress with the long-delayed bridge.

“Our bridges people are monitoring that project,” Hrones said, but he didn’t mention the delays.

What if it's not finished?

Council Member Steve Levin asked Sanna, “Do we have a projected date of completion, and what happens if it's not open, what if you can't finish it by that time?”

“It is required to be open, and we are monitoring it very carefully,” replied Sanna, who also referenced the DOT’s role. “So we're working very aggressively to ensure that it does open.” Unlike at the cabinet meeting in January 2012, Sanna didn't provide a specific completion date.

Levin continued: "What if it doesn’t?"

“We're not contemplating that it will not open,” replied Sanna.

“In the world of capital construction, stuff gets delayed all the time, so I’m just wondering,” Levin said.

“That has not been our track record to date,” responded Sanna.

As I noted, the bridge reconstruction was initially supposed to take two years. It was delayed, in part, by Forest City’s redesign of the railyard to save money.

An explanation on video

The plan for the bridge was raised at a 2/24/10 public meeting held at the Lafayette Avenue Presbyterian Church. (Videography by Jonathan Barkey.)

"The Carlton Avenue Bridge is a bit of a conundrum, so it's hard for people to understand it," Forest City Ratner executive Marshall replied. "Because it spans the Long Island [Rail Road] railyard, and the Long Island railyard is the storage yard, so it has the trains in it. The tracks are being reconfigured, with a new design, and the bridge columns... have to be built in sequence with the redevelopment of the yard."

"So, the yard is being done in four phases," Marshall continued. "The Carlton Avenue Bridge is required to be open when the arena opens. It will be built with the third phase of the yard. So we expect it to open in 2012, with the arena, and we would do it as fast as we can, but unfortunately, it's not just building a bridge, it's building a yard."

That four-stage process was a project of Forest City's revisions in its plan to reconstruct the yard. In a 9/23/08 email from Forest City Assistant VP Kate Bicknell to mayoral advisor Nnenna Lynch, a three-stage process, not a four-phase one, was contemplated:

The bridge is being demolished and reconstructed in three stages, which correspond to stages 1 (temporary yard), 2 & 3 (permanent yard) of the LIRR yard construction. As you know, we are currently constructing the temp yard (stage 1), which includes the demolition of the southern half of the bridge. The demolition of the northern half of the bridge as well as the full reconstruction of the bridge are part of stages 2 and 3 (permanent yard) of the LIRR yard construction, which will begin after LIRR's sign-off of permanent yard construction drawings. We are nearing completion of the temp yard and the demolition of the southern half of the bridge....

Neither of those scenarios were contemplated in the 2006 Final Environmental Impact Statement prepared by the Empire State Development Corporation (now known more frequently without "Corporation").

Chapter 17, Construction Impacts made no reference to such phasing. Rather, the bridge was presumed to be fully demolished and reconstructed within two years, during the construction of the temporary yard.

Who's paying?

The reconstruction project is supposed to cost at least $40 million. The city in 2007 allocated $7 million. According to a 6/24/10 Empire State Development Corporation document:

It is expected that the Carlton Avenue Bridge related infrastructure work will cost in excess of $40 million. The City shall fund $24 million of the cost of the Carlton Avenue Bridge related infrastructure work. The remaining cost will be funded by Forest City.

Not if the developer could help it. Bender tried to get $9 million from the state, but was stymied.

Still, some more public money has been found. Congress in 2010 allotted $900,000 for the bridge based on a request from the city made via local representatives. (The request was apparently $3.5 million.)

As stated in Brooklyn Rep. Yvette Clarke's list of appropriations:

The City of New York requested $900,000 for reconstruction the Carlton Avenue Bridge in Brooklyn, NY to provide a vital north- south connection over the Long Island Railroad’s Vanderbilt Yard. Bridge reconstruction is a critical element to improving transportation between the Prospect Heights and Fort Greene neighborhoods.

Not just "a critical element to improving transportation."

A critical element to avoiding chaos.

Barclays Center completion date pushed back a week, but arena "is slightly ahead of schedule." How so? They changed the schedule to erase delays.

2012-02-10T01:00:00.000-05:00

Delays are taking their toll on Barclays Center construction, pointing to a hectic--and perhaps nerve-wracking--pace to the finish line.

Not only is the Carlton Avenue Bridge delayed, the substantial completion date for the arena has been nudged back one week for the second time in five weeks, to 9/5/12. That gives arena operators little more than three weeks to test building systems before the first event, a 9/28/12 concert with superstar Jay-Z.

Also, after a report in January indicated that the Barclays Center was behind schedule, a new report from the same construction monitor asserts that the arena is "slightly ahead of schedule," based on actual cash flow versus projected cash flow.

(The final completion date is 6/30/13, which indicates additional work will have to be done while the building is operating.)

Presto: the arena's ahead

Top chart from Feb. 2012
bottom from Jan. 2012

That happy conclusion, however depends on changing the schedule, a slight-of-pen unacknowledged in the latest Site Observation Report by Merritt & Harris, the real estate consultant to the arena PILOT Bond Trustee. (Dated 2/6/12, it's based on a visit of 12/22/11 and a documents review.)

Merritt & Harris chronicles construction progress via charts, like the ones at right. (Click on all graphics to enlarge.) The solid circles represent projected cash flow, while the hollow circles indicate actual money spent.

The top chart at right, taken from the February report, suggests that actual spending handily outpaces projected spending.

However, the chart accompanying the January report, in bottom at right, points to a convergence of the two trend lines. As I wrote 1/5/12, the data indicated that the arena had been slightly behind for three months.

Changing the schedule

How to get around that problem? Change the schedule.

Top chart from Jan. 2012
bottom from Feb. 2012

By stretching out the timetable to meet the hard cost spending total of $485 million-plus, current spending can be portrayed as outpacing the projected spending.

Take a look at the graphic at left. In the top half, from the January 2012 Merritt & Harris report, as of the June 2013 final completion date, there would be $485,012,000 spent, or 100% percent of the total.

In the bottom half of the graphic, from the February 2012 report,as of the June 2013 final completion date, there would be $479,818,000 spent, or 98.88% of the total. Each previous month has a target completion percentage lower than in previous reports.

There's no indication of when 100% would be spent.

The bottom line

In the last three reports, Merritt & Harris has moved back the substantial completion date for the arena from 8/23/12 to 8/30/12 to 9/5/12.

(In last month's report, the firm, also moved back the completion date for site work around the arena to 9/25/12 from 8/29/12, but this month moves it up to 9/5/12.)

The overall construction schedule points to challenges in meeting the June 2013 final completion date. While that may set up snags in coordinating construction efforts with arena activities, the more lesson is this: these documents are tough to trust, as significant changes are presented with no acknowledgement or explanation.

Transit connection delayed

As noted in the screenshot at right, according to the Construction Progress Chart (below), based on cash flow, "the Arena is slightly ahead of schedule, while the Transit Connection is approximately 2 months behind schedule."

However, because there's some slack in the schedule--the Transit Connection isn't supposed to open until the arena does--the "additional 2 months will have no impact on the overall project schedule"

A new schedule to be issued this month is supposed to include all delays and establish the final completion date.

In the screenshots below, I've highlighted some figures on the chart, notably the percentage difference between actual and projected cash flows--percentages that have changed as the schedule was attenuated--as well as the percentage completion expected in the last few months of the project.

February 2012 report

January 2012 report

December 2011 report

November 2011 report

The transit connection

The report states that "due to early delays" the Construction Schedule slipped by approximately 2 months."

That simply doesn't compute. The early delays had no significant impact, because the transit connection was well ahead of schedule for many months.

The project began, as the graphic below indicates, in August 2010, and didn't start to lose ground until July 2011.

When is substantial completion for the arena?

In April 2001, the substantial completion date was nudged back two weeks from 8/12/12 to 8/27/12, but in October 2011 was nudged forward to 8/23/12. That number stuck through December 2011.

As noted, in the past two reports the date has slipped by a week each month.

December 2011 report

Note the substantial completion date of 8/23/12 for the arena and 8/29/12 for the site work.

January 2012 report

Note the substantial completion date of 8/30/12 for the arena, a weeklong delay, and 9/25/12, nearly a monthlong delay, for the site work.

February 2012 report

Note the substantial completion date of 9/5/12 for the arena, while that is now the date for the site work, as well.

Yonkers pol Nick Spano to plead guilty to tax evasion; brother Mike, now mayor, served as FCR agent on Ridge Hill; did Nick have a Ridge Hill connection?

2012-02-10T00:25:00.000-05:00

In an article today headlined Former State Senator From Westchester Is to Plead Guilty on a Federal Tax Charge, the New York Times reported:

Nicholas A. Spano, a former state senator who doled out millions of dollars in state grants in his Westchester County district during his lengthy tenure in office, is set to plead guilty to a federal tax charge, his lawyer confirmed on Thursday.

Mr. Spano’s lawyer, Richard W. Levitt, said Mr. Spano would appear in Federal District Court in White Plains on Friday and admit to failing to report more than $45,000 in income from 2000 to 2008....

Mr. Spano, 58, a Republican, began representing the 35th Senate District in 1987. In 2006, he was defeated by Andrea Stewart-Cousins, a Democrat, despite the $3.74 million in “member items,” also known as legislative earmarks, that he had brought to the district the year before.

Curious timing: Ridge Hill trial

What the Times didn't report is the curious timing, as pointed out by the Journal News:

Spano’s appearance in federal court comes on the eve of the trial of former Democratic Yonkers City Councilwoman Sandy Annabi and former Yonkers Republican Party leader Zehy Jereis, which is expected to begin Tuesday in federal court in Manhattan.

They are accused of conspiring to sell Annabi’s votes on two development projects in the city, including the controversial $630 million Ridge Hill development.

It could go deeper or, as New York Times columnist Michael Powell tweeted, "rumors of shoes, many shoes, to drop." As Journal News columnist Phil Reisman wrote 11/3/11, "Jereis was also a longtime crony and factotum for Nick Spano, the former state senator and older brother of Mike Spano."

After all, as has been alleged by less than fully transparent sources, Nick Spano, whose lobbyist brother was a agent for Forest City and is now the city's mayor, was indeed involved in the Ridge Hill case.

(Spano told Reisman last November that, while working for Patricia Lynch Associates, which had Forest City as a client, he was asked to hold "strictly informational" meetings with three City Council members opposing the project, but didn't lobby them.)

I'd add one incredible bonus fact: by boosting the career of Jonathan Lippman, now Chief Judge on the Court of Appeals in Albany, Nick Spano is indirectly responsible for that court's much-denounced decision upholding eminent domain for Atlantic Yards.

Yonkers politics and FCR lobbyists

On the RisingTimes blog, connected to the weekly Yonkers Rising, one pseudonymous commenter, “Yonkers Confidential,” has suggested that the feds “sorely want Annabi’s testimony against other, more ‘high-value’ targets” in other cases.

I can't vouch for "Yonkers Confidential," but put it out there just in case some of this emerges in the trial that begins next week.

“Yonkers Confidential” on 5/24/11 wrote that former Assemblyman Mike Spano was:

‘asked’ by his big brother [Nick] to leave the NYS Assembly in 2005 in order to lobby for the Ridge Hill project, working for the lobbying firm of Patricia Lynch & Associates. Nick needed Sandy Annabi’s vote, and he brought in Mike to engage the fixer, Zehy Jereis. The feds were watching (and listening) on May 31 and again on June 1, 2006 as Mike Spano and Zehy Jereis discussed their strategy in Garden City, NY. Jereis would get paid via a consulting contract with Forest City Ratner for delivering Annabi’s vote... The feds were watching (and listening) again the next day, June 2, 2006, when Mike Spano introduced Jereis to representatives of Forest City Ratner and the aforementioned consulting deal was officially cut.

I haven't seen that confirmed elsewhere. The New York Times reported 5/5/08 of talk regarding the brothers.:

And they have also questioned whether former State Senator Nicholas A. Spano, whose ability to find money in Albany for Yonkers has long made him a Republican legend, or his brother Mike Spano, a Democratic assemblyman who worked as a lobbyist for Ratner between terms in Albany, exerted any undue influence.
...Both Spano brothers said they had had no contact with the authorities. Nicholas, who is weighing another run for his old Senate seat, said he was not troubled by the specter of a far-flung investigation; Mike said he had done nothing more than speak to some of the holdouts on the City Council about their qualms on Ridge Hill and relay them to the developers.

The Pirro connection

Who else was involved? Albert Pirro, the estranged husband (and temporarily suspended attorney) of longtime Westchster District Attorney Jeanine Pirro, who left office in 2006.

According to state lobbying data, Pirro and his partner Jeffrey Buley received nearly $109,000 from Forest City in 2005 to lobby the executive branch and the Senate on “BROWNFIELDS CLEANUP PROGRAMS. PURCHASE OF RIDGE HILL PROJECT.”

The Times reported:

One meeting Mr. Pirro arranged at the Westchester Country Club included two representatives from Forest City and three of the Council’s holdouts on Ridge Hill: Ms. Annabi and two Republicans, John Murtagh and Dee Barbato. Ms. Annabi has said that anyone who attended that meeting would know that she and Mr. Pirro are not chummy; she has said that he cursed her under his breath that day.
Mr. Pirro gave Ms. Annabi’s campaign $250 in early 2005, one of several similar contributions he or his firm made that year to Yonkers officials.

The Silver connection?

“Yonkers Confidential" 12/13/10 tried to connect some dots:

To get the Ridge Hill deal done, Pirro needed to engage Senator Nick Spano, Zehy Jereis’ ‘political handler.’ After a conversation, the deal was struck. Nick would have his brother, Assemblyman Mike, take a temporary leave from the NYS Assembly and join the Pat Lynch’s lobbying firm, guaranteeing that Nick got paid for his efforts – at an arm’s length, of course, because he was still a NYS Senator. Nick Spano was very close to Shelly Silver, Lynch’s former boss. And Silver still owed Spano for clearing the way to make Silver’s boyhood pal, Jonathan Lippman, the Chief Judge of the NYS Court of Appeals.
Mike Spano, now a Lynch lobbyist, introduced Zehy Jereis to Ratner’s Bruce Bender and continued to massage the relationship, knowing full well about the payment that would be made to Annabi to get her vote on the project. Bender made a deal with Jereis, contingent upon getting Annabi’s support for Ridge Hill, that would pay him a $60,000 consulting contract. When the vote was taken in July of 2006, everyone got paid, and Mike Spano returned to the NYS Assembly in 2008. This is the criminal conspiracy that is at the heart of the Ridge Hill investigation.

This account has been confirmed, at least in part, by former Council Member John Murtag, who has said Mike Spano introduced Jereis to Forest City Ratner, specifically Bender.
Bender, as we know, recently announced he was leaving Forest City Ratner for new pastures--a departure that might just be related to a trial in which he will be mentioned, if not called to testify.

The Lippman connection

Yonkers Confidential is quite right about Nick Spano's role in the appointment of Lippman. As Wayne Barrett wrote in the 2/10/09 Village Voice, Nick Spano's machinations--getting Lippman "cross-endorsed" for his first judicial election--were key to the jurist's success.

Given that Lippman wrote the majority opinion in the Atlantic Yards eminent domain case--and could have, as legal observers have suggested, cleared a far more interventionist role for the courts in the such cases--it might be said that, indirectly, Ridge Hill cleared the way for Atlantic Yards.

Construction hours extended to 3 am to get Carlton Avenue Bridge done; flood lights will be on

2012-02-09T17:16:00.001-05:00

Apparently, Forest City Ratner is feeling the time pressure, as it plans work at Vanderbilt Yard as late as 3 am on weekdays to get the Carlton Avenue Bridge done, and will keep the lights on.

According to a Supplemental Report to the biweekly Construction Update issued today by Empire State Development (after preparation by Forest City):

Commencing on Thursday, February 9th, Yard construction hours have the potential to extend until 3:00 AM Monday through Friday. These extended hours will remain in place through the completion of the Carlton Avenue Bridge replacement, as needed. Additionally, to facilitate early start and late finish of work, Yard Flood Lights will be turned on at 6am and from dusk to 3:00 am, during double shifts through the completion of the Carlton Avenue Bridge replacement, as needed.

Journal News columnist: timing of Bender resignation seems curious, spokesman won't say whether he'll testify in upcoming trial; Forest City issues "terse kiss-off," names Bloomberg official to new external affairs role

2012-02-09T08:14:00.000-05:00

In the Journal-News, which serves the northern suburbs of New York, columnist Phil Reisman suggested that Forest City Ratner exec's resignation conjures up Sandy Annabi case and, while he didn't find any smoking gun, he sure found some circumstantial evidence.

Like me, Reisman thought that it was curious for Forest City executive Bruce Bender to leave his job just before the federal corruption trial involving the firm's Ridge Hill project, since Bender played a key role in getting the project going.

Unsatisfying answers

Reisman writes:

Even though no one at Forest City has ever been implicated in the bribery scandal, questions about what Bender (and possibly others) knew about the scheme have lingered ever since U.S. Attorney Preet Bharra announced the indictments two years ago.

Will Bender be called to testify?

I put the question to Bender through a spokesman, George Artz, but did not receive a response Wednesday.

...Asked if the upcoming Ridge Hill trial had anything to do with his exit, Artz said it did not.

“He’s long wanted to do it,” Artz said. “There is always something happening every moment of time — and 12 years is a long time for anyone to be in one place.”

Forest City issued a terse kiss-off Wednesday: “Bruce Bender has decided to leave Forest City Ratner Companies to pursue other opportunities. Everyone at FCRC wishes him the best.”

Reasons for doubt

OK, we have:

no answer regarding whether he'll testify
neither Forest City nor Bender's new firm coordinating the news (I contacted Forest City two nights ago but never heard back)

That doesn't look like a comfortable situation. Even if Bender does not testify, I bet his name will come up during testimony. Wouldn't it be better for Forest City if Bender were now at a safer distance? If so, then did the developer give him some severance or otherwise help with a soft landing (see, departure of Stuckey, Jim)?

Bender's replacement?

Crain's Insider reports:

Ashley Cotton, a senior policy adviser in the Bloomberg administration, will join Forest City Ratner Cos. as its vice president for external affairs. Her arrival coincides with the departure of executive Bruce Bender, who left to set up his own consultancy.

It's not clear whether Cotton is replacing Bender and/or Scott Cantone, who left with Bender to set up a new firm, but it suggests that musical chairs were being contemplated for a while.

The term "vice president" gets tossed around pretty frequently, while Senior and Executive VPs have more clout.

According to her LinkedIn profile, Cotton comes out of a somewhat less rough-and-tumble background than Bender and Cantone, who came out of the legendary Thomas Jefferson Democratic Club in Southern Brooklyn.

A graduate of the prestigious Phillips Academy, she earned her BA from Bowdoin College in 2001 and her MPA from Columbia University - School of International and Public Affairs in 2009.

She served as Deputy Campaign Manager for Andrew Cuomo for Attorney General for three years, worked for the newly-elected Cuomo for two years, and then spent a little more than a year as Vice President, Government & Community Affairs for the NYC Economic Development Corporation.

Since March 2010, she's been Senior Policy Advisor in the Mayor's Office. That means she's got pretty good connections to both city and state officials who might decide on, say, helping Forest City get its modular housing program off the ground.

In September 2009, Cotton was named one of the "40 Under 40" rising stars by City Hall magazine, which described "the former Bowdoin College ice hockey star" as getting her "start in politics working on the 2002 campaign of Charlie King, who was then running for the distinctly out-of-the-limelight job of lieutenant governor."

(Photo from SIPA web site.)

City Hall asked, "Five years from now, what will it say on your business card?"

"I have no doubt that I’ll still be trying to find ways to make government work more effectively for the people who rely on it," Cotton replied. "That’s probably too much to put on a business card—but I’ve got five years to condense it down, right?"

Well, it's been almost 2.5 years, and she's now at Forest City.

Workers file suit against arena facade fabricator ASI Limited based on failure to warn of (temporary) shutdown

2012-02-09T08:13:00.003-05:00

Well, the Indiana firm ASI Limited may be back at work fabricating the exterior panels for the Barclays Center, thanks to the firm's insurer stepping in, but it still may have to pay for its abrupt shutdown on or around 12/22/11.

According to a class-action lawsuit filed in federal court in Indiana, employee Andrew Shepherd, on behalf of himself and those similarly situated, have sued ASI Limited for collection of unpaid wages and benefits for the 60 days required under the Worker Adjustment and Retraining Notification Act (WARN) of 1988.

Firm of a certain size are required to provide at least 60 days’ advance written notice of termination.

According to the lawsuit, about 200 employees were abruptly laid off, and those employees were denied not only wages but holiday pay and health and other benefits.

There's been no response yet in court to the suit, which was filed 2/6/12.

ASI Limited Lawsuit

Jay-Z steering Barclays style, also making bank on the champagne served in the luxury suites?

2012-02-09T05:30:00.001-05:00

A 2/8/12 article in the Wall Street Journal, Jay-Z Determined to Make the Nets Stylish: As the Team Moves to Brooklyn, the Rap Mogul and Part-Owner Is the Czar of Aesthetics; Don't Skimp on the Forks, is essentially a commercial--sans any contribution from the man of honor--about how Hova steers Barclays/Nets styles:

In addition, the Nets are set to begin marketing 11 luxury suites that will be known as "The Vault at Barclays Center," a small, high-end space on the event level of the arena. Yes, Jay-Z chose the forks—in addition to offering his input on the Champagne ($300 bottles of Armand de Brignac), the layout (asymmetrical) and much of the décor (lots of black and shimmering metallics).

Hmm, his input on the Champagne.

About that champagne

In an excerpt from Empire State of Mind: How Jay-Z Went from Street Corner to Corner Office, run (and pulled) from The Atlantic, Zack O’Malley Greenburg wrote about a particular business deal:

So why would Jay-Z get involved with a second-tier champagne? Because of the immense profit potential. Fass estimates that Cattier’s production cost for each $300 bottle of Armand de Brignac is a mere 10 euros. Assuming Jay-Z is an investor, the connection could be through any number of outlets: Cattier itself, the brand Armand de Brignac, the importer, the exporter, or the distributor...

Greenburg, who did get much of the Atlantic Yards story wrong, seems on firmer ground here, since he interviewed several people "close to the matter... when I related everything I’d learned, all of them confirmed that Jay-Z receives millions of dollars per year for his association with Armand de Brignac."

But Jay-Z would rather be seen as a connoisseur than someone paid to promote. And the money could be very good, suggests Greenburg:

The production cost per bottle of Armand de Brignac is about $13; the wholesale price is $225. The maximum output is 60,000 bottles per year. If Jay-Z splits the $212-per-bottle profit evenly with Cattier and Sovereign, a back-of-the-envelope calculation suggests his annual take would be a little over $4 million. One of my sources confirmed that number, and added that Jay-Z may have received equity in Sovereign Brands worth about $50 million. All for dropping a few lyrical references and featuring Armand de Brignac in a couple of videos.

And now bringing it to Brooklyn.

The 99.9%

The Wall Street Journal raised a question about the most luxury of luxury suites:

By creating and marketing such an exclusive space within the arena, does the team run the risk of alienating—pardon the expression—the 99%? Or, in this case, the 99.9%? "I think there is a concern that everyone is being stratified: 'Oh no, you can't go in there,'" said Andy Dolich, a sports-marketing consultant and former chief operating officer of the San Francisco 49ers.

Yes, there will be 2000 $15 seats in Brooklyn (and if the team doesn't improve seats may go for far less on the secondary market, at least after the novelty wears off).

But the big bucks are in the suites.

Forest City stock seen as bargain by investment analysts from firms that have a business relationship with the company

2012-02-09T05:00:00.001-05:00

A 2/7/12 article in Barron's, Forest City Has Room to Grow, suggests that Forest City Enterprises, after divesting itself of the volatile land business and making its board more independent, may do better with investors, especially since it's relatively cheap.

The changes didn't spring from the ever-reformist Ratner extended family. Rather, as Barron's reported:

Many of the changes came after suggestions from existing investors, including Third Avenue Management, the asset-management firm that is the single largest outside shareholder with nearly 20 million shares.

Compromised advisors?

Barron's points out something I hadn't noticed. The investment firms tracking Forest City, whose representatives always seem so chummy with the developer during conference calls, do business with the company.

Doesn't that compromise some of their previously bullish advice? Why weren't they warning investors not to put their money into Forest City if it didn't pursue reforms?

Barron's reports:

"It's a company with a high-quality portfolio of properties that's taking a number of positive steps now," says Sheila McGrath, who covers the real-estate sector at Keefe Bruyette & Woods. "We think being able to get a real-estate company trading at such a discount to net asset value (or NAV) is a terrific opportunity."

It adds:

KBW has an Outperform rating and an $18 price target on shares of Forest City. The company has been a client of the firm in the last 12 months, and KBW expects to seek investment banking income from the company in the coming three months.

OK, but KBW is not exactly clairvoyant. Last June, KBW similarly offered an Outperform rating, with a $23 price target on shares of Forest City Enterprises Inc. But the stock never topped $19, and proceeded to dip. It has since risen over $15.

Similarly, BMO Capital Partners calles Forest City's stock "a top pick on valuation, improved governance and better financial transparency." Barron's adds:

BMO Capital Markets has an Outperform rating and a $19 price target on shares of Forest City Enterprises. The firm has received compensation from the company for products or services other than investment banking in the last 12 months.

Modular said to be Forest City's "iPhone moment;" retail rents near arena are booming

2012-02-08T14:04:00.001-05:00

There was some Atlantic Yards news yesterday at the quarterly real estate roundtable hosted by the Brooklyn Historical Society. Forest City Ratner executive Bob Sanna sees modular technology as
"our iPhone moment,” a breakthrough for the industry, the New York Post reported.

But no word yet on when and whether they'll get a plant up and running.

The Real Deal reported huge demand for properties near the arena:

Meanwhile, retail rents along Flatbush Avenue across from the arena now exceed $100 per square foot, said Pintchik, who owns Pintchik Discount Hardware in Park Slope and a number of other buildings in the area.

In a sign of the intense interest in area retail, the Flatbush Avenue site of 96-year-old Triangle Sports hit the market last week. Ofer Cohen, the founder and president of real estate service firm TerraCRG, which has the listing, told The Real Deal after the event that his firm has already gotten around 150 inquiries about the building.

For his part, Pintchik said he has plans to develop two six-story, mixed-use buildings along Flatbush near the arena.

When it comes to tenants, he said his company is “not big on fast-food chains,” preferring to “keep the local flavor” instead, with retail tenants who are “artisanal,” “independent,” “quirky,” or “edgy.”

Executive departures from Forest City pile up: four of five listed as key lobbyists in 2006 are gone

2012-02-08T00:43:00.000-05:00

Sure, CEO Bruce Ratner's still around, as is Senior VP Jane Marshall, and Executive VP MaryAnne Gilmartin surely has stepped up to run Atlantic Yards, but it's remarkable how four of Forest City Ratner's key executives working on the project have left, and under not-always-clear circumstances.

The screenshot below, from the city's lobbying database, shows Forest City's in-house lobbyists in 2005 and 2006, the years leading up to the project's initial approval. (Yes, the company mostly works with external lobbyists, and on both the city and state levels.)

Jim Stuckey, the company's Atlantic Yards point man, left abruptly in June 2007 "to pursue new challenges." Last year, the New York Post reported that the departure, as with a more recent one from NYU was spurred by allegations of sexual harassment. Stuckey and NYU have since been sued regarding such allegations.

In March 2011, FCR president and Chief Operating Officer Joanne Minieri left for her own consulting venture, and was not replaced. Was she nudged out in an effort to save on personnel costs?

Now we've learned that government relations officials Bruce Bender and Scott Cantone are apparently leaving to start their own consulting venture. Though a source asserted it was simply “time to go,” that seems odd, given that they'd presumably want to celebrate the opening of the Barclays Center later this year. I suspect that the upcoming Ridge Hill corruption trial, in which Bender is likely to be mentioned, might have been the spur.

Report: Bender, Cantone leave Forest City for new consulting firm; could pending Ridge Hill corruption trial be the spur?

2012-02-08T00:02:00.000-05:00

Capital Tonight's Liz Benjamin had a scoop today about the departure of two key Forest City Ratner executives, but didn't connect the dots to a pending federal corruption trial that likely will mention--and perhaps involve--one of those executives.

[I've queried Forest City for confirmation. This would mean that four of five key executives listed as lobbyists in 2006 are gone.]

In Forest City Departures, New Firm In Offing, she wrote:

A reader called to report two departures from the Brooklyn-based developer, Forest City Ratner, whose name has become synonymous with the Atlantic Yards project: Bruce Bender and Scott Cantone are striking out on their own to create a new political consulting firm.

Apparently, there’s no ill will involved here. The duo felt that after a decade with Forest City, it was simply “time to go.” They’ll be doing a little of everything – consulting, lobbying etc. – and focus largely on NYC, although there might be some forays up to Albany, too. This enterprise is so new, it doesn’t even have a name yet.

Well, could that "reader" be someone close to Bender or Cantone who wanted to make sure to spin this the right way?

There may be no overt "ill will," but why would these top executives leave Forest City before their achievement--the arena--comes to fruition? Why would they leave Brooklyn's most powerful developer?

The Kruger case, or Ridge Hill?

Benjamin referenced Bender's most recent misstep:

Bender got some unwanted press recently when he was caught on the federal wiretap negotiating for state funds for a non-Ratner project with former Sen. Carl Kruger, who lost his seat after pleading guilty to federal corruption charges.

Lobbyist Richard Lipsky, who represented Ratner, also pleaded guilty in the pay-to-play probe. Federal prosecutors said he paid hundreds of thousands in bribes to Kruger, the former Senate Finance Committee chairman.

No one from Forest City was indicated or charged in the case, and it is unclear if the company knew what Lipsky was up to.

The Kruger case must have been embarrassing for Bender--he was caught on wiretap not only cajoling (with foul language) Kruger for money to rebuild the Carlton Avenue Bridge (and then agreeing "I don't mind fucking the bridge"), he sought support for his wife's charitable project, the Lakeside Center in Prospect Park.

That must have raised a few eyebrows at Forest City offices, but that case is done. However, on February 14, the federal corruption trial involving Forest City's Ridge Hill retail/residential project in Yonkers begins.

Forest City's point man

With Ridge Hill, Forest City needed a rezoning, but it didn't have the votes--and then it did. And Bender was apparently involved, if not implicated in the process of getting to yes. City Council Member Sandy Annabi, not long after she said the developer was “robbing the city blind,” changed her vote in 2006 to approve the project.

Annabi, who had a taste for luxury goods and apparently lived well beyond her means, was charged in early 2010 with accepting bribes regarding Ridge Hill and another (non-FCR) project, known as Longfellow. Her cousin, Zehy Jereis, then chairman of the Yonkers Republican Party, was charged for giving bribes regarding Ridge Hill and Longfellow. Anthony Mangone, also charged in the Longfellow case, has already pleaded guilty.

FCR, which shortly after Annabi’s vote hired Jereis for an apparent no-show job as a “real estate consultant,” was not charged and issued a statement that federal prosecutors said that neither it nor its employees was a "target" of the investigation.

FCR has never explained or justified that no-show contract, but it benefited significantly. Given the developer’s apparent cooperation with federal investigators, it will be interesting to see who will say what on the stand.

And if Forest City got immunity from prosecution, how will it look for an executive--say Bender, FCR's Ridge Hill point man--explaining in court exactly how business got done?

Former FCR lobbyist (and longtime Assemblyman) Mike Spano was elected Yonkers mayor last year, despite his opponent John Murtagh’s efforts to tie him to the unresolved charges regarding Ridge Hill.

Spano introduced Jereis to Forest City Ratner, specifically Bender. Murtagh has further said that Bender was with Zereis when the latter pressured him to change his vote on Ridge Hill, given that Annabi had turned.

A critic of the EB-5 visa program says it's failing (maybe); report says it's easier to buy your way into the U.S. than other countries

2012-02-08T00:00:00.000-05:00

David North of the "low-immigration, pro-immigration" Center for Immigration Studies (also see SPLC's criticism of the organization's ties with extremists), the most public critic of the EB-5 immigrant investor program, expands on his December 2011 Congressional testimony with a January 2012 report titled The Immigrant Investor (EB-5) Visa: A Program that Is, and Deserves to Be, Failing.

His summary is that "despite massive promotional efforts":

There are comparatively few takers, and only a fraction of them complete the process and get green cards;
No one, citizens or aliens, middlemen or workers, or the economy generally, seems to be getting much out of the program;
Many of the investments turn out to be bad ones, some scandalous; and
Other immigrant-receiving nations run much more rational programs than we do, while securing more significant investments, proportionately, from aliens.

I think some of North's points, notably the last one, are valid, others more questionable. For example, the middlemen in law firms and the investment pools known as regional centers are doing pretty well, and the number of takers is rising markedly, which undermines his argument that few aliens are interested in the program.

And he doesn't really grapple with two issues that also diminish the program: deceptive marketing of investments to potential investors, as well as the questionable chances, at least with some investments, that investors will get their money back.

Still, and whatever the political valence of his organization, he deserves credit for grappling with an issue that some more "progressive" immigration organizations, like the Immigration Policy Center, simply sit out.

Indirect jobs

In his history of the program, he notes that:

Perhaps the most significant legislative relaxation of the program arrived in 2003 when the previous demand for a hard count of 10 new jobs was replaced by a mandate for the calculation of indirect job “creation using any ‘reasonable methodologies.” Middlemen organizations that promote this program often promise that their own economists will help investors — for a price — calculate the indirect creation of jobs.

That, of course, is the secret to calculating how immigrant investors in the Atlantic Yards project are creating jobs that no one can see.

Comparison to other programs

It's a lot easier to get into the United States, it turns out, and the cost is lower.

North writes:

On the other hand, as Table 1 shows, the half-million-dollar investment that routinely works in the United States is a relatively small sum of money compared to the demands made of immigrant-investors in Australia, the Bahamas, New Zealand, and the United Kingdom. Canada, alone of these immigrant investor nations, asks for a smaller investment, but wants it for a longer time and it calls for it to be a non-interest loan to a Canadian province.

Actually, North is working off old information. Canada in 2010 announced it would double its investment level from $400,000 to $800,000, and that is now in place.

In other words, the $500,000 minimum, which would be enshrined into law if the regional center pilot program is made permanent, is way too low, especially since it hasn't been raised in 20 years to keep pace with inflation. (It's about $290,000 in 1990 dollars.)

Note that the $500,000 minimum in the U.S is not required to go through a regional center. Nor must regional centers offer $500,000 investments (though in practice they do).

Rather, the $500,000 level is contingent on the investment being made in a Targeted Employment Area, which is either rural or has an unemployment rate more than 150% of the national average.

North points out in the report that the investments mean more in the other countries. Given their much lower GDPs, each investment has a higher bang per buck. He writes:

I do not like the idea of selling our visas at all, but if we do, we might as well get more for them.

Versus Canada

North points out how other countries demand more of the investors, with maximum age limits, and language tests.

I'd add that Canada's Selection Criteria (left) include age, education, adaptability, experience, and language.

The United States requires only cash, acquired legally, and a willingness to put it at risk.

More denials

North notes that the percentage of denials in EB-5 cases is much higher than in regular immigration cases, even though the agency likes "getting to yes":

Bear in mind — and this is subjective but based on many years of observations — that USCIS, in general, loves to say “yes” to applications of all kinds. It sees itself as a benefit-granting agency, not an impartial court that happens to have migrants among those it must judge.

Noting scams

Beyond the gerrymandering of TEAs, which has gotten publicity lately, North cites some other scams:

For example, many a case was rejected because the “investor” had not made an “at-risk” investment; it was a camouflaged loan, for example. Or the full required sum had not been invested. Or the alien himself had not really invested in the project, the money coming from a corporation, rather than an individual, as is required. Or the project was in a million-dollar area, and the investment was for half of it. Or the amount of money claimed to be invested included fees to middlemen, so that the full amount needed would never get to the project.

Little tracking

USCIS does not look into several important aspects of the program, North writes:

As to research, I heard, while attending one of the frequent “stakeholders’ meetings” conducted by USCIS on this subject, that the agency did not keep track of the private fees that were charged to the investors; “all we want to do is to make sure that the full investment is made in the project,” the staffer declared. I then asked, given the two-year stipulation as to the minimum length of the investment, “does USCIS have any idea what percentage of those two-year investments are still there, say, three or four years after they were made?”
The answer was no, and there was no indication that the agency had any curiosity on the subject.
The lack of internal research on the program was confirmed in a recent Los Angeles Times article, which stated: “The USCIS, by its own admission, has failed to closely track the flow of EB-5 money, how the projects are being sold to investors or whether the projects were successful. Instead, its focus has been on making sure jobs are created — but not that the jobs will last.”

Meanwhile, he points out, program changes, such as additional staff and premium processing, are aimed to get more approvals quickly.

Good deals?

He says there's a lack of "glowing government press releases on success stories," which is true when it comes to USCIS, but there's no shortage of local news stories and press releases regarding projects.

Rather, the investments are marginal, he suggests, citing an array of mini-scandals (though not Atlantic Yards). I'd agree that many are marginal bets, but they may make a difference in the local economy, hence the support from powerful legislators like Sen. Patrick Leahy (D-VT).

What the EB-5 program as currently structured does is set up an incentive for local beneficiaries to lobby their representatives.

The regional centers, he suggests, are not doing well, which may be true overall--but the ones that are doing volume work, like the New York City Regional Center, seem to be doing quite well.

What about E-2?

North writes about a much more popular E-2 Treaty Investor program, which is limited to nations with whom we have investment treaties. That doesn't include China, hence their domination of EB-5. E-2 goes through the State department, and does not grant permanent residence, but E-2 visas can be extended indefinitely. It requires a much smaller investment, without middlemen.

Why so little publicly? North speculates on several reasons, such as the small size of the project, the approval made overseas, the lack of institutions like regional centers to promote them (or seek to make it permanent), and the fact that it goes through the State Department, not DHS. Who uses it most? The Japanese.

What to do

The report suggests that visas should be more precious:

Visas should be saved for spouses of citizens, truly talented and well-educated aliens, and genuine refugees fleeing real dictatorships who have no other options. Selling our visas to unimpressive people (who cannot be admitted otherwise, or else they would not be applying to EB-5) with unimpressive amounts of money, for too low a price, is a terrible waste of a valuable resource.

He calls the program badly designed, so if a replacement is needed, it should be "both simpler and more demanding," aimed at entrepreneurs, not passive investors, willing to put at least $1 million into projects that do not include real estate.

And, he suggests, they'd also put $1 million "to be lent to the U.S. government or to one of the states at zero interest for four years (to bring some distinctly public benefits into the program), and yet another million as a cushion against the possible failure of the investment."

In other words, that's a bit like Canada, which takes the money, and gives it back years later with no interest. No middlemen, nothing flashy.

Jay-Z brings his act to Carnegie Hall, steps up charitable work

2012-02-07T13:27:00.001-05:00

Jay-Z played Carnegie Hall last night, in a benefit for his Shawn Carter Foundation (which supports college education) and he apparently nailed it. From Jon Caramanica's review in the Times:

Because for all of Jay-Z’s steely cool and expert control, this was something new. Filling Madison Square Garden is old hat by now, but ascending to one of New York’s most hallowed stages without soft-pedaling his act is another thing altogether. Backed by an orchestra conducted by Jeri Lynne Johnson (of the Black Pearl Chamber Orchestra), and also the Illadelphonics, an ensemble featuring Questlove of the Roots and the singer Bilal among others, Jay-Z proved that the Carnegie stage is agnostic.

That meant songs about drug dealing, about growing up impoverished, about questionable behavior toward women, about triumphing over adversity through hustle and capitalism. Mostly he stuck to mid- and late-career hits, the songs that made him something more than just the most important rapper in New York...

A question about Jay's charity

The concerts last night and tonight, as well as a fundraising carnival last September that raised more than $1 million, suggest Jay-Z is stepping up his support.

However, as The Daily reported yesterday, in 2010, it raised only $218,849, with most coming from a company owned by a fan. It distributed $124,000 in scholarships that year, plus $23,744 on college tours for potential scholarship recipients and $20,223 for a toy drive in Bed-Stuy.

Shouldn't it be enough for stars to donate their services to raise money? Maybe, maybe not.

The Daily quoted philanthropy advisor Trevor Neilson as saying that, on the one hand, Jay-Z wields influence in other ways, but other starts, like Shakira, both promote causes but also make donations to their own nonprofit organizations.

Of course, Jay-Z's performance at a charitable event drives more publicity than a quiet donation of his not inconsiderable cash. But I wouldn't be surprised to see Jay-Z, once he opens the Barclays Center in September, make some more strategic contributions in Brooklyn.

Arena operator seeks Community Affairs Manager; aim is to "build brand visibility," not manage relations with those bearing the brunt of arena operations

2012-02-07T07:14:00.002-05:00

The Brooklyn Events Center, operator of the Barclays Center arena, is seeking a Community Affairs Manager. (Full advertisement below.)

Is that job aimed at ensuring good relationships with immediate neighbors, so that Prospect Heights residents aren't disturbed by arena-goers who might forget the arena Code of Conduct or car stacked up on residential streets?

Nah. It's a business, man, and that business, while pretty vague in the job description, is about "brand visibility":

The Community Affairs Manager will be responsible for ensuring active and engaged communities around a defined topic or topics by managing calendars and participating in conversations to build brand visibility and thought leadership.

Main duties

The "essential duties and responsibilities" include:

Communicate issues, opportunities, and insights to the company at large;
Participate in professional networking by following the prominent bloggers and online writers and attending events;
Work with local organizations to develop master list of project ideas and plans;
Coordinate logistics, planning, promotion and staffing of volunteer initiatives;
Coordinates advertising schedules and placement, as required for ads placed in community program books, newsletters, etc.;
Liaises with parties identified in CBA – external law enforcement, political, and public agencies;
Involvement in city council meetings and activities;
Coordinate all MWBE initiatives and report quarterly results to CBA executive board

In the list above, I think there's some awkward punctuation in the third-to-last item; law enforcement, political, and public agencies are not part of the Community Benefits Agreement (CBA) but would be separate parties.
Barclays Center Community Affairs Manager

As EB-5 goes mainstream, association presents options to financial agencies; head of Vermont regional center says program crucial to state

2012-02-07T06:30:00.000-05:00

The Council of Development Finance Agencies (CDFA), a national association of state, county and municipal agencies, on 1/17/12 sponsored a webcast introducing EB-5 investment immigration to its members.

The speakers were David Andersson, President, Association to Invest In USA, and James Candido, Director, Vermont EB-5 Regional Center.

Andersson noted that the trend these days among regional centers to cover several jurisdictions or even a full state, though the regional center he manages in northwest Washington, the Whatcom Opportunities Regional Center, covers just one county.

When the WORC was designated in 2006, he said, there were only about 14 regional centers. Now there are more than 208.

In fact, not until November 2010 did prospect regional centers have to actually pay a filing fee to achieve federal designations. At that point, the United States Citizenship and Immigration Services (USCIS) introduced the I-924 form, which comes with a $6230 filing fee to get designated or to have a designation amended.

"There is a move afoot," Andersson said, to get USCIS to offer "pre-approval of projects," which, I might add, is what promoters of the Atlantic Yards project promised investors. "This preapproval has not yet been perfected."

What investors want

What does the typical EB-5 investor hope for? Andersson said the investor expects a modest return on investment, but wants to make sure he gets his money back.

The investor wants a clear business plan, which demonstrates how the required jobs will be create, and then a clear exit strategy, so they can understand how to leave the deal down the road.

I'll not that the exit strategy with Atlantic Yards is pretty murky.

Andersson suggested that the issue of designation a Targeted Employment Area (TEA) was "not overly complicated... Most regional centers use a census tract as a basic political sub-unit, and most regional centers aggregate a number of census tracts."

Unmentioned: the issue of gerrymandering. But it's crucial to ensure that a TEA--either a rural area or one in which the unemployment rate is 150% of the national average--is achieved, because only a TEA is the minimum investment $500,000. "There is no appreciable marketplace for a $1M investment," he said.

In 2011, he said, $1.25 billion from investors was pooled, but the number will be even greater in 2012.

The view from Vermont

Candido talked about the unique situation in Vermont, home to the only government-run regional center.

Projects apply first to the Vermont Regional Center before going to the USCIS. The state regional center offers both oversight and assistance.

Real estate projects, he said, were the easiest for investors to grasp, but there are several active projects within the state. (The first manufacturer in the state to use EB-5 capital involves Country Home Products and DR Power.)

Size of the market

Candido noted that, in FY 2010, the number of applications via the Vermont Regional Center represented 18% of the national EB-5 market.

In the first three quarters of FY 2011, the number represented 14% of the market. So Vermont, Candido said, "is a fairly sizable chunk of the marketplace."

If so, then an even larger chunk is occupied by the New York City Regional Center (NYCRC), which marketed EB-5 investments to 498 investors for Atlantic Yards. It also marketed several other projects to investors, thus becoming the busiest regional center in the China market last year.]

What it costs

"If you have 5% financing from a bank, don't do EB-5," Candido said.

Why? Because there are lots of potential project costs, as described in the graphic at left.

"Sourcing investors is very difficult," he said, pointing to the cost of marketing projects overseas.

"It's not a quick process, it takes patient money," Candido said, pointing to the timeline in the graphic below. "You're dealing with a lot of documentation, not just the project but also the investor."

More from Candido

I also interviewed Candido directly a few weeks earlier. He said that, while the regional center was approved back in 1997, it was difficult to use until the middle of the last decade, and Jay Peak Ski Report, the most prominent project, didn't start getting investors until 2008.The Tram Haus Lodge at Jay Peak, Phase 1, opened in December 2009.

So it's too soon to tell if the investors will get their money back after five years and, Candido said, it's not the government's job.

"Everything points to them getting their investment back," he said, but the government's job, running the regional center, is to make sure there are legitimate calculations of the required indirect job creation.
He said the regional center does review marketing materials to ensure, for example, that there are no guarantees about investment success, which is forbidden. Unlike other regional centers, created to make money for its operators, the Vermont regional center is a tool to develop the state.

More than $200 million has been raised for Jay Peak, the Sugarbush ski project, as well as manufacturing projects.

"Unless it's a large real estate development done by developers with a pretty significant track record, or it's a longstanding manufacturing or production company that has a long record of success," he said, "I've found that it's very difficult or impossible to get EB-5 investors. Start-up companies don't do very well."

The TEA issue

While Candido was quoted in the New York Times as saying some projects seem to have questionable TEAs, he told me he wasn't targeting any specific projects.

While most of the state is rural, and thus qualifies for a TEA, he said it's been difficult to get some projects in the city of Burlington qualified, with the required unemployment rate of 150%. One project, he said, was adjacent to a poor section of the city, but it was impossible tot draw a TEA.

"This may be where we are separated from other regional centers," he said. "They [TEAs] have to make sense. You can't have amoebas bulbous in one area and skinny where the project is."

The question of controversy

"While I understand there's some concern about all of this, as far as I'm concerned, even two jobs being created, we spend no money as a state, it's created thousands of jobs for us," he said. About half the jobs are directly created, the other half indirect.

"If you have a project not creating jobs and jerry-rigged a TEA, i certainly don't think it's acceptable," he said, but that's a reason to fix some rules rather than blow up the program.

"For us, it's been an incredibly important program," he said. "We've had construction companies working on Jay Peak that say they'd probably be out of business if it weren't for that construction. Right now Jay Peak is the biggest construction job in the state."

USCIS criticized in Inspector General's report for "getting to yes" and being "owned" by immigration attorneys; it didn't cite EB-5, but maybe it could have

2012-02-07T06:00:00.001-05:00

The United States Citizenship and Immigration Services (USCIS), the federal agency in charge of the EB-5 immigrant investor program, has recently come under fire by its own parent agency for going too far to help potential immigrants.

While the criticism, raised by the Inspector General of the parent Department of Homeland Security (DHS), does not address cases within the immigrant investor program, it suggests that USCIS has a "get to yes" culture and is also too much in the sway of private immigration attorneys--both of which, by my observation, apply to the EB-5 program.

The issue was first raised in a 1/5/12 article in The Daily, which got a copy of the DHS report.

The report, The Effects of USCIS Adjudication Procedures and Policies on Fraud Detection by Immigration Services Officers, was produced by the Acting Inspector General of DHS – Charles K. Edwards and dated January 2012.

Too much pressure

One field office manager described USCIS as “very production driven,” with severe time pressures, according to the report:

When asked how well USCIS balances national security and promoting immigration, 130 of 252 respondents (51.6%) said that USCIS policy is too heavily weighted toward promoting immigration. Only 25 of 251 respondents (10%) concluded that they have sufficient time to complete interviews of those who seek immigration benefits. On another question, 63 of 254 ISOs [Immigration Service Officers] (24.8%) responded that they have been pressured to approve questionable applications. Although fewer than one in four respondents had this concern, we view the number of pressured ISOs as a threat to the integrity of the benefit issuance system.

The Inspector General suggested additional staff and more time.

Special treatment

The report suggested undue influence from immigration lawyers:

Recent examples exist of senior leaders disagreeing with the statements made in requests for special treatment. One senior manager provided email messages that showed headquarters defending ISO decisions or challenging a private attorney’s views. Nonetheless, numerous staff said that private attorneys will often complain to management, which leads to special review of cases. We examined email messages where these requests were granted. Survey respondents and interviewees noted that this type of pressure compromises the adjudications process, and therefore the overall USCIS mission. A survey respondent wrote of a sense that private immigration attorneys are “running our offices.”

...ISOs and managers in some USCIS offices said that efforts to undercut some denial decisions waste USCIS resources and send an implicit message to approve petitions and eliminate outside complaints. We were informed that special treatment remains prevalent. An ISO said that the American Immigration Lawyers Association “owns” USCIS. USCIS is aware of this perception and has taken some steps to treat this organization less uniquely. For example, a regularly scheduled conference call with the association is now open to other interested parties.

I'd add that the conference call with EB-5 stakeholders does not include anyone, other than the occasional policy critic, who doesn't make money from the program.

EB-5 visa use booms; ex-elected officials cash in; immigrant investor funding eyed for sports facilities in Sacramento, Oakland

2012-02-06T06:48:00.000-05:00

EB-5 is all over the news these days, in terms of record-breaking statistics, new opportunities to deploy immigrant investor funds, former elected officials cashing in, and some questionable deals.

The Association to Invest In the USA (IIUSA), the trade association for the EB-5 Regional Center Investment Pilot Program, on 2/1/12 celebrated a new peak in investment immigration:

US Citizenship and Immigration Services recently reported 2,364 EB-5 visas issued in the first three months of the current federal fiscal year. This equates to at least 10,000 new jobs for American workers. At this pace, the 2012 Program will come close to using its 10,000 annual visa allocation for the first time since the Program’s inception in 1994. 10,000 EB-5 Visas would mean at least 40,000 new jobs for US workers.
At a time of limited liquidity around the United States, the EB-5 Regional Center Investment Pilot Program is finally coming of age...
“These recent numbers confirm the trends that our industry has been seeing for the last couple of years.” said K. David Andersson, President, IIUSA, “We are a functioning example of 21st century economic development policy that works. Thanks to the Regional Center Investor Pilot Program, thousands of Americans are employed today, and at no cost to the American taxpayer. This Program needs to be a permanent part of the American economic development toolbox.”
Despite its record setting statistics and growing economic impact, the EB-5 Regional Center Investment Pilot Program is due to expire in September 2012, absent action from Congress. IIUSA estimates failure to reauthorize the Program in a timely manner would squander a golden opportunity to create over 100,000 new U.S. jobs...

Sports facility finance

And how are those jobs being created?

Boosters of a potential new arena in Sacramento are proposing a plan to use EB-5 funds. So too are those planning a new ballpark in Oakland for the baseball Athletics.

Graphic at left (click to enlarge) from report by Think Big Sacramento, which notes that EB-5 funds were used not for the Barclays Center but for ancillary development. Unmentioned is how the arena and basketball were used to sell the investment.

Ex-elected officials cash in

It's not just former New York Governor David Paterson; other former elected officials are useful figureheads to promote EB-5 investment.

Former San Francisco Mayor and California State Assembly Speaker Willie Brown is part of the management team of Golden State Renaissance Ventures, which operates the San Francisco Bay Area Regional Center.

EB-5 enters the NYC mayoral race (sort of)

The Wall Street Journal, in a 1/19/12 article headlined Liu's Bundlers Get Scrutiny on Donations, described how New York City Comptroller John Liu returned 114 donations worth $75,000 to his expected 2013 mayoral campaign, mainly from intermediaries, given a federal investigation into his campaign.

Among the contributions were $16,000 raised by Queens developer Yi "Richard" Xia, who told the newspaper he didn't know why the money was returned.

The Journal reported:

Mr. Xia is behind a company planning to build a $100 million medical center, hotel and residential housing complex in Flushing. The entire project was slated to be finished by 2014, Mr. Xia said in a June 2011 interview with the Journal about the project.
...Mr. Xia is also the managing director of the Federal New York Metropolitan Regional Center, a group authorized by the federal government to solicit foreign investors as part of an immigrant investment program called EB-5... Of the 20 donations the campaign returned that were connected to Mr. Xia, three of those donors work for Federal New York Metropolitan Regional Center. None of those donors returned requests for comment.

The Federal New York Metropolitan Regional Center, like others in the field, uses a name that attempts to convey to unwary investors the patina of officialdom, even though it's a private company.

And while the photo heading its website portrays Manhattan, its project, the perhaps unfortunately named Eastern Mirage, is in Flushing, Queens:

Eastern Mirage is an elegantly designed glass curtain wall tower that will feature state of art North Queens Medical Center (NQMC) and luxury living with high-end amenities right in the heart of downtown Flushing.

EB-5 enters film financing?

The Hollywood Reporter reported 1/23/12 on how EB-5 has apparently become considered a vehicle for film financing:

The law firm of Akin, Gump is suing a film executive whom is claimed to owe at least $2 million as a finder's fee for helping line up hundreds of millions of dollars in studio loans as well as distribution for the film, Father of Invention, starring Kevin Spacey.
The defendant is Mark Manuel, who allegedly had some bright ideas how Hollywood could take advantage of immigration laws for funding. According to a lawsuit filed in Los Angeles Superior Court on Wednesday:
"In early 2008, Manuel sought to arrange $100 million plus loans to major film and television studios pursuant to complex federal statutory regime by which foreign immigrants seeking EB-5 resident visas in the United States fund job-creating loans."

EB-5 to help save Guam?

According to a 1/31/12 report in KUAM News, Guam's News Network, Governor Eddie Calvo, in his 2012 State of the Island address, mentioned EB-5:

Calvo also talked about revitalizing and rezoning the island's capitol, and announced that the request for proposal was signed to begin the renovations to the Plaza De Espana and efforts to restore the capitol and bring the Guam Museum to Hagatna. The governor announced that as part of the finance strategies to build new schools and also to restore the capitol is through the EB-5 Visa Program in which foreign nationals have incentives from the state department to enter a U.S. city and invest their capitol.

Note that EB-5 does not require immigrant investors to live in the location of their investment. I rather doubt that the investors, mainly from China and South Korea, would want to live in and have their children educated in the Pacific territory of Guam, which is closer to Asia than North America and relies on tourism from Japan and U.S. military spending.

A China skeptic now promotes EB-5

EB5info.com reports, in Prominent Author Promotes EB-5 Visa Projects in China:

Prominent journalist James McGregor, author of One Billion Customers: Lessons from the Front Lines of Doing Buisness in China and the 2010 report China's Drive for "Indigenous Innovation" - A Web of Industrial Policies has been touring China discussing the U.S. economy and promoting EB-5 investments by the Midland Investment Group, a California based investment management company which is developing projects for a regional center based in Oregon.

During his tour promoted by Chinese Immigration migration broker CanAchieve, he mentions his experience:
I am a former president of the Sino-American Chamber of Commerce in the USA, I have good experience in China, known many people in China and I am very positive for EB-5 investment. I think that to the majority of Chinese investors, the United States is an opportunity not only for the U.S. government, the American people, but also for the investors, the EB-5 investment is a win-win opportunity.
We can say that now the risk is relatively small, because the U.S. economy is recovering, has come back from the bottom...."
There are many ways to consider EB-5 investment, but the most important thing we consider is what kind of company to deal with: are they law-abiding? Are they complying with government regulations and so on? For the addition of projects recommended by Midland, I have more confidence because I am familiar with their investment in Oregon, I believe they can do this project well.

I haven't seen the entirety of his remarks, but the excerpt, at least, is misleading. We can't say that the risk in EB-5 projects is "relatively small," because each project must be analyzed individually.
Also, a company that's law-abiding and complies with government regulations will not necessarily return investors' money.

The business culture in China

McGregor's book, as I wrote in December 2010, offered some clues as to why deceptive EB-5 marketing could be successful in China. Some quotes:

The sad fact is that the Chinese system today is almost incompatible with honesty.
...As a result, the Chinese can feel pretty good about doing almost anything as long as they don't get caught.
...China is not the legalistic society that typifies the West. If the Chinese want to do something, they find a way to skirt rules or laws.

It doesn't look like that's changed. In a 2/6/12 "Letter from China" in the New Yorker headlined Working Titles: What do the most industrious people on earth read for fun?, Leslie Chang wrote:

China was once a country governed by morals... Today, the focus is on zuoshi, how to get things done. All the rules for getting ahead can be reduced to one: Do anything to survive, because you're on your own.

A parallel in education?

In a partial parallel to the willingness to look not too hard to welcome Chinese investors, U.S. universities are welcoming foreign students, especially from China. The New York Times reported, in a 2/5/12 front-page article:

This is the University of Washington’s new math: 18 percent of its freshmen come from abroad, most from China. Each pays tuition of $28,059, about three times as much as students from Washington State. And that, according to the dean of admissions, is how low-income Washingtonians — more than a quarter of the class — get a free ride.

With state financing slashed by more than half in the last three years, university officials decided to pull back on admissions offers to Washington residents, and increase them to students overseas.

That has rankled some local politicians and parents, a few of whom have even asked Michael K. Young, the university president, whether their children could get in if they paid nonresident tuition. “It does appeal to me a little,” he said.

New cautions from China about EB-5 investments (taxes, investment risk)

2012-02-06T06:45:00.000-05:00

Even as EB-5 business--and the ambition behind it--continues to grow, there's new caution in China about the benefits and costs of EB-5 investments, in which a $500,000 investment in a purported job-creating enterprise brings green cards for the immigrants and their families,

In a 1/10/11 article headlined Expats in US pay high price, China Daily reported some pitfalls, given that not only must residents pay taxes on worldwide income, there are new reporting requirements:

Under the new [IRS] requirement, US citizens and permanent residents must disclose detailed information about their foreign assets, including stock holdings, retirement pensions and life insurance policies.

...What's more, the law demands foreign financial institutions register with the IRS by 2013, release account holder information and annually declare their compliance...

"As result, some foreign financial institutions may no longer wish to have customers who are US residents or citizens," Mark Goldsmith, practice group leader and partner of the tax division at Troutman Sanders LLP, told China Daily.

Qi Lixin, president of the Beijing Entry and Exit Service Association, commented, "Unlike other wealthy economies, the US' immigration policy is exceptionally one-sided."

I'm not so sure about that, given that there's no proof that new jobs are actually created and many other countries require a much larger investment, as well as ensure that investors get their money back.

However, if as Qi told China Daily, some consultancies don't tell "fully inform applicants of the tax burdens as a US immigrant," then that's another pitfall.

The number of Chinese applicants for the EB-5 visa in the fiscal year that ended September 30 was 2,969, some three-fourths of the total applicants, and an eleven-fold leap over the total in 2007 of 270.

Investment risk

China Daily details the issue of investment risk, which gets downplayed significantly by American EB-5 proponents:

The US government, unlike other emigration destinations, does not guarantee against investment loss, which means that applicants might lose their seed capital and, in some cases, eligibility.

"We rarely take US immigrant investor cases as there are significant uncertainties," Ma Yuan, a consultant with East J&P Star, told China Daily.

"We mainly deal with Canadian immigrant investors as the return of the seed capital is guaranteed."

But people still want to come to the United States, especially for their children's education.

The bottom line

Here's the money quote, from Qi: "Hopefully, the zeal to emigrate will dampen a little and people can apply for EB-5 visas more rationally."

Eric Adams confirms he's running for Borough President

2012-02-05T18:47:00.001-05:00

When state Senator Eric Adams organized a surprising January 22 press conference on Atlantic Yards, I speculated that one motivation was his rumored run for Borough President in 2013.

Adams wouldn't confirm that he was running, but he did to Room 8 columnist Rock Hackshaws, who wrote 2/3/12:

I have had many credible sources tell me for quite some time now that Adams was going to seek the boro-prez position after Marty Markowitz is term-limited in 2013. In a phone conversation with Adams yesterday, he stated that right now he is first seeking re-election to his senate seat this year; then once he is successful, he will announce a run for the Brooklyn borough presidency sometime before Christmas 2012. He believes his chances of success are very high. I concur.

Well, Adams does have name recognition beyond his elective service, notably as a co-founder (according to his bio) of 100 Blacks in Law Enforcement Who Care. Both his law enforcement background, as well as his willingness to question the police, gives Adams crossover credibility with some voters who might be less favorable toward a black candidate or an ex-cop.

As Hackshaw notes, Adams would be the borough's first black Borough President.

Depends on the field

But it depends on how many candidates run in the Democratic primary, which is tantamount to election.

For example, if Council Member Letitia James chooses not to run for Public Advocate but aims for Borough President, she'd likely cut more into Adams' voter base than that of the first announced candidate, Carlo Scissura, Markowitz's designated heir. Their districts cover nearby neighborhoods, and James also is black.

Then again, should Council Member Dominic Recchia run, he'd cut into the Southern Brooklyn base of Scissura, a fellow Italian-American.

And there are rumors of other possible entrants.

That's not to say that candidates expect support mostly on regional/ethnic/racial lines, but those do serve as rough proxies for their respective bases.

New commercial to follow "Jay-Z's rise from selling CDs out of the trunk of a car "

2012-02-05T18:02:00.002-05:00

Relying on a behind-the-paywall WWD article, New York Magazine reports:

Jay-Z's forthcoming commercial will be called "From Marcy to Madison Square," and show black-and-white footage that follows Jay-Z's rise from selling CDs out of the trunk of a car in Marcy Projects in Bedford-Stuyvesant to headlining concerts at Madison Square Garden. It'll reportedly air on MTV, BET, and TNT during NBA basketball games.

Um, I thought Jay-Z's rise relied less on selling CDs than other product.

Signs of the times: Franklin Avenue, House of D, Southpaw transition

2012-02-05T06:30:00.001-05:00

So, while some were waiting around for Atlantic Yards, Brooklyn continued to change:

Franklin Avenue in Crown Heights becomes "the next subway stop on Brooklyn’s gentrification express"
While the Brooklyn House of Detention was being renovated, six high-rise apartment buildings were built nearby, and a boutique hotel is across the street
After eleven years, Park Slope music club Southpaw will close and the space, like others on Fifth Avenue, will become a business serving kids

Bonus: Southpaw co-owner Mikey Palms told the Brooklyn Paper how he got the Fifth Avenue building:

“A crackhead and a prostitute were living above the venue and the owner told me, ‘If you can get ’em out, you can have the space,’” he said.

Bloomberg (well, his media company) calls for public vote on funding for sports facilities

2012-02-05T06:00:00.000-05:00

An editorial from Bloomberg View, As Super Bowl Shows, Build Stadiums for Love and Not Money: View

What price could a city government place on its citizens’ love for their sports teams?

The answer is that public funding for new sports stadiums should be up to voters to decide. Cities should make sure the public has access to independent evaluations of the costs and benefits of building a stadium -- not just the inflated “economic-impact studies” done at the behest of team owners and publicized in the media. It should also be made clear exactly what other subsidies the sports teams will be getting: from cheap loans to cheap rent to cheap land.

Finally, in structuring a deal, cities should strive to use fees -- such as surcharges on tickets -- that place more of the cost on those who actually use the facilities, and the city’s share of the cost should, as much as possible, be dedicated to associated public-works improvements that will have benefits beyond game day. Most importantly, the teams should shoulder the heaviest financial burden in any deal.

If, confronted by an honest cost-benefit analysis, citizens vote to pay more in taxes or forgo other civic improvements, then, by all means, give them their retractable domes, their plasma TVs and their years of expensive enjoyment.

Now the Brooklyn arena, as well as the two new baseball stadiums, have relatively less direct subsidy than many other deals.

But they didn't need it. They get indirect subsidies, access to sponsors in the nation's biggest media market, and other revenue opportunities.

The city government--hello, Mr. Bloomberg--produced and embraced cost-benefit analyses for the arena that differed significantly from that produced by the NYC Independent Budget Office.

And there was never a vote.

Forest City Enterprises stock jumps after decision to shift focus

2012-02-04T08:00:00.000-05:00

Well, the stock market sure liked Forest City Enterprises' decision to divest itself of the land business and, along the way, shifting its corporate structure to have a majority of independent, non-family directors.

The stock jumped 13% yesterday, to $14.91. Last year the stock nudged over $19, while in the last five years it had risen to $70 and dipped below $4.

And Forest City ultimately should be better position to pursue projects in core markets like New York, including Atlantic Yards. (Then again, maybe they'll just keep trying to raise funds from immigrant investors.)

Conference call

A brief conference call yesterday with investment analysts shed a little more light on the decisions. CEO David LaRue explained that the land business "is very different from our rental property business... It is the biz that Forest City started in real estate over 60 years ago. It has over the years been a good business... but also very volatile.

The 35 active land projects, he said, are mostly in the southwest, Texas, North Carolina, and Ohio, aimed at single-family developments. The decision does not impact mixed-use projects such as Stapleton in Denver and Central Station in Chicago.

"We expect to recognize a non-cash impairment charge, $150-165 million pretax," he said, not including severance. "Clearly that is a significant impairment," indicating the difference between the book value of the property and its likely market value.

So the firm will sell various assets. "Our target is to have this completed by the year end, but at the same time, we won't be rushed," he said. "This will not be a fire sale."

Board chair Chuck Ratner, the former CEO, said that the firm had made similar strategic decisions in the past, such as to get out of lumber wholesaling and assisted living. "In each of these cases, we were able to redeploy the capital into higher-return opportunities," he said.

Other changes

As for the change in the board, he said, the board determined that there "were the right things to do as part of our continuing commitment to good corporate governance." (That raises the question: has the longstanding family control been less-good corporate governance?)

CFO Bob O'Brien also introduced a new schedule of net asset value components to better explain the firm's business.

LaRue added that the firm's committed "to improve, adapt, and position the company to take advantage of future opportunity while also being responsive to our stakeholders."

One question from the analysts: will Forest City reinstate a dividend payment.

LaRue said yes, eventually: "We owe our shareholders, at the appropriate time in our own financial life, a dividend again."

No one asked a specific question about Atlantic Yards.

Forest City doing worse on M/WBE contracting for Atlantic Yards than previously reported: ESD says total is 15.4%, not 22.6%, because some firms aren't certified

2012-02-03T07:13:00.000-05:00

By the state's measure, developer Forest City Ratner has a much lower M/WBE (Minority and Women's Business Enterprises) utilization figure than previously reported, which suggests it's doing less than previously assumed in reaching out to businesses that truly need a boost.

On January 31, I reported that, according to statistics released by Empire State Development (ESD), the state agency overseeing Atlantic Yards, the MBE awards total $91 million (about 16.3% of total purchases), while the WBE awards total $35.1 million (about 6.3% of total purchases).

Thus the combined M/WBE participation is apparently 22.6%, about three-quarters of the way toward the goal of 30% (20% MBE plus 10% WBE), as reflected in the Community Benefits Agreement (CBA).

Revising the numbers

Well, that was true, but I've since learned that the statistics, while released by ESD, were not only prepared by Forest City Ratner--there was no indication on the document--they do not represent the ESD's own analysis of M/WBE figures.

Arana Hankin, Director, Atlantic Yards Project for ESD, explained:

ESD and the Atlantic Yards Project have a certified MWBE utilization contract goal of 20%. Firms must use “best efforts” to meet that goal. If they have not met the goal they must show that they have used their best efforts to retain MWBE firms through outreach and solicitation. ESD has calculated that Forest City has awarded 15.4% to MWBE certified firms to date. ESD does not count the MWBE firms that are not certified. If non-certified firms were included the percentage would increase.

Why wouldn't they be certified? I speculate that either 1) they are/were too fledgling to bother or 2) are too large and prosperous to qualify under the state's newly narrowed rules aimed to exclude M/WBE firms that are very large or led by businesspeople who are so wealthy as to be clearly not disadvantaged.

Whatever the reason, the discrepancy again points out the need for Forest City to not merely self-report but to hire the Independent Compliance Monitor required by the CBA.

What are the M/WBE rules?

State rules passed in 2010 require:

All firms seeking MBE or WBE certification must be at least 51% owned, operated and controlled by minority members and/or women.
The ownership must be real, substantial and continuing, and the minority members and/or women must exercise the authority to independently control the day-to-day business decisions.
In addition, each minority or woman upon which certification is based, must have a net worth which does not exceed 3.5 million dollars. This calculation should not include the ownership interest in the applicant firm, the primary residence of the owner(s), and $500 thousand of present cash value of any qualified retirement savings plan, or individual retirement account held by the individual less any penalties for early withdrawal.
The firm cannot exceed 300 employees, must be independent and authorized to do business in New York State. Generally, the business must be in operation for at least one year.

Discomfort with the rules

The Albany Times-Union reported 1/15/12, in Wealthy minority and women business owners work to keep contract edge:

Several representatives of minority enterprises and at least one controlled by a woman have been working behind the scenes to get the Cuomo administration to support changes in a law signed by Gov. David Paterson shortly before he left office in 2010, according to several people interviewed.
The law sets a limit of $3.5 million in personal wealth. Minority- and Woman-owned Business Enterprise certification cannot be conferred by the state on companies whose principals have amassed net worth exceeding the figure.
Consultants, lawyers and lobbyists for some former MWBE-certified businesses are trying to get the law changed to raise the limit or grandfather their clients in, or to make other considerations that will maintain their status, according to people who have been involved in private talks.
The certifications give MWBE businesses an advantage over other firms for a share of public contracts. Cuomo has directed state agencies to boost MWBE participation in state contracts and procurements to 20 percent, more than double current levels.

Note that ESD had the 20% goal already.

It's not clear to me which companies working on Atlantic Yards no longer qualify. For example, the venerable McKissack Group, selected to manage railyard reconstruction (see press release at bottom), remains in the directory; it does not employ more than 300 people but is presumably led by well-off leadership.

MWBE Contract Awards as of December 2011

McKissack Atlantic Yards Railyard Press Release October 2005

Forest City Enterprises, long a family-controlled corporation, to shift to a majority of independent directors; also, new plans to sell land, change corporate focus

2012-02-03T06:36:00.000-05:00

Forest City Enterprises (FCE), parent of Brooklyn developer Forest City Ratner, is making some changes.

It has decided to sell its land band business to focus on"core rental products - apartments, office and retail properties" in core markets (including New York), and also to divest itself from properties in non-core markets.

Also, long controlled by some interlocking families, namely the Ratners, FCE is shifting its board to a majority of independent director, rather than family members.

That may be an effort to enhance credibility in the marketplace, but even independent directors are not necessarily corporate watchdogs, as history has proven again and again. FCE public board meetings, at least according to webcasts, show a clubby, go-along atmosphere.

Repositioning the company

The new business focus will cost the company's bottom line--an impairment charge means that the assets are worth less on the market than currently assumed--but also will provide new cash to drive new investments and pay off loans.

From the press release:

A primary driver of the company's strategic plan is greater focus on core rental products - apartments, office and retail - in core markets - New York, Washington, D.C., Boston, Dallas, Los Angeles, San Francisco and Denver.
As part of the commitment to greater focus on core markets and products, Forest City will strategically reposition or divest portions of its land business and is actively reviewing alternatives to do so. The land business buys and sells raw land, develops subdivisions and sells lots to homebuilders. The land portfolio consists of approximately 35 active projects primarily located in the Southwestern U.S., Texas, the Carolinas and Ohio.
As a result of this decision, Forest City expects to recognize a non-cash impairment charge of approximately $150-$165 million, pre-tax, in the quarter ended January 31, 2012. Anticipated cash proceeds from executing the repositioning will be used to both pay down debt and selectively activate new development.

The press release on directors

A press release from FCE, Forest City Announces Governance Actions:

CLEVELAND, Feb. 2, 2012 /PRNewswire via COMTEX/ --Forest City Enterprises, Inc., (NYSE: FCEA and FCEB) today announced that its board of directors has determined to reduce the size of the board from the current 15 authorized seats to 13, effective with the company's annual meeting of shareholders in June

The board further determined that it expects seven of the 13 director nominees at the upcoming annual meeting to be independent, subject to identifying a suitable additional independent candidate for nomination to the board.

Two non-independent directors, James A. Ratner and Joan K. Shafran, will complete their service as directors at the annual meeting and will not be re-nominated. Ratner is an executive vice president of Forest City Enterprises and is chairman and CEO of the company's Commercial Group, its largest business unit. He will continue to serve the company in those capacities.

Commenting on the planned change, Chairman Charles A. Ratner stated, "The board determined that reducing the overall size of the board and moving to a majority of independent directors are prudent steps in keeping with our continuing commitment to good corporate governance practices. The board thanks Jim and Joan for their diligent and faithful service as directors."

"Forest City has a rich culture and a history of growth and adapting to change," Ratner added. "The actions we are taking demonstrate our commitment to that legacy and to continuing to improve, evolve and grow."

An analyst who follows the company applauded. Reported the Plain Dealer of Cleveland:

"There are two things that have greatly improved the governance at Forest City in the last year," said Paul Adornato, an analyst who tracks the company for BMO Capital Markets. "First, the company appointed the first non-family member as CEO in the company's history. Secondly, they have reduced the size of the board and have independent directors comprising the majority of the board.
"These are both shareholder-friendly moves."

Well, where were the analysts regularly complaining about the "shareholder-unfriendly" board dominated by one family?

The current board

Independent (6): Arthur F. Anton, Scott S. Cowen, Michael P. Esposito Jr., Deborah L. Harmon, Stan Ross, Louis Stokes

Family (7): Brian J. Ratner, Bruce C. Ratner, Charles A. Ratner, James A. Ratner, Ronald A. Ratner, Deborah Ratner Salzberg, Joan K. Shafran

Ex oficio (1): David J. LaRue (the first non-family CEO)

Retail politics vs. policy positioning: a contrast between the Markowitz and Stringer "State of the Borough" speeches

2012-02-03T06:27:00.003-05:00

OK, Manhattan Borough President Scott Stringer is running for mayor. And he presides over a borough that, unlike Brooklyn, doesn't have an identity independent of the city at large nor, arguably, needs one.

But it's still worth noting how Stringer's State of the Borough Address, unlikes Markowitz's version, focused on policy. From the preview:

First, I’m announcing a plan to cut taxes for working and middle class families. It’s simply not right that in New York City someone who makes $50,000 per year pays the same city tax rate as someone who makes $500,000 per year. I’m proposing that we create a more progressive income tax system that restoresfairness and boosts the economy. You can read more about my tax plan in today’s Wall Street Journal.
Second, we should make housing more affordable by creating a larger fund to rescue foreclosed buildings. We should then work with non-profit developers to renovate these properties and turn them into affordable housing.
Third, at a time when small businesses are having trouble getting loans, we should create an alternative lending source for them. A city-run program is running successfully in Philadelphia, and we should use that model here to unlock the capital that small business owners need.

Also, from the speech, Stringer talked about racial profiling:

We all owe a huge debt of thanks to our brave men and women in blue.
But I have to tell you – I am troubled by a critical police strategy.
Last year, the NYPD stopped, questioned and frisked nearly 700,000 New Yorkers -- most of them for no reason at all.
In 94 percent of the stops, no arrests are made.
In 99.8 percent of cases, no gun is found.
And 85 percent of those stopped are Black or Latino.
The conclusion is inescapable: stop and frisk as currently practiced is riddled with racial profiling, and that is making us ALL less safe by breeding distrust across whole communities.

By the way, here's the word count per speech:

Stringer: 4,190
Markowitz: 11,246

State of the Borough: Markowitz's overstuffed tribute to Brooklyn, with only mild enthusiasm for the new arena

2012-02-02T07:50:00.000-05:00

Well, maybe next year, once it's open, the Barclays Center will make a bigger splash. As in past years, the diverse crowd at Brooklyn Borough President Marty Markowitz's typically overstuffed State of the Borough address was only mildly enthusiastic to mentions of Atlantic Yards and the new arena.

Then again, he brought it up 38 minutes into a speech (full text) that went more than 95 minutes, and that's a lot of speech.

It was a speech without major announcements or major commitments of money, though Markowitz's office had already doled out a series of mini-scoops, none of them on the scale of his past support for, say, the Loews Kings renovation (finally launching) or his legacy amphitheater (stalled) in Coney Island.

The news:

Daily News: a high-tech manufacturing plan in Brownsville/E. New York, but only $1 million in seed money (and, I'd say, zero chance to woo Apple from its China supply chain)
Daily News: expansion of ferry service to southern Brooklyn
Post: $1 million toward renovating the Crown Heights armory, one of three armory boosts
Brooklyn Paper: $1.5 million toward 3rd Ward as a food incubator, which might be a kickstart.

The speech will be re-broadcast on Brooklyn Cable Access Network, on February 3 and February 6. Afterward, it will be available for viewing online.

Vintage Marty, today's Brooklyn

As in the past, and perhaps even more so, the State of the Borough, this year delivered at Brooklyn College, was vintage Marty, with the bonus of a video tribute that portrayed Markowitz's years as a nine-year night school student (and student body president) at that Flatbush campus, slender, with dark hair, and vibrant eyes.

While Markowitz did include his share of surprises and stunts--a Barbara Streisand impersonator, WTF? a fake GQ cover picturing himself--he avoided such p.r. miscues as over-demonstrating his loathing of bike lanes or leering at younger women.

And, in recounting his ahead-of-some-constituents embrace of gay marriage--to the point of catering ceremonies at Borough Hall--he leaves a legacy of humanity that should, for many, overshadow the "screamer" underneath.

It was another example of retail politics in a borough so large that retailing takes a lot of time, plus an array of performances and special guests who demonstrated the astonishing diversity of Brooklyn (gay marriage! Hasidic soup kitchen! a couple married 70 years! African-American girls doing classical Greek dance!).

One Brooklyn?

And while the theme of the speech was "one Brooklyn," the borough is very much economically fractured, which is beyond the powers of a Borough President.

In a sign that many elected officials seek Markowitz's blessing if not endorsement, the event featured greetings from State Comptroller Thomas DiNapoli and two leading mayoral candidates, City Council President Christine Quinn and Public Advocate.

Perhaps the biggest beneficiary of Markowitz's halo, such as it is, was MC Carlo Scissura, who shifted from Chief of Staff to Special Advisor to run for Borough President in 2013. Numerous elected officials got salutes from the stage.

Markowitz, apparently unwilling to be written off in the political world, even joshed during the speech about a potential run for mayor, displaying an image of a tattoo regarding his mayoralty during a salute to an entrepreneur who produces removable tattoos.

He even had the grace to josh about how he wished he could remove some unwanted "ink" in the form of bad press regarding fines by the Conflicts of Interest Board.

The arena mention

Just after that "ink" remark, Markowitz transitioned this: "After years of struggle and false starts, 2012 is the year that the Barclays Center will really come to fruition. With the new arena nearly complete, it's clear this area will be the hub of a new city center, creating the jobs in and around the arena that we desperately need."

There was no reaction. It's not at all clear that the area will create jobs "that we desperately need," since most jobs, it seems, will be in the fields of restaurants, entertainment retail, and arena services, which generally don't pay well.

But Markowitz found some applause lines. "For an old-timer like me, it feels like Brooklyn has gone 'Back to the Future' —to the days when Downtown was teeming with nightclubs and dancing halls — when we rocked — and we rolled — our way to the Fox Theatre, the Paramount, and back," he continued, generating some claps from old-timers.

"I can't wait to sit in the arena watching the Brooklyn Nets mop up the floor with the 'Manhattan Knicks,'" he continued, provoking more enthusiasm with a line that always works by appealing to reflexive borough pride.

"And I'm filled with hope that the Nets will get Dwight Howard, someone I really 'look up to!,'" he added, as a photo illustration of the diminutive Markowitz and the itching-to-leave Orlando Magic center appeared on the screen. "In fact, my ultimate dream would be Dwight Howard on the Nets — and Neil Diamond and Barbra Streisand on stage."

The Dwight Howard mention didn't do much for a crowd that apparently included relatively few basketball fans. Then again, it didn't have time to sink in. In a rather bizarre interlude, a Streisand impersonator then entered the stage, serenading the crowd and, Babs-like, began shaking hands, as if at a bar mitzvah or wedding, with the diverse group of honored guests on stage.

Markowitz returned to his script: "Events already booked at Barclays include the Ice Capades, the Ringling Brothers Circus, Andrea Bocelli, and a monster truck show."

"I couldn't be prouder that the first show will be Brooklyn's own, the pride of Bed-Stuy, the man who wrote the 'Blueprint' for success, Jay-Z," he said, to some applause. "By the way, we all send our congratulations to Jay-Z and Beyonce on the birth of their daughter, Blue Ivy."

"And I am delighted to say that for one night this October, Barclays will host the first ever NHL game in Brooklyn when the New Jersey Devils and the New York Islanders meet in a pre-season matchup," he said, to moderate applause for some news that had already leaked. "Of course, if I had it my way," he then said, indicating a graphic with the logo of the Brooklyn Islanders.

More and less enthusiasm

So, what exercised the crowd? A salute to Dr. Roy Hastick, founder, president, and CEO of the Caribbean-American Chamber of Commerce and Industry, which will get the landmark Erasmus Hall Academy building to serve as the organization's permanent home, with $1 million from Markowitz's office.

By contrast, when Markowitz mentioned his support for casino gambling in Coney Island, there was utter silence.

There was moderate enthusiasm for his call for ferry service and armory renovation.

The biggest claps tended to go to people, to special guests like the chap who lost 230 pounds or the good samaritan who saved a woman who fell on the subway tracks.

Those who've passed

While Markowitz saluted an enormous list of people, including Brooklyn's six Pulitzer Prize winners and array of magazine editors, the somber section came when he recalled those who'd passed in 2011.

They included former Governor Hugh Carey, community activist Murray Adams (father of ESD CEO Kenneth Adams), BargeMusic founder Olga Bloom, and Maimonides Medical Center official Dr. Joseph Cunningham.

Also, he said, "We lost Marie Louis, the Chief Operating Officer of BUILD and an active member of Community Board 8, at much too young an age." A photo of Louis, who was 39, served as a reminder.

Best line

Markowitz recounted the transition of the hot-sheet Golden Gate Motel in Sheepshead Bay to the Brooklyn Amity School, a private school sponsored by Brooklyn's Turkish community: "From illicit fornication to primary education--only in Brooklyn!"

P.S.

A note to future speechwriters: even if you're writing the speech in sections, don't ever use the word "finally" unless you really mean it.

When Markowitz uttered the word "finally" at the 57-minute mark, some in the audience might have gotten their juices ready for the post-event repast, but that was merely a false alarm.

Barclays Center provoking real estate boom? If so, why can't Ratner get housing off the ground

2012-02-02T06:30:00.001-05:00

I can't say I completely buy the amNY article headlined Brooklyn nabes expect real estate boom with Barclays Center. After all, the neighborhoods described are already changing--and they're not exactly adjacent to the arena.

The article begins:

When you think about Brooklyn real estate, Williamsburg, Park Slope and the downtown district - the borough's hottest and priciest areas - are probably the first neighborhoods that come to mind.

But with the opening of a new arena in seven months, other nabes may be rising to the top - even if it comes at a price.

The buzz surrounding Barclays Center in Prospect Heights is expected to attract an onslaught of investment to the area and turn the nearby neighborhoods into some of the most sought-after ZIP codes in the city, real estate experts said.

"Crown Heights, Bed-Stuy, Bushwick and Sunset Park are on the verge of exploding," said Jamella Swift, senior associate broker at Citi Habitats. "Once the stadium opens, the domino effect from Fort Greene, Park Slope and Prospect Heights will carry over to the adjacent neighborhoods."

What? A domino effect from the corner of Atlantic and Flatbush all the way down to Sunset Park? Crown Heights began changing a while ago, as we were reminded this morning. Bed-Stuy began to boom before the 421-a law expired. Bushwick has been experiencing a domino effect from Williamsburg, not the arena.

Spillover effect?

The article concludes:

Michael Slattery, senior vice president of research for the Real Estate Board of New York, said it's hard to stop progress.

"Visitors [to the arena] will boost economic activity, and the capital investment and the creation of new businesses will have a spillover effect on housing," he said.

Well, it surely may drive restaurants and entertainment retaail--witness the fate of Triangle Sports--but if there's truly a boom market for housing, why is Bruce Ratner having such trouble building housing at the Atlantic Yards site?

Deconstructing the latest softball Ratner interview: plans for affordable housing are even shakier than before, and Ratner's tense even with a friendly publication

2012-02-01T14:28:00.002-05:00

This New York Observer article, Waiting for Bruce: The Commercial Observer Tours Atlantic Yards Arena, is such a nada-burger that it deserves some off the cuff annotation.

The article is in italics, my commentary not. I'm not sure why it was published other than a generalized desire by the Commercial Observer, which is owned by a real estate mogul, to play nice with Bruce. (Well, here's the justification, I guess: slideshow.)

A chauffered Lexus LS sedan pulled up to the corner of Dean Street and Flatbush Avenue and out slid Bruce Ratner from the back seat. He was 15 minutes late.

In a navy suit with a merino v-neck sweater over a dress shirt with no tie and an open collar, he was also underdresed for the sunny but windy chill swirling across the $1 billion Barclays Center that his firm Forest City Ratner is well into building at the Atlantic Yards site in Brooklyn.

“I thought it was going to be 50 degrees,” Mr. Ratner said, immediately noticing the cold.

This is what's called "setting the scene." But there's not much drama--unless the implicit revelation that Mr. Ratner, is indeed, a warm-blooded animal, or his blatant use of non-public transit. But the writer had to wring out a transition.

So much at the site hasn’t gone according to plan. Mr. Ratner has waded through years of lawsuits launched by landowners who were eventually booted from buildings on the yards via emminent domain, community groups and others that oppose the 22-acre development. If that wasn’t enough, the project, one of the largest developments in city, has had to weather a deep recession and its lingering aftereffects, which have put a damper on demand and pricing for the 16 residential buildings slated for the site.

Emminent domain, indeed. We don't learn that, along with the eminent domain cases, another line of cases challenged the environmental review and, at the last juncture, won a victory, requiring the state to conduct a Supplemental Environmental Impact Statement (SEIS). An appeal will be heard February 14.

Mr. Ratner managed to break ground on the basketball arena – which will be home to the Brooklyn Nets – in 2010, just before tax free bonds the state had permitted him to issue in order to finance the arena’s construction at below-market interest rates were due to expire.

Well, not exactly. The issuance of the tax-free bonds faced an end-of-2009 deadline. The groundbreaking could come later, which it did. And one of the reasons he managed is that the state chose not to conduct a SEIS, which would have delayed the re-approval of the project until 2010.

The timeline for other components of the project, including the construction of three residential towers that will hug the arena, is less clear.

Not to mention the fourth tower, long slated to house office space and thus "jobs."

“I think we’ll break ground sometime this year,” was all Mr. Ratner would say, referring to the first residential building that is slated to rise at the site, a tower on the corner of Dean and Flatbush whose base will cantilever over a rear entrance to the 14,000 seat Barlcays Center.

Wait a sec. The arena will house 18,000+ for basketball, and for concerts. The seating area shrinks only for major league hockey. More importantly, Ratner already seems to be stretching the groundbreaking even farther, adding to a string of delays.

The first building will be something of a barometer, Mr. Ratner suggested. The offerings in the other two buildings, he said, be they studios, one bedrooms, or larger apartments, will be based off the market’s reception of the spaces that Forest City Ratner will offer in the first tower.

Y'mean, if market-rate tenants don't want studios and one-bedroom units in the first tower, Ratner will take a risk and build two-bedroom and three-bedroom units in the next two? Doubtful. And if the first building is somewhat successful, that means the configuration, with few larger units, will continue, despite promises in the Community Benefits Agreement to provide larger "affordable" units to help families.

Mr. Ratner bristled when asked to make further reaching projections of progress on the Atlantic Yards site. Standing inside the arena and gazing into its nearly finished bowl of seats, The Commercial Observer’s gaze couldn’t help but trail farther, through a large entryway being used by construction vehicles. Beyond was the rest of the site, a stretch of train tracks and dirt recessed below grade that runs east for several blocks between Atlantic Avenue and Pacific Street.

That's not the rest of the site. That's some of the site. There's more site on the block bounded by Carlton and Vanderbilt Avenues, and Dean and Pacific Streets. And on 100 feet east of Sixth Avenue, between Dean and Pacific. And on Site 5, now home to Modell's/P.C. Richard.

“We’re here to talk about the arena,” Mr. Ratner snapped when asked when those portions of the development would begin.

He's snapping now, even when faced with a reporter from a friendly publication? This is reminiscent of his 11/8/09 quotes to another friendly publication, Crain's New York Business, "Why should people get to see plans? This isn't a public project." and “Can you tell me when we are going to need a new office tower?”

One could forgive Mr. Ratner’s edginess given the opposition he has faced. Sensing that he had perhaps recoiled a little too fiercely, his demeanor quickly loosened.

“You have to understand, my words have been twisted around in the past,” Mr. Ratner said.

One might remember all the money Mr. Ratner's been spent on political contributions, public relations, strategic charity, and lobbying. As for twisting his words, he does pretty well on his own, putting his name on a questionable 2008 op-ed for the Daily News.

“And then all of a sudden I’m getting sued,” he added, seeming to refer to a recent suit by a group of workers who claim they were promised union jobs by Forest City Ratner for enrolling in a training program, but subsequently weren’t offered employment.

Well, the Observer might have taken the suit seriously. The promises allegedly were made by FCR's Community Benefits Agreement partner BUILD (Brooklyn United for Innovative Local Development).

Mr. Ratner said that the company had studied 16 arenas around the country, specifically Bankers Life Fieldhouse, formerly Conseco Fieldhouse, the home of the Indiana Pacers. The problem with most arenas, such as Madison Square Garden, according to Mr. Ratner is their elevation, which forces the flow of patrons all in one direction and creates congestion.

The court at the Barclays Center is below grade, so when fans enter from ground level, depending on where they sit, they will be split between heading either up or down to their seats.

“We broke up the flow of traffic,” Mr. Ratner said. “At a place like MSG, you have everybody heading up at the start of the game and then down at the end. It creates a jam and it’s confusing. You’re forced to kind of follow the crowd just to know where you’re going.”

Is this all he's got? This is old news. We get it. The arena has some advantages, for arena-goers. The impact on the neighborhood, on the other hand--that's produced a lot of forboding.

Mr. Ratner also pointed out that games will be partially visible from the plaza in front of the arena.

“It’s going to be the only court in the league where you can literally watch the game from the street outside,” Mr. Ratner said, pointing out the arena’s embrace of the surrounding community.

Embracing the community, say, by failing to produce the promised Transportation Demand Management plan remotely on time.

February 14: a day of reckoning for Forest City Ratner? Cases involving Atlantic Yards timetable and Ridge Hill corruption charges go to court

2012-02-01T05:02:00.000-05:00

Tuesday, February 14, may be a day of reckoning for developer Forest City Ratner, as two key court cases proceed in Manhattan.

Sometime after 2 pm, there will be oral argument in the appeal filed by FCR and Empire State Development in the case challenging the state's finding that there was no need for a Supplemental Environmental Impact Statement (SEIS) to analyze the impacts of a 25-year buildout.

In a victory for community petitioners, a judge ruled that such an SEIS was needed.

The case will be heard in the Appellate Division of New York State Supreme Court, 27 Madison Avenue. I've already written about the first two legal exchanges: the appeal brief from ESDC/FCR and the reply from the petitioners. The appellants get the last word, so I will write shortly about their reply.

The Ridge Hill case in Yonkers

On February 14, jury selection begins in federal court regarding the Ridge Hill corruption case, which touches on Forest City Ratner, though the developer was not charged. The case, which could take a month to try, will be heard by U.S. District Judge Colleen McMahon in courtroom 14C of the federal courthouse at 500 Pearl Street.

It involves two defendants. Former City Council Member Sandy Annabi, who changed her vote to approve the project and was indicted for accepting bribes. Her cousin, Zehy Jereis, was indicted for giving them.

A third defendant, Anthony Mangone, in November 2010 pleaded guilty to participating in a conspiracy to bribe Annabi regarding another project (the Longfellow project), aiding Annabi's receipt of corrupt payments, extortion under color of official right, and travel act bribery.

Forest City, which hired Jereis for an apparent no-show job, was not charged and issued a statement indicating that it had been told by federal prosecutors that neither it nor its employees was a "target" of the investigation. Will Forest City staffers or lobbyists be called to testify?

I'll have a preview article about the case in the next week or so.

Markowitz will promote Barclays Center hockey (exhibition game!) in State of the Borough, won't close door on mayoral run, but seems resigned to sitting it out; not sure "son" (gray parrot) understands his legacy

2012-02-01T05:01:00.000-05:00

Brooklyn Borough President Marty Markowitz, who gives his invitation-only State of the Borough address tonight, apparently will be promoting future events at the Barclays Center.

As Newsday first reported yesterday, the Islanders will play the New Jersey Devils in a preseason game on October 2; it's the first NHL game in Brooklyn.

(Would you believe the New York Times devoted a Metro section article to the game, Testing the Ice Where Hockey Was an Afterthought, with credits to four reporters? The Times sure didn't cover the failure to provide the promised Transportation Demand Management plan, or the failure to provide promised larger affordable housing units.)

According to a Courier Life report issued before the official announcement, he indicated he'd be pushing for NHL hockey. Markowitz was appearing at the Bay Ridge Community Council's Presidents' Luncheon, held, not coincidentally, at the Bay Ridge Manor, long owned by state Senator Marty Golden and his family.

His political future

Also, Markowitz can be seen discussing his political future in a mid-December 2011 interview with Roberto Perez of The Perez Notes. (Last month I analyzed his comments about Atlantic Yards.)

Markowitz, asked whether he'd run for mayor, sounds ambivalent, unwilling to close the door--even as announced candidates like City Council Speaker Christine Quinn have maxed out fundraising. "I still have a little window of review," he suggests.

Questions of legacy

"The only thing that motivates me is not a legacy," he says, at about 1:37. "I must tell you, it's my wife and I, my son"--he smiles--"is almost an 11-year-old African gray parrot. So I'm not sure that he'll understand my legacy. But the incentive for me is really to do great things for New York."

(I know some people consider their pets--often dogs--their "children," but isn't it a little icky, especially when the animal isn't even a mammal?)

"The good news is this city is not dependent on any one mayor," he said. "I know I could do a lot of good. But I have to weigh that with the cost to myself, both in terms of my psyche, and in terms of my health, and the current political climate"--he frowns--"in terms of service to New York. So there's a lot of things in there. But"--he smiles again, ever the pol--"thank you for asking me that question."

He referenced "the political climate" with a tinge of disgust, perhaps a reference to the recent tough reporting on his fundraising for his charities.

"If I was 50 years old, you wouldn't be asking me this question," he says a bit later. "I'd be a candidate. I'll be almost 69 years of age should I win [in 2013]."

So, the question is: what will Markowitz do after he leaves office? Will he simply retire? Or will he snag a job, say, promoting a regional center for immigrant investors, or at the Barclays Center he helped bring?

BP candidate Scissura: "I get" the old/new/future Brooklyn

2012-02-01T05:00:00.000-05:00

Carlo Scissura, Brooklyn Borough President Marty Markowitz's designated heir--former Chief of Staff, now Special Advisor so he can campaign--discusses his political predictions and political future in a mid-December 2011 interview with Roberto Perez of The Perez Notes.

His one political prediction, "Albany redistricting will be as partisan as it has ever been," was a gimme.

Next question: why Carlo Scissura for Borough President, and not rumored candidates State Senators Eric Adams and Kevin Parker, and Assemblyman Nick Perry?

Why Carlo?

Scissura, prudently, did not say 1) that he's Markowitz's candidate 2) he's a lawyer, not as cartoon-y as Markowitz, and 3) in a borough where a good number of voters vote along ethnic/racial lines, he's the only announced white candidate among the four listed.

(The above potential candidates have not committed, though I'd bet Adams, at least, is on board. And the race could be shaken up if, say, Council Members Dominic Recchia and Letitia James decide to run.)

"We're all good people, and we're all going to have great ideas for Brooklyn, but why me? Why me? Simple. I'm the son of immigrants who came to Brooklyn. I built my life here. I've done that things that a Borough President should do. I was on a Community Board for ten years, so I know what Community Boards are like. I was on a school board..."

"I was raised by a single mom [as of 15]... my mother works for a union... I get people. I get this borough. I love this borough. I'm going to come out with, I believe, some great visions for this borough, for the future. Let me tell you, the borough presidency is a very unique job. you're not a legislator, and you're not the mayor, you're somewhere in between. You have to really get where people are going... I get the old Brooklyn, the new Brooklyn, the Brooklyn of yesterday, the Brooklyn of today, and the Brooklyn of tomorrow. And I'm the one to put it together."

The full interview

Here's the full audio interview, with excerpts, concerning efforts to spruce up Fourth Avenue (and the importance of affordable housing along with rezonings), Coney Island revitalization, the importance of increasing bus service and ferries, and education.

"I'm a grassroots guy," he says at one point. "Everything I do is from the bottom up. I've always said, I think working with schools taught me that, you let people yell at you when they have to... The more they talk, the more I learn. The more I listen, the more that can get done for the neighborhoods."

What should come out in the campaign is where he differs, if anywhere, with his boss and mentor. One place suggested by the interview: measured support for bike lanes, a topic that exercises Markowitz.

Scissura says, regarding rezonings, "My opinion is 30% must be for affordable housing period, whatever you build you want a rezoning and you're a developer and you come to me as Borough President, I will say to you, I will not approve it unless you commit to 30% affordable housing period."

The devil is in the details, however. Scissura also uses the term "workforce housing," a term generally applied to moderate- and middle-income housing. So any discussion of "affordable housing" has to address the income levels for whom the housing is targeted.

Asked about schools, he says, "Parental involvement is the most important thing, so mayoral control is good, as long as you have parent involvement, mayoral control is good, as long as you have community education councils with teeth."

From the latest Construction Alert: a two-week (at least) closure of the Flatbush Avenue sidewalk west of Dean

2012-02-01T04:30:00.000-05:00

The latest two-week Atlantic Yards Construction Alert, dated 1/30/12, was distributed yesterday by Empire State Development (after preparation by developer Forest City Ratner).

There's not much dramatic in the alert, just indications of expected progress in various aspects of the project. Most notable to neighbors, perhaps, is this:

An 80’ section of the northern Flatbush Ave. sidewalk west of Dean St. will remain closed during this reporting period while façade installation is underway. This closure is due to agreement between NYCDOB [Department of Buildings] and Hunt [Construction].

Late-shift work

As in the previous alert, there will be double-shift and weekend work at the Long Island Rail Road/Vanderbilt Yard/ Carlton Avenue Bridge:

All weekdays all locations in the yard: 6:00AM to 11:00PM
Saturdays as required: 7:00 AM to 11:00 PM
Sundays and Holidays as required: 8:00AM to 11:00PM

And there may be late shift and overnight shift work at the arena site:

Subject to receipt of permits, a second shift shall be continued throughout this reporting period, from 3 – 11 PM, Monday-Friday only. Also subject to receipt of permits, a third shift may be instituted during this reporting period, from 11 PM – 7 AM, Monday –Friday only.

The text below is excerpted from the latest document (bottom), with the bolded text indicating what's new compared to the previous alert.

Excavation

Excavation for the “A and B” lines (which circle the basketball court and ice floor) and inner bowl footings that support the precast rakers for the lower bowl seating is expected to begin during this reporting period.

Steel Erection and Stadia Installation

The de-shoring of the roof trusses is expected to commence on or about the second-third week of February. The de-shoring plan has been submitted and reviewed by DOB.The steel erector is expected to begin on the main entry canopy steel erection in mid – March. Fabrication of this material has started.

Façade Installation

• The façade subcontractor will continue to work a second shift as needed throughout this reporting period. Work may be performed on the Flatbush Avenue and 6th Avenue elevations on this shift, as well as the 6th Avenue and Atlantic Avenue elevations.• The installation of façade panels at the street level and up to the Upper Concourse levels on Atlantic Avenue has been substantially completed. Contractor will return to install the façade panels at the uppermost elevation and in the area of the material hoist at a later date, possibly beginning this reporting period and taking place on second shift.

Interior Build-out

• Precast concrete stadia erection of the upper seating bowl was completed during the last reporting period at Blocks 10-12 (Dean Street elevation). Precast erection is expected to resume within the lower bowl seating area in mid-March. The placement of concrete column wraps will continue during this reporting period.

New Subway Entrance: demolition

• The existing tunnel lighting room located in the IRT sub passage has been demolished now that the new tunnel lighting room has been completed.

Work outside the subway Fence

• Permits have been secured for the portions of the street immediately adjacent to the “Tip” of the project area. The southern eastbound lane of Atlantic Avenue continues to be taken behind an expanded MPT in order to facilitate the removal of the planking/decking to be removed and the installation of temporary roadway restoration. A pathway for the new water main has been coordinated with the utility team and is now complete. A substantial amount of the roadway plank has now been removed. The watermain installation has now commenced. This expanded MPT, noted above, has been approved by DOT.

Transit Canopy for subway entrance

• The steel and concrete roof for the canopy is now complete along with the spray fireproofing. The contour slab will commence in the next month and will then be followed by the roofing. Tile work has started. The steel risers will follow the completion of the MEP work, painting and canopy ceiling installation. MEP work will progress over the next 2 months and will be followed by the canopy ceiling.

Elevator/Escalator for subway entrance

• The two new escalator trusses from the fare array area to the new plaza have been set and final assembly continues. Electrical and fire protection work at the escalator trusses is in progress. The new elevator enclosure has also been erected and elevator installation continues. Work activities have been resequenced to accommodate canopy work items.

Railyard work

East Lead Track Foundation • The forming and pouring of the foundations and retaining walls for the East Lead Track will continue the next few months. Work on the new Lead Track retaining wall will continue in approximately 200 foot sections until the foundation and walls are completed. All of this work is located within Block 1121 adjacent to the Car Shop.

Carlton Avenue Bridge

• Concrete has been placed at the Pier #2 footing. Formwork for the stem will continue this reporting period.

Replacement of Adjacent Water Mains and other Utility Work

Stage One began in early August. The first work included the installation of a distribution water main along the sidewalk of Flatbush, north of Atlantic. The work is being done at night (10 pm to 6 am) and requires partial closure of the sidewalk and the curb lane of traffic during the work hours. The work along the west side of Flatbush is complete except for final pavement restoration. The work across Flatbush began in early January and was completed this month except for final restoration. The bus stop at the west side of Flatbush, north of Pacific, has been removed by NYC DOT, per the approval of NYCTA.
...Stage Three, which is over a portion of the transit area, began in mid January and will continue for two to three months.

Traffic Mitigation Site Work

The first element of the 2011 work includes the installation of curb extensions at the Pacific/4th Avenue, Dean/Flatbush and Pacific/Flatbush intersections and the reversal of traffic from westbound to eastbound on Pacific between 4th and Flatbush Avenues. This work is complete.

Arena Site Work

The revised Flatbush Avenue MPT is allowing work to continue on the installation of the Flatbush Avenue façade and the installation of bollards along this same stretch. Part of the overall site work for the arena block, bollard installation, commenced at the intersection of Dean and Flatbush in the area of the southern vents and is continuing north along Flatbush, eventually continuing around the entire block. The bollard work is now substantially complete along Flatbush Avenue. Other work that will be done as part of the site work includes sidewalks, installation of pavers, street furniture, street trees, light and signal poles, way finding signage, hydrants and the canopy to the new subway entrance. Additional detail on the work will be provided as the contractor progresses.

Atlantic Yards Construction Alert 1-30-2012

Did an "emergency situation" really preclude alerting neighbors to overnight work last Saturday? Permit for crane was issued 11 days in advance

2012-01-31T18:40:00.000-05:00

Let's take another look at the explanation given for the disruptive overnight work beginning last Saturday at the corner of Atlantic Avenue and Sixth Avenue.

Arana Hankin, Director, Atlantic Yards Project, Empire State Development, stated:

The work that was occurring this weekend was being done by the LIRR and had nothing to do with Atlantic Yards. The LIRR is typically very good at notifying us of work that they need to do after hours so that we can inform the community, especially when it relates to Atlantic Yards. But apparently there was an emergency situation in the yard this weekend and they had to get in there very quickly.

Well, maybe it had "nothing to do with Atlantic Yards," but, given that reconfiguration of the LIRR's Vanderbilt Yard is part of the project, it seems like there's some connection, even if not formally part of the Forest City Ratner-led work.

"Emergency situation"?

It's even more doubtful there was an "emergency situation." After all, it's hard to get cranes on short notice.

And, it turns out, the (almost surely) related Department of Transportation permits were issued January 17, eleven days earlier. The permits were for work on Atlantic between Sixth Avenue and the block immediately to the east, South Oxford Street,beginning Saturday, January 28,

Three sequential permits, listed below, were issued the same day. (Click on graphics to enlarge.)

Given that the announced purpose purpose was "Mobile Crane to Lift Electrical Equipment," and that's what happened, I trust that the permits applied to the work indicated in the photo above. I've asked Hankin for any further explanation, and will update this post if I learn more.