Thursday, March 5, 2009

Missing a Leg To Stand On: ESDC Didn’t Consider Developer Profit, the Main Thing Atlantic Yards is About

When is it possible to have the illusion of a carefully considered decision-making process, perhaps even decked out with weighing some pros relative to some cons and still not engage in the basics steps necessary to arrive at a credible decision? It’s easy if you leave out the essence of what you really need to consider. Presto, you get a ludicrous result. Case in point? ESDC’s consideration of the Atlantic Yards megadevelopment is a marvelous example of how constrained, two-dimensional, for-the-benefit-of-appearance-only thinking leads to absurd results.

Say you weren’t truly interested in thinking through the merits of a megaproject but you didn’t want to be accused of looking like you hadn’t given serious thought to what you were doing? You could easily find a couple of things to weigh against each other. If you were up to it, you could even go so far as considering how possible public benefit from the Atlantic Yards project might outweigh its public harm. That could look convincing in a two-dimensional way. It might even appear that you had two legs to stand on. But if you failed to consider the very essence of what the project was about. . . well, a conclusion reached with such a patent lack of multidimensional thinking ought to topple right over.

. . . Private benefit to the developer is the essence of what the proposed Atlantic Yards megaproject has always been about since its developer-initiated inception. It is obvious looking at the Atlantic Yards proposal that, as we have said before: Atlantic Yards is an example of what you get when you turn over to a developer all the “public” decision-making functions, telling the developer they can write themselves a sky-is-the limit blank check.

So what would it mean if our public agencies never considered how the meager (at best) public benefit the developer is stingily parceling out to the public stacks up against the truly colossal benefit the developer is designing into the project’s DNA for himself?

ESDC Admissions: They Didn’t Bother To Look at What the Developer Was Taking For Itself at Public Expense

It is therefore a significant story when last week representatives of the Empire State Development Corporation, the lead government agency theoretically responsible for Atlantic Yards, admitted aloud in court a week ago Monday that they approved this megaproject without weighing the extraordinary magnitude of benefit the developer, Forest City Ratner, was bestowing upon itself.

(For the most thorough coverage see: Tuesday, February 24, 2009, In a swift half-hour, eminent domain argument touches on balance of public and private benefit--but not much more. For Coverage the focuses on ESDC’s admission of its failure to weigh benefit the developer designed for itself see February 23, 2009, Lawsuit asks Ratner: So, how much profit will you make on Atlantic Yards? By Gersh Kuntzman, The Brooklyn Paper. See also: Arena opponents: New York violated eminent domain laws, Monday, February 23, 2009 by John Brennan; At Supreme Atlantic Yards Hearing, Questions of Process, by Lydia DePillis on February 23, 2009; N.Y. court hears objections to Nets arena, by The Star-Ledger Continuous News Desk, Monday February 23, 2009; Arguments Heard in Atlantic Yards Case, February 24, 2009, by LT and February 24, 2009, State Appellate Court Hears AY Eminent Domain Arguments.)

The Atlantic Yards plaintiffs had pointed out that there was no evaluation or record of what the private benefit of the project will be to Ratner even though this is something New York courts have previously found to be required by the New York State Constitution. Picking up on their point, Presiding Justice Robert Spolzino, during oral argument asked ESDC attorney Charles Webb if “ESDC articulated the balance between private and public benefit.”

There’s no requirement of such a finding, Webb said.

Pressed by Spolzino Webb said: “I don’t believe there is. There’s no reason to. They don’t have to.”
Not long after that ESDC attorney Philip Karmel took the oral argument podium and compounded the earlier ESDC admission, saying that ESDC had neglected to “explicitly lay out the private benefit.”

All of which is to say that ESDC first allowed Ratner to fill in the sky-is-the limit blank check and then was not the slightest bit interested in taking a peek to see the amount the developer filled in.

Curiosity as a Value Upon Which Some Depend

It is staggering to think that ESDC did not care enough to think about the wealth Ratner had decided to transfer to himself. It is also curiously incurious. Thankfully, this kind of studied obliviousness may be going out of fashion. We quote:

But those values upon which our success depends—hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism—these things are old. These things are true. They have been the quiet force of progress throughout our history.
(Emphasis supplied.)

Those are the words from President Barack Obama’s inaugural speech. (See: Science Progress: Curiosity Makes a Comeback, President Obama Understands Its Importance and Thursday, January 22, 2009, Obama Inaugural Address: National Themes and Atlantic Yards)

If curiosity is an old, true value upon which we depend. .. If it goes along with to standing side by side with the core values of “hard work and honesty, courage and fair play”. . . What does the absence of curiosity go along with? Forest City Ratner is proposing to pull down well over $2 billion dollars in public taxpayer subsidies. And that was before they sent ex-senator D’Amato to skulk around to rustle up some federal stimulus funds in addition.

Missing the Leg of an Argument to Stand On

We can make a technical argument as to why it is a fatal lapse of public responsibility for ESDC to fail to consider how Bruce Ratner filled in his no-bid blank check. The benefit of the proposed Nets arena is nil. Even though he should probably be considered a shill, Ratner’s own sports economist expert did not find that the arena provided a net benefit. To find benefit, he relied, instead, upon the idea that the arena would bring in or be accompanied by the building of housing, something that was outside his “expertise.” That was judgement was made when the cost and proposed subsidies for the arena were substantially shy of the last publicly released projections. And that was when it was assumed that the housing would be built within a reasonable time frame, something no longer expected. Further, the housing involves little or no defensible benefit since it also sidesteps bidding and involves a reshuffling of scarce-resource subsidies from other projects in other areas. What would be built as part of a monopolistic no-bid Atlantic Yards is more than canceled out by the more valuable housing that won’t, as a result, be built elsewhere.- -

- - Then there is the public harm. Recently renovated buildings, worthwhile buildings and historically valuable buildings are torn down as part of the Atlantic Yards plan. Publicly owned and valuable streets and avenues are expunged. A rational neighborhood zoning plan, appropriate density and good design are sacrificed.

So in the end, when you calculate the net public benefit by subtracting the public harm from what may be possibly no public benefit at all, you get a substantial negative or, at best, infinitesimally meager benefit. This then is the meager or negative and only “incidental” benefit that ESDC didn’t, and should have, weighed against the colossal goody bag of benefit Forest City Ratner is scooping up to take away for itself.

(But, in the end, did ESDC even weigh meager public benefit against public harm? It's not clear that what they did amounts to even this kind of net cost benefit analysis. We know they went through the motions of a few minimum statutory requirements, a few somersaults to find a public purpose for a private wealth grab, working as best they could to find “blight” in a thriving neighborhood, “considering” environmental impact.)

Why should ESDC have weighed the very expensive taxpayer supported private benefit Ratner wants to pocket? Because if you don’t know how a deal is being structured to benefit the developer you don’t know where the weight is going in terms of shortchanging the public to create the heft of that private benefit. Considering this will teach one a lot about the equations involved. It explains the peculiar footprint of the project, why the Ward Bakery block, unnecessary to the project and outside of railyard area or any conceivable blight area, is being taken for eminent domain windfall purposes. It explains the peculiar forced density of the project. It explains the stealing of the public streets, avenues and sidewalks. It explains the side-stepping of public process. It explains why public benefits that could be delivered to the public with less harm and with greater impact are instead being used simply as an excuse to accumulate private benefit for Forest City Ratner.

It is one thing to fail to ask about private benefit when a public agency specifies and puts out for bid the creation of public benefit it wants. Even then, as a government official negotiating these things (and I do have a lot of experience in this), I would keep my eye on the ball of developer profit. It is, however, something entirely beyond the pale not to ask about pocketed-private-benefit and the benefits a developer has cooked up to serve to himself when dealing with a no-bid megadevelopment which is developer-initiated and -driven and where the developer is commandeering the public functions of eminent domain, writing the zoning code, defining who owns streets and sidewalks and accessed public subsidy.

We agree with the Atlantic Yards opponent plaintiffs in this case who are saying that if the public agency hasn’t considered that this project is, in reality, simply about private benefit to Ratner and not much else, the agency hasn’t done its job. We agree that having paid attention to two legs of what they needed to consider to justify the project, the agency missed another critical evaluation without which their arguments cannot stand up.

Beyond the Technical Argument

In a way, it is a senselessly technical argument to focus on ESDC’s obliviousness to the way in which private developer benefit overwhelms the meager or missing net public benefit. That is because this technical argument assumes that ESDC was, as they assert they were, actually motivated to assess other considerations of public benefit vs public harm. We think that ESDC’s incuriosity about Forest City Ratner’s profits is actually a pretty good indication that, overall, ESDC is in the words of Justice Catterson in another legal case challenging Atlantic Yards, “ultimately being used as a tool of the developer.”

Does the Sargent Shultz of Hogan’s Heros response of “I know nothing, nothing . . . ” assuage ESDC’s failure to be publicly responsible as it falls in line as the developer’s tool? We think the know-nothing approach allows ESDC to step away from and abandon the other core values that President Obama associates with curiosity:“hard work and honesty, courage and fair play.”

Don’t Ask Us, Ask Forest City Ratner. No, Don’t Do That Either

Time and again, if you ask a question- the ESDC answer is to say that they don’t know the answer- you have to “ask Forest City Ratner.” ESDC didn’t know how significant arena security issues were going to be handled and didn’t itself have critically relevant information about how far the arena would be set back from a major avenue that might require closing for security reasons. (See: Wednesday, November 21, 2007, News flash: Brooklyn arena would be as close to the street as the Newark arena.)

Sherry Karabin, a reporter for Brooklyn Independent TV, put together a Brooklyn Review documentary about delays and problems at the Atlantic Yards project that was broadcast last week on Reporter Roundtable. Part of her report:

Brooklyn Review contacted the Empire State Development Corp. the state public authority handling the project to get an update on the status. However, we were told that information could only come from Forest City Ratner Companies.
If you want information about how the ESDC “Atlantic Yards ombudsman” knows only what is in the newspapers and can’t circumvent ESDC’s “Ask Forest City Ratner” mantra see: Thursday, February 12, 2009, Atlantic Yards Ombudsman faces audience frustrated with partial answers regarding stimulus funds, Carlton Avenue bridge.

In the Brooklyn Review documentary City Councilman David Yassky criticized ESDC’s lack of responsible involvement, at one point in his remarks struggling with the anomaly that while theoretically supposed to be responsible, ESDC hasn’t exercised responsibility:

It's time for the Paterson administration to take charge of this project. It's a state approved project, the state government is [supposed to be?] calling the shots, they at least have the authority to. It's time for them to really get engaged.
In fact, ESDC goes beyond not bothering to know what Forest City Ratner knows. They now consider that when questions come up concerning Forest City Ratners profits, such as what the public approved and evaluated costs of the arena are currently, this information can be withheld from the public by ESDC’s declaring it will be concealed from public as a “trade secret.” (See: Friday, February 20, 2009, Is the cost of Atlantic Yards now a "trade secret"? NYC EDC foils FOIL request.)

What Does ESDC Consider Its Role As “Tool of the Developer” to Involve? Statutes to Trump the Constitution

If ESDC is not considering public benefit and is only acting as a “tool of the developer,” what then does this leave for ESDC to do as a public agency?

At the oral argument we picked up on a main theme represented in two ways. In each case there was the protection that the New York State Constitution should provide and then there was the possibility that such protection might be removed from public reach by the interposition of statutory substitutes for justice. In each case, it seems that ESDC would be pleased to have statutes supersede constitutional protection.

Clearly, ESDC has no interest in pursuing the spirit of the New York State Constitution. That has mostly been what this post is about. But from what we heard ESDC is also interested in using statutory interventions to prevent the Constitution from technically applying. This then seems to be their raison d’etre.

One of their arguments involves technicalities about whether anyone would ever be procedurally able to raise the New York State Constitution as a legal protection. Suffice it to say that ESDC would prefer that no one could ever procedurally be able challenge and stop an eminent domain taking that violated the state constitution. ESDC’s other argument is that it should not matter what the New York State Constitution says about condemnations that are and are not allowed, and it is not important how that has been and should be interpreted. Instead, ESDC would like to replace such tests with whatever they write into their statutes about them minimums they intend to do while acting as a “tool of the developer.” In other words, in both situations they would like to have statutory unrealities interposed to separate the public from the spirit of real constitutional protections.

We think that the courts have caught onto the unreality of ESDC’s game. In the beginning of this post we used the adjective “ludicrous” and in doing so we intentionally picked up on the adjective Justice Catterson used to describe ESDC legal arguments. Unfortunately, at this point we can only hope that the courts recognize and utilize their power to overturn this ESDC unreality. They can do this by recognizing ESDC’s technical failures. Or they can go farther and recognize that ESDC clearly acts in bad faith when they act with cultivated obliviousness as a “tool of the developer.”

(Matthew Brinckerhoff and Jennifer Levy, attorneys for the plaintiffs' opposing Atlantic Yards being interviewed outside the Monroe Street court house after the oral argument.)

1 comment:

Bob said...

Great article---keep up the good and important work!