The Great Recession: A Stimulus to Get Our City Back to “Bidness?”

Listening to a report tonight on NPR’s All Things Considered about how the federal stimulus bill was affecting the construction industry we heard the following:

With private capital all but dried up many contractors who normally work on private construction projects are now bidding on the public sector jobs funded by the stimulus. One benefit of so many contractors seeking the work is that bids for stimulus construction projects are coming in below expectations, meaning that there may be more money available to fund more projects later on.

(Listen to: The Stimulus Bill And Construction, by David Schaper: at 2:30)

We have also heard Forest City Ratner’s explanation for why it is stopping work on its Beekman project near City Hall: That it wants to similarly take advantage of the current economic climate by rebidding the construction work “with contractors eager for work.” (See: Monday, March 30, 2009, Forest City Enterprises announces losses, asserts that AY arena is one of only two new projects to launch in 2009.) (We suspect that something else is actually preventing the Beekman from proceeding at this time. . . Might it not have to do with the way Forest City Ratner’s financials and credit rating are tubing, added to the way that NYC commercial real estate assets like the Beekman are not underwriting the way they did nine months ago?)

So state and local governments everywhere else are saving significant money on public sector work by getting bids during this economic downturn, and Forest City Ratner claims it is similarly going to reduce costs for itself through the lower bids they can get during the economic downturn. . . Who isn’t invited to the party to get the benefits of such bidding? The New York taxpayers who are expected to shoulder the unbelievably huge subsidies (more than $2.1 billion) being given to Forest City Ratner, without bid, for its proposed Atlantic Yards project! That is because, our politicians gave Ratner (without any bid) a multi-decade monopoly on a 22-acre site which, in theory, precludes competition for perhaps 40 years.

Are our politicians really telling us with straight faces that they have made a deal with Ratner that precludes any competition for however many decades it takes his company to complete Atlantic Yards? Are they saying that the public can’t even give project work to competing developers if Ratner dawdles for decades, goes bankrupt or reneges on what was once promised for delivery?

We have always advocated that development on the scale of Atlantic Yards should be done the way that other large developments are and should be done, using the same model as Battery Park City and Queens West: The project should be bid out, as ready, in multiple parcels to developers who actually commit themselves to specified results in the near term. If our advice were being followed some development in the area might be complete by now. More important, however, nobody would be arguing that whatever development wasn’t already underway couldn’t be bid out to take advantage of the substantial savings the public could now be achieving.