Wednesday, April 28, 2010

Schumer Says Atlantic Yards Area Is Not Blighted. Doesn’t See AY As A Ratner Mega-Monopoly, But Could His Support Wane?

(Above, U.S. Senator Charles E. Schumer with State Senator Daniel Squadron at the 25th Senate District Community Convention were Senator Schumer spoke about protecting the public from vested interests saying that the political spending of big corporations receiving government largess should be restricted.)

We had a short conversation with Senator Charles E. Schumer on Sunday April 11 following his statement at the 25th Senate District Community Convention held by State Senator Daniel Squadron in downtown Manhattan. We talked about Atlantic Yards and Senator Schumer said some interesting things.

Schumer said that he bicycles around the Atlantic Yards area (which he says he lives “very close to”) and that he knows it is not blighted. He also denies that Forest City Ratner has been granted a mega-monoply (while attesting that he strongly opposes monopolies) even though he acknowledges that the single-developer mega-deal is being handled totally differently from the multi-developer Battery Park City. Schumer said he still supports the Ratner mega-project but used words to indicate he may not support the project now as much as he used to. He said that his support is because of the housing it will provide.

Among other things, we discussed whether the no-bid Atlantic Yards effectively leverages the housing subsidies it is getting. Supplying the Senator with documentation that Atlantic Yards is not leveraging its housing subsides effectively could conceivably get the Senator to withdraw his support for the project if it is provided in a manner so as to be sufficiently incontrovertible. Such documentation, however, is already available and we are not overly sanguine about politicians, Schumer included, paying attention to facts over politics and campaign contributions when it comes to Atlantic Yards.

Atlantic Yards “Not Blighted” (Is It Official and of Legal Weight When a Senator Says What He Sees With His Own Eyes?)

Schumer’s statement that he knows the Atlantic Yards area well and that it is “not blighted” is extremely important because even if one envisions that Atlantic Yards is somehow a desirable mechanism to create “affordable housing” it would be illegal to seize all the acreage for it so as to give Bruce Ratner and his Forest City Ratner company his 30-acre mega-monopoly unless that area were in fact “blighted.” Though Schumer says he knows it doesn’t exist at Atlantic Yards, finding “blight” was a prerequisite for state agencies to proceed with the mega-project and that finding was a prerequisite for state and federal courts to find that Ratner’s mega-deal was legal.

Atlantic Yards as Ratner Mega-monopoly

We began our discussion with Senator Schumer about the subject of Atlantic Yards as a monopoly, referring to a jocular remark he had made moments before about how the fancifully-envisioned merger of the efforts of a number of politicians (consolidated in one giant form) would violate the antitrust law. We previously wrote about Schumer’s opposition to monopolies and how his message on the subject is muddied by his support for Atlantic Yards (See: Friday, November 27, 2009, Schumer's Multi-Monopoly Positions Unhealthily Muddy Debate on an Issue With Left, Right and Center Appeal.)

Schumer denied that Atlantic Yards is a mega-monoply but given what we have written about the scale of the project that is being handed to Ratner on a no-bid basis that is hard to conceive. Nominally and conventionally referred to as a 22-acre project with 17 buildings, eminent domain has actually been abused so that Ratner can carry out plans to construct 19 new towers plus an arena. And that is just the new development Forest City Ratner intends to hold the rights to. When all is said an done, the Atlantic Yards mega-development site Forest City Ratner intends to own includes the following on 30 contiguous acres of prime Brooklyn real estate:
• Two large suburban-style shopping malls (existing)
• One sports arena (proposed)
• 20 towers of both residential and commercial development. (One built and 19 planned.)
(See: Wednesday, January 27, 2010, Did New York City Planning Officials Sidestep Looking at the Bigger Atlantic Yards Picture?)

(Above, map of Ratner's 50-acre mega-monopoly of government-assisted high density development sitting astride Brooklyn's subway lines.)

Extended Implications of Ratner Mega-Monopoly

We have also written providing analysis about how Forest City Ratner’s of these 30 acres is coordinated with its ownership of other nearby properties so that it is, in this process, seizing most of the density available for development above our major Brooklyn subway lines getting an aggregate of approximately 50 interlinked acres most of which it has acquired with government assistance and playing-field-tilting devices like eminent domain. (See: Saturday, November 21, 2009, Mapping Out Forest City Ratner’s Monopolistic Strategy of Subsidy Collection.)

Cracking the Nut of the Question: Who Says Atlantic Yards Is Providing “Affordable Housing”?

Previously we reported that when confronted in a neighborhood Park Slope barber shop about his support for the project Schumer used the `it provides housing’ defense in support of Atlantic Yards. Back then, as we were told, he used a short cut that would be much less politically convenient now: “I just accept what ACORN tells me about the project.” ACORN, having undertaken the PR necessity to reinvent themselves as “NY Communities for Change,” is viewed now as significantly less trustworthy than it was back then, not a good entity to be passing off the reliance-buck to. We have also tackled the way that Bertha Lewis, the head of ACORN aka “Communities for Change” was totally irresponsible when it came to seeking affordable housing for the community, how she essentially negotiated for the community to get nothing at all. She did this by shilling for Forest City Ratner's plan to do only the bare bones minimum that the tax code requires combined with what for economic reasons the market would pretty much dictate that Forest City Ratner would do anyway in terms of renting apartments. (See: Friday, July 31, 2009, Ratner: The Little Boy Trying To Get Too Many Cookies Out of The Cookie Jar and Getting None.)

Ratner Getting a Lot of Housing Subsidy Anyway

That doesn’t mean that a lot of scarce housing subsidy won’t be directed to Ratner when it could and should be directed elsewhere. We have written about our calculation of the amount of subsidy being concentrated on Ratner without bid. We came to a total of $638.67 million in housing subsidies alone. (See: Monday, February 8, 2010, Award of No-Bid Mega-Monopoly Means Forest City Ratner Hopes To Claim an Awful Lot of Housing Subsidy, ALSO Without Bid.) Of course the figures we gave are subject to increase as costs escalate. They are mostly based on figures publicly available in the fall of 2006. Further, as we noted in the post where we calculated that number, it does not represent the total subsidies going to Ratner for the no-bid deal which come to between $2 and $3 billion.

Schumer Walking the Walk on His Own Sidewalks

Had Schumer denied the pretext of “blight” that was used to give Ratner his no-bid mega-deal we would have known he was off-base. As we noted when we spoke to him, the same sort of cracked sidewalks that were used as a pretext to find “blight” necessary to transfer the many acres to Forest City Ratner can be found right outside Schumer’s own home, something we covered in a previous post. (See: Thursday, January 21, 2010, Senator Schumer’s Block Is (Super) “Blighted”! (And Back to You, Marty).)

Atlantic Yards Detracts From Schumer’s National Message

We think that Schumer’s support for the Atlantic Yards project weakens him as a Senator and the messages he needs to convey to do a good job. In his statement to Senator Squadron’s Senate District Community Convention Schumer staked out positions on a number of issues that should relate to Atlantic Yards. Among them he spoke about:
• The people vs. the special interests
• The need to appoint a suitable replacement for Justice Stevens on the U.S. Supreme Court. Justice Stevens noted that one of his most unpopular decisions during his tenure on the court was the Kelo eminent domain abuse decision without which Atlantic Yards could never have proceeded. (Most unpopular as in over 90% of the country strongly opposes Kelo whereas on controversial abortion choice decisions the country is more or less split.) He also noted it was bad policy. Schumer observed that he personally had recommended Justice Sonia Sotomayor for appointment to President Obama. (See our open letter to Justice Sotomayor concerning Atlantic yards and eminent domain abuse: Tuesday, October 6, 2009, First Monday in October: An Open Letter to Sonia Sotomayor about Noticing an Eminent Reality.)
• The need to control money going into politics from big corporations (a Supreme Court issue given the much-reviled Citizens Union case that corporations are “persons” for the purpose of campaign spending). He suggested disclosure and, addressing pay-to-play specifically saying that corporations that receive sizable contracts from the government (like Forest City Ratner?) should be barred from making political contributions.
• The need for financial services reform to protect the consumer and the average citizen. Of course a big part of the financial services reform debate is addressing the way that “too big to fail” has been used as an excuse to soak the taxpayers. The same kind of concept and maneuvering is very much in evidence respecting Atlantic Yards.
For those of you who wish to listen to the above referenced remarks which Schumer made just before we spoke, a sound file including them is provided here.

Our Actual NNY Exchange With Senator Schumer

You can read my conversation with Senator Schumer below. If you would prefer to listen to it (I acknowledge that “His Girl Friday”-style we are talking over each other to a certain extent) go here.
NNY: Michael White, Noticing New York.

CS: Yes, I know who you are.

NNY: You made a jocular remark about anti-trust while you were speaking and I know that you have spoken about the evils of monopolies.

CS: I am strong anti-trust, you bet.

NNY: But you have been supporting Atlantic Yards which is 30 acres of mega-monopoly through eminent domain abuse for Forest City Ratner, which gives him essentially, with his neighboring properties, about 50 acres of monopoly.

CS: Well it’s not monopoly. You can’t call that a “monopoly.” He’s going to build, he still is going to build. . . .

NNY: You’ve got the density that’s sitting on top of the subways. . .

CS: I know, but . .

NNY: . . . contiguous acreage. It’s not Battery Park City. . In Battery Park City, right over there, every parcel is bid out separately to developers. [Next to us, Battery Park City was visible right outside the windows of the school we were in.]

CS: Yes it was. It’s true.

NNY: And that is the way it could have been done.

CS: The reason I supported it, and it’s still part of it, not as much but still, is affordable housing. We’re desperately short of affordable housing.

NNY: That’s not what’s being built.

CS: Oh, Some of it is.

NNY: It’s like Yankee Stadium.

CS: No, No, some is affordable housing. 1,800 units. It was 3,000; it’s still 1,800. You know how long I fight to get 1,800 units of affordable housing to New York? Do you know how many families that helps?

NNY: And what you are doing is you are redirecting subsidies away from where they would be better leveraged elsewhere in the city.

CS: It’s not subsidies. It’s not subsidies.

NNY: You and I worked . . We worked on the housing programs together over the years. We go back to the 80s.

CS: Yes, we did. We did.

NNY: What you are doing is you are taking subsidies that would go much further with other developers elsewhere in the city.

CS: Yes, well I will look at that if you’ve got paper on that. OK? I don’t think that’s true, but if it is, I will look at it. OK?

NNY: OK. And the area is not blighted. I mean sidewalk cracks, the same as outside your building; Right?

CS: I live very close to it. I ride my bicycle around there all the time. I know it’s not blighted. But, I care about affordable housing, I really do. OK? I do. Anyway, send me something about how it could go better elsewhere, I’d be interested in that.

Schumer’s Possible Reconsideration of Support For Atlantic Yards

So might Senator Schumer further reconsider his support of the mega-project? (In fact, is there maybe even an indication of the possibility of ebbing support when he uses the phrase “not as much” saying: "The reason I supported it, and it’s still part of it, not as much but still, is affordable housing.") If there is no “blight” as he assures us he knows there isn’t, then it’s illegal. And as for the inappropriate use of housing subsidy, surely our calculations that there is approximately $638.67 million in housing subsidies involved should convince him that the amount is substantial. Our review of what Ms. Bertha Lewis of ACORN “negotiated” should convince him that the community is really getting virtually nothing in terms of true affordable housing. And the testimony of urban planner Ron Shiffman and Michelle de la Uz, Executive Director of the Fifth Avenue Committee, ought to convince that the subsidies can be far better used and leveraged elsewhere.

Analogy of a Schumer Shift on Wall Street and Financial Services Reform? Financial Patrons vs. Harmed Constituents

Last week the New York Times wrote a story indicating that when it’s time to do so, Senator Schumer can back away from the support of special interests working against the public good. We mentioned that the day of the community convention Senator Schumer spoke about the need to reform the financial industry. The Times wrote about how Schumer has backed away from defending the financial industry, describing how this means he has been navigating “gingerly between the financial patrons he has mined for millions in campaign donations for himself and his party, and constituents who were hurt by the economic collapse.” (See: Friend to Wall Street, Schumer Is Suddenly Quiet, by Carl Hulse, April 22, 2010.)

From that article here are statements by Mr. Schumer that could, with only the slightest change, be applied to Ratner and Atlantic Yards:
“There are some on Wall Street who want me to say Wall Street right or wrong, and I’m not going to do it,” Mr. Schumer said in interview on Thursday, a few hours after Democrats brought their overhaul of financial rules to the floor.

“Clearly they did a lot of things wrong,” he said. “Too many Wall Street firms had no one looking over their shoulder, and they went off the deep end.”
The Times article also notes that Schumer’s shift on Wall Street and financial services reform had put him at odds with Wall Street-defending Bloomberg. Were Schumer to withdraw his support from Atlantic Yards he would similarly be at odds with Bloomberg, who is an Atlantic Yards stalwart without whom Ratner’s megadevelopment would not be happening. (Bloomberg’s seems consistent about supporting big vested interests at the expense of the public.) Democrats (presumably Schumer included) who expect to support Obama in the 2012 presidential race may well want to put some distance between themselves and Bloomberg so they can effectively attack him when Bloomberg runs to depose Obama.

Financial Patrons vs. Harmed Constituents: Political Business-as-usual?

Why are we worried that in a political business-as-usual fashion Schumer may not change his support for Ratner’s mega-deal as he should? This article in Politico about Bruce Ratner being a headline figure in some fund raising Schumer was doing for harry Reid and the Democrats on Monday morning is the answer to that. (See: Would-be replacements raise for Harry Reid, By Manu Raju & John Bresnahan, 4/27/10.) The article reports:
Sen. Chuck Schumer invited Harry Reid to spend Monday morning with him in Brooklyn, where some of Schumer’s well-heeled friends opened their checkbooks to help the Senate majority leader’s struggling reelection bid.
Monday’s fundraiser was headlined by Bruce Ratner, the real estate mogul who owns the Nets — and who has donated more than $127,000 to Democrats in recent years.
(In aggregate, the money directed by Ratner and those connected with him is probably much greater than this stated figure.) What’s going on is complicated. Harry Reid is currently the Senate leader but as the article points out about Schumer, “most Capitol Hill insiders think there’s little doubt each sees himself as the next Democratic leader if Reid goes down to defeat in November.” Factoring into the overall complexity is the log-rolling that hides who is getting what campaign money from whom for what.

The question is whether Schumer can, like he did with Wall Street, collect lots of money on behalf of Democrats from Mr. Ratner and his cohorts and then take a stand on behalf of those who should be his true constituents to oppose the harm Mr. Ratner’s projects are doing to Schumer’s Brooklyn and the rest of the city? What is more important to Schumer: The money he is collecting from Ratner or a clear and consistent message for Democrats about what needs to be done in this country? When Schumer made a distinction speaking of the people vs. the special interests wasn’t the idea that he would stand up against the vested interest on behalf of the people?

Financial Patrons vs. Harmed Constituents: A Clear and Consistent Message for the Schumer Democrats?

Remember what we said about how Senator Schumer had spoken out at the community convention against pay-to-play and in favor of disclosure when it comes to accepting contributions from huge companies, especially those receiving huge contracts (and subsidies?) from the government? Here again from the Politico article about Monday’s morning’s fund raising:
While Schumer’s office won’t say how much money the event raised for Reid, cash poured in from a number of developers and real estate types. The event came just hours before a procedural vote on a plan to rewrite the rules for Wall Street, but Reid’s office stressed that the donors who turned out Monday weren’t bankers or Wall Street officials — and that, in fact, many work for Ratner’s company as well as for electrical and construction companies.
Forest City Ratner is getting between $2 and $3 billion in subsidies from the government (state, local and federal combined) and Schumer’s support has been an important part of making that happen on all levels. In terms of a message that needs to clarified, is that clear enough?

Postscript on Schumer’s “Affordable Housing” Unit Count vs Actual Numbers: Schumer’s reference to there being 1,800 units of affordable housing in the proposed Atlantic Yards or the mega-deal having been reduced down to the that number of affordable units from 3,000 (“1,800 units. It was 3,000; it’s still 1,800") doesn’t parse with any publicly released descriptions of what has ever been agreed to. Officially, the nominal number of affordable units (to be included in 16 of the 19 new towers to be built on the 30-contiguous acres the developer is getting) is still 2,250, half of the non-condominium units in the sixteen towers. In real terms, the truly affordable units will actually be only 20% of the non-condominium units in the sixteen towers as required by the tax code, or 900 low income units, which is less than 20% of all the units in those sixteen towers and far, far less than 20% of the units in all 19 of the new residential towers the developer plans to build on his 30 contiguous acres.

Schumer might simply be flat-out wrong about his numbers for the project which is entirely possible since he hadn’t prepared for our questions. Alternatively: Might this be a hint that some sort of reduction of the mega-project is planned? The only public reference we can find to there being a reduction in the nominal number of “affordable housing” units at Atlantic Yards to “1,800" is with respect to the bill Assemblyman Jim Brennan proposed (initially in 2006) to reduce the size of the project so that 1,800 would then be number of nominal “affordable” units required of Ratner. (See: Friday, March 28, 2008, "Deeply troubled" Jeffries says it's time to evaluate changes in AY; Brennan's subsidy bill resurfaces.) Unfortunately, that kind of compromise, to reduce just the size of the project, is not the fix we need to address the corruption of the Forest City Ratner mega-deal. Yes, the project needs to be taken back to the drawing board and redesigned along the lines of the community’s UNITY plan design (which means it would be significantly smaller), but what is also needed is for the property to be taken away from Forest City Ratner so that it can be divided up and properly bid, parcel by parcel, among multiple developers, just like the Battery Park City model the senator and I discussed. That way it won’t give Forest City Ratner a government-assisted 50-acre mega-monopoly on prime Brooklyn real estate. Breaking up ownership of the huge acreage needs to be done even if the monopoly-opposing Senator Schumer wishes to deny that Atlantic Yards is indeed a mega-monopoly that he needn’t therefore oppose.

No comments: