Monday, May 17, 2010

New York City Bar Association Program on Community Benefits Agreement Reform: Atlantic Yards Mega-monopoly as Unsurpassable Example of Abuse

(Above, Monday night’s Bar Association panel discussion of “Community Benefits Agreements.” Ken Fisher, chair of the bar association's land use committee is standing.)

This post has been updated as of May 18, 2010 to include photos, including the one above, a link to the post-program coverage of the discussion at Atlantic Yards Report (see: Tuesday, May 18, 2010, Panel discusses CBA reforms; in successful West Coast CBAs, signatories don't take developer cash; developer pays upfront for affordable housing) and the concluding update at the end of this post.

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Tonight the Association of the Bar of the City of New York is having a program on the subject of Community Benefits Agreements: Community Benefits Agreements: Time for Reform?

(Monday, May 17, 2010 6 - 8 PM, House of the Association, 42 West 44th Street, There is no charge for this program, however registration is required.)

I preparation therefor we offer the following Noticing New York thoughts:

Atlantic Yards Mega-monopoly as Unsurpassable Example of CBA Abuse

Whatever one wants to argue about the possibility of “benefits” from “Community Benefits Agreements” it is easy to see that the example of the Ratner (now +Prokhorov) Atlantic Yards mega-monopoly is hard to surpass for the litany of detriment and abuse it provides. In particular, the community and public at large was disserved by ACORN, now renamed New York Communities for Change and still something of an alter-ego for the Working Families Party.
* Where else were ALL the CBA signatories on the take from the developer?
* Where else was one of the CBA signatories (ACORN) secretly getting $1.5 million in funds?
* Where else were several of the CBA signatory groups actually formed by the developer?
* Where else is the developer actually housing one of the CBA signatories' offices?
* Where else does the CBA contain a contractual provision that the developer and one of the CBA signatories (ACORN) will do business with each other in an arrangement where the CBA signatory will be getting fees? (See the “additional housing” provisions of the housing section that sets ACORN up to do Affordable Housing Corporation-style owner-occupied housing).
* Where else does a CBA signatory (ACORN) negotiate a deal that says that the developer is exempt from providing the community with anything at all. (Virtually everything the developer is supposed to provide in the way of housing for Atlantic Yards is either required by the tax code or what the market would provide anyway.)
* Where else do the CBA signatories agree to sign away their first amendment rights to criticize the project no matter what event might materialize?
* Where else do the CBA signatories agree to unconditionally support major aspects of the project about which they have no expertise, such as the density of Atlantic Yards?
* Maybe there are other situations where the CBA signatories are called together secretly, in advance of the revelation of the project to the rest of the community, to be told that they will be signing the CBA. But AY is maybe one of the most glaring examples.
* Where else are aspects of CBA compliance monitored by a criminal fraudster who pleaded guilty to fudging and miscertification of numbers? (And that fellow is being paid by the developer!)
Yes, in some respects Atlantic Yards tactics reflect a typical divide-and-conquer-the-community strategy like other CBA situations, but Atlantic Yards itself provides a textbook worth of material to show how Community Benefits Agreements can be manipulated and abused. And it’s likely unenforceable to boot!

Concluding update: As noted, this post has been updated as of May 18, 2010 to include the photos and a link to the post-program coverage of the discussion at Atlantic Yards Report (see: Tuesday, May 18, 2010, Panel discusses CBA reforms; in successful West Coast CBAs, signatories don't take developer cash; developer pays upfront for affordable housing) and the following.

As Norman Oder reports in his Atlantic Yards Report coverage all the panelists opposed Community Benefits agreements where the signatories take money from the developer, that includes the panelist Vicki Been for whom this is just one contributory reason to oppose Community Benefits Agreements generally, and also Julian Gross the principal proponent on the panel for trying to make Community Benefits Agreements workable.

Sung Mo Kim, Associate Counsel to the Conflicts of Interest Board, made very clear that whatever protections the rules against conflicts of interest administered by the New York City Conflicts of Interest Board can afford* against self-interested politicians finagling to get personal benefit back from developers, those rules currently provide zero protection against groups like ACORN entering into feather-their-own nest arrangements as ACORN did with respect to Atlantic Yards. It is not illegal for them to do so out in the open and it is, furthermore, not illegal for ACORN to take $1.5 million from Forest City Ratner as developer of Atlantic Yards in secret as they did.

(* Perhaps VERY LOW standard given that Bloomberg-the-Mayor and Bloomberg, L.P.-the-Business regularly and mostly each do business with the same giant companies.)

Since there are no laws against these self-interested receipts by CBA signatories that vitiate the possible good of such agreements we asked the panelists what they thought the rules should be in this regard.

As Mr. Oder reports, Julian Gross responded with the suggestion that the public will essentially have to live at the mercy of a “catch 22": That though it may be a key concern it is something that nothing about which nothing can be done:
"I think that's a concern, but I don't think the city can legitimately govern all private relationships related to a development project with a set of rules,"

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"On the stronger CBAs," he said, "we've made a point of not having our groups ever be in a position of receiving money," because it can undercut the validity of the their support for the project. "People would say, Look, you've been bought off. Maybe it is, maybe it isn't, but it undercuts the value of what they're offering to the developer."
It was up to Vicki Been to take up and answer the part of my question that Mr. Gross did not answer. She said that at a very minimum these self-interested agreements need to be disclosed.

But if Mr. Gross is right is saying that these should be considered private relationships that can’t be legitimately governed, can even disclosure be required? Note that the latter part of Mr. Gross’s response to our question quoted above actually presupposes that there will be a check and balance in the public knowing about these conflicts of interest which is belied by the fact that ACORN was able to take $1.5 million from Forest City Ratner in secret. Even when that was discovered it was something that major news outlets, including the New York Times self-conflicted by its own business dealing with Ratner, elected to ignore. (See: Friday, April 10, 2009, An open letter to the NYT Public Editor: why has the Times ignored Forest City Ratner's "incredible" bailout of ACORN?)

After the formal discussion Mr. Gross, discussing the enforceability of CBAs with audience members, mentioned that he had experienced his greatest difficulty in this regard with successor entities to the developer but suggested that there was still some control over these entities to the extent that, in ongoing projects, the successor developer can probably be convinced to see the benefit of continued support from the groups who signed the CBA. While the advent of successor developer entities can definitely throw a monkey wrench into the enforceability of agreements, we would like to throw one more thing into the pot that perhaps hasn’t been mentioned before: What about successor signatory entities? Or what if the signatory entity evolves, fades away or, if not originally so, is subsequently co-opted? All of these are bars to long-term enforceability.

Our favorite quote during the evening was one that again came from Mr. Gross when an audience member asked what the remedy should be in a situation such as Atlantic Yards where the developer used the CBAs as cover to take a huge amount of property through eminent domain (we would say eminent domain abuse) and then did not subsequently follow through with promises like building affordable housing. The question is obviously an extremely real one: The Ratner/Prokhorov basketball arena is pretty much in the works but the development agreement Ratner entered into (with ESDC, not the CBA signatories) makes clear that Ratner has no obligation to complete the housing portion of the project within the 10-year time frame originally envisioned. While the agreements now formally provide a 25-year time frame for completion it is reasonable to envision that with future amendments thereof it is just as likely to be the 30-40 years envisioned in the remarks of ESDC head Marisa Lago and that the project will continue to degenerately morph to the detriment of the public. (Mr. Oder pointed out that in rephrasing the question Moderator Ken Fisher, noted that it's very common for large projects in New York to experience "changes in shape."

Included in Mr. Gross’s response (which referred to there being some applicable “common law principles” that could help?) was that the public should be saying to the developer:
. . you have to give the land back to us.
We like that answer. The naive simplicity of it aside, this is essentially what we ourselves are advocating. And, no, it’s not too early to demand the land back now.

(Above, some in the Audience for last night's discussion.)

Here are the panelists who spoke last night:

KENNETH K. FISHER, Cozen O'Connor; Chair, Committee on Land Use Planning and Zoning

VICKI BEEN, Boxer Family Professor of Law and Director, Furman Center for Real Estate and Urban Policy, New York University School of Law
JULIAN GROSS, Director of the Community Benefits Law Center, a project of the Partnership for Working Families
SUNG MO KIM, Associate Counsel to the Conflicts of Interest Board (substituting for the originally scheduled WAYNE G. HAWLEY, Deputy Executive Director and General Counsel, NYC Conflicts of Interest Board
AL RODRIGUEZ, General Counsel, Bronx Borough President ETHEL SHEFFER, Past President, American Planning Association, NY Metro Chapter

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