Getting Bloomberg Out of The Way to Honor Moynihan

The New York Times produced an editorial on Friday praising the possibility of progress on the Moynihan Station which involves converting “the elegant old Farley Post Office” into train station space so that commuters will no longer have to “endure New York’s gloomy Pennsylvania Station.” (See: Moynihan Station, Maybe, September 18, 2009.)

Moynihan and Other Announcements About What Might be Moving Forward

The idea that the proposed Moynihan Station might finally begin to move forward is just one of many “good news” announcements we are going to be hearing about respecting New York City development now that the Bloomberg is revving up to come down the election home stretch. This weekend we heard about the plans for a colossal new shark exhibit at Coney Island Aquarium and last week we also heard about plans for development of the Homeport development in Stapleton, Staten Island near the ferry at St.George. The public is being further titillated by the projection that spurs having been kicked so that the first phase of the long-delayed Brooklyn Bridge Park will be open by December, just two months after the mayoralty election. Really?

Noticing New York is betting that one piece of “good news” that won’t be trotted out is that redevelopment of the Ground Zero World Trade Center site is proceeding faster than planned. The slow pace of activity there was recently lambasted as a national embarrassment in discussions on Real Time With Bill Maher. The Bloomberg administration is unlikely to want to remind the public how Bloomberg has handled Ground Zero which was one Bloomberg’s most clear-cut opportunities to prove his development credentials immediately after he was elected to his first term.

The Moynihan “Maybe”

Expressed even in its title, (“. . . Maybe?”), Friday’s Times Moynihan Station editorial expresses skepticism about whether the Moynihan Station project will really happen. It was first agreed to in principle by Amtrak over 20 years ago and was another clear-cut development opportunity for Bloomberg when he first came into office almost 8 years ago. The Times suggests that if it finally really does move forward it will be because the “focus” “of the entire development” has been adjusted so that “Instead of an elaborate mix of shopping, housing, sports arena and, oh, yes, a railroad station, the new plan is primarily a transportation project.”

Bloomberg Administration Misfocus

The Times editorial places the blame for the what has previously been a delaying misfocus onto the Port Authority of New York and New Jersey and Governor Paterson. It fails to mention that a huge amount of the distraction from what would have been a proper focus came from the Bloomberg administration.

Noticing New York has written before about this lack of focus (Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart- See # 17). Some of what we wrote (click on the link for more):

As of the spring of 2003, with things sufficiently settled after 9/11, the project was supposed to have been completed by 2008. It hasn’t even been begun. Why? Our public officials put the public project in the hands of private developers to diddle with. . . .

* * * *

. . . So what happened when the public train station was turned over for developers to take the lead? For the developers it became all about making profit on adjacent properties. Things went so far afield as for the developers to focus on whether they could acquire and tear down Macy’s, “the world’s largest store” in order to build huger and huger buildings in the vicinity! No wonder the possibility of proceeding in 2003 with any ghost of the 2008 “completion date” came and went. If you are not building a new train station but negotiating to buy and redesign a whole neighborhood with the goal of putting private developer profit in your pocket, you are talking a whole different time frame and the lead winds up being taken by entities whose eye is on a different ball.

Trust us. These expansively wild dreams were not being entertained without the support of the Bloomberg administration. Clearly indicative of this is the fact that when Daniel Doctoroff, Bloomberg’s former deputy mayor for development, left the mayor’s administration to go to work for the mayor’s Bloomberg, LP, Doctoroff made a special trip to the city’s Conflict of Interest Board where he was (we say inappropriately) given the right to continue working on Moynihan Station while no longer technically a government official. (See: Doctoroff Wants to Stay Involved with Hudson Yards, Moynihan, by Matthew Schuerman, December 6, 2007) For more on some of Doctoroff’s and the administration’s other conflicts see: Tuesday, February 3, 2009, The Good News IS the Bad News: Thanks A lot for Mayor Bloomberg’s “Charity” (Part II).

We think the Times was negligent in not pointing out Bloomberg’s responsibility for these delays in their editorial even though they were on target by aligning with Noticing new York in pointing out the Bloomberg-induced lack of focus is the culprit for the delays. The Times surely ought to have figured out the problem by now: They previously ran an editorial (Miracle on 32nd Street, December 28, 2007) that objected to dragging the destruction of Macy’s into the Moynihan Station planning:

At this point, this move seems like another complication for a project that is already about as complex as public works can get. For one thing, the old Macy’s building has national landmark status and needs to be protected. Also, moving Macy’s to 32nd Street raises new questions about whether that part of the Moynihan complex would become more shopping mall than railroad station.

Honoring Moynihan
(Image above from Muncipal Art Society 2007-2008 Annual Report: Voice for the Future of Our City.)

Let us return a moment to Friday’s editorial about how plans for Moynihan Station should finally proceed. It ends with the suggestion that one reason the Station should finally move forward is that when it does Senator Daniel Patrick Moynihan can finally be appropriately honored:

Then, that station can finally be named for the man who championed the whole idea: Senator Daniel Patrick Moynihan.

We will have more comment on that at the end of this post. First, let’s look at some of the “good news” projects that the Bloomberg administration is trotting out for press events because it says something about the way the Bloomberg administration does or does not move things forward.

The Coney Island Aquarium’s New Shark Tank

You can read about the new aquarium in a number of places, the Brooklyn Paper and the New York Times among them (September 18, 2009, New Aquarium revitalization plan finally has some real teeth, By Ben Muessig, for The Brooklyn Paper, and Aquarium to Renovate With Giant Shark Tanks, By Charles V. Bagli, September 16, 2009

From the Brooklyn Paper:

“With the city’s plan to revitalize the amusement district, Coney Island is poised for exciting growth and the New York Aquarium is an important part of that vision,” said Bloomberg. . .

New investment in the aquarium is probably long overdue and the shark tank has been focused upon before. New York’s current 90,000-gallon tank shark tank is far and away outclassed by the 400,000 gallon walkthrough Wild Reef habitat in Chicago’s Shedd Aquarium where sharks swim above you and on all sides. The Chicago exhibit opened in 2003. The new plan for our city’s aquarium, according to the Times, is for “two glass-walled tanks with a total capacity of 600,000 gallons.”

The Times Bagli article points out that the new plans were announced despite the fact that the city is currently tangled in negotiations regarding neighboring Coney Island land with developer Joe Sitt:

Still, the city remains at odds with Joseph J. Sitt, a developer who owns 10 acres and once had his own redevelopment plan for the area.

But Bloomberg says of the timing of his announcement:

. . . the timing “couldn’t be better” for the project, because the City Council had approved the city’s plan to redevelop the seafront district, once known as the world’s largest playground.

Indeed, Bloomberg no doubt hopes that his announcement will serve to distract attention from the fact that his administration just forced through a plan that is assuredly calculated to destroy the adjoining Coney Island amusement area. See: Wednesday, July 1, 2009,
Noticing New York’s Testimony at Today's City Council Hearing on Coney Island, Tuesday, July 14, 2009, City’s Coney Island Plan: Our Skepticism of Times Editorial Credulity, Wednesday, July 15, 2009, The Jane Jacobs Way for Coney Island, Friday, July 10, 2009, This is the Coney Island the Bloomberg Administration Doesn’t Want the City to Have!.

In terms of saving Coney Island it would have been good if the Bloomberg administration had been moving on investing in the aquarium long before this third-term election cycle.

Indeed, from the Times:

The wildlife society has long wanted to revamp the 52-year-old aquarium in Coney Island, which attracts about 750,000 visitors a year. But the city rejected one plan last year because it provided for new exhibits but failed to transform the building’s exterior and create a more engaging link to the Boardwalk and Surf Avenue.

And from the Brooklyn Paper:

It’s certainly not the first time someone has made that promise. Indeed, the latest renovation plans come almost three years after the city proposed, and then scrapped, a much ballyhooed aquarium rehab that called for an entirely new look.

Announcement of Homeport Development on Staten Island

Here from a periodical that picked up the Bloomberg press release on the proposed Homeport Development on Staten Island not that far from where the ferry lands at St. George:

In the continuing effort to revive the local economy and spruce up local neighborhoods, Mayor Michael R. Bloomberg announced on Wednesday that the city has secured a commitment from the Ironstate Development Company to invest $150 million to revitalize the underutilized Homeport site in Stapleton, Staten Island.

(See: Staten Island Waterfront Gets $150 Million Revamp By Julia Kantor, Epoch Times Staff Sep 16, 2009.)

Putting this in perspective we go back to an article from the Real Deal published only last July (Will development of former Staten Island Navy Homeport finally move forward?, July 16, 2009, By Lynne Miller.)

It is:

. . . a project that's been discussed by local business leaders and city officials for years, but has seen little action.

and

Local observers on Staten Island expressed skepticism about the likelihood of any project moving forward at the waterfront in the current economic climate.

And we find out that the last time it was discussed by Bloomberg was approximately four years ago when he was last running for mayor in 2005:

In his 2005 state of the city address, Bloomberg compared the Homeport to Mark Twain's description of the weather: "Everybody talks about it … but nobody does anything about it."

In last week’s Crain’s we find this:

“This is a viable plan in a very difficult market,” said Seth Pinksy, president of the city's Economic Development Corp., in a statement.

(September 16, 2009, At last: City unveils big S.I. waterfront project. Crows borough president: “This is the biggest one-time development in the history of Staten Island.”)

Let’s see what happens after the election.

Sudden Activity at Brooklyn Bridge Park
(With about nine more weeks to go before its announced completion date, this is what Brooklyn Bridge Park’s Phase I looks like today.)

Noticing New York has written before about the failure of Brooklyn Bridge Park to move forward. (Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart- See # 4). Our diagnosis was much like that of Moynihan Station: That complicating the park’s development by unnecessarily intertangling it with private development has stymied progress. The idea was that the park would be paid for by taking land that could be park (and that much of the public wants to be park), and sell it for development. Below is some of what we wrote (click on the link for more):

Even if one can question what the city can currently afford and whether all of the waterfront area now available for new use should become park, the precept that a city park should “pay for itself” has created confusion and uncertainly about design and management that compound exponentially with the vagaries of an erratic real estate market now on a downward trajectory. As a consequence, there are valid concerns about the unpredictable answers as to just what development may happen. There are equally valid accompanying concerns that the mystery development that finally materializes will be driven by factors other than what normally makes for good urban design and zoning.

Notably, much like the Times advises public officials to do in the case of Moynihan Station, the city is now suddenly moving Brooklyn Bridge Park forward (we’ll gauge how fast when December finally rolls in after the election) because it is setting the extraneous focus on development aside. We suspect that the focus has only been set aside for the time being. There are indications that the Bloomberg administration is going to return to it immediately after the election. The line that is likely to be used is that “We have gone as far as we can go with the park without additional funds from development. Should we stop here because you, the public, are opposed to development within the park? And, by the way, we have a little publicity blitz about how great the development will be.” We think we saw a test-marketed preview of the approach surface at a recent debate among the candidates running for David Yassky’s City Council seat. (Steve Levin won the democratic primary.)

Honoring Moynihan Revisited

Earlier on, we noted that Friday’s Times editorial about how plans for Moynihan Station should finally proceed ended with the Times’ suggestion that one reason Moynihan Station should finally move forward is that when it does Senator Daniel Patrick Moynihan can finally be appropriately honored. We promised we would revisit this with an additional comment.

Senator Moynihan took principled positions about the proper division of roles between the private and the public sector. One thing he fought hard for on that score was NOT to have the public finance sports arenas and stadiums with tax-exempt bonds.

We’ve written about this too:

In 1986 Congress passed the Tax Reform Act of 1986 which took away tax exemption for private activity bonds that were used to finance stadium construction. According to Senator Daniel Patrick Moynihan, who was instrumental in getting those 1986 provisions passed, the subsequent "Issuance of [tax-exempt bonds] contravenes the clear and expressed intent of Congress." (See: Is the sun setting on tax-exempt stadium financing? Janet Ward, Oct 1, 1996.) Moynihan introduced a new bill in 1996 to prevent the post-1986 financings that were occurring, knowing that Yankee and Mets stadium financing would be prevented by his corrective legislation. (See: Moynihan's Tax-Break Bill Could Foil Dreams of Fields, by Thomas J. Lueck, July 14, 1996)

(See: Monday, December 15, 2008, Stadium Finance: Mayor, Professing to Know Numbers, Should Know He Can’t Have It Both Ways (Unless He’s Keeping Two Sets of Books))

Much of the focus of Bloomberg officials has been on unwisely overriding the Moynihan prohibitions on such financing. The Bloomberg administration has sought to do so even when, for instance, an arena like the proposed Atlantic Yards Nets arena would be a $220 million net loss to the city. Bloomberg has sought to do so even when financing Yankee Stadium meant criminally falsifying city tax assessment records and risking the cost and ignominy of having city tax-exempt bonds declared taxable.

We think it is clear that proceeding with Moynihan Station would indeed honor Senator Daniel Patrick Moynihan. We think it would honor the senator for more reasons than the Times envisions. It would honor him by materializing his vision of the glorious train station, but we would also be honoring him by setting aside Bloomberg’s detrimental focus on trying to transform public projects into special gifts for private developers. We could honor Senator Moynihan greatly in many ways by casting Bloomberg and his ineffectual developer-oriented style to the wayside. Too bad the Times didn’t think to point out that one of things we could do immediately to honor Moynihan is NOT finance the Atlantic Yards arena.

Third Term’s Not The Charm

Finally, if the Bloomberg administration’s focus had been where it belonged for the past eight years perhaps we would be hearing more about what the administration had done in two terms rather than what it was going to do in its third.

Unfortunately, we are likely to see more of the Bloomberg administration’s errant focus in its third term. It is likely Bloomberg will be fighting for his old developer-focused development style with redoubled effort. Bloomberg when signing his term limit extension said as much. Of all the things he might have talked about at that moment, he said then that the reason he needed a third term was to overcome the public’s opposition to his developments. (Remember the West Side Stadium?) Perhaps a trifle incoherent and certainly inaccurately biased toward his own point of view, this is what he said:

I do think that if you take a look at the real world, of how long it takes to do things; we live in a litigious society, we live in a society where we have real democracy and lots of people have the ability to INPUT their views and approve or disapprove projects.

(Tuesday, November 4, 2008, Remembering; Not Forgetting in Chinatown.)

Some of Bloomberg’s developments may have been held up by litigation, but mostly they have been held up by his own misplaced focus, and if some have been litigated against, that too is largely the result of his own misfocus which has resulted in projects, often mega-projects, that are on top of everything else incredibly poorly designed.

Permission to Speak Frankly: How We Know More and Less From Breakfast Interviews With Marisa Lago

Last week Empire State Development Corporation CEO Marisa Lago was the interviewee in the “on the record” part of the "On/Off the Record" breakfast sponsored by City Hall News. A fraction more light can now be shed on that interview given Ms. Lago’s participation in another breakfast this week and her on-the-record, answers, previously unavailable to all the general public, to questions we asked about Atlantic Yards.

The subject of last week’s City Hall News breakfast interview was economic development in general. Atlantic Yards provided a large part of the morning’s fare, City Hall News interviewer Edward-Isaac Dovere conscientiously bringing it a number of times amongst a short list of the most important big projects for which the state, through Ms. Lago and ESDC, is responsible. All of those big projects may be considered troubled as we will touch upon here.

Atlantic Yards Report has already covered the key revelation (of the “obvious”) of last week’s breakfast interview: Atlantic Yards is going to take far longer than previously averred by the state in court proceedings and far longer than the public was told or has otherwise been officially acknowledged. Based on what Ms. Lago said, Atlantic Yards isn’t going to take 10 years as previously planned: It is going to take “decades” (See: Thursday, April 09, 2009, ESDC CEO Lago admits the obvious: Atlantic Yards would take “decades”.)

You should definitely read Norman Oder’s Atlantic Yards Report piece on the morning interview especially for how it parses out the inconsistency of Ms. Lago’s “revelation” with prior information ESDC supplied to the public. That information was also used to create the misleading court record based upon which ESDC litigated. Other things occurred during the morning that we think supply insight into the public agency’s economic development process. We would like to let you know about these this as best we can. We say “as best we can” because we are hampered in telling you what you certainly ought to know by the peculiar format of the breakfast interview: Only some of the morning’s event, the interview by Mr. Dovere and Ms. Lago’s response were on the record. Unfortunately, what impedes us is that the publicly attended question and answer session that followed the interview was “off the record.”

We are going to respect the breakfast’s “off the record” rules, but we don’t agree that they are a good thing. In fact, we think they are representative of something exceedingly bad for society, the idea, that there can be concentric circles of access to public officials, and that depending upon how far “in” you are, what club you can be a member of, you will get to know a respectively greater portion of the “truth” that our public officials know and can relate when they speak with greater candor.

Have you ever suspected that within the most inner circles our public officials and those close to them speak absolutely frankly about Atlantic Yards, including acknowledging that it is a "wired deal" being done, not because it benefits the public but because the political fix is in, that it is a burlesque of counterfeit process structured to give Mr. Bruce Ratner a special deal based on relationships and political contributions? Do you wonder whether the multi-decade time line for Atlantic Yards referred to as previously “obvious” by Norman Oder has long been a subject of frank discussion in inner circles long before it was officially disclosed by Ms. Lago? Is that why the official documents signed by public agencies long ago actually accommodate this multi-decade developer monopoly? Don’t bother to wonder.

By that same token, there were perhaps 50 people at the City Hall news breakfast, including bank tellers and officers at the TD Bank (317 Madison Avenue, corner of Madison and 42nd Street) which played host to the event. Those individuals will know a lot more about what Ms. Lago said when speaking (somewhat) more frankly about development of our city than those of you who were not present. You will know less because we are going to respect the rules and not report anything that was “off the record” that morning.

We will, however, tell you more of what you should know that was actually on the record. We also figured out how to inform you about at least some of what you ought to know that was off the record: We are putting on the record our Noticing New York Atlantic Yards question that we orally put to Ms. Lago the morning of the breakfast and later resubmitted to the ESDC press office in writing for the on the record response she has now supplied.

Also at the breakfast were City Council candidate Josh Skaller (City Council District 39) who had an Atlantic Yards question of his own (more on this coming up) and New York State Senator Bill Perkins, who has held hearings about eminent domain abuse (a sore Atlantic Yard subject) and will be asking his own set of questions about Atlantic Yards at hearings he will be having on the project. (See: Tuesday, April 14, 2009,Questions for Sen. Perkins: Why did ESDC punt to the city's DOT on the Carlton Avenue Bridge.)


(Image of Mr. Skaller from Only The Blog Knows Brooklyn.)

How Many Decades of Blight is ESDC Assisting Atlantic Yards Developer Forest City to Create?

First, let us return to the subject already covered by Atlantic Yards Report. How long has Ms. Lago admitted that Atlantic yards will take? How many “DECADES” will it be?

Norman Oder’s strictly construed analysis is that Ms. Lagos’s admission that it will be “decades” (plural) means that Atlantic yards will take at least 20 years. We think however that the fair import of Ms Lago’s remarks is that Atlantic Yards is likely to take the better part of three or four decades, or perhaps even longer. It is especially troubling to us that for what is likely to be the better part of a half century, ESDC will be giving an extended development monopoly over more than 30 acres to BYOB (“Bring Your Own Blight”) developer/subsidy collector Forest City Ratner.

Ms. Lago when describing how long Atlantic Yards would take said it was “similar” in “scale” to “Roosevelt Island, a project that has grown over decades, 42nd Street, a project that has grown over the past 25 years.” (Emphasis supplied.) More specifically, Roosevelt Island got underway at the beginning of the ‘70s and the UDC lease that initiated things was signed in 1969. The project is not yet finished so it is already at least a four decade project. Times Square, as noted, has taken at least 25 years. (BTW: The fact that eminent domain is still being used for Times Square redevelopment at this late date to favor certain developer’s acquisitions raises troubling policy questions.)

Here is what Ms. Lago said at last week’s breakfast:

Mr. Dovere: Let’s finish, in terms of talking about projects, with talking about everybody’s favorite, the Atlantic Yards which doesn’t seem to be one that generates a lot of answers all the time.

Ms Lago: Obviously, challenging project again. Projects conceived in a different time and in a different economy - But, a few things: One, the focus now is very much on moving forward with the Nets stadium and with the housing that is on that first block, the first phase of the project. Attenuated time lines, I think, are a reality for private sector and for public sector projects. There is nothing wrong with that. We look at the history of the transformational projects that have occurred in the city. Earlier I was discussing with some of the folks here, Roosevelt Island, a project that has grown over decades, 42nd Street, a project that has grown over the past 25 years and the scale of the scale of the Atlantic Yards is similar in that it is remaking, it is reknitting a portion of the city. So, as I said, focus on what can get done now in the current climate, what is financable now. And also recognizing that it is a project that is scheduled to grow out over multi-years, decades, not over months.

What Is the Proper Way for the State to Foster Economic Development? A “New Realism!”

In predicting a multi-decade time frame for Atlantic Yards Ms. Lago may have been incorporating some of her thinking, expressed just moments before, about the development of Moynihan Station. She said there was a “new realism of saying that plans that had been conceived in frothier times when there was an expectation that millions of square feet of new office towers could crop up, were unlikely to occur.”

The other thing we noted when she was talking about this “new realism” is that Ms. Lago seems to be adopting our Noticing New York thinking about how Moynihan Station should be developed. We think that the government should do what it does best, infrastructure, and that the Bloomberg administration has wasted its years in office on this project by virtue of being distracted by an unnecessary effort to create “public/private partnerships” which in the end surrenders too much control and responsibility to developers. Ms. Lago therefore sounded rather like us when she said (emphasis supplied):

And so it is a back to the basics and a focus on ongoing discussions with Port, ESDC, the city, the various parties in interest, about focusing on the transportation facets. We know that Senator Schumer has been very helpful in advocating for a focus on stimulus funding. That’s the type of project that is going to take years, will provide jobs along the way and doesn’t in any way foreclose, I think quite the opposite, sets the stage for private sector development down the road. It won’t happen in the first phase, but by having an enhanced transportation infrastructure it will be the catalyst for rebirth of the far west side.

That seems to comport with what we have been saying. Here is part of a longer analysis of the problem previously provided by Noticing New York (and, yes, we believe our longer analysis is worth referring to):

. . . . If you are not building a new train station but negotiating to buy and redesign a whole neighborhood with the goal of putting private developer profit in your pocket, you are talking a whole different time frame and the lead winds up being taken by entities whose eye is on a different ball. Developers were focusing on building towers where Madison Square Garden is and enacting laws to transfer development rights to adjacent properties they owned or were trying to buy.

(See: Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart.)

The fact of the matter is, development has a way of happening on it own as Seth Pinsky, President of the New York City Economic Development Corporation, recently admitted at another City Hall News "On/Off the Record" breakfast session. (See: Thursday, April 09, 2009, NYC EDC head on recent past: "We’ve been much more the 'Real Estate Development Corporation'".) Mr. Pinsky’s admission: “What occurred to me was that, really, for much of the last several years, even though we call ourselves the Economic Development Corporation . . . the economy has been growing on its own without much need for the city’s interference.” We might add to “without much need for the city’s interference” the following which naturally goes along: Without any need for special multi-billion subsidy deals for specially handpicked developer friends of the mayor and other politicians.

If the city does development the right way and invests in infrastructure such as transit (Moynihan Station included), it can expect development, as Ms. Lago was admitting, to follow. To paraphrase urban planner Alex Garvin, `development-oriented transit’ is preferable to that which the Bloomberg administration is doing too much of: `transit-oriented development’ (e.g. Atlantic Yards). For instance, city investment to put light rail, bike lanes and trees along 21st Street in Astoria as Mr. Garvin recommends (going west to the East River to create a new “public realm”) would, Mr. Garvin predicts, create tremendous amounts of new housing and the community would NOT be opposed to the investment. (See: Tuesday, July 22, 2008, At MCNY panel, defending dissent and promoting the better way to develop (not like Atlantic Yards).) Garvin’s “back to basics” prescription in this regard is “spend more money on the public realm.” (See: Monday, November 03, 2008, Overdevelopment, zoning, and the public realm (and AY).)

(Here, for reference, is the extended version of Ms. Lago’s statements at the breakfast:

Moynihan Station, as I am sure you know, the Governor, this past summer before I joined, was looking to the Port Authority to take this forward. I think, again that was part of the new realism of saying that plans that had been conceived in frothier times when there was an expectation that millions of square feet of new office towers could crop up, were unlikely to occur. Why? Because the market is telling us that there isn’t the demand, there isn’t the private sector financing. And so it is a back to the basics and a focus on ongoing discussions with Port, ESDC, the city, the various parties in interest, about focusing on the transportation facets. We know that Senator Schumer has been very helpful in advocating for a focus on stimulus funding. That’s the type of project that is going to take years, will provide jobs along the way and doesn’t in any way foreclose, I think quite the opposite, sets the stage for private sector development down the road. It won’t happen in the first phase, but by having an enhanced transportation infrastructure it will be the catalyst for rebirth of the far west side.)

Struggling to Get a Few Questions and Answers about Atlantic Yards on the Record

As noted, the Q&A session was “off the record” but since we think it is important for the public to know what was said about Atlantic Yards, here is our solution for partially informing you. We can tell you on the record what our question to Ms. Lago was. Also, because we conferred with City Council candidate Josh Skaller, we can tell you for the record the question he asked Ms. Lago about Atlantic Yards. While we can’t tell you what Ms. Lago’s answers were at the breakfast and we don’t even think we can tell you whether our questions were, in fact answered, Noticing New York submitted these questions to Ms. Lago for on the record responses which we got. Originally, ESDC was not willing to answer Mr. Skaller’s question if it was submitted through us, but when we said that we would adopt it for submission as a second question of our own we were able to get an answer. Mr. Skaller is also obtaining an answer to his question directly.

Noticing New York’s Question to Ms. Lago About Atlantic Yards

We asked Ms. Lago the following.

We have seen with the Wall Street crisis that the lack of transparency and proper valuation has led to “toxic assets” being held by a swath of financial institutions across the economy. Doing finance, I think you are in a culturally linked area. When I was doing the kind of work that you are doing I used to think that if you couldn’t find a worthwhile project it was time to stop providing subsidies and maybe take away an agency’s programs and powers. In that vein how do you justify a developer-driven, -initiated and -designed project like Atlantic Yards, where ESDC has admitted that it never weighed the public benefit as opposed to the private benefit that was designed into that project by the developer. I think that is contrary to what you said you were calling for in the Empire Zone program where you said that you were analyzing actual benefit.

That was the question we asked orally. In our written follow-up we were able elucidate our reference to Ms. Lago’s earlier remarks at the breakfast about the Empire Zone program (emphasis supplied):

Regarding my question, Ms. Lago will remember that, when speaking of the Empire Zone program, she talked about the importance of evaluating what is funded in the program for delivery of actual benefit, saying that ESDC currently has in the program some businesses that don’t even return a dollar’s worth of benefit for each tax dollar of tax break which is given to them. She explained that this had come about when the program morphed over the years and its focus was lost so that accountable measures of benefit were also lost. She said that was not a sustainable approach and that reform of the program was to include evaluating firms for removal from the program.

(We take it that our readers will perceive by analogy that public agencies really and truly do drift off course for political or other reasons so that they wind up being involved in delivering projects with little or no benefit or project which are actually deleterious to the public good like Atlantic Yards.)

We have received Ms. Lago’s written response to our question from ESDC. Here it is:

Although AY is a developer initiated project - we have carefully reviewed the expected impact of the project and the expected benefits to be generated from the project - in terms of jobs, fiscal benefits, the production of affordable housing and the removal of blight. We think this is a good deal for the City and State - especially now.

We don’t think we are allowed to tell you whether this response is as satisfactory as the answer we either did, or did not, receive at the breakfast, or whether it was the same or even similar. Only the 50 members of the public who were at the breakfast will have the privilege of evaluating that. We will point out however that we disagree with the on the record assessment that the project is, or ever was, “a good deal for the City and State.” That is partly because we don’t think the project delivers any real benefit and it is also because we have years of experience as a public official negotiating public benefit. As a negotiator experienced in this field we think that it is impossible for ESDC to say that it is a “good deal” given that ESDC has admitted in court that it never weighed the public benefit as opposed to the private benefit that was designed into that project by the developer even though the project was developer driven, initiated and designed. (See: Thursday, March 5, 2009, Missing a Leg To Stand On: ESDC Didn’t Consider Developer Profit, the Main Thing Atlantic Yards is About.)

(Here for consideration and comparison, here is Ms. Lago speaking more frankly at the breakfast about the Empire Zone Program, another ESDC program for which she is responsible, that sometimes fails to create value:

ML: A second is the Empire Zone program. This is program which has been much maligned for years, and we were fortunate in this legislative session to put in place a couple of very significant reforms to the program. One is a requirement that new businesses entering the program produce $20 dollars of benefit. And what is benefit? It’s the wages that are paid and it’s the capital investment that businesses make for every dollar of tax credit. And in a particularly deft move, a wise move, there is a recognition that manufacturing jobs are key jobs for the state and so for manufacturing firms the ratio for benefit to the state was10 to 1. Now the program sunsets in a year and that, I think, poses an opportunity, a challenge and an opportunity, which is working with the business community to design a program, the economic development strategy of a program, that will replace the Empire Zone program.

Asked to explain the arcane program and the hoped for effect Ms. Lago continued.

ML: The Empire Zone program started out in the ‘80s as an attempt to put together a very rich package of tax benefits for a small handful of extremely economically depressed communities throughout the state. So the notion that the state would have a tool to attract jobs to those areas that were the most intractable. It has ballooned over the years. There are now 85 zones. There are 9000 companies in these zones and as the program morphed over the years the focus on the most economically distressed areas was lost and the measure, the accountability of what was the state getting in return was also lost. We currently have in the program some businesses that don’t even return a dollar’s worth of benefit for each tax dollar of tax break which is given to them. That is just not a sustainable approach. And that was one of the reforms, that those firms will be evaluated for removal from the program. Now, currently, the Empire Zone program costs over $500 million a year. It’s a half a billion program. It has become quite untargeted: 85 zones, 9000 firms. I think it’s incumbent on us to step back and say if we are to design a successful program what are the strategic industries that we want to focus on and also get back to the roots of particular areas- what are the economically distressed areas that we want to target. We know that it’s a useful attraction tool for companies that are thinking of coming to the state, or unfortunately, when a company is thinking of relocating out of state. But it does need to be more far more focused, I think we can employ the $500 million more effectively.)

The Question From City Council Candidate Josh Skaller “Adopted”by Noticing New York As Its Own

Candidate Josh Skaller’s question was:

Given delays in construction and the difficulty they are going to have actually to bring the Atlantic Yards project about and given the amount of money being spent on Atlantic Yards, couldn’t that money be better spent on other smaller projects, such a smaller local jobs? Especially given the need for direct job stimulation in New York?

Ms. Lago’s on the record response to this question is:

We expect that the AY project will generate a substantial number of construction jobs - commencing in 2010 - as well as permanent jobs once the arena and project get built out.

The response while vague actually provides some real news: The project won’t commence until 2010. Notwithstanding the ever-receding commencement dates that have been officially offered heretofore, that’s a later date than anyone has previously talked about.

Some Other Questions We have For Ms. Lago

As can be noted from Ms. Lago’s on the record response to our question, “the expected benefits to be generated from the project” include “the removal of blight.” Based on a chat we had with Ms. Lago after the breakfast’s Q&A concluded we also asked ESDC press office for more information as to Ms. Lago's impression, based on her personal experience, that there is blight in the neighborhood around Atlantic Yards. In answer to this, we have so far been informed that Ms. Lago likes to bicycle in Brooklyn. This limited answer does not fully cover what Ms. Lago told us about how she formed her personal experience-based impression that there is blight in the neighborhood. We want to know when her personal impressions were formed and we are waiting for more information about this. Also, what particular areas were involved in contributing to Ms. Lagos’ personal impression?

Another Week, Another Breakfast With Ms Lago

This week, as noted, there was another breakfast where Ms. Lago discussed development and Atlantic Yards. The breakfast featured the heads of the State and City development agencies, Ms. Lago and Robert Leiber, respectively.

We weren’t able to attend, but we heard about it through WYNC reporter Matthew Schuerman. He wrote about it and was interviewed about it on Brian Lehrer immediately afterward. (See: WNYC News Blog, Projects Whose Names None Dare Speak, by Matthew Schuerman, April 14, 2009, and listen to The Brian Lehrer Show / April 14, 2009 / 2,000 and Counting, Tuesday, April 14, 2009.)

A lot of the same ground was covered as the previous week with the same projects being mentioned. There were, however, some slight, but critical variations.

Atlantic Yards, (et al), “Not Dead yet. . Far From Dead. . . Supposed to take Lots of Time. . Plenty of Years to Go”

Has ESDC known all along that Atlantic Yards was going to take decades (as we suspect), longer than they were previously telling the public and longer than they were telling the courts in the litigation? If what Mr. Schuerman said on the Brian Lehrer show was true, then Ms. Lago was at this week’s breakfast transmuting her earlier “revelation” of a longer Atlantic Yards time table into something that, in fact, has been known for some time whether or not the public and courts were fairly put on notice: Speaking about Atlantic Yards and some other big projects “They were supposed to take lots of time to build and we still have plenty of years to go.”

Here is the whole of what Mr. Schuerman said on Brian Lehrer (at 7:55), saying that the two economic development heads were:

“basically assuring the New York Building Congress, a construction industry group here in New York City, that all these projects you hear that are on the rocks, Atlantic Yards, West Side Railyards, Willets Point: They’re not dead yet, in fact, they’re far from dead. They were supposed to take lots of time to build and we still have plenty of years to go. And stimulus funding did come up in regards to one maybe dead or maybe not dead project, Moynihan Station, on Manhattan’s West Side. Senator Schumer a while ago said that Amtrak should give $100 million that it has through the stimulus package - and give it to Moynihan Station. And the one bit of news, there wasn’t much this morning, but the one bit of news was Marisa Lago the head of the Empire State Development Corporation, saying that it was unclear whether any part of that project was shovel ready and would actually qualify for stimulus funding.

Mr. Schuerman’s short written account of the breakfast with its provocative headline “Projects Whose Names None Dare Speak” focused more dramatically on the tap dancing the public officials did to avoid mentioning the city’s big projects which are “the public private partnerships”and their big delays, particularly Moynihan Station. Mr. Schuerman wrote:

New York Times reporter Charles Bagli, one of the moderators, got impatient at one point, telling panelists, “I was struck by the fact that so many of the projects–the public private partnerships that dominated the headlines, that dominated the public approval process–were not mentioned or were barely mentioned this morning.”

* * * *

Marisa Lago, of Empire State Development, said Atlantic Yards was “clearly a challenging project in this environment.” [Sound like a scripted repeat of the earlier breakfast?] She said her agency was focusing on meeting a December 31st deadline to qualify for tax-exempt bonds. [Humm: What about that 2010 start mentioned above?]

On Hudson Yards, Robert Lieber deputy mayor for economic development, said it would be “decades before that is completely built out.” [If that sounds like a scripted repeat of the earlier breakfast, someone else was handed the script!]

Bagli, the reporter, brought up another hibernating project: Moynihan Station–which was first conceived in the early 1990s as a renovation of the Farley Post Office on Eighth Avenue, exploded in scope, and has since returned to smaller, but indeterminate, shape. (Bagli called it the project that “none dare call its name.” . . . .)

Lago, the state economic development chief, threw cold water on Senator Schumer’s idea to convince Amtrak to devote $100 million of its stimulus funding to the station, saying officials had not figured out what part of Moynihan could qualify as “shovel ready.”

There you have it: More than 15 years, and three-and-a-half environmental reviews later, Moynihan Station still isn’t shovel ready.

It doesn’t seem like the projects delayed by Bloombergian “public private partnerships” are getting much appreciation. The aforementioned Charles Bagli of the Times has another article about more delays at the Ground Zero redevelopment site (As Finance Offices Empty, Developers Rethink Ground Zero, April 15, 2009).

Speculation about Inspector Generals Investigating Projects Like Atlantic Yards If They Get Stimulus Money

Does is seem as if all this dancing around, failure and lack of frankness on the part of public officials doesn’t stand up to scrutiny? There may be more scrutiny coming. Among other things, the same Brian Lehrer program (with a different moderator standing in for Lehrer) concluded (at 16:25) with an interesting prediction of investigative journalism headlines in this area (if there are still newspapers around 18 to 24 months from now.):

Moderator: This calls into question, Rick Newman, the issue that I put off earlier which is transparency, which obviously has a lot of people concerned, where is this money going, how is it being spent, who’s accountable? What are you seeing now, on a national level to make sure that this process does unfold in a fair and equitable way?

Rick Newman: We’ve seen very little oversight so far because there’s just not enough information yet. But here is a prediction: In a year or eighteen months, I think, (if there are any newspapers left) we’re going to see some very interesting investigative headlines about portions of stimulus money being used for illicit purposes and for pet projects at the state and local level. And here’s why: I think that in Washington there is a great deal of oversight. You know, it’s practically a cottage industry; you’ve got the Government Accounting Office, you’ve got all these subcommittees in Congress, inspector generals in every department of the federal government - - Not so much at the state and local level where oversight tends to be more lax and, you know this is kind of a feeding frenzy - - And I think the Obama administration knows that. And I think they are trying to find the right balance between flushing money into the system which is one way, one of several ways, to help get the economy started and getting it out throughout the country, which you have to do, and getting it out quickly. And I think they are kind of making a deal with the devil by accepting what is some inevitable waste, fraud and abuse. So by the time we start to hear about this in eighteen months or two years, if we are lucky the economy will be back on its feet, and Obama is probably gambling that he will be able to say, “Hey look, we kick-started, we jump-started the economy, we will look into this, prosecute it if necessary but things are going good.” We’ll see what happens. It’s going to be interesting because if that time line plays out that will be right around the time of the 2010 elections.

Mr. Newman’s prediction reminds us of what we wrote about how multiple inspector generals might be actively investigating Atlantic Yards if stimulus money is ever used for it:

It is interesting when just one office like a State inspector General’s Office has jurisdiction to look into improprieties. They may ignore them or choose to be lethargically inactive. What may raise interest sufficient to get an investigation rolling under one state administration may differ from another administration, and vice versa. We have noticed, however, that the dynamic often changes significantly when at least two such offices share jurisdiction over a matter: Casual disregard of a matter’s significance recedes as an option and competition can take hold. We certainly don’t ever want to see Atlantic Yards put on a list of projects to potentially receive federal stimulus money. But if that were ever to happen, a shift in the dynamic of who wants to investigate what and when and with how much vigor could cause things to become very interesting.

(See: Thursday, February 26, 2009, Dear Eliot, . . . other things kept undercover may bear investigation.)

Earlier on we spoke of our disquiet with the idea of surrounding our public officials with concentric circles of access, with those being closer in having access to greater candor about what is going on with the development process in this city. We find objectionable the idea that as you go further and further into these circles, more “truth” is available and that it’s not until you have accessed the innermost concentric ring that real truth is available. Unfortunately, the reason we think that there is no candor is because the truth would be so objectionable to the public if revealed. That makes the prospect that the truth might come out through a future inspector general’s investigation exceedingly interesting.

The Answer to Our Question About NYC Density Destiny Is National News

(Image above from the print edition of Newsweek- click to enlarge.)

Noticing New York has been posing the question whether New York City is becoming too dense. (See: Thursday, December 11, 2008, Is NYC Becoming Too Dense? Who’s to Say?) We have also pointed out that eminent domain is being used to achieve levels of density that are greater than what was actually anticipated and achievable when the city’s zoning code provisions establishing controls over the level of density were put in place. In essence, the shoe-horning in of extra density through the use of eminent domain abruptly overrides those original expectations. (See: Sunday, January 11, 2009, Eminent Domain Is Density.)

Bloomberg’s Answer to Our Density Question

Now it seems that our question respecting whether “NYC Becoming Too Dense” has been answered by none other than Mayor Bloomberg himself. The answer is “Yes,” and it turns out that answer is national news.

To deal with escalating levels of congestion Bloomberg is planning to close down large portions of Broadway to vehicular traffic. Not only is this being reported in the city’s national paper, the New York Times, (In New York, Broadway as Great Walk Way, by William Neuman, Published: February 26, 2009); it has also made national news as a two-page spread in Newsweek (Where the Neon Lights Are Bright—And Drivers Are No Longer Welcome: Under Mayor Bloomberg, New York City is embracing a controversial theory: closing down streets can reduce traffic jams, by Nick Summers, Feb 27, 2009.)

(Graphic from the new York Times below)


Herald Square and Times Square, The Pedestrian Environment. Bloomberg Echos Noticing New York

Not surprisingly, the measures being undertaken are in large part an effort is to deal with the high levels of density in areas we have written about, Herald Square and, where eminent domain recently squeezed in extra density, Times Square. The Times’ writes:

Vehicles would be barred entirely from Broadway at public plazas in Times Square and Herald Square, and would share the thoroughfare with a bike lane and a promenade along the rest of the stretch from 59th Street to a new plaza at 23rd Street.

The city plans to start making the changes in late May, and more alterations are possible in the future.

Mr. Bloomberg said the plan would relieve traffic congestion and make more room for pedestrians, enhancing some of the city’s most popular public spaces. But it could also change the very nature of some of Manhattan’s busiest and most famous areas, including the theater district, Times Square, the fashion district and Macy’s front stoop.

In Noticing New York we also wrote about “Macy’s front stoop:”

I found myself asking the question of whether perhaps we might have reached a density limit one warm afternoon the fall of 2007 as I stood on one foot on a corner of 34th Street and Sixth Avenue at about 4:30. I was waiting for a space in the crowd to clear so I could put my other foot down to proceed in the general direction I wanted to go.

Bloomberg speaks of essentially the same indicator, pedestrians not having enough room to walk and being forced out into the streets. We think that whenever people are swarming into the streets it axiomatically means that density is overflowing. Again from that Times article:

“People avoid Times Square because the traffic is so terrible and people are getting pushed out into the streets — the sidewalks can’t handle it,” Mr. Bloomberg said at a news conference.

Newsweek’s article reports:

It's especially bad at Times Square, where drivers on Broadway and Seventh Avenue meet heavy crosstown traffic—along with 356,000 daily pedestrians.

And had the city traffic commissioner unfurling a map to point to:

the horrible intersection outside Macy's, at 34th

An Aside on Macy’s, Moynihan Station and Going Off-Track Due to Developer Ambitions for More Density-Producing Towers

(We should note that one of the things that sidetracked and held up the urgently desirable goal of the proposed new Moynihan Station replacing the currently fouled-up Penn Station.was that private developers took the project astray trying to figure out how they could acquire historic Macy’s to profit by building more density-producing towers in the area. See: Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart. Senator Schumer in recent statement is calling for more public funding for Moynihan Station expressing an understanding that the reliance on the private sector has been part of the unnecessary delay of this vital public transportation project. See: Tuesday, March 03, 2009, Schumer touts stimulus funds for Moynihan Station, waves off question on Atlantic Yards. In that vein, reporting on Schumer’s remarks, the Times noted that “Despite widespread support, the project has languished because of . . . political inertia . . . and the developers’ ambitions.” And quoting Schumer “The focus is now on the station, letting private development follow rather than the other way around.” The Times added, “Mr. Schumer’s proposal recognizes the inability of private developers in the current economic environment to advance the six office towers they had wanted to build as part of the train station project.” See: Schumer Seeks Federal Stimulus Funds to Jump-Start Moynihan Transit Project, by Charles V. Bagli, March 1, 2009.)

Shutting Down Streets and Avenues as an Escape Valve

As we have just pointed out, the shutting down of Broadway is in essence an answer to our question of whether New York is becoming too dense in that it is an implicit acknowledgment that the answer is “yes, the city is becoming too dense.” It is an acknowledgment because if the city had said ahead of time that it was going to shut down streets and avenues in order to build extra density, then it is not clear that the idea would have been readily embraced. The Times article points out that the city proposal “aroused a range of passionate reactions” reporting that “cabbies largely disliked the plan” and that “some in the theater industry also were wary of the plan.”

The shutting down of the street space is also “answer” to the density question in another sense: although it was likely not anticipated when more density was being created, it serves as an after-the-fact escape valve adjustment to deal with it. That raises the question in our mind: What will happen in those situations where we build to cram in maximum additional density and we don’t have extra streets and avenues to close down as an escape valve or way to adjust when it turns out that we get more congestion than we can otherwise handle? The question is urgent because cramming in maximum additional density is the new Bloombergian planning style.

We are thinking in particular of areas of the city that will experiment with combining superblocks with never before tried levels of density with FARs (zoning code parlance for “Floor to Area Ratio”i.e. “density”) that only become legally possible with such street closings. Ironically, important acknowledged urbanists like Jane Jacobs would call for more streets and avenues (particularly for pedestrians) as a means to cope with high density. Two examples of situations where we therefore may be building without the kind of escape valve option being used here are Atlantic Yards and, considered by the City Planning Commission only last Wednesday, construction of a dense new superblock of towers at what is now Fordham University’s midtown campus site.

(Proposed new Fordham University residential neighborhood below)


Times Square Hubbub Uniquely Desirable?

It should also be pointed out that while the density in Times Square is now so great that this escape valve seems needed, it is arguable that Times Square should be a unique example of an area where a “happy hubbub” of buffeting density is a desirable part of the experience. Times Square is an example of a situation where the city went counter to the general rule to specially zone for the amusement park fun of being assaulted by huge scale flashing animated billboards. The Times reports how the experience of hubbub in the area is valued by many:

“I like the happy hubbub,” said Melissa Gasparis, of Upper Saddle River, N.J., who was strolling through Times Square on Thursday. She said she was afraid the mayor’s plan would make the place less vibrant, because the sidewalks would be less crowded and the streets more free-flowing.

“I like to drive through Times Square,” Ms. Gasparis said. “It cheers me up. It’s big, bright and fun.”

Her mother, Aphrodite Kalonturos, of Delaware, said: “It’s the craziest place in the world. Why change it?”

But can the same thing be said about a crazy hubbub being desirable in the proposed new Fordham University residential area below classical Lincoln Center? And does it make sense interjecting such insane hubbub (and possible additional avenue closings) into the heart of residential brownstone Brooklyn as is proposed with Atlantic Yards?

(Atlantic Yards density proposed to be added to brownstone Brooklyn below)


Newsweek’s Car-Oriented Reporting: And a Not-So-New Traffic Theory

It is interesting that Newsweek’s reporting is much more from the standpoint of what the proposal means for vehicular traffic than for pedestrians. Maybe this is because Newsweek is a national news magazine and we are a nation of car drivers. We were intrigued that one way the Newsweek story shows up when you google it, (though we are not sure from where the goggled heading derives) is “New York City Embraces a Bold New Traffic Theory / Newsweek ...”
Newsweek reports on the concept that traffic congestion in the city will be reduced by the reduction of street space rather than additions to the street space:

These pilot projects fit in with a larger counterintuitive theory that's gaining traction with urban-planning wonks: that closing roads can reduce congestion. During the 1990s, a British transit engineer named Stephen Atkins read about how San Francisco congestion decreased, rather than increased, after an earthquake knocked out a key freeway. He observed the same phenomenon in other cities that closed roads, too. "In a lot of places, the traffic was not just displaced—a lot of it disappeared," he says.

Maybe it is all well and fine to hand out credit for groundbreaking thinking to urban traffic experts of a more recent generation, but this theory and its accompanying observations date back earlier than the 1990s. Jane Jacobs wrote about precisely this in painstaking and eloquent detail in her seminal 1961 book, the “The Death and Life of Great American Cities.”

The Argument About Making It Worse

In conclusion we want to say that Noticing New York considers that the proposal to shut down Broadway is probably a good idea, but we have more to say. We note that the Times article concludes with what we consider a challenge to argue from Bloomberg. It quotes Bloomberg thus:

“We all know that traffic in Midtown can be excruciatingly slow, . . .” he said, adding that it would be hard to argue that “we can do anything to make it worse.”

Noticing New York has no problem arguing that the Mayor can do a lot to make things worse. It only takes the Mayor’s continuing to move forward with his predilection for unthinking, pell mell and insufficiently planned additions to city density at every seeming opportunity.

Newsweek concludes its article with some complimentary statements about Bloomberg that indicates they have not caught up with the current turning of the tide in public opinion. (See: Monday, February 2, 2009, The Good News IS the Bad News: Thanks A lot for Mayor Bloomberg’s “Charity” (Part I)). They do say one thing with which we agree; he has a “love” of “risk-taking.” It is just that when he arrogantly joins such “risk- taking” with “big ideas” to which he has given insufficient thought and his reflexive love of accommodating big developers, the rest of us wind up with an unlivable city.

The Good News IS the Bad News: Thanks A lot for Mayor Bloomberg’s “Charity” (Part II)

(Mayor Bloomberg above listening to public testimony about the term limits extension bill he signed immediately afterward.)

This is Part II of an article about why Mayor Michael Bloomberg’s contributions to charities from his ever-increasing wealth is bad news. The first part of this article (Click here) examines how Bloomberg uses “charitable” donations in an abusive conflict-of-interest way. This Part II of the article was necessary to address at length the important related concerns about high-level conflicts of interest in the Bloomberg administration.

We left off in Part I asking:

How separate are the worlds of big mega-deal city administration-assisted real estate development and the Bloomberg private-wealth businesses that are growing so fast? Perhaps the first and best clue would be how responsibilities divide up when Bloomberg puts his senior confidants in charge of these worlds. It turns out that at the very top of the Bloomberg administration there is a troubling lack of separation and all sorts of problems with conflicts. Let’s talk about two of Bloomberg’s top administration officials, two deputy mayors with key city real estate development responsibilities, Daniel Doctoroff and Patricia Harris. The latter, Ms. Harris is also key when it comes to Bloomberg’s charities, both dispensing them and collecting charitable donations from New York developers who are receiving city largess. Of course, Bloomberg’s own conflicts deserve further discussion too.

Doctoroff of Development: His Continuing Deputization by the Mayor

The person who was for most of Bloomberg’s administration the deputy director of development, charged with overall responsibility for the city’s mega-deal administration-assisted real estate development was Daniel Doctoroff. Daniel Doctoroff left that position relatively recently (the last day of December 2007) and when he left he became the President of Bloomberg L.P., the mayor's media corporation. That in itself may indicate insufficient separation, but Doctoroff wanted to keep working on the major city-assisted deals even when he was President of Bloomberg L.P..

Doctoroff went to the city Conflicts of Interest Board to get approval to do so. Megaprojects take decades to bring to fruition and at the times that Doctoroff went to the Conflicts of Interest Board the Bloomberg administration was destined to wrap up the end of 2009. It is doubtful that mention was made to the Conflicts of Interest Board that in less than a year the Bloomberg administration would ram through an extension of term limits in order to procure four more years in office. The Conflicts of Interest Board approved Doctoroff’s request despite the fact that Doctoroff would thereby be in a position where he was simultaneously dealing on the public’s behalf with the same developers of multi-billion dollar real estate projects and negotiating with these same developers as a private businessman (See: No Conflicts Over Doctoroff's Dealings, By Dave Hogarty in News on December 23, 2007)

Doctoroff’s continuing involvement involves some of the city’s highest-dollar volume deals. According to the Observer, Doctoroff said he:

wanted to continue on as chairman of the Hudson Yards Development Corporation—the agency that is involved in rezoning the West Side and finding a developer for the rail yards—and remain involved in the Moynihan Station proposal, Hunters Point South and congestion pricing.

(See: Doctoroff Wants to Stay Involved with Hudson Yards, Moynihan, by Matthew Schuerman, December 6, 2007)

One Clear Example of Doctoroff Conflict

The Gothamist article above points out that even though the Conflicts of Interest Board cited “extraordinary circumstances” to say that “Doctoroff's negotiations on behalf of the city with Vornado Realty Trust regarding the development of the Hudson Yards and Moynihan station were allowable,” that Bloomberg L.P.. of which Doctoroff will be president and chairman of the management committee:

will be negotiating with Vornado for additional space at the building that houses Bloomberg LP's headquarters on Lexington Ave., since Vornado owns that building. The Conflicts of Interest Board gave its blessing on the condition that Doctoroff have no direct dealings with Vornado for a year after he leaves his position as Deputy Mayor.

That is just one example of a problem, based on just one project. The Conflicts of Interest Board ruling also applies to“other city projects including the redevelopment of Governors Island, PlaNYC, and Queens West.” (See: Doctoroff Cleared to Continue Work on Moynihan Station, 2008-03-26.)

The five member Conflicts of Interest Board which considered that “extraordinary circumstances” presented themselves is made up of mayoral appointees.

An Example of How Confusing Doctoroff Conflicts Can Be, With Distinctions Not Made and Distinctions Not Observed

Adding to confusion, having issued “a waiver” in December 2007, the board followed up with a ten-page Ex-Official Cleared to Continue Work on Big City Projects, by Patrick McGeehan and Ray Rivera, March 26, 2008.)

Here is just some of what the Times wrote in that article pointing out aspects of the confusion:

The board’s decision underscores a reality that has often been noted in the city’s development community: Mr. Doctoroff may have left City Hall, but he remains a participant in — and has a big influence over — what is going to be built.

* * * *

It is not unprecedented for former city officials to be involved with public projects, but in the case of Mr. Doctoroff, the city’s longest-serving deputy mayor for economic development, the list is so long and varied that city officials and even some who serve on boards with him have expressed confusion about his roles. In response, City Hall circulated a memo in January advising city employees how to interact with him.

For a year after leaving public service, former officials are strictly prohibited from appearing before any city agency within the branch of government where they served; the ban is even longer if the subject is one in which the official was directly involved. The prohibitions do not apply, however, if the official is appearing on behalf of the mayor or another government agency.

Some questions about Mr. Doctoroff’s future role remain unanswered.

The board’s 10-page opinion did not address his participation in development decisions about the West Side railyards, known as Hudson Yards, although the city had asked for a ruling on the matter.

* * * *

On Wednesday, the transportation authority is expected to grant development rights over the railyards, a 26-acre slice of Manhattan overlooking the Hudson River, to Tishman Speyer, one of Manhattan’s largest real estate operators.

Mr. Doctoroff met during the week of March 10 with the teams of developers competing for the billion-dollar project, according to members of the teams, who spoke on the condition of anonymity because they did not want to offend Mr. Doctoroff.

Even after he left later on a business trip to Asia, Mr. Doctoroff remained in constant contact with the selection committee throughout the deliberations.

. . . . Mr. Doctoroff dismissed the notion that there might be a conflict of interest between his continuing work for the city and his new role at Bloomberg.

“Certainly, if I felt it was going to create conflict that I thought was going to be harmful to the company, I wouldn’t do it, and I’d be the same way with the city,” he said. “If there was a conflict, I just wouldn’t do it.”

At the time of that Feb. 22 interview, Mr. Doctoroff also insisted that his involvement with the city had been limited since leaving office. . . . That did not include the recent railyard negotiations.

* * * *

The opinion issued on Tuesday limits the role he can play in matters involving Vornado Realty, which owns the building housing the Bloomberg L.P. headquarters. The company is negotiating with Vornado for additional space.

The board said that given Mr. Doctoroff’s knowledge, it was best for the city for Mr. Doctoroff to continue his involvement with the Moynihan Station plans. Vornado is a developer of the station project and was one of the companies vying to develop the railyards with whom Mr. Doctoroff met earlier this month. On March 12, Mr. Doctoroff met with the Vornado chairman, Steven Roth, and the M.T.A. selection panel, and last Friday with David Greenbaum, a top Vornado executive.

The opinion advises Mr. Doctoroff to recuse himself from any discussions between Bloomberg L.P. and Vornado for one year from the date of the conclusion of the Moynihan Station negotiations, and from all dealings involving Vornado or Bloomberg L.P. in any of the other projects addressed in the ruling.

Gene Russianoff, a senior lawyer for the New York Public Interest Research Group, said he agreed with much of the ruling but was troubled by the absence of the railyards and the station exception.

“I can see recusing himself from landlord-tenant matters with Vornado, but is Vornado going to say, ‘O.K., we’re going to jack up the rent when we’re trying to make some kind of deal over Moynihan,’ ” Mr. Russianoff said.

We have set forth the above at substantial length because it is so valuable; it is worth reading the entire Times article carefully to appreciate how much more confusion of roles is involved in the Doctoroff situation.

Recusal, Refusal and Confusal

As good as it is, the above Times article did not mention yet another level of complication. Before Doctoroff officially left City Hall, he was responsible for matters from which his boss, Mr. Bloomberg was supposed to recuse himself because of conflicts of interest respecting Bloomberg, L.P. Doctoroff’s being at Bloomberg L.P. invokes those same conflicts and the need for Doctoroff also to recuse himself personally. (The Roles Blur for the Mayor and the Mogul, By Serge F. Kovaleski and Ray Rivera, December 8, 2007.) Who then is anyone reporting to and who in the chain of command doesn’t have a conflict of interest? That, in a moment, will bring us to Deputy Mayor Patricia Harris.

The Times reported on how, while Doctoroff was Deputy Mayor for Development, he had been officially charged with negotiations from which Bloomberg was required to recuse himself, but that: 1.) Bloomberg failed to effectively recuse himself, and 2.) people were skeptical about whether delegation to Doctoroff was, in any event, a sincere attempt by Mr. Bloomberg to recuse himself:

When the city began negotiating with Verizon on its bid for a cable franchise, Mr. Bloomberg, whose company, Bloomberg L.P., owns a business news channel, stepped aside and put Mr. Doctoroff in charge of the talks.

When Merrill Lynch, which owns 20 percent of Bloomberg L.P., was considering leaving Lower Manhattan and moving to Midtown, Mr. Bloomberg limited his involvement in negotiations. He let Mr. Doctoroff handle them.

The Bloomberg administration said these steps were intended to protect the mayor from any appearance of a conflict of interest. But other people were skeptical of the arrangement, given the close relationship between Mr. Doctoroff and Mr. Bloomberg.

The Times observed the following in relation to the Mayor Bloomberg / Doctoroff recusals (emphasis supplied):

The Conflicts of Interest Board agreement Bloomberg was supposed to follow:

. . .said that the mayor would recuse himself “from all city matters involving Merrill.” But when the drama erupted over Merrill Lynch’s possible relocation from Lower Manhattan, the mayor picked up the phone and called E. Stanley O’Neal, who was then the chief executive, “one or two” times, according to Jason Wright, the Merrill spokesman.

* * * *

. . . Mr. Bloomberg does not recall any such conversation. But he said that, while Mr. Doctoroff was put in charge of the negotiations with Merrill, it would have been “entirely appropriate” for the mayor to offer his administration’s assistance.

Mr. Loeser said Mr. Doctoroff will now recuse himself, as well, from any dealings involving Merrill or cable television.

In another matter involving Merrill, the mayor has signed off on $1.43 billion in municipal bond deals in which the investment firm was the lead underwriter and several more in which the firm was part of the underwriting team, according to city records.

* * * *

. . . the mayor’s office has never sought a waiver from the conflicts board to allow for an exception to its 2002 opinion.

* * * *

Councilman Avella has raised another issue involving recusal: this one about the city’s continuing negotiations with Verizon as it seeks to break into the lucrative cable television market here.

* * *.*

Bloomberg Television, which reaches more than 200 million households worldwide, is carried by major cable operators in the city. And the mayor has not been shy about voicing his views on cable industry issues, saying, for example, that cable rates should be able to rise without government interference.

Mr. Avella said it is not credible that the mayor is uninvolved, especially with the huge revenues at stake for Verizon and the city. He added: “Even if the mayor has recused himself directly, who is then overseeing the city negotiators? He is obviously involved in leading these discussions at some level, somewhere. Where is open government in all this?”

Bloomberg needs to recuse himself. Doctoroff now needs to recuse himself. Who does that leave in charge who is not recusing themselves? We are now ready to talk about First Deputy Mayor Patricia Harris, currently Bloomberg’s number one in City Hall.

Patricia Harris’ Conflicts

Deputy mayor, Patricia E. Harris (sometimes reported upon as “Patti Harris”) like former Deputy Mayor Daniel Doctoroff also has both Bloomberg L.P. responsibilities and responsibilities affecting major New York real estate development projects. Deputy Mayor Harris, a City Hall official, is who the Times went to in 2007 (when her salary was $225,000 a year) for information about and a characterization of the Bloomberg’s “private” giving through his Bloomberg L.P. business:

“He’s continuing to be more generous and give to more organizations, but the focus has remained consistent,” said Patricia E. Harris, a deputy mayor who helps oversee his philanthropy. She added that his main areas of focus have been medical research, public health and the arts.

(See: Bloomberg’s Gifts to Charity Exceeded $165 Million in 2006, by Diane Cardwell, September 17, 2007)

Ms. Harris, who once worked for the Koch administration ,shifted over to the private sector and was working for Bloomberg in 1994 before his ambition to become mayor emerged. She was “Bloomberg L.P.'s Corporate Communications Department . . . overseeing its Philanthropy, Public Relations, and Governmental Affairs divisions.”

Very important to the real estates industry, First Deputy Mayor Harris also oversees the city’s Landmarks Preservation Commission, as we noted in Times Coverage of Landmarks Preservation Commission: The Pieces Needing to Fall Into Place (Tuesday, December 9, 2008) and is likely to have had a hand in promoting the Atlantic Yards project when she and Mayor Bloomberg met with the Atlantic Yards developer Bruce Ratner. That meeting bore evidence of a quid pro quo exchange of contributions to Bloomberg charities in exchange for project approvals. For more on this, see: Are the Atlantic Yards Land Grab and City Official Fraud Being Used to Finance Bloomberg’s Bid for Billionaire Term Limit Exceptionalism? (Wednesday, October 22, 2008).

Deputy Mayor Harris’ Failure to Be Sensitive to the Conflicts

Certainly the probability of substantial conflicts is present in these dual roles. Can it at least be said that Ms. Harris and the Bloomberg administration were sensitive and attentive these likely conflicts? Now, it is reported that Ms. Harris and her assistant, Allison Jaffin, performed the dual roles, failing to inform or obtain approval from the Conflicts of Interest Board beforehand. From the Daily News coverage:

The city charter generally bans bosses and subordinates from entering into business relationships with each other or doing private work on city time unless the Conflicts of Interest Board agrees it is in New York's best interest.

As the mayor tries to figure out what his third career is going to be - politics, philanthropy, something else - the line between his public and private lives seems to be growing increasingly muddy.

He insisted this summer he had no involvement in his media company and then had to backtrack a few days later, admitting he talks to top execs frequently.

(See: Mayor Bloomberg's aides staff his foundation without city ethics check, by Kirsten Danis, December 23rd 2007.)

In the article a Bloomberg spokesperson referred to Harris’ Bloomberg, L.P. work as a “minimal amount” when just two months earlier the Times was quoting Ms. Harris and writing about her overseeing what had been $165.3 million to 1,077 groups the previous year and Bloomberg was going to be “more generous” (to quote Ms. Harris) to the tune of $205 million in the year when the question came up.

And the City Health Commissioner’s Dual Role

The article reported that the Bloomberg administration also had Health Commissioner Thomas Frieden working with the Bloomberg L.P. foundation (which involved travel to China) and because he had obtained permission from the Conflicts of Interests Board, the administration suggested that Ms. Harris similarly doing so was unnecessary. Because we at Noticing New York know and appreciate and care more about the possibilities for conflicts in the real estate industry we won’t comment to compare how similar the Health Commissioner’s possibilities for conflict were.

Bloomberg Entrusts Deputy Mayor Harris. . .

How involved in major city-assisted real estate projects is Ms. Harris and how sensitive should she have been to possible conflicts of interest with respect to them? It was Deputy Mayor Harris who submitted the request for a conflicts of interest waiver for Daniel Doctoroff to the Conflicts of Interest Board.

The Times reported that Ms. Harris’ job includes being:

officially in charge of New York City whenever Mr. Bloomberg leaves town. But perhaps more significantly, she will see to it that the mayor's vision for the city is carried out in his second and final term as he seizes on the momentum from his huge electoral victory.

(See: Bloomberg's New Deputy Has a Velvet Fist, by Jennifer Steinhauer, December 6, 2005.)

It reports:

Ms. Harris is by far the most powerful person in the Bloomberg administration, a role rooted in her past at Bloomberg LP, where she served as director of his philanthropy for several years.

* * * *

They have a very secure relationship.

* * * *

"The mayor trusts her implicitly,"

(According to William T. Cunningham, who helped run both of Mr. Bloomberg's campaigns.)

Explicit Acknowledgment of Harris’ Use of “Charity” for Political Purposes

The Times article which is almost in the nature of a puff piece reports explicitly about the her role in utilizing the mayor’s “philanthropy” as a tool for political ends; apparently without realizing the full ramifications thereof:

Last year, when Ms. Harris became aware that some people in the arts world who had benefitted from Mr. Bloomberg's philanthropy had given political donations to one of his early campaign rivals, City Council Speaker Gifford Miller, she called them and demanded to know what they were thinking.

Extensions of Deputy Mayor Harris “Philanthropy”-based Power

Right now Ms. Harris’ “philanthropy”-based power has been expanded because, besides overseeing the mayor’s Bloomberg L.P. giving, the article writes about the control and influence she exercises over the City Hall-based Mayor's Fund to Advance New York City and its chairman. That’s for now. What does the future have in store? As noted, Ms. Harris was once in the private sector working for Bloomberg (de facto chief of staff) on his “philanthropies.” Now as a city official she continues to do so and the Times article says that with respect to the future she:

will continue to run his philanthropy once he leaves office. That endows her with formidable power beyond his term, . .

(Ms. Harris’ predecessor, Deputy Mayor Mark Shaw, went to work for real estate developer Extel Development company upon departing government.)

Ms. Harris’ husband, Mark D. Lebow, is a lawyer with Lebow & Sokolow LLP whose practice areas include real estate. Bloomberg appointed him to the board of the Metropolitan Transportation Authority and Ms. Harris’ stepson also works for the Bloomberg administration.

The Conflicts of Mayor Michael R. Bloomberg Himself

What about the mayor’s own conflicts in running the city while accreting so much wealth through his private company? His conflicts while controlling so much “charitable” giving? Among other things, the above-discussed conflicts of his senior people must travel up the ladder to be laid at his doorstep as well. But Mr. Bloomberg isn’t good at seeing conflict. Even though the Times wrote so explicitly about Ms. Harris’ use of “philanthropies” for political purposes, when the need for Ms. Harris to obtain Conflicts of Interest Board approval was raised, Mr. Bloomberg professed to see no possible conflict:

“She has been handling all of my philanthropies for all the years I’ve been in office,” the mayor said. “And whether she does it through a foundation or directly, there is literally no difference in terms of potential conflict.”

(See: Ruling Allows Wider Investment Options for Bloomberg and His Foundation, by Ray Rivera, December 27, 2007.)

The mayor is perhaps right: Whether the deputy mayor handles his “philanthropies” directly or indirectly does not affect the potential conflict. The conflict presents itself either way.

New 2007 CIOB Opinion

Ironically, the mayor’s statement was in an article that reported that the Conflicts of Interest Board was issuing a new 2007 opinion imposing specific theoretical restrictions on the mayor himself vis-a-vis his relationship with his private foundation. Given Mr. Bloomberg’s use of Ms. Harris to oversee his philanthropy, one would expect that she might easily be violating those same proscriptions applicable to Mr. Bloomberg without guidance.

What a Disobedient Mayor Does

It’s worse than that in several ways. The new Conflicts of Interest Board requirements were new because they were requirements that were being relaxed from what was previously required. At the same time, long into Bloomberg’s second term, it was being reported that Bloomberg had not complied with requirements to avoid conflicts that the Conflicts of Interest Board imposed upon him at the beginning of his first term.

In that same Times article:

In a 2002 agreement with the conflicts board, the mayor promised to limit his involvement with his company to major decisions that would have a significant impact on his ownership value. Throughout his two terms, the mayor repeatedly insisted that he had no involvement in the firm’s day-to-day operations.

This month, however, The New York Times reported that the mayor talked regularly to senior officials at the company about topics ranging from new data terminal sales to expansion into new markets and the general financial performance of the company. He even recruited the company’s spokeswoman.

And despite the 2002 agreement, which required him to recuse himself from any city business involving Merrill Lynch, the biggest investor in his company, the article said the mayor had taken numerous official actions that involved Merrill Lynch.

Not unexpectedly the Administration denied any problem:

Administration officials insist that Mr. Bloomberg has not violated the 2002 opinion.

Inadequacies of Agreement With Which Bloomberg Failed to Comply

The Times reports that much of the language of the 2002 ruling with which Bloomberg failed to comply was supplied by Bloomberg’s own lawyers. It also points out that its disclosure is antique, setting forth “Bloomberg L.P.’s top 100 customers” without update since 2002 when, comparatively speaking, Bloomberg was a considerably less bruising presence, his company’s customers now including “virtually every major financial institution in the city.” (The Roles Blur for the Mayor and the Mogul, By Serge F. Kovaleski and Ray Rivera, December 8, 2007.)

Once Again the Bad News is that “Charity” is Good

What seems to have convinced the Conflicts of Interest Board to give more freedom to a disobedient mayor in the new 2007 Opinion? Apparently, the deceptively all-too-simple argument that bolstering Mr. Bloomberg’s wealth and “philanthropic” potential would be good. To this end the board decided to:

allow him to move his money into more aggressive investments, including hedge funds and publicly traded stocks.

Because?

The mayor’s spokesman, Stu Loeser, said Mr. Bloomberg was not seeking the changes to expand his personal fortune, which has been estimated at anywhere from $5 billion to more than $13 billion. But he said that as the director of the Bloomberg Family Foundation, the mayor “has a responsibility to maximize the amount of money it has to give away to charity.”

(Note: The $13 billion figure is closest to the Forbes estimates.)

New Flexibility For the Mayor

The article explained:

The ruling by the five-member panel modified a key element of an opinion it issued in 2002 that urged the billionaire mayor to sell all of his stocks, along with his interests in a hedge fund, because the holdings violated the city charter.

(Bloomberg complied with that part of the directive.)

Specifically this was spelled out as the arrangements with which the mayor (Ms. Harris too?) was theoretically expected to comply:

Under the arrangement, the mayor will select one or more investment firms to oversee his personal and charitable foundation’s investment strategies, and then recuse himself from any city business involving those firms.

The firms will then choose managers who will carry out the investment decisions, but their identities will not be shared with the mayor, the board said.

* * * *

. . . the mayor could advise the investment firms about categories of investments and could hire or fire managers based on reports about their performance. But the mayor must receive no information about the specific holdings in his or the foundation’s accounts, and must not know the identities of the managers, the board said.

Is this adequate protection for the public when dealing with a mayor who had already demonstrated disobedience? Maybe not, but it was expected that it would sound good to the public:

“The proposed arrangement will not conflict with the proper discharge of his official duties, and it avoids the appearance of conflict to the public,” the board said.

It Ain’t Something for Nothing

One should always beware when something is offered for nothing.

Once upon a time, the idea was that we were going to have a mayor so wealthy that he was not interested in the acquisition of further wealth, a mayor so wealthy that he was motivated by pure generosity. Bloomberg was supposed to represent “a new paradigm,” “a businessman and a technophile, a man focused on communication and transparency,” a “technocrat-mayor” who didn’t personalize conflict. We were even relieved of contributing to the political campaign he willingly paid for himself! (See: The New Paradigm, Has Bloomberg changed the mayoral model forever? By Edward-Isaac Dovere.) But that was always just public relations preamble to the facts. The facts now deserve another look.

The Conflicts of Interest Board’s 2007 opinion is specifically about accommodating the mayor in the continuing acquisition of more wealth. Results speaking for themselves, that is something he had already done very well throughout his administration. Rather than generously giving money away, Bloomberg “donates” money to acquire more personal power and perhaps to acquire still more money as well. It even turns out he is driving up public expenditures on mayoral campaigns! Whereas once upon a time we were told we were going to have a mayor who was so angelically generous that we didn’t have to worry about anything, we now find that we have a mayor so financially omnipresent and capable of corrupting charity that we need to worry about everything. It is almost like a real life version of the jokey chestnut episode of the Twilight Zone, To Serve Man.

An Enormous Problem in Context

Given Bloomberg’s omnipresence, getting far enough away from him to avoid conflicts of interest is a daunting proposition. It is increasingly hard since Bloomberg has gone in a decade from just one of the wealthy (# 56 on Forbes list in 1998, # 42 in 2001) to the wealthiest New Yorker (# 8 richest American on Forbes list for 2008).

The Times had a paragraph that framed the enormity of the problem nicely:

The opinion is the latest ruling to try to address ethical questions created by Mr. Bloomberg’s public and private roles. The mayor not only runs a city that is one of the world’s financial capitals and retains a majority ownership of Bloomberg L.P., a media and financial information giant whose customers include many of the city’s biggest banking firms. He is also a philanthropist whose private giving often involves nonprofit agencies active in civic and neighborhood affairs.

Increase of Bloomberg Wealth at Taxpayer Expense?

Setting aside conflict-of-interest abuse of charities to enhance personal power, there is also simply the question of Bloomberg’s possible conflict-of-interest abuse to enhance his wealth at taxpayer expense. It should not be disregarded.

Our Capability to Know

How might Bloomberg make money at taxpayer expense? And how much do we know about how he might be doing so? Don’t expect information about what Bloomberg is actually doing to accomplish the phenomenal increase in his wealth to be readily available:

Releasing details of Mr. Bloomberg's tax returns could reveal too much to his company's corporate rivals, said his director of communications, William T. Cunningham.

(For Bloomberg, 'Rich' Is Just Too Weak an Adjective, by Leslie Eaton, July 3, 2004)

Long Live Bloombergian Competition?

“Corporate rivals?” Apparently it is acceptable to acknowledge that Bloomberg IS competing for wealth when it is convenient to withhold information about what that entails, even if that may be inconsistent with the original public relations spiel that Bloomberg was a man who was beyond that self-centered phase of his life.

Education in His Finances: Bloomberg Tax Return 2002

Early in his administration the Conflicts of Interest Board ruled that Bloomberg had to sell all of his individual stocks. (Note that does not preclude all the ways that Bloomberg might benefit from changes in stock market. Note also the later, more relaxed, permissions of the COIB’s 2007 ruling.) The sell-off of the stocks involved occurred in the 2002 tax year. The Times reported that he had losses associated with selling stocks that year: “at least $1 million of his personal fortune” which was at the time, given conflicting information, $4 billion? $5 billion? Forbes had it going up from $4 billion to $4.8 billion from 2001 to 2002. According to the Times (emphasis supplied):

Only the mayor knows whether his stock market loss was close to $1 million or far more because the mayor disclosed only three numbers yesterday in making available for review heavily edited portions of his income tax returns.

(In 2002, Bloomberg Lost a Bit (for Him) and Gave a Lot, by David (Cay) Johnston, June 14, 2003.)

In the article, the mayor's communications director pointed out that Bloomberg was paying taxes at the maximum rates and despite the heavy editing of the tax returns his “charitable” giving was sufficiently evident so as to become a good portion of the Times story. All the mayor’s income was income from investment:

The two taxes the mayor escaped were Social Security and Medicare taxes because his only salary is a dollar a year from the city. Those two taxes do not apply to investment income.

Is this to say that Bloomberg was not actually working to increase his private sector wealth? (Remember his later-revealed contacts coordinating affairs with senior Bloomberg L.P. executives.)

What do we really know? (Emphasis supplied)

While the mayor's 2001 tax return was a rich sea of G's, this year a number of E's, C's, A's and a few blanks -- meaning less than $1,000 -- showed up on the heavily edited documents that reporters were allowed to examine at Geller & Company accountants in Manhattan.

Asked if the mayor would sign legislation that added new categories, say for laddered categories of amounts up to $500 million, Mr. Cunningham said he did not want to discuss policy issues.

Hot Stocks: Hot Tips?

It may readily be envisioned that the Conflicts of Interest Board required the sale of Bloomberg’ individual stocks because of the possibility that he could benefit from special information and relationships. The concern is not necessarily insider trading, per se, which would be illegal, but akin to it. In that regard, what do we know about what kind of stock investor Bloomberg actually is?

The limited documentation showed that the mayor's competing teams of investment managers sought quick gains, often investing heavily in hot stocks, and that the mayor was not a buy-and-hold investor.

With the relaxed 2007 Conflicts of Interest Board ruling this kind of stock investment (and hedge fund) activity can resume.

Released From the Stocks: Terminal Interest

But are the stocks in which a wealthy Bloomberg invests the main concern? Bloomberg’s business is founded sale of the Bloomberg terminals to the financial community. That is core to the question of where he takes in most of his profit.

The possibility that Bloomberg’s terminal business could involve conflict-of-interest problems got some attention in a January 2002 New York Times article (before the Conflicts of Interest Board ruling) which is almost laughable in the way that it fails to identify the greatest possibilities for conflict-of-interest concern.

Once Again Charity IS the Bad News

Once again, Bloomberg’s ostensibly charitable nature is the grist used in a PR feint: The Times article reports about how Bloomberg, L.P. is “donating” 35 Bloomberg terminals to the city for use by members of the mayor's staff together with “seven other terminals that were previously being leased by the city's financial departments” in order to pay “heed to conflict of interest laws that forbid elected officials to sell goods and services to the city.” (See: Mayor Brings His Gadgets, And Thorny Conflict Issues, by Edward Wyatt, January 6, 2002.)

The article almost puffs over the nonviolation of conflict of interest rules:

Mr. Bloomberg and his company will receive no direct financial advantage from the city's use of the terminals -- and as a donation, the terminals violate no conflict of interest rules

and

''The reason for the donation was to alleviate the potential conflict of interest,''

For `balance’ the article fusses over the “reputational capital,” that might be created by the “the commanding presence that the Bloomberg terminals will have at City Hall” . . . “an asset that has value even if it does not show up on a balance sheet” according to "Kevin T. Jackson, an associate professor of business ethics at Fordham University."

In fact, by the article’s fourth paragraph, it is still talking about how the appearance of the Bloomberg terminal “at City Hall put the Bloomberg, with its sleek monitors and acres of flat-screen space, on the public stage as an object of desire” is a “a product placement that would make any marketing director salivate.”

Putting the Object of Desire on the Public Stage: Ominous Message?

Albeit that product placement and reputational capital idea is a valid concern, what goes unstated in the article is the slightest thought that placing the terminals on “the public stage as an object of desire” can also send a clear message about how easy it could be to deliver benefits equivalent to a kick-back.

This is why it is a critical concern that the Times reported, as noted above, that for years thereafter (emphasis supplied):

the mayor talked regularly to senior officials at the company about topics ranging from new data terminal sales . . . .

Sales of Bloomberg terminals were shooting up in the years just before running for mayor when Bloomberg’s billionaire fortune essentially doubled, according to data available for 1997, 1998 and 1999. (See: The Company He Keeps (for Now), by Timothy L. O'brien, March 20, 2005.) But increased sales do not correspond in arithmetic proportion to increases in profit. The industry is somewhat of a diminishing marginal cost business; after a point, most costs have been paid for, so sale of each additional terminal beyond that point is essentially gravy.

If you analyze it, all it takes for New York financial firms to deliver quid-pro-quo benefit to the mayor in a virtually undetectable fashion is for them to order more Bloomberg terminals than they otherwise want or need. And, as noted, each additional terminal is almost pure gravy, pure cash to Bloomberg. For the years that the mayor has been in office, Wall Street has been far and away that largest sector of the city’s economy and, as the Times asserts, Bloomberg does business with“virtually every major financial institution in the city.”

Comfortable With the Bloomberg Terminal?

The Times article on the “donated” terminals said that the terminals had been given in part because of Bloomberg’s own comfort with the system:

The donations are not an attempt to further market the Bloomberg name, his aides said. ''It was just the fastest way to get the office set up with computers,'' said William T. Cunningham, the mayor's communications director, who added that the system is the one that Mr. Bloomberg is most comfortable with.

The new hardware lets users get e-mail messages, do word processing, make spreadsheets, surf the Internet, as well as gain access to the news services and financial market data typically offered to Bloomberg customers, all without the bother of flipping between windows on a single screen.

But the system Bloomberg was switching everybody at City Hall over to was not necessarily designed for everybody else’s comfort, as reported in the later 2005 Times article about Bloomberg’s terminal business:

Early Bloomberg users needed to pick their way around the terminals using arcane commands and interfaces, many of which persist today. Mr. Bloomberg believed that once people were trained in how to use a Bloomberg terminal, no matter how confusing, it would make them less inclined to switch to other systems. He also insisted that every new service or data point be bundled inside the Bloomberg and never sold separately, increasing the value of the machine and allowing the company to charge a premium to use one.

Skepticism? Bloomberg, Wall Street City’s Financial Leadership?

Given the lack of separation between Bloomberg business interests and Wall Street, we must inevitably speculate skeptically about poor financial leadership of the Bloomberg administration. (See: Saturday, October 25, 2008, More Discredit of Bloomberg as Qualified Financial Crisis Leader.)

Sufficient Separation?

We started this Part II asking whether we should feel confident of sufficient separation between the worlds of big mega-deal city administration-assisted real estate development and the Bloomberg private wealth businesses that are growing so fast. The answer is no, given the troubling conflicts we see at the highest level of the Bloomberg’s administration and business involving Daniel Doctoroff, Patricia Harris and Michael Bloomberg himself.

Charitable “Giving” Bad News: No Light at the End of the Tunnel

That now brings us back to where we started with Part I of this article, that more “charitable giving” by Bloomberg is bad news.

The worse news is that there is no light at the end of the tunnel.

Don’t expect the flow of Bloombergian “philanthropic” money to abate. Even though more than a billion dollars have been distributed since Bloomberg became mayor, we may have seen nothing compared to what is yet to come. Bloomberg has a hands-on attitude about distributing his money. He says he wants to do it all himself when he is alive, joking about the desirability of having the “check to the undertaker” bounce. (See: Bloomberg’s Gifts to Charity Exceeded $165 Million in 2006, by Diane Cardwell, September 17, 2007) That means we can project a huge flow of money, much more than we have seen to date. Born February 14, 1942, Bloomberg is about to be 67 years old. Assuming that he lives to a ripe old age and “gives” away all his money over another 30 years (even without his current wealth increasing still further), that would mean, dividing equally over those years, distributions of $666 million each and every one of those future years!

Bloomberg has disclosed political ambitions sufficient to keep him on the scene through a considerable portion of all his "philanthropic" years: running for governor or even a second run at the presidency. He wants to be mayor for another five of these future years. Five more years . . . unless he has another term limits extension surprise in store for us. Would that be unachievable?

As the New York Times commented about the public promise that First Deputy Mayor Harris will, in future years, even after leaving her current public office, be coordinating dispersal of Bloomberg's $20 billion:

That endows . . . formidable power beyond his term, . .