Relevance of Mayoral Debate Discussion About Forest City Ratner Atlantic Yards Misconduct To The Sale and Underfunding of NYC Libraries

From the pen of Simon Verity: Is Bruce Ratner going to get the Brooklyn Heights Library?  Maybe.

Why would Citizens Defending Libraries, a group that has mobilized to fight the sale of New York City libraries and the underfunding and shrinkage of the library system (including with a petition) post a clip of mayoral candidates discussing, at an April 3, 2013 mayoral forum, the subject of what to do about the unsatisfactory conduct of Forest City Ratner with respect to its development of Atlantic Yards?

The answer is easy and should be fairly obvious.  In a bit we’ll return to the ramifications for libraries that relate to the difficulty of dealing with Forest City Ratner vis-à-vis Atlantic Yards, but first let’s review what happened at the mayoral forum held at St. Francis College April 3rd by the Brooklyn Reform Coalition.

The Citizens Defending Libraries YouTube video channel clip is here: NYC Mayoral Candidates Debate the Broken Promises of Atlantic Yards.  (For best viewing you may want to go directly to YouTube to watch it.)



Atlantic Yards Report covered it here: Thursday, April 04, 2013, At mayoral forum for Democrats, Liu blasts Atlantic Yards; no candidates understand Community Benefits Agreement.

The Mayoral Forum Question, The True Scope of the Problem, And The Potentially Simple Answer To The Atlantic Yards Problem

The question asked the candidates was:

Forest City Ratner signed a Community Benefits Agreement promising jobs and housing at the Atlantic Yards site. Now that the organizations that signed the CBA no longer exist, the community has no representatives at the table. What are you going to do as mayor to make sure that these promises are kept?

The answers of all of the candidates acknowledge that there is a serious problem with Forest City Ratner not fulfilling its obligations and promises to the public.  I think the combined answers of all of the candidates indicate that if the elected officials and politicians in this city were less financially beholden to real estate developers in general, and to Forest City Ratner in particular, the question of what to do about the giant problem of Atlantic Yards would be relatively easy to solve.

The solution?: Elected officials, not taking money from Forest City Ratner and not beholden to Ratner, should get tough with Ratner, cut off subsidy to Ratner and take the mega-monopoly away from Ratner to divide it up amongst multiple developers.

As it was, the question asked did not express as fully as possible the severity of the problems to be solved, but for it to do so would have been a challenge when the questions were supposed to take about only 20 seconds to read.  Similarly the candidates were limited to a one-minute answer, so perhaps it is appropriate that their answers have to be consolidated to arrive at a true and complete solution.

The question didn’t convey the following regarding the background scope of the problem:

    •    Development in Brooklyn outside the perimeter of the Atlantic Yards monopoly has proceeded at a far healthier, faster pace than within it as was testified to by the Pratt Institute at a recent public hearing on the subject of redoing the original inadquet environmental impact statement and whether Forest City Ratner should be allowed a substantial extension of time to build the project, 25 years instead of the original ten.  The real amount of time that turns into may actually be on the order of 40 years that was the estimate of a former ESDC head supervising Atlantic Yards.  The logical alternative to this extension of time, considered at the hearing, is to take Atlantic Yards away from Forest City Ratner and bid it out in parcels to multiple developers.                                   

    •    The Fifth Avenue Committee testified at that same hearing about how the mega-project’s delays are decreasing its likely eventual level of affordability.

    •    The difficulty of negotiating the delivery of public benefit from the project is not exclusively related to the evaporation of some of the astroturf organizations that signed the so-called CBA (“Community Benefits Agreement”) so that they are not now around to enforce it: More important is the fact that government is in a weak position to negotiate with the government-created Ratner monopoly because it is a monopoly.

The Candidates' Responses

The first thing to note about the candidates' responses in the video is the visual of Christine Quinn’s response of seemingly deep displeasure that the question is being asked at all (still frame below).  (Quinn is normally adept at smiling pleasantly when challenged.)  Quinn, as Bloomberg’s enforcer at the City Council, stands out amongst the candidates as being most responsible for Atlantic Yards going forward and receiving deep city subsidies.

Quinn's reaction to question about getting benefit out of Atlantic Yards

Something else to note and explain is the reaction of audience measured mainly by the volume of its applause.  Notwithstanding that there were good points being made across the candidate spectrum, not every candidate succeeds in getting an enthusiastic reaction from the crowd with them.  The question itself gets enthusiastic applause.  Liu gets the most enthusiastic reaction.  Albanese gets a good reaction talking about the evils of developers' campaign contributions (as does Quinn when mentioning campaign contribution reform).  There is little such enthusiasm for the expression of the other points however valid.   This can probably be explained by the knowledgeability of the crowd respecting the subject and their familiarity with what candidates like Quinn, de Blasio and Thompson have not done to take on Forest City Ratner in the past.

Here is what the candidates said were the solutions, in the order of their responses. . . .

Sal Albanese- Candidates For City Office Shouldn’t Be Taking Money From Developers Like Ratner  

Sal Albanese’s answer was that candidates for public office should not be taking money from developers like Ratner.  The Atlantic Yards Report article on the forum characterized this as `changing the subject,’ but it is not.  It is the core of the problem when our officials in city office get into those positions by taking money from developers.  And it is a vicious cycle when elected officials dispense real estate subsidy and benefits and that subsidy then comes back in the form of political contributions.

Albanese said he didn’t take money from developers so that he could “make decisions on the merits” and with entities such as “Atlantic Yards’ Forest City Ratner” getting huge tax breaks in exchange for promises be able to “actually follow up on those things, and, if they don't, . . . take some strong action.”  He said: “The bottom line is you've got to be independent to do that.”

Albanese pointed out that Christine Quinn has taken over $1 million in contributions from developers, and Bill de Blasio, the runner-up in that category, has taken in the hundreds of thousands.  In fact, Forest City Ratner held an important fundraiser for de Blasio.

Christine Quinn- Elected Officials Should Enforce Public Benefit Notwithstanding Weird Particularities of The Disappeared Astro-Turf CBA signers

Quinn’s response was the least coherent of the candidates and it did not necessarily sound as if she wanted to be entirely clear about what she was saying.  She referred, perhaps euphemistically, to the “unique problem Forest City Ratner had” with the CBA signers “where the groups don't exist anymore” eliding the way in which these astroturf groups never represented the community to begin with and were formed so as to minimize any benefit that the developer might have to agree to provide.

As Atlantic Yards Report says, Quinn threw in:

    . . .elected officials must continue "to focus on what was committed to, being in the room... to get reports on where things are happening, and to be very clear and transparent on where things are at... hands-on follow-up." However, neither she nor anyone else at the table has said a word about the failure to hire an Independent Compliance Monitor.

“Clear and transparent . . .. hands-on follow-up.” It all sounds good but, as the AYR commentary indicates, Quinn has given no evidence she is for real on this.

Quinn did respond to Albanese accusation about taking money from developers, saying she was proud of the campaign finance system and the way she was raising money.  That might seem outrageous except that Quinn, in typical Quinn fashion, was able to spin this saying, while claiming credit, that the campaign finance system was better than it used to be and better than the situation in Albany where some are talking about using the city system as a model for improvement on the state level.

John Liu- Turn The Heat Up- Recognize How The Promised Benefits of The Atlantic Yards Mega-Project Aren’t For Real

Liu said with emphasis that the answer was to “turn the heat up” on what he referred to as the “so-called Atlantic Yards development project.”  He also said that when the Ratner team came to his office “to explain what's so great for Brooklyn” about the mega-project, what he saw that the benefit was, was just getting “some popcorn vendors” in exchange for people “kicked out of their homes.”  He asked: “After hundreds of millions in city, state, and MTA subsidies. .  was it worth all that public subsidy that was surrendered. The answer, so far, is absolutely not” no matter that there is a “Barclays” arena, no matter whether anyone (even Liu himself) thinks it is beautiful.

Hopefully when Liu says “so far” he would not think that the answer would be to give Forest City Ratner more subsidy to get the job done.  As we’ll get to in a moment, Bill de Blasio had an interesting more specific answer on that score: turning off the subsidy spigot.  But would de Blasio actually enforce this?

Bill Thompson- Atlantic Yards Should Not Be One Big Mega-Project; It Should Be Developed As Multiple Smaller Projects Divided Up Amongst Multiple Developers

Thompson started by recognizing that there are problems with how Community Benefit Agreements are idiosyncratically negotiated outside of a standard or government framework.  What he said next was more important:

As you look at development projects across the city . . . here's a project we're giving to ONE major developer.   Sometimes it works, sometimes it doesn't.

If you look at something like Battery Park City and other developments like that, where you've done staged development with multiple developers that build in good times and bad times, and you hold each of them as you move along, that's a better way of doing development.  It gives communities an opportunity, it gives them a full voice.  And it's not up to the organization that's no longer there to monitor and have a seat at the table.

This suggestion that mega-projects like Atlantic Yards should be broken up and bid out as multiple parcels to multiple developers reprises what Thompson was saying in his mayoral campaign four years ago.  The problem then, and the problem now, and one reason Thompson was not getting applause from the crowd at the forum is that Thompson has never gotten to the next obvious step and clearly and specifically said that Atlantic Yards itself should be broken up for such reorganization.  That would be easy to do if Thompson, as next suggested to de Blasio vowed to use the “immense power” of the mayor to just say “no,” saying “no,” for instance, to the developer's desire to have multiple decades to complete the project rather than completing it in the originally promised ten years.

Bill de Blasio- Hold The Developer To The Original Agreement and say “NO” When They Come back For More

Bill de Blasio’s response was bifurcated, the first part being the most relevant to a solution:

Let's be real about the fact that a mayor has immense power to create discipline when it comes to the development community.  And if the developers don't keep their promises to the city I don't think the legal limitations stand in our way, because I assure you the developers will be back time and time again wanting considerations from City Hall.  If they don't keep their end of the bargain the answer from City Hall has to be no.  So I think it is our obligation to make sure that Forest City Ratner fulfills all elements of the original agreement.

The problem is that, just as de Blasio says, developers do keep coming back “time and time again” wanting more from City Hall and Forest City Ratner has been a conspicuous example of this, returning over and over again to substantially whittle away at their obligations and increase their subsidy.  De Blasio, taking money from Forest City Ratner, has never, not during his years in the City Council when it would have mattered, nor during his now almost complete four year term as Public Advocate when it could have also made a big difference, objected to or suggested saying “no” at any one of the multiple junctures that presented such opportunities.

My teeth were on edge when de Blasio proceeded to the second part of his answer, given that de Blasio has never taken any opportunity to say  “no” to Forest City.  Atlantic Yards Report points out that de Blasio did not even object when Forest City Ratner departed from the terms of its original promises to provide “affordable” family-sized units and that is especially pertinent to the fact that de Blasio talks about affordable housing in the second part of his answer.  This second part of his answer is essentially an apologetic promotion for the project, endorsing its extreme density while promoting the myth that it is would actually provide significant affordable housing and would ameliorate rather than amplify the bad side of gentrification.  He said:

We need that affordable housing,  let's be clear, and I say this as a resident of Brownstone Brooklyn, if we don't create large amounts of new affordable housing, this neighborhood will continue to be a place for folks who have a certain level of income.  It will not be the diverse place we love.   It's a problem we have all over the city and as gentrification has proceeded.  And gentrification is obviously a multifaceted reality; it's not all good it's not all bad.  But when reality is that we end up with an economically less diverse community, which is why we must make sure that affordable housing is built at that site.

Not mentioned by de Blasio was how Ratner’s Atlantic Yards activity destroyed existing, newly created housing built by completing developers, destroyed affordable housing without so far creating any, and destroyed affordable housing that under the plan it won’t replace.  Mr. de Blasio failed to show any of the skepticism about the actual benefit of the mega-project shown by Liu, showed no apparent awareness of the Pratt Institute's observation that development outside the periphery of the Atlantic Yards site has been much more productive, robust and healthy than within it.  His reference to Brownstone Brooklyn refers to the concern about how Atlantic Yards has been destructive to the neighborhood fabric of Brooklyn, but the reference to the neighborhood being “for folks who have a certain level of income” and then the counterpointing of this with a reference to diversity as an endorsement of the mega-project, conveys misinformation about the project’s gentrifying effects while seeming to echo the race card that Forest City Ratner played when trying to divide the community.

How Many Candidates Does It take To Solve Atlantic Yards?

It says something about how complex we have allowed the Forest City Ratner Atlantic Yards problem to become that five different mayoral candidates can come up with five different points about what needs to be done to fix the situation and have all of them be to a certain extent correct.  What is scary is that you would have to combine what all of them say together to really have the workable solution:

Elected officials not taking money from Forest City Ratner should say "no" to Forest City Ratner based on failure to perform, recognize that Community Benefit Agreement and the mega-monopoly were never really set up to benefit the public, and take monopoly and the project away from Ratner to break it up into a project with multiple parcels bid out to multiple developers, using the Battery Park City model.

Of Obvious Relevance To Libraries: Forest City Ratner Is Not A Good Partner To Create Public Benefit

Another from Simon Verity's pen

Why is it relevant to the selling off the libraries that Forest City Ratner is not fulfilling it obligations or meeting its promises with respect to Atlantic Yards, and that elected officials are finding it difficult to find ways to get it to do so? . .

. . . One of the most important and obvious reasons is that Brooklyn Public Library officials who say they plan to sell and shrink the Brooklyn Heights Library say they are considering that they will do so by entering into a “partnership” with Forest City Ratner pursuant to which Forest City Ratner would be obligated to furnish a smaller replacement library in exchange for having handed to it the right to develop what may be a 40-story building on the site.  Brooklyn Public Library officials describe the relationship as a “public/private” partnership.  In actuality, we have seen this in action as the kind of developer-driven private/public partnership Forest City Ratner has notorious expertise in abusing, one of the very best examples being the Atlantic Yards mega-monopoly where the functions of government have been commandeered by the Ratner firm.

From the pen of Mark Hurwitt: BPL officials say they want to sign a contract with a developer for the sale of the Brooklyn Heights Library be fore the end of Bloomberg's term.  The NYPL also plans to demolish the research stacks of the 42nd Street on a similar time frame

The Brooklyn Heights Library property is city-owned.  The library is the city’s tenant.  There are certainly ample reasons to suspect that Forest City Ratner, which procured from the city the property adjacent to the library in 1988 without bid and with subsidy, will also wind up owning the city-owned library site through the partnership the BPL is saying they are considering entering into with Ratner. Based on what is publicly known, it cannot be said that it is definitely now known that Forest City Ratner will be the firm selected, but the mere fact that the BPL says that they would enter into such a partnership with Ratner indicates that, no matter who they enter into such a contract with, the BPL is has no true interest in having appropriately tight control of the partnership relationship so as to ensure that public benefit is achieved.. . . Otherwise, they would learn from Atlantic Yards and the discussions that were part of the mayoral forum.

As representatives of Citizens Defending Libraries, Carolyn McIntyre (my wife) and I recently met with representatives of the office of Brooklyn Borough President Marty Markowitz about the sale of the Brooklyn Heights Library and were told that, like it or not, we should expect that Forest City Ratner may wind up as the developer “partner” taking over the library site.  They told us that they did not see how it would even be possible to disqualify Forest City Ratner as the ultimate possible recipient of the site.  It is unfortunate to think they would believe disqualification to be impossible.  I explained that in my own experience as a government official involved in the selection and approval of developers it was entirely possible to disqualify developers based on prior unsatisfactory performance or conduct.

In other words Markowitz’s office didn’t seem to be on the same page with de Blasio’s rhetoric in the mayoral forum that, “If they don't keep their end of the bargain the answer from City Hall has to be `no.'”     And when you are saying “no” to a developer on one project you shouldn’t be thinking of handing them other projects at the same time.

There is another reason you can decline to select a developer: To avoid giving the developer a monopoly or augmenting an existing monopoly.

Here are three prime reasons it is so difficult to get Forest City Ratner to honor its obligations to deliver public benefit:

    •    Private/public partnerships are very difficult to manage effectively to produce maximum benefit for the public, especially if public officials are not adequately motivated to do so, which is where Mr. Albanese’s point about not taking contributions form developers has particular pertinence.  Those partnerships tend to tilt irresistibly toward private benefit.

    •    You can’t negotiate effectively with a monopoly

    •    Forest City Ratner does not seem to be especially inclined to deliver public benefit, which may account for why it seeks to put itself in the two situations of the two bullet points above.

Also of Obvious Relevance To Libraries: Forest City Ratner And Astroturf

From Simon Verity

Here’s another matter relevant to libraries: It relates directly to the question the candidates were asked at the forum.  In the case of Atlantic Yards, delivery of public benefit became less likely because community organizations that were supposed to be representing the community and enforcing public benefit disappeared.  In fact, the problem originated and stemmed from the bigger problem that, from the get-go, the Atlantic Yards controversy swarmed with community groups that were supposed to be representing the community but didn’t really.  While Quinn referred to the “unique problem Forest City Ratner had” in connection with its Atlantic Yards mega-project; that “unique problem”  was a situation that was largely of Forest City Ratner’s own making because, as was seen with Atlantic Yards, part of the Forest City Ratner play book was to pave the way for its mega-project by preceding its unveiling with the creation of astroturf groups that would promote rather than oppose the project.

To be clear, the term “astroturf” refers to groups or campaigns set up to give the appearance of coming from a credible, disinterested, grassroots participant but actually generated, in a masked way, by a sponsor interested in steering to a privately intended outcome.

Alert to that issue, we are witness to a very odd situation in the case of the planned sale and shrinkage of the Brooklyn Heights Library: Two groups supposedly representing the community are both taking identical positions, saying they accept the sale and shrinkage of the library.  They are the Brooklyn Heights Association and a small recently shrinking group (now with under 200 members) called “Friends of the Brooklyn Heights Branch Library, Inc.”

Stepping into the breach, Citizens Defending Libraries sprang up and mobilized quickly in February to oppose the Brooklyn Height library sale and shrinkage as soon as it as announced. 

Explanation of the Brooklyn Heights Association's implicit support for the sale and shrinkage of the library is a case unto itself, probably having much to do with the power of certain of the wealthy elite in Brooklyn Heights and the influence within such circles of David Offensend, a former president of the Brooklyn Heights Association and now as Chief Operating Officer of the NYPL, one of the key and most central figures behind the city-wide real estate deals selling off libraries going all the way back to the announcement of the Donnell Library sale in 2007.  The BPL is in some respects a technically different library system, but I have been told that Offensend, talking with locals, refers approvingly to the sale of the Brooklyn Heights Library using personal possessive pronouns.   But even while the position of the Brooklyn Heights Association must be examined as its own special case, the Brooklyn Heights Association takes cover by saying that it adopted its position in support of the position of the very small “Friends” group.

When plans for the sale and shrinkage of the Brooklyn Heights Library were first unveiled on January 29, 2013 (they had been in the works for a long time prior), the BPL chose to reveal them to the public at a “Friends” group meeting.  The almost immediate condoning of the sale and shrinkage by the “Friends” group is suspicious and there is substantial indicia of an astroturfing effort involving the  “Friends” group that needs to be studied.  See: Saturday, April 13, 2013, Condoning The Sale and Shrinkage Of The Brooklyn Heights Library, Does The Brooklyn Heights Associations Think Of Friends Group As A Fig Leaf? It Should Think Again.
      
If, indeed, Forest City Ratner is the developer in the wings waiting to take over the Brooklyn Heights Library site then there is all the more reason to study lessons from Atlantic Yards about Forest City Ratner’s play book of astroturf tactics.

Also of Relevance: Do Public Subsidies From Atlantic Yards Flow Back To Attack The Public’s Ownership of Other Assets Like Libraries?

From Simon Verity

In connection with Sal Albanese’s commentary we noted the vicious cycle that occurs when elected officials dispense real estate subsidy and benefits and that subsidy then comes back in the form of political contributions. .. .  followed by more subsidy flowing out from the officials who get elected.  There is another related vicious cycle to worry about. . . .

. . .  As John Liu said people were “kicked out of their homes” to create Atlantic Yards.  Businesses were also evicted and the city turned over public streets, sidewalks and avenues to the politically connected developer.  That private property was taken through the developer’s abuse of eminent domain.  In theory the abused eminent domain endowed the land turned over with public characteristics when it was given to the developer for the developer's private use.

Despite all of this and copious other public subsidies, the private profit from the so-called “Barclays” arena is unrestricted: Ratner as the developer/subsidy collector owning the arena can charge any price it desires for tickets, making as much profit as possible.

Where does all this unrestricted profit go?  There is nothing to prevent it from going into financing and laying the groundwork for the next set of seizures whereby politicians and elected officials can steer publicly owned or controlled assets into private hands.  So when we see that the Brooklyn Heights Library is under siege because its valuable real estate is craved by a developer we must ask whether profits from the “Barclays” arena are, behind the scenes, funding the attack.  The same thing with the attack on Long Island College Hospital: Forest City Ratner may, or may not, be the real estate company that expects to get LICH property that the real estate industry is obviously after there but there are certainly rumors that the Ratner firm is among the sharks circling in the water with that hope.

As the real estate industry seems to know no bounds to its attacks or methods this is a very dangerous vicious cycle indeed.

So all of this explains why a mayoral forum discussion of the government’s difficulty getting Forest City Ratner to deliver benefit at Atlantic Yards is extremely relevant to the subject of the protection of libraries.

Citizens Defending Libraries outside the mayoral forum on April 3rd

Where do the mayoral candidates stand on the selling off of libraries, shrinkage of the library system and the intentional underfunding of the city’s increasingly used libraries as an excuse to sell them off in these special real estate deals?. . .

. . . April 2nd, the day before the mayoral forum, Citizens Defending Libraries issued an open letter to all the mayoral candidates asking them for their support of its campaign.  So far:

    •    John Liu and Sal Albanese have been very supportive and have each come to more than one Citizens Defending Libraries event.  Comptroller Liu coordinated with CDL to hold a City Hall press conference event to decry the sale of libraries, at which Sal Albanese also spoke.

    •    Randy Credico has delivered a short message that he stands with CDL

    •    Citizens Defending Libraries met with a representative of Bill de Blasio but so far not heard back from de Blasio on his position.  Twice recently de Blasio has been personally reminded while attending mayoral forums that he needs to get back to CDL.

    •    Bill Thompson has twice been reminded while attending mayoral forums that he needs to get back to CDL.   He says he will, but so far hasn’t.

    •    At one mayoral forum Quinn gave her assurance that her staff would get back to Citizens Defending Libraries on this subject that day, but that didn’t happen.

    •    Nothing to report on the Republican Candidates and Adolfo Carrión, about getting back to CDL.

Let’s conclude by turning the question around: Based on where they are on the subject of libraries, which candidate would you predict would best and most appropriately address problematic situations like Atlantic Yards?

City Hall Citizens Defending Libraries press conference with Comptroller Liu, Albanese and Assemblyman Micha Kellner

Add To Bloomberg’s Other Mistakes: Mistakes In NOT Acknowledging Mistakes, Including A Certain Ratner Mega-Monopoly

The blood is in the water. Right now Michael Bloomberg’s poll numbers are way down in the dumps and the press is finally picking away at the tatters of the myth of his infallibility. The New York Times says that Cathie Black’s forced resignation on the 95th day of her ever so brief (but hard fought) tenure is Bloomberg’s “most embarrassing reversal yet.” It then adds to the list of his recent reputational woes “botched snow removal” (not mentioning the exacerbation of Bloomberg insistence on keeping secret* all information about his plane’s concurrent trip to sunny Bermuda) and the “CityTime automated-payroll scandal, with its hundreds of millions of dollars wasted and tens of millions allegedly stolen by contractors.” (See: News Analysis, Ever-Growing Image of a Stumbling Third Term for Bloomberg, by David M. Halbfinger, April 7, 2011.)

(* Public Advocate Bill de Blasio may even have officially been acting mayor for a while without ever having been informed about it!)

Atlantic Yards on the Parade of Hits

The list of Bloomberg’s errors in the Times analysis continues together with additional toothsome details about why those various failures should especially rankle and irk the public. The top-listed complaints in the Times article coincide with those cited by City Council Member Tish James, who adds as an additional headliner (in a website statement) the ever more ill-fated Atlantic Yards Ratner/Prokhorov mega-monopoly, describing how “many would consider this the third term curse.” (Friday, April 08, 2011, Council Member James: departure of Cathie Black, along with Atlantic Yards, a sign of Bloomberg's "third-term curse")

A Curse Paid For Upfront

The third term suffering this curse is, of course, the one Bloomberg earned so disreputably first by overturning the City Charter provisions prohibiting it and then by spending over a hundred million dollars of his own money to campaign, more than ten-fold what his opponent, William C. Thompson, was able to spend. In fact, depending upon what spending you included in Bloomberg’s expenditure to assume office (including charities and targeted contributions to various other politicians, political parties and potential endorsers) the ultimate tally is potentially far higher, verging on the order of a billion. Bloomberg even gave between$43 million and $51 million in public and personal subsidies into a museum project led by the wife of his opponent worked (some of it very late in the campaign).

All of this money needed to be spent by Bloomberg to promote the ostensible rationale by which, with a City Charter change, Bloomberg needed to elected to his accursed third term: That no one else had the management expertise to guide the city at that time.

Previous Myth Debunking

Noticing New York has often tackled the task of debunking Bloomberg’s myth of managerial magnificence. The most recent reviews of the subject (linking back to prior NNY posts similarly analyzing the myth) were occasioned by recent CityTime mismanagement schedule which hits very close to the core area of Bloomberg’s (formerly) vaunted private sector expertise: the development of computer management and information systems. (See: Saturday, March 26, 2011, The Myth Of Bloomberg’s Management Expertise Reexamined: What Happens When Government Doesn’t Manage Its Programs and Monday, March 28, 2011, Take TWO (AYR’s) On Times Coverage- Revisiting Light Shed by CityTime Outsourcing Scandal When Reexamining Bloomberg Management Myth.) The second of those two recent articles compares the strongest attributes for which publishing executive Cathie Black might have been picked with publishing executive Michael Bloomberg’s: A facility with sales and promotion, in both Ms. Black’s and Mr. Bloomberg’s case, particularly an unabashed willingness to self-promote. (Check out Bloomberg's "Mike.gov," "Mike.org," and "Mike.com.")

Atlantic Yards Mixed Deep Into the Stew of Mistakes

The first of those Noticing New York two stories focuses on Bloomberg’s willingness to delegate to the private sector tasks that inherently need to be done by government and thus makes a link to Bloomberg’s misguided practice of delegating, with virtually no oversight, the development of large swaths of the city to private developers. The prime example is the city’s grant of a 30-acre monopoly over prime Brooklyn real estate to Forest City Ratner, when it gave the Atlantic Yards mega-project to Ratner without bid. The second story cemented the Atlantic Yards connection, picking up on Atlantic Yards Report’s observation that Bloomberg's budget director, Mark Page, was responsible for pushing through both: i.) the scandal-ridden CityTime contracts, and ii.) the continued uncontrolled outsourcing of the Atlantic Yards megadevelopment (again as a monopoly and again without bid) to Forest City Ratner in June 2009, in a very substantial revamping of the project, a revamping entirely for the developer's benefit.

That brings us to Bloomberg’s mistakes overlaying all his others, the failure to acknowledge mistakes.

Bloomberg's Admission of a Mistake Billed as Something New

The recent Times article about Bloomberg’s mounting third term stumbles contains the following about Bloomberg’s acknowledgment of mistakes:

William C. Thompson Jr., the former comptroller who lost the mayor’s race to Mr. Bloomberg in 2009, said he also noted a change in the mayor’s tone on Thursday as he announced Ms. Black’s departure.

“It is a different Mike Bloomberg who finally admits to failure, and failure on this public a position,” Mr. Thompson said. “This is him saying he was wrong about Cathie Black, and that everyone else was right.”

Do we now have a different Bloomberg who is finally acknowledging mistakes? Then what about Atlantic Yards?

Bloomberg's Opportunities to Come to Terms With Mistakes Go Back At Least to 2008

This brings us back to Noticing New York coverage on the subject of Bloomberg’s acknowledging his Atlantic Yards mistakes, circa October of 2008. The article was critical of Bloomberg’s then-recent announcement that he was seeking a third term. (See: Wednesday, October 1, 2008, Coming to Terms With Mistakes.)

Here are some quotes:

Coming to Terms with Mistakes

The most pronounced downside of a Bloomberg third term involves a need to acknowledge and correct mistakes. . . .

* * *

Here is a press conference question for Mayor Bloomberg: Does he acknowledge any mistakes and, if so, is he willing to correct them?

* * *

There is another philosophy of decision-making to which I suspect Bloomberg subscribes. It is more prevalent in the less bureaucratic business world: “Better a bad decision than no decision at all.”

The question is, when you have made a bad decision, what do you do about it?

Should we have to live with the mistakes produced by badly made decisions? No matter what?

* * *

The Uncorrected Mistake of Atlantic Yards

Atlantic Yards is probably Bloomberg’s supreme mistake. . . . Atlantic Yards is a spectacular example of a decision that was rushed through with improperly forced haste and it is a spectacular example of just how bad the consequences of such thoughtless haste can be.

The Bloomberg administration has implicitly acknowledged the ignominy of its failure with respect to Atlantic Yards. It did so in the way it handled the departure of Deputy Mayor for Development Daniel Doctoroff (see: Atlantic Yards As Political Hot Potato.)

However disgraceful all its lapses, the Bloomberg administration has done nothing to correct the misreckoned Atlantic Yards course it is on. Correction could be made with less difficulty than continuing through the bog in which the city is now steeped. It would be relatively easy to do what is needed which is to take the project back to the drawing board and bid it out to multiple developers. (Yes, this time the megaproject, currently 17 separate building sites, should actually be bid out.) The project is adrift, amorphously ill-defined and the developer repeatedly transgresses with unacceptable behavior that should long ago have disqualified the developer from Bloomberg’s ongoing accommodation and indulgence.

Bloomberg Mistakes Then and Now

That was then. This is now. Since that time Atlantic Yards has progressively deteriorated, each incremental degradation giving Bloomberg the opportunity to walk away from it. But that is precisely the opportunity that Bloomberg missed when, through his CityTime scandal-tarred budget director, Mark Page, Bloomberg piled additional subsidized on Ratner in June of 2009 for an even less publicly desirable version of Atlantic Yards. Those additional subsidies were piled on just weeks after Bloomberg told the press it was time to turn off the spigot and that no additional public funds should be poured into Forest City Ratner’s Atlantic Yards. He said: “We’re not putting money in. We’re going to invest our money in better schools and in safer streets and in better parks and everything else.” (See: Friday, June 26, 2009, Deciphering Words of a (Campaigning) Bloomberg on Atlantic Yards: “Enough Already” Means, “Bruce, We Have Another $180 Million Plus To Give You!)

Bloomberg still has the opportunity to walk away from the Atlantic Yards mega-project and declare it a recognized mistake. Bloomberg’s recently departed housing commissioner Rafael Cestero said that Atlantic Yards is not deserving of additional housing subsidies (it, "was not a good public investment"). Such subsidies would be disproportionate and greater than the subsidies that other more deserving projects would be eligible for elsewhere in the city. Nevertheless, given Bloomberg's very recent defense of the megadevelopment (immediately after talking with Bruce Ratner), Atlantic Yards Report is predicting that we should all gird for the awfulness of yet more subsidies for Atlantic Yards courtesy of Mr. Bloomberg. Atlantic Yards Report has an excellent record in making such calls.

Do we have a new, different Mike Bloomberg who finally acknowledges mistakes? Is Mr. Thompson correct when he says that Bloomberg is now a man finally willing to admit to failure on a public position. . and acknowledge, as Mr. Thompson puts it about Cathie Black, “that everyone else was right”?

It would be nice if we had a new Bloomberg who admits and corrects mistakes. But don’t hold your breath.

Take TWO (AYR’s) On Times Coverage- Revisiting Light Shed by CityTime Outsourcing Scandal When Reexamining Bloomberg Management Myth

In beating the New York Times to the punch covering the Bloomberg administration’s admissions about the city’s failed outsourcing policy, an about-face in that came in response to the CityTime scandal, Noticing New York presented a very different and much bigger big picture story than did the Times Sunday. - - Missed in being so Johnny-on-the-spot was the opportunity to incorporate observations by Atlantic Yards Report today about how the Times story buttressing a key point of that Noticing New York coverage: That the ill-fated trust the administration placed in delegations of government duties to the private sector carries over into its failures with respect to the management of the city’s mega-development projects.

Atlantic Yards Report (Monday, March 28, 2011, Behind the Bloomberg administration's CityTime scandal: budget director Mark Page (who helped steer the revision of Forest City Ratner's MTA deal)) connects a dot the Times article neglected to (Behind Troubled City Payroll Project, Lax Oversight and One Powerful Insider, by David W. Chen, Serge F. Kovaleski and John Eligon, March 27, 2011). . .

. . . Atlantic Yards Report points out that the “drive to install the” [disastrously outsourced CityTime] “system could be traced to the determination of one powerful administration insider: the budget director, Mark Page” (Times quote) “one of the two Bloomberg appointees on the board of the Metropolitan Transportation Authority who pushed hard against any skepticism” (AYR quote) for the continued uncontrolled outsourcing of the Atlantic Yards megadevelopment (as a monopoly) to Forest City Ratner in June 2009 when that entailed a substantial revamping of the project without bid for the developer's benefit (and the public’s detriment).

Atlantic Yards Report thereupon lays out the course the city, MTA and ESDC should have taken at that juncture in 2009, which course might well have been pursued were it not for the obdurate case that budget director Mark Page helped spearhead to continue outsourcing to the weaseling Forest City Ratner as developer; Atlantic Yards Report does so, quoting shrewdly from a 1994 New York Times editorial written when a similar juncture was reached with respect to the Coliseum site at Columbus Circle:

The most sensible course now is for the city to find out anew the market value of this property, and that cannot be accomplished through negotiations with one bidder.

New Details in Times Coverage Plus Blame-Trading

Yesterday’s Times story and the Noticing New York coverage from Sunday (which draws partly on prior New York Times coverage) are `apples and oranges' enough so that one cannot really say either is necessarily, per se, better than the other. But let's consider.

The Time article gets to the issue of private sector outsourcing in its third and fourth paragraphs and then never returns to examine the issue of that policy (now reversed):

Last week, Deputy Mayor Stephen Goldsmith declared what had become obvious: the city cannot rely on outside consultants to monitor multimillion-dollar technology contracts, which it had done with CityTime. He added that the city would create a new office inside City Hall to do so.

An examination of the events that led to the CityTime scandal reveals lax oversight, mismanagement and a basic failure to control costs.

The Noticing New York article spent some reviewing the flaws likely inherent in outsourcing of government responsibilities.

What the Times article does do is furnish details about who saw or should have seen the CityTime disaster coming and how the ill-advised work proceeded at great expense anyway. The details for the story seem to have been furnished and fueled by some behind-the-scenes efforts at blame-trading even as the Bloomberg administration was publicly accepting responsibility with adult sobriety.

Mounting Ironies

One thing the Times failed to do is observe this irony noted in the Noticing New York Coverage:

. . . that a fraud involving a system to reliably monitor city employee attendance was perpetrated in part with the submission of false time sheets.

The details in the Times, however, addressed other management ironies:

Mr. Page, a lawyer, had little familiarity with technology, but he believed CityTime would curb timekeeping abuses and save the city tens of millions annually.

(To fully savor this one has to remember- unstated in the Times- that other factors aside, the city is said to have been taken for $80 million in fraud, perhaps more than it hoped to save.)

And:

The industry standard for payroll or other automated projects is typically a cost per user of $200 to $1,000. By contrast, CityTime’s cost per user is roughly $4,000. New York State, for example, is spending only $217 million to modernize its finance and accounting systems — a far more ambitious project — that will be used by 200,000 people.

(Previously in its story the Times provides the context that: CityTime switched from being a “fixed-price contract, in which a negotiated amount is paid for services delivered, to an hourly one. The cost then climbed from $224 million in 2006 to $628 million by 2009. Investigators say the hourly-wage arrangement, coupled with a lack of oversight, facilitated the corruption scheme.” Incidentally, when you think of the lack of any fixed enforceable price or scope of work leading to disaster, think Atlantic Yards- and Mark Page’s support for it.)

Administration Turning on Page (With Blame for Thompson Added In)

The main effort in the article to deflect blame from the Bloomberg administration is by pointing to supervision over the CityTime contract that was supposedly shared with Bill Thompson as the then city comptroller, but immediately before getting into that the article first disassociates the rest of the Bloomberg administration from Mr. Page:

“Nobody was enthusiastic about CityTime,” said one former high-ranking Bloomberg administration official who, like most people interviewed, insisted on anonymity because the investigation was continuing. “Our take was that CityTime was long and troubled, but that it had a champion, and that champion was Mark Page.”

Shades of the Atlantic Yards, also so generally unpopular (but supported by the mayor)! (Page is described in the article by a senior Bloomberg administration official as an obsessed “Ahab”.)

We learn that Thompson did not “audit CityTime, despite a crescendo of grumblings” but conversely (according to one of his former high-ranking aides) “the comptroller’s office raised, on at least five occasions, concerns over costs in meetings with Mr. Page, as well as with others working for Mr. Bloomberg.” So does the quoted claim that Thompson was “asleep at the switch” hold up?

The debate about Thompson vs. Bloomberg administration responsibility for shared responsibilities that went wrong is reminiscent of the Bloomberg/Thompson debates during the last campaign for mayor when they traded play-to-pay accusations about city pension fund investments previously covered by Noticing New York.

The skinny on this is that Thompson defended against Bloomberg’s charges saying that Bloomberg was accountable for pension funds investments since the mayor appoints the majority of board members and the chairman of the pension boards that vote on the investments. (The Times offered the judgment that the buck ought to stop with Thompson under the city charter.)

Thompson’s defense meant that he and the mayor were pointing fingers at each other, each saying that the other either 1.) had the responsibility (all of the “buck”), or 2.) was at least supposed to be acting as a check against their own abuse. Could we really expect Bloomberg and Thompson to be a check and balance for each other when it came to the pension fund investments, or CityTime or Atlantic Yards?

What came out after the election was that Bloomberg and Thompson were far cozier than almost anyone knew: “The mayor has directed or triggered between $43 million and $51 million in public and personal subsidies into a museum project led by Thompson's current wife and longtime companion, Elsie McCabe-Thompson, dumping $2 million of additional city funding into it as late as September 30, in the middle of the mayoral campaign.” (See: Bloomberg and Thompson: The (Really) Odd Couple, Now it can be told: The surprising ties between the billionaire mayor and the poor slob who ran against him, by Wayne Barrett, January 05, 2010.)

So much for the idea that the two men were a check and balance against each other.

Connect the Dots

So, bottom line, the Times article is pretty good for some original reporting that surfaces additional details respecting the particulars of Bloomberg’s CityTime embarrassment and, in addition, thank God that Atlantic Yards Report weighed in afterwards pointing out the Mark Page/Budget Director link between the CityTime scandal, but if you want a bigger picture of the connected dots when it comes to delegating the duties of government to the private sector with outsourcing together with basic examination of the myth of Bloomberg management expertise, I think you will find the Noticing New York article on this subject extremely valuable: The Myth Of Bloomberg’s Management Expertise Reexamined: What Happens When Government Doesn’t Manage Its Programs (Saturday, March 26, 2011)

Election Day Triangles

We sometimes worry whether some of the accusations we make about the strange links between politics and New York City developement will seem too extreme. One story we held back about reporting was the tale of the Broadway Triangle intrigue. We thought we could only do it justice with a well-documented analysis of what is going on. Now, today for an Election Day editorial the New York Times boils Broadway Triangle down to the stark and appalling core of its political mechanics.

Times Editorial With Emphasis

We reprint today’s editorial below in full with some emphasis supplied:

Councilwoman Diana Reyna, a Democrat from City Council District 34 in Brooklyn, is battling two formidable foes in Tuesday’s election. One is a vengeful Democratic Party boss, who rails about her independence, and the other is the Roman Catholic bishop of Brooklyn, who has made robocalls supporting the party boss.

If Ms. Reyna is defeated as a result of these misplaced efforts, it will be a real loss for the residents of her district. Ms. Reyna has helped her struggling constituents with housing and school difficulties. Her willingness to stand up to Assemblyman Vito Lopez — the boss who increasingly runs the Democratic Party in Brooklyn with an iron fist — shows extraordinary political courage.

In his recorded phone messages to every registered voter in District 34, Bishop Nicholas DiMarzio does not mention Ms. Reyna or her opponent, Maritza Davila of the Working Families Party. His pitch is to support Mr. Lopez, who has been helpful to the church. But the subtext is clear: Mr. Lopez has been working overtime to elect Ms. Davila instead of his party’s candidate.

Mr. Lopez has, indeed, helped the church, most recently by blocking legislation in Albany that would have temporarily lifted the statute of limitations for civil lawsuits involving the sexual abuse of children. The church has returned the favor by ordering a priest to drop his fight against the rezoning of a 31-acre parcel that Mr. Lopez favors.

It is that same rezoning, for a housing project called the Brooklyn Triangle, that helped land Ms. Reyna on the boss’s enemies list. Ms. Reyna sided with community members who opposed the secretive way the project has moved forward through the city’s development process. Voters in City Council District 34 should reward that independence by re-electing Ms. Reyna.

(See: Editorial: Election Day, November 2, 2009.)

The Three Faces of Broadway Triangle: What’s Missing From The Times

In the print edition of the Times the editorial is followed by something astounding given that there is one last appalling thing the Times editorial leaves out: The Broadway Triangle rezoning deal was apparently a “triangle” itself, Assemblyman Vito Lopez, the Catholic Church and Mr. Michael Bloomberg. Who do you think has the power over rezonings and to move things secretively “forward through the city’s development process” if not Bloomberg?

Extending the “Election Day” Choice to an Absurd Contradiction

Here is what is astounding. In the print edition of the Times, looking like it is actually part of the same editorial and under that same "Election Day" heading with a subheading of “Election Day Choices” the Times Editorial Page then tells us to vote for Michael Bloomberg.

(See image below. Click to enlarge.)
No Denying Denials

A bit schizophrenic? Can the mayor magically disassociate himself from the unpopular mega-projects he supports? Atlantic Yards Report asks that question today and the answer should be “no” provided there is a responsible press. (See: Tuesday, November 03, 2009, On Election Day, a Bloomberg story: the mayor disavows influence on Atlantic Yards.) This story reports Bloomberg trying to duck responsibility for Atlantic Yards with his electioneering dismissal “the city doesn't have much sway or influence” over it. Then the article, without having to do deep research digs up obvious and ready contradictions including the mayor’s statement that “we’re going to get this one done” which he offered when rejecting the NYC Independent Budget Office report that the Atlantic Yards arena will be a $220 million net loss to the public.

Bloomberg’s Charmed Sail Through the New York Press

A responsible press? Tom Robbins of the Village Voice has pointed out that Bloomberg is, in general, getting a free pass from an anemic New York press corps. (See: The Mayor's Press Pass: The unexamined world of Mike Bloomberg, by Tom Robbins, October 27th 2009.) Robbins begins: “One reason for the remarkably charmed life of Mike Bloomberg's administration as he sails toward re-election has been the waning of the city's news business.” Robbins goes on to catalog a long list of Bloomberg scandals that didn’t get follow-up press coverage, suggesting that Bloomberg has gotten a pass that no other mayor before him ever got.

Important to Vote Today

So the Question is what should voters do on this election day? One thing is that, no matter what, it is very important to vote. It is important to vote even if you don’t think the candidate you would like to see win can, and even if you don’t see a candidate in an election you would like to see win.

A low turnout is predicted throughout the city which means that your appearance at the polls will count even more. If nothing else you are voting for your neighborhood and your election district, reminding elected politicians that your area votes and that its concerns need to be paid attention to. As an e-mail from the Brooklyn Heights Association reminds us: “a strong voter turnout" from the neighborhood “will demonstrate to our city officials that we are an active and informed community that deserves their attention.”

Bill T or Billy T?

Most readers of Noticing New York will be considering whether to vote for either Bill T or Billy T, Democrat Bill Thompson or Green Party candidate Billy Talen (Rev. Billy.) When it comes to development issues and questions like Atlantic Yards we certainly prefer the clarity of Talen’s message and we would certainly vote for him if, as we recommend, the city had a form of instant runnoff voting that would allow a second-ranked vote for Mr. Thompson also to count. Nevertheless, given that the system is, instead, the way it is and that there is at least a chance that Bill Thompson could win, we will be voting for him this election.

(On other elections like the Brooklyn Borough President where the voters have been deprived of choice we could go into the mechanics of write-in votes, which we won’t, or we can point out the options of not voting in that column or voting for the Republican as a simple protest even though he too has the wrong position on development issues like Atlantic Yards.)

Bloomberg vs. Thompson on Atlantic Yards and Megadevelopment

Atlantic Yards Report in the above-linked story suggests today that “No one voting on Atlantic Yards issues can discern much different from the Democratic candidate, Comptroller Bill Thompson. AY voters have to go with Green Party candidate Bill (Rev. Billy) Talen.” We don’t exactly agree. We have criticized Mr. Thompson for his lack of a clarion message on Atlantic Yards (Sunday, October 11, 2009, Thompson’s Campaign: Lacking a Clarion Message, Plus Issues of Confused “Respect”) but we think that the position that Thompson has since taken that megadevelopments should be broken up and bid out to multiple developers is a significant difference in outlook that we hope will one day be applied to Atlantic Yards. (See: Monday, October 19, 2009, Thompson’s Advocated Multiple Parcels (a la Battery Park City) vs. Single-Developer Mega-monopolies Should Boost Developers’ Bids.)

The fact is that while Thompson’s errant support for some version of Atlantic Yards is a problem (he has occasionally said he doesn’t know "what" the mega-project is at this point), there is hope that with a Thompson city administration support for Atlantic Yards will ultimately (and logically) fade. There is no such hope with the stubborn Bloomberg administration, irrespective of the way Bloomberg may try to hide, misrepresent or deny his administration’s support.

Bloomberg Stubbornly at the Apex of Power

The other matter is this. If Thompson’s and Bloomberg’s positions on Atlantic Yards (and/or other megadevelopments) were substantially the same, we would still rather see Thompson as the less powerful mayor pushing that agenda. Right now, Bloomberg is supremely at the apex of too many power triangles in New York and his dissembling about his noninvolvement and true positions too often gets a pass. The balance of powers in this city needs to be restored. (See our recent pieces: Sunday, November 1, 2009, Bloomberg vs. Thomson (54% to 29%?): It’s Not What You Think. (For Instance the “P” is Missing and What Might “P” Stand For?) and Monday, November 2, 2009, On Your Way Vote, We Quizzically Ask: How “Green” Is Our Bloomberg?)

Triangulating

For more thorough reporting about the Broadway Triangle project, including some information about the instant runnoff voting we recommend for future elections see: Tuesday, August 11, 2009, In the 33rd: Levin vs. everyone else, AY & Broadway Triangle, and the argument for IRV (Instant Runoff Voting).

For a (NY Post/Courier life) update about how a coalition of 40 North Brooklyn community groups filed a lawsuit against Mayor Michael Bloomberg for his involvement in the development of Broadway Triangle “contending that the city violated the Federal Fair Housing Act in its negotiations” regarding its development see: Lawsuits over Broadway (Triangle), by Aaron Short, September 10, 2009.

Bloomberg vs. Thomson (54% to 29%?): It’s Not What You Think. (For Instance the “P” is Missing and What Might “P” Stand For?)

With everyone focused on Tuesday as election day and the race for New York City mayor we think there is another race that deserves some focus: Bloomberg vs. Thomson. That’s right, Bloomberg vs. Thomson without a “p” in “Thomson.” No, we are not talking about the mayoral race where mega-billionaire Michael Bloomberg is running against city Comptroller Bill Thompson (though we are talking about the same “Bloomberg”); we are talking about the race in selling financial terminals in the New York market. We are talking about the financial terminals that Mayor Bloomberg’s company sells and the major competition for Bloomberg’s company when selling those terminals: Thomson Reuters. Why is this an important thing to focus on? Almost all of Bloomberg’s billions come from terminal sales.

Never Before in New York City History

We have written before, (quite recently) about how Michael Bloomberg became the richest New Yorker while in office. We pointed out that never before in history has the city’s wealthiest individual also been the mayor. (See: Thursday, October 22, 2009, This Is Rich! Looks Like Bloomberg is Making History.) We pointed out that in 1997, when Bloomberg’s political aspiration to be mayor was first publicly disclosed, his wealth was calculated at a mere $1.3 billion, a fraction (7.4%) of his current $17.5 figure while in that same year the wealth of others routinely high up on the list of the city’s wealthiest like Ron Pearlman’s and Rupert Murdoch had a net wealth 65% of what they have now. For more detailed analysis, see our previous post.
Never Before in United States History

We also wrote about how never before in history to our knowledge have we had the kind of conflicts of interest that exist between Bloomberg’s role as mayor and his business. Here’s an addition to the “never before in history” list. The day after our own “never before in history” post, the New York Times ran a story with the following opening paragraph (emphasis supplied):

Michael R. Bloomberg, the Wall Street mogul whose fortune catapulted him into New York’s City Hall, has set another staggering financial record: He has now spent more of his own money than any other individual in United States history in the pursuit of public office.

(See: Bloomberg Sets Record for His Own Spending on Elections, by Michael Barbaro and David W. Chen, October 23, 2009.)

That Times article, providing an update to figures previously available, noted that as of the last available count Bloomberg, having so far “spent $85 million on his latest re-election campaign” (that’s just his direct campaign expenditures), was “on pace to spend between $110 million and $140 million before the election on Nov. 3”and that “Bloomberg, in his three bids for mayor, will have easily burned through more than $250 million” (in direct campaign expenditures.)

A Full Count: A Billion?

Giving a flurry of specific supporting figures, the Times article reported that Bloomberg had spent more than New Jersey’s Jon S. Corzine, Steve Forbes and Ross Perot in all their respective multiple races. There are some problems with the assessment provided by the Times. One problem, as we keep emphasizing with parentheticals inserted above is that the $250 million figure for Bloomberg’s spending is just for his direct campaign spending. We have offered calculations before pointing out that, including ALL of Bloomberg’s political spending, political contributions to buy endorsements, the money he furnishes to charities with political strings and other city funds he controls, his spending just on this last campaign alone may be verging on close to $1 billion. That calculation was before Times upped the estimate of Bloomberg’s possible direct spending by another $35 million and without factoring in the very recent discovery that Bloomberg’s accountant contributed the maximum allowed $26,000 to Newark Mayor Cory A. Booker’s campaign. (Should we call this the Bookkeeper’s Booker scandal?- See: Newark Mayor Backed Bloomberg, Then Got Funds, by David W. Chen, October 27, 2009.)

Booker not only delivered an endorsement of Bloomberg that was timed coincidentally with the Bookkeeper’s donations; he has since been a routine prop on Bloomberg’s campaign circuit.

A Belated Perspective?

Another problem with the Times assessment that Bloomberg has now achieved United States history by setting “another staggering financial record” is that the Times is making this call this late in the game. The Times is thereby failing to provide a true perspective of how incredible the level of Bloomberg’s political spending is. Using just the direct $250 million expenditure the Times uses in making its determination, the Times concludes that Bloomberg spent more than the $130 million his next runner-up, Jon Corzine, spent of his three races (two for governor and one for senate) and more than the $114 million, the next runner-up, Steve Forbes spent on his two races for president. Notice, not only did Bloomberg surpass the two runners-up, his spending figure exceeds the total of both their expenditure sums combined. It should therefore be obvious that Bloomberg didn’t set the United States historical record just recently. He must have set it a long time ago. What he has done recently is to compound the “achievement” by almost double. Does that put everything in perspective?

Comparison to Corzine? A Hundred to One Shot

Another thing. Since Bloomberg has sometimes previously been compared to Corzine we thought it best to point out how far that comparison does not go. Accordingly, this is what we wrote last spring:

Yes, Corzine spent heavily on his own campaign, but Corzine’s wealth is measured in mere millions. Corzine’s total net worth is less than half of what Bloomberg “gives” away every year to “charity.” Bloomberg’s charitable giving is used to manipulate politics and public opinion, so Corzine’s total net worth is way below what Bloomberg spends on such manipulations each year.

* * * *

To compare Bloomberg’s billions to Corzine’s paltry millions is simply to illustrate that you have seriously lost track of how outsized and beyond most people’s comprehension of Bloomberg’s wealth actually is.

(See: Sunday, April 12, 2009, Bloomberg Update: Fire and Ice (Part I).)

In that same article we noted that Corzine doesn’t have the same kind of conflicts of interest that routinely present themselves in Mr, Bloomberg’s case.

On the subject of noncomparisons between Bloomberg and Corzine the New York Times ran an article yesterday doing precisely this. At the very top of the chart that accompanies the article are the net worth figures: Bloomberg $16 billion (or $16,000 millions) and Corzine only $150 million (less than one one/hundredth of Bloomberg’s wealth). (Though Forbes latest figure for Bloomberg’s wealth is $17.5 billion the Times sometimes variously reports his current wealth as $16 billion. Bloomberg’s wealth temporarily took a 20% dip (down from $20 million) recently apparently because Bloomberg, not foreseeing the financial crisis, did not protect his investments. (See: Bloomberg and Corzine: 2 Leaders, Few Parallels, by David W. Chen, October 30, 2009.)

Missing from the Times article is any mention of the unique relationship between Bloomberg’s wealth and his impressive conflicts of interest. So the Times “comparison” article, merely by existing is misleading and incomplete.

Never Before in New York State History

Here is another example of how one has to be careful not to be misled by comparisons. Chris Smith writing in New York magazine also found himself reaching for historical comparisons to put Bloomberg’s wealth in perspective. Specifically assessing power (and referring to New York magazine assessments going back in time) he compares Bloomberg to Nelson A. Rockefeller in 1972 and writes (emphasis supplied):

Thirty-six years later, the parallels are uncanny—an exceedingly wealthy man in a top elective office, using his own money as well as the tools of his job to dominate a weakened civic hierarchy—even if the details are different and the valences are reversed: Rocky was a strong governor stepping in to clean up for a hollow mayor (the post-presidential-campaign John Lindsay); Bloomy is a strong mayor who wishes he could clean up for a hollow governor (indeed, David Paterson’s weakness only augments the mayor’s power). But perhaps the greatest difference is that Bloomberg’s power outstrips Rockefeller’s by a wide measure, wider even than the gap in their wealth: Bloomberg, New York’s richest man, is approximately twelve times richer than Rockefeller, in today’s dollars, and he’s spread his money around more craftily and more extensively than Rocky ever did.

(See: Mike Bloomberg Owns This Town: With shrewdness and luck, an imperious idea of democracy, and plenty of money, the mayor has made himself the only political player in New York who really matters. By Chris Smith, Oct 18, 2009.)

Conflict Avoidance?

We like Chris Smith and have commented favorably on the quality of his articles before. (See: Thursday, December 25, 2008, Our Reasons to Love New York Magazine and Elected Politicians.) Nevertheless, one thing that Chris Smith neglects to mention with respect to this comparison in the entire article (which otherwise has a lot to recommend it) are the myriad conflicts of interest between Bloomberg’s business and Bloomberg’s role as mayor. Rockefeller, whose wealth is rendered diminutive by the Bloomberg comparison Smith furnishes above didn’t have comparably large scale conflicts. History fails again! Chris Smith only mentions the conflicts involved in Bloomberg’s funding of charities. His reference to Bloomberg’s spreading “his money around more craftily and more extensively than Rocky ever did” evokes the political strings Bloomberg attaches to his charities in a way that Rockefeller didn’t.

A Historical Interest in Politics

One other quibble we have with Mr. Smith’s article is this. Mr. Smith references 1999 as the year that “Bloomberg began to think about a career change” into politics. We think we have very clearly identified Bloomberg’s entrance into the pursuit of his political career as occurring between 1994 and 1997 or slightly earlier. 1994 was the year that Bloomberg hired Patti Harris, a former City Hall official under Koch and the woman Bloomberg put in charge of handling two functions simultaneously: running his political operations and controlling funds the fund he distributes to charities. She still has essentially those same two functions today as Bloomberg’s First Deputy Mayor. 1997 was the year that Bloomberg brought out his book, “Bloomberg by Bloomberg,” that as we pointed out was doubtless intended to launch him into politics. For more on this see: Friday, October 2, 2009, No Real Debate About It: Press Remains Way Off Track in Presupposing Bloomberg’s “Charity.”

The Missing Coverage on Mayor’s Conflicts Provided by Barrett

We have certainly written at length about the conflicts of interest between the Mayor’s business and his role as mayor but if you would like to see another recent a recent article that throughly covers the voluminous conflicts of interest issues not mentioned or delved into in the Chris Smith New York Magazine cover story, see Bloomberg Keeps His Billions Separate From His Mayoral Obligations? Yeah, Right! By Wayne Barrett, Tuesday, September 1st 2009 in The Village Voice.

Barrett sometimes scares us in how neutral he can sound in some of his assessments of Bloomberg. His more recent article (A Bloomberg Score Card: The Mayor's Hits and Misses, October 13th 2009) though chock-full of criticism of Bloomberg is an example of such neutrality. It may be that focusing less on Bloomberg’s destructive developments (like Atlantic Yards- Its arena is mentioned by Barrett as a “stadium-centric” Bloomberg “miss”) there are on balance a few more areas where he is willing to give Bloomberg the benefit of the doubt. However, in his September “Bloomberg Keeps His Billions Separate From His Mayoral Obligations? Yeah, Right!” article Barrett scares us in a different way, by litanizing Bloomberg’s seemingly endless conflicts of interest. It makes for a long, detailed article dedicated to that single subject.

Bloomberg TV’s Little Blessing

Some of the article, under other circumstances would be almost comic. Mr. Barretts notes and asks why Bloomberg’s “little business-news network called Bloomberg TV” somehow bounced the sports network that carries the Yankees out of Time Warner Cable’s prime Channel 30 slot. That means that the sports stations are no longer all grouped by genre. Formerly they were 26-27-28-29-30. Barrett contrasts other cities’ treatment of the little Bloomberg station:

Meanwhile, in the rest of the country, Bloomberg TV remains in the cable hinterlands: It's still at 224 in Los Angeles, 252 in San Diego, 246 in Boston, and, like it once was in New York, 104 in New Jersey. (Cablevision, which has the city contract in the Bronx and parts of Brooklyn, has Bloomberg TV at 105.)

Crisscrossed

Barrett describes as we have, but offering fresh detail, the crisscrossing of Bloomberg L.P. executive positions with top City Hall positions. Not only do the executives go back and forth and mix functions but a number of them get dual salaries simultaneously from both the government and from Bloomberg, L.P. As Barrett expresses it:

in an unusual arrangement approved by city ethics officials, working for him on personal and corporate matters for up to 30 hours a week.

When it was reported (see our earlier post) that Bloomberg gave $1 million to Deputy Mayor Patti Harris’s alma mater to have a building named after her “several historians and experts on good government” said the gift raised the question of whether “Ms. Harris’s loyalties would be to Mr. Bloomberg rather than to taxpayers.” We think these salary arrangements raise the same question of allegiance.

Bloomberg also uses Bloomberg. L.P. to hire people with inside political information such as “Judi DeMarco, a close confidante of Republican State Senator Joe Bruno and other GOP senators” who also worked for Attorney General Andrew Cuomo. Another was the “son of the current Senate GOP leader, Dean Skelos.”

Conflicts Not Prevented

We have complained about the increasing fecklessness of the NYC Conflicts of Interest Board in dealing with the Bloomberg conflicts of interest and Mr. Barrett makes parallel observations. One point he makes very well is how little it is possible to know about the details of the conflicts of interest or the extent of their potentially huge financial import. Bloomberg negotiated an arrangement that prevents the COIB from being advised about any possible conflicts unless Bloomberg is doing more than 10% of his terminal business with a company. Bloomberg’s terminal sales are currently $6 billion so that means that Bloomberg can have undisclosed conflicts with any particular company to the tune of $600 million. Bloomberg gets to self-police compliance with this 10% limit himself. The last time any information was furnished to the COIB on the subject (in 2002) “Bloomberg told the COIB that the largest customer on the list accounted for less than 4 percent of total revenue, but no one knows how much that might have changed since then.” If there is currently a client Bloomberg company accounting for about 4% of sales (and it could be a lot more) that would be $240 million in sales.

As for policing compliance himself, we have previously pointed out that it is already known that Bloomberg has not complied with proscription of the COIB when he didn’t want to.

Pot of Goldman

Great minds think alike: We recently focused on Goldman Sachs and the possible link between terminal sales and discretionary benefits the firm was granted with respect to its new building; so did Mr. Barrett. We wrote:

Take one big company as an example, Goldman Sachs. Goldman has a new building in Battery Park City which was allowed to override the Battery Park City master plan, was granted extra density and tax breaks. Meanwhile, despite the fact that the city’s Conflicts of Interest Board said that he should not do so, Mr. Bloomberg calls up his business to check on terminal sales numbers. All that it takes for a big company to send money Bloomberg’s way in what could be the equivalent of a kickback or a political contribution is to order more terminals. Political contributions are not tax deductible, but paying for more terminals than you really need is.

Mr. Barrett’s long article gives well-documented examples of companies besides Goldman (especially intriguing is the tangle of companies involved with the sale of Stuyvesant Town/Peter Cooper Village) but about Goldman he writes:

Goldman Sachs had so many issues before the administration that it took seven pages to list its lobbying activities in the city clerk system (it spent almost a million dollars). When the city and state approved $1.6 billion in low-cost, tax-exempt bonds for Goldman's new downtown headquarters in 2005, Doctoroff justified it by saying that Wall Street's top firm might otherwise leave the city. Last year, the Daily News editorialized that Bloomberg was "taken to the cleaners" in the Goldman deal. The city and state "are in line to forfeit a whopping $321 million to Goldman because the governor and mayor agreed to contract terms that were downright foolhardy." Because of the meager demands of the COIB opinion, no one knows how big a Bloomberg customer Goldman was when it won this largesse.

Pretty much all of the terminal sales in question benefit Bloomberg, who reportedly owns a 92% share of his company.

The Terminal Race: Bloomberg vs. Thomson

So that’s why we are wondering about the Bloomberg terminal sales and that is what makes Bloomberg’s competition with their main competitor, Thomson Reuters, so very interesting indeed. When a business generates money hand over fist the way the Bloomberg business does, it usually attracts competitors, especially in the leapfrogging hard-to-stay-on-top tech world. Is Bloomberg getting its fair share of competition? Is that competition fair and square in New York where it especially counts?

Bloomberg Wins New York, Thomson the World?

Worldwide Bloomberg and Thomson Reuters both have about 34% of the market with each company having about 300,000 terminals. Just to get an idea of its sales, Bloomberg terminals sell for $20,000 a year. We have commented before how each additional terminal customers buy from Bloomberg is essentially free money to Bloomberg because of the lack of additional overhead.

Though the market share is about equal worldwide, in New York Bloomberg is dominant. Does that then mean that Thomson makes up the difference by besting Bloomberg abroad? Apparently. We are working on coming up with more exact and current figures but apparently, based on 2007 figures, Bloomberg sells about 40% of its terminals in North America. But if foreigners like Thompson terminals best, why don’t New Yorkers? Are Bloomberg terminals better in new York than elsewhere? Or is like the way the Bloomberg News channel has one of the best slots on New York’s Time Warner Cable but not elsewhere in the country?

Clunky Bloomberg Machines?

One local Business Week reporter, Stephen Baker, author of The Numerati, has been wondering whether Bloomberg is up to snuff enough as a company to continue dominating the terminal market. Admittedly, Mr. Baker may have an ax to grind since the Bloomberg, L.P.’s terminal sales just financed Bloomberg’s acquisition of Baker’s Business Week employer so he may not have a position much longer. Alternatively, the Bloomberg acquisition may have given Baker a chance at a “safe home” at a publication Baker says was losing “$1 million a week.” This is some of what Baker has to say (emphasis supplied):

Bloomberg ranks as the closest thing in journalism these days to a safe home.

Still, I'm trying to think ahead 10 years and wondering about the future of Bloomberg's model. They have a proprietary technology platform in a world moving toward open standards. Their box has an interface that requires training courses--this in a global market where simple, intuitive systems rise to the top. These limitations haven't mattered to date, because Bloomberg holds a trump card: speedy and reliable data. Traders have plenty of incentive to pay for the boxes and figure out how to use them, because real-time data is a must. If their competitors get the news first, they lose. . . .

How much can this market grow? To listen to Bloomberg execs, they make money from the boxes and invest that money in more news-gathering power, which makes the boxes even more attractive. It's a virtuous cycle which presumably leads to continuous growth. With BusinessWeek, Bloomberg hopes to extend its brand into the wider business audience, including c-suite executives, and open up further markets for their boxes.

I don't see it. In my experience, every continuous growth projection encounters some force that disrupts it.

(See: BusinessWeek Reporter On Bloomberg's Terminal Business: It's Toast, Jay Yarow, Oct. 15, 2009 and The BW acquisition: Can Bloomberg extend beyond its core? posted on October 15, 2009.)

If Bloomberg terminals have a clumsy, hard-to-learn, nonintuitive interface that is going to take the sales down in the future, does it really make sense that sales in New York shouldn’t already be going down? The future may hold changes. Thomson Reuter is actually the result of the merger of two companies, Thomson Financial and Reuters that merged in 2008. The recent combination of the services the two separate firms provided should mean a more formidable competitor for Bloomberg is emerging. (Others might argue that in the long run Bloomberg and Thomson are both “legacy providers” and the real competition will come from new technology companies like Google.)

Comparative Models

There may be changes in the future but what accounts for Bloomberg’s dominance of the New York Market now?

The Thomson Reuters model is a more flexible one that is customizable. Bloomberg presents a take-it-or-leave it all-in-one proposition. You always buy the whole terminal, while with Thompson Reuters it is possible for companies to save money by subscribing specifically to what they truly need. Do terminals need to provide all services and all of them high-speed real time when most individuals in finance specialize? In essence, Bloomberg “bundles,” a variation of the same approach that got Microsoft in trouble in Europe. It is also one reason that Windows 7 is pared down. There may be regulatory and antitrust issues here. Thomson Reuters’ more flexible sale of services may actually keep it out of trouble. Bloomberg not only engages in the take-it-or-leave it bundling; it also prevents its terminals from being shared by multiple individuals by associating access to the them with a dedicated biometric fingerprint scanner. Not everything is an “apples to apples’ comparison. For instance, Thomson informs us that, as opposed to Bloomberg, “50% of our Markets revenue comes from non-desktop sales.”

Spending More on Bloomberg Terminals?

We would like to learn more about the merits of the respective terminals and we will try to keep you up to date about anything important that we learn. Right now it seems to us that New York companies that want to save money would follow the example of the rest of the world where Thomson is ahead and buy more Thomson than Bloomberg terminals. It would seem to us the boards of directors at companies that are not doing this ought to be inquiring with due diligence into the reason for extra expenditures on Bloomberg terminals.

Digression: Terminal-Financed Bloomberg Interweaving Into Anemic Journalism Industry

One important digression: It should be noted that at the same time that Bloomberg’s terminal wealth was financing the acquisition of Business Week, Bloomberg has been making other deals integrating the company into the otherwise anemic journalism business. That includes a deal with the Washington Post reported on at the same time as the Business Week acquisition. Also, not widely reported, Bloomberg just made a recent deal with the New York Times to buy the Times real-time news feed for use in Bloomberg terminals. (See: New York Times Now Being Delivered On Bloomberg Terminals, by Staci D. Kramer, Sep 20, 2009.) This is not the first business relationship Bloomberg has had with the Times. The Wayne Barrett article on Bloomberg’s conflicts of interest reported that Bloomberg previously had an arrangement with the Times flowing in the other direction, for Bloomberg to produce the news for is WQXR station. Bloomberg investment in national media such as the Times and Washington Post will become very interesting if Bloomberg tries again to run in a national race.

Wondering About the “P”: Bloomberg Educates Us On the Subject of “Pay to Play”

Now lets talking about what that “p” missing from “Thomson” might stand for. Maybe it stands for “pay to play.” During the two mayoral debate the mayor made an issue about “pay to play,” asserting that Bill Thompson would engage in such conduct and implying that this kind of thing is definitely NOT going on in Bloomberg’s own administration. As the Times reported when this came up in the earlier debate:

Mr. Bloomberg bluntly asserted that Mr. Thompson picked money managers because they supported his campaign. But there has been no evidence of a direct link.

(See: Dust-Up of the Debate Occasionally Obscures Some Facts, by David W. Chen, October 13, 2009.)

(Below: Recent Bloomberg campaign mailer accusing Thompson of "Pay-to-Play".)
Bloomberg still hasn’t dropped this tactic. Bloomberg is running televison ads during the closing days of the campaign that similarly feature the subject of “pay to play.” Is it true that Bill Thompson engaged in “play to pay”? Thompson has defended against the charge, saying that Bloomberg is accountable for pension funds investments since the mayor appoints the majority and of board members and the chairman of the pension boards that vote on the investments. The Times offers the judgment that the buck ought to stop with Thompson under the city charter. That question is worthy of further examination but we think the more important question is whether Bloomberg has been engaged in what is in all possibility a much more massive kind of “pay to play.”

Finding Out About the Mayor’s Wealth: Don’t Ask Bloomberg Questions If You Don’t Want Lies

The mayor has well-documented conflicts of interest. Unlike the pension funds, there are essentially zero protections against those conflicts. Is the mayor methodically taking kickbacks in the form of Bloomberg terminal sales that would not occur but for Bloomberg’s position as mayor? One way to try to investigate would be to ask the mayor who, as Mr. Barrett made clear, the Conflicts of Interest Board has left in charge of policing himself. Bloomberg is not, however, willing to honestly answer these questions about his wealth and how he uses it. The subject and the mayor’s demonstrable dissembling came up in two ways in the last mayoral debate with Thompson.

A Charitable Response?

The one moment in the last debate when we thought Bloomberg seemed clearly nervous was when he was asked about his political use of distributions to charities. This also came up in the prior debate. This is how the Times reported on Bloomberg’s response in the first debate (emphasis supplied):

On charities: When Mr. Bloomberg was asked whether he thought his contributions to the city’s charities had insulated him from criticism from nonprofits, the mayor’s response seemed difficult to swallow.

“I think most of the people that get the gifts or the beneficiaries probably don’t know where the money comes from,” he said, prompting chortles in the audience.

In fact, the role of city charities was a prominent issue during last year’s debate over term limits. The New York Times reported that Mr. Bloomberg and his top aides asked those groups to testify during public hearings in support of changing term limits and to pressure wavering members of the City Council. Indeed, one official at a social services group that had received tens of thousands of dollars from the mayor, and also had a city contract, got a call from a deputy mayor.

“It’s pretty hard to say no,” the official said at the time. “They can take away a lot of resources.”

(See: Dust-Up of the Debate Occasionally Obscures Some Facts, by David W. Chen, October 13, 2009.)

Mayor Not Acquainted With His Little Tin Box?

But what about the phenomenal growth of the mayor’s wealth which has so substantially outpaced that of other NYC billionaires? That would be the question most elucidating about whether there is quid pro quo occurring in his terminal sales business. Bloomberg was unwilling to give an answer in the realm of truth. Asked about the growth of his wealth the mayor said, “I don’t know what’s happened to my wealth.” Here is how the Times fact check column on the debate dealt with that:

WEALTH Asked about the growth of his fortune, estimated at $16 billion, Mr. Bloomberg replied that because his company is not publicly traded, and therefore is not valued every day by the stock market, “I don’t know what’s happened to my wealth.” That strains credulity. Mr. Bloomberg owns the vast majority of Bloomberg L.P. and is regularly briefed on its performance, which is a real-time barometer of his wealth. His investments in mutual funds and bonds are managed by outside advisers, but they give him updates on their value. And he employs a small army of accountants, who keep close tabs on his finances.

(See: Dissecting the Claims: Exaggeration Amid Truth, by Michael Barbaro, October 27, 2009.)

Mr. Barrett offers this perspective of the mayor’s involvement with his business and the wealth he says he supposedly doesn’t know about:

Joyce Purnick, the former Times reporter who has just written the first Bloomberg biography, concluded that "his identification with his company is so strong" that discussing it "animates him like no other" subject, adding that he cites "current facts and figures," though he theoretically left it eight years ago. In 2007, the Times reported that Bloomberg "talked regularly to senior executives at the firm," adding that the scope of the contacts was "at odds with the way the company and Mr. Bloomberg have frequently portrayed his role."

Most Important Race?

So while there is always plenty of opportunity to read these days about how Bloomberg is ahead of Bill Thompson in yet one more poll- One of the latest is Bloomberg 53% to Thompson 38% (Bloomberg Leads Thompson In Yet Another Poll By Jen Chung in News on October 31, 2009)- we think that perhaps the figures documenting the contest that we should really be considering are those concerning Bloomberg’s heavy dominance in New York City terminals sales versus those of Thomson Reuters. With the gross inequality in their campaign spending ratios financed by terminal sales (now perhaps even 17-to-1 with respect to direct campaign expenditure alone), wasn’t the New York City race for mayor really determined long ago by the billions Bloomberg socked away from this other market share race?

What’s Most Worth Knowing?

Therefore let us ask what is most important. Is it most important to know about Bloomberg’s record as mayor during his two terms in office? That’s something you won’t really get a true picture of given Bloomberg’s extraordinary campaign spending paid for by terminal sales. Or is it most important to know about something else about which much less information is available: How during those same two terms Bloomberg became the city’s wealthiest man through terminal sales? Maybe what is needed is to appreciate how these two things interrelate.