Tuesday, March 31, 2009

Looking at Things From Another Point of View: Do We See Distinctions That Make A Difference?

(Click to enlarge image. More images for comparison in our original "Tales of Two Landlords" post.)

Sometimes when you are weighed down by concerns you want to try considering an opposite point of view because you really hope that doing so will change what you were thinking. We have been enormously worried about Rupert Murdoch's purchase of the Brooklyn Paper and what it means for coverage of Atlantic Yards and other local development stories.

Murdoch’s Acquisition of Local Community Papers

Murdoch’s News Corporation already owns the Courier-Life Publications chain and therefore the Brooklyn Courier, previously a much less estimable paper in many ways. Consolidation or some sort of folding together of the Brooklyn newspapers is likely. It is not just the fate of the beloved and mighty borough of Brooklyn about which we must worry. Murdoch has been buying up local papers in other boroughs as well. To wit, in Take Note: News Corp Quietly Owns NYC Neighborhood Newspapers, (In the Huffington Post, by Sharon Toomer, March 27, 2009), we read Murdoch:
. . . acquired these neighborhood publications:

• The Bronx Times and The Bronx Times Reporter.
• Times Ledger newspaper group in Queens.
• Courier Life group in Brooklyn (28 weekly papers, 27 of them geared to covering specific neighborhoods).
Bridging Two Separate Points of View

Our last post worrying about the change in the Brooklyn Paper’s ownership was Tales of Two Landlords Bridged by an Iconographic Clash (Saturday, March 21, 2009) wherein we also focused worriedly on the fact that the Brooklyn Paper’s new landlord is Forest City Ratner. In it, we wrote about how, Forest City Ratner has appropriated an iconographic view of the Brooklyn Bridge in its advertising (as Norman Oder of Atlantic Yards Report pointed out) which, ironically, just happens to be the same view of the bridge that another developer, the Walentases’ Two Trees Management, now proposes to obliterate with an outsized new building known as the Dock Street Project. Undergirding this irony is that while Ratner will be the Brooklyn Paper’s new landlord, the Walentases were, until this point, the paper’s landlord and it has been asserted that this fact has slanted the Brooklyn Paper’s reporting more favorably toward the Walentas project.

We got an e-mail response to our Tales of Two Landlords piece pointing out that the iconographic view of the Brooklyn Bridge in the Ratner advertisement is taken from the Manhattan side of the bridge while the view of the bridge the Walentas project will obliterate is the view of the bridge you see from Brooklyn. That is true. We can, and should, for accuracy’s sake consider them two separate points of view. They are two points of view but because they are visually almost identical they lead us to the same conclusion: One developer (Ratner) is appropriating Brooklyn iconography which another developer (Walentas) is on track to destroy; both developers have been landlords to the Brooklyn Paper and, in each case, concern applies that such landlordship undermines the paper’s critical and considered coverage of the developer’s projects. (We should mention that Ratner, the appropriator of the Brooklyn Bridge iconography, also proposes to destroy significant parts of essential brownstone Brooklyn.)

This is to say that while we acknowledge that these are two points of view, we wind up in the same place. In law school there was a shorthand phrase: “a distinction without a difference.” Before that, in high school we distilled the same thought down to the shorter flippancy of “same difference.”

Oder-ing Up a Gersh Kuntzman Point of View

In a very similar way we had the chance to try on a different point of view about whether our concerns for the Brooklyn Paper are real, and in quite the same way we found ourselves coming out in the same place as before. In a stupendous piece of reporting last week, (Wednesday, March 25, 2009, Gersh speaks! Award-winning Brooklyn Paper editor answers (sort of) questions about new Post parent, Courier-Life sibling) Norman Oder presented an 11-question interview with the Brooklyn Paper’s editor Gersh Kuntzman.

The questions, presented and answered by email, were, as preagreed, followed up on by Mr. Oder. Knowing how assiduous Mr. Oder is, no one should agree to be bookended by him, questions first and follow-up answers after, unless they are prepared to be absolutely straightforward. If you are concerned about good journalism in the borough of Brooklyn the interview is an essential must read. We would do a disservice to quote so much of it here that you think needn’t read it in full. When you do read it, click on all the links and spend time with them. Among other things, by doing so you will be reminded what excellent journalism the Brooklyn Paper has provided up to this point.

It should be clear that we share the concern made in a prediction by Mr. Oder “that The Brooklyn Paper’s news coverage of Atlantic Yards will diminish somewhat (as it already has), and its editorial criticism will diminish even more.” In theory, Mr. Kuntzman by being interviewed offered us the opportunity to take in another viewpoint. In fact, reading the interview led us to conclude these concerns about the paper’s future are absolutely valid.

Oder supplies his own short “takeaway” from the article, (but read the whole thing):
To summarize the news:
• Kuntzman doesn't think anything's changed with the paper's historically critical Atlantic Yards coverage (I disagree)
• he acknowledges that his newspaper can no longer critique its former rival
• he doesn't know if the two chains will be consolidated (I predict some level of that)
• he doesn't notice advertising in the paper (I think he should)
More FCR Appropriation of Thematic Brooklyn in Service of Destroying Brooklyn

A couple of things: Oder spends time (question #11 about Forest City Ratner’s advertising in the paper) on the subject of Ratner’s appropriating what is valuably and validly Brooklyn in his head-on course to destroy it with the anti-Brooklyn. Mr. Oder harkens back to a parallel Brooklyn Paper story from May of 2006 about how when Ratner used happy-Brooklyn photos (posed for as stock shots) to sell the idea destroying Brooklyn, Sahara Meer, the model who posed for the shots, surfaced to object to the use of her image. The Brooklyn Paper’s front page story concluded noting that Ms Meer “wants to channel her anger and is now volunteering with Develop Don’t Destroy Brooklyn.”

Gehry Truth-Gaffe Coverage

Mr. Oder’s article was published on Wednesday, so he had to prognosticate on the following:
Then again, I fully expect the Brooklyn Paper to cover architect Frank Gehry's "I don’t think it’s going to happen" bombshell.
He was, of course, correct. When the week’s edition of the paper came out Thursday there was an article by Mr. Kuntzman himself on the front page, its headline a trifle confusing, Weary Gehry Leery, Then Turns Cheery: Architect was `misconstrued’ about Yards. The current headline on the paper’s website is different: Gehry says he was ‘misconstrued’ over predicting Yards demise (March 26, 2009). - - We focus on the headlines because that is often the extent of what people take in.- - The text of the Brooklyn Paper article played out as a sort of he said/she said story. (Mr. Oder referred to the Gehry remark as “a bombshell.”) Reading carefully you could detect a jaundiced skepticism as architect Gehry carefully corrected his truth-based “gaffe” in parsed-out public relations terms, and as developer Bruce Ratner tried to spin that into something more favorable. The paper was working from “a statement issued by his [Gehry’s] Los Angeles-based firm.” Develop Don’t Destroy and the opposition was given a credibly generous amount of ink before the article was through.

Off-Kiltering Antics

Where does this lead? A trait we have noted with Mr. Kuntzman and which comes through in the Oder interview is that he often spars with an antic humor that keeps others off kilter, sometimes experimenting with a feigned insincerity that may not always be entirely mock. We wonder if we will see more of this from him, which will for a while make it more difficult to identify the ongoing changes at the paper. Notwithstanding, Mr. Oder has done a superb job of pinning down where things are apparently heading.

Back to Port With Dock Street?

We said we are worried about the Brooklyn Paper’s coverage not only of Atlantic Yards but of all Brooklyn development. As fate would have it, Mr. Kuntzman defended his journalistic efforts with a list of nine articles he had worked on last week (actually authoring six), leading off with a Kuntzman-bylined article critical of the Dock Street project. As previously mentioned that project is being developed by the Walentases, now the ex-landlords of the Brooklyn Paper. The material for the article was choice and the article made the most of it. It starts off:

The School Construction Authority was not being honest last June when it stated publicly that it did not “identify a need” for a new middle school in Brooklyn Heights or DUMBO because the comment came while the agency was in the midst of negotiating with a DUMBO developer to build just such a school.

That’s the most stunning news buried in dozens of pages of just-released documents made public by the SCA after a freedom of information request by Councilman David Yassky (D-Brooklyn Heights), who is an opponent of a project by David and Jed Walentas of Two Trees Management to build an 18-story tower and public middle school on Dock Street near the Brooklyn Bridge.

“It’s always troubling when government agencies, which are accountable to the public, are doing one thing in private yet saying something else in public,” said Yassky. . .
(See: Did city lie about its Dock Street plans? By Gersh Kuntzman, March 20, 2009.)

That’s tough on the peculiar politics of the Dock Street Project, but the Walentases are not the paper’s landlord anymore.

Note: The revelations about the School Construction Authority comport with our previously expressed suspicions:
The following coincidences are therefore unnerving. The School Construction Authority until recently used to say that the neighborhood did not need a new middle school. Now the School Construction Authority has suddenly backed the idea that there should be a new school in precisely this spot and precisely in this building. Next, testimony at the hearing by Historic Districts Council President Paul Graziano made clear, with the use of a map, that while there is a confluence of designated landmarks and historic districts where the project is proposed to go, there is also an ominous hole in their contiguity that surrounds the project site. Creating such an absence of historic designation takes a certain amount of political artistry.
(See: Saturday, March 14, 2009, At the City Planning Commission Hearings on Proposed Dock Street Project: A Reprise.)

The Delia Hunley-Adossa Candidacy: The Setting of a Bar By Which to Gauge

The Oder interview gets into coverage of the Delia Hunley-Adossa candidacy to unseat City Council Member Tish James as a gauge of the extent to which the Brooklyn Paper will be adequately covering Atlantic Yards (see question #8). Tish James is a stalwart Atlantic Yards opponent. Stripping away the trappings of a phony community-group “charity” Ms. Hunley-Adossa is essentially an employee on the Ratner organization’s payroll. The Brooklyn Paper hasn’t covered this attempted developer takeover of local politics and the non-coverage is a good gauge of what there is to be concerned about.

The depth of concern about the Brooklyn Paper's coverage is not as apparent from the interview as it is in another extraordinary piece of reporting Mr. Oder did two days later, thereby setting the bar. (See: Friday, March 27, 2009, Behind Hunley_Adossa's campaign, treasurer Nimmons heads another dubious nonprofit, with Ratner funding.) The Brooklyn Paper has heretofore run some very important stories about the abuse of charities for political purposes, but this article of Mr. Oder’s is leaving them in the dust.

Twisted Sister Coverage of Hunley-Adossa Campaign

While The Brooklyn Paper hasn’t yet covered the Hunley-Adossa campaign, the Brooklyn Courier with which it is likely merging is covering that campaign involving the Atlantic Yards developer’s extreme abuse of charities as if it were an ordinary campaign and one that the challenger is "winning." Mr. Oder is on hand to tell us more about this. (See: Saturday, March 28, 2009, "Dee raises more than Tish" and other reasons for more journalistic voices (plus a new 35th District candidate.) By remaining silent the Brooklyn Paper is allowing its confederate sister paper to report PR manipulations as actual news.

Dropping a Dime on the Hunley-Adossa Campaign as a Non-Story (The Dime Upon Which Things Turn)

In the Oder interview Mr. Kuntzman takes the position that the campaign is a non-story:
. . It is a story about an election that is months away. Besides, Delia has not raised a DIME yet, which is typically our standard for determining whether a candidate merits coverage. Our lack of coverage of Hunley's longshot campaign should not be interpreted to mean anything — though you, no doubt, will continue to interpret to mean everything.
As noted, by weeks end the sister Courier was uncritically reporting that Delia had not only raised Kuntzman’s proverbial dime but had `outraised’ Council Member Tish James. We think there is a story to report here: Part of the story is the Courier’s uncritical coverage and another part is the Brooklyn Paper passivity while its sister paper engages in that unbalanced journalism.

Critical Coverage of Abuse Of Charities for Political Purposes

At the heart of the Hunley-Adossa Campaign story is the subject of abuse of charities for political purposes, which is an absolutely critical one in the city these days. See our own: “Charity?” We Begin to Groan (Monday, October 20, 2008) and we have written more on the subject. At the moment it is difficult to say how many in the next cycle of elections will turn on the issue, including the mayoralty campaign.

Real estate developer funding is frequently a big part of the charity abuse picture, but Mr. Oder may have documented a direct abuse of charities by a developer for political purposes that is more blatant than anything seen before. It is not on the scale of what goes on in the case of Mayor Michael Bloomberg, the city’s richest individual, but it must command attention when such abuse takes off initiated by a developer (and his faux charity) with no pre-existing politician helping to instigate it. Here the abuse generates the politician rather than vice versa. We hope the IRS wakes up and takes notice. We hope that the Brooklyn Paper decides to cover these things before the IRS wakes up rather than afterward.

From All Points of View, Big Concerns Remain

We said at the outset that with the Murdoch takeover of the Brooklyn Paper and other local papers, we were worried about coverage of all Brooklyn real estate development. Truthfully, you should be able to tell from what we just said that we are worried about coverage of real estate development throughout the city by all of the media and, beyond that, we are also worried about coverage of the political process in the city as a whole.

We had our concerns. We read Mr. Oder’s interview with Mr. Kuntzman and we think we have considered Kuntzman's alternative point of view. But considering that alternative point of view has brought us back to the same place. We are still concerned. And yes, there is also that thing called “hope.” We can hope that our concerns are unfounded. Hope aside, we know that there is a critical role for good journalists to be playing in this city right now. The question remains: Who is going to do it?

Monday, March 30, 2009

Former AIG Executive’s Whereabouts: Quick Note on Scandal Follow-up Questions We Hope Are Being Asked

This is a to take note about questions we hope are going to being asked about the whereabouts of AIG executives after they leave AIG. Asking the questions would seem to be imperative given what we view as the patterns of self-dealing in which AIG executives have been involved.

Windfall Funding of Barclays Atlantic Yards Vanity Advertising by U.S. Taxpayers
We previously wrote about the AIG scandal observing that, as Develop Don’t Destroy pointed out and a number of news organizations are following up upon, Britain’s Barclays Bank is funding a $400 million vanity advertising expenditure on naming rights for Atlantic Yards sports arena with windfall money derived from the U.S. taxpayers. (See: Thursday, March 19, 2009, Willets Point Lawsuit Points Out . . .)

What Makes it a Windfall for Barclays

What makes this a windfall paid for at U.S. Taxpayer expense is the fact that, in a self-dealing fashion, AIG executives routed substantially more money to Barclays than it deserved. We said in our previous article:

As people closely following the scandal know, AIG has been routing federal bailout money around the world and to Wall Street, essentially buying favor with big firms and banks by unnecessarily paying 100% on the dollar to extinguish collateral obligations which should have been extinguished with much lower negotiated discount sums. This has turned into windfall infusions of cash, a counterintuitive reward for financial companies who (foolishly?) placed their bets on AIG’s unregulated derivatives and CDO division being sound.
More Self-Dealing: Retention Bonuses

Commenting further in the self-dealing aspects of what was going on, we brought up the subject of the "retention bonuses" AIG executives gave themselves rights to:

AIG’s undiscounted billions of dollars in payouts to banks like Barclays are an example of how poorly managed the AIG government subsidies are, but people probably understand the problem reflected in the case of the AIG “retention bonuses” better.
Our Two Cents: The Atlantic Yards Analogy- Who says You Get to Clean Up the Big Messes You Make?

Adding our two cents to the points DDDB made, we found, with respect to those bonuses, another analogy with respect to Atlantic Yards (like the AIG scandal, also a product of New York’s “FIRE” sector- Finance, Insurance and Real Estate culture). We asked why the executives who steered AIG into the mess thought they were entitled to be retained (through bonuses) to clean up that mess. This, we said was the same thing as the financially teetering Forest City Ratner executives expecting that they have some sort of propriety right to clean up the mess they very consciously created in Prospect Heights and Fort Greene. (For the latest on the financial teetering and FCR’s hopes to retain development rights at AY, see: Monday, March 30, 2009, Forest City Enterprises announces losses, asserts that AY arena is one of only two new projects to launch in 2009.)

The Old Economics “Moral Hazard” Question of Rewarding Bad Behavior

We were, and are, essentially asking the standard old economics question about the “moral hazard” of rewarding those who fail or choose to destroy or loot the economy. We don’t think that the mismanaging executives should be able to write self-serving contracts requiring them to remain integral participants in the very same companies which they expect the government will be forced to bailout as “too big to fail.”

The AIG executives’ payout of 100% on the dollar to extinguish collateral obligations that should have been extinguished with much lower negotiated discount sums demonstrates that keeping such executives in place doesn’t work. It is far better to clean house.

100% Overpayment Getting More Attention

We are glad to see that the AIG overpayments of 100% on the dollar that we wrote about are receiving more attention now. It is now being investigated by State Attorney General Andrew Cuomo and the overpayments have been reported on by the Daily News as highlighted by Develop Don’t Destroy. (See: Barclays Doesn't Get $8.5 Billion Without the US Taxpayer, 3.29.09 and Follow the money: Enough about the AIG bonuses – focus on the banks' billions, by Michael Goodwin, Sunday, March 29th 2009.)

As the Daily News’ Goodwin puts it:

If AIG had gone bankrupt, the trading partners, known as counterparties, could have received as little as 20 or 30 cents for each dollar owed. Instead, thanks to Uncle Sap, they got paid in full.
He might also have added that any payout of collateral that occurred was only necessary because AIG was having financial problems. The recipients of the 100% on the dollar payout of collateral, like Barclays or Goldman Sachs, shouldn’t be able to have it both ways: Payment of collateral triggered by AIG financial difficulty and then complete and total insulation from that difficulty entirely at U.S. taxpayer expense.

Being Alert for Self-Dealing, the Questions We Think Should be Asked: Where Are They Now?

Having initially focused on the AIG executives’ self-dealing bonuses, we hope that Attorney General Cuomo remembers to be alert for self-dealing on these 100% payouts.

Here is the question we hope everyone will be asking. Not all the AIG executives who received retention bonuses remain at AIG. Where are those executives now? Or where will they be not long from now? Additionally, where will the executives who have yet to leave AIG go? Will we find these executives at the Goldman Sachs and Barclays or any of the other banks and financial institutions that received these 100% payouts?

Attorney General Cuomo has wavered on whether he will be making the names of the AIG bonus recipients public. It is not the names of the bonus recipients we want to know so much as where the executives involved in the 100% payout decisions have gone. Without knowing who they are and where they are now, it will be hard to know what kind of self-dealing there may have been.

Gehry Leaks

News went out on March 19, 2009 that the Frank Gehry-designed Forest City Ratner Beekman Tower now under construction might cease construction at about half its originally planned height. (See and hear: WNYC’s Downtown Housing Complex May Downsize, by Matthew Schuerman, March 19, 2009.) Funny thing is it was just two weeks before that we happened to be wondering about possible problems with the Beekman’s construction for an entirely different reason when No Land Grab* directed our attention to a story in the Toronto Globe and Mail about how the new the new Frank Gehry-designed Art Gallery of Ontario was leaking. The Globe article included a picture of museum artwork by Giuseppe Penone covered with plastic with buckets set up on the side to catch water (see the image on the side) and it said that buckets dotted the Museum’s “famed Douglas fir central staircase, catching errant drips.” (See Gehry Partners image of the staircase from an Ouroussoff Times article we have talked about and will talk about again here.)

(* See: No Land Grab’s March 5, 2009, Moisture plagues 'impermeable' gallery, Toronto Globe and Mail, by James Bradshaw or read the original article Moisture plagues 'impermeable' gallery, Buckets line AGO's signature Douglas fir staircase, while condensation blurs view from windows, James Bradshaw, March 3, 2009.)

Adding to the List of Gehry Projects With Leak Problems: The MIT Stata Center . . .

This new report added the Art Gallery of Ontario to the list of Gehry-designed projects where there have been problems with leaks. As the Globe article wrote:

The leaks and condensation problems at the AGO have dredged up memories of a negligence lawsuit that ensnared its architect, Frank Gehry, in late 2007 after another of his designs, at MIT, became cracked, leaky and mouldy.

. . . And the Bard Campus Fisher Performing Arts Center

We have also written about similar problems with roof leaks at the $62 million Richard B. Fisher Center for the Performing Arts that Gehry designed for Bard College. We reported having it explained to us that:

. . . . there was a problem with the five-year-old roof because Gehry’s design specifications did not take into account the variability of the climate.
(See: Monday, January 19, 2009, A Fable for Our Times: Gehry and the Spirit of the Land.)

Gehry Blames “Value Engineering”

In that article where we wrote about the leaks at the Fisher Performing Arts Gehry designed for Bard College we also wrote about how Gehry attributed leaks at the Massachusetts Institute of Technology’s 2004 $300 million Stata Center to:

“value engineering” — the process by which elements of a project are eliminated to cut costs — was largely responsible for the problems.
The MIT building is the one Gehry once said “looks like a party of drunken robots got together to celebrate” and according to the Times reporting on the lawsuit brought by MIT against Gehry within months of the center’s opening, it essentially started coming apart, with “considerable masonry cracking” in the amphitheater’s seating areas. (The builder said that the construction was not the issue.) (See: M.I.T. Sues Frank Gehry, Citing Flaws in Center He Designed, by Robin Pogrebin and Katie Zezima, November 7, 2007. Image below is from MIT Sues Frank Gehry Over Design of Celebrity Architect's 'Party of Drunken Robots' Building, Monday, November 12, 2007.)

Gehry Designs with “Value Engineered” Future in Store

Gehry’s blaming of the leaks on “value engineering” for causing the problems is especially interesting for several reasons. Gehry is no longer working on Forest City Ratner’s planned Atlantic Yards and laid off those on his staff who worked on it. It is therefore not at all clear how much, if any, of Gehry’s previous design work would be used if any version of that project ever goes forward but there is talk about how whatever does go forward will be “value engineered.” (See: Thursday, March 26, 2009, Paging Lillian Hellman: on WFAN, Nets' Yormark does damage control on Gehry, reaching new depths of suspicious spin and Friday, January 09, 2009, As FCR scales back arena cost, Gehry's role recedes; ESDC, which once touted architect, says developer controls aesthetics.)

There are also indications that the Beekman Tower will be subject to value engineering or similar cost saving measures if its originally planned upper half is ever built. (According “Joyce Baumgarten, spokesperson for Forest City. . . the addition of new floors had paused so Forest City could look for ways to save money, possibly by re-bidding construction contracts.” Ratner says Gehry tower will keep rising, by Julie Shapiro, April 2, 2009.)

Gehry thinks that “value engineering” results in problems like leaks- - at least when it comes to his own designs. So?

Gehry Reassessment Time

Our January article, A Fable for Our Times: Gehry and the Spirit of the Land, suggested that it is time for a reassessment of Gehry as an architect. Interestingly, we used commentary by Nicolai Ouroussoff about the newly opened Art Gallery of Ontario to make our point that reviewers like Ouroussoff, with a blind spot for Gehry, praising him for the wrong things. We pointed out that Ouroussoff was treating the value of Gehry’s work as being based upon a personal “journey of psychological revelation.” It seemed like an indulgence even before we knew that the building Ouroussoff was talking about would leak. Back then, (though we knew other buildings leaked), we were mainly worried that Gehry’s self-absorption would takes things off-track by shortchanging the public in other ways. (See: Gehry Puts a Very Different Signature on His Old Hometown’s Museum, by Nicolai Ouroussoff, November 14, 2008.)

Time Spent With Gehry

The blind spot that we think that Ouroussoff and other reviewers like Ada Louise Huxtable have for Gehry may come from spending personal time with Gehry. We noticed that this weekend in the Times, Ouroussoff worked into an article time he spent with Gehry in LA:

. . . . In the early 1990s Frank Gehry and I took a drive down the city’s once-great commercial spine, which stretches 16 miles from downtown Los Angeles to Santa Monica.

Mr. Gehry guided me through the range of communities that the boulevard intersects, from the Latino neighborhoods near MacArthur Park to Koreatown to the many cultural institutions that include the Wiltern Theater, the Los Angeles County Museum of Art and the Hammer Museum . . . .

Mr. Gehry suggested that by concentrating more public transportation and cultural institutions along this thoroughfare, Los Angeles might finally find its center, both geographically and socially.

(See: Reinventing America’s Cities: The Time Is Now, by Nicolai Ouroussoff, March 25, 2009.)

Climactic Events?

Dealing with the challenge of local climates seems to be a problem for Mr. Gehry. In theory, it shouldn’t have been a problem for him to remember to take into account the climate in Toronto where the art gallery is now leaking even though it was his first commission in his hometown. Mr. Ouroussoff stressed, in his review of the art gallery, how significant it must have been for Mr. Gehry that the commission was in his hometown. On the other hand it was Gehry’s first commission in his hometown. It is not just inclemency and seasonal cold that is a problem for Mr. Gehry. Even in LA he had problems where the skin of his Disney Concert Hall had to be abraded because its reflection of too much concentrated sun created a problematic amount of heat on the walkways outside.

Should a Predication Be Made?

But it was the leaks that got us thinking about the Beekman before there was news of its most recently revealed problems. Thinking of these leaks we were looking at the Beekman and wondering just what will happen when it is built.

Here is prediction that somebody should perhaps be making about the Beekman. Have you watched the way water runs down mountainsides in a heavy rainstorm? Look at how the Beekman facade has channels that will collect rivuleting water into expanding streams, especially when pushed around by wind. We really can’t help ourselves; we are expecting that there may be water problems at the Beekman. As water cascades down the side of the building where will the water go? Leaks into the building’s interior may not be the only problem.

That’s what we were thinking before word came out that the Beekman may be redesigned and built at only half its originally planned height. Where are we now? All we can say is happy value engineering!

Of course, we don’t know. We haven’t studied the plans and specifications for the building. We have not asked the engineers questions and we are not engineers ourselves. In fact, we don’t even know what is ultimately going to be built. But when Ouroussoff was lauding the Toronto Art Gallery did he expect it to leak? Did MIT expect their leaks or Bard College theirs?

Whatever gets built, a short Beekman or a tall one, perhaps we should all make a date to visit the Building and see what is happening to it the first formidably inclement day after it is officially complete. We plan to bring an umbrella.

Saturday, March 21, 2009

Tales of Two Landlords Bridged by an Iconographic Clash

In a moment we are going to circle back to the huge precedent-setting advertisement that Forest City Ratner ran (full page) on the back of this week’s Brooklyn Paper. (See: Saturday, March 21, 2009, Sign of the times: Forest City Ratner buys welcome ad in the Brooklyn Paper.) First we have to explain a few things.

Tale of One Developer-Landlord: Forest City Ratner

There is a lot of concern about the Brooklyn Paper’s recent acquisition by Rupert Murdoch (and the fact that it is almost certainly being consolidated with Murdoch’s Courier-Life chain papers). The concern is . . . Well, here is the New York Times reporting what Norman Oder has to say:

“I’m going to go out on a limb here and predict that The Brooklyn Paper’s news coverage of Atlantic Yards will diminish somewhat (as it already has), and its editorial criticism will diminish even more,” wrote Norman Oder, a critic of the development, on his blog Atlantic Yards Report.
(See: Brooklyn Up Close: A Scrappy Local Paper Ponders Its New Parent, by Gregory Beyer, March 20, 2009.)

The concern is accentuated by the fact that Forest City Ratner, the developer of Atlantic Yards, will now be the paper’s new landlord; the coverage of the Courier-Life for which Ratner was already landlord has historically been problematically deficient.*

(* Note that there has been longstanding concern that Forest City Ratner is also the New York Times’ landlord/business partner; now that the Times selling its half of the Times building, just landlord. See: Wednesday, December 17, 2008, Time to Times; Dear, Dear, Dear)

Tale of Another Developer-Landlord: Walentas

This problem of who is the Brooklyn Paper’s landlord reminds us of another of its landlord problems that people have been worrying about recently. This problem also has to do with unwanted real estate development, the Dock Street project which is proposed to be put next to the Brooklyn Bridge.

In our previous reporting about the Dock Street project we wrote:

We note that we often place much stock in the reporting and positions of the Brooklyn Paper and that the Brooklyn Paper is editorially supporting Dock Street (see the link above). We also note that those opposing the project have pointed out that the Brooklyn Paper is a tenant of the developer.
(See: Wednesday, February 4, 2009, Reject the “Bundle” Bungle: Saying “No” to Walentas Dock Street Project Next to the Brooklyn Bridge.)

As the Brooklyn Paper is moving into Ratner premises at MetroTech, David and Jed Walentas, the developers of the Dock Street project, will no longer be the paper’s landlord but, critically, they were when the issue was in play.

Testimonial Substantiation: Pages Ripped from Brooklyn Paper Headlines Submitted at City Planning Commission Hearing

The issue of Walentas as Dock Street developer and Brooklyn Paper landlord came up in sharp relief at the City Planning Commission’s Wednesday, March 4, 2009 hearings on the Dock Street project. (See: Saturday, March 14, 2009, At the City Planning Commission Hearings on Proposed Dock Street Project: A Reprise.)

At the CPC hearing, pages of the Brooklyn Paper were introduced into testimonial evidence as substantiation for the supposition that the Dock Street project would not deleteriously detract from the public experience of seeing the bridge. We noted above that the paper editorially supported the project. Pro-Dock Street testimony was delivered that averred that investigative reporting by the paper also substantiated the fact that the “iconic” views of and from the Brooklyn Bridge would not be impaired. That pro-project testimony was thereupon followed up by testimony from those opposing the exceptionably large project pointing out that the Brooklyn Paper’s position and reporting were suspicious and ought to be discredited due to the fact that the Walentases were the paper’s landlord.

Iconographic Clash of Developer Landlord Images

Here is what we find especially ironic in these two deference-to-landlord stories. As Norman Oder points out in his Atlantic Yards Report story today, “Forest City Ratner has not been shy about appropriating Brooklyn Bridge iconography in advertising.” He notes:

As a commenter notes, the advertisement portrays the Brooklyn Bridge, which happens to be closer to the Brooklyn Paper's longtime DUMBO offices, rather than the generic MetroTech office park.

There it is! That iconic view of the Brooklyn Bridge so important that Forest City Ratner has on multiple occasions used it, passing up other opportunities to more accurately represent itself.

(Brooklyn Paper image from today’s Atlantic Yards Report. Click on any image to enlarge.)

The interesting thing is that the view of the Brooklyn Bridge in the Brooklyn Paper’s Forest City Ratner advertisement this week is almost exactly the same view of the bridge that the Dock Street opposition has pointed out, using visuals (such as that below) is about to be sacrificed if the Dock Street project is ever built.

(Picture from Save the Brooklyn Bridge.)

Thursday, March 19, 2009

Willets Point Lawsuit Points Out . . .

The latest news on Willets Point is that a coalition of neighborhood land owners and businesses have sued the City of New York, challenging its redevelopment plans for the area. The twenty-two lawsuit plaintiffs who filed an Article 78 petition on March 11, 2009 are members of Willets Point United Against Eminent Domain Abuse. Included among the plaintiffs is 76-year-old Joseph Ardizzone, who stands to lose the Willets Point home where he has resided since birth. Mr. Ardizzone is the sole residential resident of Willets Point but as the lawsuit points out the neighborhood is “home to approximately 225 businesses” that are “viable and vital” that have “operated in Willets Point for generations” and employ “approximately 1,400-1,800 workers most of whom “speak only Spanish.” (The press release information about the filing of the lawsuit is available at: Wednesday, March 11, 2009, Willets Point United Challenges City’s Environmental Review Files Article 78 Against Mayor, City Council and City Agencies.)

Lawsuit Discussion Plus

This post discusses the lawsuit, particularly its challenge to the city’s indefinite and supposed “public purpose” in condemning Willets Point. For reasons which will become clear, we venture in our discussion to consideration of another city administration supported megaproject, Atlantic Yards, and we also give some attention to the AIG scandal tumult. We suggest you sit back for the adventure.

Willets Point Vibrancy in the Face of City Administration Orchestrated Adversity

Willets Point’s economic vibrancy persists despite, as the lawsuit points out, that the city has “for decades,” going back to Robert Moses in the early 1960s, quested to “condemn Willets Point” and “destroy its businesses and turn it over to developers.” Moses considered it a desirable goal to turn the neighborhood into a parking lot for a baseball stadium (Shea). Moses was successfully fought off by Mario Cuomo when he was a young lawyer at the beginning of his career but the plaintiffs’ lawsuit filed describes how the city has since “systematically deprived Willets Point of the vital infrastructure that every neighborhood needs and is entitled. For example, Willets Point has no functioning storm sewers, sanitary sewers, paved and maintained streets, gutters or fire hydrants, and Willets Point has little or no snow removal or municipal trash removal.”

The plaintiffs brought their petition against Mayor Michael Bloomberg, the New York City Council, the City Planning Commission and Deputy Mayor Robert Lieber.

Background on Willets Point

The filing of this lawsuit provides an updating chapter to the (four-part) story we told about Willets Point in Will It Come? What the Bloomberg Administration Wills at Willets Point (Thursday, December 4, 2008). We were pleased when No Land Grab described our series as a “must read that contains information and analysis that you'll never find in the mainstream media.” The lawsuit’s point of view accords with the analysis we provided in our Will It Come series. We note we intended that eries to provide a neutral analysis of what is going on in Willets Point.

Lawsuit Challenges: Environmental Review and Public Purpose

The lawsuit challenges the adequacy of the environmental review and the city’s lack of public purpose in taking the property through eminent domain. Michael Gerrard of Arnold and Porter, the lead attorney for the plaintiffs, is one of the best lawyers in New York State and probably the number one lawyer in the state when it comes to environmental law. As can then be expected, the papers are extraordinarily strong and well drafted when it comes to stating the suit’s two-pronged attack challenging to the environmental review. Notwithstanding, we find ourselves more immediately fascinated by the public purpose challenge to the use of eminent domain.

Multi-acre Megadevelopment Just a “Starry-eyed Vision”

The city wants to take 61 acres away from those in the neighborhood and give a single developer a 75-acre monopoly for what is likely to be 30 or more years of development. The plaintiffs’ refer to this in their lawsuit as only a “starry-eyed vision” and not a “carefully formulated economic plan” which is what the U.S. Supreme Court’s Kelo case would require at a minimum. The Office of the Deputy Mayor for Development and Rebuilding (the Office held until recently by Deputy Mayor Daniel Doctoroff and now filled by Deputy Mayor Robert Lieber) which is responsible for this project is quoted in the petition as saying that “there is currently no specific development plan.” “In other words,” says the lawsuit, “the city intends to condemn property to implement a development plan that has not even been created yet.”

The actions of the city have already brought harm to the residents of Willets Point. Even so, the suit’s challenges to the environmental review point out that for various reasons it remains to be determined that anything approximating what is being talked by the city is practically achievable.

“Starry-eyed Vision”: Excuse to Create Developer Monopolies and Holes in the Ground

In our Will It Come series we were similarly inclined to think that the city’s vision seemed more than a trifle “starry-eyed.” Would that we had used the phrase. It occurs to us that the city is attracted to these “starry-eyed visions,” Atlantic Yards being another example, more as an excuse to transfer huge tracts of land from many small owners into the hands of single-developer monopolies. After such transfers, what the project will actually turn out to be then depends upon those monopoly developers. Given the time frames involved what these developers may thereupon build is highly speculative. In the meantime, each generates a giant hole in the ground. In fact, given the 30 or so years it may likely take to fill holes created for either the Willets Point or Atlantic Yards megadevelopments, it is highly speculative that the developers to whom the monopolies are given will be around. Case in point: Forest City Ratner, the developer for Atlantic Yards and one of the developers the city was considering for Willets Point.

Developer Monopolies, Developer Demise and Disappearing Definitions of Public Benefit

The city determined to give Forest City Ratner a bidless monopoly for Atlantic Yards back in 2003. The project has not yet broken ground. Yet already, in the fraction of the 30-year time horizon the megaproject might take, it appears that the developer is very likely to financially succumb and go out of existence. When it does, the definition of what the project is supposed to be essentially disappears with it because the project seems to be little more than what Forest City Ratner has from time to time decided to define it as. As for the financial demise of Forest City Ratner, we think that it couldn’t happen to a subsidy-seeking company that deserves it more.

For more on the pending financial demise of Forest City Ratner see: Tuesday, March 17, 2009, Three months later, Morningstar again says Forest City Enterprises stock is worthless, Thursday, March 12, 2009, Purchase of FCE bonds, sale of FCE properties suggest corporation faces unsteady fate, March 11, 2009, Forest City in the News: Financial Straits Edition, March 16, 2009, Forest City in the News: Financial Straits Edition, Forest City Enterprises, Short on Money, Abandons Fresno Project, 3.14.09, and reporting on a Cleveland Crain’s article, Forest City Enterprises Dumping the Good Stuff Into a Bad Market, 3.17.09.

Abrupt Changes in Project Definition Even in Mid-construction of a Building

How strapped for cash is Forest City Ratner? One newly emerging story provides a clue. The Ratner firm is in the middle of building the Beekman Tower. The Beekman was supposed to the tallest (and probably strangest-looking- it’s Gehry-designed) residential apartment building in New York City. Though construction has only reached floor 38 of its proposed 76 stories, it is already looming oppressively over other buildings to the southeast of City Hall Park. Astoundingly, although the building is actually in construction Forest City Ratner has reportedly filed building plans to cease construction at the 38th floor, right where it is now, only midway up. (See and hear: WNYC’s Downtown Housing Complex May Downsize, by Matthew Schuerman, March 19, 2009.)

Beekman Symbolizes . . . . ?

One wonders. It is amusing to toy with the idea that the building might have been stopped by the mayor himself when he realized how the immensity of the building in his own City Hall backyard might stand as a symbol to influence the debate over his administration’s sell-off of the public realm. (See: Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart.) Realistically, however, we must conclude that this is just a stark example of Forest City Ratner’s reversal of fortune.

Mega-Openings for Mega-Change

The emerging story of the Beekman, just one building, reminds us what we should always remember: Things change. The bigger and more long-term the project, the bigger the potential for changes. When Battery Park City started construction of its first buildings in 1980 all of its residential construction was supposed to be middle-income housing. 30 years later, with Battery Park City almost completed, only a minor fraction of it is middle-income or affordable housing.

It Doesn’t Take a Bankruptcy to Redefine a Monopoly Megadevelopment

It doesn’t even require the bankruptcy of a company like Forest City Ratner to make entirely speculative in nature decades-long megaprojects over which developers have been given rights. All it takes is a change in the company’s financial condition or the economy and whatever “starry-eyed vision” the city accepted can change dramatically. Even with Forest City Ratner still technically on the scene there are no New York politicians who know what currently constitutes the project. That is, if they ever did.

As City Councilman David Yassky recently commented “I don't think the project as put forward by Forest City Ratner and approved by the State is going to be built. There just isn't the funding for it. It doesn't work in this economy. It's really time to go back to basics and say 'what do we want at that site?'” (See: Atlantic Yards on BCAT. Councilman Yassky Makes Some Interesting Comments, 2.23.09) And people like William Thompson, the City Comptroller and candidate for mayor, are noting that they don’t know what the Atlantic Yards project is.

The Atlantic Yards megadevelopment is totally undefined even though it is, in theory, much farther along than the Willets Point megadevelopment that is many acres more than Atlantic Yards. Perhaps the most defined aspect of Atlantic Yards, the proposed arena, is being subjected to such a total redesign-overhaul that it will be unrecognizable and unlike anything that was previously officially speculated about.

Private Developers Should Not Define Public Benefit

Of course, it is not good for megadevelopments to be designed by developers/subsidy collectors who will thereby be defining the benefit that will be delivered to the public. Norman Oder of Atlantic Yards Report astutely picked up that this is even acknowledged by city officials when it serves them to do so. “Having a for-profit developer write these zoning amendments is the equivalent of having a Big Tobacco lobbyist write anti-smoking legislation,” says a city official. They were talking about Coney Island, but they could be talking about the design of Atlantic Yard’s 22 acres or the 75 acres of Willets Point. (See: Tuesday, March 17, 2009, City criticizes developer for writing Coney zoning amendments, but has not criticized source of AY design guidelines and the original Daily News article providing source materials, Local Brooklyn politicians push developer's zoning changes for Coney Island, by Rachel Monahan, Sunday, March 15th 2009.)

Public Benefit is Vague When “Defined” by Private Developers Pursuing Private Benefit

It isn’t good to have developers/subsidy collectors drive the design and definition of the project and benefit the public is getting. When you give a megadevelopment monopoly to single developer that is exactly what you are doing. We have commented before that granting these monopolies before projects are defined allows developers to blackmail the public for delivery of more public subsidy, something that Forest City Ratner has already proved it can and will do. An example: Forest City Ratner’s aforementioned Frank Gehry-designed Beekman project in Manhattan. (See: Monday, September 8, 2008, Endorsements for Paul Newell for 64th Assembly District Seat.)

Production of Possible Public Benefit Becomes Trade Secret

The problem is that with an undefined project which has been given to a developer as a monopoly, the developer’s financial needs drive what the project is. That is unless and until the secret of what the project is goes with the developer/subsidy collector to their financial grave.

We have learned that assigning the project’s creation to the developer turns what should be public information into a privatized “trade secret” that the government helps conceal from the public. (See: Friday, February 20, 2009, Is the cost of Atlantic Yards now a "trade secret"? NYC EDC foils FOIL request.)

With these trade secrets intact, the developer/subsidy collector first designs the project to provide the level of private benefit and profit for themselves that they find satisfactory. At least in the case of Atlantic Yards, this level of private benefit was not weighed against the level of benefit that the developer designed the project to possibly deliver to the public. For a discussion of recent public agency testimony on this subject see: Missing a Leg To Stand On: ESDC Didn’t Consider Developer Profit, the Main Thing Atlantic Yards is About (Thursday, March 5, 2009).

Forest City Ratner: Reports of Seedy Lobbying

Gardeners talk about how dying plants parched for water and nourishment don’t curl up and die in the way that you might intuitively expect: Before they succumb, the dying plants put all their remaining resources and energy into flowering and seeding. Similarly, the financially parched Forest City Ratner, while doing little else right now (certainly not building) is reportedly spending huge sums on lobbying right now. All told when federal lobbying is added to the lobbying of New York state and local officials, the sum is assuredly exceeds a million this year. (See: Monday, March 16, 2009, Despite Atlantic Yards slowdown, Forest City Ratner spent $928,652 in 2008 on city/state lobbying.

Turns out to Be a Small World When You Are Too Big: DDDB Points Out How AIG Bailout and Atlantic Yards Have Collided

Because they are both so big, it is perhaps not surprising that a link has been found between the AIG and Atlantic Yards. “Too big to fail” in the case of the scandalized insurance giant AIG and just too damn big in the case of Atlantic Yards. (BTW: Remember Willets Point is bigger.)

As people closely following the scandal know, AIG has been routing federal bail out money around the world and to Wall Street, essentially buying favor with big firms and banks by unnecessarily paying 100% on the dollar to extinguish collateral obligations which should have been extinguished with much lower negotiated discount sums. This has turned into windfall infusions of cash, a counterintuitive reward for financial companies who (foolishly?) placed their bets on AIG’s unregulated derivatives and CDO division being sound. As Develop Don’t Destroy pointed out, and a number of news organizations are following up upon, because Barclays Bank received substantial windfall moneys in this fashion that money is essentially funding the Barclays $400 million vanity advertising expenditure on the naming rights for Atlantic Yards arena. That vanity expenditure was likely to be cancelled and then Barclays received the windfall and extended its commitment to the name rights advertising. (See: Money: Taxpayers to AIG to Barclays to Ratner, 3.16.09, U.S. Taxpayers To Pick Up Tab for Barclays' Vanity Project, 3.17.09, Gonzalez: If Ever Built, Call It "American Bailout Arena" 3.17.09, Following the AIG Bailout Money to Brooklyn, 3.17.09, "U.S. Taxpayer Bailout for U.K. Bank Center", 3.09.09.

The latest on this is that City Council Member Tish James is calling on Barclays to pull out of the naming-rights deal saying:

“Taxpayers are more willing to support efforts to free up lending for critical needs but they will not and should not support frivolous naming-rights deals like this one”

“Deals like this put the legitimacy of all future public spending in jeopardy, as well as jeopardize public trust in the government’s commitments of public money. . .”
(See: Councilwoman James: Barclays Should Pull Out of Naming-rights Deal, 3.18.09 and March 18, 2009, Trickle-down economics in Brooklyn, by Michael O'Keeffe.)

AIG and Big Monodeveloper Megadevelopments: The Thematic and Cultural Link of Subsidy Bear-Hugs

The above story about AIG/Atlantic Yards links is certainly arresting but we see other AIG/Atlantic Yards connections that may be even more worthy of attention, involving the tales of the $160 million in “retention bonuses” now generating outrage. (The total amount of these retention bonuses is eventually supposed to tally around one billion dollars.)

Consider the similarities: Like Forest City Ratner, huge AIG was headed for bankruptcy. Essentially, AIG was bankrupt except for the fact that the government stepped into a subsidizing partnership relationship with AIG. Through its subsidies, the government owns 79.9% of AIG. Similarly, the government is subsidizing Atlantic Yards so heavily with taxpayer money that it is paying for substantially more than half of the $4.4 + billion price tag of Atlantic Yards. In each case we are discovering how rushed and badly thought out the government’s provision of subsidies has turned out to be.

AIG’s undiscounted billions of dollars in payouts to banks like Barclays are an example of how poorly managed the AIG government subsidies are, but people probably understand the problem reflected in the case of the AIG “retention bonuses” better. Let’s look at the roots of the problem. First, AIG insiders made a bet that the government would not let AIG fail, that the government would step into the trap of a debilitating subsidy bear-hug. (Had the government let AIG go into bankruptcy any “bonuses” could have been restructured out of existence.) Second, the AIG insiders used their inside advantage and knowledge to stay a step ahead of the government in engineering a diversion of government subsidy funds to their personal benefit.

The Self-Interested Behavior Evident at AIG

The evidence in the case of AIG? At the time the contracts were written for the “retention bonuses” it was clear that AIG was headed for a bad year. We would expect that somebody in the know would have understood that AIG was very likely tubing. The contracts were written by insider-drafters to protect insider-recipients of the bonuses by specifying that if (as certainly turned out to be the case) 2008 was a worse financial year than 2007 the bonus payments would be no less than they had been in 2007. Though the bonuses were officially “retention bonuses” they went also to individuals who left the firm. As Hank Greenberg, former head of AIG (who was forced out after an Eliot Spitzer investigation) pointed out on Charlie Rose Tuesday night, the bonuses vitiated the purpose of provisions pursuant to which the special AIG unit had been set up that were structured so that the profits (or lack thereof) of people in that AIG unit would be at risk if there was poor performance.

The AIG unit not only wasn’t profitable, it took AIG into virtual bankruptcy. The New York Times front page print edition headline dubs it the “Havoc-causing Unit.” (The on-line edition changes the headline. See: 418 Got A.I.G. Bonuses; Outcry Grows in Capital: Data From Cuomo’s Office Show Payments to Nearly All in Havoc-Causing Unit/Outcry Builds in Washington for Recovery of A.I.G. Bonuses, By Jackie Calmes and Louise Story, March 17, 2009.)

Forest City Ratner’s Similarly Self-defeating Subsidy Bear-hug: The Rewards for Havoc and “Bring Your Own Blight”

Similarly, Forest City Ratner is hoping that the government will enter into a self-defeating subsidy bear-hug even if it is turning into a zombie developer. The theory with AIG was that sufficient additional “havoc” would be wreaked if AIG was not saved. Similarly Forest City pursuing a BYOB (“Bring Your Own Blight”) policy has done everything it could to make a hole in the ground big enough so that politicians could be convinced that they had no other choice but to accept its zombie subsidy bear-hug. (See: December 3, 2008, Lessons from the Ward Bakery demo.*) This is the logic the city is setting up for at Willis Point as well.

(* The latest on the BYOB front materialized yesterday. It turns out that all of the reported crime relied upon in order to find “blight” in the Atlantic Yards footprint was actually in the new shopping mall buildings built, owned and operated by Forest City Ratner. See: Wednesday, March 18, 2009, Case closed (and Blight Study bogus): high crime in Sector 88E relates to Ratner's malls, not AY footprint.)

Terminal Frustration: Obama’s Crew Were Flubbing AIG

The men the Obama administration appointed to handle the AIG bailout have been flubbing it. Probably too influenced by Wall Street’s point of view, they just didn’t get what was wrong. They started out with a tone-deaf handling of the bonuses this past Sunday on the talk show circuit where they were saying that the AIG bonuses were contracts that had to be honored and that there were also policy reasons to honor the “contracts” which means that they probably weren’t thinking very hard about how to get out of them. The sanctity of contract theory was defended by Andrew Ross Sorkin of the New York Times. (See: The Case for Paying Out Bonuses at A.I.G., March 16, 2009.) As for the additional policy reasons to retain these people, Sorkin writes:

Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.
Fallacy of Giving People Rights to Clean Up Their Own Mess

The way in which the retained AIG staff unnecessarily paid out windfall payments to banks like Barclays on an undiscounted, unnegotiated basis belies Mr. Sorkin’s theory. Besides, the AIG personnel involved had previously demonstrated their incompetence (many didn’t stay around anyway); they have now throughly demonstrated their venality and, in a tremendously down Wall Street market, there are more than enough competent individuals to easily hire more competent replacements.

In yesterday’s Times it was pointed out that it would not be difficult to replace the individuals these bonuses were meant to “retain” (Economic Scene: Paying Workers More to Fix Their Own Mess, by David Leonhardt, March 17, 2009.)

Mr. Leonhardt writes:

. . . . executives and bankers had an incentive to create rules that would reward them no matter what. The country is now living with the consequences.
So any attempt to build a new financial system, one that’s less susceptible to bubble, bust and bailout, will have to include a new approach to pay.
* * * *
Simon Johnson, a former chief economist at the International Monetary Fund, has pointed out that in financial crises, bankers often exaggerate the difficulty of cleaning up their mess. They do so partly to justify their own continued importance and also to fight off calls for a government takeover of banks. In reality, Mr. Johnson says, the mechanics of cleaning up hobbled banks turned out to be fairly straightforward during other recent crises, like the Asian one in the ’90s.
* * * *
Throughout this crisis, policy makers, starting with President George Bush and Ben Bernanke and now including President Obama, have been a bit too deferential to Wall Street.
A Clarion Call to Repudiate Self-Serving Contracts

While it is important to have a world where contracts are honored, the self-serving background under which these contracts were crafted certainly provides grounds for their repudiation. That is what President Obama, his Treasury Department officials and just about everyone else are now calling for. The contracts ought to be void as against public policy since they were premised upon an expectation (and actually required) that the government would rescue AIG from bankruptcy to protect the public from the jeopardy the AIG division manufactured.

The self-serving “contracts” with zombie developer/subsidy collector Forest City Ratner respecting Atlantic Yards ought to be similarly repudiated. There are probably even more grounds and reasons for doing so than with the AIG retention bonus contracts. (See: Friday, December 26, 2008, A New Year’s Revolution List (Starting 2009 Off Clean: Pull the Plug On Atlantic Yards)) We think that politicians who are not exploring these options are behaving in fashion similarly tone-deaf to the earlier behavior of Timothy Geitner and his staff.

Bloomberg Administration’s Embrace of Zombie-Hugs

What is the Bloomberg administration likely to do? It seems that the primary goal of the Bloomberg administration in situations like Atlantic Yards and Willets Point is not to build particular projects for which it has only “starry-eyed visions” but only to put large tracts of property into the hands of monopoly developers. It is likely that the Bloomberg administration will not want to pull the plug on these transfers until such limping developers have reached the ultimate nadir of a complete and total financial demise.

Keeping up with the Updates on the Declining Willets Point Developer List

We should note that super-large megaprojects reduce to a very small club, the list of “competing” developers that might (and sometimes don’t actually) “bid” for the development. After our Will It Come series it was reported how the original list of eight potential monopoly developers for Willets Points had dwindled to five, partly by reason of Forest City Ratner’s financial debilitation, and that a realistic appraisal probably thereupon reduced that list to what may be only two developers. (See: Friday, December 19, 2008, Let's take a look at the Willets Point finalists, part 1. and Tuesday, January 27, 2009, Let's take a look at the Willets Point finalists, part 2) Our own guess is that despite its recently reported problems, Muss Development probably still considers itself in the running. Should they?

These short lists of what must be very big developers means that every developer on these lists is likely to have exceptional access directly to the mayor.

The Zombie Developer “Que Sera, Sera” Answer to the “Whatever That Might Be” Theory of Determining Public Purpose

It may seem that we have gone rather far afield from where we started; talking about the Willets Point laws suit. Not really. Asserting that the state and federal constitutions require that plans justifying proposed condemnations must be reasonably ascertainable so that if the condemned property owners “are to be forced to sacrifice their livelihoods, they at least have the right to know the use for which their sacrifice is made” the papers declare (in paragraph 114 of the petition):

New York City cannot take Petitioners' businesses, property and homes based solely on the assertion that the future use of the property -- whatever that might be -- would be for a public purpose.
“Whatever that might be,” is so poorly defined as to be virtually unknown. But to the extent Atlantic Yards foreshadows the future of Willets Point the “whatever that might be” is likely to be similarly defined by the subsidy bear-hug embrace of a failing developer that is putting its own interest first and predominantly ahead of the public’s. Are the chances against lightning striking twice so remote that Willets Point will not also wind up with a failing developer? We don’t think so. It has only taken from March 2006 until now for six out of eight of the “finalist developers” to be falling off the list for various financial reasons. Therefore, why expect the remaining two won’t turn zombie or worse during the 30 or more years the firm finally selected will have a monopoly during which time it will be defining the answer to the question what public purpose is inherent in “whatever that might be.”

Reviewing the Review, The Insufficiency of What Goes on in a Bad Environment

Though the part of the Willets Point petition focusing on the city’s lack of defined public purpose in condemning Willets Point is the part that interests us most, we are not surprised by how much more of the legal petition focuses on the city’s failure to properly follow environmental review procedures. We are not surprised because our state and city government don’t seem to want New York citizens to have protective rights against government-assisted takings under either the Bill of Rights of either the federal or state constitutions. And our courts often don’t seem to want to contradict these abusive government inclinations. Therefore, challenges to environmental process almost have to serve as a stand-in for the better constitutional protections we lack. It is also not surprising because the lack of public purpose driving these land transfers to developers generates associated flaws in the environmental process.

Because the city transfers of sections of the city to monopoly developers have a different relationship with the determination of public purpose than they are supposed to, they treat the environmental review process as if it is a forgone conclusion rather than a deliberative process weighing and exploring relevant facts. Accordingly, the transfers flirt with disastrous flaws and attorney Michael Gerrard did a good job of identifying such flaws with respect to Willets Point.

The Deputy Mayor for Development’s Office Environmental Responsibilities: And How Was an Odd Grab of Power Exercised?

Notably, the role of “lead agency” for the required environmental reviews was undertaken by the Office of the Deputy Mayor for Development and Rebuilding. As noted earlier, this is the office held until recently by Deputy Mayor Daniel Doctoroff and now filled by Deputy Mayor Robert Lieber. The petition asserts that:

. . .the Deputy Mayor's Office is not even a proper lead agency, since it lacks the power to fund, approve or directly undertake the Development Plan. Indeed, the Deputy Mayor's Office has not even issued a statement of findings as required by SEQRA and CEQR.

Even if it were a proper lead agency (and it was not), however, the Deputy Mayor's Office also failed to perform the paramount function of a SEQRA lead agency: it failed to take a hard look at a number key environmental impacts of the Development Plan.
Getting more technical, the papers say:

The NYC Charter and Code do not vest any powers in the Deputy Mayor's Office -- rather, the Mayor must vest powers in the Deputy Mayor. See New York City Charter § 7 ("The mayor shall appoint one or more deputy mayors with such duties and responsibilities as the mayor determines."). Upon information and belief, there has been no applicable delegation of power to the Deputy Mayor's Office. Even if there were, it would not be sufficient to authorize the Deputy Mayor's Office to serve as lead agency, since under applicable precedent the role of lead agency is non-delegable. E.g. Coca-Cola Bottling Co. v. Board of Estimate of the City of New York, 72 N.Y.2d 674, 536 N.Y.S.2d 33 (1988).
We have noted the ongoing problems the mayor’s office has with conflicts of interest and delegations of authority when it comes to the large real estate transactions going on in New York. (See: Monday, February 2, 2009, The Good News IS the Bad News: Thanks A lot for Mayor Bloomberg’s “Charity”.) It would be too time-consuming to review them again here but one of the major concerns in this regard is about what kind of quid-pro-quoing could possibly be going on in the mayor’s office either directly or through his deputy mayors.

We find it interesting that Willets Point was under the auspices of the Deputy Mayor’s Office rather than being handled directly by a fully capable development agency. The petition offers a rationale furnished by the city administration for the Deputy Mayor’s office conducting the environmental review which is ominously unreassuring in terms of quid-pro-quoing (at paragraph 104):

In an effort to defend its role, the Deputy Mayor’s Office claims otherwise:
The Office of the Deputy Mayor for Economic Development is representing the City, which is undertaking this initiative, issuing the developer RFP, selecting the developer, and providing funding, and thus is the appropriate lead agency for this project.
Why would a city administration office that is incapable of taking a hard look at the environmental impact statements and which neglects to follow through with the required findings thereunder, be selecting the monopoly developer for a 75-acre swath of city acreage?

Detailing what Was Overlooked in Environmental Review

The petition goes on in excruciating detail documenting the ways in which the environmental review fell short. In addition to the state and city environmental review acts (SEQRA and CEQR) the petition deals with city failures to comply with:

• requirements of the New York State Department of Transportation
• the National Environmental Policy Act
• the Safe Drinking Water Act
• the National Interstate and Defense Highways Act of 1956
• National Fire Protection Association standards for adequacy of emergency response services
The lawsuit says that the Deputy Mayor’s Office failed to properly disclose significant, unmitigated adverse impacts to regional highways as well as failing to properly disclose the approval process for highway modifications, suggesting that (as is probably so) the city hasn’t even started the process of obtaining state or federal approvals.

Among other things the lawsuit says were not considered was significant new traffic congestion (with the location of ramps or even the possibility thereof not yet properly been considered):

61. One example of the severity of the impacts can be seen in the traffic on the ramp from the westbound Northern Boulevard to the southbound Van Wyck Expressway. Even on days without baseball games, a comparison of data tables in the FGEIS indicates that traffic on the ramp will drop during the weekday afternoon rush hour from 28.9 mph to 1.4 mph (!). (Ex. 1, FGEIS at 17-73, 17-77.) In other words, a person walking at an average speed of 3 mph wouldmove twice as fast as a car on the ramp.
Writing about the unaddressed prospect of the contamination of the aquifer under Willets Point:

88. Willets Point sits over an aquifer that has been designated a sole-source aquifer within the meaning of Section 1424(e) of the Safe Drinking Water Act. See 49 Fed. Reg. 2950 (Jan. 24, 1984). When the fill presses down on the soil, the fill will squeeze the soil like a sponge and inject its contaminants into the aquifer and New York City’s water system. (Ex. 2, Tab A - Adler Letter at 6-7.)
Aside from not taking the required hard look at these things the suit depicts the Deputy Mayor’s Office as cavalier. Asked to consider emergency response times when the highways are overburdened with new ramps (see above):

84. When these concerns were presented to the Deputy Mayor's Office, however, the Deputy Mayor's Office refused to evaluate them. Instead, the Deputy Mayor's Office offered – without supporting data or studies -- the extraordinary response that emergency services would not degrade at all.
Back to Kelo and the Violation of the Constitutional Protections Against Taking Without a Public Purpose

The suit points out that with none of these environmental considerations examined the development plan is not "finalized" and “indeed, it does not yet exist” and therefore cannot be upheld under Kelo as providing the public purpose required for a taking of private property. The suit points out that undetermined questions such as whether required access ramps can serve the project:

are not just an ancillary feature of the Development Plan, but rather “an integral part of the Plan.”
The suit says that without them the Kelo requirement of a “carefully formulated . . . economic development plan” is also absent, as well as Kelo’s requirement that the plan’s “purpose is legitimate and its means are not irrational.”

Parking the City’s “Starry-eyed Vision”

If, as appears, the city is incapable of envisioning the plan it wants for Willets Point with enough clarity to conduct a proper environmental review that can pass muster, perhaps the city should just plan on replacing Willets Point with a giant parking lot. After all, if Robert Moses had been allowed his wish Willets Point would have been turned into a parking lot for Shea Stadium though, now that it has survived about three-quarters of a century, Willets Point has succeeded in outliving Shea Stadium, just demolished, which was in use for only 44 of those years.

These days, saying that you want to tear down a time-tested neighborhood to put up a parking lot doesn’t pass muster with the public. That’s why "starry-eyed visions" are pressed into service. Still, without real plans, "starry-eyed visions" often turn into nothing more than parking lots. If Atlantic Yards foretells Willets Point’s future, pay attention: It looks exceedingly possible that much or all of the Atlantic Yards won’t be anything but a giant parking lot for decades. (See: The Municipal Art Society’s Atlantic Lots.)

Can it be? Is it possible that when the city speaks in terms of "starry-eyed visions" it is content when it gets parking lots instead?

(Above image representing the future of Atlantic Yards site from Municipal Art Society’s Atlantic Lots. Original Aerial Photograph by Jonathan Barkey.)

Sunday, March 15, 2009

Inside Baseball

The other day we found ourselves in a waiting room where there were two pals, about 65 years old, talking. They were both professional baseball scouts. One of them had Hall of Famers to his credit.

It has been a while since we had a strong personal interest in professional baseball. The interest we had fell away after our younger years: Rather than watching, we prefer the sports in which we actually engage and if we don’t have to get two teams together to get started so much the better. Still, there is a certain amount of fascination listening to “inside baseball” and our ears perked up all the more when the chat of these two fellows touched upon one of our Noticing New York urban planning concerns, the financing of Yankee Stadium.

We’ve written before about the value of parking spaces at Yankee Stadium and Mayor Bloomberg’s misplaced focus in negotiating the terms of the public financing of Yankee Stadium. Specifically:

. . . . the Bloomberg administration paid a very, very high price for a “free” luxury suite for its own use at Yankee Stadium including, but not limited to, giving the Yankees 250 parking spaces in exchange.
(For a lot more detail and quantified analysis see: Wednesday, December 3, 2008
Mayor’s Focus on City Planning Matters: Some Quantified Analysis.)

Not only has the public financing of the stadium cost taxpayers an inordinate amount of money, but it has also been commented that the final product is costing the baseball fans a lot more.

Accordingly Noticing New York ears perked up at ths exchange:

Baseball Scout #1: “The New Yankee Stadium: . . (Pause) . . Parking, twenty-nine dollars.”

Baseball Scout #2: “Is that any special kind of parking?”

Baseball Scout #1: “Nope. General Admission.”

Baseball Scout #2: : “Makes you sick!” (Maybe it was good that they were already in a doctor’s office.) “Do you think they will make money?”

Baseball Scout #1: “In the beginning when they first open. After that they are going to have to win.”