Friday, May 20, 2011

The Miscalculations Encouraged By the Fuzzy Math of Subsidies: Yankee Stadium Bonds on Verge of Default- A Case Study

Noticing New York is not a fan of subsidies for sports venues like stadia and arenas. Even when the schemes behind those subsidies work out as the public officials dispensing them intended they tend to amount to crony-capitalism style transfers of more wealth to the already wealthy and connected. As in the case of the new Yankee Stadium they can replace taxpaying businesses with freeloading businesses exempt from the tax rolls. As in the case of the Atlantic Yards Prokhorov/Ratner basketball arena they wind up being significant net losses for the public. Add to all of this is the fact that these schemes may not even work out as public officials intended. They may work out a lot worse. To consider the implications of that point more thoroughly let’s direct our attention to a new Transportation Nation story about bonds issued to subsidize Yankee Stadium that are on the verge of defaulting: After Hundreds of Millions of Dollars of Public Subsidies, Barely Used Yankees Parking Garages Face Financial Collapse, May 19, 2011, by Jim O'Grady.

(The WNYC Transportation Nation story has also been substantially reprised in this WNYC story: Yankees Parking Garages Driven to Brink of Financial Collapse, Thursday, May 19, 2011, WNYC, by Jim O'Grady.)

Defaulting Bonds

The bonds issued in connection with Yankee Stadium that are in jeopardy of possible default are $237 million in tax-exempt bonds that were issued to finance a 21-acre parking garage complex for the new stadium. The stadium was subsidized by the public in multiple ways, not just by these parking garage bonds; other subsidized bonds were issued for the stadium itself. At the moment it's just these parking garage bonds that are in danger of default and not the other bonds financing the stadium directly. Those stadium bonds are presumably OK for now (unlike the bonds issued around the same time to finance the stadium for the financially flailing Mets) but the financial difficulties associated with the garage bonds highlight how the city’s public officials made a number of fundamental miscalculations when handing out these subsidies.

No Problem, Says Bloomberg

The Transportation Nation story includes information about Mayor Bloomberg cavalierly dismissing the screw-up:
Mayor Bloomberg says private bondholders, not taxpayers, will be on the hook if the Bronx Parking Development Company defaults on the bonds. On his weekly radio show, he shrugged off the Bronx Parking Development Company’s possible collapse.

“The city has no downside,” he said. “If they were to go bankrupt, it doesn’t hurt us. It wouldn’t be good for the project.”
Notwithstanding Bloomberg’s blithe dismissal, defaults on municipal bonds that are issued and promoted by the city administration are bad. Bad for the city, not just for the bond holders who also get shafted when things go wrong after the city convinces them to buy their product. When bond holders get shafted by a New York issuance, how do you think they will feel about buying bonds the next time a New York issuance comes out? Especially when you have a top city official like the mayor dismissing their interests, sounding like the mistake was all on the part of the investors who bought what the city was selling.

And, by the way, as we will be discussing, there is a long list of additional downsides for the city.

Who’s Watching?

This default was on the Forbes radar screen as of last fall: Yankee Stadium Parking Garage Bonds Are Among Shaky Muni Bonds, Sep. 21 2010 as well as that of the Bond Buyer, Yankee Stadium Parking Garages on Track for Default on $238M of Debt, Tuesday, September 14, 2010, By Ted Phillips and Crain’s, Yankee Stadium parking strikes out: Bronx outfit faces default on bonds as fans park elsewhere and residents fume, by Hilary Potkewitz, March 13, 2011.

The WNYC public radio stories note that the garages were also defended in 2006 by City Council Speaker Christine Quinn, Bloomberg’s regular comrade in crime when it comes to promoting developer-promoted over-development.

Underwriting Immediately Proved Wrong

The bonds were issued by the city’s Industrial Development Agency in 2007. That means that there was hardly the blink of an eye between the underwriting of the bonds and the proof, through failure, that the underwriting was terrifically wrong. The New Yankee Stadium opened in April of 2009, so the bonds took only the first two seasons to go bust, given that before that, during construction, interest on the bonds would have been paid out of capitalized interest (i.e. funds borrowed from the bond holders up front.) WNYC reports that the garage facility is $17 million behind in back rent and other payments owed to the city.

When the Fuzzy Wuzzies Come to Bear

The default is illustrative of a danger everyone should be on guard against when it comes to development through subsidies: Beware of miscalculation because those involved in development are likely to have put away their sharp pencils. Subsidies, generate fuzzy math, fuzzy thinking and they take peoples' eyes off reality and real costs. Those who are expert at working City Hall to finagle subsidies do not necessarily have the same skill sets as those who know how to shave a profit out of the real world, and frequently there is also the danger that their thinking is that if and when they are off on their numbers they will be patching things together at the back end with additional subsidy flows, perhaps with a “too big to fail” argument. That seems to be the case with Atlantic Yards. (The latest about Atlantic Yards fuzzy math was reported upon by Atlantic Yards Report yesterday.)

In the case of Atlantic Yards, say for example with the mega-project’s implausible initial job-projection numbers, fuzzy math is cultivated as a habit to get a foot in the door for what would otherwise have been an unacceptable project. Atlantic Yards' false projection of a ten-year build-out rather than a multi-decade build-out is another example.

Listing, We Sink With Miscalculations

So what were some of the miscalculations made with respect to the issuance of these now defaulting bonds for the new Yankee Stadium complex? Here is a list:
1. That there was no need for 9,000 parking spaces* in the eleven garages in the onsite complex directly serving the stadium. (With the stadium’s reduced 50,287 seat capacity- the reduction was between 4,561 and 7,459 seats while 2,000 parking spaces were simultaneously added- that’s one parking space with the new configuration for every 5.587 seats for a baseball game. And games are not selling out.) WNYC reports that on game days the garages are two-thirds empty and Crains reports they have never been more than 60% full. This is an odd miscalculation for officials serving the public to make in a city where the policy should be to encourage mass transit and discourage the onslaught of vehicular surges through stadium neighborhoods. (Atlantic Yards planning is similarly biased toward providing parking spaces.)

(* It should be noted that of the 9,000 parking spaces there were 250 additional parking spaces, previously intended for “public use” that were given to the Yankees “for the private use of Yankees officials, players and others” so that the Bloomberg administration “intent on obtaining a free luxury suite for its own use” could get a suite with twelve seats. Because the city and state codes governing public official ethics are different, this was not technically an ethics code violation although Governor Paterson’s obtaining a set of free tickets to a Yankee game was and consequently earned him a $62,125 fine. The overriding caveat, however, is to beware of public officials obsessed with using the office they hold to attend sports games for free.)

2. That the new, more expensive stadium parking would be attractive enough at the new, more expensive prices to attract sufficient utilization to support the bonds. Was that a good bet when they underwrote the bonds in 2007? In spring of 2009, concurrent with the first season’s opening, Noticing New York reported on the skepticism of two old-timers, both baseball scouts. They thought $29 was too much to charge for parking (Sunday, March 15, 2009, Inside Baseball.) The price of parking has recently been hiked to $35, probably worsening the situation. Will we now see a vicious cycle of price hikes intended to compensate for low utilization?

3. That other existing cheaper local private sector garage and parking facilities wouldn’t out-compete the subsidized Yankee garage facilities. (WNYC reports competitors are charging as little as $15.)

4. That high prices wouldn’t cause those who do drive to the stadium to roam the streets looking to usurp the street parking that was previously available to those who live in the neighborhood. This part of the miscalculation nullifies some of the environmental assessments made when the new stadium was first considered and winds up being contrary to assurances that Yankees president Randy Levine offered the City Council during at least one public hearing.

5. That the alternative transportation options provided by the new Metro-North stop added next to the stadium as part of the reconfiguration wasn’t essentially a duplicative and conflicting public investment.

6. That having all of this unutilized new parking infrastructure was more desirable as a public investment than the alternatives that were available. Some of the alternatives:
a. New York State didn’t need to spend $70 million in taxpayer dollars to build Parking Garage B, the private VIP garage with direct access into the stadium. Using the way-back (time machine) capabilities of the Internet (and their inventory of previous posts) to hold everyone accountable to the facts and a consistent story, No Land Grab pointed out that in 2006 “discredited” “sports economist” Andrew Zimbalist Jr., wrote in a New York Times Op-Ed that “all parking revenue would go back to the state and more than pay off the investment.” - One more fuzzy math miscalculation.
b. The neighborhood public parks and trees sacrificed to create the parking could have been kept instead. 377 mature oak trees might have been kept or at least some of them. 25.3 acres was taken. The "replacement" parkland for the community includes space on top of one of the stadium's parking garages, some already mapped parkland, and a patchwork of other plots ranging up from less than a half acre in size.
c. The city wouldn’t then have to be paying all of the $195 million it is supposed to be paying to replace parkland it gave to the Yankees.
d. The local community needn’t now be dealing with the fact that the “replacement” parkland has been slow to materialize and inferior.
A Jane Jacobs Digression

In her The Economy of Cities, urbanologist Jane Jacobs at one point digresses as she is discussing how new kinds of work evolve out of previously existing tasks and occupations. One of Jacobs' themes in this book is her endorsement of cities for their ability to foster these new, generally productive, ingenuities but she cautions that while it is ordinarily a good thing that new trades can evolve from old ones, the particular evolutions that result are not always to be desired. As she declares (page 54) not all the results are necessarily “useful, legal or innocuous.” In a long list she catalogs examples of things that are not “useful, legal or innocuous” and includes police that take bribes (or burglarize) and government officials who stuff ballot boxes and to this list she adds:
some city-planning departments take to scouting out and processing profitable deals for favored real-estate operators and also to organizing and running fraudulent “citizens’ organizations” to help overcome public opposition.
This observation can be readily adapted to say that while the work of government officials administering subsides may, when they start out, be doing the job of serving the public (a useful and desirable vocation), when they become captives of the development industry they have embarked upon a qualitatively different kind of pursuit (one that isn’t useful or innocuous and may not even be legal). When the miscalculations associated with administering subsidies become profuse as with the list above perhaps it is time to believe that the administering public officials have transitioned into the captive class. (Consider the concept of “Agency Capture.”)

In the End the Community Pays the Price

The WNYC Transportation Nation story begins and ends with an anecdote about a local community high school varsity baseball team that can no longer play its games in the community because the Yankees built one of their parking lots on the field where the varsity team used to practice and the team is still waiting for promised replacement fields. Jim Dwyer of the Times also wrote about how the varsity team now buses out of the community to its games. (About New York, Yankees Claimed a Park; Children Got Bus Rides, October 23, 2009. Putting the miscalculations in terms of the losses to the community and public is really the only way to put appreciate what the miscalculations actually mean.

Here is a cruel irony about how badly the local community has been shortchanged that may be added to the list of miscalculations- - it doesn’t seem to have been noted in any of the coverage to date: Since some of the “replacement” parkland for the community includes space on top of one of the stadium's parking garages, the community might now stand to lose that parkland (as inferior to the original replaced park as it might be). As Crain’s notes, “A default could set up a seizure by bondholders and would leave the garages' future in question.” Presumably the future of that parkland as well.

This Saturday May 21, 2011, The First Acoustics Season Finale, Bob Cunningham Jazz Ensemble

(Above, February 15, 2009, Bob Cunningham at a previous First Acoustics performance with First Acoustics' producer Coco Wilde and singer Wendy Russell who opened for Cunningham that evening.)

This Saturday (if the world is not ending) you can catch the Bob Cunningham Jazz Ensemble in a return engagement performance that will constitute The First Acoustics Season Finale. Next season's performance line up will also be announced.

What does notice of a local music event have to do with Noticing New York’s more typical focus on development in New York City and associated politics? - - It’s a long story (some of which is still being written). Some of it can be found via the segments linked to below:
Wednesday, March 16, 2011
Another Insert into the Music- Hands Joining Across Eras: Brooklyn Heights Unitarians and How a Historical Landmark Saved the Past For the Future

Wednesday, March 9, 2011
An Insert Preview - Music Superstar Ethics: How Completely You Can Sell “You can say what you say, but you are what you are.” Jay-Zzzzus!

Tuesday, October 19, 2010
Adding A few More Off Topic Notes (Or Are They Really?)
Here's information about Saturday night’s performance. Tickets are available on-line. Enjoy.

Saturday evening at 8:00 PM
Bob Cunningham Ensemble
First Acoustics
May 21, 2011
All seats $25.00 advance, $30.00 at the door
For More Info

Friday, May 13, 2011

Notice About “National Notice”

Noticing New York readers may be interested to know that it isn’t just all about “Noticing New York” any more. I have started another site, “National Notice” (banner logo subject to change). Sometimes, when I have things to say they just aren’t appropriate items to bend the ears of Noticing New York readers with. In other words, the central theme of what I want to say is not about development in New York and the associated (frequently dirty) politics.

Mostly, the other issues I find myself attracted to involve national politics and, in that regard, what likely makes good economic sense as national policy always intrigues me. If you go to “National Notice” you may find that the issues discussed, even if they do not directly discuss New York City development issues (and hence have been invited to this new territory), nevertheless echo the themes frequently presented in Noticing New York posts, that life could be better for the general population if the wealthy and privileged held a little less sway over policy, decision making and distribution of resources.

Perhaps this will be a salve, if on a slow day you are hungry for a new Noticing New York post you don’t find and are willing to settle for something similar but a little bit different. And, inevitably I expect, the two discussions (with some meaty recommended links) will converge when many topics get discussed.

For an initial introduction you may be interested in this review of economic issues affecting the national real estate market (it does not go into why New York City, benefitting from the direct federal support received by Wall Street since the 2008 economic downturn, is currently in a somewhat different boat from the rest of the country):
Friday, May 13, 2011
Inflation That's Causing Deflation: Some Not So Very Good News For the Real Estate
Right now, the just started National Notice doesn’t Google very high, something I hope to address in time. (It’s already going up.) If you would like to help in this regard and there are articles you see that you like, please feel free to assist by sending links to your friends.

For Noticing New York readers may this be the start of a long and beautiful expansion of our relationship. See you over at the other place from time to time.

Saturday, May 7, 2011

Reminder: So Many Wonderful Things To Do On A Sunny Saturday, May 7, 2011- Combine Choices But You Still Have To Choose

Here is a brief reminder: There are some great things you can do today. Some of them can be combined with others to make a full day of it but you’ll still have to make choices because you can’t really do them all- Or you could somehow try?


• Monday, May 2, 2011, This Saturday May 7, 2011, In Brooklyn Heights: Folk Music With We’re About 9, Barnaby Bright and the Brooklyn Heights Association Landmark House Tour

• Sunday, May 01, 2011, Coming Saturday, May 7: a Jane's Walk around the Atlantic Yards site and environs

Friday, May 6, 2011

Xanadu- Governor Christie’s Ode-ious “Yes We Khan” Moment

(Above: “Xanadu” from “Citizen Kane” - “cost: no man can say”- and “Xanadu” the mega-project in New Jersey, - more costs now being assumed by the New Jersey taxpayers- both from wikipedia.)

Suppose the New York Times proposed a contest for readers to write a poetic ode about a huge, over scale, garishly designed and questionably subsidized mixed-use project critically integrated with a sports complex: Do you think the readers might respond with lacerating lyricism questioning the judgement, priorities and profligacy of public officials?

Well, the New York Times did, and its readers did, only the contest was not held with respect to the Brooklyn Atlantic Yards meg-monopoly handed out to Bruce Ratner (the Times business partner in building the new Times building). The contest was held with respect to New Jersey’s stalled Xanadu project recently rescued from financial insolvency by Governor Chris Christi. (For background on the basic story see: Developers and Christie Detail a Plan for Xanadu, by Richard Pérez-peña, May 3, 2011 and For Xanadu Mall, Stalled and Scorned, Deal May Offer New Life, by Charles V. Bagli and Richard Pérez-peña, April 28, 2011.)

Is It Even Debatable?

The justice of poetic criticism alone not being sufficient, the Times also set up “a debate” with five chosen debaters to take up the subject of whether the mega-project should be saved: May 1, 2011, Is a Failed Megamall Worth Saving?

It is a something of a misnomer to call the result of unleashing the five chosen commentators “a debate” since what each of the five had to say was, on balance, extremely negative about saving the mega-project, providing prosaic parallels to the scathing wit of the poetry contest submissions. Even if one reviewed and included the readers' comments responding to the five chosen pundits it would be reaching to say that a debate had been opened up as the Times readers were also almost all similarly uniformly negative. Perhaps the project being in New Jersey, and the Times being a New York City based newspaper, the New Jersey construction unions hadn’t gotten the memo that some positive supporting statements for the project need to be typed.

Here is a taste of the views offered by the professional commentators (with full commentary and multitudinous readers' comments available at the Times site):
Judith Martin: (a professor in the department of geography and director of the urban studies program at the University of Minnesota.)
Too big to fail* one more time? How about too ugly or redundant to succeed?
(* This picks up from what was reported in the first Times article by Charles Bagli about how the Christ administration rationalized his governmental intervention: “The administration has argued that the project is too big and too far along to let it lie fallow.”)

David Smiley: (teaches architecture and urban studies at Barnard College.)
People have a right to their pleasures but not with our tax dollars, please.
Brigid C. Harrison: (a professor of political science and law at Montclair State University.)
This would placate the building trades unions which were temporarily riled up by his decision to cancel the ARC tunnel project.

But the problem with Governor Christie's decision is also economic: it puts the state at risk for financing a historic boondoggle while in the midst of a slow economic recovery. The state would relinquish some of the potential gain of tax revenue generated by Xanadu, which is almost certain to snatch business away from other local merchants, given its enormous size.
Bob Ingle: (a senior political columnist for Gannett New Jersey Newspapers, a daily blogger at Politics Patrol)
How appropriate that it shares a name with a stinker of a movie, “Xanadu.”*
(* The IMDB link to the Olivia Newton-John movie “about a girl who makes dreams come true” is supplied by NNY. In movie fame terms “Xanadu” was also, in the movie “Citizen Kane”, the name of Charles Foster Kane’s “world’s largest” palatial estate “cost: no man can say” the film’s stand-in for William Randoph Hearst’s San Simeon castle. Kane was, of course, modeled after Hearst, who was boss to my grandfather, Thomas Justin White, the General Manager and one-time President of the Hearst publishing organization, who consequently spent a lot of time at San Simeon.)

Terry Golway: (a former member of The New York Times editorial board, teaches United States history at Kean University in Union, N.J.)
Nearly $2 billion already has been sunk into this modern Swamp Castle, so it’s highly unlikely that it simply will be demolished. Too bad. The building’s hideous appearance can be fixed, but only a wrecking ball could change its status as a symbol of bad public policy and private sector overreach.
Out of the Swamps Some Editorializing About Preserving Ecosystems

Mr. Golway’s views expressed in his “Swamp Castle” piece (making a wonderful analogy to the satire of an episode embedded in“Monty Python and the Holy Grail”) were especially interesting: One reason is that he is noted to be a former member of the Times editorial board which has not excoriated the Atlantic Yards project (the way years before it did the early proposed developer-centric designs for the Time Warner Center) and the board has also been supportive of the similar wholesale decimating takeover of West Harlem by Columbia. Mr. Golway speaks in terms of respecting, preserving and working with the existing authentic ecosystem of the area, instead of importing just “cookie-cutter attractions” and unimaginatively replicated “food courts, chain stores.”

The ecosystem that Golway speaks about preserving is the natural ecosystem of the swamp but with only a little imagination it easily stands in as a ready metaphor for the kind of natural and intricately evolved and valuable ecosystem of neighborhoods that Jane Jacobs wrote about, neighborhoods like Prospect Heights, West Harlem, Willets Point and Coney Island. The development community and developers like Forest City Ratner and Columbia University are so eager to raze these communities rather than work within their context when they build huge, subsidized mega-projects.

As one Times reader (Comment #3, Cram from Brooklyn, NY) points out about the Meadowlands ecosystem: “Navigable wetlands within the New York region, you can't create and you don't need to subsidize.” The same could easily be said about the neighborhoods (and their associated economies) in Prospect Heights, West Harlem, Willets Point and Coney that are being wiped out in favor of subsidized replacements that won't even be created for a while.

Here is more of what Mr. Golway has to say. Just see out how easy it is to substitute in your mind the concept of neighborhood ecology (in the case of NYC many mega-projects) for the nature's ecology in the Meadowlands that Mr. Golway is talking about (in the case of the Xanadu mega-project):
Before they spend another few billion in an attempt to right this environmental wrong, the site’s new owners should spend a couple of days reading Robert Sullivan’s brilliant 1997 book, “The Meadowlands: Wilderness Adventures at the Edge of a City.” [Substitute Jane Jacobs "Death and Life of the Great American City"?] Mr. Sullivan [Jane Jacobs] showed how this fragile ecosystem has managed to survive repeated assaults -- and he [she] wrote long before anybody thought that the swamp was a good place for another new shopping mall [retro-urban renewal-style extravaganza]

If the owners truly are intent on correcting the mistakes of the past, they will consider offering New Jersey something more than food courts, chain stores and, yes, an indoor ski area. How about incorporating the site’s setting, so beautifully described in Mr. Sullivan’s [Ms. Jacob’s] book?

In fact, why not include a conservation center [parts of Prospect Heights such as the Ward Bakery Building] as part of the “entertainment” component? Instead of designing cookie-cutter attractions, the new owners should remember that they built their castle in a swamp. If they read Robert Sullivan’s [Jane Jacobs] book, they’ll understand why that’s so important.
Putting Taxpayers Out of Business

With all their criticism (as well as that added in by Times readers) there is one thing I am not sure the commentators made clear enough. Brigid C. Harrison got closest to expressing it: “The state would relinquish some of the potential gain of tax revenue generated by Xanadu, which is almost certain to snatch business away from other local merchants, given its enormous size.” If David Smiley is correct in his sentiment (seemingly shared by Ms. Martin as well) that the region is “what retail analysts call ‘over-stored’” then it can be expected that directing enormous subsidies to create an additional huge mall will result in other existing businesses, perhaps other competing malls, going out of existence. Entire malls do go out of business through competition.

Our Old Chum the "Churn"

When government actions and subsidies simply promote the substitution of one set of businesses for another the end result is essentially a “churn.” The way the government thereby assists in putting competing private enterprises out of business is only one or two steps conceptually removed from New York-style abuse of eminent domain to replace one set of private property owners with another set who will be using the land for the same purpose. All this may make the subsidy-seeking real estate industry happy, but it is not good for the public. In fact, it is bad for the public to the extent that the substituted tax-excused businesses are paying less in taxes than those they replace and perhaps not any at all. This, for example, is what is going on up at Yankee Stadium.

Mr. Smiley makes the point that the new massively subsidized mega-project is not just competing with other large malls that may themselves be subsidized; it is also competing with the “small stores and the older main streets of New Jersey” and he suggests that therefore, to even things out, single store and local store owners should be the target of “proportionate loan deals and subsidies.”

What Should Really Be Subsidized Anyway?

Aside from the prospect that this newly created retail space will be putting other retail out of business, there the question of whether retail is a good thing to subsidize. One reader (# 3 David Weinstein of Bethpage, New York) offers the critique that there are other smarter investments for job creation because: “Retail has a very low multiplier-effect: It produces very few jobs secondary to the jobs it immediately creates.” Similarly, there are questions in New York as to whether we should be subsidizing, for instance, housing near a transit hub (or hubs) like those being commandeered by the Atlantic Yards project, where that housing was busily under development anyway, or whether the city should be investing its resources in the sort of transit infrastructure that was stimulating that development without such subsidies. It is likely that investment in infrastructure will have a greater job-creating effect.

In much the same vein Nicole Gelinas meditates in a short piece (May 4, 2011, Like, OMG, NJ, a mall is not public infrastructure!!!!!!!!!!!) whether any jobs this mall may be said to be creating is simply taking away better jobs, by killing competing private enterprise and stealing money from the creation of valuable infrastructure.

Well Versed To Win

Having hopefully whetted your appetite at the beginning of this post we should not delay too long before proceeding to the lyric conclusion of this post.

On April 29, 2011, the Times challenged readers to do their poetical best with the offer that the winner would receive a prize (Odes to a Pleasure Dome Deferred?): “Your assignment: Rewrite a stanza or two of the Samuel Taylor Coleridge poem that gave Xanadu its name, in light of current events.”

May 3, 2011, the Times declared a winner: Prevailing Poet Is Decreed in Meadowlands Ode Contest.

Here for reference is the opening stanza of the original Samuel Taylor Coleridge poem:
In Xanadu did Kubla Khan
A stately pleasure-dome decree:
Where Alph, the sacred river, ran
Through caverns measureless to man
Down to a sunless sea.
The declared winner was Steve Schoenwiesner of Montclair, N.J., for his two-stanza entry, one stanza of which is reproduced below:
For Xanadu did Christie-Khan
A stately subsidy decree.
While tracks below a river, planned,
Were scuttled, fundless, by this man
A blight revives tax-free.
(The hyperlinks in the above are Noticing New York supplied.)

For the second stanza and all the other admirable entries visit the Times site.

Touching on Christie's Tunnel Vision

Mr. Schoenwiesner was chosen as winner for “smartly touching on both the tunnel and the wildlife.” The wildlife reference is in Mr. Schoenwiesner’s second stanza. Reference to the tunnel is something many commenters in the “debate” mentioned: Not long before Governor Christie decided to rescue Xanadu, which its new developer, the Triple Five Group, is re-christening “American Dream” (no kidding) Christie axed the much more essential ARC tunnel link between New York and New Jersey which stood to be a much bigger job creator and stimulus to the New Jersey economy. The Triple Five Group is the owner of another subsidized mall, the Twin Cities’ Mall of America in Bloomington, Minnesota.

It is true that, in the overall scheme of things, the Xanadu project will require less subsidy from the state than the ARC tunnel (even as the state adds $200 million to the $1 billion or so it has already spent on Xanadu) and, if all goes well, it will be completed sooner, but New Jersey’s ARC tunnel subsidies were being highly leveraged by contributing subsidies from the federal government and the Port Authority: Christie gave up $6 billion that was coming from the federal government and $3 billion committed from the Port Authority (coming from its tolls). Christie expressed concerns that New Jersey was going to be responsible for cost overruns on the project originally priced at $8.7 billion. Those estimated overruns might have been as low as $2.5 billion or, Christie was alleging, as high as $5 billion. (With luck, a substitute for the ARC tunnel will one day be built.)

What’s interesting, as Brigid Harrison points out, is that it is Christie’s killing the ARC (theoretically on the vaunted Republican Party principle of small government) that may have backed him into subsidizing Xanadu because as a politician bowing to practicalities at the expense of principle he then needed to “placate the building trades unions.” The problem being, as Harrison points out, that the Xanadu deal “antithetical to” and “flies in the face of” the conservative vision Christie has repeatedly expressed that “government should be smaller, leaner, and not in the business of providing services best left to the private sector.”

Unidentified Cost of Abandoning Principle

Christie ducked out of the ARC tunnel deal, assertedly because he did not know how much it would cost the state. But New Jersey’s Xanadu may also be a bottomless money pit with an unknown cost. Like Charles Foster Kane’s Xanadu it may well have a “cost: no man can say.” Whatever the cost of the state subsidies to Xanadu itself may be, that will not be the end of all the associated costs, especially when the line of principle has been crossed and the government gets repeatedly involved in the incalculable losses associated with the endless churns that the subsidized real estate industry will continue to pursue.

Thursday, May 5, 2011

Good Grief! More Stories (Involving Computers and Schools) Deflating The Bloomberg Management Expertise Myth

(Above: Michael R. Bloomberg has created a plethora of self-laudatory faux websites, ", "," and ""- more about that here. It seemed fitting that one more be added to that Pantheon, happily supplied by NNY above, in light of recent news stories: "". Click to enlarge.)

Come on, quit it. Enough already. I am not looking to do another Noticing New York story on this. But, here it is. It can’t be avoided. Noticing New York has some new links for you.

If Bloomberg is supposed to have brought any expertise with him from the private sector other than self-salesmanship it would theoretically be that he knows how to manage a computer information empire. And if Bloomberg were to push anything to the forefront for consideration and public admiration about the top priorities and goals focused on by his administration it would likely be improvement of the city public school system.

Computers, schools.

It seemed as if Noticing New York had adequately dispensed with the subject of how inadequately the Bloomberg administration was doing in these touchstone areas, computers and schools with several pieces in the wake of two scandals recently in the news: the early forced resignation of Schools Chancellor Cathie Black and the $80 million fraud in the CityTime payroll and time sheet computer automating scandal where some of the core of fraud ironically involved falsification of time sheets.

See all of the following:
Saturday, March 26, 2011
The Myth Of Bloomberg’s Management Expertise Reexamined: What Happens When Government Doesn’t Manage Its Programs

Saturday, April 9, 2011
Add To Bloomberg’s Other Mistakes: Mistakes In NOT Acknowledging Mistakes, Including A Certain Ratner Mega-Monopoly

Monday, March 28, 2011
Take TWO (AYR’s) On Times Coverage- Revisiting Light Shed by CityTime Outsourcing Scandal When Reexamining Bloomberg Management Myth
Another Story Computer Fraud (Affecting Schools) Undetected By Bloombergian Management

No sooner had these articles put to bed what ought to have been a convincing case that Bloomberg overrates his own expertise when we get yet another revelation in this vein. And what does it pertain to? You got it, computers and schools, specifically another fraud during the installation of a new computer system, this time one for the city school system. Again it involves work that was contracted out to the private sector. According to the New York Times whose headline for their coverage was a summing up of this point, the work being done seemed suspicious to those on the sidelines (IBM contractors) as far back as 2002, a date when Bloomberg was newly in office and reportedly giving great scrutiny to the city computer systems (January 2002) and schools (March 2002). Selections from the opening of the Times story:
Sometime in 2002, a manager at I.B.M., which was working on a large project to wire New York City schools for the Internet, noticed something unusual about payments the company was making for some workers.
The manager asked a colleague if this was proper . . . The colleague said others at I.B.M. were also concerned, with one saying he “did not trust Lanham.” But Mr. Lanham . . . assured I.B.M. that he had spoken with a supervisor at the Education Department, who “was O.K. with it,” and the matter was taken no further. . . .

It was the first of several warning signs about Mr. Lanham, whom investigators have accused of stealing $3.6 million from the city through marked-up billings using a complex scheme of contractors and subcontractors . . . .. But because of Mr. Lanham’s unchecked power over the project, which the city was paying him $200,000 a year to oversee, virtually all of the suspicions came to naught.
(See: Doubts About Schools Consultant Charged in $3.6 Million Fraud Dated to ’02, by Fernanda Santos, April 29, 2011.)

It seems appropriate that Noticing New York provide an update. But it is also helpful to hearken back to put it in context because, otherwise, the busy reader might just wind up thinking they were reading the same story over again- “Oh, yeah, yeah, I’ve read that one already.” But you haven’t read this one before and while it's similar and amounts to piling on of more of the same, it’s a different story, something you might not realize from glancing over the Times Story or its headline until you get to this language buried in the middle:
The case, which comes on the heels of an $80 million fraud prosecution involving consultants on another city project, the CityTime automated payroll system, illustrates again the vast amounts of money the city is spending on technology, and the trust it was putting in independent consultants.
The Times story neglected to mention that these scandals are both in the area of the mayor’s vaunted expertise, computer data system management.

Policing the Police With Computers

Meanwhile, the Bloomberg administration is reassuringly selling computerization as the cure for the Police Department ticket-fixing scandal in the news the last few weeks. (See: April 22, 2011, Bloomberg Says Computers Will Cut Ticket-Fixing, By Diego Ribadeneira.)

And One More Story of Waste and Inefficiency Involving Bloomberg Bringing Computers to the City Schools

The foregoing stories about Bloomberg’s failures with respect to computer data system management also have to be distinguished from this other new story from WNYC, again involving a computer data management system for the city’s schools: Bloomberg By the Numbers: $80 Million School Data System Still Evolving, Thursday, March 24, 2011. Although this account involving “ARIS” (the Achievement Reporting Innovation System) doesn’t involve allegations of fraud it does involve allegations of disappointing waste and inefficiency.

Here’s how the WNYC report begins, together with a few excerpts from what ensues:
If there's one over-arching principle Mayor Michael Bloomberg has brought to city government, it's accountability through data. If you can measure something you can manage it better.

In 2007, the Bloomberg administration launched a new computer system for the city schools called ARIS, the Achievement Reporting Innovation System. The goal was to put information about test scores, attendance and student histories all in one place to help principals and teachers do a better job of reaching their students and improving performance. But the $80 million system hasn't yet achieved its full potential — even at schools that use it heavily.

* * * *

If ARIS is struggling to keep up with changing demands of teachers, that's partly because it had a difficult roll-out. IBM had to turn over most of the work when it fell behind schedule. The project was handed over to a subcontractor, the Brooklyn-based Wireless Generation (now owned by Rupert Murdoch's News Corp, which also hired former Chancellor Joel Klein as a vice president for educational technology).

Sources said this wasted time and money. Plans to make the system more user-friendly for teachers to share information with one another got put on the back burner and so were plans to allow more regular updates of school-by-school data. But Suransky said ARIS should be able to add some of those features in by the fall with a feature called ARIS Local.
Troublesome Focus on Management by Troublesome Statistics

If you spend time absorbing the whole report (which is not all negative) you can form your own impression of whether Bloomberg’s constant emphasis on “data” and computerization makes managerial sense. It is possible that all this technology can just be a wall between real people and that in education the answers are really more about how real people interact with each other.

Also, sometimes Bloomberg data is just wrong and self-serving even as it goes unquestioned. Consider his statistics about the presumed growth of the city, or this respecting the Bloomberg administration’s statistics on: 1.) school test score improvements, 2.) addition of affordable housing units (as many were being lost as created), 3.) the lack of job creation and quality job creation, and 4.) police statistics. (On the presumed growth of the city see also this excellent piece summarizing a Francis Moronne Historic Districts Council address from Atlantic Yards Report: Friday, April 29, 2011, PlaNYC 2030, the questionable estimate of 1M more people, Morrone's history of erroneous NYC predictions, and the preservation movement.)

Bloombergian "Start From Scratch" Grandiosity

When you are questioning the reliability Bloomberg’s management expertise and the extent to which his statistics reflect a real world versus Bloomberg’s desire for an exulting edifice-complex oriented headline, the statement the in the Times about Bloomberg’s “big push” for an applied sciences school (“envisioned as one of the largest development projects in the city’s history” - What? Bigger than the Atlantic Yards mega-monoploy handed to Bruce Ratner?) has more ominous resonance:
William A. Zajc, chairman of Columbia’s* physics department, said the idea for an applied sciences school was a “field of dreams venture.”
(* Is this gripe just because Columbia doesn’t want competition for its takeover of West Harlem?)
(See: Bloomberg’s Big Push for an Applied Sciences School, by Javier C. Hernnandez, April 26, 2011.)

Some more tidbits from that Times story:
Critics have deplored the city’s willingness to offer incentives at a time of economic distress.

* * * *

“In a period of economic crisis, when we are so tight with our budget, we should not be giving incentives to private institutions,” City Councilman Ydanis Rodriguez of Manhattan said.

* * * *

The idea is one of the more imaginative proposals to come out of Mr. Bloomberg’s City Hall, but it may also be among the riskiest.

* * * *

Some have faulted the city for not clearly articulating how it might recover some of its investments if the school does not turn out to be the economic engine that the mayor expects.
The Times story also includes criticism that the mayor should, instead, be thinking in terms of deploying the city capital (“the city has pledged to offer capital [$100 million or more] and public land”) to build upon and expand existing resources and programs rather than these grandiose plans to “start from scratch” which NYU’s proposal to the mayor dares to criticize:
“A ‘start from scratch’ approach that parachutes a new player into New York without the requisite ingredients that lead to success has the potential to be a waste of resources.”
Willlets Point, Atlantic Yards, Coney Island, even the Columbia expansion into West Harlem (potentially competing with the mayor's applied sciences school vision): Where else have we been hearing about the mayor’s intoxication with wiping the slate clean in order to “start from scratch” before building anything?

Yet, as the Times story notes, “Mr. Bloomberg has taken a strong personal interest in the project, embarking on a campaign-style effort to lobby university leaders and business executives” for his start from scratch approach.

Maybe Bloomberg is not serious about this new proposal. Maybe it is just that talking about parachuting “a new player into New York” just gives Bloomberg a better chance to roam around the country talking to power players on the national stage as he toys with the idea of replacing Donald Trump as the multi-billionaire Republican candidate to challenge Barack Obama in the next presidential election.

Net Net: When you read the Bloomberg stories in the news, they all have to be remembered and read together.

Monday, May 2, 2011

“Welcome To Brooklyn” Where the Game Is Frivolous Spending On Boondoggle Basketball Arenas- Getting the Image Right

Just the other day we were out crossing the Pulaski Bridge that connects North Brooklyn to Queens when lo and behold what did we espy but a “Welcome to Brooklyn” sign set up to flog the Forest City Ratner/Mikhail Prokhorov Nets basketball arena to the traffic going to and fro!

The sign was doubled-sided so it presented the same “Welcome to Brooklyn” message whether you were coming to or leaving Brooklyn (the shot above is the “Welcome to Brooklyn” you see when leaving Brooklyn- the shot below is what you see when arriving), but we found ourselves transfixed more by a second anomaly of this image that wasn’t gotten right: The picture is the really preposterous old rendering of the arena which by now ought to be discredited in the minds of most people. I am surprised it hasn’t been discarded. . . .

. . . For one thing, the preposterous old rendering used in the billboard still has, in the background, the notorious ghostly vaportechture that stands in for the buildings that aren’t being built, while blotting out both the real neighborhood being destroyed and the developer-created parking lots that are likely to be around for decades. The rendering also substituted a whoosh of orange glow for the inevitable slow-moving traffic jams that will surround the arena.

The fact is, after that old rendering came out quite a few of us spent a fair amount of time working on a corrected version of what things are apt to really look like.

With collaborative corrective efforts, the rendering thus went from this fantasy:

To this likely reality:

And thereupon it seemed like the image really needed to be overlaid with some visual reminders about how the arena New York taxpayers are subsidizing for the subsidy-collecting Bruce Ratner and his Russian oligarch financial pal will be a significant financial net loss* for the public.

(* It is true that an updated calculation of the extent of the net loss needs to be prepared and in this regard it is telling that the public officials responsible have not disseminated and probably not bothered to calculate such an update.)

For more on this see:
Friday, October 30, 2009
Getting The Image Right: Forest City Ratner’s Proposed Atlantic Yards Nets Basketball Arena

Saturday, September 12, 2009
Really Now! The subject of Rendering the Atlantic Yards Arena Realistically Revisited
All that remains now is to get this image up on a billboard so that all those entering or leaving the borough of Brooklyn will get the message (click to enlarge).

This Saturday May 7, 2011, In Brooklyn Heights: Folk Music With We’re About 9, Barnaby Bright and the Brooklyn Heights Association Landmark House Tour

Here is a suggestion for making a great day of it in Brooklyn Heights this coming Saturday, May 7th. It caps off with catching the folk music performance of We’re About 9 in a return engagement in the First Acoustics series at the Unitarian Church on Monroe and Pierrepont Streets. Folk music duo Barnaby Bright, a married couple, is their opening act. The performances start at 8:00 PM.

But here is how you can make a real day of it. Start out with the annual Brooklyn Heights Association Landmark House Tour. You should be done just in time to have a perfectly timed pre-performance dinner at one of the good local restaurants. The window of time for doing the "go-at-your-own-pace" five town house tour tour is 1:00 PM to 5:00 PM, with tickets available in advance on-line or by phone, or on Saturday at the event from 12:30 to 3:30 PM. The brownstone/townhouse and garden-oriented house tour is fun and raises money for the oldest and one of the strongest community neighborhood associations in the city. (The BHA is part of the Brooklyn Speaks, which is currently litigating against the Atlantic Yards Ratner mega-monopoly.) With luck this will be another year when homes on the Promenade with views of the harbor will be on view. And if you haven't done it before you should take the tour's opportunity to do the docent-led tour of historic Plymouth Church.

What does notice of a local music event and the Brooklyn Heights Association annual House Tour have to do with Noticing New York’s more typical focus on development in New York City and associated politics? - - It’s a long story (some of which is still being written). Some of it can be found via the segments linked to below:
Wednesday, March 16, 2011
Another Insert into the Music- Hands Joining Across Eras: Brooklyn Heights Unitarians and How a Historical Landmark Saved the Past For the Future

Wednesday, March 9, 2011
An Insert Preview - Music Superstar Ethics: How Completely You Can Sell “You can say what you say, but you are what you are.” Jay-Zzzzus!

Tuesday, October 19, 2010
Adding A few More Off Topic Notes (Or Are They Really?)
Here again is the information about Saturday night’s performances. Tickets are available on-line. Enjoy.
Saturday evening at 8:00 PM
We're About 9
with special guest
Barnaby Bright
First Acoustics
May 7, 2011
All seats $25.00 advance, $30.00 at the door
For More Info

More on the details of getting tickets for the BHA house tour are here. The tour tickets are $30.00 for BHA members and $40.00 for non-members, with an additional significant discount for those who become members and reserve in advance, which is still possible.