Private Sector Croynism Seeks to Replace Government in Wisconsin: Might New York Be Leading the Way?

I am writing something else right now so . . . .
. . . I didn’t really wanted to be distracted by writing this.

But the thing is, as I am working on other things*, topical events keep getting reported in the news – far faster than I can write to keep up with them– that bring back memories of my earlier career and I find myself wondering whether I should take time out to comment on some of them. And then I read Paul Krugman’s column at the end of last week and that did it: I really have to say something now.

(* You may have a feel for some of what I up to, someday to made much more clear, if you have been paying attention to the idiosyncratic and ongoing augmentations to my earlier post, Adding A few More Off Topic Notes (Or Are They Really?), updating additions that pertain to everything from the dates for Shepley Metcalf’s upcoming performances at the Metropolitan Room in March, to “Over the Rainbow,” to more on Jean-Paul Vignon.)

Bagging Sachs?

One of the things reported in the news recently that caught my attention was the front page story in the New York Times and ensuing editorial (a carefully-“Times-ed” one day later) about Governor Andrew Cuomo’s close friend and advisor, Jeffrey A. Sachs. (See: Cuomo Adviser Takes Pay From Health Industry, by Nicholas Confessore, February 22, 2011 and Editorial: Gov. Cuomo’s Friend, February 24, 2011 plus this follow-up article Pressure Put on Adviser to Cuomo, by Nicholas Confessore, February 23, 2011.) Back in the day, I worked with Jeffrey when he was involved in Cuomo’s HELP projects that provided housing for the homeless. I rather liked him, which is not to comment in any way on the Times articles or to say that I ever got to know Mr. Sachs very well.

Looking For The Silver Lining When It Comes To Public Employee Unions

What has brought back far more memories for me are the stories about Wisconsin Governor Scott Walker’s effort to take collective bargaining rights away from that state’s government workers. I used to negotiate on behalf of management with public employee unions of the New York State’s public finance authorities. I actually have a perspective from both sides because, before I did that, I was a member of one of those municipal unions.

All the same, I didn’t think I had much to say that would add enough to the debates such that it would be worthwhile to write it up and post. How exactly, after all, would it relate to the Noticing New York concerns that I try to make my focus?

I figured that, if I wrote, I could point out that public employees should have a basic right to organize and that they should also have a right to participate in politics, but there are problems when they have both: It can be a form of unfair extra power during the negotiation process. I know it is problematic because I have been in the situation of being told from on high (as in from a political on-high), not to negotiate a deal that management considered was fair, workable and the most conducive to a good workplace environment. Instead we were told to capitulate to union demands. By quirk of fate and electoral fortune the capitulation didn’t actually happen. I am sure there are corrective fixes for concerns about such meddling but I don’t offer them here.

I am sympathetic to some things that unions negotiate for; I am not sympathetic to all of them. I remember having a special personal antipathy to the idea that pay escalations, beyond cost of living, should be awarded for longevity of service. I think that the pay increases that individuals receive should be handed out by management and earned only in connection with promotions and recognition of merit. On the other hand, negotiating for general benefits is entirely fair. More important, last-in-first-out layoff rules and protections against improper dismissals are especially appropriate, given the uglier vicissitudes of politics. I am sure that little "p" politics can also get rough in the private sector, but at least in the private sector people are supposed to be keeping their eye on the bottom line, not political affiliations.

The last thing I was going to point out was that government unions, pain in the ass that they might be, can be a bulwark against senseless privatizations of government functions that far too often involve some politically connected private company lurking in the background ready to shaft the taxpayers.

The Krugman Revelation

That was about all I figured I was going to be able to say until I read Paul Krugman’s Friday Op-Ed column: Shock Doctrine, U.S.A., by Paul Krugman, February 24, 2011. Krugman points out that Governor Walker is not only trying to bust the government unions but that the 144- page-long piece of legislation with which he is attempting to do it has “hidden deep inside” some “extraordinary things,” among them:

“Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).”

In other words, as Krugman points out, the proposed law contains a “setup for cronyism and profiteering” whereby the governor could sell the state’s public facilities and capital assets (plants supplying heating, cooling, and electricity to state-run facilities):

without taking bids, to anyone he chooses. And note that any such sale would, by definition, be “considered to be in the public interest.”

How to Outfox the Fox That Has Invited Itself In

Privatizing the government’s functions without taking bids? One of my jobs while in government was to fend off the improper privatization of government functions and one of the ways we did that was to initiate a bid process that would be followed if and when functions might be privatized. That was enough; we didn’t have to actually go forward with the bid process (and there wasn’t any ensuing privatization) because once those on the outside who were pressing for the privatization knew it would be subject to a bid process they stopped pressing for the privatization. They apparently didn’t believe that the business would land in their lap if they had to prove through a bid that they could do it better and at less cost than anyone else. Land in their lap? They probably didn’t think they had a chance to get the business at all.

It was good that the functions were never privatized. The ideological vision of privatization was, at the time, a newly promoted idea in the air, but the notion of privatizing these particular functions didn’t originate within the government. It was politically connected schemers on the outside looking for something easy to pick off, but the proposed privatization, a transfer for mortgage portfolio management would have created a disjuncture similar to what ultimately helped cause Wall Street’s financial crisis: Those who were originating a mortgage portfolio would have lost touch with feedback and accountability for the product they were creating, whether it was a successful one or met its intended public purpose.

Fending off this kind of privatization involved sailing through very treacherous waters. There were, of course, the wishes being communicated, politically from on high. I also found that I had to watch out for subordinates theoretically working under me (and the others officially in charge of the Agency) who, paying attention to the political tea leaves, looked to curry favor with the outside schemers by trying to get past us things they suspected would be stymied if they came to my attention. Was our New York State Governor at the time involved when pressure came from on high? I am not saying he was or that he wasn’t, but I will say that even if you are the governor, when faced with external pressure for such privatizations you need political cover and tools to fend them off when the proposals harm the public and don’t make sense. That’s why you want competitive bids to be in your defensive arsenal.

Incredible Legal Fictions

Here above all else is what caught my eye in the Krugman piece: That when these privitizations are done without bid, which is clearly NOT in the public interest, they will by law be deemed “by definition” to be “in the public interest.” It just seems impossible that sensible Wisconsinites could propose to indulge in such legal absurdities and fictions. Then I realized how closely this situation parallels one of the worst abuse situations in New York:

• The Atlantic Yards mega-monopoly was handed out to developer Forest City Ratner at Ratner’s initiative and without any bid. (Ratner is winding up with contiguous ownership of about 30 acres of Brooklyn real estate over the subway lines and a monopoly on about 50 acres of interrelated high-density real estate total.)
• The megadevelopment is essentially a privatization of the much of Brooklyn together with (through abuse) what is supposed to be the public function of eminent domain.
• In order to allow Ratner this cronyistic seizure, New York State public officials, with New York State court justices affirming their pretextual fiction, have similarly had to legally deem this privatization to be “in the public interest.”

So whatever fight is going on in Wisconsin, maybe New York led the way. (The proposed expansion of Columbia University into West Harlem involves a set of misdeeds quite similar to Ratner’ s Atlantic Yards.)

Question for Our Times: Does the Public Get “Sach”ed?

Back to Andrew Cuomo’s friend Jeffrey A. Sachs: I suppose I should care about what the Times is claiming are the questionable things Mr. Sachs has used his inside influence to lobby for. As my family resides in Brooklyn Heights, I should probably care in particular that Sachs is accused of lobbying to close Long Island College Hospital rather than have it merge with SUNY Downstate Medical Center because “Brooklyn Hospital Center, a Sachs client . . . . stood to absorb most of LICH’s patients should that hospital close down.”

The many visits our family members have suddenly needed to make to the emergency room have all been to LICH. The Brooklyn Heights Association (whose annual meeting is tonight) has fought to keep LICH open. I could expand this discussion to go into some Noticing New York how-the-city-is-shaped background about LICH: community parks and playgrounds that were reaarnged to give it needed space, how its recently donated-to endowment is no longer there, the proposed sell-off of LICH buildings to create more condos and co-ops. . . . But I won’t.

The Times’ Blind Eye Toward Blatancy

Let me instead note this: The Times has gotten on its editorial high horse about Jeffrey Sachs. The position on LICH attributed to Sachs in the Times (by vicarious report) is “‘You’re dealing with one hospital. We have four or five there. Why are you dealing with one hospital when the others are falling like dominos?’ ” I’ve worked in the health care area (in fact, in government, I worked on the financing of LICH). I have also worked in the area of more straightforward subsidized development like Ratner’s. The difficult issues respecting which hospitals to close are far more nuanced. (The fingerprints of lobbyists are, consequently, probably harder to detect.) Here though is what the Times editorial on the subject had to say about Cuomo’s ethics in the Sachs situation:

As he pushes for ethics reform, he should call for a tougher lobbying law — one without loopholes. He must also ensure that his good friend does not get — or appear to get — special treatment.

But the Times has had a blind eye when it comes to the issue of “special treatment” when it comes to the more blatant exploits of Forest City Ratner, its real estate business partner in building the Times building. When it comes to Atlantic Yards the issues of abuse are far more stark. And just in case anyone is forgetting: Forest City Ratner is also lobbying Mr. Cuomo. During his campaign for governor Mr. Cuomo took money from Ratner that was never returned by Cuomo despite a number of conflicts of interests pursuant to which it should never have been accepted at all.

To Attorney General Andrew Cuomo and State Comptroller Thomas DiNapoli: Investigate and Halt Issuance of Arena Bonds

The following an open letter from Noticing New York to Attorney General Andrew Cuomo and State Comptroller Thomas DiNapoli calling for an investigation and halt to the proposed issuance of ESDC’s Brooklyn Local Development Corporation PILOT Revenue Bonds for Forest City Ratner’s proposed Nets basketball arena.

* * * *
December 13, 2009

Hon. Andrew M. Cuomo
Attorney General
Office of the Attorney General
of the State of New of New York
120 Broadway
New York, New York 10271-0002

Hon. Thomas P. DiNapoli
New York State Comptroller
New York State Office of the Comptroller
633 Third Avenue
New York, NY 10017


Re: New York State Public Authority Bonds Being Rushed to Market Without Proper, Adequate and Required Assessment, Disclosure and Approval of Risks (Empire State Development Corporation’s Proposed Financing of Nets Arena Via the Issuance of Its Subsidiary Corporation’s “Brooklyn Local Development Corporation PILOT Revenue Bonds, Barclay’s Center Project”)

Dear Attorney General Cuomo and Comptroller DiNapoli:

As you each have jurisdiction, capacity and, we respectfully submit, the duty to act in this area, we are writing to bring to your attention the fact that New York State public authority bonds are being rushed into the tax-exempt bond market without the required assessment, disclosure and approval of the risks associated with their issuance which in this case is substantial. The sale is being rushed to market (while a number of lawsuits are pending that ought to affect the issuance) in order to benefit Forest City Ratner hoping to meet a December 31, 2009 IRS deadline to obtain a tax-exempt status for which that private developer’s project would otherwise not qualify. (The goal is to avoid the provision of the IRS code enacted by Senator Moynihan that prohibits tax-exempt financing of private sports arenas and stadiums.) The risks being ignored in the process put the public, the state and the investors potentially buying these bonds in significant jeopardy.

We ask that you use your powers to investigate this issuance and, in the meantime, to order it halted as not being in compliance with minimum state requirements.

Here are just some of the things you need to know and about which you can readily learn more when you investigate:

1. Bonds Issued by Subsidiary Public Authority: (More than One Tranche). More than one series of bonds are being issued by the Brooklyn Arena Local Development Corp. a subsidiary public authority created by the Empire State Development Corporation as an instrument to bring this financing to market. The issuance of different series of bonds is being used in order to stratify the unacceptable risks of the transaction. The tax-exempt bonds would be paid with “PILOTS” diverting taxpayer revenues for the developer’s benefit.

2. Inadequate Assessment of Risk by the Rating Agencies. More than one series of bonds are being issued. Moody’s Investors Service and Standard & Poor’s (December 1, 2009) gave the senior bonds (i.e. the most credit worthy of the bonds being issued) respectively Baa3 and BBB-minus which means that these best-of-the-lot bonds being issued were given the very lowest investment-grade ratings possible, ratings just a notch above junk. However, the evidence is that these ratings do not reflect a proper assessment of actual risk. (Fitch did not rate these bonds.) Among other things:

a. Moody’s Cash Flow Review Mistake: Starting With 225 Annual Arena Events vs. 200. The Moody's review on the bonds was based upon a supposition that there would be 225 arena events per year while the evidence is that to assume even 200 arena events would be aggressive and inconsistent with the information that the developer itself has been able to promulgate. (There is no evidence of an independent market study or realistic recognition of the arena's competition with three or perhaps four regional arenas. - The consultant hired to do a market analysis made clear that “information provided to us by others was not audited or verified, and was assumed to be correct.” The “others” would be FCR.) When asked to address the significant 11% error in assessing the cash flow Moody’s was unable to respond.

b. Arena Completion Date Unrealistic. It is unrealistic to project that the arena will be completed by April or even June 2012, thus prolonging the duration of bond payments without any projected revenues.

c. Bonds Involve Provisions For Junior Bonds to Default: Atypical Absence of Cross-Default and Redemption. The bonds include provisions where the junior bonds can default, in which case a Russian billionaire, Mikhail Prokhorov, will be in litigation to take over the arena from the developer. The junior bonds are junk bonds quite likely to default. Mr. Prokohrov’s involvement in this transaction is as yet apparently unapproved by any public agency involved. In other words a background check and review have not been done. There is no provision for cross-default, acceleration or redemption in such an event. Given this atypical provision for a litigious transfer of the project we are at a loss to explain why the ratings for these bonds have not, accordingly, been reduced several notches. We do not believe these kinds of litigious difficulties were envisioned or similarly foreshadowed when bonds were issued for the new Yankees and Mets stadiums. The bonds for those baseball stadiums also deserve a respectively higher rating than these new proposed arena bonds given the proven track records of those teams in New York City. The New Jersey Nets have absolutely no track record. Forbes is reporting that the Nets are distributing 5200 free tickets a game, which is more than one-quarter of the house. Additionally, ratings for the Yankees and Mets stadium bonds were given before the national fiscal crisis. We understand that attendance for those teams has not been as good as was projected.

d. Risk of State Agency Non-Compliance With Public Authorities Accountability Act. One Significant risk to the transaction is that the half of the land required for the transaction (the half the developer is not attempting to take through eminent domain) will not be obtainable because of a violation of the Public Authorities Accountability Act. Despite the fact that these bonds are being issued by a state public authority and that this will pose a significant risk to any buyers of these bonds the assessment of the question of whether there was a state agency violation of this law is not being offered by state officials but by the developer. The Preliminary Offering Statement seeks to assure the buyers of the bonds with the private developer’s self-interested assessment that the developer: “believes that the MTA complied with all applicable legal requirements and expects that the [defendants] will prevail in this proceeding.” We also note that this assessment is not in the form of a legal opinion.

e. Errors in Offering Statement. The Preliminary Official Statement Being used to market the bonds contains other inconsistencies and inaccuracies that go to the question of how many arena events will be generating cash flow for the bonds and the basis for ratings. (See next section.)

In assessing the reliability of the ratings agencies we point out that in a front page story the New York Times offered this assessment of the current state of affairs: “. . for now, and for the foreseeable future, the market for ratings is sure to look uncannily similar to the one that helped usher in the crisis: three rivals, all of them paid by issuers, bestriding the market.” (See: Debt Raters Avoid Overhaul After Crisis, By David Segal, December 08, 2009.)

3. Inaccuracies in the Preliminary Official Statement (POS) relating to number of possible events in the arena.

a. Non-Profit Arena Events for Community Go Missing. The Preliminary Official Statement (POS) being used to sell the bonds says that each year NO MORE THAN TEN EVENTS (“not to exceed ten (10) events”) shall be held in the arena for the public and community groups at the FULL COST of normal events in the arena (“which access shall be on the same terms, including cost, as the Arena is generally made available to other Persons for use”). Inconsistently, the developer has already promised the public that there will be AT LEAST TEN EVENTS which will be at a LOWER COST to the public with the developer forgoing profit on the minimum ten events. (Alternately: “a minimum of 10 events would be made available for use by community groups at a reasonable cost (generally the cost of operation) with any net proceeds to the sponsor from these events to be donated to not-for-profit organizations” and “at least ten (10) events per year, at a reasonable rate, with net proceeds from such events to be used to support non-profit community organizations.”) In other words, that subtracts out a minimum of at least another ten events a year from the 220 projected profit-making events.

b. Misrepresentation on Possible Hockey Team. The POS claims that simply by retrofitting the arena with “ice-making abilities” the arena can house a NHL hockey team and thus bring it the revenue associated with that team. This representation offers absurd hope for mitigating risk because the evidence clearly shows that the arena is physically too small to include a hockey rink. This is highly material because if a hockey team plays in an arena, the team plays a minimum of 43 home games per year and as many as 55.

4. Bonds Far Riskier than Transaction Approved by the State Public Authorities Control Board (PACB). (As furnished to and consented to by the State Comptroller’s Office.) The bonds being issued are far riskier and for a very different transaction than was approved by the State Public Authorities Control Board (PACB). As required by the governing state legislation that original transaction was also sent to, commented upon and the approval determination was consented to by the State Comptroller’s Office. The new transaction which has not been approved by the PACB also lacks that statutorily required comptroller review, input and consent. The new transaction is much riskier and different from what was approved because:

a. The arena (supposed to generate income) is 20% smaller. The PACB (and the ESDC board) approved a transaction that involved the financing of an 850,000 square foot arena, not the 20% smaller 675,000 square foot arena that developer Forest City Ratner currently plans to build.

b. The arena (needing to be paid for with generated income) is substantially more costly. At the time the PACB issued an approval, the arena was projected to cost $637.2 million, only a fraction of the $1.1 billion (including infrastructure) it is currently projected to cost according to the recent disclosures of the Preliminary Offering Statement. $1.1 billion represents an increase of 73% over $637.2 million.

c. The arena is less functional. The smaller arena will be less functional. The diminished functionality means among other things that, as noted above, the arena will not (as would previously have been possible) be able to host an NHL hockey team with 43-55 arena events per year.

d. Larger Atlantic Yards financing now a decades-long option for the developer. The larger Atlantic Yards megadevelopment as part of which the arena financing was approved has also changed very substantially (and is much more undefined than ever). It is now a muti-decade option on multi-acre mega-monopoly on the part of the developer that will involve subjecting the community to years of unnecessary developer-created blight as parts of the community are torn down and once-thriving alternative development is stymied.

5. No ESDC Board Approval for Smaller Arena. Not only has the PACB not approved the far riskier and different transaction being brought to the bond market; the ESDC board members have also not acted to approve the financing of the new smaller arena that Forest City Ratner proposes to build.

6. PACB Approval (and Comptroller Review and Consent) and Public Policy of Requiring Public Benefit: $220 Million Net Loss. While it may be argued whether the PACB and the Comptroller take into account the generation of public benefit and public policy issues when they conduct their review of proposed project financings, it should be noted that the transaction now getting underway involves no benefit to the public, whereas the transaction that was previously brought to the PACB and the Comptroller’s office for approval did. The New York City Independent Budget Office has reviewed the new arena financing transaction being brought to market and concluded that it will represent a $220 million net loss to the public ($39.5 million in direct losses and $180.5 million in opportunity losses). That is not the total cost to the public: That is the current project net loss; the project will cost much more.

7. Secret Approval of Additional $400 million in Bonds For Arena That Will Substantivally Increase Total Net Loss to the Public. On September 17th the public authorities issuing these bonds secretively and in violation of the New York State open meetings and sunshine laws approved the groundwork to issue another $400 million in tax-exempt infrastructure bonds, the proceeds of which can be turned over to the developer to reimburse it for its costs of building the arena, thus significantly boosting the net loss to the public of this transaction. Those additional bonds have also not been approved by the PACB or the comptroller. Absent a recission of these actions by the public authorities there can be no assurance that the public is not about to be saddled with these extra undisclosed costs.

8. Bonds Negative Effect on Credit of the State. Though the taxpayer-backed bonds are technically non-recourse to the state for additional funds in the event of a default, the state is still in jeopardy due to their riskiness. Though there is no state guarantee of the bonds, state public authority officials have not ruled out the possibility that the state would rescue the bonds in the event of their default. One possible backdoor method being set up to effect such rescue is the secretly approved issuance (at taxpayer expense) of the additional $400 million in bonds described in the above paragraph. Even if the state were not to rescue the bonds, the PACB was created to review and approve the issuance of all bonds, including such non-recourse or limited-recourse bonds issued by state authorities because the negative effect of default on the state and all other state issuers is recognized.

9. Public Authorities Out of Control? We believe that you each independently have authority to step in to halt these transactions and investigate them. To say that such is not the case would be to say that our public authorities are extraordinarily out of control.

It is not the purpose of this letter to criticize your fellow politicians and public officials, but it is important to note that the issuance of these bonds is being played out against an Alice-in-Wonderland denial to the public of realities, fiscal and others, by holders of public office who should be exercising their oversight to restrain the abuses in these transactions:

1. Denial of Responsibility by Mayor Bloomberg. Bloomberg has denied the financial facts of excessive subsidy for Ratner Atlantic Yards mega-monology with incredible assertions both preceding and following his actions. On Wednesday, May 20th Bloomberg publicly said that the Atlantic Yards project would receive no more subsidy. On May 29th it was revealed that a deal was in the works to give millions more, what turned out to be a package worth more than $180 million in additional no-bid subsidies to Ratner. These subsidies facilitated by the mayor (which can still be halted) are being given to Ratner via handouts from the MTA’s board, approved by the mayor’s representatives. Just this week, commenting on the MTA’s lack of funds (the $200 million shortfall in its 2009 budget), Bloomberg, as if he himself was not responsible, said: "I don't know why anybody is surprised at what is happening to the MTA," . . . "It's a piggy bank that keeps getting raided.”

2. Denial by Governor Paterson. As of last Wednesday, Governor Paterson announced that New York State, with only $3 million of cash on hand, is running out of money. He has been urging legislators to find ways to cut back on state spending and speaking about the dire cutbacks that he will be forced to make without the legislature taking action. Yet how can Governor Paterson expect legislators to take him seriously about legislative branch-controlled spending when he has refused to do anything about Atlantic Yards, which is the premier example of executive branch-controlled pork barrel spending. Upon her recent departure from the state housing finance agencies, Housing Finance Agency CEO Priscilla Almodovar commented caustically about the cronyism of housing approved by the Pataki administration. There can be no better example of such Pataki administration cronyism than its attempted no-bid award of a huge mega-monoply on Brooklyn development to Forest City Ratner.

Necessary Investigation of Eminent Domain Abuses. Finally we must also raise with you the background of eminent domain abuse by state and city officials about which the state Attorney General’s office has initiated investigations respecting conduct relating to Willets Point. The situation with respect to Willets Point involving misconduct by city officials is not an isolated incident. (We are aware of news reports that the Bloomberg administration has been resisting subpoenas from the Attorney General’s office by countering with political threats.) It is tip of a much larger iceberg. As you found, your investigation into Willets Point quickly expanded into investigating activities of the Brooklyn Downtown Partnership, which brings it very close to Atlantic Yards itself. (You should probably also be looking at Coney Island as well.)

The recent decision in the Kaur case respecting the abuse of eminent domain by Columbia University makes this clear how far the abuse of eminent domain by government officials extends. We borrow the language of lawyer, legal scholar, and eminent domain expert Gideon Kanner summarizing his assessment of what happened in Kaur:

. . . in the Kaur case, the New York Appellate Division did examine the unseemly facts underlying the decision to condemn and found them to give rise to a miasma of favoritism, conflict of interest, procedural mistreatment of the condemnees, and deliberate blighting of the area.

The cast of characters in the Kaur case (substituting Forest City Ratner for Columbia University) is virtually identical. The facts of abuse are very much the same, in some respects even worse. They need to be investigated. Senator Perkins has written a letter to Governor Paterson asking for a state moratorium on the use of eminent domain in which he offers his opinion that the “actions on the part of the ESDC are part of an insidious form of discrimination and civil rights violations that must not stand.”

We suggest that investigation needs to start now, not in six months or a year from now. We suggest that your investigation should also extend to how in the case of Atlantic Yards public officials have coordinated such abuses of eminent domain with other illegal acts such as the non-compliance of the MTA with the Public Authorities Accountability Act. The investigation should commence before New York is subjected to a wasteland such as was left in New London, Connecticut in the aftermath of the Kelo decision and before these rushed-to-market bonds default.

From this brief list of problems it should be evident that the skimping on due diligence and normal procedures in service of the private developer's deadline poses great risk to the State, the public and the potential buyers of these bonds. Once again, we believe investigation by each of your offices will find serious problems and wrongdoing in the financing process such that an immediate halt to this unapproved financing transaction is warranted.


Sincerely,


Michael D. D. White

The Jane Jacobs Way for Coney Island

We have been writing a lot about Coney Island recently. Because of a proposed city rezoning plan, Coney’s fate hangs in the balance. (Your City Council members need to be contacted.) And we have also been keeping up with our Jane Jacobs Report Card Atlantic Yards posts. Monday morning Coney Island and Jane Jacobs came together in an event in which we participated.

“Jane Jacobs Way”

The city picked Monday to dedicate and rename a portion of Hudson Street where she lived “Jane Jacobs Way.” This produced the odd spectacle of politicians, including City Council Speaker Christine Quinn praising community activists and protestors who fight what used to be thought of as Robert Moses-style development, development that is oblivious to communities, their input and their wisdom about their own neighborhoods. These days that style of development is more apt to be thought of as Bloombergian. The event also produced protesters, mainly “an army Janes,” protesters who were dressed up as Jane Jacobs and asking that the city plan for Coney Island be fixed. We were one of that group; we wore Jane Jacobs glasses but not a wig.

Jane Jacobs and Coney
Two YouTube videos of the event are available. Save Coney Island masterminded the army of Janes and their video is available at their site: Save Coney Island Activists Rally Support at Jane Jacobs Ceremony. In addition, earlier in the day Save Coney Island released a statement from Jane Jacobs’s son, Ned Jacobs, critical of the city plan, saying in part.

While I cannot speak on behalf of my mother, the late Jane Jacobs, or predict what she would think about particular proposals today, in my view, this rezoning plan for Coney Island does not appear to reflect the urban values and planning principles she espoused. These include sensitivity and integration with the scale, character and performance of existing neighborhoods and their established uses; the need to retain aged but serviceable buildings for the sake of economic diversity and continuity, as well as for their history and charm; the benefits of planning and redevelopment based on organic, iterative change, and the inherent dangers of top-down urban renewal-type schemes, propelled by “cataclysmic money.”

(See: As N.Y. Honors Jane Jacobs, Her Son Is ‘Appalled’ at Coney Island Rezoning Plan.)

Jacobs Speaks About Bloombergian Development Directly to Bloomberg

Jane Jacobs is not around to speak on her own behalf anymore, but she has spoken often about New York. The last occasion we are aware of before her death in April of 2006 was when she wrote an April 15, 2005 letter to Mayor Bloomberg recommending the community plan alternative to the city’s proposed Williamsburg rezoning. Introducing herself as “a student of cities, interested in learning why some cities persist in prospering while others persistently decline” Ms. Jacobs wrote:

Let's think first about revitalization successes; they are great and good teachers. They don't result from gigantic plans and show-off projects, in New York or in other cities either. They build up gradually and authentically from diverse human communities; successful city revitalization builds itself on these community foundations, as the community-devised plan 197a does.

(See: Letter to Mayor Bloomberg and the City Council, by Jane Jacobs.)

That is obviously consistent with what her son Ned wrote and could easily apply directly to Coney or to many other large Bloombergian meg-endeavors like Atlantic Yards, Willets Point or the Columbia University’s expansion taking over West Harlem.

The same is true in what Ms. Jacobs writes at the letter’s end:

I will make two predictions with utter confidence. 1. If you follow the community's plan you will harvest a success. 2. If you follow the proposal before you today, you will maybe enrich a few heedless and ignorant developers, but at the cost of an ugly and intractable mistake. Even the presumed beneficiaries of this misuse of governmental powers, the developers and financiers of luxury towers, may not benefit; misused environments are not good long-term economic bets.

Come on, do the right thing. The community really does know best.

(Background: When we were at the City Council candidates debate in Williamsburg a number of weeks ago we noted that there was a great deal of apology in the air for the unfortunate ways that the plan was `unexpectedly’ turning out. New York magazine (July20-27 now on the stands) is also just now trying to sort out its own thoughts on some of this. See: The Billyburg Bust, by David Amsden, Jul 12, 2009: “A working-class neighborhood became a bohemian theme park, which in turn became a fantasyland for luxury-condo developers. Now, littered with half-built shells of a vanished boom, Williamsburg is looking like something else entirely: Miami.”)

The Odd Thing About Quinn and Jacobs
Here is the odd way that things stood on Monday morning. Christine Quinn was a central part of the ceremony dedicating “Jane Jacobs Way” in honor of Ms. Jacobs. There are probably few people paying attention to development in the city who believe that either Quinn or Bloomberg have a Jane Jacobian bone in their bodies. We ourselves were quoted in the NY Metro story about the event as follows:

“Jane Jacobs was about looking out and seeing what really works. The city’s plan is going to create a hole in the ground. Quinn and Bloomberg are the Robert Moses of today.”

(See: Celebrating Jacobs’ place in city, July the 13th, 2009, by Amy Zimmer.)

Besides the army of Jane look-alikes present in their attempt to rescue Coney Island, Suzannah B. Troy was also there to protest and quickly produced yet another video in an energetically heartfelt series of videos she has produced opposing “King Bloomberg” and Ms. Quinn, who assists him by passing administration-backed development proposals. Ms. Troy’s sentiments are clear from the title of her video: Protesting Christine Quinn at Jane Jacobs' street naming, Jane must be turning over in her grave!

Quinn Has the Power

Nevertheless, Quinn has the power right now of life or death for the Coney Island amusement area. Therefore Save Coney Island and the protesting Janes truly hope that it is possible to persuade Ms. Quinn to fix the city plan for Coney. Indeed, is Ms. Quinn is persuadable? She acknowledged as may be seen in the videos and as reported in the Metro that “phone calls are flooding City Hall urging the city to expand the area designated for amusements.” (To be viable the area for amusements needs to be expanded to a minimum of 27 acres as opposed to the 12 acres under the city plan.)

Ad Hominemism, Jacobs and Quinn

Jane Jacobs was not in favor of ad hominem attacks, but when it comes to city development issues we can't think of anyt where Quinn (or Bloomberg, from whom she is inseparable) has been on the right side. We also haven't seen that the inseparable pair are actually open to compromise as opposed to feigning that they are. Anyway, in terms of getting necessary messages across ad hominemism seems increasingly efficient when it comes to Quinn and Bloomberg. In this though we can’t speak for the Save Coney Island group, only for ourselves. We know the Save Coney Island people have their hopes about Ms. Quinn.

We have visited Quinn’s record on development before. (See: Monday, February 23, 2009, Un-funny Valentines Arriving Late: Your Community Interests at Heart.) A short list of the votes she has arm-twisted through that stand to affect the shape of urban fabric begins with the way she rushed Bloomberg’s term extension through the City Council. At his bill signing ceremony to overturn term limits Bloomberg indicated that he needed a third term in order to surmount the litigation stopping his projects. (Like the West Side Stadium? No, probably more like Atlantic Yards.)
At the Jane Jacobs dedication Doris Diether, a Jane Jacobs friend, told a story about how Ms. Jacobs had thwarted a maneuver by administration officials to rush through a vote so fast that no one would have any time to find out about it or react to the hastily unveiled public hearing. Ms. Jacobs reportedly delivered 200 citizens to testify at the hearing with only a weekend to do so. Times have changed but administration tactics haven’t: This kind of insider-manipulated rush was exactly the way that Quinn put through the major term limits law change for Bloomberg. (Ms. Diether was the one who was chosen to pull the cord to unveil the new street sign.)

Other Development Votes. .

The list of strong-armed votes continues with Quinn’s work on the previously mentioned Willets Point and Columbia University’s expansion into West Harlem. The City Council should also be withdrawing funds from the Atlantic Yards boongoggle but that is not likely to happen under Christine Quinn. (We once talked to her about it when she visited Brooklyn Heights.) Most recently, Quinn forced through the Dock Street project with a lopsided vote that totally disrespected David Yassky, the local City Council member for the DUMBO and Brooklyn Heights neighborhoods. She ignored not only the merits but also smoking gun e-mails that showed the Bloomberg administration and the School Construction Authority to be dishonestly collaborating in manipulations to put a school in the project for the sole purpose of promoting the project’s approval. We contacted Quinn’s office for her comment on those e-mails. They have still not been forthcoming. (See: Tuesday, June 9, 2009, Still No Comment from Speaker Quinn or Any Other of 18 City Council Members Who Put Dock Street Through Committee Last Week.)

. . . in Chelsea and Greenwich Village

Closer to her political home on Manhattan’s West Side, Ms. Quinn had been helpful in pushing through a sell-off of a portion of the Greenwich Village Historic District in order to subsidize a large new St. Vincent’s Hospital that also involves an exceptionally large new residential building being developed by the Rudin organization. Also, Chelsea Now says the community is complaining about the mounding up of extra density at “Himalayan” Hudson Yards. (See: Hudson Yards 'Himalayas' earn public ire at forum, Thursday, June 18, 2009, by Diane Vacca.) Not only is a great deal of extra density being put on that site but consider this for an example of how the Bloomberg administration wants to have its cake and eat it too: Notwithstanding the already extreme density of Hudson Yards, the Bloombergian Department of Housing, Preservation and Development is proposing to have the developer go off-site, outside the project footprint, to provide the assocaited affordable housing the community wants (at two off-site locations) but only if an additional zoning change is put through also up the density of the other sites as well.

Will Quinn Detect That People Are Getting Fed up and Change Course?

We have recently seen a great deal of the grass roots anger being directed toward Quinn. For instance, there is another YouTube labor-of-love video we came across recently done by Donny Moss that catalogues Quinn’s misdeeds and deceptions with particular focus on her betrayals with respect to the lesbian and gay community: Christine Quinn: Behind the Smile. We think that a lot of the anger being directed at Quinn now is earned by reason of her constant support for Bloomberg, particularly his Bloombergian style of development. Robert Moses, move over.

Will Quinn modify her behavior now that she is faced with a primary? She has two opponents for her 3rd district City Council seat: Maria Passannante-Derr and Yetta Kurland. We don’t know much about them yet, though if one of them is going to win it would be advisable for them not to engage in vote splitting.

Does Ms. Quinn feel vulnerable enough to start changing course? There is this primary and then, of course, she also wants to be mayor. Were it not for the term limits extension she would be running for mayor now, but the extension worked out well for her given the timing of her slush fund scandal.

The deadline for the City Council to fix the city plan is about to expire unless procedural maneuvers can briefly extend it. If the City Council under Quinn doesn’t act to fix that plan then Quinn’s Council ought to scrap the plan entirely.

Coney Island will provide an interesting test of whether Ms. Quinn will be changing course. Ms. Quinn clearly acknowledges that she heard the community’s request to fix the plan and knows the phone calls are flooding in. The question is whether she cares what the community wants if that’s not what the mayor wants.

(Above photo by Kevin Downs)

UN-FUNNY VALENTINES ARRIVING LATE: YOUR COMMUNITY INTERESTS AT HEART

Remember grade school when you sent multiple valentines around the class? Well this month was Valentine’s Day and we were imagining, if we could peek into other people’s mail, what kind of valentines we might discover that various of our New York City communities might be sending to other of our various New York City communities in recognition of the affinity they have that comes from having certain things in common.

With whom do we envision communities might share their hearts? We envision that they might share them with other communities that have the same interests at heart.

Here are our thoughts, with respect to the communities in the different boroughs of our city.

1. South Bronx and Yankee Stadium. Up in the South Bronx the community is sitting with unreplaced parkland. Their parkland was taken to build, at substantial taxpayer expense, Yankee Stadium. Mayor Bloomberg focused on a not-so-sweet suite deal that would not benefit the public. It seems to us that the community might want to send out empathic valentines to other communities whose community board members where replaced by borough president action because community board members trying to protect their community voted against a destructive project. They might want to send out valentines to other communities beleaguered by stadium and arena finance scams that disregard the interests of the community.

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2. Willets Point & the New Mets Stadium. The Willets Point community might find itself sending a valentine back to the South Bronx community. The Willets Point community, next to the new nontaxpaying Citi Stadium which just replaced Shea Stadium, is now under threat of having eminent domain used to eliminate is bustling taxpaying businesses in a questionable move to give a huge 75 acre development monopoly to a single developer. The community might want to send valentines to other communities faced with the abuse of eminent domain as swaths of acreage are turned over to single developers with whom government is collaborating to give special benefits. Valentines might go to communities such as Prospect Heights and Fort Greene where Atlantic Yards is proposed, and to West Harlem (Manhattanville) which Columbia wants to own all of for an expansion. Those communities are likely to have holes in their hearts for 20 or 30 years as a result.

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3. Destruction of Historic Coney Island. Coney Island is where the community is experiencing the systematic dismantling of its famed amusement area by a developer. Is the developer acting in collaboration with the city government to create this hole in the community that will likely persist for decades? The city is doing nothing to stop it and is pursuing a zoning change that will reward the developer with higher land prices for having removed the amusement park uses and not complied with the city zoning that requires them. Whether working in conscious coordination with the developer or not, the city probably catalyzed the developer’s destruction when it advertised its receptively to destruction of the Coney Island amusement area. The Coney community might want to send a valentine to other communities with developer-created holes-in-their-hearts induced by developer-sympathetic mismanagement by the city. The holes-in-the-heart of Coney will, of course, be a loss for that community and its unique heritage, but Coney is an area of recreation that should belong to all the city. Its draw should be wide.

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4. Development in Brooklyn Bridge Park. Perhaps the Coney community would like to send a valentine to Brooklyn Heights, DUMBO, Cobble Hill and Red Hook communities where a predilection for prioritizing commercial development is being given odd weight as Brooklyn Bridge Park, which should be one of the city’s most important new waterfront parks, is planned and designed. Some strange and fretful politics have been created by the illogical precept that a park of citywide importance should “pay for itself.” Even if one can question what the city can currently afford and whether all of the waterfront area now available for new use should become park, the precept that a city park should “pay for itself” has created confusion and uncertainly about design and management that compound exponentially with the vagaries of an erratic real estate market now on a downward trajectory. As a consequence, there are valid concerns about the unpredictable answers as to just what development may happen. There are equally valid accompanying concerns that the mystery development that finally materializes will be driven by factors other than what normally makes for good urban design and zoning. Then there is a danger that density, driven by the goal of hitting a high profit target, will become too dense. The situation also presents the significant concern that the “park” will be designed and operated as a “backyard” to the residental and hotel development. It needn’t be that way, but the false equation of the precept that “parks must pay for themselves” drives the tension in exactly that direction.

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5. Pier 40 on Manhattan’s West Side. Maybe those Brooklyn neighborhoods we just described should be sending some of their valentines to the Manhattan riverside community at West Houston Street. They are struggling with the idea that Pier 40 needs to be self-supporting. More than six years have gone by trying to find proposals that work in this respect. The community board recommended that the Hudson River Park Trust board vote down the proposals that were presented to deal with the deteriorating pier. Instead of wanting something developmentally very elaborate (such as Related Development’s proposal which included putting Cirque du Soleil on the pier) the community wanted something simple and more in line with what it currently has, including soccer fields and other recreational uses. Economic viability being a problem, the trust is now reviewing its plans and suggesting changes to state legislation to make it easier to build something at Pier 40.

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6. DUMBO and the Proposed Dock Street Project. Concerned as they are about how the decisions they have been presented with have been bundled together, Manhattan’s West Side Pier 40 community will probably want to send one of their valentines to the DUMBO neighborhood in Brooklyn. Unable for years to get the School Construction Authority to consider building the school they wanted, the community was suddenly presented with a bundled decision opportunity to approve, at greater height, a building it already rejected as too tall in order be granted a school within the building. It must now be skeptically asked what good is a residential building that can only be “sold” by tacking on a school and whether a school shoe-horned into a project is likely to be the equal of a school designed with the community’s needs foremost in mind rather than to coerce it to approve an extra large project it previously rejected.

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7. Gehry/Ratner Beekman Tower Blackmail. These kinds of Faustian bargain bundles can also lead to awkward after-the-fact choices. Right across the river on the other side fo the Brooklyn Bridge from the Dock Street project is the Beekman project, another towering project into which a school was inserted as a sales gimmick. The project is designed by Frank Gehry and looks like what you would get if you sculpted a gothic tower out of wax and then made a quick pass with blowtorch. With this project we saw how the tactic of bundling backfired and how the public was hurt when, with construction underway, the developer, Forest City Ratner, blackmailed the public and the community board, telling them they were holding construction of the school hostage for the demanded receipt of extra subsidy.

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8. In Red Hook Brooklyn, IKEA, a Park and a Dry Dock. Having a bad development deal forced down its throat might cause the DUMBO community to send a valentine to the Red Hook Community. Lest anyone think that the “bundling” of development decisions is about good economics, keeping the city solvent or making sure that tax revenues flow, one can consider the situation in Red Hook. Red Hook got a new IKEA store and an expensive new Michael Van Valkenburgh park. But in order to get these things the community and the city lost a graving dock (dry dock), which the city and its economy sorely need, to create an outdoor parking lot for the IKEA. This resulted in the elimination of high-paying jobs while replacing them with a similar number of much lower-paying jobs. The real tragedy is that, if the IKEA (with its parking lot) was wanted, it was not necessary to sacrifice the graving dock in order to have it. We could have had both IKEA and the graving dock. The city is now looking at spending a billion dollars to replace the sacrificed dry dock. Why was an existing, necessary and productive billion dollar asset sacrificed? We attribute it the city’s reflexive accommodation of big real estate projects and the administration’s failure to value what we have. This was also a failure to value what the community values.

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9. The Proposed Atlantic Yards Megadevelopment in Brooklyn: Poster Child For Everything Developmentally Bad. Speaking of destroying what the community values and what is economically of superior value, the Fort Greene and Prospect Heights communities, near the proposed Atlantic Yards, should get a valentine from Red Hook. The developer-driven Atlantic Yards involves tearing down worthwhile existing buildings. Some of those buildings, like the Ward Bakery are historic and surpassingly valuable as candidates for adaptive reuse. Others were very recently produced within the last few years by a vigorous and governmentally unaided development economy that the project seeks to quash and replace. The communities near Atlantic Yards will be getting empathy valentines from, and sending them to, almost all the other communities in New York beset by bad development. Atlantic Yards is the one project that is so supremely bad that it is the poster child for virtually every kind of city and state development incompetence and collusive oversubsidization of big developers. Atlantic Yards is an example of what you get when you turn over to a developer all the “public” decision-making functions, telling them they can write themselves a sky-is-the limit blank check. Every decision box with respect to this megadevelopment has been checked in the developer’s favor and none in the public’s. Designed as a maximum subsidy-sponge with a maximum churn, the project is mainly a redistribution of assets in the developer’s favor rather that the creation of wealth or value. The overscale project involves eminent domain abuse in the extreme. The megaproject is bad design, overly dense and seizes streets and avenues to augment an already indefensible 30+ acre governmentally assisted developer monopoly. Though the developer had a free hand filling in his blank check, ESDC, the lead New York government agency effecting this project, admitted aloud in court Monday that they approved this megaproject without ever weighing the extraordinary magnitude of benefit the developer was bestowing upon himself against the definite harm and, at best, only incidental benefit befalling the public.

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10. Eminent Domain Squeezing in Previously Unimagined Density into Central Business Neighborhoods. The Bryant Park neighborhood in Manhattan likely would get a valentine from the proposed Atlantic Yards neighbors. The neighborhood will be experiencing more density than once imagined for it, courtesy of the use of eminent domain to unexpectedly squeeze that density in. Will this previously dense area become more so to an uncomfortable degree? Similarly, more density is coming to Downtown Brooklyn where eminent domain is also planned so that developers who want to build big buildings with bulky floorplates will be able to do so. Like the plan for Atlantic Yards, the density is planned to come with a loss of some of the streets that would help make the extra density more bearable. The streets would not be kept as valuable or reminders of the past the way the streets in the Wall Street area were landmarked and preserved. We could go on. Little of Harlem’s 125th Street might remain after the use of eminent domain in conjunction with zoning that will substantially increase density.

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11. On Manhattan’s East Side, A Dense New Solow Project. Valentines concerning oppressive density will be going back and forth between many neighborhoods. One of the senders and recipients will be Manhattan’s East Side. Seven generic-looking straight-up glass towers are proposed to be built along the waterfront south of the United Nations. The density the City Planning Commission allowed with an approved rezoning is probably greater because, even though streets will be reinserted into the grid, those streets were once demapped when a Con Edison generating plant was on the site. That streets once happened to be privately owned is not a legitimate reason to have approved greater than normal density. The 9.8 acres of land is the largest privately purchased and owned tract being developed in Manhattan (compare that to the 30+ acre government-sponsored no-bid monopoly being awarded Ratner in Brooklyn). In theory, the immense size of the Solow development was negotiated down from a possibly more immense size by public officials, but the tallest proposed tower at 595 feet, is about 60 stories and 90 feet taller than the United Nations building. The unexcitingly designed neighborhood of new towers is supposed to house about 3,000 apartments and 1.06 million square feet of commercial space, as well as 69,000 square feet of retail. There is good news in that the Municipal Art Society led negotiations to obtain developer cooperation that will continue East Side waterfront access by building a waterfront park and promenade. As the park is such an obvious benefit (almost a “need”) for the neighborhood and its creation will involve public expenditures, why was it so hard to negotiate this? Didn’t the developer understand it was to his own benefit? . . . And this is a Manhattan community that should have more political power and say than most! Still, this grand scheme project may be a hole in the ground for years to come. The developer is now involved in several lawsuits relating to financing and the residents of Tudor City sued to prevent the project from happening. In particular, the community in this area ought to be upset that, in order to approve the unusually immense density for the project, the City Planning Commission adjusted its review timetable to favor review of the developer-driven rezoning proposal rather than the community-sponsored 197-Community Board 6 proposal for rezoning of the area that antedated it. Since the community plan should have receive, but didn’t, preference over the developer-driven plan, Community Board 6 can compare notes and commiserate with Community Board 9 which submitted a community-based 197-a plan to accommodate Columbia’s expansion into West Harlem. . . .

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12. Columbia’s Expansion into West Harlem. In the case of Columbia’s proposed expansion into West Harlem, the City Planning Commission also followed a review timetable that sped up and slowed down as necessary to favor the Columbia-as-developer-driven plan over an earlier prepared community board-sponsored 197-a plan. Columbia’s own plan involves some highly intricate and odd-explanation reasoning about why there has to be a neighborhood-wide, seven-story-deep basement under the project such that, according to Columbia, Columbia must be granted each and every fraction of real estate it wants to develop in the vicinity over the next 25 or more years, no ifs, ands or buts and with not the slightest little corner clipped off. Columbia probably benefits a lot in its quest in that the other residents and landowners in the neighborhood it is figuratively knocking off the economic up-escalator are not high income. It probably benefits even more in its quest in that people recognize Columbia is a revered nonprofit institution chartered for the high-minded purposes of education and, as they have emphasized recently, health care research. Therefore people have been eager to accommodate and subsidize the “venerable” institution by bestowing upon it the right to eminent domain windfall. Columbia is being subsidized by allowing it to acquire real estate at extra-low prices by this exceptional special means of acquisition. The West Harlem community at whose expense Columbia is being subsidized should be sending a valentine to the community of Greenwich Village where, similarly, a revered nonprofit chartered for high-minded purposes, St. Vincent’s Hospital, has persuaded people that it should be subsidized by being allowed to acquire real estate at extra-low prices in other than the standard way.

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13. The Rudin/St. Vincent’s Real Estate Deal. St. Vincents and its real estate partner, the Rudin Organization, are being allowed to sell off a portion of the Greenwich Village Historic District in order to replace landmark buildings with buildings of substantially greater density than could otherwise be built within the historic district. Just like Columbia, the nonprofit St. Vincent’s (and its for-profit real estate developer partner Rudin) argues that it must be allowed to develop precisely the real estate it says it needs and no other real estate, no ifs, ands or buts about it. And of course, just like Columbia, doing so will result in the greatest real estate subsidy for the “venerable” institution. The Rudin/St. Vincents’ proposal is quite a shell game. It involves swapping around different uses at different properties at several sites to play its magic tricks of garnering more density while putting asunder a portion of the historic district. The hospital claimed that due to hard times it had fallen upon and poor original planning, buildings built only 24 and 21 years before (with special planning accommodations) need to be torn down on an accelerated basis. Don’t, however, take your eye off the resulting increase in density. Like so many other proposals, the Rudin/St. Vincent’s proposal feinted by starting out with a proposal of something far worse than what they intended. This way politicians could say that they had negotiated “improvement” over what might have come to pass. The historic Greenwich Village neighborhood that is having these tricks played upon it should send one of their valentines to the downtown South Street Seaport Historic District.

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14. South Street Seaport Shenanigans. There is a plan afoot to tear down buildings in the South Street Seaport complex. The buildings proposed to be torn down are not old. They were heralded as masterpieces of special government-assisted planning in Time magazine when they were built only 25 years ago in the summer of 1983. The proposal involves a lot of swapping properties around (just like the Rudin/St. Vincent’s real estate deal) but the net effect would be to allow a developer to build something new very densely (just like the Rudin/St. Vincent’s real estate deal) out over the water. A drumbeat was started about how the South Street Seaport’s time had come, how it was old and passe. Listening to the real estate community come alive with buzz, you could tell long beforehand a plan was in the works. South Street Seaport mall tenants are collectively litigating, charging that the mall is being intentionally mismanaged to run it into the ground. If the developers succeed in what they want to do, much of the historic character of the Seaport will be sacrificed. Do we need to give special permission to a developer to replace a project the city helped build only 25 years ago? Do we need to give special permission to a developer to build, with massive density, over our river when only a few blocks away from the Seaport sits a huge parcel of undeveloped land that has been vacant for decades? Where is the spirit of good planning? Where is the spirit of saying good planning takes precedence over simply accommodating every developer’s rigamarole-plan and desire to build at extraordinary density? The Landmarks Preservation Commission turned down the recent initial South Street Seaport proposal. Expect that, like the Rudin/St. Vincent’s real estate deal, the developer will return with something that is “not as bad.”

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15. The Pre-eminent Master Plan Abandoned: New Goldman Sachs Tower at Battery Park City. For those concerned about design being forced to take a back seat (or just throwing design away) when the goal is to accommodate a special freebie deal to squeeze in extra density where it was never previously supposed to go, send a valentine to the community of Battery Park City. No community or neighborhood built in NYC within the last half century has been as renowned as Battery Park City for the exquisite perfection of its master planning. That is why when you visit Battery Park City it is immediately apparent that there is a one giant new overbearing building that doesn’t fit in with the orchestrated family of buildings that constitute the rest of the community: the new Goldman Sachs tower. The marvelous balance and beautiful interplay apparent everywhere else in the community is immediately and obviously missing when it comes to the jarring building that was specially subsidized for Goldman. You know instinctively that the renowned Battery Park City master plan was abandoned in order to dump the building’s density into the community. Could the extra new density of the building have been accommodated if properly designed to fit in? The answer goes unaddressed because it looks like no one even tried. It is not clear that anyone tried to exact much of anything from Goldman when Goldman and our public officials were sneaking this one in.

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16. Rebuilding at Ground Zero. Before the Goldman building was built, Battery Park City was always considered to be a job exceptionally well done, from which others could learn. Here is something that should engender an exchange of valentines: When it comes to sadness that these immediately present and obvious neighboring Battery Park City design exemplars were ignored, we have pointed out that the rebuilding at Ground Zero also falls short of learning any of the lessons evident from the quality of design at Battery Park City. Ground Zero serves as an example of how, when actually given the often coveted opportunity to replace an only recently designed section of the city (South Street Seaport opened in 1983, the ribbon cutting for the Twin Towers was only ten years earlier, April 4, 1973), our current city officials are not inclined to take advantage of the opportunity to learn from past mistakes so as to produce significant improvement even when there is enormous impetus to do so. The redevelopment of Ground Zero is not one of the worst things happening in New York City. It is probably one of the best, but one would expect that with such a high profile do-over we would get the very highest possible urban design quality. You would expect that the design would learn from, reflect, match or exceed and integrate with the best design in the adjacent Battery Park City. Instead, we are getting something where the design is not of the highest quality or as exceptional as it should be. The new Ground Zero design is too much a bunch of conventional straight-up towers, some with unfortunately intimidating fortress-like bases, zooming skyward for maximum density. Qulaity of the design aside, the filling of this hole in financial downtown is proceeding with aching slowness. Why so slow? Partly because of efforts to accommodate real estate owners by struggling to squeeze in maximum density, notwithstanding the creation of new public space, an improved transit hub and the restoration of desirable previously removed streets.

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17. Moynihan Station (The New Penn Station). If your heart aches with sadness for how slowly desirable public development proceeds when bollixed up when the extraneous sidetracking concerns of developers replace concerns that should be in the forefront, consider Moynihan Station, the proposed replacement for Penn Station. This is to say that our downtown lower Manhattan Ground Zero neighbor communities ought to be sending a valentine up to the Penn Station neighborhood. Government officials have been saying that the new station project, conceived decades ago, was ready and supposed to start in earnest as far back as 1997. As of the spring of 2003, with things sufficiently settled after 9/11, the project was supposed to have been completed by 2008. It hasn’t even been begun. Why? Our public officials put the public project in the hands of private developers to diddle with. Why? Because, in theory, that way they could get something for nothing. The developers stepping in were to take care of things that would normally be public responsibilities. But there is no free lunch. Something for nothing is too good to be true and when somebody offers you a deal that is too good to be true, the advice is to reject it because someone is probably scamming you. In other words, the party that offers you a something-for-nothing deal is going to be interested in what’s-in-it-for-them. So what happened when the public train station was turned over for developers to take the lead? For the developers it became all about making profit on adjacent properties. Things went so far afield as for the developers to focus on whether they could acquire and tear down Macy’s, “the world’s biggest store” in order to build huger and huger buildings in the vicinity! No wonder the possibility of proceeding in 2003 with any ghost of the 2008 “completion date” came and went. If you are not building a new train station but negotiating to buy and redesign a whole neighborhood with the goal of putting private developer profit in your pocket, you are talking a whole different time frame and the lead winds up being taken by entities whose eye is on a different ball. Developers were focusing on building towers where Madison Square Garden is and enacting laws to transfer development rights to adjacent properties they owned or were trying to buy. (Image above from Muncipal Art Society 2007-2008 Annual Report: Voice for the Future of Our City.)

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18. Christine Quinn’s West Side of Manhattan: Hudson Yards and a Lot Else. Want to send a valentine to a community that might appreciate that you get less when you send in (or allow) a developer to do the job or jobs that government should do? The Penn Station neighborhood can send a valentine to the part of western Chelsea where the Hudson Yards project is planned to go, . . . someday. The developer has just been given an extension on making payments and, accordingly, it needn’t proceed with the project now. The extension is because the economic times are tough. If that is the reason for an extension it could be quite some time before anything starts there. A lot of economists are saying they expect things to be economically tough for at least five years. Things have come to an unfortunate standstill now, but this standstill didn’t need to have occured. It is directly due to a fateful decision public officials made to relinquish public development responsibilities for the 26 acres in order to put them in the now inert developer’s hands. Government had two options for developing the 26 acres and many argued the wrong choice was made. Government could have prepared the 26 acre site for development itself at it own expense. It could then have offered individuals sectioned-off development lots to the various highest bidders ready, willing and able to proceed with development immediately. Those in favor of proceeding this way argued, correctly, that this is the way that government would have received the greatest recompense for the publicly owned railyards that are to be developed. That greatest recompense would be calculated after netting out the government’s expenditures to prepare the site. Furthermore, the value of the site is currently escalating terrifically because the government is busy constructing an extension of the #7 subway line to the site. Instead, our local officials decided to have one developer take and prepare the entire site. For a variety of reasons this lowers the amount the public will receive for the 26 acres. Among other things it forces the developer to bear risk associated with when the new subway extension might actually be in place to benefit the site, a risk which could be more appropriately borne by the government. It also means that it is more difficult for the developer to undertake the financial carriage of the substantial cost of site preparation when the developer can’t reliably factor the timing and amounts of their recoupment when they actually complete commercial development. All of this uncertainty must be reflected in a lower price. And now, in addition to that lower price, it is also reflected in the developer’s delay in proceeding and in making payments for the site. Ironically, one reason the unprepared site was sold at a lower purchase price was so as NOT to have to postpone receiving these payments.

If the government (as opposed to a private developer) was preparing the site it would not be necessary to postpone the site’s preparation at this time. Site preparation during the current economic downturn might even be cheaper. As it would be a public work, it would arguably be in the running for funding through federal stimulus, an important part of that being that the prepared parcels would later be bid out. But stimulus money cannot be given to a private developer already signed onto the deal because it would totally change the equation based upon which the developer bid to pay the public a low amount for the site. Used that way, the money would eliminate the risk developer assumed and constitute an award of enormous private benefit to the developer without bid.

Would the current change in the economy resulting in the developer's default have made it possible at this point to switch over and have the government prepare the site, especially as time now seems to have borne out that this would have been the better way to proceed in the first place? Yes, the developer missing its payments presented precisely this valuable opportunity. BUT that is exactly what the administration elected NOT to do when, instead, it extended the developer’s rights to the 26 acres.

Extending the developer’s rights seems consistent with a city administration bias, as exprssed by the adminstration itself, to bequeath extended monopoly rights to individual large developers for large swaths of acreage that they will have on an “unfolding” basis “across many years” and “economic cycles” no matter the “various economic conditions” encountered along the way. Why does the Bloomberg administration do this? Is there benefit to this particular administration’s making single large, unstructured and inchoate bequests that apply for decades going out, thus sidestepping multiple opportunities for bids and checkpoints on accountability going forward into the future? By their very nature these arrangements limit participation in ownership of the city only to the very largest developers, and the arrangement works out only if the very large developers happen to remain solvent for longer than many people’s careers.

If Hudson Yards ever gets in gear and starts moving again it will be good because, like the redevelopment at Ground Zero, Hudson Yards (and the preservation fo the High Line which wraps into it) is one of the better things happening in New York right now. That’s a nice reversal because not long ago the Bloomberg administration wanted instead to bring to this same site one of the worst things that could have happened to Manhattan, the west side Jets Stadium. Adding to the unfairness of putting a stadium in a central city neighborhood, the area nearby already suffers from arena blight in the vicinity of Madison Square Garden. Even if the community dodged the Jets Stadium bullet, perhaps the neighborhood, represented by City Council Speaker Christine Quinn, would like to send some valentines to other city communities faring less well in avoiding inappropriate stadium and arena development. On behalf of her constituents, Quinn complained that the stadium was not properly planned or thought out, noting the order in which things had happened: “I just don’t think there’s been the kind of process where anyone’s tried to determine what the city really needs. The planning was done after the goal had already been decided.”

Yes, the Jets Stadium, was defeated and in its place will probably be something much better, but how effective is Christine Quinn in opposing the mayor on behalf of her community, notwithstanding the fact that she is the speaker of the City Council? Quinn is the perpetual ally of Bloomberg such that, in the case of everything we have talked about in this article, she has sided with Bloomberg against the interests of local communities. (In most recent news that means the Dock Street project.) Does that mean that when it comes time to consider the particular interests of her own community’s constituents she is effective at providing anything more than lip service in opposing the mayor? Quinn had little to do with defeating the Jets Stadium proposal which was defeated in Albany. Even though we can say that the new plans for commercial and residential Hudson Yards development represent one of the best things that could be going on in the city, the plans could certainly be improved. In this regard Speaker Quinn has participated in ineffectually raising community concerns that are being ignored by the Bloomberg administration. A January 8, 2008 open letter to the MTA from the Hudson Yards Community Advisory Committee signed by Quinn and other politicians, including Senator Duane, Borough President Stringer and others, expressed concerns about government’s efforts to cram “unprecedented density” onto the Hudson Yards site: “There is too much density for a successful environment.”

The density planned for Hudson Yards is only slightly more than the overall significant increase in density planned for a wide surrounding area. The amount of density in the works may not yet have caught the attention of all of Quinn’s constituents. Overall, there will be a continuous swath of density right across Manhattan over to and including the Solow project. (Send another valentine?) Extra increased density right over Hudson Yards is being pursued as a way of generating more proceeds from the sale of the site. The MTA is technically the seller of this public land and would receive those proceeds. Since the MTA is striving to put as much density on the site as possible, the proposed density mounds up and is greater directly over the Hudson Yards property being sold by the MTA than the property that surrounds it. (The picture inserted here shows proposed density, not the density which now exists.) That doesn’t make optimal long-term urban planning sense since the density around the property closest to the extension of the #7 subway line winds up being less, although it is there that it should be relatively greater.


The Chelsea Hudson Yards community should be sending a valentine to the Brooklyn neighborhoods that are having to contend with the shove-it-to-the-public efforts of the Atlantic Yards developer. We have commented before that the Hudson Yards Community Advisory Committee letter on Hudson Yards reveals where Speaker Quinn and the others should stand on Atlantic Yards. We’ve noted the many parallels between the proposed Hudson Yards and Atlantic Yards projects so that criticisms of Hudson Yards, which is a relatively good project (a high density project in a high density neighborhood), also apply to Atlantic Yards. At the same time, all the ways in which Atlantic Yards is different from Hudson Yards make Atlantic Yards probably the Bloomberg administration’s worst “city-planning” escapade. Interestingly, one of the things that makes Atlantic Yards so much worse is that the MTA is NOT maximizing the sales price of the land it is selling. Rather than raise more money for capital or operating expenses, the MTA is selling its property to the Atlantic Yards developer at a substantial write-down and collecting far less (hundred’s of millions less) than it could.

We could go on to talk about other things various of our city communities have in common. We could talk about communities that have to deal with misnomered “community benefit agreements” that are really rigged non-negotiations disguised as excuses not to provide benefit to the community. Communities such as Williamsburg and maybe even Union Square might want to submit arguments about where they fit in on this list and what their to-and-fro should be exchanging valentines with other communities. (We have a comments section.) There are other questionable rezonings to talk about, buildings and industries that are being carelessly lost. .


. . . We could go on and perhaps we should, but we think we have made our point. The individual communities across the city have their particular profound concerns about the way that development is done by the administration in this city. Those communities deal with and fight their fights individually and often don’t win fights they should win, but in a larger sense, the community concerns are concerns in common. The city is cutting deals, some of them intricate and clever, putting the interests of real estate developers first. Not all real estate developers, only the very big ones large enough to hobnob with the mayor.

Strip things down to their core and you find that something is being sold. What is being sold is what belongs to public. Sometimes it is referred to as the “public realm.” That means such things as the right not to have our streets and avenues closed and sold off, the right to our historic neighborhoods, the right to good urban design, livable density and the right not to have our parks or amusement areas like Coney Island given away for development or speculative purchase. Real estate taxes should be paid by everyone, without special friends of the mayor being excused or allowed to intercept those moneys for their own private use and benefit. Subsidies which come out of the public’s general funds (once those taxes have been collected) should not be made special and piled on the mayor’s favorites.

Government’s function should be to protect the public interest, not to sell off the public’s assets. Government functions should not be privatized and handed out to developers whose interest is adverse to the public. Eminent domain should be the public’s special and rarely used tool for those special public improvement the public itself creates and owns. It shouldn’t be handed out for private use by developers to enrich themselves however they chose by accumulating and owning more of the city. The city should stop creating artificial fiefdoms in neighborhood after neighborhood of the city where, through government intervention, the richest large and lumbering developers will hold an exclusive monopoly sway over vast acres and where, by consequence, we may have blight for decades as development languishes. The hole-in-the-neighborhood-heart that warrants so many understanding valentines.

All of this provokes the thought: If all our communities have similar interests in common then, collectively, these communities are in the majority. As a potentially powerful majority with common concerns at heart, there is no reason for our communities to be losing the fights to the mayor that they are. Or does the reasoning run that we must put up with this perpetual selling off of the public realm because Bloomberg is, in other respects, such a good mayor? Would one argue, as some do, that Bloomberg is needed as a mayor because his financial acumen is critical to the city? But the answer to that is the reverse. Just as the mayor has been squandering public realm assets by selling them off to the big real estate developers throughout the city, Bloomberg has also conducted the city’s finances in a squandering city-fiscal-health-debilitating way. For more on that see: More Discredit of Bloomberg as Qualified Financial Crisis Leader (Saturday, October 25, 2008.)

In conclusion, we suggest that mailboxes be watched for valentines that might be coming late. There is nothing wrong with that. We like the rule: “Better late than never.” We suggest that there may be a few neglected messages your community might want to be sending off even now. One way to start: Send a link to this article to someone in another community with a note explaining why you wanted to share it with them.