Thursday, September 29, 2005
IRS documents show BUILD relies on Ratner--but the Times ignores the Daily News's scoop
So Daily News columnist Juan Gonzalez, with BUILD's IRS filings in hand, could finally expose the group as "Snake in the grassroots," as his 9/29/05 column was headlined. He wrote:
A nonprofit group that spearheaded neighborhood support for the huge $3.5 billion Atlantic Yards housing and commercial development in Brooklyn, reported to the IRS in January that virtually all its $5 million budget for 2005 and 2006 was coming from Forest City Ratner, the project's developer.
In early 2004, Brooklyn United for Innovative Local Development Inc. (BUILD), a newly-formed organization, became one of the first neighborhood groups to publicly back the Ratner plan, which includes a proposed new arena for the Nets.
Since then, BUILD's leaders have lobbied fiercely for the project at scores of community meetings, and they played a key role in hammering out a much-touted "community benefits agreement" with Ratner that was announced by eight Brooklyn organizations in June.
As part of that agreement, BUILD will run a program to recruit and train neighborhood residents for jobs in the Atlantic Yards project. BUILD's leaders, who have never run a job training program before, have repeatedly denied receiving any financial backing from Ratner.
"We've developed on our own," Marie Louis, BUILD's chief operating officer, told me last week, calling her group a "grass-roots organization."
Both Louis and Joe DePlasco, spokesman for Forest City Ratner, denied yesterday that the developer is currently giving any money to BUILD.
"We are providing them free office space," DePlasco said, and both he and Louis confirmed that the developer will soon begin to fund the job training program that BUILD will run. But they denied any specific dollar amount - such as $5million - has been discussed.
"I can't dispute what's on that form," Louis said. "When we turned that in earlier this year, we were calculating what we needed to implement those [job training] initiatives."
Meanwhile, none of the group's officers is drawing a salary, she added.
But local City Councilwoman Letitia James wasn't satisfied with that explanation.
BUILD's IRS forms "raise questions of conflict of interest," said James, who has been a critic of the Ratner project from the start. "This suggests BUILD's leaders were not negotiating on behalf of the community but for their own self-enrichment."
Even if BUILD has received no money yet, as its officers and Ratner state, it's clear that the Community Benefits Agreement BUILD signed with Ratner--which is supposed to be negotiated by 1) groups with a track record and 2) adversaries--has been further undermined. Remember, Good Jobs NY offered definitive 5/26/05 testimony criticizing this CBA.
Develop Don't Destroy Brooklyn's comprehensive web page on BUILD assembles numerous quotes from BUILD officers denying connection to Ratner and also offering fulsome praise of the company. Much of this--and some more context about the dubious Community Benefits Agreement--was in Chapter 4 of my report on the New York Times's coverage of Atlantic Yards. But, I guess, it took an actual smoking gun--er, IRS form--for the press to take notice.
Newsday ran an Associated Press story headlined "Brooklyn arena opponents call community group a front." The article noted that:
BUILD said in an August filing with the Internal Revenue Service that it would receive $5 million from the developer's Forest City Ratner Companies. BUILD chief operating officer Marie Louis said Thursday that the group had received no money from Ratner and did not expect to receive any. Cheryl Duncan, a spokeswoman for BUILD, said the group had projected receiving the money from Ratner but no longer expected to. She said Ratner is providing office space to the group.
Louis has spoken in support of the project at public meetings, saying it would help ease poverty and unemployment in neighboring areas. A Ratner spokesman said the developer supported BUILD and other worthy local organizations but had not purchased the group's support.
"It is the right thing to do and FCRC encourages others to do the same," spokesman Joe De Plasco said.
Worthy local organizations? BUILD was formed solely to negotiate a Community Benefits Agreement (CBA), while real CBAs require organizations with some track record. [Addendum: while there's evidence that BUILD did very little before the Forest City Ratner plan was announced, founder Darnell Canada told the Brooklyn Downtown Star that "BUILD was created back in August 2003 to address the unemployment situation in the Ingersoll, Whitman, and Farragut housing developments."] James Caldwell, BUILD's founder, is noted for saying things like "I would be for this project if it only provided 10 jobs." Note that the IRS filing says Caldwell receives a $125,000 salary from BUILD, which, according to the document (which BUILD officials now deny) is funded almost exclusively by Forest City Ratner.
The NY Sun, in a 9/30/05 article headlined Critics Say Ratner Is Bankrolling Supporters, wrote:
"We had a budget, what we proposed the programs would cost,” [BUILD lawyer] Mr. [Sharai] Erima said. Based on other community benefit agreements, he said he thought the developer generally provided the money for community programs.
Mr. Erima, who appeared to be angered by yesterday’s press conference, where he interrupted Mr. Goldstein more than once, said the salaries of BUILD’s officers were projected for 2005 and 2006 and had not yet been paid. The IRS statement showed three salaries of more than $100,000.
A spokesman for Forest City Ratner, Joseph DePlasco, said in a statement that the developer gives funding to nonprofits that provide community benefits, including BUILD, but that no dollar amounts had yet been determined, as BUILD’s IRS document suggested.
[DePlasco later revised his account, saying he was out of the loop.]
In this case, the term "community benefits" is specific--a reference to a negotiated agreement--rather than a general one. The issue is whether a developer should promise benefits--or a negotiating partner should expect one--while a formal Community Benefits Agreement is being negotiated.
The New York Observer's blog The Real Estate adds some more denials and details:
BUILD’s lawyer, Sharia [actually Sharai] Erima, said that the IRS form asks new organizations to project budgets two years in advance, and to list anyone who contributes more than 2 percent of that budget. Out of an excess of caution, he says he listed Forest City as the likely donor.
The community benefits agreement states, “The Developers and BUILD will seek and secure adequate public and/or private funding for this initiative.” (PDF p. 7) Yet the IRS application lists no one else other than Forest City Ratner as a potential contributor. Does that mean that BUILD’s “best guess estimate” estimates that this job training program won't inspire a lot of contributors?
Again, Erima said he was being cautious in filling out the form. He said he met with the IRS and went over the application and the agency approved it.
Caldwell is listed on the application as receiving a salary of $125,000. But he said that amount was what he expected to receive and that nobody was getting paid now.
...As for the public relations firm that is representing them, Caldwell said he didn’t know who was paying them.
“The Terrie Williams Agency just called us up one day and said they would be doing our p.r.,” he said.
He doesn't know who's paying for his p.r.? At public meetings, Caldwell regularly confers with Ratner officials. Given that those who pay for the p.r. generally shape the message, wouldn't an organization given the gift of p.r. want to know who's behind it?
BUILD is known for invoking God. A "Connect to CBA [Community Benefits Agreement] Opportunities" document, handed out at the Forest City Ratner booth at the 9/25/05 Atlantic Antic street fair, contained this quote on the cover page of the 11-page document: God used us, the Coalition and FCRC, to achieve this so that the possibilities could be here for you. Now we must all keep and expand the faith and apply it to the task of manifesting the vision.
Used? Who's using whom here? Several news outlets have elucidated some of the story. (WNYC and local TV stations also covered the press conference.) The Times was conspicuously absent. If someone were to read only the Times, the only mention of BUILD came in a 6/9/05 story headlined Unlike Stadium on West Side, an Arena in Brooklyn Is Still a Go that said the developer also courted groups like Brooklyn United for Innovative Local Development,an employment advocacy group formed by James E.Caldwell, the president of the 77th Precinct Community Council, with promises of community involvement in the planning and a sizable share of the jobs.
More recently, in a 7/15/05 article headlined Arena Project For Brooklyn Wins Approval From M.T.A., the Times reported praise of the Community Benefits Agreement without any acknowledgement that experts on such CBAs think this one is suspect.
Yet the Times, at least in today's newspaper, ignored the revelations about BUILD that many other media outlets deemed worthy of coverage. In July, as my report points out, the Times ran six stories in eight days about a doctored campaign flier issued by Democratic mayoral candidate C. Virginia Fields. Was that Fields story is any more worthy than examining whether the biggest supporter of the biggest development in the history of Brooklyn has a major credibility gap?