Friday, November 04, 2005
Legislators consider eminent domain; Manhattan Institute takes on Ratner
..The House bill would cut off for two years all federal economic development funds to states and localities that use economic development as a rationale for property seizures.
But it's not clear if this would affect the Atlantic Yards project. As noted by the New York Observer blog The Real Estate, Forest City Ratner is arguing "blight." Lumi Rolley commented on NoLandGrab:
Ratner has been hedging his bet since he first announced the project, claiming both that the neighborhood is BLIGHTED and that the plan is necessary to increase the tax base of the City and State. The tide has turned on the argument that economic revitalization is a "public use" — Ratner and Marty have long since moved on to Plan B (blight).
Of course, the definition of blight in New York State is murky, and under discussion in the state legislature. Here's testimony from Daniel Goldstein of Development Don't Destroy Brooklyn.
And there's new evidence that Prospect Heights--the neighborhood surrounding most of the Atlantic Yards project--is booming. The New York Observer references Halstead's report that prices have topped $1 million. And The Real Deal reported, in a November 2005 article headlined Park Slope neighbor presents fresh prospects:
Now, it's seeing a slew of new upscale condominium and rental development. As well, it appears Prospect Heights will have to absorb an additional 7,000 apartments as part of developer Bruce Ratner's plan to build a basketball arena and residential and commercial complex on 22 acres in its northwestern corner.
The neighborhood, then, has definitely bounced back from a depressed period in the 1960s and 1970s, partly because of an overflow of residents from ritzier Park Slope.
The article doesn't mention the blight issue.
Discussion of eminent domain in New York should begin with a look at They’re Taking Away Your Property for What?, a lengthy and powerful analysis by Nicole Gelinas in the Autumn 2005 edition of City Journal. The magazine is published by the conservative Manhattan Institute; while some of those most exercised about eminent domain are property rights absolutists from the right, this is issue that has united people from various parts of the political spectrum (including the NAACP), and troubled academics like Yale's Doug Rae and alt-journalists like Paul Bass, cited in the City Journal essay. (Also see the May 2004 Manhattan Institute newsletter, Thinking about Ratner's Urban Renewal, by Julia Vitullo-Martin.)
Gelinas first takes on the Supreme Court's Kelo decision:
But what critics haven’t noticed is that the decision simply expands the Court’s approval of a practice that state and local governments have long used to bring about urban renewal or economic development. More important, they have also failed to notice that, over its long history, this practice has almost never worked.
...If Soviet-style central planning actually worked, America’s vast urban renewal projects that used eminent domain to bulldoze slums would have produced flourishing communities rather than high-rise housing projects awash in social pathology. And the megaprojects of today—the stadiums, convention centers, Renaissance Centers, and so on, for which urban planners have condemned acres of private property—would actually have produced the economic development that their sponsors promised.
While the piece addresses eminent domain in several locations, Gelinas focuses on Ratner's record in Brooklyn. First, MetroTech:
In New York, politicians’ efforts to trap corporate jobs through government planning resulted in a similar centrally planned boondoggle: downtown Brooklyn’s Metrotech. For decades, New York pols had fretted that the city was losing its white-collar jobs to New Jersey, Connecticut, and other lower-cost regions, even as skyrocketing crime and taxes sent middle-class residents fleeing from the outer boroughs.
The solution? Nearly two decades ago, Gotham decided to build a walled camp in the middle of a lower-class area of Brooklyn to lock white-collar jobs in. This project would accomplish two goals, pols thought. In addition to keeping jobs in New York, Metrotech would spark further development in a slummy neighborhood that never had grown on its own, despite its proximity to lower Manhattan. City and state officials used eminent domain to displace 250 owners and tenants so that developer Bruce Ratner could build the suburban-style office campus.
Metrotech tenants have received about $270 million in state and city subsidies (of which more than $200 million went to JPMorgan Chase). But Metrotech hasn’t “kept” the nation’s financial-services jobs in New York: Gotham’s share of U.S. securities-industry jobs has fallen from one in three to one in five since 1980. Metrotech, despite its Class A office space and its quiet campus lush with greenery, can’t even attract enough private-sector tenants to remain fully occupied; its tenants include an array of government agencies.
Nor has Metrotech, completely cut off from the surrounding streetscape, encouraged the growth of an unsubsidized business community in its neighborhood. Metrotech is what it was when it opened: a suburban-style office campus carved out of inner-city downtown Brooklyn. The two worlds don’t meet.
And then, unlike the many journalists who don't place Atlantic Yards in the context of Forest City Ratner's track record, she makes the connection:
The government’s newest solution for “underdeveloped” Brooklyn is another top-down project by eminent domain planned by the same developer nearby....
Ratner’s sweeping master plan for the Prospect Heights neighborhood envisions a basketball arena over some uncovered railyards he’ll buy at a below-market price from New York’s Metropolitan Transportation Authority, and he’s petitioning the state and city to condemn the adjoining blocks so that he can build nearly 6,000 [actually 7,300] high-rise apartments there...
But the properties Ratner wants the government to condemn, like the houses in Kelo, are hardly distressed....The taxpayers sure won’t get much in return...Without government intervention, prosperous people have chosen to move in, and one Prospect Heights property owner, Henry Weinstein, had tentative plans to develop his land to its full potential, including, possibly, more luxury condos. In order to win the bid for the state-owned railyards, Ratner also had to stymie rival developer Gary Barnett’s competing bid to build apartment towers over the railyards’ footprint, which did not require eminent domain and massive stadium subsidies. So taxpayers will end up subsidizing economic growth that would have happened naturally, and far more rationally, anyway.
Politicians line up behind megaprojects like Ratner’s Prospect Heights scheme because they can boast that their sponsorship will create jobs and economic growth, whereas no politician can take credit for gradual and organic free-market economic development. The big, politically connected, unionized construction companies love such projects, too, because subsidized construction mandates unionized contractors, and the politically active construction unions love them no less. The Wall Street firms that underwrite the bonds for the public subsidy are also big supporters, as are the industry associations whose members stand to gain, even while other taxpaying businesses stand to lose.
Gelinas also notices Ratner's manipulations:
His new Prospect Heights project comes complete with a 51-page “Community Benefits Agreement,” which could serve as a textbook for politicized economic development. In it, he offers sweeteners to “community” activists, among them at least 2,000 units of below-market “affordable” housing and a generous percentage of jobs for minority contractors and employees.
The sweeteners attracted some powerful, if unsavory, political support. Unsurprisingly, Al Sharpton climbed on board... But, more crucially, Ratner’s chief “community” cheerleader is Bertha Lewis, head of the New York chapter of Acorn, the nation’s biggest left-wing activist group...Acorn’s Lewis, as “enforcing member” (the literal term the agreement uses) of the plan’s affordable-housing component, will have a huge say in deciding who will get the project’s subsidized apartments—a rich patronage plum indeed.... In return, Acorn will take “reasonable steps to publicly support the project...This is no trivial matter, since Lewis is not only a “community” leader but also co-head of the powerful Working Families Party, the political face of Gotham’s public-sector unions.
Some details are missing--such as an analysis of the how "affordable" housing mostly helps the middle-classs, how Ratner added 2,800 condos after getting the 50-50 "affordable" agreement publicly praised, and how the number of promised office jobs has plummeted--but this is as lengthy a treatment of the Atlantic Yards project as you'll find beyond my report. Thus, it points out the failure of the local dailies and weeklies to dig into the biggest project in the history of Brooklyn.