Saturday, January 28, 2006

 

Beach volleyball coming to Brooklyn; Ratner will market it

The first New York stop on the AVP Beach Volleyball Tour will be in Brooklyn, for the AVP Brooklyn Open, August 17-20, and yes, it will be televised on NBC. The tour is a product of AVP, Inc., which focuses on professional beach volleyball, and the local marketer will be Brooklyn Sports & Entertainment, the affiliate of Forest City Ratner. It seems to be part of a general strategy for the developer to get involved in sports and sports marketing beyond the Nets; Ratner has also offered support to amateur sports in Brooklyn.

In a photo caption, the Brooklyn Papers declared, "Bruce Ratner’s Atlantic Yards project remains controversial, but there’s nothing ire-provoking about his latest initiative — a deal to bring Kerri Walsh (above) and other top pro volleyball stars to Coney Island this summer."

Well, maybe question-provoking. The press release didn't answer some basic questions. Will the 4,000-seat volleyball stadium to be built for this be temporary or permanent? And where exactly will it be located? What's the financial relationship between AVP & Ratner?

Those questions weren't answered in initial coverage last week in the New York Daily News and the New York Post, and the Times didn't cover the issue. I sent emails asking those questions of Forest City Ratner, but didn't get any response. Fortunately, the Brooklyn Papers, in its 1/26/06 article headlined Pro volleyball is coming to Coney Island beach this summer, explained that yes, the stadium will be temporary.

Another twist has been ignored by all but Brian Hatch of NewYorkGames.org. For New York's 2012 Olympics bid, beach volleyball was proposed for beachless Williamsburg, apparently because it was closer to the center of the city and because Coney was an "obvious" site. Obvious, yes, because there's a great beach there, as AVP and Forest City Ratner clearly recognize.

Friday, January 27, 2006

 

Correcting the Times on which mall is which: one more try

I'm still surprised how hard it is to get a relatively straightforward correction in the New York Times. As I wrote in a 12/27/05 post, a caption in the business section that day stated that a shopper was outside the Atlantic Center mall, while he actually was outside the Atlantic Terminal mall.

The two malls from Forest City Ratner are quite different--Atlantic Center is mostly dun-colored, while Atlantic Terminal is red brick. But I initially erred by misidentifying the building in the fuzzy background of the photo as Atlantic Center, which is east of Atlantic Terminal, while it was actually Site V at Atlantic Center, which is south of Atlantic Terminal and across Flatbush Avenue. (Note that the photos at the above links from the Forest City Ratner web site show a now-departed Macy's store at Atlantic Center and a somewhat earlier design for Atlantic Terminal.)

There was other evidence, of course, that the shopper had just been to the Atlantic Terminal mall. The version of the photo in the online version of the newspaper was cropped to show only Atlantic Terminal (right). And the shopper was carrying two bags with the bullseye logo of Target, an anchor tenant of Atlantic Terminal. The other bag that's identifiable, as seen in the print copy version of the picture, has the red star of Macy's, which does not operate in either of the mall complexes, but has a store on the Fulton Mall in Downtown Brooklyn.



I went back to the malls yesterday to try to reenact the photo as seen in the print edition of the Times. It was taken from the southeast border of the Atlantic Terminal Mall (at top left of the Atlantic Yards site plan), looking southwest at Site V, which is across the street (in blue and yellow on the map, below the diagonal Flatbush Avenue). Note that the Atlantic Terminal mall and the Atlantic Center mall, the modified L-shaped building to its east, are outlined in black but are not part of the Atlantic Yards project, as both are on the north side of Atlantic Avenue.

First, I took a photo to try to capture the same light poles (which now lack the festive holiday decorations, obviously, as pictured in the Times) and the mall to the right.


Then I took a closer-in shot to gain a clearer sense of the P.C. Richard sign in the background, as well as the traffic on Flatbush Avenue.


Then I rotated slightly to capture the name of the mall: Atlantic Terminal.


I backed up a little to capture the name and logo of Target under the name Atlantic Terminal. (Yes, it's a little dark.)


Then I rotated and took a picture of the Atlantic Center mall opposite.



There are other sides of the Atlantic Center mall that look more like Site V (which is actually considered by Forest City Ratner to be "Shops at Atlantic Center"). But the bottom line is: the shopper had been to Target in the Atlantic Terminal Mall, he was just outside the Atlantic Terminal mall, and he was headed in the direction of both the Atlantic Center mall and a parking garage.

The caption stated: "Keino Bennet leaving the Atlantic Center Mall in Brooklyn yesterday." It still should be corrected.

 

Marty's State of the Borough: Atlantic Yards gets less push than last year

Is Brooklyn Borough President Marty Markowitz backing away from the Atlantic Yards arena-cum-skyscrapers project? No, but maybe. If you see him at public meetings regarding the project, he maintains his enthusiastic support. But at last night's State of the Borough Address, held at Brooklyn Technical High School in Fort Greene, Markowitz gave Atlantic Yards far less attention than in his 2005 and 2004 addresses. (Photo of Mayor Mike Bloomberg, Marty's wife Jamie, and Borough President by Kathryn Kirk, from Brooklyn-usa.org.)

That's reading the tea leaves, of course, but that's all we have. A State of the Borough Address is many things--a chance for fellow politicians to pay homage, a shout-out to various neighborhoods and ethnic groups, a recounting of achievements, and a chance to honor those who've "done Brooklyn proud." (A particular favorite last night was Keith Beauchamp, the filmmaker whose documentary helped reopen the investigation of the murder of Emmett Till.)

But it's also a chance to lay out goals, and in his previous addresses, excerpted below, Markowitz devoted several paragraphs to the Atlantic Yards project. Last night he gave it part of a sentence--plus the prominent closing segment in a post-speech video. Maybe that's because some of the previously stated goals--such as 10,000 permanent jobs--have fallen by the wayside, or maybe it's because he didn't want to remind people of potentially ruinous traffic. Maybe it's that there are more changes to come, like a new design from architect Frank Gehry. Or maybe it's simply that we're still waiting for a Draft Envirornmental Impact Statement from the Empire State Development Corporation.

Marty got to Atlantic Yards in the middle of his address. "Maybe it's an obsession with realizing Brooklyn's promise, or maybe it goes back to my childhood, but everything I do has the same objective. Fulfilling government’s core duties of providing affordable housing, quality health care, public safety, and a sound education for all — and making Brooklynites proud of our home town," he said. "I pushed for two of the largest affordable housing initiatives in New York City history with the Greenpoint-Williamsburg re-zoning and the Atlantic Yards project — and it is worth the agita and mishegas, because I’m confident it’s good for these neighborhoods, and good for Brooklyn."

That was it--no mention of jobs, or the controversial Community Benefits Agreement, or the concerns of local residents, references he made last year. (Interestingly, the press release touted the Greenpoint-Williamsburg and Atlantic Yards as "economic development.)

By contrast, in his inaugural address yesterday, Mayor Mike Bloomberg was effusive: In Brooklyn, construction workers will put shovels in the ground at Atlantic Yards, the most exciting housing, commercial, and sports development in Brooklyn’s history.

Bloomberg, swearing in Markowitz last night, said in Brooklyn, "Standing together, we'll cheer for the Nets."

The video and the heckler

Near the end of Marty's address, a video featured six disparate people congratulating the Borough President. Among them: Yvette Jarvis, the Brooklynite who is now a City Councilor in Athens, Greece; Gavin McLoed (of The Love Boat), on behalf of Princess Cruises; the captain of the Queen Mary II, scheduled to dock in Brooklyn; a couple of seniors from Red Hook hailing the new Ikea; and beach volleyball star Holly McPeak, whose pro tour will stop in Coney Island in August.

Finally, after a montage of basketball action, Vince Carter of the New Jersey Nets declared, "I want to congratulate Marty on his reelection, and we look forward to having you sit at center court when we get to Brooklyn." Then came a quick shot of Marty holding a Nets jersey.

The audience was quite enthusiastic about the Nets, but the ending of that segment, and the resumption of Markowitz's speech, was interrupted, at least for one section of the audience, by Schellie Hagan of the Prospect Heights Action Coalition, which has long opposed the Atlantic Yards project. She had periodically heckled Markowitz during his speech by shouting, "What about eminent domain? What about Prospect Heights?," and she upped the volume when the Nets were mentioned. One fellow attendee angrily urged her to shut up, and a squad of auxiliary police officers approached. Hagan and her sister Patti Hagan, who had also participated in some heckling, agreed to be quiet, and soon left the building, as Markowitz's portion had finished.

Unmentioned power brokers

Among those in the VIP section of the audience: Forest City Ratner president Bruce Ratner and VP Jim Stuckey. Neither Ratner nor any of the other powerful developers in Brooklyn--Joseph Sitt of Thor Equities, David Walentas of Two Trees Management, and Shaya Boymelgreen of Leviev Boymelgreen--were mentioned in the speech, though they, more so than the many Brooklynites hailed by Markowitz, are Brooklyn's power brokers. (I don't know if those other three developers were present.)

Brooklyn touches

It was the first State of the Borough I've attended in person and, while the speech has some formulaic inclusiveness, it's hard not to be impressed by the diversity of Brooklyn. (That can lead to unintended consequences: the table with kosher food was near the entrance, and the crowds were so thick that many non-Jews lined up for the kosher food, despite the protests of the servers.)

And Marty's people know how to put on a show. The program opened with songs from the multiethnic Brooklyn Youth Chorus Academy and an invocation from a Borscht Belt-y rabbi. Then Marty entered, in the midst of the Brooklyn "Steppers" Marching Band. (Photo by Kathryn Kirk, from Brooklyn-usa.org.)


As he spoke, a giant postcard saying "Greetings From Brooklyn, NY" was projected on screen. After a reference to the "Leaving Brooklyn, Fuhgeddaboudit" sign Marty managed to get placed on Brooklyn roads, he announced a new sign for the Jackie Robinson Parkway: "Welcome, Brooklyn's in the House." No wonder Bloomberg hailed Marty as Brooklyn's "the best salesman" Brooklyn's ever had and Senator Hillary Clinton called him "the most enthusiastic cheerleader for any community in the U.S."

Most impressive was a witty visual rebuke to the 3/7/2005 New Yorker cover that depicted, as the Daily News described it, "a horrified Adam and Eve exiled from Manhattan by God - into a dark and forbidding Brooklyn." Markowitz defended Brooklyn back then and last night introduced the cover of "The Brooklyner" (Price: Affordable), which showed Adam and Eve strolling peacefully over the Brooklyn Bridge into the borough, beckoned by God.

Also, all attendees were given a booklet containing the more than 1,000 entries submitted in a call for a new Brooklyn slogan. Among them: "Brooklyn is like an everything bagel;" "Brooklyn: Where Life Gets Interesting;" and "Brooklyn: "It's More than a Freakin' Tree."

Past speeches

From Marty's 2005 address:
Meanwhile, new residents, businesses, and cultural institutions — not to mention the upcoming arrival of the NBA’s Brooklyn Nets — are increasingly making Brooklyn a true land of opportunity.
Now, I fought hard to get a national sports team to call Brooklyn home.
I know of three things that bring people together like nothing else — music, religion, and sports.
As a boy, I’m happy to say that I was able to watch the Brooklyn Dodgers play every summer, just a few blocks from where I lived.
This year, by the way, we mark the 50th anniversary of the Dodgers’ legendary 1955 World Series championship.
I want to tell you what I remember about that time.
After that World Series victory — life as we knew it stopped in the borough of Brooklyn, because for two weeks, there was a non-stop party in the streets.
That was then, and this is now.
The Atlantic Yards Project will include the Nets arena, as well as residential and commercial buildings. Every city in America competes for a national sports team. If you’re lucky, you get a chance like this once in a lifetime.
Brooklyn — now is our time.
I expect Atlantic Yards to result in two things that are vital to Brooklynites — more jobs and more affordable housing. I want to say right now, that I fully understand — and I share the concerns — of local area residents who have spoken out in opposition to this development.
People of good will can differ. And constructive opposition is something I value and cherish — because I honestly believe that, in the end, it makes for a better plan.
The Nets arena — and the Atlantic Yards project — will go forward, but it must work for both Brooklyn and for the community surrounding the arena.
Because people do not move out of Brooklyn today seeking a better life. They move out because they can’t afford the good life we have here.
It is estimated that Atlantic Yards will create about 10,000 permanent new jobs. That is above and beyond the 15,000 construction-related jobs that it will create over the next decade. And we can all be proud that 100 percent of those workers will be union employees.
Under a proposed groundbreaking Community Benefits Agreement, as many as possible of those new jobs will be filled by Brooklyn residents, and I promise you, those jobs will go to those who need them most — particularly low income residents living in public housing nearby.
I believe this project will help give individuals and Brooklyn families the chance they need — and deserve — to break the cycle of poverty, with opportunities to work at jobs that will grow into careers.
I want every Brooklynite to be given the same chance I had.
As someone who grew up in poverty — and who grew up in public housing — I know what an opportunity can mean. And with this project designed by a world class architect, Brooklyn-born Frank Gehry, Atlantic Yards will be an unmistakable statement that the new center of this universe we call New York City has shifted to the intersection of Flatbush and Atlantic!


From Marty's 2004 address:
Oh yeah, I almost forgot.
There's one other little project that's coming to Brooklyn.
The borough of Kings is about to get its crown back.
Brooklyn needs this arena because Brooklyn's best -- like the Lincoln High School team -- deserve a place in Brooklyn where they can compete at the highest levels, and watch the stars of the game.
Just as the Dodgers thrilled Brooklynites in the first half of the 20th century, the Nets will be the team that unites us in the 21st.
It's a moment in our history that future generations are going to look back on as a turning point, and they're going to thank us for making it happen!
If everything goes according to plan, in a few years we will bring a new center of life to the heart of this borough.
I want to thank Mayor Bloomberg for his enthusiastic support of this project – it couldn't have happened without you, Mayor. And thank you to Governor Pataki.
I will of course make sure that this is the best possible project for all Brooklynites, including those in the immediate neighborhood. I will do everything in my power to make sure that as few people as possible will be displaced -- that any negative impacts are minimized -- and most importantly that they are treated with dignity and respect.
For 26 years, I have kept my promises to Brooklynites.
And I will keep this one too.
This project must be a great resource for the entire neighborhood -- and for the entire borough.
The world-class arena and surrounding area will be designed by renowned architect Frank Gehry – and will include:
4400 units of new housing – up to half of which will be at below-market rates for middle and moderate income households – which we desperately need.
Many new businesses and stores, which will create thousands of new, much needed jobs.
Six acres of public park land.
And even a skating rink on top of the arena.
And we're going to make sure that those who have missed out on construction and contracting opportunities in the past – especially women and minority owned businesses -- have their rightful place at the starting gate for this project -- and aren't just watching the race.
Above all, the Brooklyn-wide pride for a top basketball team – which is the urban sport – will bring all of our neighborhoods and cultures even closer together.

Thursday, January 26, 2006

 

The big unknown: Borough Board punts on fiscal impact of Atlantic Yards

It's one of the biggest questions--perhaps the biggest--surrounding the proposed $3.5 billion Atlantic Yards development: would this project be a winner or a loser economically?

The answer: we don't really know, beyond generalities, even though developer Forest City Ratner estimates billions of dollars of new revenue to the city and state, and some of FCR's assumptions have been forcefully challenged by not only critics but also by two city agencies, which estimate costs and revenues differently.

And our government isn't helping us find out more.

Yesterday, the issue came up briefly, and inconclusively, at the meeting of the Brooklyn Borough Board Atlantic Yards Committee. The topic: socioeconomic conditions, which, according to the state environmental impact process, covers a lot of ground, including direct or indirect displacement of residential and commercial tenants,and adverse effects on specific industries.

There's no requirement to figure out the fiscal impact of the project. The Environmental Impact Statement (EIS) from the state Empire State Development Corporation won't address it--a draft should be issued in a few months--and the Borough Board meetings are supposed to track issues in the EIS process.

Yesterday, Borough President Marty Markowitz, an enthusiastic supporter of the project, brought up the issue, querying George Sweeting, a deputy director of the city's Independent Budget Office (IBO), with a leading question. According to a September 2005 report from the IBO, Markowitz said, "this project would result in a small net fiscal gain to the city over 30 years. If you evaluated it on the basis of the commercial, and retail, and residential sections, would it result in... a bigger net gain?"

Sweeting responded cautiously but positively. "The paper focused solely on the arena. We had a pretty good sense of the subsidies and benefits that were available," he said, adding that calculating the impact on the entire city was complicated, since it would require determining whether new residents at Atlantic Yards were new to the city (and thus new taxpayers), and who would occupy apartments vacated by New Yorkers moving to the project.

However, given that most of the subsidies available on the non-arena portion are of-right, and available to any developer, Sweeting said, "it's a virtual certainty we would find a larger net fiscal benefit."

But how much larger--a few million, or a few billion? A benefit sufficient, for example, to absorb a potential huge increase in traffic and transit costs? (The arena would represent less than ten percent of the project square footage.) That tantalizing question was put aside.

Certain tax breaks indeed would be available to any developer, as Sweeting said, as would some affordable housing subsidies--though these would be cumulatively much larger than typical. However, other benefits that don't fall under the rubric of subsidies would not be of-right; those include the conveyance of city streets, city infrastructure costs, the opportunity to override city zoning, and the opportunity for the state to invoke eminent domain. Note that Develop Don't Destroy Brooklyn calculates a very large set of subsidies.

A look at the arena numbers

The IBO report estimates that, over 30 years, the arena would produce $28.5 million (present value, 2005 dollars) more in revenue than the project would cost the city, and that "the combined state and local 30-year net fiscal surplus would be $107.0 million (2005 dollars)."

The IBO's conclusions have been challenged. Sports facility analyst Neil deMause, on his Field of Schemes site, noted that the IBO underestimated the amount of subsidies due to the developer, and also made optimistic calculations--based on assumptions provided by the developer--about the number of fans coming from New Jersey. Change those numbers and the "small net fiscal gain" could turn into a loss.

Why would the arena benefit the state more than the city? The report states: Much of the difference between the results for the city and the state is attributable to the fact that all those who earn income at the arena—Nets players, executives, coaches and other staff, and other workers—must pay New York State personal income taxes, while only New York City residents pay New York City personal income taxes.

Public costs for the project

Even though the IBO didn't try to estimate revenues from the new taxpayers who would move into Atlantic Yards, it did try to estimate some public costs posed by the project as a whole, not just the arena. The IBO report estimates that the cost of delivering new education, sanitation, and police services over 30 years would be $530 million in current dollars (present value), or $208.6 million more than the $321.4 million estimated by Andrew Zimbalist, the sports economist FCR hired to estimate the fiscal impact of the project.

However, the cost almost certainly would be even higher. The IBO's higher cost prediction was based on an estimated 6,000 housing units, not the 5,850 number used by Zimbalist. However, the developer now plans at least 7,300 units onsite, plus up to 1,000 additional units offsite. More people require more city services.

And the IBO report doesn't address the cost of traffic. Transportation engineer Brian Ketcham, looking at the entire range of development for northwestern Brooklyn, including Atlantic Yards, estimated that traffic could generate $250 million a year in externalities, including the cost of air pollution, traffic noise, and lost productivity.

As noted above, Develop Don't Destroy Brooklyn calculates a very large set of subsidies.

$6 billion in revenue?

Forest City Ratner cites $6 billion in new revenue to the city and state to be created by the project over 30 years, but less frequently acknowledges the $1.1 billion in public costs. Note that the apples-and-oranges issue here. The IBO uses present value--the cumulative number in current dollars, rather than the cumulative number after 30 years. So the developer should use present value as well; under one scenario, that means $2.1 billion in revenues and $572.6 million in costs. Under present value, note that the ratio of costs to revenues is higher. (See Chapter 3 of my report for all these figures.)

But those revenues depend on some dubious assumptions, ones criticized by the New York City Economic Development Corporation (NYCEDC), which is a general supporter of the project.

For example, as noted in Chapter 3 of my report, NYCEDC disagrees with Zimbalist’s estimates of how many staffers associated with the basketball team would live in New York City and pay city income tax. Zimbalist, in his 2004 report and 2005 report, assumes that 30 percent of the Nets players will live in the five boroughs and pay city and state taxes, while 75 percent of the arena workers will live in the city. However, NYCEDC estimates that 20 percent of the players, 35 percent of the executives and team staff, and 50 percent of the facility staff would reside in New York City.

More crucially, NYCEDC and Zimbalist differ significantly on those assumptions mentioned by the IBO's Sweeting: how much revenue would be generated by the new residents in the project. Zimbalist, in his first report, in 2004, projects that the average annual income of households in the development would be between $80,000 and $90,000. In his second report, in 2005, he projects that the average annual income would be $94,875. (If he were to do another report, acknowledging the addition of another 1,300 market-rate condos, his estimate would undoubtedly rise.)

But Zimbalist and the city agency apparently disagree significantly in methodology. NYCEDC assumes that the new units "will represent an equivalent increase in households Citywide, either directly in the project itself or as infill in units vacated by households relocating to the project. Income tax revenue is based on an average income of $45,000, the Citywide average for all industries." (Emphasis added.)

Given that income tax revenue is key to Zimbalist's estimates, this represents a discrepancy deserving of further study. Also note considerable challenges to Zimbalist's assumptions in this report by urban planner Jung Kim and economic anthropologist Gustav Peebles.

The overburdened IBO

I caught up with Sweeting after the session yesterday and asked him again about the challenge of doing a full fiscal impact study. "You would have to make assumptions about the kind of firms that come in, assuming there's still a commercial component," he said. "That would tell you what the salaries are. You make assumptions about the income taxes that would result, and the corporate taxes."

He continued, "To estimate tax revenue [on the residential component], you'd need to know the average household income of the people coming in. Then you want to make at least some calculations about how many of them are new to the city and how many are from elsewhere in the city."

Were Zimbalist's assumptions appropriate? "I'm not going to criticize the assumptions he made," Sweeting said. "The way we set it up, once we got to a positive fiscal impact for the arena, that was the part that we felt comfortable tackling."

But that's a fraction of the entire project, I said, pointing out that the NYCEDC and Zimbalist differ. "That's why that assumption about how many are new is a key part of the analysis," Sweeting acknowledged. "And you also want to think about who takes the apartments, does that create space for other new people to come in, or maybe that solves some of the shortage of affordable housing."

"We just chose not to do that," he said. "But that's not a reflection on the quality of the work of other people who have tried to do it. It's just not something we had the time or the resources to get into."

Sweeting pointed out that, as stated during the meeting, the project as a whole would likely generate greater fiscal benefits than the arena would. Still, a solid estimate of the project's fiscal impact remains elusive. Can any other agency pin it down?

"Not that I'm aware of," Sweeting said. "We could, if we had nothing else to do."

Will we ever know?

At the 5/26/05 City Council hearing on the project, urban planner Mafruza Khan of the Pratt Center for Community Development testified:
Given the wide divergence in [subsidy] estimates, from $200 million to over $1 billion, we do want to emphasize that it is impossible for the public to know whether this project is a good deal without knowing how much it will cost to taxpayers. It is being asked to buy something without knowing how much it will cost.

Given the wide divergence in estimates of revenues, as well, it remains impossible to know whether the project is a good deal. However, the press has not pursued this question. In an 11/27/05 editorial, the New York Times declared:
The city's nonpartisan Independent Budget Office calculates the arena would produce a modest benefit for the city and state, $107 million over 30 years. Even that may be optimistic...
The Nets arena is not destined to be a cash cow, but the borough deserves a sports team, so long as the price is not too high.


But the Times didn't acknowledge that the IBO report mostly concerns the arena. We still don't know the price of the Atlantic Yards project.

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