Thursday, February 11, 2016

Fair play! New effort (from former BUILD officer) to enforce Community Benefits Agreement, despite lack of formal standing

It's a belated cry for fair play from a one-time cheerleader for Atlantic Yards.

Yesterday, a key participant in the early days of BUILD (Brooklyn United for Innovative Local Development), the now-defunct Atlantic Yards Community Benefits Agreement (CBA) signatory, launched a campaign arguing that the project developer left Central Brooklyn behind and must fulfill promises regarding jobs, contracts, small business loans and more.

The fledgling Devotion NYC, founded by former BUILD small business development director Michael West, now aims to get the CBA implemented, especially regarding business development and jobs for minority residents who thought Atlantic Yards would make a difference.

The challenge strikes me as quixotic, given that the contract is only enforceable by its eight organizational signatories, not the public at large or elected officials (as in some more praised CBAs), and many of its goals are aspirational.

A promised independent monitor who would report specifics on jobs and contracts was never hired. One commentator recently called the CBA a "borderline calamity."

Indeed, Mayor Mike Bloomberg signed the Atlantic Yards CBA in 2005 only as a witness and Empire State Development, the state agency that oversees the project, has said the CBA is outside its purview.

But West, an educator and community organizer who left BUILD in 2008, believes public pressure can work. He has a meeting next week with a representative of developer Forest City Ratner.

Who's in charge

That's another issue. Though the CBA obligations were presumably transferred when original developer Forest City sold 70% of the project (minus the Barclays Center and one tower) to the Shanghai government-owned Greenland Holdings, forming Greenland Forest City Partners, the CBA today is far less important to their corporate goals.

Nor does Forest City, now the front-facing part of the joint venture, call the shots as junior partner.

Once, the CBA groups--most of them formed for the purposes of the project--gave Forest City community cover as it achieved a state override of zoning and gained other special benefits. Two of them, BUILD and ACORN, supplied supporters at rallies and public hearings, which is alluded to in the video below.

Many supporters genuinely believed that Atlantic Yards could change their lives and change Central Brooklyn, albeit without recognizing the fuzziness of the promises. But a Forest City-hired consultant said an effort to find a grant-writer for the CBA signatories failed partly because people though the groups were "fronts" for Forest City. (I should add that other CBAs nationally were signed by broader coalitions.)

Ambitious, unfulfilled promises

The chart above right, and especially the video below, are somewhat wobbly regarding the promises, especially given the vague language in the CBA and the inability of anyone outside the eight community groups that signed the CBA to pursue implementation. (Note that 50% of the rental apartments, not condos, were supposed to be affordable.)

But West's crusade echoes a common frustration articulated by a good number of black residents of Central Brooklyn: the Atlantic Yards project was oversold, by both the developer and supporters, and hasn't had much impact.

I consider the CBA more trickle-down than transformative, given the failure of BUILD's job-training efforts and the delays in producing less-affordable than promised subsidized housing.

Michael West, via Devotion NYC
Yes, free arena tickets are distributed and a community foundation launched belatedly last year--both attributed to the one active CBA signatory, the Downtown Brooklyn Neighborhood Alliance, or DBNA. But numerous CBA initiatives never got off the ground. They would have required significant outside help and funding.

Moreover, the CBA was implemented in a fundamentally un-transparent way: it required an Independent Compliance Monitor, but Forest City never hired that monitor, offering vague excuses or simply dodging the question.

That means we have no concrete, and independent, assessment of how much the developers have fulfilled goals regarding, say, hiring and contracting for minorities and women. Nor do we know how much numerical progress in those areas is achieved by working with well-established companies from outside Brooklyn.

Hindsight: need for implementation

West today still thinks the CBA is a "great model," but "we should not have let our foot off the pedal once we got the CBA." In retrospect, that would have meant that community groups, many of them dependent on Forest City for funding, would have had to publicly press the developer or otherwise pursue enforcement.

That's not how things worked--and critics at the time warned about flaws in the CBA--though we now know that the relationship between CBA groups and the developer was less than copacetic.

BUILD's officers, for example, publicly praised Atlantic Yards while privately complaining that Forest City had dragged its feet regarding a promised Pre-Apprenticeship Training Program, perhaps the single most important element of the CBA. (It was the only element that, if not implemented, could have led to specified money damages, in that case $500,000.)

Though the coveted training program eventually launched, it led not to construction careers for the eager trainees but rather a bitter lawsuit, which was settled, with terms undisclosed, last year, well after BUILD, in debt, shut down in 2012.

Below in this article, I'll look more closely at the promises in the CBA. But first let's look at the video introducing Devotion NYC's campaign, and then Twitter.

The video

The video, well-scored with ominously propulsive music, begins with a photo of the railyard and states "Forest City Ratner wanted to transform Atlantic Yards into Barclays Center." (Actually, there was no such thing as "Atlantic Yards," which was the developer's brand, but rather the Vanderbilt Yard plus another 13.5 acres of private property and public streets.)

"Our communities supported them. We lobbied politicians for them," the narration continues. "Held countless community meetings for them. Marched in the streets for them and gave them $1.5 billion of our tax dollars." (Let's say there are hundreds of millions of dollars in direct subsidies, tax breaks, and other benefits.)

"Why?" the narration continues. "Because Forest City and our politicians signed a contract with our communities promising that we would receive desperately needed job training, construction jobs, construction contracting opportunities, post-construction contracts, retail space for our businesses. Affordable rentals, and affordable home sales."

"Do you see employment increasing in our communities? Do you see our businesses developing?
Has the agreement been fulfilled? We say 'no.' We are Devotion," the narration closes. "As community members, we must work together again to assure that Forest City fulfills their commitment."

Did Forest City sign a contract with "communities"? A lawyer would say no. Outsiders are not able to enforce the CBA.

Has Forest City fulfilled its commitment? Well, in some areas, such as the Independent Compliance Monitor, clearly no. In other areas, the commitments were fuzzy, and contingent on others' funding or actions.

I pointed out to West that the contract may be difficult to enforce. "My perception is that [the groups] were standing in for the community in general," responded West. "BUILD no longer exists. Does that mean that all the commitments that were made, and BUILD was supposed to complete and fulfill... will go by the wayside?"

That, apparently, will be an issue of public pressure. West, who said he left BUILD in 2008 without rancor but that they "grew away" from each other, said, "Right now, we're working with young people from the community [apparently this new group]. We're focused on making sure that the low-income and moderate-income communities that were identified in the CBA benefit from the CBA. We've just really begun. We believe that, as more light is shown, more people will work with us."

The Twitter campaign

Meeting with Forest City

I would expect Forest City's Cotton to repeat the developer's talking points: it hired significantly from Brooklyn for arena jobs and in the modular factory. Then again, the factory is likely shutting down by the end of February.

And Forest City--which now represents Russian oligarch Mikhail Prokhorov, who as of last month fully owns the arena operating company--has never specified the average weekly hours and pay for arena workers, most of whom surely don't earn enough working part-time to live on their own.

No wonder SEIU 32BJ is pushing that the next contract for arena security guards, ushers, and other event staffers enforces a weekly schedule that allows workers to qualify for benefits.

Forest City likely will tout the free tickets and the more than $100,000 distributed last year via a new community foundation. But there's no sign that the CBA's promise of "systemic changes in the traditional ways of doing business on large development projects" has come to fruition.

Big promises

Coverage in the Bedford-Stuyvesant-based Our Time Press in 2005 quoted West as optimistic:
To aid those who may not otherwise have access to much-needed capital to bid, the Director of BUILD’s small business development, Michael West, says, “Forest City Ratner is using its financial leverage with financial institutions to make available loans, lines of credit and other resources to minority business, construction businesses and other businesses that need those capital input."
That didn't happen. "It's been 10 years since we started this process," West said. "You just have to walk on the streets of Brooklyn, and talk to people, and you see that the CBA, that particular model, hasn't been implemented, to the degree that it needs to."

Looking at the CBA: BUILD's role in jobs/contracting

Perhaps the most ambitious plans in the CBA involved the role of BUILD, which did help workers get retail jobs and pointed them to a Community Labor Exchange.

Forest City was supposed to get a Project Labor Agreement from unions that would hire one trainee or apprentice from the community for four journeyman positions. That never happened.

Forest City was supposed to aim at no less than 35% Minority and 10% women construction workers. While that certainly happened in the modular factory, it's not at all clear if that happened regarding the rest of the project.

BUILD was supposed to work with local stakeholders and the Developer to create a new High School for Engineering, Design & Construction. That never happened. It was supposed to pursue other initiatives to develop jobs for Unemployed/Underemployed Adults, Out-of-School Youth, and students

Regarding construction, 20% of total contract dollars was supposed to go to MBEs (minority-owned business enterprises) and 10% to WBEs (women-owned business enterprises). Both the numbers and the names are unclear; it's hardly systemic change if a woman-owned major company from Long Island is hired, as I've written.

In 2012, the last time statistics were released, the Atlantic Yards developer was well behind both its own stated goals and New York State's goals on MWBE contracting. No update has been provided by Empire State Development nor developer Greenland Forest City Partners.

Some 20% of total contract dollars, including Concession Activities at the Arena, were supposed to go to MWBEs. Maybe that happened, maybe not. And 15% of gross retail leasing space is supposed to go to community based businesses, with special preferences to MWBEs. That's too be determined.

Another promise was for loans: "FCRC will work with local lending institutions and banks to develop special financial packages for local small business and merchants to ensure that they have the financial capability to benefit from the project."

Another was to help minority developers: "FCRC will work with minority developers to help them expand their business through mentoring, financing, providing resources and overall expertise to ensure that the next generation of real estate professionals is represented by minority members."

None of that happened. Note that another CBA signatory, the New York State Association of Minority Contractors (NYSAMC), was to work on Small Business Development with BUILD. I haven't heard of any activity in recent years on this, though the NYSAMC was and remains an active organization.

Looking at the CBA's: ACORN's role in housing

The CBA incorporated previous plans for 50% affordability, which simply means income-linked: 30% of income. As I've written at length, the developer is committed to 50% affordability, but the income ranges of the subsidized units make them less affordable than ever before.

ACORN is defunct, but successor groups, notably the Mutual Housing Association of New York, are serving as Greenland Forest City's partner, helping implement the lottery for the subsidized units. (Other successors, including The Black Institute and New York Communities for Change, have praised the affordable housing, even if not directly involved.)

They thus have no reason to challenge their partner.

Looking at the CBA: the DBNA's role in Community Facilities & Amenities 

The most active current CBA group is the Downtown Brooklyn Neighborhood Alliance (DBNA), led by the Rev. Herbert Daughtry and centered at his House of the Lord church.

A community health care center is destined for a building under construction, B3, though it surely will be paid for by public funds. Ditto for an Intergenerational Community Program Initiative, which will be part of one of the last buildings to be constructed, within a decade.

The DBNA has been regularly distributing more than 50 tickets to arena events via a lottery for community groups. However, a promised program to make the arena available to community groups for at least 10 events per year, at discounted rates, has not gotten off the ground.

A Meditation Room has been established inside the arena, but it is for use only by arena patrons, not the community at large, as once promised.

And a foundation, which was supposed to get started no later than 30 days after the signing of the CBA in 2005, finally got off the ground last year, distributing more than $100,000 to community groups, though it no longer aims--as originally promised--to "fund sports programs in disadvantaged communities."

Looking at the CBA: vague promises for other groups

Other CBA promises were vague and mostly not significant, other than providing the developer with community cover:

  • a group, renamed Faith in Action, was supposed to channel the role of clergy for referrals to jobs, housing and other programs
  • a group, renamed Brooklyn Endeavor Experience, was supposed to form and facilitate an Environmental Council for community input (but, of course, the watchdog function regarding the project's community input has gone to neighbors)
  • Public Housing Communities has helped recruit residents of public housing complexes for jobs, though that could have been accomplished without a new group; a promised "Good Neighbor" program to raise money for public housing improvements never got off the ground
  • a group, renamed the Downtown Brooklyn Educational Consortium, was supposed to help create four new schools, a child health initiative, a Youth Enterprise Program to involve students; a new Children's Zone for a comprehensive impact on Central Brooklyn, and an after-school program to enable noncustodial fathers to spend time with their children; none of that happened.

None of these groups, as far as I can tell, are active.

The Atlantic Yards CBA

Wednesday, February 10, 2016

At Senate EB-5 hearing, criticism of gerrymandering and job-creation calculations; federal official doesn't know if foreign governments benefit (but they do)

In December, Congress reauthorized the EB-5 immigrant investor program for one year with no reforms, despite significant consensus regarding the need to crack down on fraud and to limit gerrymandering of purported high-unemployment districts that nonetheless contain projects in places like glitzy Midtown Manhattan.

Under EB-5, which has raised more than $500 million for Atlantic Yards/Pacific Park, immigrant investors (mostly from China) get visas for themselves and their families if they park $500,000 in an investment that purportedly creates 10 jobs.

They eschew market-rate interest and get their money back in five to seven years, as the visas are the carrot. The intermediaries and recipient of the loans make big profits, but the public does not necessarily gain, as often the money merely substitutes for a high-interest loan, and job creation is merely estimated, and calculated not merely on the immigrant investors' funds but the entire pot of money.

If the EB-5 money were truly seed money, it might be justifiable, but in a large majority of cases, it's just added profits. But Senators like Chuck Schumer of New York wanted to keep the money flowing to favored projects, such as those from the developer Related.

Two hearings

On Tuesday, 2/2/16, the Senate Judiciary Committee held a hearing, The Failures and Future of the EB-5 Regional Center Program: Can it be Fixed?, which significantly articulated the critique of reformers from rural states.

They don't so much want to kill the program--I believe it needs a total re-think--but to ensure that the gravy train goes beyond the big cities, to crack down on abuses, and to raise the minimum investment, which has been stagnant for 25 years (and thus hardly keeping up with inflation).

Only one Senator on the Committee, Sen. Dianne Feinstein (D-CA), suggested killing it.

Tomorrow, the House Judiciary Committee holds a hearing at 2 pm, IS THE INVESTOR VISA PROGRAM AN UNDERPERFORMING ASSET?, which again hints at reforms but hardly a total rethink.

House Judiciary Committee Chairman Bob Goodlatte (R-VA) said in a press release:
 “While I support the overall goal of the EB-5 investor visa program, it is currently riddled with fraud and abuse and has strayed further and further away from the program Congress envisioned when creating the program a quarter century ago. The facts make it clear that this program is in desperate need of statutory and regulatory reform. At the minimum, the investment amount should be increased, gerrymandering should be curtailed, and national security concerns should be addressed in order to reform this troubled program.
Grassley dismayed

Sen. Chuck Grassley (R-IA) chaired the hearing, urging "as much reform and enforcement as can get done," saying the law was supposed to create employment and infuse new capital into the country, "not to provide immigrant visas to wealthy individuals."

Well, actually, it was both, but Grassley's right in that the use of regional centers--investment pools that lend money to projects--has veered away from Congressional intent. Probably because everyone, including Congress, is susceptible to rhetoric about "job-creating investments" and have not looked closely.

But Grassley was forceful, saying EB-5 was "widely acknowledged[to be] riddled with flaws and corruption," citing the use of "indirect" jobs--estimated by a paid economist"--and job-creation calculations based on the total investment. 

He said "investment funds are not adequately vetted," "gifts and loans are acceptable," that there's no prohibition against foreign governments owning regional centers or projects, and that every TEA is "rubber stamped by the agencies."

The TEA issue

"How many more projects in Midtown Manhattan at the expense of Rural America need to be highlighted?" Grassley asked rhetorically.

He asked witness Nicholas Colucci, Chief, Immigrant Investor Program of U.S. Citizenship and Immigration Services (USCIS), why the agency has rubber-stamped state and local designations of TEAs. 
(He later noted the obvious: its in the interest of states to draw TEAs to attract investment to local projects.)

Colucci smoothly said the USCIS regulations defer to the states, but noted that Department of Homeland Security Secretary Jeh Johnson has proposed "limiting TEAs to a specified number of contiguous census tracts."

Grassley said he thought the agency should be more aggressive.

Schumer defended the status quo against a "rural model" for EB-5. "People in the South Bronx travel across several census districts to sell food or clean or build an office tower," he said. Just as EB-5 might help "a ski resort in Vermont or a big manufacturing plant in Iowa," he said, it was unfair to limit EB-5 money in densely populated New York.

Of course, there's no proof that a significant amount of EB-5 money in New York actually goes to residents of the city's poorer neighborhoods. He noted that he and Sen. John Cornyn (R-TX) had proposed a "rural set-aside" of visas.

"We need jobs in America," Schumer rhapsodized. "We need good paying jobs. We need to lift poor people out of poverty... We don't have that many tools." He suggested that, while EB-5 could be reformed, it would be unwise to eliminate it, "at a time when we're desperate to get people into the middle class, or to stay in the middle class."

Under questioning from Sen. Thom Tillis (R-NC), Colucci acknowledged that he didn't have statistics about the location of EB-5 investments, but suggested that New York, California, Florida, and Texas probably received the most. He agreed that there should be more guidance regarding TEAs.

Sen. Jeff Sessions (R-AL) asked about raising the minimum investment, and Colucci noted that an increase--unspecified--was in Johnson's letter and can be part of a regulatory action.

"Is there more we can do to track the jobs that are created?" asked Sen. Amy Klobuchar (D-MN). Colucci said the Department of Commerce was doing "a more precise study for us."

Getting a fair share

Sen. Pat Leahy (D-VT) said, "I'm not trying to keep rich neighborhoods in New York and Texas from getting access to EB-5, but they shouldn't get it all, and they shouldn't get it at a discount." 

What he meant was that the statutory minimum is $1 million, but TEAs--rural areas and zones of high unemployment--the minimum is $500,000. Thanks to gerrymandering, areas like Prospect Heights are connected to poorer areas, and--voila!--the overall unemployment rate exceeds 150%.

"Atlantic Yards III," involving Shanghai government-owned Greenland
Leahy was pugnacious, saying "the regional center program too often serves as a corporate subsidy to megadevelopers," citing reports in the Wall Street Journal and the Seattle Times. 

Asked if gerrymandering was appropriate, Colucci said the USCIS does not now "second-guess areas that they designate," but added that the agency could bring more consistency through regulation.

The role of foreign governments

"Can you say with certainty today that no foreign government owns a regional center or doesn't invest in a regional center or its affiliated enterprises?" Grassley asked at 1:56 of the hearing.

"I do not believe that is the case," Colucci responded, promising to consult with staff. Grassley asked for a submission in writing.

That's just not true. 

There have been three rounds of EB-5 fundraising for the Atlantic Yards project, renamed Pacific Park Brooklyn in 2014. The first round, $228 million, was done on behalf of original developer Forest City Ratner.

The second round of Atlantic Yards EB-5 fundraising suggested the role of incoming partner Greenland Holding Co., which is owned and controlled by the government of Shanghai and now owns 70% of the project, excepting the Barclays Center arena and one of 16 towers. The joint venture was not signed when the marketing occurred, though the joint venture surely benefits from the $249 million raised.

After the joint venture was signed, the third round of EB-5 fundraising, Atlantic Yards III, highlighted the role of Greenland and Chief Executive Zhang Yuliang, in the effort to raise another $100 million. See screenshot above right. 

Ironically enough, while Greenland Forest City Partners renamed the project Pacific Park Brooklyn, the old name, Atlantic Yards, is still used in EB-5 fundraising.

All told, the project developers have raised some $577 million at below-market interest rates, with $349 million benefiting the joint venture. That's tens of millions of dollars is savings. And, as I wrote, a foreign government is profiting by marketing a scarce U.S. public resource--green card slots under the EB-5 program--to its own citizens.

Counting the jobs

Asked about the distinction between direct and indirect jobs, Colucci said he didn't have numbers.

Asked if USCIS would terminate policy allowing investors to count all jobs toward job-creation even when EB-5 money accounts for only a fraction of total investment, or if it would consider putting a cap on percentage of jobs credited to non-EB-5 funds, Colucci said the agency made a policy choice to count all jobs. 

He  said several industries, including manufacturing, in which the job-creation numbers just wouldn't work if the job-creation calculations were limited to EB05 money. He added that the presence of third-party financing adds solidity to a project.

Unmentioned was that a significant increase in the minimum investment should be linked to more jobs.

Coverage of the hearing

Here's some coverage from last week:

Cuomo's attempt to intervene in NYC housing bonds widely denounced (but maybe acceptable to some?)

I'm late to this, but there's been widespread denunciation of Gov. Andrew Cuomo's effort to wrest control of affordable housing bonds issued for projects in New York City. As the New York Times editorialized 2/3/16, Mr. Cuomo’s Housing Wrecking Ball:
 It could be even tougher now that the governor has proposed placing new layers of state control over the city’s use of federal tax-exempt bonds to build and preserve affordable rental apartments. It’s not a stretch to call this sabotage.
Mr. Cuomo says it’s transparency and accountability, but it is more about intrusion and control. It would give the head of the Empire State Development Corporation, a Cuomo appointee, the power to sign off on the flow of tax-exempt bonds to New York City, which uses them almost exclusively for affordable housing. It would also require that every single affordable-housing project in New York City that uses the bonds get the approval of the Public Authorities Control Board, a shadowy entity controlled by the governor and the leaders of the Assembly and Senate.
These are the proverbial “three men in a room” who hold a death grip on policy-making power in New York State government. The phrase evokes the low-minded, chronically corrupt jockeying and deal-making that govern how the Albany game is played. That two of the three — Sheldon Silver and Dean Skelos — were ejected from the room last year, because of federal felony convictions, is about all you need to know.
Note that even the Real Estate Board of New York opposes the move.

Interestingly enough, it's plausible--though I don't expect to see it articulated publicly--that developers with particular access to Cuomo and Empire State Development (hint: Greenland Forest City Partners) might find Cuomo's policy acceptable, since it would give them a leg up on rivals.

More criticism

Added NY Slant's Nick Powell in CUOMO'S PETTY PLAY FOR HOUSING BONDS, 2/3/16:
State Budget Director Robert Mujica’s reasoning that the Control Board’s veto power over volume cap would bring additional transparency to the process is also puzzling. The PACB has never been particularly open about its approval process – the New York Times aptly characterized the body as “shadowy” in a Wednesday editorial – and typically only chimes in at the very end of negotiations, rubber-stamping bond allocation per the governor’s instructions.
Powell followed up with BRINGING HOUSING BONDS OUT OF THE SHADOWS, 2/4/16, calling for more transparency on the part of the state:
If we assume bringing the bond allocation process out of the shadows is really what this proposal is about – rather than a clear vindictive play against Mayor Bill de Blasio’s housing plan and the city’s Housing Development Corporation (the city agency that negotiates the bond allocation) – then there are more serious concrete steps that can be taken to provide more accountability.
...The state is a virtual black box as far as publicly reporting this bond-allocation process, with most of the negotiating with IDAs [Industrial Development Agencies] conducted behind closed doors. None of the IDAs publicly list the number of projects they have in their pipeline, including HDC.
Instead of giving the Empire State Development Corporation veto power over any reallocation of volume cap from an IDA to another eligible local agency – which would severely hamstring the city’s IDA from transferring those bonds to HDC – why not amend the proposed legislation to force these agencies publish detailed information on their development projects? 

Tuesday, February 09, 2016

Outside arena on Dean Street, narrowed passageway not even open; pedestrians wind up walking in street

On the north side of Dean Street east of Flatbush Avenue, on the south flank of the Barclays Center, there's usually a very narrow passageway between the construction fence for the B2 tower and a barrier, protecting pedestrians and bicyclists from the narrowed street.

Today, when I walked by at about noon, that passageway was closed, at both ends, and some unwitting pedestrians wound up walking in the street.

A photo posted by Norman Oder (@atlanticyards_pacificpk_report) on

With demolition of 666 Pacific, lot cleared for 27-story tower; another company not quite fulfilling CBA goals

According to the latest two-week Atlantic Yards/Pacific Park Construction Update, "Demolition of 664 Pacific Street at the B15 site will continue during this reporting period."

Indeed, it has, though 664 Pacific is the new address for the 27-story market-rate rental tower (with school at base) planned, aka B15, while 666 Pacific Street was the address for a three-story industrial building on the site. See photo at right.

It has now been demolished, as shown in photos below sent by a reader. 

The CBA and MWBEs

Note the presence of A. Russo Wrecking, a WBE, women's business enterprise, which allows Greenland Forest City Partners to check off progress toward goals for MWBE (minority- and women-owned businesses).

As I wrote back in 2010, a firm owned by a white female resident of Nassau County fulfills the official aspirations of the Atlantic Yards Community Benefits Agreement (CBA), but hardly represents the groups based in Central Brooklyn--however unrepresentative themselves--that signed the CBA. 

In 2012, the last time statistics were released, the Atlantic Yards developer was well behind both its own stated goals and New York State's goals on MWBE contracting. No update has been provided by Empire State Development nor developer Greenland Forest City Partners, and the promised Independent Compliance Monitor for the CBA was never hired.

The CBA, as I noted five years earlier, is supposed "to encourage systemic changes in the traditional ways of doing business on large urban development projects." But this project has also been supporting long-established firms, like Russo, founded in 1952, and whose officers serve on major industry boards. 

Here's criticism from the Black Institute (led by Atlantic Yards CBA signatory Bertha Lewis) of the city's MWBE programs; Atlantic Yards/Pacific Park goes unmentioned.

Not so courteous in hard hats: more photos of construction workers hanging out in neighborhood near project

There's been ample anecdotal evidence of Atlantic Yards/Pacific Park construction workers using the residential neighborhood--stoops, sidewalks, double-parking--for their breaks, and now there are more photos.

In part, their behavior is understandable--there just aren't too many options. But that's the developer's responsibility, since they already said sitting on stoops is not acceptable.

Bottom line: despite an anecdote in the New York Times about "Courtesy in a Hard Hat," for residents, the experience has been less than courteous.

Monday, February 08, 2016

Two views of Pacific Park construction workers: "Courtesy in a Hard Hat" and "Like Being in a Shark Tank"

Today's New York Times Metropolitan Diary anecdote, by Elana Rabinowitz, Courtesy in a Hard Hat:
Passing the Pacific Park renovations at Atlantic Yards in Brooklyn every morning made my walk to work less appealing. The mammoth cranes, road blockages and omnipresent construction workers added to my reluctance.
However, her skirt hikes up, exposing her butt, unbeknownst to her, and a construction worker, not speaking, alerts her to the miscue:
Now when I see those orange vests and cranes, I feel at ease. I keep looking for that man with the dreads to thank him.
That's a nice story, and I'm sure a good number of construction workers, belying the stereotype, are protective of women. Then again, what hasn't made the Times is the story of a local woman regularly harassed by construction workers--"as a female it is like being in a shark tank just to walk down your own street"--as well as periodically by arena attendees.

By the way, there's no such thing as "Pacific Park renovations at Atlantic Yards." They're not renovations, they're obliterations followed by construction. Pacific Park is the name of the project and a professed "new neighborhood," though it's actually within Prospect Heights. Atlantic Yards is not a place but a discarded brand name.

Bark Hot Dogs closes. The arena helped, but was no savior.

So Bark Hot Dogs on Bergen Street just off Flatbush Avenue--once favored by Brooklyn Net Brook Lopez--closed yesterday after seven years, as Eater and Gothamist reported. The owners blamed "many factors," but they excluded the Pintchik family, their landlord.

It's safe to say that the Barclays Center was no savior, and it's a reasonable bet that the August 2014 advent of Shake Shack, which served a somewhat similar demographic with a larger location closer to the Barclays Center, did not help.

A Bark employee told this reporter last March:
However, [Frederick] Whinery noticed that business changed in the past six to eight months (2014-2015) because more businesses have come into the area spreading out the customers. “When we were the only burger joint in the area, during the first year of Barclays Center, the impact was more substantial than since Shake Shack opened,” Whinery said. He thinks that there will be a jump in business when the new residential complex that is going up right next to Barclays opens.
“We still get pops for Nets games or big concerts – we certainly see a spike in business,” Whinery said.

Surely various retail operators are wondering what happens when the new residential buildings open.

Going forward

We'll see how the replacement at the Bark space navigates the challenge of trying to appeal to the neighborhood as well as to arenagoers.

Meanwhile, former Allied Orthopedics space at 240 Flatbush just west of Sixth (closed 2013, moved to Queens) is now Bleachers Sports Bar.

Up Flatbush another long couple of blocks, as Here's Park Slope reported, Construction Underway on Union Market, SoulCycle Coming to 342 Flatbush Avenue. That's between Sterling Place and Grand Army Plaza near Franny's.

Sunday, February 07, 2016

As TV makes location less key for sports fandom, the Nets at a disadvantage

Will Leitch's recent New York Magazine column, In the Future of Sports Fandom, State Lines Mean Nothing, makes some verry interesting points about the decoupling of fandom and location:
But 2016 is a far different year to be a sports fan than 1988 was. You can get upset about this as a citizen; that is your right. But for fans, where your team plays has never been less relevant.

In the past decade, the world of sports has changed dramatically thanks to television, arguably in more profound ways than it changed when television came on the scene in the first place. The difference this time wasn’t television itself: It was how we used it. In the past, sports was just another morsel of appointment viewing, like Cheers and Seinfeld and All in the Family. But the rise of streaming services and DVR and everything else that has upended TV has vaporized the idea of appointment viewing: If you’re a cord-cutter, you can drop just about everything and not miss it … except for sports.

This has made sports incredibly powerful: The highest-rated programs at the end of every year are almost always NFL games, and the vast majority of sports teams make their money not from gate receipts but from the deals they’ve signed with various television networks — and the NFL has the biggest television contract of them all.  in the stands.
This may be most true for a sport like football, where people are so far from the action it's truly made for TV. But it does explain why, when the Los Angeles Lakers or Miami Heat visit the Barclays Center, can can feel like an away game for the Brooklyn Nets.

The overall structure of TV deals and marketing still boost Mikhail Prokhorov's franchise. But the ease of fandom for faraway teams, coupled with the Nets' (for-now) weaknesses, will make it ever more difficult to establish a staunch local fanbase.

The disengaged Nets fans

NetseDaily last month noted how Forbes ranked Brooklyn among the 10 "least engaged" fan bases in the National Basketball Association: 
According to Nielsen Scarborough, only 15% of the Nets' market watched, attended or listened to a game last year -- the lowest percentage in the NBA///
Forbes said its rankings are based on "hometown crowd reach (defined by Nielsen Scarborough as a percentage of the metropolitan area population that watched, attended, and/or listened to a game in the last year), three years worth of television ratings (from Nielsen), three years of arena attendance based on capacity reached (from the league), three years worth of merchandise sales (from the league), secondary market ticket demand and premium pricing (from Vivid Seats), and social media reach (a combination of Facebook fans and Twitter followers as a percentage of the team’s metro area population)."
There's been lots of debate about whether the Nets have tried to build a team more organically. We should recognize that one very good player could make a difference. One NetsDaily commenter wrote:
When I was a Nets half-season ticket holder in NJ (not even a full season), I consistently received perks. I had seat upgrades, complimentary tickets, nights with access to the VIP area for free food and drinks, draft night parties, autograph signing sessions, and, what I enjoyed most, Q&As with Rod Thorn and Lawrence Frank! And I was just going to 20 games a year! The Q&As were fantastic, as even when the team struggled post-Kenyon, Thorn would face the music. Qhile I didn’t agree with many of his moves (those drafts from 04 to 07 were horrendous), he got out there, faced the fans, and took accountability. I eventually became a full-season ticket holder when they moved to Newark.
When they moved to Brooklyn – poof – all of that was gone. I was a half-season ticket holder (in much worse seats, due to the enormous price raise), and in two seasons, I was upgraded once (in a preseason game) and went to one post-game autograph signing. That’s it. So, when I had to plan for a wedding, guess what was the first (and easiest) expense to cut? In 2014, for the first time since the mid-90s, I didn’t buy any ticket deal for the Nets. And I don’t regret it one bit. I’ve gone to about a half dozen games individually over this season and last, and that atmosphere is getting worse.

Selective outrage: Downtown Brooklyn Partnership's call for payment from Witnesses not matched by pressure on its members

Crain's New York Business on 2/4/15 published Jehovah's Witnesses saved $368 million in real estate taxes over the past 12 years, subheaded "Downtown Brooklyn Partnership [DBP] ups its pressure on the tax-exempt organization to donate $50 million."

From the article:
The study looked at the Witnesses’ Brooklyn portfolio of 37 properties concentrated in and around Brooklyn Heights and Dumbo. As a religious organization, the group is exempt from paying taxes. The analysis estimated that its property taxes would have totaled $138.6 million since 2006, while transfer and capital gains taxes for 21 of its sites sold since 2004 would have added up to about $230 million. Reed called that a conservative estimate, but said it shows the magnitude of the Witnesses' profits and the money that otherwise would have gone to taxpayers.
The DBP certainly has an argument.Generally speaking, tax exemptions for religious and other institutions deserve questions. More specifically, the Jehovah's Witnesses, as this article notes, got a rezoning at 85 Jay Street but never built there--and that rezoning upped the value of the property to perhaps $1 billion.

What's missing

That said, it's more than a little hypocritical for the Downtown Brooklyn Partnership (significantly influenced by Forest City Ratner, its board co-chaired by FCR CEO MaryAnne Gilmartin) to be so selective in its outrage. Consider benefits for its members:
  • the lack of affordability requirements coupled with the rezoning that increased the value of Downtown Brooklyn real estate
  • the DBP's call for continued tax exemptions to fuel office space in Downtown Brooklyn
  • the DBP's silence on the (apparent) giveaway of public streets to the Atlantic Yards/Pacific Park project
  • the DPB's silence regarding the (nonbinding) pledge to require a second sports tenant at the Barclays Center (now, the Islanders) to make payments to New York State

Saturday, February 06, 2016

The backlash against comments from Yormark (not a hockey fan until now) continues; why not dynamic pricing?

On Lighthouse Hockey, Dan Saraceni writes an open letter to Barclays Center/Nets/Islanders CEO Brett Yormark, who recently provoked lots of negative coverage by encouraging visitors in the obstructed-view seats to check their phones or the scoreboard: Dear Brett Yormark: Please stop talking. Signed, an Islanders fan.

Saraceni makes three key points:
  • Hockey fans never forget a mistake...
  • Hockey fans are always upset or outraged about something...
  • Hockey fans want hockey. Good, fun, winning hockey and a lot of it.
He reminds us of a very interesting admission. "I've never really been a hockey fan," Yormark said at about 2:26 of this interview, "and I'm becoming one very quickly." (Remember, Marty Markowitz said he never was a basketball fan.)

Various commenters suggest ways Yormark could have finessed the issue with apologetic candor and empathy.

Separately, a columnist suggests Yormark should step away from the Islanders, which ain't gonna happen. Another catalogued Brett Yormark’s Many PR Gaffes.

Three suggestions

On IslesBlog, Joseph Buono suggests 3 Ways To Improve The Obstructed View Seating Experience
1) Brand it “The Barn”... Hand out rally towels, props, something that makes fans sitting in those seats feel a part of the game. Make the overall game experience in these sections different and not just because they can only see one goalie.
2) Tarp It / Horse Shoe Configuration... It would be far from ideal, but it would be unique, maybe even charming over time....
3) Incentivize the Experience... Dynamic Pricing or no dynamic pricing, these seats should not cost more than $10-15. If you are going to charge more, make other aspects of the Barclays Center experience more affordable for these fans.

All good ideas, especially the third one.

Construction workers eating and resting on neighborhood stoops: a regular occurrence (despite developer's pledge)

As I commented, this is a consequence of shoehorning a project of this size into a residential neighborhood and... a reminder of one of the unstated (or less stated) arguments for modular construction: fewer workers on-site. But modular hasn't worked out.

At the last Community Update (aka Quality of Life) meeting, in December, when the issue of workers eating/resting on stoops was brought up, Forest City Ratner External Affairs VP Ashley Cotton commented, "We have gone to them again, to say 'stop sitting on people's stoops.' It's absolutely not acceptable."

That hasn't worked.

Friday, February 05, 2016

In Times Real Estate section, 461 Dean gets promotional treatment (no mention of modular troubles; affordability misleading)

Somehow the troubled B2 tower, aka 461 Dean Street, gets prominent position--a photo at the top of the web version--of an upcoming front-page New York Times Real Estate section article headlined
New York’s New High-End Rentals (and in print " Advance of the Rentals").

Notably, there's nothing in the article about how this building has taken two years longer than promised, that developer Forest City Ratner and former modular factory partner Skanska are locked in litigation over huge cost overruns, and that lower floors of the building were plagued by leaks and mold.

Nor is there mention of Forest City's claim that it had "cracked the code" for modular construction, but this is the only Atlantic Yards/Pacific Park building to be built modular, as Forest City aims to sell the factory it operated with Skanska and then operated itself to finish the modules.

Nor that people are--hello--living next to an arena, with attendant crowds, some of them loud, and an arena loading dock that does not operate seamlessly as promised but sometimes stalls trucks on the street, snagging traffic.

What's the affordability?

But that's not all. The article misleads people about the affordability. Here's the relevant text:
One new rental in the current crop, 461 Dean Street in Brooklyn, will be split almost evenly between apartments with below-market rents and market-rate apartments.
The 363-unit project from Forest City Ratner Companies, which is made of prefabricated modules, will have 181 apartments with lower rents. About 40 percent of the affordable units, or 72, will be for people making 100 percent to 160 percent of the area’s median income, or up to $124,000 for a family of four. That family could end up paying $2,800 a month for a two-bedroom, said Susi Yu, an executive vice president of Forest City.
Interestingly enough, that ignores the 109 affordable units for lower- and moderate income people, who perhaps are not expected to read the Times.

Also, that misstates the current Area Median Income (AMI) and projected rents, since it relies on 2012 numbers. And it fails to point out that, while income limits are 160% of AMI, the rent for that cohort is calculated from 150% of AMI.
From FCR presentation

When the building launched in of 2012, when AMI was $83,000, income limits (160% of AMI) were $132,800, according to a Forest City presentation. See chart at right.

However, since rents would be set at 150% of AMI, for the best-off "affordable renters," rents would be calculated at 30% of $124,500. 

That should equal $3,112.50. (Here's the math: [$124,500 x .3]/12.)

But yes, in 2012, the New York City Housing Development Corporation (NYC HDC) did estimate rents at $2,740 a month, so obviously there's an adjustment factor. See chart below.

Today, the most recently available AMI, according to the NYC HDC, is $86,300 for a four-person household. 160% of AMI is $138,080. Now, it's possible the AMI has dipped down or nudged up for 2016, but it's clear Yu's $124,000 figure is wrong.

Rents will be set based on 150% of AMI, or $129,450 for a four-person household, based on 2015 numbers.

That should equal $3,236.25. (Here's the math: [$129,450 x .3]/12.)

Again, however, there's clearly an adjustment factor. 

Let's look at it another way: the most recent AMI, $86,300, represents a nearly 4% rise from $83,000. Apply that percentage to the previous figure of $2,740, and the monthly rent should be $2,849.

That's not too far from Yu's estimate--a little less than 2%--but its far enough off that they shouldn't be rounding off the numbers.

Reaching the better off

From the article:
“This is actually a segment of the market that really has been overlooked,” Ms. Yu said, referring to the income bracket of that same family of four.
Well, it may have been overlooked by developers--what middle-income household doesn't want a deal?--but actually the segment is a tiny fraction of New Yorkers, and hardly those who most need subsidized housing. See the chart at right from the Association for Neighborhood Housing and Development.

What's market rate?

From the article:  
Forest City has not yet determined what a market-rate two-bedroom would cost in the building. In December, the median price of a two-bedroom in Brooklyn was $3,350 a month, Elliman said.
That's only a 17.6% premium. That said, the median price in the area for new construction may be higher. StreetEasy says the least expensive two-bedroom rental in a new or newly converted building in Downtown Brooklyn is $3,754, while in Park Slope, Boerum Hill, Fort Greene, and Prospect Heights it's $3,300. (That's eliminating one cheaper anomaly.)

While 461 may offer some luxury amenities, the location and troubled history may make it difficult to get premium prices.

About the lottery

The article states:
To score one of the coveted reduced-rent units at 461 Dean, renters must enter a lottery, which will be organized by Forest City and the city’s Housing Development Corporation.
When the lottery is announced, which is expected “imminently,” according to a project spokeswoman, applicants will have 60 days to register at the New York City Housing Connect web page, or by paper application. To get the word out about the application process, Forest City will contact labor unions, community boards and churches.
Each applicant will receive a number. If that number is drawn, he or she must submit tax returns, landlord references and bank statements to verify eligibility. Priority will be given to people with visual impairments and other disabilities, and secondarily, to those who live within the boundaries of Brooklyn Community Boards 2, 3, 6 and 8. Municipal workers also will have an advantage.
(Emphases added)

Note that, in public discussion (and, yes, most of my coverage), mention of the lottery cites the 50% priority to residents (or recently-departed residents) of the three Community Districts.

As I wrote in July 2006, covering an affordable housing information session:
There is a housing lottery, but the preferences announced, required by city regulations, deflated some people in the room. Half the affordable units—1125 of 2250—would be reserved for residents of the three Community Boards, CBs 2, 6, & 8. Five percent would go to police officers and another five percent to city employees. Five percent would go to the mobility-impaired and one percent each to the sight- and hearing-impaired. That’s two-thirds of the units, plus ten percent for seniors, though there could be some overlap.
Note that that was before the preference was expanded to residents of Community Board 3. Also note that the preferences may be re-allocated depending on different buildings. But it also means that a lot of people, especially those seeking low-income units, will be frustrated.