Thursday, December 31, 2015

Atlantic Yards, Pacific Park, and the Culture of Cheating

I offer a framework to analyze and evaluate Atlantic Yards (in August 2014 rebranded as Pacific Park Brooklyn) and the Barclays Center: Atlantic Yards, Pacific Park, and the Culture of Cheating.

Note: this post is post-dated to remain at the top of the page. Please send tips to the email address above, rather than posting a comment here.
A model shown in Brooklyn in September 2015, via Curbed

model shown to potential immigrant investors in China in 2014,
though not shown publicly in Brooklyn.

Tuesday, December 01, 2015

In the New Yorker, lovely (but resigned) paintings of Prospect Heights gentrification

Official (and misleading) 550 Vanderbilt rendering
Artist Andy Friedman has been deservedly praised for his set of watercolors posted on the New Yorker web site 11/29/15, Painting the Gentrification of Prospect Heights.

Most of the captions and paintings describe the changes since he moved to Vanderbilt Avenue, in 2000, when it was quiet, easy to park, and bar-free.

The art is lovely, and his tone melancholy, but some of the implicit analysis deserves more precision and more skepticism.

A high-rise in perspective

Consider the caption for Friedman's painting below:
A rapidly ascending high-rise residential tower on the corner of Vanderbilt Avenue and Dean Street, in Prospect Heights, Brooklyn, has robbed me of a kitchen-window view of the Chrysler Building. More than a dozen of these buildings will follow. Some will be taller than this one. A quiet brownstone neighborhood is turning into a busy city of glass and steel.
First, Friedman's facts, while not inaccurate, are imprecise and thus somewhat misleading. Actually, at 202 feet, the 550 Vanderbilt condo tower will be the second-shortest of 16 towers. In other words, there will be major changes.

Also, and this is asking more of his editors, he missed the opportunity to point out the difference between his straightforward perspective below, and the misleading rendering above right, which downplays the size of the building.

And, while Friedman accurately describes the location "Prospect Heights," he misses the opportunity to point out that developer Greenland Forest City Partners misleadingly, arrogantly calls Pacific Park Brooklyn an entirely separate, new neighborhood, built from scratch.

In other words, there's a lot of political and marketing juice behind the changes, which are by no means natural.

The meaning of change

Then, consider the caption below:
When I catch myself complaining about the rate at which my neighborhood is changing, I remind myself that the makeover is happening at exactly the same speed that it always has in this town. Every new building robs someone of a view, and, at the same time, becomes the apple of somebody else’s eye.
That's a remarkably resigned, and ahistoric view. Of course New York is about change, and change was inevitable to Prospect Heights, given the growth in population and income, and the neighborhood's assets, including culture and transportation.

But the makeover is not necessarily "happening at exactly the same speed that it always has in this town." For one thing, the Atlantic Yards/Pacific Park project relies on a state override of city zoning to plant an arena and to allow towers larger than current zoning, and the project also relies on a suite of direct and indirect subsidies. Those were political decisions.

Will Silver conviction lead to investigation of ally Forest City Ratner? Or any changes in Albany?

Longtime Assembly Speaker (and, most recently, just Assemblyman) Sheldon Silver has been convicted in a federal corruption trial, having gained nearly $4 million in kickbacks from two schemes. Surely he will appeal, but, for now, the judgments are harsh

As the Times put it in an editorial:
Mr. Silver used public funds or promoted legislation that benefited a cancer researcher and two real estate firms. In one scheme, Mr. Silver used a secret discretionary fund at his disposal to make two grants totaling $500,000 to Dr. Robert Taub at Columbia University. Dr. Taub then referred patients suffering from mesothelioma to the law firm Weitz & Luxenberg, which then paid Mr. Silver for the referrals.
In another scheme, in return for support for legislation benefiting real estate interests, Mr. Silver pushed Glenwood Management and the Witkoff Group to refer some tax matters to a small law firm, Goldberg & Iryami. That firm then secretly sent a portion of its fees to Mr. Silver. Mr. Silver’s lawyers tried to argue that this kind of quid pro quo was normal in Albany. While it might indeed be business as usual, the jury rejected that defense in three days of deliberations.
Real reform coming?

Observers wonder if there will be real reform, especially since Silver's defense was that his behavior was not quid pro quo and business as usual. Politico's Jimmy Vielkind was cynically doubtful:
Three (maybe four) men will still meet in a room to decide the state's legislative agenda, who gets what billion in the budget process and, even, what the ethical and political rules of engagement will be. They had little to say in response to the verdict.
Silver's successor Carl Heastie stated that he was “deeply saddened” by the events of the year and promised that the chamber's ruling Democrats remain “committed to exploring ideas and implementing reforms to restore trust in our government.”
Cuomo, a Democrat, did not mention Silver's name in a statement that announced “justice was served,” and said that “with the allegations proven, it is time for the Legislature to take seriously the need for reform.”
Prior comments from the men were more informative. At the Capitol last month, the new speaker said the verdict was “not relevant” and that the latest half-measure of disclosure should play out before more changes are made.
 Writes David Howard King in Gotham Gazette:
Some advocates and legislators have railed against Silver's influence for years, decrying the concentration of power of the 'three men in a room,' of which Silver was one until he was indicted and resigned his leadership post. Some thought that with Silver all but gone Albany would somehow be redeemed. That redemption has been elusive.
As Silver faces decades of prison sentencing, Albany is still left to write its own rules. The men in charge, including Gov. Andrew Cuomo and Assembly Speaker Carl Heastie, who replaced Silver, have indicated there is currently no appetite for more reform and have rejected calls for special session on ethics.
The Post's Bob McManus writes:
Certainly, the successors to Silver and [Senate Majority Leader Dean] Skelos [currently on trial] — Assembly Speaker Carl Heastie and Senate Majority Leader John Flanagan — have been distressingly accommodating to a return to the legislative “member-item” pork that has been at the core of most of the lower-level corruption cases Bharara has prosecuted to date.
And Cuomo has been more than willing to play along — indeed, to encourage the old ways. Chalk that up to lessons not learned.
A fully sanitized political process, of course, is not possible — nor is it even desirable. Governments based on civic virtue have scarcely ever existed — because they simply don’t work. (Sorry about that, League of Women Voters.)
But at some point over the past few decades, legislative-lobby horse trading in Albany crossed a line.
The Forest City role

The Times quoted U.S. Attorney Preet Bharara:
When he filed charges against Mr. Silver, Mr. Bharara said that if the former speaker is convicted, “how can we trust that anything that gets decided in Albany is on the level?” After Monday’s verdict, that is a very good question.
So, why not look into the curious connections, first reported here,  and later amplified in a long New York Times report in March 2014, between Forest City Ratner, Silver, and Silver's longtime friend, the recently convicted (and now on work release) charity leader William Rapfogel, whose wife Judy was Silver's longtime chief of staff.

(Note that prosecutors might have gone after Forest City Ratner in the Yonkers corruption case involving the developer's Ridge Hill project, though the case was much stronger against the elected official involved.)

The Times reported:
And the ties between Mr. Silver, Mr. Rapfogel and Mr. Ratner strengthened.
The Rapfogels’ eldest son, Michael, finished law school in 2005 and soon went to work for Mr. Ratner. The job was seen internally as a way to please Mr. Silver, say people familiar with the son’s work; Mr. Ratner’s company rejects the notion.
The Times described the Atlantic Yards connection:
In 2006, the Public Authorities Control Board, over which Mr. Silver has significant control, approved Mr. Ratner’s Atlantic Yards project in Brooklyn. Intervention by Mr. Silver and others enabled the project to retain a lucrative tax break, even as that break was actually being phased out.
In 2008, Forest City Ratner, which compared to other developers makes few political contributions, gave $58,420 to the Democratic Assembly Housekeeping Committee, which is controlled by Mr. Silver.
That same year, Mr. Ratner helped raise $1 million for Met Council and was honored at a luncheon given by Mr. Rapfogel and Mr. Silver. 
The Times did not mention that, when Ratner in 2013 sponsored a concert of Jewish cantorial music at the Barclays Center, profits went to support Rapfogel's Met Council.  I suggested that the evidence suggested an effort to bolster ties with a charitable ally, Rapfogel, and the powerful Silver.

I even predicted that Forest City might even wind up partnering with the Met Council on a bid to develop the Seward Park Urban Renewal Area. And I was right--though the bid, evaluated after Rapfogel was busted, obviously didn't succeed.

Monday, November 30, 2015

Paterson promised New York State would be "scrupulous in our monitoring," but neighbors document clogged street, demolition dust

Remember then-Gov. David Paterson at the March 2010 groundbreaking for the Barclays Center?

"To those who have supported the project and to those who opposed the project," he declared, "I guarantee that we will be scrupulous in our monitoring of the contract that Forest City Ratner signed with the state to make sure that everything we were promised, we receive."

There are several ways to look at that statement, which seems tilted to monitoring the project's benefits, though of course Empire State Development, the state agency overseeing/shepherding the project, has not pointed out the less-affordable nature of the subsidized housing. Nor did it proactively make public the mold and water-infiltration problems with the B2 modular tower.

As to the regular complaints and concerns regarding construction impacts, state officials like to say incidents are "closed," though that doesn't necessarily mean much.

What might the state report to the public about two incidents captured by resident monitors?

A truck clogs Sixth Avenue

 The video below, as linked on Atlantic Yards Watch by Peter Krashes, shows a very large truck essentially closing Sixth Avenue near Dean Street for more than two minutes on Saturday, 11/28/15.

The construction workers seem wary of scrutiny. Commented Krashes:
I'm curious what specific part of the environmental monitoring team was out today? 
While I videotaped this incident, I was videotaped myself by two or three of the construction workers. Note the truck driver waving my camera away. My focus is a circumstance I think merits being captured because it is unfolding in a shared public space which has been compromised by the project temporarily and perhaps permanently.
A plume of dust

The video below, taped by resident Wayne Bailey on Friday, 11/27/15, shows the demolition of 491 Dean Street, the last of three 19th century row houses on Dean demolished for 664 Pacific Street, a 27-story luxury rental tower with space for a public school.

Note the worker using a hose to tamp down the dust, as is required by the Second Amended Memorandum of Environmental Commitments signed by the developer (see. p. 24). But also note that, after about 1:50, that doesn't seem to be working too well, as the dust starts escaping from the west end of the structure, closer to Dean Street.

Who official was monitoring this? What are the consequences?

Perhaps the next Community Update meeting, on Dec. 9, should not merely be a "developer meeting," in which Greenland Forest City Partners selectively discloses its plans.

Can't Empire State Development report more concretely on monitoring and sanctions (beyond, for example, toothless reports on the arena operator's regret that a street was blocked)?

Gargano, Mastroianni, and a table at Rao's; don't forget the EB-5 connection

Let's decode this story from yesterday's New York Post Page 6 gossip site, Financier fights back against claims of a Rao’s regular:
Florida financier Julian Rubinstein is fighting back after Rao’s regular Charles Gargano told us Rubinstein’s story that he bought Gargano’s Rao’s table for charity — then was stiffed — is full of baloney.
The red-sauce row thickened when Rubinstein shot back: “I researched my e-mails and found that Nick Mastroianni III — who was running for and won [Leukemia & Lymphoma Society] man of the year — got Gargano to donate the table.” Mastroianni III’s dad, Nicholas Mastroianni II, is president of US Immigration Fund, where Gargano’s executive director. “Nick provided all of Gargano’s contact info — I certainly didn’t get Gargano’s cell number from Google,” Rubinstein said.
Mastroianni III told Page 6 that Gargano did donate his Rao’s table to the Leukemia & Lymphoma Society, but had already promised the table to another cancer organization.

A perfect fit

Now Rao's, an impossible-to-get-into East Harlem Italian restaurant known for both its mob and law enforcement clientele, sounds like a perfect place for Gargano, former Chairman of the Empire State Development Corporation, who liked to be called "Ambassador" long after he left his posting to Trinidad and Tobago.

Gargano, as I reported, has a post-government career promoting EB-5 investments, in which immigrant investors get green cards for delivering low-interest loans of $500,000--that purportedly create 10 jobs each--to real estate and other projects. Chinese investors, rich but naive, feel more confident when "government"--or in this case, former government officials--are involved.

And the U.S. Immigration Fund, run by the Mastroianni family, is responsible for both the Atlantic Yards II and Atlantic Yards III projects. Fortune magazine did an epic takedown of the sketchy history of Nicholas Mastroianni II.

Promoters of EB-5, nervous about Congressional reauthorization of key program elements, like the hashtag, #EB5isWorking. Given the sketchy nature of the program, and the clubby participants, the hashtag #EB5IsARacket strikes me as more apt.

The Rao's episode, of course, indicates no specific wrongdoing. But it does indicate the clubbiness.

As for Nick Mastroianni III becoming Leukemia & Lymphoma Society Man of the Year, well, that was for the Palm Beach chapter, as far as I can tell; there are a lot of local winners. Among his supporters were various people/firms involved in real estate; thus charity is used to put a halo over people whose business activities may raise doubts.

Sunday, November 29, 2015

Developer buys auto-related lots catercorner to NE edge of Atlantic Yards/Pacific Park, plans apartments on Atlantic

From the New York Post 11/24/15
Developer Jeffrey Gershon of Hope Street Capital has locked up the entire southern blockfront of Atlantic Avenue, between Vanderbilt and Clinton, with 99-year leases for two sprawling parcels at 529 Vanderbilt and 809 Atlantic. It is expected to take on a 550 Clinton address.
The site — home to ramshackle car washes and repair joints — is opposite the McDonald’s and the Pacific Park project. Up the block, a 2012-era rental at 525 Clinton has shown the area is ripe for modern apartments.
Actually, this is the north side of Atlantic Avenue, at Vanderbilt Avenue, opposite McDonald's and catercorner to the Atlantic Yards/Pacific Park site. It's currently occupied by Atlantic Hand Wash at the corner and other auto uses. There's a lot of traffic, of course, but the neighborhood is changing.

The Pacific Park building at that corner, B10, is tentatively scheduled to open in 2019, the first tower to be built on a deck over the Vanderbilt Yard.

Gershon is bookending the Atlantic Yards/Pacific Park site, more or less. As reported last April by the Real Deal, Gershon  and partner AEW Capital bought a Walgreen's site on Atlantic Avenue in Boerum Hill, at 520-528 Atlantic Avenue (at Third Avenue), and is planning condos there.

"Beware of China's Safety Record," in Brooklyn?

Beware of China's Safety Record, opined Chinese novelist Murong Xuecun in the 11/26/15 New York Times, regarding accidents in Chinese industrial buildings, construction sites, and mega-engineering projects, including nuclear power projects.

"There’s no reason to expect the safety standards and the quality of building to be higher in China-run projects abroad," he wrote, citing the management role of "Chinese state-owned companies," work done by "imported, low-paid Chinese laborers," with management by "mainly Chinese government appointees."

He citesdincidents in Vietnam and Ecuador, as well as information control from Chinese authorities.

And in Brooklyn

Should that impact how we think about Atlantic Yards/Pacific Park?

After all, it's a project of the joint venture Greenland Forest City Partners, with Greenland Holdings, controlled by the government of Shanghai, owning 70% of the project going forward, excluding the Barclays Center arena and the B2 modular tower, aka 461 Dean Street.

Forest City Ratner, the minority partner, manages site activities, and all the workers are union workers. (That, however, didn't protect an unfortunate ironworker killed in a site incident last February.)

So the situation isn't exactly parallel.

Then again, Forest City has regularly pushed the envelope, or cut corners, on construction activities that, whether or not they affect the safety of the building itself, impact the community very near the project site. (See the Instagram posts from resident monitor Wayne Bailey or this post about trucks on Dean Street.)

The margin for error, when a project is so close to established residences, is very small.

And it quietly gutted dozens of pre-fabricated units in the B2 tower after water penetrated them.

That can't be attributed to Greenland. But it's hard to believe that Greenland, whose American leader said, “We should all move very fast. We should catch the moment,” has put the brakes on Forest City and Atlantic Yards/Pacific Park.

That's why the ultimate responsibility goes to New York City and New York State authorities.

Saturday, November 28, 2015

EB-5 gets an unskeptical mention in the New York TImes

From a Sunday Business section story in the New York Times, headlined Chinese Cash Floods U.S. Real Estate Market:
Investments in the United States provide another advantage: a pathway to a green card.
Chinese investors have been particularly aggressive at using a federal visa program called EB-5 that allows overseas citizens to put $500,000 to $1 million into a project that will create at least 10 jobs. Investors can get a green card in about two years. So far this year, 86 percent of the EB-5 visas issued worldwide have gone to Chinese.
Ha! It should be "that will purportedly create at least 10 jobs."

Hubris: developer touts "public benefit" of new infrastructure, though railyard was downsized

The 11/27/15 tweet below from Pacific Park Brooklyn represents remarkable hubris: "Investing in complicated #infrastructure makes for the biggest public benefit."

Do keep in mind that the 2005 deal to build a modernized replacement Vanderbilt Yard to store and service Long Island Rail Road trains was revised, at Forest City Ratner's request, in 2009, and accepted by the Metropolitan Transportation Authority.

The permanent railyard, instead of having nine tracks with capacity for 76 cars, will have seven tracks with capacity for 56 cars. While there would be several improvements, the new railyard would be valued at $147 million, while the MTA's Gary Dellaverson in 2009 said the previous iteration could be worth $250 million, after inflation.

Looking at discounts for Islanders game on Monday

According to the Living Social deal web site, there are some big discounts for Monday's New York Islanders game against the Colorado Avalanche, which is not exactly a premier opponent.

That's $35 for two tickets, via the re-seller Venue Kings. Note that typically sellers on sites like Living Social and Groupon take home 50% to 60% of the fee.

As shown on the Venue Kings chart below, sections 211 and 221 are not bad, since they are not in the restricted-view side of the venue, where, curiously enough, many tickets are not available. (Are those for the Barclays Center to distribute as freebies?)

Surely some tickets on these resale sites come from season ticketholders, but I have to believe some are quietly put on sale by the venue itself.

On the Venue Kings website itself, tickets start at $9.96. Is that a better deal overall??

Actually, if you're buying from Venue Kings (and many other sites), there's a big service fee, so two tickets cost $37.29, which is more than the Living Social deal. On StubHub, tickets start at $9.25, with a smaller service fee, for a total of $26.65 for two.

The official channel

Tickets officially start at $20 (see inset in screenshot below) and $15 on the re-sale market, via Ticketmaster and the Barclays Center. (I didn't check the service fee.) Either way, that makes StubHub, for this event at least, a better deal.

Friday, November 27, 2015

Holiday discounts at the Barclays Center. Lots of them.

Remember, pricing for Barclays Center events, including many Brooklyn Nets and New York Islanders games, is variable.

Below is a partial screenshot from a recent promotion, offering 30% off selected basketball and hockey games.

Thursday, November 26, 2015

"Posing for holy cards": the Nets and the Thanksgiving giveaway

Yes, it may seem churlish to look critically at the Brooklyn Nets' recent charity/media event, helping give out Thanksgiving turkeys and other food to needy families via the Bed-Stuy Campaign Against Hunger.

After all, it does short-term good, helping hundreds of needy families, and shows the basketball players in unselfish mode.

But really, do you think the Nets would do this without the reciprocal promise and expectation of significant media coverage (aka "earned media")?

After all, this event, which surely cost the Brooklyn Nets more in organizational time than money--partner Key Food supplied all the food--generated coverage on their own web site (and video), television coverage via WPIX (a Barclays Center partner!) and News12, an article in the Brooklyn Paper (a Forest City Ratner tenant!), and blog mentions in Kings County Politics, the Brooklyn Reader, and NetsDaily. (And maybe more.)

Above right is a telling screenshot from the Brooklyn Reader video: that's Barclays/Nets CEO Brett Yormark in the background, masterminding the media event.

As I wrote in March 2013, community and charity events from the Nets and the Barclays Center are like "posing for holy cards," as a former food industry executive put it, regarding his company's sponsorship efforts.

In Brooklyn, there's a "sports entertainment corporation" trying to make money, distracting from more complicated issues like worker pay, the discontinued promise of $15 tickets, construction/operational impacts, and some sweet land deals.

Those are the kinds of stories the arena and Nets do not present to media outlets.