There is a rail yard to nowhere in Brooklyn, and the possibility of New York becoming the poster child for misuse and abuse of stimulus funds—pork of the most rancid kind. To this we should say, "Thanks, but no thanks."
Here in Brooklyn there has been a 5-year long grassroots fight against a development plan known as Atlantic Yards consisting of 16 skyscrapers (6,400 housing units) and a $1 billion (yes billion) arena proposed to to move the New Jersey Nets who were purchased by the developer, Forest City Ratner, to enable a corrupt real estate land grab in the heart of the Borough (at the intersection of Flatbush and Atlantic Avenues, at the Nexus of Prospect Heights, Fort Greene, Park Slope, Clinton Hill and Boerum Hill, to be precise).
Due to lawsuits and the financial crisis, the project has been indefinitely halted before the developer has done anything more than demolish half the neighborhood, and some preliminary work on the rail yard where part of the 22-acre project would sit (the rail yard is 8 acres).
And now the developer wants to abuse the stimulus bill to get a federal bailout for a private professional basketball arena already heavily subsidized.
The development proposal already has the financial benefit of city, state and federal taxpayer subsidies in the form of direct cash payments, below-market public land, free public land, housing subsidies, tax breaks and tax exemptions, estimated by most close observers to be worth anywhere between $1.5 and 2 billion. The developer expects to float a federal tax-exempt arena bond estimated to be a subsidy worth about $165 million. Yet, the proposed arena has been shown by New York City’s Independent Budget Office to be a loss for the city.
Forest City Ratner has also received the enormous windfall benefit of New York state’s support for eminent domain at the site, the threat of that support and the state’s eventual approval of the condemnation two years ago.
And now, with Forest City Ratner (parent company is Forest City Enterprises — FCEA) struggling financially to build its $4 billion fantasy project, they are lobbying hard for stimulus funds to bail out their project. And they are using former Senator Al D’Amato as their chief lobbyist to get access to a piece of New York’s grant.
As a leader in the fight against the project, a fight that has gone on for over five years now, I can express my assurance that the use of stimulus funds to bail out this project would be wrong in the extreme and would undermine the intention of President Obama’s bill. It is an obscene and corrupt proposition to even ponder, yet there is an effort underway to convince the Paterson administration that bailing out this project should be a priority for New York.
It isn’t.
The developer, in addition to all of the government-backed goodies listed above, has a naming rights agreement with Barclays for $400 million which the city and state taxpayers of New York will never share in because the arena will be de facto owned by Forest City. And though the developer once promised to build “affordable housing” those units have been put on the backburner, while the arena is prioritized.
And Forest City Ratner wants stimulus money?
The intent of the stimulus bill, of course, is to generate jobs and kick-start the economy, not bail out projects that have been found to deaden economic growth, such as sports arenas, or a private developer— TARP took that approach and look where it got us. TARP was about rewarding bad behavior; the American Recovery and Reinvestment Act isn’t.
Right now, Forest City Ratner and its lobbyists are working hard to convince the Paterson Administration that their project deserves—needs!—stimulus money. It doesn’t. The Atlantic Yards project is already subsidized to the hilt, and it is simply too highly leveraged to return the public’s investment even with an infusion of federal stimulus funds.
But, the community fighting this land grab is concerned that the developer will attempt to secure stimulus funds by claiming its project is a “transit project” because they are supposed to build a new rail yard. The developer received the development rights to the MTA’s 8-acre Vanderbilt Rail Yard site, despite a bid less than half the appraised value, because it had committed to building a new, “state-of-the-art” rail yard. The sole purpose of the new rail yard is to facilitate the construction of the arena, rather than any transit need expressed by the Metropolitan Transportation Authority (MTA) in 2005 when they approved their sale to Forest City or in the MTA’s 20-year projected needs assessment. Forest City had committed to the MTA and the public to building this new rail yard and paying for it, as they should because the new yard was only needed for their project.
And now they want the federal taxpayer to bail them out of their commitment to build this rail yard to nowhere.
It is disturbing that earlier drafts of the bill’s amendments included prohibitions on spending stimulus money on stadiums. That prohibition was removed from the final bill the President will sign. Was this D’Amato’s doing or some other reason? I simply don’t know. But it is fishy. Keep in mind that the powerful Senator Chuck Schumer is an unconditional supporter of the Atlantic Yards project.
Most important, nearly all economists agree that arenas are not economic generators or cost-effective job creators. Forest City Ratner has never even publicly estimated the number of new jobs the arena would create because it would be woefully few, especially in relation to the public cost of the arena. And the opportunity costs are dramatic.
The project, including the arena, is not “shovel-ready” by any stretch of the imagination, as Forest City Ratner doesn’t own the land it needs to construct it and, according to the developer, it’s undergoing an extensive redesign with a final price tag unknown. The proposed affordable housing is nowhere in sight. Construction is highly unlikely to start in 2009, if ever.
The use of stimulus funds for this project birthed in opaque backrooms, and laden with non-competitive and no-bid contracts, would also violate accountability provisions of the bill that require a transparent and competitive public bidding process before contracts with entities such as Forest City Ratner can be entered into.
The attempt by Forest City, their consultants and their friends in government, to lobby for federal stimulus monies for Atlantic Yards is reflective of the ethical morass that has had a strangle hold on Washington and New York for decades. Frank Rich wrote in his February 8th NY Times column “Slumdogs Unite!” that, “few articulate this ethical morass better than Obama,” who has repeatedly vowed to ‘close the revolving door’ between business and government and end our ‘two sets of standards, one for the powerful people and one for the ordinary folks.’
Using the federal funds for the Atlantic Yards project and the arena (or infrastructure earmarked for the arena), or to relieve the developer of its commitments to the MTA and public would seriously undermine the stimulus package, expose it to widespread ridicule and deepen the ethical morass Rich describes.
Not to mention embarrass besieged Governor Paterson and the Obama Administration, allowing the GOP to (rightfully) find a big poster child for all that can go wrong with the stimulus bill, and right where all the lights shine—New York.
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Want to do something about it?
Some good places to start:
You can write and/or the following to tell them to tell them that giving stimulus funds to this developer for this project is not acceptable. You can also write or call the White House about it, particularly the Dept. of Transportation.
Governor Paterson
State Capitol
Albany, NY 12224
Phone: 518-474-8390
Email Form
Senator Charles Schumer
313 Hart Senate Building
WASHINGTON DC 20510
Email Form
Senator Kirsten Gillibrand
531 DIRKSEN SENATE OFFICE BUILDING
WASHINGTON DC 20510
Congressman Charlie Rangel (Dean of the NYC delegation)
2354 Rayburn House Office Building
Washington, DC 20515
Office: (202) 225-4365
Fax: (202) 225-0816
Congresswoman Yvette Clark (the project is in her district)
1029 Longworth HOB
Washington, DC 20515
Phone: (202) 225-6231
Fax: (202) 226-0112
Email Form
Congresswoman Nydia Velazquez
2466 Rayburn House Office Building
Washington, DC 20515
Phone: (202) 225-2361
Fax (202) 226-0327
Email Form
And Kucinich has been the only Congressional member looking into these stadium deals, specifically holding hearings on the Yankees new stadium taxpayer rip off. He would be worth contacting.
Congressman Dennis Kucinich
2445 Rayburn HOB
Washington, DC 20515
Phone (202)225-5871