Brooklyn’s vaunted, tainted Barclays Center

By Norman Oder
December 14, 2012

The new Barclays Center arena in Brooklyn opened in late September, garnering cheers from elected officials, most architecture critics and guests who have gone to see Jay-Z, the Rolling Stones and the revamped Brooklyn Nets, relocated from New Jersey and contenders in their NBA division.

However, the story behind the arena, and the larger $4.9 billion Atlantic Yards project, slated to include 16 towers over 22 acres, is darker. In New York, the government has supplied far less direct subsidy than in other jurisdictions — just look to Miami, which paid for more than 80 percent of the Marlins’ new stadium—but the overall deal still shows how the public interest can be clouded when government agencies welcome a new “hometown team” and an ambitious development tethered to a sports facility.

The nine-year battle to build Atlantic Yards is steeped in controversy: over public support via subsidies, tax breaks and low-cost land; over the use of eminent domain to remove recalcitrant residents; over a bypass of local elected officials (given that the project was supervised by an unelected state agency) for Brooklyn’s most expensive real estate project; and over a persistent lack of accountability.

The project, its defenders point out, has survived several legal challenges. (Well, except for a court ruling, upheld this year, that cited a “failure of transparency” and forced the state of New York to do something it chose not to do three years ago: study the environmental impact of a potential 25-year project buildout.) Still, the legal bar regarding issues like eminent domain and environmental review in New York is low.

What we have seen is cozily cooperative behavior by powerful Brooklyn-based developer Forest City Ratner and government agencies. It seems fitting that Forest City’s partner on the arena is Nets majority owner Mikhail Prokhorov, whose ascension to wealth included self-admittedly corrupt activities (neither unusual nor illegal in post-Soviet Russia).

Consider that Forest City ultimately used public money to buy out locals with seemingly generous payments while imposing gag orders (a policy it wouldn’t discuss with the press). Or that the arena’s construction was achieved while failing to sufficiently mitigate neighborhood impacts, according to a consultant hired by neighborhood civic groups, despite claims last July by a spokesman for the developer that “[w]e take every complaint from our neighbors seriously.”

Riding praise for the arena, developer Bruce Ratner recently asserted, “I think everyone right-thinking realizes that this was well worth it.” Nevertheless, the New York City Independent Budget Office in 2009 said the arena would be a net loss for the city.

Project backers responded that the overall Atlantic Yards would be a win, though such calculations were premised on a now-chimerical 10-year time line. Likewise, the 3,000 full- and part-time jobs now cited by backers pale in comparison to the initial promises of 10,000 office jobs and 15,000 construction jobs for Atlantic Yards as a whole.

How, then, did the arena come to be? Forest City Ratner, proclaiming “Jobs, Housing, and Hoops,” spent big money on lobbyists, made strategic political contributions, had the state find blight in a rapidly gentrifying neighborhood and persuaded state authorities to take less direct cash than a rival developer had proposed.

Forest City recruited community groups to sign the city’s first Community Benefits Agreement (CBA) in 2005. It was a private contract, guaranteeing such things as local hiring, minority contracting and job training, according to the developer. But many of these groups had no track record in their professed expertise and were formed and recruited for the express purpose of adding local legitimacy to the Atlantic Yards project. While a Forest City spokesman says, “We do not agree that the CBA’s community groups’ legitimacy was undercut,” experts on CBAs have long pointed out that a “landmark” CBA developed in Los Angeles relied on established organizations.

To put the arena in place, Ratner worked with the Empire State Development Corporation (ESDC) to exercise eminent domain, override zoning and bypass local officials. The ESDC, “New York’s chief economic development agency,” let Forest City Ratner draw the map of the irregular, 22-acre project site. The process was upheld by the courts, but that hardly qualifies as best practices (as noted by the American Planning Association), which call for such redevelopment districts to emerge from a comprehensive plan.

The authority then conducted a Blight Study limited to that 22-acre site, finding evidence of blight necessary to exercise eminent domain. That process was again upheld by the courts despite the ESDC failing to study, as it once intended, trends in the real estate market on the site and the surrounding neighborhood. Although that was not legally required, it would have acknowledged the inevitable upscaling of this pocket of brownstone Brooklyn, one of the hottest real estate markets in the country. As revealed in a state Senate oversight hearing, AKRF, the industry-leading consultant hired by the ESDC, has a pristine record of always finding blight.

The ESDC declined a request to comment for this piece. AKRF also did not respond but has stated, in response to periodic criticism, “we would not be as successful as we are if the quality and accuracy of our work could not be sustained.”

The project’s predestined outcome was evident after the 2003 announcement, when public officials indicated in press interviews and public statements that Forest City had the inside track on the 8.5-acre railyard that was the key piece of public property within the site. In 2005, when exactly one rival, recruited by Atlantic Yards opponents, emerged to build over the tracks and offered more cash ‑ $150 million vs. Ratner’s $50 million ‑ the Metropolitan Transportation Authority, controlled by the governor, agreed to negotiate exclusively with Forest City. While the MTA said Forest City’s bid was more “complete and well thought out,” its chairman also contended that he had “never sent two tenants the lease for the same space at the same time,” a statement that belied the auction-like nature of the bid process.

But by 2009 the financial crisis necessitated a renegotiation. Forest City got the MTA to accept only $20 million down for the portion of the railyard needed for the arena, with 21 years to pay off the rest, at a gentle interest rate.

The MTA’s current spokesman declined to comment on decisions made in a previous administration, which disregarded a call from the mainstream Regional Plan Association to request more public oversight and potential future revenue in return for concessions. The then-MTA chairman declared, vaguely, “I think, in this economy, jobs and an arena in Brooklyn is a public good.”

The accommodation for Ratner continued. In 2009 the state development agency agreed to give Forest City 25 years to finish all 16 towers in the project, instead of the 10 years that had long been promised. Revising history, Ratner declared to some astonishment in September 2010 that 10 years “was never supposed to be the time we were supposed to build them in.” (Still, Forest City allies like Mayor Michael Bloomberg blame project protesters for having delayed the promised public benefits.)

“Our company is really what I call a civic development company,” Ratner likes to say, suggesting that he tries to ensure that his projects include such things as jobs, quality architecture or subsidized housing. But Atlantic Yards ‑ for now, an arena, with one tower slated to start construction on Dec. 18 ‑ should serve as a reminder that, as such complicated deals evolve, the public interest requires constant vigilance.

PHOTO: Crowds arrive outside the Barclays Center before the Brooklyn Nets played the Toronto Raptors in their first NBA basketball game in their new arena in Brooklyn, New York, November 3, 2012. REUTERS/Ray Stubblebine

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