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September 26, 2009
Should Public Agencies Approve Prokhorov as New Nets, Arena and Atlantic Yards Owner?
Noticing New York
This blog entry notes that the entry of potential Nets owner Mikhai Prokhorov into the approval process for Atlantic Yards makes for some sticky situations, given that Prohkorov's past isn't exactly squeaky-clean.
So, if you were a public agency having to approve Mr. Prokhorov as the substantial recipient of billions of dollars of public subsidy, you would be asking questions about whether you could possibly disregard the incident involving the planeload of prostitutes given that Prokhorov was released without charge by French authorities. You would wonder if that meant that he had actually done nothing wrong or only that his $14 billion in wealth (down to $9 billion now) helped him tell a convincing story to the French authorities about how he was only importing the girls for his Christmas party. Does that mean that he gets off as just being the client-john? That he was not procuring for his own commercial benefit when he supplied the guests at his Christmas party? Does that mean that under United States law he would also have been released just as the socially tolerant French did?
These are obviously fun questions for a public agency to have to deal with and they likely have something to do with the fact that perpetual Atlantic Yards cheerleader Marty Markowitz has been uncharacteristically silent about Prokhorov being the latest Forest City Ratner orchestrated Atlantic Yards unveiling. (See: Friday, September 25, 2009, The Russian connection: reason for celebration or dismay? Has Marty been rendered "oddly silent"?)
Of course, the biggest joke is that, despite appearances to the contrary, there are likely no agreements yet for any agency to approve.
Here is a very possible answer to the question whether ESDC has the right to approve the Prokhorov transfer. They probably do. Not because the transferability section of the Modified General Project Plan says they do but because it is very likely ESDC has not signed the current deal. In all likelihood it is still being written up.
Those who have been tracking Atlantic Yards will remember that at the June 22, 2009 MTA Finance Committee meeting it was revealed that after five long years the MTA had never ever signed a deal with Forest City Ratner! (And politicians had once been worrying how difficult it would be to terminate the deal with Ratner! Ha!) Until signed, ESDC and its board can always revoke any approvals given. ESDC's board only just approved the last deal dumping, among other things, an unexpected extra $25 million on Ratner at the last minute. It is a good bet that Ratner, who perpetually tries to squeeze more out of every deal, has not negotiated to his ultimate satisfaction.
By the same token the MTA may not have signed their new deal either.
That puts ESDC and the MTA on the spot. Do they want to approve this deal with Prokhorov?
And what happens if Prokhorov becomes a part-owner of the entire Atlantic Yards project?
But even if ESDC and the MTA manage to somehow sidestep the question of such approval or even if they do approve Prokhorov, the next question is the review that Prokhorov will need to be subjected to if he is to be a major participant in owning the rest of the project. After all, everyone knows that the arena is projected to be at least a $220 million net loss for the city. The ostensible reason for proceeding with this mega-project anyway was that affordable housing might speculatively be provided someday. Well, if Prokhorov has to be involved, the awkwardness in redirecting housing subsidy away from other housing developers to the Prokhorov tainted team becomes pronounced. The housing, per se, becomes less likely. For ESDC and the MTA to approve the new Prokhorov deal now makes for exceedingly awkward nonapprovals in the future.
This doesn't even include uncomfortable questions as to whether sufficient background checks were ever done for ACORN's participation in the proposed Atlantic Yards project. Click through and imagine bureaucrats squirming.
Posted by steve at September 26, 2009 6:13 PM