« A Ratner Bluff on the Not-So-Fab Prefab Modulars? A Second Opinion | Main | Seven years ago, Brooklyn Paper house ad touted "the most complete and honest coverage" of Atlantic Yards and "changing face of Brooklyn" »
March 20, 2011
At tense Council hearing, James, Lander cite AY delays, construction changes, press NYC EDC's Pinsky on need for updated cost-benefit analysis
Atlantic Yards
City Council Members Tish James and Brad Lander questioned Seth Pinsky about what the true benefits would be for Atlantic Yards. Pinsky continues to acknowledge the 25 year build-out that call into question any return for the City's subsidies for the project.
Two Brooklyn City Council Members yesterday grilled Seth Pinsky, president of the New York City Economic Development Corporation (NYC EDC) about Atlantic Yards, but Pinsky both defended Forest City Ratner’s potential plan to build modular housing for the project, and argued that it, along with delays in tax revenues from a longer buildout, would not necessarily affect the city’s cost-benefit analysis of the project.
The latter statement, which Pinsky repeated in several ways, left Council Member Brad Lander dismayed and dumbfounded, calling Pinsky’s answers to Council Member Letitia James “deeply inadequate” and warning that the city has “misplaced confidence” in Forest City Ratner (FCR).
I'd also suggest that it requires an independent cost-benefit analysis, by the Independent Budget Office, rather than a self-serving one by the city.
...
“Let me go to may favorite project of all time, Atlantic Yards, they've been in the news,” James said. “They've been involved in two controversies, sort of unindicted co-conspirators.” She cited the Ridge Hill corruption case and the charges against state Senator Carl Kruger.
Does the $24 million “we so graciously have provided them” for the Carlton Avenue Bridge represent new money?
“No. That's money that's been in the budget now for some time,” Pinsky responded. “As you know, the original investment that the city was going to make in the Atlantic Yards project was about $200 million. Over the course of our negotiations, we finalized an agreement with Forest City last year which brought the total investment by the city to $179 million. the $24 million for work that were doing to help it go forward, $24 million for the Carlton Avenue Bridge, and $131 million for land acquisition.”
“What was original commitment to Forest City Ratner from the City of New York?” James asked.
“I believe the $200 million,” Pinsky responded.
That’s not true. The city initially committed $100 million, only to double that figure in 2007 after the project received initial approvals, and later to dial back slightly. (I think it’s still murky, given the likelihood that the city is also paying for some work on the FCR side of the ledger.)
...
“Have you done an updated cost-benefit analysis to determine how many jobs are being created by Atlantic Yards, because this project has changed?” James asked.
“The project actually has not changed significantly,” Pinsky maintained. The build program still calls for 16 towers. The arena size, though it’s decreased in square footage, continues to have the same number of seats. The MTA yard continues to meet the needs of the MTA.”
(That’s a bit of a euphemism, because, while a replacement railyard remains planned, it’s smaller than originally announced.)
“We haven't updated the cost-benefit analysis since we made the investment, but the analysis that we did showed that this would yield hundreds of millions of dollars in net incremental benefits to the city,” he stated.
James then referenced the recent news that Forest City Ratner is considering constructing the tallest-ever building made via modular construction, to meet its affordable housing obligations.
“Does that concern you?” she asked, noting that it would affect the number of jobs and the cost-benefit analysis.
“As I understand, this is an option that’s being explored,” Pinsky said carefully. ”I think, more importantly, that it's really not our place to stand in the way of innovations in technology relating to buildings.” He added that "it’s obviously incredibly important” that whatever is built complies with the project Design Guidelines and with safety requirements, but said that it’s tough to speculate on the impact until Forest City Ratner makes a decision.
He then went on to speculate a bit. “One thing I do know, in the articles, Forest City said they were looking at using a factory in New York City to do the construction, which is a benefit and job creator that we certainly didn't ever factor into our analysis,” he said. So, “if we were to go back,” that would have to be factored in.
“Well, clearly they're not going to complete this in ten years,” James noted, adding that the city committed funds based on that timetable.
Council Member Brad Lander continued the questioning:
“Everything you've said so far, in response to my questions, I think, has been a thoughtful answer. I have to say the answers you gave to Council Member James’s questions, I think, were deeply inadequate,” Lander began. “To begin with, let’s talk about the cost-benefit analysis. If I promise you a dollar today, and then instead I say, ‘I’ll give you a dollar in 15 years, is that dollar worth the same amount?’”
“Well, actually, that's not what the agreement was,” replied Pinsky with a touch of pique. A veteran of grilling by the bombastically prosecutorial legislator Richard Brodsky, Pinsky is no shrinking violet. “If we’re going to play an intellectual game it has to be fair.”
“I'm talking about the cost benefit analysis on the project revenues,” Lander continued, in a genially prosecutorial tone. “Your cost-benefit analysis evaluated a city investment of capital against projected tax revenues to the city, correct?”
“Among other things, correct,” Pinsky replied, a bit cagily.
“A pretty important one, though, the revenues, in terms of figuring out whether it’s a net positive to the city,” Lander asked.
“Absolutely,” confirmed Pinsky.
“So,” Lander continued, with increasing incredulity, “if the project is delayed from the timetable of ten years, and you earlier in your remarks said ‘over the course of the next several years,’ which I think is extremely generous, to a minimum of 25 years, with total uncertainty on whether the full buildout will happen at all, when and whether the office jobs will actually happen, the revenues that are going to come to city as a result of the construction and implementation and operation, are likely to be dramatically delayed from what you originally estimated in the cost benefit analysis that you did when you agreed to put all this capital into that project. I don’t see how you can say that’s not true.”
Posted by steve at March 20, 2011 9:27 PM