Oder Does The Times

norman-oder-062210.jpgAfter years of (rightly) criticizing The New York Times for its failure to bring a critical eye and adequate resources to its coverage of the Atlantic Yards project, Norman Oder, publisher of the Atlantic Yards Report, got his own essay (that’s what The Times calls it; he calls it an Op-Ed) in the paper of record. A central point of the essay, and the one that he parses further in a follow-up post on his blog, is that public officials might have thought harder about handing out hundreds of millions of dollars in subsidies if they’d known that someone with unlimited financial resources–in this case Russian billionaire Mikhail Prokhorov–would end up being the beneficiary. “All was forgotten as flashbulbs popped for Prokhorov, as was the notion that had a man worth nearly $18 billion put his hand out for subsidies, someone might have called foul.” Lest the appearance of Oder’s piece on The Times give the impression that the paper has changed tack on Atlantic Yards, it’s accompanied by another criticism-free profile, this one of Ratner, in today’s sports section, the main point of which appears to be to stir up conflict between him and Madison Square Garden chief Jim Dolan.
A Russian Billionaire, the Nets and Sweetheart Deals [NY Times]
Ratner Content to Succeed in the Shadows [NY Times]
My Time Op-Ed [Atlantic Yards Report]
Photo by gilly youner

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  • daveinbedstuy

    I think it’s time to move on with the AY condemnation and get something built.

  • He looks like someone I wouldn’t like.

  • This deal is EXACTLY the kind that Robert Moses refused to do for the owner of the Dodgers – to his great credit.

  • Oder makes some good points but his “essay” is a bit disorganized; more like a rant.

  • “All was forgotten as flashbulbs popped for Prokhorov, as was the notion that had a man worth nearly $18 billion put his hand out for subsidies, someone might have called foul.”

    Rich people do deals involving subsidies all of the time – it’s often the piece of the puzzle that makes a transaction work.

  • daveinbedstuy

    “more like a rant.”

    And this come as a surprise??????

  • Unfortunately, Oder’s IS a sadly disorganized article, missing several opportunities to spell out the extent of the boondoggle to people who haven’t followed the story too closely. He also wastes a silly amount of ink throwing mud at Prokhorov. Isn’t “Russian billionaire” synonymous with “corrupt crook”? Disappointment.

  • delepp

    Is the NYTimes still the paper of record?

  • “Rich people do deals involving subsidies all of the time – it’s often the piece of the puzzle that makes a transaction work.”

    DING DING DING!!!! Jessibaby gets the sensible person of the day award. I couldn’t have said it better myself.

    This guy’s article reveals a complete failure to understand the basic economics of the project. Typical confused liberal interpretation of economics.

    Prokhorov is not getting a “handout.” He is putting in risky equity. And it’s not like they didn’t look far and wide for someone willing to do this before settling for this guy. Without the subsidies the equity wouldn’t be willing to come in and Brooklyn wouldn’t have this project. That would be a bad outcome for everyone but the NIMBYs.

    Maybe if the developers didn’t have to spend so much money fighting NIMBYs like Goldstein and dealing with delay after delay cause by the lawsuits they wouldn’t need to many subsidies.

    DIBS is right. It’s time to sit down, shut the fuck up, and let them build.

  • This guy’s article nicely absolves the Times for not running stories like this. I guess the Times decided to just let him discredit his views on his own.

  • Oder is right as usual – but in 20/20 hind site you should keep in mind

    as if the final shape of the deal could have been predicted by anyone

    vast majority of subsidies tax forgiveness, forgiving something that never would happen w/o those gifts, as taxes skyhigh in nyc so they get in the way people

    real estate and govt. don’t mix well, just never jibes always some disconnect

    Stuckey once said they risked up to 700mm to get to this point – even if one 500 when one does that one gets a deal

    Pod came along and got a good deal when others had been packaging for 10 years

  • veteran talks but money walks, final result is what counts

    Goldstein – deal was in place for 1.6mm at last minute he asked for 4.5…… fcrc gave him 3 to get it over with, he would have taken less ……. he was always thinking about this, sort of like subsidy for Pod, what comes first, results count

  • East New York

    “This deal is EXACTLY the kind that Robert Moses refused to do for the owner of the Dodgers – to his great credit.”

    Yep, and what did we get. Nothing. A hole in the ground for 40 years. Thanks for that, Robert Moses.

    “”Rich people do deals involving subsidies all of the time – it’s often the piece of the puzzle that makes a transaction work.”

    DING DING DING!!!! Jessibaby gets the sensible person of the day award. I couldn’t have said it better myself.”

    Me either. The anti-AY sour grapes is really a bit much, now.

    Even more amazingly I actually AGREE with lechacal on something!

  • “Even more amazingly I actually AGREE with lechacal on something!”

    Oh shit. I’m waiting for a fifth dimension to open up and swallow us all.

  • East New York

    You’re OK in my book, lechacal.

  • Lechal,

    “Risky equity”? The developer buys land from the MTA at a below market price, gets subsidized on his financing and exempted from taxes. The value of the subsidies likely exceeds the value of the private equity contribution.

  • daveinbedstuy

    If the MTA didn’t want to sell it at below market price then they should have held on to it.

  • Boerum Hill – you dont see this project as risky? I don’t need to tell you that equity gets paid last. And you likely remember all of those muni bonds with the crappy ratings have to get paid first.

  • “Typical confused liberal interpretation of economics.”

    Not really. I’m liberal, and hardly confused about economics.

    I am however sickened that our tax dollars underwrite Ratner’s business incompetence. If this is a free market, how come so much of our handout (primarily the first $50 million that was supposed to go to affordable housing) was spent on political lobbying and PR?

    Even though many people think a few billion dollars is a good price to lease a basketball team for a few years, those of us that refuse to accept this scam will perhaps make New York less likely to get robbed on this scale again.

    Wishful thinking on my part perhaps. But given the economic pain this city is going through, speaking up when people that drive quarter of a million dollar Bentleys get welfare seems the least this unconfused liberal can do.

  • wasder

    I consider myself highly liberal and even I want this damn arena built at this point.

  • yes, this is how development is always done: give eminent domain and large amounts of subsidies and breaks to the 19th richest man in the world (who became rich through a rigged deal) so that that Russian oligarch can enjoy the benefits of the Brooklyn rigged deal.

    Every project in New York has been built that way. Right?

  • Yes, risky equity. I will not spend all day explaining that one, but here is a primer:

    If the project does well the muni bonds get paid off and Prokhorov makes a bundle.

    If the project doesn’t do well, 100% of some lower percentage of the muni bonds get paid off and Prokhorov’s equity gets wiped out.

    Risky.

    But I’m sure that 10 years from now people will completely lose sight of the fact that equity is making a risky bet now and act like the outcome was pre-determined and unfair. Sort of like making a losing bet on synthetic CDOs put together by Goldman Sachs – if the market had kept going up the buyers would have made a bundle, but instead it went down and now no one seems capable of understanding that it was a risky bet with no pre-determined outcome.

  • benson

    Somehow this myth has evolved that Robert Moses killed the Dodger’s move to the Atlantic Terminal area. Not true.

    Robert Moses had no formal jurisdiction over that deal, nor was the land around the Atlantic terminal under the city’s ownership (it belonged to the LIRR, in those pre-MTA days).

    What is true is that O’Malley went to Moses to ask him to lend his support to the idea of a baseball stadium in the Atlantic Terminal area. O’Malley rightly believed that Moses was the only one in governmental circles who could get things done. Moses refused to support the idea of a stadium in that area. Rather, he urged O’Malley to consider a stadium in Flushing Meadows park, which WAS under his jurisdiction (he was the Parks Commissioner). O’Malley refused to accept a stadium in Flushing, and the rest is history.

  • “yes, this is how development is always done: give eminent domain and large amounts of subsidies and breaks to the 19th richest man in the world (who became rich through a rigged deal) so that that Russian oligarch can enjoy the benefits of the Brooklyn rigged deal.”

    Brokeland – nobody else was stepping up to contribute the equity!(because the deal risky) This deal wasn’t designed *for* Prokhorov.

  • “Not really. I’m liberal, and hardly confused about economics.”

    When I read that my eyes lit up. But then I kept reading and you dashed my hopes.

    “I am however sickened that our tax dollars underwrite Ratner’s business incompetence. If this is a free market, how come so much of our handout (primarily the first $50 million that was supposed to go to affordable housing) was spent on political lobbying and PR?”

    The confusion is packed in here pretty tightly, so let me try to unpack it piece by piece.

    1. Ratner is “incompetent” when it comes to business? He runs a very substantial business concern. Are you calling him incompetent because you don’t like the Atlantic Yards or because you are actually capable of analyzing complex business decision making in an area as difficult as public-private partnerships? Can you provide a thoughtful and objective analysis of Ratner’s skills as a business person? Would you say that his leadership and decisionmaking styles have appropriately balanced risk in on behalf of his shareholders over time? I have no idea, but since you are expert enough in this area to call Ratner “incompetent” I’m interested in your analysis.

    2. I was going to go through the rest of the paragraph, but it’s just too painful. You somehow manage to cobble together the idea of a free market and the affordable housing issue lobbying and PR (as if every substantial business doesn’t have lobbying and PR costs – again, what is it that you do again?). Re-write the rest of your paragraph as a coherent series of arguments and I will respond to it.

    “Wishful thinking on my part perhaps. But given the economic pain this city is going through, speaking up when people that drive quarter of a million dollar Bentleys get welfare seems the least this unconfused liberal can do.”

    The deal wouldn’t happen without the public piece. It’s not “welfare”, it’s a part public part private venture. It’s a very common arrangement for projects that benefit the public and bring in tax revenue but require private money and management to get done.

  • benson

    I have a question for those who claim that they oppose city subsidies to developers. Our city routinely subsidizes privately-built “affordable” housing, and Mr. B. covered the ribbon-cutting of one in Crown Heights a few days ago. Typically in these deals, the city provides the land to the developer at a price well-below the market, provides low-interest (i.e subsidized) construction loans and lucrative tax breaks. Usually the developers make out quite well in these deals.

    Question: do you also oppose these deals? From the comments I see in Brownstoner, I gather that most folks don’t object. I would like to know how these deals are different than Atlantic Terminal IN PRINCIPLE.

  • Banson – I am completely and absolutely 100% opposed to those deals if the equity comes from a rich person. Rich people are bad! If a rich person does a business deal in partnership with a public entity, it’s a welfare handout!

    Obviously we need to require risk equity to come from the poor – ie those who are least able to absorb risk.

  • I think it would be difficult to adequately summarize a project such as AY when so much is wrong with it and so precious little is right. I think Oder did an okay job. Ratner and Porokhov gamed the system and we are all poorer for it. But I don’t necessarily care which billionaire profits from this boondoggle. I do care about anti-democratic process that was allowed to ram through a taxpayer-funded project that is a veritable exhibition of poor city planning: superblocks and dead-end streets, anti-contextual design, infrastructure overload, poorly integrated parking, etc., etc.

    The biggest cost of this project may be its opportunity cost to Brooklyn. A smarter, less corrupt process could have yielded a project that paid for itself yet also knitted together communities and provided a healthy mix of year-round uses and actual public space, not massive parking lots, monolithic towers and walled-in “green spaces.”

    I don’t agree with the “it’s not great but we should just get on with it” sentiment. I don’t know if improving the AY plan is still a possibility, but we ought to at least keep the debate alive and try to make good public planning a priority. This city needs less Penn Station and more Grand Central, and the only way to do that is to put public officials on notice that their mistakes won’t be forgotten.

  • I get the criticisms, but the toothpaste is out of the tube. I’ll join the “just build it already” chorus.

  • Benson,

    The difference principal is that public dollars used for affordable housing are a public good while public dollars on this project are for the benefit of a private developer.

  • I will admit to being confused about the interpretation that “all public-private” deals are bad. They’re not. Sometimes it’s win-win. But in this instance a couple of points to mention.

    One, the scale of the public component is staggering. Between misdirected public housing funds, our largess and naming rights from Barclays, Ratner managed to do this all on our dime.

    The fact that companies buy PR is a rather odd straw man. They do. But usually they use their own money to do so.

    Business acumen-wise, how does a businessman take this much public money and still need a bailout? Incompetence in my book. But that’s just me.

    Two, successful public-private partnerships when it comes to sports invariably enrich no one but the owner(s) of the sports franchise. Another topic I occasionally read about – history.

  • The subsidies are just icing on the cake to what is a bad project. Unfortunately, the true cost of this project is not the millions of dollars of subsidies but the fact that this thing is actually going to get built – creating a construction zone for years, bringing more traffic to the surrounding neighborhoods and generally degrading the quality of life for those who live here. Supporters of AY seem to forget that. I don’t live near AY but feel bad for those who do – not only is the city wasting money and ultimately dipping into taxpayers pockets, but in doing so is destroying the resale value of property owners’ homes etc.

    Personally, instead of giving millions to developers for a project fo at best debatable benefit to the community, I would rather have seen the city use the money to a. improve the MTA situation or b. save other programs that the city is now cutting such as the day care centers, senior centers and swimming pools discussed yesterday.

  • benson

    Boreum Hill;

    So let me get this straight:

    -Small projects in which a few folks are able to get new apartments at below-market rent via a lottery = public good.

    -Large project in which a significant number of folks will be able to get apartments at below-market rents + new stadium + filling up an eyesore of a hole in the ground is NOT a public good.

    Thanks for the clarification!

  • “One, the scale of the public component is staggering. Between misdirected public housing funds, our largess and naming rights from Barclays, Ratner managed to do this all on our dime.”

    Naming rights from Barclays? How is that our dime? Please don’t say TARP…

  • In response to both Boerum Hill at 11:19 and Johnny at 11:22:

    You are right that only the developer is “enriched” in the traditional sense. (after all, only the developer puts in risk equity). But the idea is that a sports arena enriches the entire community in a lot of ways. Increased tax revenue from businesses, team spirit, etc. These deals are made in a way that gives the developer a reasonable prospect of making a nice equity return. In exchange for that, the developer puts in risk equity – and the community gets a sports franchise to enjoy.

  • Oh and remind us what we have won for putting up with all of this construction – an arena to host an NBDL team. It’s not like we are getting the Lakers or the Celtics here.

  • Benson, if the choice is between a hole in the ground and the area around Madison Square Garden on a game night, I think the residents in the surrounding neighborhoods would prefer the hole in the ground even before you factor in the public fleecing.

  • “It’s not like we are getting the Lakers or the Celtics here.”

    What about getting the celtics back when they sucked eggs? I can’t stand defeatism.

  • “I can’t stand defeatism”

    Lechacal, in that case you understand why people continue to fight AY rather than burying their heads in the sand and rationalizing what is a dreadful project on multiple levels.

  • ” I think the residents in the surrounding neighborhoods would prefer the hole in the ground even before you factor in the public fleecing.”

    OK, ignoring the loaded use of “public fleecing”, as if the use of the term demonstrates anything other than bias on the part of the author…

    OK, sure, the immediate locals don’t want to be near an arena. I think 20 years from now the rest of Brooklyn will be proud of their basketball team. Good thing the vocal few (the neighbors) failed to stop a project that is for the greater public good. If the NIMBYs always won NYC wouldn’t exist as we know it.

  • “Lechacal, in that case you understand why people continue to fight AY rather than burying their heads in the sand and rationalizing what is a dreadful project on multiple levels.”

    I was assuming the cause is rational and just to begin with. I guess one could not give up banging one’s head against the wall.

  • “You’re OK in my book, lechacal.”

    Aw shit I missed this earlier. Thanks ENY, you’re OK in my book too. I’m sure we’ll still get up in each others’ grills once in a while but what the hell.

  • “Question: do you also oppose these deals? From the comments I see in Brownstoner, I gather that most folks don’t object. I would like to know how these deals are different than Atlantic Terminal IN PRINCIPLE.”

    it is called Atlantic Yards. how is it different? Atlantic Yards is built on once public land and once private land using eminent domain. the affordable housing subsidies you are talking about, agree or disagree with them, are given for projects built on land privately owned by the developer. Ratner’s land was acquired by a well below market MTA deal and eminent domain theft. plus he didn’t have to go through any voting process. those are the key differences.

  • “I get the criticisms, but the toothpaste is out of the tube. I’ll join the “just build it already” chorus.”

    they are just building it, so they claim. but you know what, the war in Afghanistan is out of the tube too. does that mean there should be no criticism?

    hey, Ratner’s dug a hole, lets stop talking about how he got to build that hole. what kind of logic is that?

  • “I was assuming the cause is rational and just to begin with.”

    Lechacal, you’re right. My bad.

    It is completely irrational to be against backroom dealings, the use of taxpayer subsidies to permit a project that is of at least questionable public good at a time when the city doesn’t have enough funds to pay for other vital social services, and to suggest that maybe with the MTA facing a massive budget shortfall selling a piece of property to the lower bidder might not be the smartest idea. I can now see why you believe that opponents of AY are unjust.

    In all seriousness, the use of the words “public fleecing” are not designed to reflect bias but rather to suggest that the city’s coffers have been raided, both through the MTA decision to sell at the low bid and through lucrative subsidies. Given the economics of the transaction, I think you’d have to be biased not to call the deal what it is.

  • “I get the criticisms, but the toothpaste is out of the tube. I’ll join the “just build it already” chorus.”

    hey, Ratner’s dug a hole, lets stop talking about how he got to build that hole. what kind of logic is that?”

    I think the point is that all of the legal challenges have been brought and finalized. It’s a done deal – to get it the property back, the state would have to condemn it. That would be funny, though.

  • Man I cant believe Norman Older is just this big a fool – I mean the Times is punking him or something right????

    The guy is pissed that the NY Times wasn’t more critical of AY and now AFTER it is a D-O-N-E D-E-A-L, after they started DIGGING, they give him an op-ed and the fool pathetically takes them up on it? (and then writes a rambling mess of an article no less)

    Have some fucking pride Older – its over, your essay’s and missives are wasted breath – come back in a few years and if all your negative predictions come true then the press will love to give you the “I told you so” columns (the press loves that kinda shit); but right now??? its DONE, OVER, ‘FINITO, –

    and if you must write about AY then how about some suggestions on ways to improve the current plans (i.e. traffic flow ideas, mass transit suggestions, local business development initiatives) – something…anything that is at all relevant and productive to the reality that the argument you wont STFU about is OVER.

  • the commenter’s point, or lack of one, it seems to me is that because it appears to be moving forward in some form we should all just shut up about and never discuss again.

    which, of course, is really an indefensible position.

  • benson

    Brokeland;

    Point taken on Atalntic Yards.

    I think the issue of eminent domain is a legitimate one. However, the Supreme Court ruled in Kelo and here we are. My point is that the potential for its use was NOT unique in this case. It is the law of the land. Since there really has been no substantial movement to change this law in NYS (in many other states the eminent domain laws HAVE been tightened up since Kelo), it seems that there is something about this project that brings out the tinhats.

    Beside the eminent domain issue, I see no difference between this project and many other public-private ventures these days.

    Given all this, I wonder why this project brings out so much venom and I come to the conclusion that Lech is right. It simply boils down to venom against a developer because he is rich and in the public eye.

  • My venom’s based purely on the gross inefficiencies of the project. Was all in favor of developing AY. Was never in favor of it going to the firm that bid the lowest, and needed the most welfare for a project with the least economic benefit.

    Affordable housing? Perhaps wise to check the plans at this point and see what decade that’s planned to be built.

    In 20 years the best economic case is we’ll have an empty stadium and the bills from another relocated sports franchise that cost the relocating city hundreds of millions more than it received before it moved again. Standard story.

    We paid hundreds of millions of dollars more to lease a team than it would cost to buy the team. The pricing inefficiency caused by lobbying and public indifference of course goes to the owner(s) of the Nets from we taxpayers.

    Worst case is the Nets renegotiate at first opportunity, threaten to leave unless the taxpayers subsidize the team further. Again, standard story.

  • This is kind of like talking to Southerners about the civil war. At a certain point you just have to remember that we won the war and all the talking in the world isn’t going to change that. Then you smile and pat them on the back and go about your business.

  • slopefarm

    hey, benson,

    For me, not venom, but disagreement, and I care less about the developer than the development. Here are what I think are some of the main themes and questions:

    1. Subsidies — Disagreeing with the subsidies here doesn’t mean you are against subsidies to leverage private investment, although I realize some are (it’s an easy target). The question is, what did you get as a marginal benefit of the subsidy? Did the subsidy leverage more in the way of investment and economic activity over what would have happened without it than the subsidy itself cost? AY is problematic on this score in part because of the value of the rejected bid. What exactly did the subsidies buy us over and beyond what we could have gotten without them?

    2. Planning — The project is going to have a huge impact on all kinds of infrastructure, services and quality of life issues. That’s not an excuse never to build, but planning got little more than lip service here. the project’s density is huge. The site straddles areas that are apropriate for high-density commercial use and lower density residential areas. There had been nice growth along the Atlantic, Pacific, Dean and Fulton corridors nearby for a while, but this seems overwhelming. Would it have been wise to preserve the street grid a bit more? Scale back the east end of the project to knit the adjacent neighborhoods together rather than wall them apart? What about schools, traffic, etc.? It’s already a madhouse over there at times. There was really no entity in this process with accountability on these issues. Which leads me to . . . .

    3. Process — there really was no process here to reconcile competing interests. I know you might view good process as merely a chance to kill development (good and bad), but absence of decent process undermines legitimacy. If an anti-development edict for the site had been adopted with as little input, process and accountability as AY was put into place with, I think you’d be up in arms.

    I’m not arguing that three-story townhouses is all that should be built above all those train lines and next to all those shopping centers. But I do think overall that this is too big. Good planning lets sensible development proceed in a way that reconciles multiple and competing interests, although never perfectly. I wish that had been tried here.

  • Slopefarm.

    Please keep your balance and logic away from this discussion. Stick to short, offensive, emotionally charged posts with no more than 30 words.

    Thanks.

    Jackal

  • benson

    Slopey;

    I could well agree that the manner in which these public-private ventures are hatched needs some fine tuning. In fact, I am dubious about them in a large way. However, the responsibility for their structure rests with our laws and elected officials, not with the developers. The latter are just exploiting (and I mean that in a good way) the opportunities that come their way.

    If someone were to take a look at the history of AY and point out how we could learn from it for the future, I’m all ears. I would suggest to you, however, that the large majority of anti-AY commentary on this site has not been of their nature. In fact, I would suggest that the opponents have done their cause a dis-service by aiming so much venom at the developer.

  • morralkan

    I’ve aimed plenty of venom at Ratner, but I have hurled just as much at Emperor Bloomberg (who never met a billionaire whom he did not thing was a genius) and our dancing chimp, Markowitz
    (who loves getting Ratner subsidies for his summer concert series). Shelly Silver, who could have killed AY as he did the West Side yards proposed stadium, gets lots of my venom also. As far as I’m concerned, they can all drop dead.

    Still, the fact remains that the MTA has been crying poverty for several years now. And then they turn down HIGHER bids in order to give the property to the lowest bidder — and were prepared to give Ratner the property for $100 million less than they ultimately settled upon. And subsequently agree to allow Ratner to pay off even that below market amount over 20 (?) years instead of all upfront.

    As to the housing itself, it remains to be seen when, and if, the subsidized, below-market housing will actually be built. It is highly likely that the first housing that will go up will be the high end apartments that will be the money makers and that Bloomberg will not be breathing down Ratner’s neck to build those lower-income apartments. Who knows if they will ever be built?

    There were lots of other reasons to be against Atlantic Yards, none of which are invalid simply because Ratner pulled off his coup of draining badly needed public resources. From the statistics I’ve seen, stadiums seem to be money losers for the cities in which they’re located.

  • “Given all this, I wonder why this project brings out so much venom and I come to the conclusion that Lech is right. It simply boils down to venom against a developer because he is rich and in the public eye.”

    utter non-sense. a naked land grab was committed by this so-called “public private” partnership.

    no, most public private partnerships do NOT happen this way. our government gave away the store, and that seems to be okay with you.

    and FSRQ, the project is going to take 20 years minimum, so how can you say there is nothing more to say about it. maybe take your own advice and STFU about it if it is so utterly unimportant now?

  • Benson: “If someone were to take a look at the history of AY and point out how we could learn from it for the future, I’m all ears.”

    here is one way to learn from it. dont allow developers to go to the governor and tell the governor what land he wants for himself by eminent domain and then not allow a single legislator to vote on the project. would that be a good piece of advice to start off?

  • Just as Dan Goldstein sold out for $3M, Norman Oder sells out by accepting an assignment from a paper he has wasted so much of his life criticizing. These anti-AY types are showing their true colors, but that’s hardly surprising.