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March 28, 2007

ESDC OK'd AY Without Seeing a Business Plan

So, get this. Assemblyman James Brennan has been trying for months to get the Empire State Development Corp to cough a copy of the business plan, finally suing the state agency last month. Turns out all the effort was just a waste of time since the ESDC never had a business plan from Ratner for the project. Instead, the agency now admits, it relied solely on a consultant's report: "We brought in KPMG to take a look at all the forces involved," says ESDC spokesman Errol Cockfield. "We feel very confident that that data allowed them to take a thorough look at the project in its long-term value for taxpayers." One problem with that, though: KPMG says it never saw a comprehensive financial model either. Former city planning commissioner Ronald Shiffman summed up the common-sense position when he said, "One would believe they should look at it with a lot of due diligence, particularly with the amount of money they're putting into this. It's been a done deal from the beginning without anybody really looking at it."
State Never Saw Business Plan For Atlantic Yards Project [NY Sun]

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Total nonsense. What constitutes a business plan? Several appraisals have been done for the land with various scenarios of development. What more do you need?

You have an enormous amount of vacant land in a major population center and transit hub. It doesn't matter what you build there. It will be profitable. And developers never create detailed "business plans". Development costs are HIGHLY variable - there is no way to accurately project how much it will cost to build these things over the next several years. Any numbers they provide are going to be a "best guess".

As for the financial model - I can only assume they mean some kind of discounted cash flow. No one is going to hire a major account firm to "review" such a financial model - they would have them produce it! This is not difficult folks.

And, KPMG hardly is a major force in the commercial real estate field. They might as well hire a 2 bit accountant. What do they know about real estate? NOTHING.

Posted by: Eryximachus at March 28, 2007 9:31 AM

[i]And, KPMG hardly is a major force in the commercial real estate field. They might as well hire a 2 bit accountant. What do they know about real estate? NOTHING.[/i]

All the more reason that the ESDC shouldn't have relied on KPMG.

Posted by: Anonymous at March 28, 2007 9:48 AM

Hi Eryximachus!

I totally agree, no matter what you build there will be profitable. The question is, for who?

And also, why would you want the numbers to be reviewed by a "major force in the commercial real estate field"? Wouldn't that present some kind of conflict of interest (they'd either be a competitor or a partner of Ratner's)?

If you want someone to look at numbers and see if they make sense, you ask an accountant. And KPMG, for all its faults, is by no means a two-bit accountant.

All that said, I think the whole thing reeks of insiderism and corruption. And Eryxi, even you think that's bad.

Posted by: sylvia at March 28, 2007 9:55 AM

Is anyone really surprised by this? Of course the proper studies regarding ANY aspect of this project were never done in any standardized or meaningful way that demonstrates fiduciary responsibility to the taxpayers of New York. Their plan worked brilliantly: get the deal done by circumventing proper channels through the endorsements of ALL of the big time G-men.

This has probably been one of the most spectacular white-collar crimes ever committed, right in front of everyone's nose.

Thanks Jim Brennan. You have courage.

Posted by: Anonymous at March 28, 2007 9:59 AM

Dear AY Opponents,

I think your heart is in the right place but your efforts have been an utter failure because you and your lot come across as radical extremists and thus have alienated most of the moderates on the issue of AY. The non-stop "sky is falling"/doomsday rhetoric of the opposition did not win you any support in the community. Instead, it made you less credible as it's widely interpreted as non-sensical rethoric; with time people simply turned a deaf ear to everything coming out of the AY Report, No Land Grab and DDDB. Furthermore, Dan Goldstein was not the right person to lead this charge. He's too volatile, emotional, unpredictable and easily offends. Where the position required a consensus builder - someone levelheaded with a centrist point of view who could work with FCR and bring about some of the concessions which would've been appropriate for the project - the opposition instead put forth Goldstein whose confrontational, slash and burn method of negotiation alienated everyone. The opposition's first mistake was that they allowed the likes of Goldstein and the Hagans to wreck havoc on this entire process and become the face of the movement. Unfortunately, we are now faced with the grim reality that the zero sum game that was played will leave us with absolutely nothing in the end.

You want to know how you guys failed the community? (1) the scare tactics on falling real estate prices were pure horse shit and unbelievable; (2) you never provided a consistent message (a)too much luxury housing that would create more gentrification and drive up real estate values and make the community unaffordable or (b) too much low income housing which would set the community back ten years and reintroduce crime and drugs into the area (which one is it?); (3) Dan Goldstein calling African-Americans "slaves to their white masters" was a disgusting act of desperation; (4) the Barclay's and slavery tactic was equally offensive; (5) an "all or nothing" approach to negotiation is never the right path to take when dealing with a project of this size and scope with so many different constituents; (6) failing to listen to AY supporters and portraying everyone who differed with the opposition as a monster or devil worshiper (the politics of personal destruction is a major turn off); (7) the offering of better suited sites (e.g., Coney Island, Red Hook and the Navy Yard with either no or very little transportation infrastructure) spoke of pure NIMBYISM; and (8) the opposition seriously misunderstood the psychological importance of a professional sport franchise in Brooklyn.

I'm sorry but this was not a well organized and orchestrated battle - it was marred by blunder after blunder after blunder. You guys were not the right people for the job and as a result valuable and necessary compromises were never achieved in a way that could have improved the project for everyone. I hold those individuals at the forefront of this debacle fully responsible for this sordid state of affairs.

Objective Observer

Posted by: Objective Observer at March 28, 2007 10:06 AM

IMO, the AY opponents have failed, in part, due to their many contradictions:

1. Declaring ad nauseam that the AY will create “instant gentrification”, while simultaneously insisting that it will thwart development on Vanderbilt Ave and make the general area unlivable.

2. Complaining that the people who drive to the Nets games will have no place to park – and then screeching when Ratner proposes a parking lot near Vanderbilt Avenue .

3. Complaining that the public commenting period is too short and presents only two opportunities for the public to testify – and then, after the period is extended and another chance to testify added, urging people not to attend.

4. Repeatedly endorsing candidates who haven’t a snowball’s chance in hell of winning and then declaring victory after losing miserably at the polls.

5. Insisting that the opposition represents a broad base of races and ethnicities, but every demonstration, march, or fundraiser shows a turnout that is vastly white.

6. Complaining that the density of the project is too high, but kicking and screaming when the idea of moving the affordable units offsite is proposed.

7. Claiming that density is the issue, only to switch to eminent domain when someone suggests size reduction as a solution. (Or vice versa)

8. Claiming that a person’s neighborhood should not be a factor in their opinions, and then repeatedly asking project supporters if they reside in or near the footprint.

9. Claiming that the project will make the area too expensive for poor and working-class residents, but never considering how the steady influx of college-educated professionals (i.e. THEM) has been doing just that for years.

10. Criticizing AY for being “out of context” development, but then endorsing a plan that contains buildings of 25+ stories.

11. Repeatedly claiming that Ratner is corrupt, only to (a) put the girlfriend of a prominent spokesperson on the payroll of DDDB, (b) delete from the DDDB archives a press release regarding an opponent’s racial faux paus, and (c) endorsing a political candidate who supports a murderous dictator in Africa.

12. Criticizing a BUILD employee for driving a Cadillac, but conveniently turning a blind eye to the obvious wealth of several prominent project opponents.

13. Claiming on dailyheights.com in April, 2005 that DDDB is a 501c3 (http://www.dailyheights.com/archives/423, comment #6), only to declare on dddb.net in September, 2006 that DDDB is a *pending* 501c3 (http://www.dddb.net/php/latestnews_ArcTxtSrch.php, 9/11/06).

14. Accusing anyone and everyone who supports the project of being a paid Ratner stooge, but accepting at face value to sincerity of anyone who opposes it.

Posted by: Anonymous at March 28, 2007 10:17 AM

Objective Observer? About as objective as Fox News.

I don't object to a team in Brooklyn and I don't object to development in AY. I object to a development in my neighborhood paid for with my tax dollars that's being done without a single shred of consideration for anything other than Ratner's bottom line.

I don't hold the protesters responsible, disorganized or otherwise. I hold Ratner and the local, city and state politicians he bought responsible. 9:59's right - perhaps one of the largest white collar crimes in history.

Posted by: John at March 28, 2007 10:24 AM

Objective Observer --

You hold the opposition to AY responsible for the fact that AY is such a flawed development plan??? Yeah, okay, and I hold the Democrat party responsible for Iraq. I mean, after all, a lot of them voted for it.

Anon at 10:17--

Whenever people are trying desparately to fight powers much greater than themselves, they try anything. The AY opposition started with a few individuals who were paying attention to what was happening in their neighborhood. It took a long time for anyone else to start paying attention. Also,

the AY opposition has never been a monolith. Some of your own objections to the objections of the opponents are also contradictory. In any case, your list has little to do with the merits of AY. Do you wish the project plans were different than they are? Did you do anything to try to change them?

Posted by: SPer` at March 28, 2007 10:31 AM

I suspect that my position is similar to that of many other brooklynites - I don't oppose developing the area or the arrival of the basketball team or even the increased density/traffic, etc.

I do oppose leaving taxpayer dollars on the table, the use of eminent domain by a private developer, and elected officials acting in a covert, concerted effort to approve a plan without the input of the people who they are accountable to: taxpayers!

Posted by: Anonymous at March 28, 2007 10:32 AM

we'd better test the air sample right around the rail yards. given fcr's tendencies to be honest, responsible and accountable...there's no telling if the ongoing asbestos abatement is being implemented with the utmost safety and attention to detail.
And talk about back-stabbing, I hope KPMG, Boymelgreen and Hakeem Jeffries have learned their lesson. fcr uses you and then disposes of your interests and reputation as soon as you are no longer needed and viable.

Posted by: Anonymous at March 28, 2007 10:37 AM

Its actually pretty sad that ESDC didnt get some sort of financial projections from FCR. Not that it would really matter since projections made over 16yrs w/thousands of variables can really show anything you want and for sure AY opponents would cry foul no matter what the projections said. But it does show how incompetent the state is that they dont even have the most basic of due diligence.
I am sure that AY opponents will jump up and down and scream how this proves it was a fix etc, etc... however I dont beleive it shows this at all-if there was actually a conscious effort to deceive a perfectly reasonable plan would have been prepared even if only for appearance sake.
No this is just further proof of the incompetance of government.

Posted by: David at March 28, 2007 10:40 AM

If anyone should be held responsible - it's Objective Observer and people like him.

If you recognized such glaring deficiencies in AY, why didn't you do something? Just sit around and criticize and type long comments on blog.

Your objective observations are worthless.

Posted by: Chuck at March 28, 2007 11:06 AM

scandalous! truly. and don't blame the opposition for failing. a fait accompli is BY DEFINITION a done deal, no matter what happens.

even project supporters should oppose the tactics and methods by which this new mini city has been dropped onto brooklyn. we are all diminished by the disenfranchisement of the voters.

sorry, but bklyn feels a bit Soviet these days, doesn't it?

Posted by: david at March 28, 2007 11:19 AM

actually--bklyn doesn't feel 'a bit soviet'

Posted by: Anonymous at March 28, 2007 11:23 AM

let's be aware of the smoke screen tactics at hand and ignore the long winded comments that dont address the issue that's raised today..... which is my tax dollars being given to a developer with no plan.

Posted by: Get your hands out of my pocket! at March 28, 2007 11:32 AM

The above posts are not mine.

Posted by: David at March 28, 2007 11:57 AM

Yes, David we knew they weren't yours.

Posted by: anon Fort Greener at March 28, 2007 12:13 PM

I agree with Objective Observer. I've observed for a long time now, that the opposition was not well organized or well-conceived. Or professional. And I heard from someone experienced with these things who attempted to advise Goldstein a couple years ago, that Goldstein rather arrogantly and naively rejected all advice for a long time at the start. So 11:06, people DID try to step in and help.

Posted by: Anonymous at March 28, 2007 12:53 PM

Actually the 10:40 post is mine - Me being the David that posts here all the time, the David that all you Anti-AY people love to bash....
Just b/c I support AY/density/arena doesnt mean I cant note Govt incompetence.

Posted by: David at March 28, 2007 12:59 PM

anonymous at 12:53. yes, lets rely on an anoymous blog commenter quoting an anonymous source.

point is. there is no profit loss statement for Atlantic Yards and the state signed off. unbelievable.

Posted by: Anonymous at March 28, 2007 1:17 PM

Exactly, 1:17.

No matter whether you're pro or anti AY, or think the AY opponents are ugly and smell bad or are extremely well-polished and deserve a gold star because their socks always, always match (even on weekends), there is no way this kind of backdoor agreement should be tolerated. Corruption is wrong, period.

Posted by: sylvia at March 28, 2007 1:24 PM

People "tried to step in and help" on AY very late in the game. IIRC Brooklyn Speaks was not organized until just prior to the ESDC environmental hearings. Contrast to the organizational effort on the West Side re the proposed football stadium. A big part of this is that Brooklyn has never rated much attention until very recently. Were this project going on in Manhattan, it would never have gotten as little scrutiny as this.

Posted by: SPer at March 28, 2007 1:31 PM

Wrong. Pure rationalization. This battle was lost by a bunch of rich, inexperienced idealists who made one bad choice after another. Plain and simple.

D-O-N-E-D-E-A-L!!!

Posted by: Anonymous at March 28, 2007 2:01 PM

Please stop the nonsense and get the facts before hurling outlandish assertions of public corruption and malfeasance. These baseless accusations represent the exact reprehensible actions that anger the public, diminish credibility and render the opposition ineffective. A comprehensive business plan is not required by law and as such no laws were violated or broken. As typically is the case in hundreds of ESDC reviews, ESDC relies on a combination of interviews, presentations and consulting reports in making board decisions. I've been privy to many of these proceedings and I've encountered numerous instances where there were no business plan to speak of but rather an extensive report from a hired consultant. For the most part, business plans (especially those that extend 20years out) are fairly inaccurate and are riddled with facts and numbers that can be easily manipulated to support the desired outcome or goal - remember these are assumptions we are taking about. Whether ESDC received a comprehensive business plan or not the state provided appropriate oversight by hiring an independent consultant in KPMG to run its own objective analysis of the project. What did they discover? The KPMG report showed that the AY project would result in less city and state taxable revenue then previously estimated (this is public information). The truth of the matter is that the development corp. spent months reviewing all of the relevant facts and came to the objective and rational decision that the project was in the best long term interest of taxpayers. I agree with that decision wholeheartedly (and so does most of Brooklyn for that matter) and I'm happy to see that my considerable tax dollars are being put to such great use. It’s a damn shame that Brooklyn’s vast waterfront is underdeveloped and under the control of the special interest. At the very least, the borough deserves something as grand and visionary as Frank Gehry’s Atlantic Yards!

The focus on this non-material issue is yet another dead end for AY opponents.

Posted by: Anonymous at March 28, 2007 2:48 PM

"sorry, but bklyn feels a bit Soviet these days, doesn't it?"

Maybe at the park slope coop.

Posted by: Anonymous at March 28, 2007 2:55 PM

And who are YOU, anon at 3/28? And why are you apparently unable to write like a normal person? Who writes likes this: "something as grand and visionary at Frank Genry's Atlantic Yards!" Visionary? This is ad copy speak.

And who are you to write this?
"As typically is the case in hundreds of ESDC reviews, ESDC relies on a combination of interviews, presentations and consulting reports in making board decisions. I've been privy to many of these proceedings and I've encountered numerous instances where there were no business plan to speak of but rather an extensive report from a hired consultant."

Please. As I have said before, we all know that FCRC has people on payroll to monitor the web and post comments. I mean, if the NYPD had such in anticipation of the Republican Convention, I am sure FCRC can manage the same. A publicity operation that sends out mailers to everyone in Brooklyn that conveniently do not depict the project itself is certainly not going to let the free space of a blog go to waste.

Why has it been so hard for elected representatives to get information out of the ESDC? Just who does the ESDC work for? By its behavior, I'd have to say that whoever it is, it isn't the public interest. When public officials, like the ESDC, try as hard as possible to hide their operations, then corruption is a reasonable assumption.

Posted by: SPer at March 28, 2007 5:49 PM

SPer is a retard. He's demonstrated this fact time and time again on this board. No need to comment on his non-points.

Posted by: Anonymous at March 28, 2007 8:31 PM

Check out the building in the back of the picture. I think it's 470 Vanderbilt that's own by the Caryle Group. Talk about a great piece of property!!! Wow!!!! When developed, this is going to be an awesome loft/condo building!!!

Posted by: Anonymous at March 28, 2007 8:34 PM

Objective Observer at the top of the thread has it all right. The Hagan gals as the front cover for the AY cause was totally inappropriate. Why would anyone take these alcoholic ladies seriously. Why, Shelly looks like Paul Bunyon in drag with her wherewolf pack of dogs. She once protested the laundromat on Fulton St because she has a laundry in her cabin on Downing and all the poor minority folk around her have no where to wash their clothes. Comon folks you are really foregone here and if you think the fact that this one guy Dan Goldstein was going to convince anyone that he was the voice of reason behind this mess you probably were smoking something far stronger than anything the Hagan gals could consume. Let's be reasonable AY's is good. If it werent you wouldn't have retards opposing it so inappropriately. Finally, I am taking up a collection of the Brooklyn Papers for a life long supply of Cat litter trash, afterall its free and recycable.

Posted by: anon at March 28, 2007 8:56 PM

How about the lady who posts banners on her home all the time on Lafayette Ave? Using your home as a billboard. How effective.

Posted by: anon at March 28, 2007 8:58 PM

The Hagan sisters also protested against the transition home on the corner of Pacific and Carlton about five years ago. What a shit show that was! I encourage everyone to Google this case and research the plethora of news articles on the subject matter. What an abomination! They called everyone in that complex thieves, dealers, addicts and hookers and used every dirty trick in the book to stop the project, e.g., race card, fear mongering, you name it!

When Ratner presented the AY project, the Hagans immediately flipped the script and befriended the transition home offering to represent its residents in their fight to secure and protect their homes from ED designation. The audacity!!! In the span of one minute these people went from being transplanted thieves, dealers, addicts and hookers to being hardworking Prospect Heights tenants about to be uprooted from their homes by the evil Ratner, FCR and corrupt politicians. You can not trust these women. Period. Snakes in the grass.

Posted by: Anonymous at March 28, 2007 9:24 PM

-mous

I'm in favor of corruption but can't be bothered to do anything about it.

I know! I'll criticize the anti-AY contingent. Ahhh -- that's so much easier.

Posted by: Anony at March 28, 2007 11:45 PM

-mous

I'm agains corruption but can't be bothered to do anything about it.

I know! I'll criticize the anti-AY contingent. Ahhh -- that's so much easier.

Posted by: Anony at March 28, 2007 11:45 PM

What do the Hagan sisters have to do with the corruption of the city and state government which is detailed in the original article. Please address the topic at hand and don't just criticize the opposition. It shows the weakness in your logic, when you don't have anything on your side try to demonize those who oppose you.

Posted by: Anonymous at March 29, 2007 4:17 AM

4:17 AM.

Can you not read? Posters clearly addressed the article and stated their opinion that there was no corruption. This is not news. This info came out over a month ago when ESDC released the four page financial model that Ratner DID PROVIDE! The article or the opposition did not deleneate any acts of public corruption by any official at ESDC. If so, where and by whom? What laws or ethic rules where violated? The ESDC simply did its job as it has in thousands of other cases. If the ESDC had accepted Ratner's financial plan at face value and did not rely on the review of an independent auditor, the opposition would have cried foul. Furthermore, what is a comprehensive business plan? You mean 25 pages of fluff (FCR provided ample literature to ESDC) that would have also included the same four pages of financial projections that Ratner DID PROVIDE! Did any of you idiots ever attend business school? IMHO, the ESDC in hiring an independent third party to review the facts did everything above board, stuck to its fiduciary responsibilities and provided ample oversight in a manner that represented taxpayer's interests. You can cry foul all day long and say corruption occurred until you are blue in the face but that my friend does not bolster you case one iota. State officials thoroughly fulfilled their obligations under the law. This is a dead issue.

Posted by: Anonymous at March 29, 2007 5:47 AM

"IMHO, the ESDC in hiring an independent third party to review the facts did everything above board..."

Except for the fact that KPMG says it never saw a comprehensive financial model either!

FOUR PAGES of financial projections? That's all you have to provide the State to receive a billion dollars in public subsidies???

Again, if everything was so above-board and by the book, with the ESDC simply doing its job, then why did it take the ESDC months to acknowledge to Assemblyman Brennan that the ESDC never saw a business plan for AY? Why the obfuscation? What wasn't this elected representative simply told right off the bat -- we never saw a business plan, we relied on an outside auditor?
Why did Brennan have to threaten to sue to get this information?

Posted by: SPer at March 29, 2007 10:08 AM

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March 28, 2007

ESDC OK'd AY Without Seeing a Business Plan

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