Bad news for Atlantic Yards...

The New York Times reported today that Forest City Ratner, the developer of Atlantic Yards, is facing financial problems stemming from the credit crisis. Ratner is still optimistic that the arena will be built, but the prospects for the retail, office and residential space look grim.

In a separate article, the Times' architecture critic just about implored Frank Gehry to pull out of the project rather than see his architectural vision destroyed by the construction of the arena without the other buildings. "Postpone the towers and expose the stadium," stated Nicolai Ouroussoff, "and it becomes a piece of urban blight — a black hole at a crucial crossroads of the city’s physical history."

All of this news suggests that the affordable housing promised in the CBA may not be built until years after the stadium, if ever (see the Atlantic Yards Report (somewhat speculative) FAQ for more information about this). Unfortunately, the CBA doesn't give the community any real redress. Consider the following provisions (text of the CBA is available here):

• The term of the CBA lasts until 30 years after construction begins on the first residential building. If Ratner only builds the arena, it might be difficult to show any breach for not building affordable housing since he can claim that the housing is still in the works (pgs. 5-6).
• The CBA also provides that "[t]he Developers may change the Development Phases in their sole discretion prior to commencement of the first Development Phase; provided that they shall provide advance notice...as soon as reasonably practicable" (pg. 11). Again, Ratner has free reign here to change the plans, and significantly postpone construction of the residential units, since construction has yet to begin.
  
• The affordable housing agreement specifies the percentage of units that will be affordable. It does not set any minimum amount of affordable housing that must be completed, even though the creation of new affordable housing has been one of the key reasons for public support of the project. See the MOU on affordable housing for more details, and the Atlantic Yards Report story on the MOU an explanation of the affordable housing plan).
  
• Ratner is required to submit quarterly status reports to the CBA Coalition and the independent compliance monitor, but those status reports focus mainly on jobs--there is no requirement that Ratner report the amount of affordable housing that has been constructed (pgs. 41-43).
  
• If a new developer takes over the project, it will have no real obligation to continue the CBA. Ratner will still be responsible for the jobs development and local employment provisions (pgs. 49-50).
  

The problem goes beyond affordable housing though. The CBA also includes provisions that the project will include open space (pgs. 30-31), a community health center (pgs. 26-28), and child care, youth and senior centers (pgs. 28-30). If Ratner postpones construction of most of the project due to financial problems, there's a good chance that these will be postponed too. And that means that the community may end up with a stand alone stadium that causes traffic, noise and crime problems without adding many of the benefits that the developer promised.

If Ratner never breaks ground on the first residential building, is the agreement still any good? Probably, since Ratner can't be held to the creation of any specific amount of affordable housing because he only agreed that a percentage of the units actually built will be affordable. He also probably can't be blamed for misrepresenting the terms of the contract, since the prospects for the development looked a lot better in 2005.

Community coalitions need to contemplate these issues ahead of time. A developer may make great promises, but there's always a chance that the project will fall through.

Update: The Atlantic Yards Report has some better news, including a statement from ACORN, one of the CBA signatories, and a statement from Brooklyn Borough President Marty Markowitz, indicating that some affordable housing will be built.

Atlantic Yards CBA update

The Atlantic Yards Report posted a story today about the latest in a series of public relations efforts to highlight the benefits of the project. The most recent deals with the CBA.

The Atlantic Yards CBA certainly includes some important benefits, but these do not detract from the actual and perceived improprieties in its negotiation process (see here for details on the agreement). This publication understandably emphasizes the positive aspects of the CBA. Still, I'm not convinced that this CBA is so "historical" that it merits depiction as a weathered and august parchment document.

Atlantic Yards CBA

The first New York CBA was completed in 2005 in relation to the multi-billion dollar Atlantic Yards arena project, future home to the New Jersey Nets. In addition to the basketball arena, the project will include an attached residential and office complex to be made up of several high-rise buildings, a development that will radically alter Brooklyn’s skyline. Since its inception, the project has faced broad opposition from Brooklyn residents, primarily because the project is to involve the use eminent domain.

The Atlantic Yards CBA was negotiated by only eight community groups and was purportedly based on the Staples Center agreement. It includes affordable housing, living wage, first source and minority hiring provisions, a commitment to build a day care center and the perk of free basketball tickets for neighborhood residents.

Reaction to the agreement has been decidedly negative, althought there has been some praise for the concessions contained in the agreement. Critics have pointed out that several of the coalition’s member groups were created expressly for the purpose of the negotiating the agreement. And numerous other community groups in fact expressed opposition to the development and to the CBA, claiming that the developer never had any intention of bargaining in good faith. One of the coalition’s member groups also reported that it expects to receive $5 million from the developer, creating a conflict of interest that has clearly tarnished the CBA’s integrity. Additionally, several chairpersons from local community boards protested statements made by the developer that they had played an advisory role in the negotiations. The chairpersons contended, to the contrary, that their involvement with the CBA ended very early in the process and well before a final draft was prepared. A representative of Good Jobs New York also expressed serious misgivings about the CBA, claiming that the negotiations were “marked by secrecy” and that they “contributed to a fragmentation of community responses.”

The fundamental problem with the Atlantic Yards CBA is that it is not representative of the community. A significant portion of Brooklyn residents are opposed to the project due to the extensive impacts that it will have on Brooklyn, and they were not invited to participate in negotiations. Rather, the talks were led by community members already on the developer’s side. It can only be guessed what the CBA would have looked like had inclusive and transparent talks actually been held. Without input from the stakeholders who had the most concerns about the project’s effects on the community, however, common sense would suggest that the CBA is weaker than it otherwise would have been. Interestingly, another Brooklyn community group lobbied the developer to reopen the CBA for further negotiations in 2006. The developer refused, but offered instead to consider a second agreement to be called a “Neighborhood Benefits Agreement.” Little seems to have come of this initiative, however.

Construction of the Atlantic Yards arena has been significantly delayed by litigation, and the major provisions of the CBA have thus yet to be implemented. The developer did advertise that it was seeking an Independent Compliance Monitor in 2007, as required by the CBA, but some have questioned just how independent the monitor will be. One upside of the situation is that with so many people opposed to the project and the manner in which the CBA was made, there will likely be heightened public scrutiny of the developer’s compliance with its agreements. Moreover, fears that the Atlantic Yards CBA will establish “bad precedent” for future CBAs have died down somewhat. The Atlantic Yards CBA has been so thoroughly criticized (see here and here) that other New York CBA negotiators have expressly chosen to avoid “the Brooklyn model.”

The CBA is located here, and a summary of its provisions is available here.

For information about Atlantic Yards litigation, see Develop Don't Destroy Brooklyn. For additional news and information about the project, see the Atlantic Yards Report.