Atlantic Yards: Judge Slams State Development Agency for "Failure of Transparency"

In today's New York Times, the Arts section features a long article on a play with music that dramatizes the Atlantic Yards development controversy in Brooklyn, another work from the impressive investigative theater company The Civilians.

Meanwhile, the Times ignores a long-awaited ruling in the last remaining Atlantic Yards lawsuit, which laid bare just how the state cut corners to favor developer Forest City Ratner, allowing a 25-year buildout while insisting the arena-plus-towers project could get done--and bring benefits like new tax revenue and affordable housing--in just ten years.

To the surprise of many, state Supreme Court Justice Marcy Friedman not only ruled for Develop Don't Destroy Brooklyn and other project opponents but also slammed the Empire State Development Corporation (ESDC), the state's economic development agency, for "what appears to be yet another failure of transparency" and "totally incomplete representations" in legal papers.

The importance of the ruling

No, the decision won't stop construction of the Barclays Center arena, which is already under way and slated to be finished by the fall of 2012. It likely won't impact construction on the arena block, as the Development Agreement the state signed with Forest City Ratner contains specific penalties regarding delays in the first three towers.

However, either the ESDC will have to file an appeal--and be forced to defend some very questionable behavior--or issue more findings justifying its analysis of the entire 16-tower project. Friedman wrote:

If ESDC concludes, in the face of the Development Agreement and the renegotiated MTA [Metropolitan Transportation Authority] agreement, that a 10 year buildout continues to be reasonable, and that it need not examine environmental impacts of construction over a 25 year period on neighborhood character, air quality, noise, and traffic, among other issues, then it must expressly make such findings and provide a detailed, reasoned basis for the findings.

That should shine even more of a light on the ESDC's questionable behavior and might affect plans--and mitigations--for the project's second phase.

What it can't do, however, is turn the clock back to the summer of 2009, when the ESDC agreed that a Supplemental Environmental Impact Statement (SEIS) was not needed. Had the the ESDC ordered such an additional review, it could have delayed the project past the deadline Forest City Ratner faced to get tax-exempt bonds issued, and thus would have jeopardized the developer's savings of perhaps $140 million.

The path to the lawsuit

Here's what happened. For years, Forest City Ratner and the ESDC said the project would be built in a decade. Their analyses of Atlantic Yards' purported economic impact covered just ten years, and assumed that the project would be built in full, at nearly 8 million square feet.

Sure, there were many reasons to doubt that ten-year timetable, given the history of megaprojects. In April 2009, then-ESDC CEO Marisa Lago even acknowledged publicly that the project would take "decades." Six weeks ago, Forest City Ratner CEO Bruce Ratner claimed that the project was always market-dependent, a statement, as WNYC pointed out, that contradicted previous promises.

The ESDC, in its September 2009 approval of the project, agreed that a ten-year buildout was reasonable, noting that Forest City Ratner would have to make "commercially reasonable" efforts to get it done.

But what leverage did the state have? The penalties were part of a Development Agreement signed Dec. 23, 2009 and, crucially, not revealed until about a month later.

Fudging the timing

The ESDC made the massive Development Agreement available--in hard copy, no less, requiring onsite inspection--a week after the oral argument in a previous case before Friedman challenging the legitimacy of the ten-year timetable. (That was also a couple of weeks after the ESDC told me the document would be available.)

The petitioners in this case, including Develop Don't Destroy Brooklyn and groups associated with the BrooklynSpeaks coalition, soon asked Friedman to amend the record to include the Development Agreement. She refused.

In her March 10, 2010 ruling, she criticized the ESDC for a "deplorable lack of transparency" but was "constrained to hold that ESDC's elaboration of its reasons for using the 10 year build-out and for not requiring an SEIS was not irrational as a matter of law."

A day later, the ceremonial arena groundbreaking was held. Had Friedman ruled otherwise, her decision would not have blocked arena construction, but might have put a damper on some of the pomp, and provoked some more journalistic skepticism.

Reopening the case

The petitioners, however, didn't give up. They tried again to bring the Development Agreement to Friedman's attention and she took the unusual step of reopening the case. During the oral argument last June 29, she was especially tough on the ESDC's lawyer.

Yesterday, the judge wrote that, at the oral argument, "ESDC continued to represent that the terms of the Development Agreement were described in the summary that was in the record before ESDC at the time of the approval," but noted that the summary "said nothing about the 2035 outside substantial completion date for the Phase II construction."

Atlantic Yards: development's not pretty

At the arena groundbreaking in March, New York City Mayor Mike Bloomberg soothingly declared, "[N]obody's going to remember how long it took, they're only going to look and see that it was done."

The legal record, however, suggests otherwise. Even though the ESDC has prevailed in two eminent domain cases, the litigation exposed the state's questionable findings of "blight" in a neighborhood with million-dollar condos.

Given the responses from the ESDC and Forest City Ratner to yesterday's ruling--essentially, that it doesn't stop arena construction--their official line seems to echo Bloomberg: "Nobody's going to remember how it got done, they're only going to look and see that it was done."

Friedman's ruling suggests otherwise. People will remember how it got done. And it wasn't pretty.