Did a Blogger’s Big Scoop Stall “Atlantic Yards?”

NY1 is reporting a rumor that Assembly Speaker Sheldon Silver will not vote to approve Forest City Ratner’s Atlantic Yards development project at tomorrow’s three-men-in-a-room meeting of the Public Authorities Control Board. (Amazingly, this one meeting constitutes the only legislative "debate" and vote that this massive project will ever see). NY1 reports:

According to a source briefed on the matter, as of now, Assembly Speaker Sheldon Silver will not give final approval to the project before January 1st. There’s word he still has financial questions about Atlantic Yards, which includes office and apartment towers and a sports arena for the Nets basketball team. Officially, a Silver spokesman says the speaker hasn’t decided.

Financial questions about the project have escalated since the discovery by Norman Oder, author of the Atlantic Yards Report, that nearly half a billion dollars in projected public revenues had simply vanished from the Empire State Development Corporation’s project plan. Oder reported:

The revised Atlantic Yards General Project Plan (GPP) issued last Friday by the ESDC contains one very significant change from the document released in July. Projected net new tax revenues have plummeted by $456 million. That’s almost a one-third decline from the $1.4 billion figure announced five months ago. That’s much more than a rounding error.

Oder was the only working journalist in New York City to notice the half billion dollar revision (though, apparently, Brooklyn Papers reporter Ariella Cohen was also working on the story which came out two days after Oder’s). His scoop was significant enough that even the New York Times deigned to give the blogger credit. In an article titled "Agency Cuts Atlantic Yards Revenue Estimate," the Times reported:

The new estimate was included in a statement and other documents issued by the development agency on Friday, but the difference went unremarked in both the brief board meeting that preceded the approval vote and the news conference that Charles A. Gargano, the agency’s chairman, held shortly afterward. Norman Oder, a journalist who has a blog devoted to the Atlantic Yards project, noticed the change later and wrote about it yesterday.

Granted, DDDB, community organizations and good government groups have been putting lots of pressure on Silver to delay the approval. And they cite a litany of reasons why the project needs a closer look. But you’ve got to hand it to Oder. If Silver does choose to delay approval of the project, Oder’s $456 million scoop may be a reason why.

  • noon

    I asked Comptroller Bill Thompson about Norman Oder’s blog, and he said he didn’t read blogs. Maybe he should start.

  • John Ryskamp

    It doesn’t really matter, because the Atlantic Yards development could never happen anyway. There are two developments in the law which make it impossible. I wrote Sheldon Silver about these in connection with my new book on eminent domain (plugged below). He knows the legal issues and knows the project is doomed. Here is why:

    I. ATLANTIC YARDS HAS A PRIVATE PURPOSE.

    As your readers may know, the only way eminent domain can be used is if it passes “minimum scrutiny.” This is a legal test which says that the use has to have a rational relation to a legitimate government purpose.

    The question is, is there, in FACT, a government purpose? Two answers show why Atlantic Yards will never happen:

    1. Atlantic Yards has a PRIVATE, not a GOVERNMENT, purpose. Even the evidence in the public records show that this is–glaringly–a case of what political scientists call “capture”–in which private interests affected by government decisions, simply buy the government decisions.

    Atlantic Yards proponents claim they have uttered the “magic words” which give the project a government purpose. That’s not enough. In two 1996 cases, Romer v. Evans and U.S. v. Virginia, the Supreme Court emphasized that there must in FACT be a government purpose. This means that opponents can inquire into the facts about how the purpose was formulated. This dooms Atlantic Yards.

    Justice Kennedy, in his CONCURRING Kelo opinion, even gave a list of things to look for to see if private purpose has been substituted for government purpose. In their Federal lawsuit complaint (available at http://www.dddb.org), the opponents apply each Kennedy test and list the evidence. It is devastating to the project.

    II. ATLANTIC YARDS DOES NOT HAVE A GOVERNMENT PURPOSE.

    OK, say there was no chicanery going on. Say you cannot show that a private purpose was substituted for a government purpose. Atlantic Yards OK?

    No. Once we establish–if we can–that there was no substitution, we go on to ask the Court’s NEXT question: was there in FACT a government purpose?

    But what IS a government purpose? The Court also tells us. In two cases, Euclid v. Ambler and West Coast Hotel v. Parrish, the Court told us that government purpose is, in FACT,

    THE MAINTENANCE OF IMPORTANT FACTS.

    In Euclid the Court upheld zoning for single-family residences. Why? Because it contributed to the “maintenance” of housing. In West Coast Hotel, the Court upheld a minimum wage law. Why? Because it contributed to the “maintenance” of income.

    So housing an income are regarded by the Court as important facts. Of course, Atlantic Yards proposes to destroy housing, so that dooms Atlantic Yards right there.

    III. THE ATLANTIC YARDS PROPERTY OWNERS MUST NOW MAINTAIN IMPORTANT FACTS.

    What does the Supreme Court mean when it calls housing and income, important? Important facts are unchanging facts of human experience. They are like freedom of speech and religion–facts which do not change no matter what government does to change them.

    But watch out for this. When the Court decided that freedom of speech and religion were important facts, they took them OUT OF THE POLITICAL SYSTEM and placed power over them in the HANDS OF THE INDIVIDUAL.

    Thus, the Atlantic Yards property owners are not finished once they defeat the big, bad developer. Once the government has been shown to have no government purpose, it then falls to the property owners to SUPPLY the government purpose. In short, they have to tell the judge how to maintain their property.

    They will have to have the Court KEEP JURSIDICTION OVER THE CASE FOR MANY YEARS, as they investigate the interrelation of such facts in their area such as housing and education, education and health care, taxation and housing, and so on. They will have have to request orders from the Court changing the law in these respects in order to maintain their property.

    This is what happens when facts are taken out of the political system–and that is REALLY what is going on in Atlantic Yards and throughout the country. We have entered an era in which important facts are being taken out of the political system and turned over to the individual. A good example of what happens when this occurs is the Abbott v. Burke New Jersey education cases (see http://www.edlaw.org). When the New Jersey Supreme Court increased rights in education, suddenly the litigants bore the burden of coming up with Court orders to vindicate that right.

    And guess what? Abbott v. Burke has been under the Court’s jurisdiction for OVER THIRTY YEARS. And that’s just what is going to happen with Atlantic Yards. Does anyone think that the political system is just going to “go away and leave use alone” once it loses Atlantic Yards. No. It still wants the property. It will still use all the power it possesses to get it. So the Atlantic Yards property owners will have to fight government from now on. However, once they win the right to maintain important facts, they will have the power to fight. That is the point.

    And now the shameless plug for, really, a wonderful book which lays this all out for you:

    The Eminent Domain Revolt: Changing Perceptions in a New Constitutional Epoch

    The Eminent Domain Revolt: Changing Perceptions in a New Constitutional Epoch by John, Ryskamp (Paperback – Nov 1, 2006)
    Books: See all items

  • someguy

    Sorry, my eyes glazed over. Can’t they claim that Atlantic Yards, on the whole, creates jobs and creates tax revenues? Isn’t that a public purpose? And isn’t that why the city of Kelo was allowed to proceed? (as far as I know) How is Atlantic Yards different than Kelo?

    Thanks for explanation.

  • noon

    Both Kelo and the Ratner proposal call for the state to take property from one individual and give it to another. But the Supreme Court went along with this in Kelo because the process was deemed fair, and not driven by a private developer. The difference here is that the Atlantic Yards is a private developer’s plan.

    Yes, Ratner’s development plan may provide jobs, but would it provide more jobs than other proposals? Did those proposals get a fair chance?

    More and more questions are coming out about the public moneys going to Ratner, and since this seems to be a developer-driven project, how can we be sure that ESDC is doing giving Ratner a “hard look,” as it is required to do under state law?

    Ratner seems to be afraid to provide the numbers, so more and more people are doubting whether his proposal would create tax revenues.

  • John Ryskamp

    Don’t let your eyes glaze over when an attempt is being made to deprive you of your rights. Wipe the glaze from your eyes and read carefully.

    Just look at my book. Several weeks after the Kelo decision, The Day–the New London, Conn., newspaper–revealed the TRUE facts of Kelo: it was just like Atlantic Yards. In fact, private purpose had substituted for public purpose. Pfizer approached New London, not the other way around. The Supreme Court was simply lied to. And, in fact, in Stevens’ opinion there is coded language which simply says, “The Court is lying to you, reader. We know what the true facts are.” Because, if you looked at the argument, you could tell that something was wrong. There were no plans for some of the seized property, there was no evidence for development, there was no idea of what development even was. It was a complete conspiracy to defraud, which is also the case with Atlantic Yards.

    So no, there is no difference between the TRUE facts of Kelo and Atlantic Yards. The difference is that our AWFUL, CORRUPT Supreme Court simply decided to buy New London’s “magic words.” Governments allege whatever they want to allege–those are the “magic words.” The question is, what in FACT was the purpose, not what, in FACT, did government say was the purpose?

    This comment is wrong:

    “Yes, Ratner’s development plan may provide jobs, but would it provide more jobs than other proposals? Did those proposals get a fair chance?”

    The test of government purpose is not a balancing act: more versus less, better versus worse. That is not the legal test. The legal test is, is there in FACT a government purpose? Be strict: keep to the tests, don’t veer off into the sentimental.

    And the Supreme Court has said that government purpose is the maintenance of important facts. Dan Goldstein, an Atlantic Yards homeowner, is going to have his housing destroyed by the eminent domain use.

    Does the eminent domain use maintain his housing? No. Must government purpose maintain housing? Yes. Why? Because it is an important fact. How do we know? The Supreme Court told us so in Euclid v. Ambler.

    Maintenance of important facts is the law with respect to government purpose. The question is not: does the purpose more or less, better or worse, maintain important facts? The test is not a policy test, it is a factual test. And it is simple: does the proposed eminent domain use maintain Dan Goldstein’s housing? Of course not. So, there is no government purpose in Atlantic Yards for two reasons:

    1. private purpose has been substituted for government purpose;

    2. the proposed eminent domain use destroys housing.

    Now a few words about bonds in connection with Atlantic Yards.

    In looking over the financial data on Atlantic Yards, remember that often, it isn’t the public officials, or even the developers, who promote eminent domain. It turns out that behind them are the bond dealers. Bond dealers want two things:

    1. a commission on selling the bonds;

    2. control over the investment of the proceeds of the sales prior to its expenditure on whatever it is spent on.

    I don’t know whether any governmental entity has already borrowed money for the Yards project. If so, where isthat money right now? In what bank? What is the account number? What are the names on the account?

    Who are the bond dealers are for the project? Let’s bring those rascals into the case. What contacts did they have with Ratner and government entities? Starting when?

    These questions are why Spitzer never will sign off on Atlantic Yards. He’s a lawyer, and these are exactly the questions he has asked in some of his own cases. It’s obviously a straight-up conspiracy to defraud.

    What I want to know is, why aren’t all the rascals involved in Atlantic Yards, under criminal indictment for conspiracy and fraud? where are the RICO charges? Will Governor Spitzer launch such a case? And by the way, how dirty is Spitzer?

    I notice there are no bond dealers among the defendants in the Atlantic Yards lawsuit. Why not?

    Looking ahead: no matter the court in which Atlantic Yards is finally litigated, the property owners are going to have to figure out what relief they want to impose on governmental entities with regard to bonding and the taxation used to pay the interest on the bonds. They will want the court to impose orders which make that power used to maintain the facts in the case: housing, among other things. Of course, they are also going to have to get into zoning issues too.

    The requested relief is the next area the property owners have to go to, and that’s when the court is going to want to know what they propose to do.

    The regulations discussed in the following Field of Schemes piece, are based on the idea that the IRS is finally deciding that tax exempt organizations (501 organizations, which I think is what the development corporations in Atlantic Yards, are), and tax exempt bonds, must have a government purpose. So there we have that test again. If what the organizations do, and what the bonds are for, do not have a government purpose, they are not tax exempt. If government authorizes such organizations, and such organizations issue such bonds, then, if the eminent domain victims find that those organizations and bonds do not have a government purpose, then THEY are going to have to come with orders to make sure

    1. that doesn’t happen again;

    2. the organizations and the bonding powers are used to maintain important facts, which is what, in FACT, government purpose is.

    So there you are again. The court is going to turn to them and say: “What are the orders you want the court to give in order to achieve those two results?” they are going to need a lot of experts in a lot of fields to advise both you and the court.

    New IRS bond regs could affect Nets arena
    In the wake of the possibly illegal stadium finance deals worked out by the New York Yankees and Mets earlier this year, the Internal Revenue Service has proposed new regulations governing the use of payments in lieu of taxes (PILOTs) to pay off tax-exempt bonds. If the new regs go into effect following a scheduled public hearing on February 17, developers would no longer be allowed to use federally subsidized low-interest bonds for projects repaid via PILOTs unless the payments represent “a fixed percentage of, or reflect a fixed adjustment to, the amount of generally applicable taxes in each year, based on comparable current valuation assessments.”
    What on earth does that mean in English? First off, the basic dodge of the Yanks and Mets deals would still be intact: Developers could still use tax-exempt bonds for privately financed projects – normally a no-no – by calling their rent payments “payments in lieu of” property taxes they wouldn’t have to pay regardless. What they couldn’t do is set out a fixed schedule of PILOT payments ahead of time based on projected property-tax payments, as the baseball teams did. Instead, the PILOT payments would have to be pegged to actual annual property assessments, and would float year to year as the value of the property rose and fell. And since bond buyers really really don’t like uncertainty in their bond payments, they’d doubtless demand that either the developer sell a smaller amount of bonds for the same projected PILOTs (to create a cushion in case of a shortfall), or buy bond insurance – either one of which would make the project more expensive to finance.
    The Yanks and Mets bonds are long since sold, but the new IRS regs could come into play for the proposed Brooklyn Nets arena, which would use a similar tax-exempt bond plan. Matthew Schuerman of the New York Observer goes so far as to speculate that they may “imperil” the entire Atlantic Yards finance plan, but really, this is just a matter of forcing Ratner (or the public) to pay more to borrow the funds for it. Though it’s worth recalling that this same problem – that bond buyers want to know where their money is coming from – is the same one that forced the New York Jets’ Manhattan stadium plan to switch from tax-increment financing to fixed PILOT payments back in 2003. At what point might Atlantic Yards be too rich for Ratner’s blood? That’s between the man and his fleet of accountants.

  • As it turns out, Silver was concerned with the project’s financial viability, not the return to the public.

  • Well, that’s still some good journalism you’re doing over there at the Atlantic Yards Report Norman. I suppose you’ll now be turning more of your attention to court proceedings.

    And I’m glad to know that our Assembly Speaker is looking out for Forest City’s bottom line.

  • John Ryskamp

    Here are the arguments to be used against the motion to dismiss the Atlantic Yards complaint:

    The complaint in the famous Atlantic Yards eminent domain matter–Goldstein v. Pataki–is online at http://www.developdontdestroy.org. The recently filed motion to dismiss is on file with the case in the Federal District Court. For this reason, the motion to dismiss is not more completely cited in this essay.

    The motion is discussed here because it involves two grounds–ripeness and abstention–which are frequently used to defeat eminent domain actions. The government typically attempts to assert that government acts in the eminent domain process both are and are not facts. With respect to ripeness, the acts are not characterized as facts, because that allows the government to argue that no right to sue has yet arisen. However, in the abstention context the same government acts–state acts–are characterized as facts, so that, ostensibly, abstention can be invoked to deny the matter a hearing in the Federal Court. In short, the government tries to have it both ways with respect to the factual status of government acts. We shall see where this trips up the government in this case, with respect to abstention.

    The point of the government is to prevent a factual inquiry into the facts underlying the eminent domain use. Eminent domain actions characteristically fail to have a government purpose, that is, they do not maintain important facts, which, according to the Supreme Court, is in fact government purpose. This doctrine holds both in the Lochner era (in Euclid v. Ambler from 1926), and in the case which established the scrutiny regime, West Coast Hotel v. Parrish (1937).

    However, in defeating the Atlantic Yards motion to defend–and in all such motions for summary judgments–we need not reach the underlying purpose of the motion, since it involves misstating the doctrines of both ripeness and abstention. Apparently, as readers will see from the cases cited in the Atlantic Yards motion, both courts and attorneys have been sloppy enough with respect to these doctrines that cases have been improperly dismissed.

    At the same time, two 1996 cases–Romer v. Evans and U.S. v. Virginia–make it clear that is what is required to reveal the true nature of the doctrines, and apply them correctly, is the understanding that both these doctrines–along with all other government policies–must have a government purpose, that is, that there must in FACT be a government purpose for finding a case is not ripe, or that abstention applies to dismiss it from the Federal Courts.

    Once we apply government purpose to these two doctrines, it becomes clear that–unless the Federal Judge in the case, Nicholas Garaufis, is not completely silly–the case should not be dismissed.

    There is, unfortunately, evidence that the attitude of the Judge is silly and ill-informed. In the initial hearing, he had the impertinence to ask the plaintiffs why the plaintiffs were in a hurry. He asked the plaintiffs if they didn’t feel outnumbered by the number of opposing counsel. These contemptuous comments bespeak a judge who is not prepared to apply the law.

    RIPENESS

    The dispute over ripeness and abstention is a dispute about facts. The causes of action arose with respect to certain facts which are alleged not to have a government purpose. These facts included, but were not limited to:

    the agreement in fact between the government and the developer, Ratner, to build the subject development;

    the declaration of the project; which in fact is part of the agreement;

    the memoranda of understanding, which in fact are part of the agreement;

    the recent ESDC decision which in fact is part of the agreement;

    the recent notices to property owners which in fact are part of the agreement.

    The facts show that the claim is ripe and that the Court should not abstain.

    I. SAN REMO AND WILLIAMSON PLANNING ARE NOT ON POINT.

    San Remo and Williamson Planning are not applicable because there is no dispute as to whether government policy in this matter involves a taking. It does. The issue is whether the alleged facts have a government purpose. That issue is not addressed in either case. Plaintiffs are not seeking to develop their property. They are seeking to relief from facts which do not have a government purpose.

    II. PLAINTIFFS’ CLAIM MEETS THE IMPACT TEST FOR RIPENESS.

    The government claims the case is not ripe because the government policy has had no impact. Apparently the government is seeking to put itself in the position of the government in Abbott. But the case goes against the government, because the government lost in Abbott. The government evidently does not understand the applicability of Abbott to the present case.

    The “sufficiently direct and immediate” impact test of Abbott is a fact-based test. So, since Abbott won (and Goldstein is in the place of Abbott), let’s see what the Supreme Court considers the indicia of “sufficiently direct and immediate” impact (the tests are at 387 US 154):

    1. “the regulation is directed at them in particular;”

    The facts alleged above target the properties of Goldstein and the other plaintiffs, and the government does not dispute this;

    2. “it requires them to make significant changes in their everyday business practices;”

    The facts alleged above require plaintiffs to give up title to and possession of their property and the government does not dispute this;

    3. “if they fail to observe the Commissioner’s rule they are quite clearly exposed to the imposition of strong sanctions.”

    The facts alleged above result in eviction if plaintiffs do not comply and the government does not dispute this.

    Clearly, when applying the impact test to the facts, the matter is ripe.

    III. PLAINTIFFS’ CLAIM MEETS THE INITIATION TEST FOR RIPENESS.

    In the context of a physical taking, the government invokes the initiation test: “the claim is not ripe at least until the condemnor has initiated a proceeding seeking transfer of title” (p. 13). There is no “initiation” when “the feared legal consequence remains a mere possibility, or even probability of some contingency that may or may not come to pass” (p. 14, quoting Dow Jones). That is, there is no “initiation” if there are no facts. However, in this case, as alleged above, there are facts, indeed they are undisputed facts, and they go against the government. Clearly, again, there is initiation for purposes of ripeness.

    IV. PLAINTIFFS’ CLAIM MEETS THE FLUCTUATIONS TEST FOR RIPENESS

    The government claims the case is not ripe because the facts alleged in it amount to “fluctuations” which are insufficient allegations of ripeness. The “fluctuations” test cited in footnote 9 of Agins v. Tiburon is a fact-based test, and the test is government purpose. The threshold of invoking “fluctuations” as a defense against a ripeness claim is, as the Court says, “good-faith planning activities.” Good faith is a question of fact for the trier of fact. That is, the government must show the fact of good faith in asserting the “fluctuations” doctrine. The government alleges good faith; Goldstein denies it. This is grounds for finding ripeness, not finding that the case is not ripe, because the government is simply saying that the claim is at the stage at which good faith is a question of fact for the trier of fact. Government does not prevail in claiming lack of ripeness, simply by claiming good faith–its claim in that regard is simply another fact along with other facts to determine whether there is good-faith planning. Hemperly, Port Chester and all the other cases cited on this point, all promulgate the “fluctuations” doctrine under other names (for example, the “actual attempt” test of Hemperly (p. 17) or the “legal interference” test of Port Chester (p. 17).

    ABSTENTION

    V. DEFENDANTS’ ALLEGATIONS DO NOT MEET THE COMITY TEST.

    The “comity” test of Younger and its progeny, is a fact-based test. As the Court states in Younger, when abstention is invoked the question is: does the party requesting abstention show “proper respect for state functions” or show “blind deference,” that is, does the party allege facts in favor of abstention? “Blind deference,” means, no allegation of fact. 401 US 37. It is up to the party requesting abstention to make the factual showing. Contradictory allegations with respect to facts, shows “blind deference” because there is no allegation of fact.

    The government asserts, with respect to plaintiff’s allegations, that they both are and are not facts. In the portion of his pleading relating to ripeness, the government alleges—not that, for purposes of ripeness, the “proceedings” the government mentions, are not facts—but that, simply, the “proceedings” are not facts. However, in the portion of its pleading relating to abstention, it alleges—not that, for purposes of abstention, the “proceedings” are facts—but that, simply, the “proceedings” are facts.

    The government is asking the Court to abstain on the grounds of the “proceedings,” in which case the threshold question the Court asks the government is this: are the “proceedings” facts?

    The government’s answer to the Court is that the “proceedings” both are and are not facts. Thus, Pataki does not allege facts. Since he does not allege facts, the Court cannot find in favor of abstention.

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