Atlantic Yards, Shadow Government, and Albany Frozen in Amber
October 14th. The big chill was early, even for Albany. A press conference was being held in the park across from the New York Court of Appeals. The highest court in the state was set to hear Goldstein et al v. New York State Urban Development Corporation. The press conference speakers and their supporters were primarily Brooklynites up from The City. Veterans of the Atlantic Yards wars. Folks who've attended numerous court proceedings, marched in myriad demonstrations, and organized countless fund-raisers in a six year effort to keep their homes, businesses, and neighborhoods from being crushed by Atlantic Yards, the dream baby of mega developer Forest City Ratner. Eminent domain abuse is the heart of the matter.
“Goldstein” challenges the use of eminent domain within the Atlantic Yards footprint. Dan Goldstein, whose name graces the case, is one of the founders of Develop Don't Destroy Brooklyn (DDDB), a coalition of 21 community organizations supported by thousands of donors. I live near Albany. Until the day of the hearing I'd never met Dan in person. But I've followed the Atlantic Yards situation since 2005, starting around the time the U.S. Supreme Court made its infamous decision re Kelo v. City of New London -- the Connecticut case that opened the nation's eyes to growing misuse of eminent domain.
Eminent domain is government's constitutional right to seize private property in the name of “public use”. Owners must receive fair recompense. (Though being forced to sell does tend to push fairness downward.) In the past, eminent domain cleared the way for public facilities such as hospitals, bridges, and schools. At times it was used for corrupt land grabs. By the beginning of this century abuse was the norm, largely because the interpretation of “public use” had been stretched to cover private development. A typical rationale is that projects will ultimately deliver more tax revenues and create more jobs than existing homes and communities.
For pols, projected birds in the bush are worth more than ones in the hand.
The Atlantic Yards project was officially announced in 2003. Though plans went through changes as the real estate and credit markets waned, Atlantic Yards is essentially envisioned as 22 acres of high rise set amidst the low built neighborhoods of downtown Brooklyn. It includes a sports arena for the New Jersey Nets (owned by Bruce Ratner, CEO of Forest City Ratner) commercial spaces, luxury condos at NYC market rates, and a far smaller number of “affordable” units subsidized by the U.S. Department of Housing and Economic Development (HUD). The number of cheap slots keeps shrinking. HUD subs aren't assured. Much of “affordable” Atlantic Yards will be done under the aegis of the Association of Community Organizers for Reform Now. Aka ACORN. Yup, the same ACORN whose Brooklyn offices were featured in those notorious videos-- the ones where ACORN staffers give tips on how to commit housing fraud to undercover reporters posing as a garish pimp and rather wholesome hooker.
By the by, those who think only right-wing vid kids revile ACORN are wrong. Many NYC lefties do likewise. ACORN has a history of supporting development projects that roll over low income and/or minority communities with eminent domain. They also have a rep for cutting self-serving deals with developers.
ACORN's participation in Atlantic Yards provides the astro turf cover Forest City Ratner needs to qualify for government largesses. The Ratner/Acorn relationship is mutually beneficial. In mid 2008, Ratner gifted ACORN with a package of grants and low interest loans worth $1.5 million. The assistance couldn't have come at a better time; ACORN was having fund-raising problems due to a New York Times article about the group covering up a $1 million embezzlement by ACORN biggie Dale Rathke.
Note to collectors of funny ACORN stuff: the photo of developer Bruce Ratner wearing an ACORN t-shirt, throwing his hands in the air, and marching side by side with ACORN president Bertha Lewis in a demonstration, is right up there on the laff meter with the clown-pimp and hooker vids.
ACORN is only one Ratner pal. Atlantic Yards has been pushed by three different governors (Pataki, Spitzer, and Paterson) U.S. Senator Chuck Schumer, NYC Mayor-For-Life Michael Bloomberg (oops, he rescinded his support for term limits) and Brooklyn Borough President Marty Markowitz. The result has been tax deals, overrides of local laws, massive public subsidies direct and indirect, and eminent domain. Earlier this year there was talk of using federal stimulus funds to keep Ratner afloat.
Much of what moves Atlantic Yards flows through the New York State Urban Development Corporation. Godzilla member of the state's Shadow Government. Defined by the New York Times as “the 800 or so quasi-private authorities that run everything from the housing projects to the New York City subways.”* Though the quasi-private authorities wield government power, they aren't subject to the same public oversight or level of transparency as actual government agencies.
The Urban Development Corporation (UDC) does business as the Empire State Development Corporation (ESD or ESDC). The UDC/ESD dispenses billions in public money, overrides local land-use and zoning laws, saddles taxpayers with bonded debt sans legislative or voter approval, and has the power of eminent domain. Its mission is to help pols and players circumvent the messy tangles and wrangles of representative government that can block them from doing visionary things. If done through the ESD or any of its gazillion subsidiaries, those visionary things are protected from the public by layers of impenetrable poop.
When Goldstein et al v. Urban Development Corp. was heard in the Court of Appeals, lawyers from the ESD appeared on behalf of Forest City Ratner, arguing that the quasi-private ESD has the right to use the government power of eminent domain to advance a private developer's interest. If the court rules in favor of Goldstein, it will establish a precedent that would limit abuse of eminent domain in New York State. Supporters of the status quo say that if eminent domain for private development is curtailed, economic development all over the state will falter. The without-land-grabs-we're-doomed mantra helps keep New York among the worst states in the nation for eminent domain abuse.
Of course, nothing discourages development more than an absence of reliable property rights...
Note to collectors of funny UDC/ESD stuff: on the same day ESD lawyers were defending the interests of Bruce Ratner in court, the Albany Times Union ran a story about the ESD awarding $4 million to Chaim Ausch, a Brooklyn-based investor and diamond merchant doing business in Albany as C&Y Albany Hotel LLC. The ESD gave Ausch millions even though he owes $615, 000 in city taxes, school taxes, sewer and water bills, and assorted fees and penalties! How Ripleys' is that?
Ausch owns the DeWitt Clinton, a gone-down deluxe hotel near the capital building in downtown Albany. The $4 million ESD funding is intended to help restore the Dewitt as luxury hotel. Initially a loan, the money becomes a grant if Ausch creates 75 jobs. Ausch bought the DeWitt in 2006 as See Why Gerard LLC. The name may refer to a prior business address in the Bronx. Ausch evicted the DeWitt's 122 subsidized tenants, a mix of the disabled (including substance abusers) and the elderly. (Putting able-bodied addicts and old people into the same housing is an upstate HUD special.) Ausch also tried unsuccessfully to roust an on-site banquet hall. The proprietor has a long term lease. In 2007, Ausch aka See Why Gerard filed for bankruptcy, supposedly in an attempt to nullify the lease. He reemerged as C&Y Albany Hotel LLC.
According to ESD chairman Dennis Mullen, the review process of Ausch was “very arduous.”** Albany Mayor Jerry Jennings stands firmly behind Ausch. Chaim Ausch as See Why Gerard and another related entity, C&Y Atlantic, has stood firmly behind Jennings with campaign contributions. Ausch's attorney says the unpaid sewer and water bills were the result of clerical error and all outstanding bills will now be paid. If the paybacks were made with ESD funds, taxpayer Peter would be paying off taxpayer Paul. With the pay-offs flowing through the quasi-private ESD. However, on the day the Times Union article appeared Chairman Dennis Mullen announced the ESD had been unaware of Ausch's debts (guess the arduous review didn't include public records) and that Ausch won't get a penny of state cash until the taxes etc. are paid.
Whew. After Ausch pays, the tax deadbeat thing won't be held against him. Nor does the ESD seem concerned about his bankruptcy filing. Maybe 'cause Ausch only did it as a ploy to break a contract.
Incidentally, in 2003, HUD got stuck with $3.4 million in dud DeWitt mortgages when the hotel's former owners, DeWitt Clinton Associates, stopped making payments.*** By 2005 HUD was set to auction off the DeWitt. But Chaim Ausch stepped in and saved it from possible short sale with a $4.1 million mortgage from the State Employees Federal Credit Union (SEFCU).
A friend from Jersey recently asked me why I hadn't been writing about Albany of late. Meaning Albany as the symbol of state government. Saying “has Governor Paterson cleaned up all the corruption?” After I stopped laughing I wrote back “I've become so cynical, disgusted and bored with politics at the state level (Albany in the broader sense) as well as Albany the city, that I have absolutely nothing to say. Why bother? I see no game changers on the horizon. The political situation is frozen in amber...”
I know. I was being too gloomster. No system, no matter how calcified, is immune to change. Tiny almost imperceptible cracks appear then suddenly split wide open. Think of the Soviet Union.
Meanwhile, back in Brooklyn, Atlantic Yards rages on. The court decision re eminent domain abuse in the UDC/Ratner footprint is expected by Thanksgiving. Whatever the outcome, folks in and around Develop Don't Destroy Brooklyn will keep fighting. Their never-say-die is an inspiration...
Carola Von Hoffmannstahl-Solomonoff
*New York's Shadow Government, New York Times, 08/18/09
**Despite debt, grand hotel plans, Chris Churchill, Albany Times Union, 10/14/09
***"DeWitt Clinton finds a buyer; $5.3M sale of Albany landmark brings few details, eviction notice, " Brian Nearing, Albany Times Union, 04/11/06
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