Thursday, September 5, 2013

Willets Point as the “new” 42nd Street: EDC Village Has a New Idiot

The mayor keeps finding these guys, and we are hoping that whoever takes his place will start looking for people to head economic development who don’t appear that they just emerged from an extended stay at Creedmoor. The latest genius is Kyle Kimball, EDC’s new leader, who managed to mangle history by the following distortion of the historical record:
The revitalization of Willets Point — the industrial Queens neighborhood that is set to undergo an extensive renovation — could help transform the neighborhood like the project that helped reclaim 42nd Street two decades ago, the president of the Economic Development Corporation said Tuesday.
While the finished neighborhood will be “very different” from Times Square, the redevelopment is being approached the same way, Kyle Kimball, the EDC president said while speaking at a public hearing at City Hall.”
Unfortunately for the hapless Mr. Kimball, what happened at Times Square bears no relationship to what the city is planning to do to Willets Point-and we were there at the time, but don’t take our word, listen to what William Stern has to say. Who’s he? Well, only the guy who was in charge of the original eminent domain-centered plan for 42nd Street:
By popular lore, the revival of Times Square ranks among the most celebrated achievements of New York City in recent years.  In the 1960s, 1970s and early 1980s, Times Square was sleazy, crime-ridden and so physically and economically blighted it represented a threat to public safety—but today it is nearly crime free.  It is filled with tourists, and world-class corporations dwell and prosper within its borders.  It is celebrated as a triumph of “urban planning,” “public-private partnership,” the wise use of the power of eminent domain, an example of the intelligent intervention of government into private real estate markets.
All of it is a myth.” 
Just like what is being planned for Willets Point-the Myth of Mike. But continue to listen to Stern set the record straight:
In 1983, when I went to work for Governor Mario Cuomo as chairman and chief executive of New York State’s Urban Development Corporation (UDC), I was convinced I knew how government planning could transform the Times Square I saw at that time to what it is today.  The truth is, however, almost none of the grandiose plans my colleagues and I created and aggressively spearheaded ever came to fruition.  Our extravagant plans actually retarded development.  The changes in Times Square occurred despitegovernment, not because of it.  Times Square succeeded for reasons that had little to do with our building and condemnation schemes and everything to do with government policy that allowed the market to do its work, the way development occurs every day nationwide.  By lowering taxes, enforcing the law, and getting out of the way instead of serving as real estate broker, the government incentivized investment and construction and encouraged the rebirth of Times Square to what it is today.
So, let’s not suffer from delusions being proffered by sleazy government bureaucrats with one eye and a leg out the door into the real estate industry-as did the late unlamented Seth Pinsky did just this year. As the Observer reported:
“The waning months of Mayor Bloomberg’s reign are expected to be marked by a series of high-powered departures, as one official after another jumps ship before the mayor leaves office. The latest is Bloomberg stalwart and Dan Doctoroff protégée Seth Pinsky, who is stepping down from the Economic Development Corporation to take a private sector gig with RXR Realty, as the agency announced today.”
But what the Observer article underscores is just how much the EDC has become a cat’s paw for big finance and big real estate: 
“Mr. Pinsky, who worked as an investment analyst and lawyer, refinancing real estate deals for the big banks as an associate at Cleary Gottlieb before leading the EDC…”
What Kimball is trying to do is pull the wool over the public’s eyes so the sheer level of unethical and criminal behavior by his quasi-public agency will remain unobserved. The fact tha EDC was forced by the NYS AG to completely restructure its corporate structure because of illegal lobbying was somehow unmentioned in his testimony-and no council member had the integrity to hold EDC to account for this.
Here’s what the state’s Urban Development Corporation under Stern had planned for the “deuce:”
Under my watch, the UDC gained approval to put in place one of the largest urban renewal projects nationwide, in the heart of midtown Manhattan no less.  Mayor Koch—who assumed office on the tail of a traumatic fiscal crisis—and Governor Cuomo enthusiastically supported it.  Although fierce, bitter rivals, both “saw political opportunity in the ragged morality of the notorious boulevard.  Each sensed the chance to create a higher national profile for himself as the moral savior of ‘the Deuce.’” 
And so the tumultuous collaboration began.
The 42nd Street Development Project would have made the emperors of Rome green with envy.  Its biggest component was to be Times Square Center:  four giant office towers, containing 4.1 million square feet of floor space in all, looming over Times Square’s southern border.  Offered a $240 million tax abatement, relatively unknown George Klein’s Park Tower Realty would develop the site.  
Upon being chosen, Klein had just completed only his third major building in New York City, raising many eyebrows as to why this newcomer would get this potentially (and enormously!) lucrative nod.”
Could it have been a little political insider trading? Heaven forbid-after all, Related and Sterling Equities got the Willets bid fair and square. Right? This couldn’t be part of a time honored NYC tradition of bid rigging?
Stern goes on the point out his growing disillusionment with the sleazy nature of the wielding of government condemnation power-and the self interested role of the NY Times (go figure!):
It was then that I began to see the negative implications of government-directed projects like this—the influence peddling, cronyism and corruption, especially when eminent domain is involved.  Using eminent domain for private development gives the private sector the opportunity to wield public power—which is more or less for sale—in order to benefit privately.  One of the more prominent yet untold players was The New York Times, a private company that was deeply involved in this public project.  As the newspaper of record in New York, they would naturally cover the project closely—but their involvement transcended journalistic scrutiny.”
What surprised me most was that nobody at the Times seemed to care that they were compromising their journalistic integrity by assuming the dual roles of political reporting and pure politicking when it came to 42nd Street.  Yes, the Square was named after the paper and the Times was the largest property owner in the project area, so it is understandable they were very interested in the government’s decisions.  Yet being interested and covering the story closely is different than assuming a decision-making role and assigning an editorial page executive to tell government officials what to do.”
Role of Eminent Domain

Here we get to the heart of Kimball’s misrepresentation. Yes, eminent domain was used-and abused-at 42nd Street, but it played no role in the revitalization:
In fact, about the only thing the plan accomplished was something it never needed to do in the first place—use eminent domain to take the property of private parties and give it to other private parties for the latter’s use.  From 1984 on, drawing on the UDC’s special condemnation powers, the redevelopment project began taking businesses in a purported attempt to cure “economic blight.”  
This condemnation binge kicked out businesses of all types and sizes.  To implement the project, the plan called for the demolition of 20 buildings and the displacement of 400 existing businesses, only a little more than 40 of which were adult bookstores or peep shows. In other words, although the sex businesses represented an economic drag on the area, our goal was to remove not only these establishments but all businesses that did not fit into the government’s master plan.”
While eminent domain may have made it easier two decades later to build (since the property was already condemned), the city lost far more than what it could ever gain from the lands’ new uses.  It destroyed legitimate local businesses that create the patchwork of unique attractions that bring tourists from across the country to any major city.  It delayed any resurgence of Times Square, as property owners and government officials remained in limbo and tax dollars were lost.  Our efforts ignored the root causes of the problems in Times Square, blinding us to any true cures and setting a dangerous precedent for future projects in New York City.  Property owners who were anticipating massive buy-outs as a result of the West Side’s upzoning were shocked when they learned this simply ushered in a plan that effectively wiped them out, with “fair” market value in place of negotiation.  
This unfair, unjust and unconstitutional treatment led to ten years of legal challenges.  What’s worse, none of the developers we condemned property for ever realized our collective vision.”
What a criminal farce. But here is Stern’s money quote about how the use of eminent domain invites corruption-and his words were prescient given the sleaziness surrounding the Willets Point development:
When government is given the power to take property from one private owner and give it to another, an inevitable and very ugly political process begins.  Instead of competing in a marketplace where outcomes are determined by who has the best innovative ideas, strong financing, creative marketing and capable management, developers compete for political influence.  In order to be anointed by government or protect their property from being taken, they hire anyone who has political influence or is remotely perceived to have influence:  law firms, public relations firms, lobbyists, political consultants, etc.  They attempt to cultivate the media, knowing that the media influences politicians.  The use of condemnation on 42nd Street provided a commercial opportunity of enormous proportions for political insiders. “
The Willets West deal is a corrupt example of corporate welfare and crony capitalism-demonstrating in ironic fashion how the development of the deuce mirrors that of Willets Point (although we don’t believe that irony is Kimball’s strong suit). Stern deserves the last word:

Looking back now at this giant redevelopment, I am glad the area has come back and that children can enjoy Times Squares as I did in my childhood.  But we do these children a disservice if we perpetuate the myth—the lie—that the Times Square of today resulted from the massive government failure my colleagues, the New York Times and I foisted upon the citizens of my city.  The lesson they should learn, indeed the lesson all of our civic leaders should learn, is that the right way for governments to pursue economic development is to fulfill their core responsibilities of protecting safety and freedom and allow the market to work as it did in creating the world’s most famous square in the world’s premier city.”