Billions for Brooklyn—No Questions Asked

The Borough’s New Power Brokers

A half-century ago, Robert Moses audaciously promised that his plans for a downtown Civic Center would be "to Brooklyn what the great cathedrals and opera plazas are to European cities." Today, the borough’s leading developers’ promises are just as inflated, with visions of Flatbush Avenue as Brooklyn’s Champs Elysées and the arch at Grand Army Plaza as its Arc de Triomphe. If the specifics are actually a bit less grand, the sum of the developers’ plans is no less far reaching.


On the Brooklyn waterfront, a $150 million Brooklyn Bridge Park is under construction, with plans for recreational, commercial, and cultural installations. At MetroTech Center, the last office tower in the more than one billion-dollar development is going up. Just down the street in Fort Greene, the 15-story Atlantic Terminal retail and office tower complex soon will be home to everyone from Target and the Gap to the Bank of New York and Starbucks. And across downtown, while the Brooklyn Law School is building dorms and the Brooklyn Marriott is expanding, and lofts are going up in DUMBO and mixed-use commercial/residential space is under construction on the edges of Cobble Hill, major corporations are working to pave the way for even more development.


That downtown Brooklyn should be an exciting 24-hour community with activities ranging from the commercial to the cultural, educational, and recreational, has become a mantra among the borough’s boosters. With downtown Brooklyn already the third-largest central business district in New York, after Midtown and lower Manhattan, some envision a cohesive area eventually stretching from the waterfront to Grand Army Plaza, almost three miles away.


In effect, the greatest attempt to reshape Brooklyn since Robert Moses slashed and built through the borough in the 1940s and 1950s is well underway. Nevertheless, there has been almost no public debate about the projects proposed and their likely effects. Billions of dollars in not just private but public development money are flooding Brooklyn’s central business district. Significant construction has already begun with little thought about alternative uses for the money or the land being used, or for the cumulative effect of all the development. Observed in isolation, these projects seem to be a hodge-podge of large and small development efforts aimed at creating dance theaters and Grade A commercial office space. Taken together, the projects constitute an enormous, intersecting attempt to transform a large swath of Brooklyn.


A constellation of downtown Brooklyn’s corporate, university, and cultural institution elites are marshaling sophisticated and seemingly selfless promotional campaigns about the inherent good of each project— think Green Space! Culture! Development itself! Rather than a selfless commitment to Brooklyn’s future, though, the borough’s new power brokers are driven by primarily self-interested goals—i.e. profit making—with little regard to the damage—i.e. displacement-heavy gentrification—that their projects are likely to have on communities already existing downtown or nearby.


Business Boosters


One person eminently concerned about all the development taking place—and not taking place—in and around downtown Brooklyn is Robert Catell, CEO of KeySpan Energy. Catell is chair of the Downtown Brooklyn Council (DBC), a two-year-old advocacy organization that is part of the Brooklyn Chamber of Commerce.


Apparently the one Chamber of Commerce was not enough to represent Brooklyn’s business interests. A powerful group of elites in downtown Brooklyn decided they needed a focused development lobby—hence, the DBC—to attract new companies to the area and to promote downtown as an alternative to Manhattan and the New Jersey waterfront. Along with Catell and KeySpan, the Council is backed by executives from the area’s major players, including J.P. MorganChase, Citibank, Verizon, ConEdison, Forest City Ratner, Polytechnic University, and the Brooklyn Academy of Music.


These backers follow in a long tradition of area business leaders collaborating as development boosters for downtown Brooklyn. "It all started back in 1966," wrote Brooklyn’s Phoenix a decade later, "when a few of Brooklyn’s downtown business leaders, distressed about what they saw as the inevitable future 10 to 15 years away, began to talk about taking a hand in making the future they wanted to see happen." The president of KeySpan’s predecessor, Brooklyn Union Gas (BUG), was the catalyst for the creation of the Council’s predecessor, the Downtown Brooklyn Development Committee (later the Downtown Brooklyn Development Association). Not coincidentally, the older group consisted of Catell and the company’s corporate forefathers from, among others, Dime Savings Bank, South Brooklyn Savings Bank, Kings Lafayette Bank, New York Telephone Company, and retailer Abraham & Straus.


As the chair of Dime Bank said at the time, "The key to our success… was that we had the top people involved in the process. We put the right people together, and they made the City officials we had to work with take us seriously right from the beginning."


Today the descendants of these executives are working with (and lobbying) City officials to shape the future of downtown Brooklyn to their liking. "We want to work with the City and developers," explained Catell in the pages of Crain’s New York Business, "to do outreach to prospective tenants and work on incentive packages."


The DBC is especially concerned that available commercial and office space is running out in downtown Brooklyn. The Council wants to open new opportunities for development that would attract new business to the area. Central to that goal is a major effort to lobby the city to rezone large parts of downtown in order to allow for larger construction projects than current zoning permits. If the changes are approved by the City, the new zoning would allow for 12 million additional square feet of construction. This 9 million square feet of commercial space and 3 million of residential space would be a major new phase of downtown development, adding to the major projects already fully in motion.


The Developer


Two permanent full moons glow above downtown Brooklyn, each visible for miles around on a clear night. One is the luminescent white logo of J.P. MorganChase, a hovering octagon suspended in the sky atop Morgan-Chase’s hulking building at 4 MetroTech Center. The other is the glowing red clock tower atop the 74-year-old Williamsburg Savings Bank building, the tallest in Brooklyn.


One developer will soon be able to take credit for building MorganChase, as well as all of Metrotech, and for altering the profile of Williamsburg Savings. That developer, Bruce Ratner, has acquired quite a taste for development in downtown Brooklyn over the past two decades.


Entering real estate development from scratch, Ratner started out with the heavy backing of his family’s now $4.7 billion nationwide real estate development company, Forest City Enterprises. Working as an affiliate, Ratner’s Forest City Ratner Companies quickly became the biggest developer in Brooklyn and one of the largest around the city. Within a decade of its founding, Forest City’s building of MetroTech became New York’s second-largest office development project (after the World Trade Center).


Ratner’s rise owed to more than just his family’s deep pockets. Formerly Commissioner of Consumer Affairs under Ed Koch, Ratner soon parlayed his insider connections into major government backing for his projects. To build the billion dollar-plus MetroTech, city, state, and federal entities gave a range of subsidies to Forest City Ratner as well as to tenants like Chase, Bear Stearns, and KeySpan. By the mid-1990s, the numbers totaled at least $329 million.


If MetroTech represents the recent past for Ratner and Brooklyn, then Atlantic Terminal—just seven blocks down Flatbush Avenue—represents part of the future. At the spot where two self-jacking cranes now rise 160 feet above the Terminal, Ratner has started construction on a $120 million retail complex. A decade after Ratner built the subsidy-laden Atlantic Center mall across the street, Atlantic Terminal now targets the higher-income shoppers who moved to the area during the gentrified ’90s. This time it’s Gap instead of Old Navy and hip Target rather than Pathmark, as well as Starbucks, Victoria’s Secret, Outback Steakhouse, and other mainstream chains.


When the five-story mall is completed (expected opening March 2004), construction will not stop there. Ratner will build an additional $120 million 10-story tower on top of the retail complex, with the Bank of New York taking 8 floors for back-office employees and equipment. All told, the new structure will rise 287 feet above the streets of Fort Greene. At a height rivaling the clock tower on the Williamsburg Savings Bank building, Atlantic Terminal will, in the words of one Forest City Ratner representative, "gesture deferentially" to the landmark (many Fort Greene residents, of course, interpret it as a rather different sort of gesture).


How has Ratner pulled this off? One way is that he has again convinced government to play a yeoman’s role. As usual, he will be able to offer a public-sponsored goodie bag of economic incentives to prospective tenants. And who do you think was named as the first recipient of a commercial bond in the post-9/11 Liberty Bond program aimed at stimulating rebuilding in New York? Ratner, of course. Which for him means all-important low-cost tax-exempt bond financing to the tune of $114 million (covering fully 95 percent of estimated development costs), all at the expense of federal, state, and city taxpayers.


Manufacturing Consent (and Profit)


"A multicultural mixed-use arts district is great for Brooklyn and New York City," read the PowerPoint text at the front of the hall. "We are all pioneers together," exclaimed John Alschuler, partner in the prominent design and planning firm Hamilton, Rabinowitz & Alschuler (HR&A). "Dialogue" is what keeps this process going, he continued.


If this vapid rhetoric almost puts you to sleep, do not be surprised. Alschuler made this presentation to a crowd of somewhat skeptical Brooklynites as official representative of the Brooklyn Academy of Music Local Development Corporation (BAM LDC). The LDC hopes to create a "BAM Cultural District" in Fort Greene. It hired Alschuler and HR&A to do its planning and to lead three "planning workshops," beneficently allowing the public to participate in the development of the district.


In addition to their work on BAM’s cultural district, Alschuler and HR&A are also shepherding planning and public presentations for the Brooklyn Bridge Park Development Corporation’s (BBPDC) $150 million waterfront project. The Marino Organization is likewise the public relations firm for both projects, and the overlaps are even greater: Just as BAM prominently trumpets the unquestionable public good of culture and the arts, so too does the BBPDC highlight the public good of park space and the environment as justification for its receiving public funding and support.


Upon closer inspection, however, one finds that both projects have other more troubling goals. Both projects are far more commercial than simply "cultural" or "environmental." With BAM, it is hard to see how loft housing, retail stores, restaurants, and a boutique hotel planned as a major part of the district can be accurately described as "cultural." Similarly, while the BBPDC’s promotional material focuses attention on "providing recreational, cultural, and educational opportunities," a significant part of the park will be reserved for a 409-room, $235-a-night hotel; a 240-seat restaurant; 83 market-rate luxury rentals; retail space; cafes; and a whole lot more, all designed to make the park "self-sustaining." (Apparently this is what it takes to build a park these days.) More importantly, the hundreds of millions in heavily subsidized development in both projects are likely to be a payday for developers while boosting nearby property values and the value of other development projects in and around downtown Brooklyn.

"Enlightened Self-Interest": Development and Gentrification Converge


The BAM Cultural District and the Brooklyn Bridge Park could also help to gentrify even more of downtown Brooklyn and its surrounding neighborhoods. According to urban geographer Neil Smith, "gentrification is no longer simply a housing strategy" to sell lofts to yuppies. Gentrification, he says, is the complete transformation of neighborhoods into places largely dedicated to middle and upper-class shopping.


"More than rehabilitated mews and refurbished flats," Smith maintains, "gentrification increasingly implies new restaurants and shopping malls in the central city, waterfront parks and movie theaters, brand name office towers alongside brand name museums, tourist destinations of all sorts, cultural complexes—in short, a range of mega-developments in the central and inner urban landscape."


Which is of course exactly what is planned for downtown Brooklyn—albeit in a messy, piecemeal process. There is, as much as I may have wanted to find one, no singly organized conspiracy among the downtown elites to transform Brooklyn by gentrifying it, one mega-project to the next, from the Brooklyn Bridge Park to BAM and beyond. There is, however, a common recognition among members of the business elite that gentrification serves their interests by bringing more affluent residents—that is, potential charge-card-laden customers—to live in and around neighborhoods downtown.


As many of the new power brokers know, culture and parks have become two of several possible "anchoring" strategies for this multifaceted gentrification. Bruce Ratner sees culture as an anchor, and speaks of gentrification euphemistically. The Chicago Sun-Times reported back in 1992 that "Ratner believes that the arts… are a tremendous boon to real estate." By this he meant "especially small scale operations like theaters and galleries that tend to have a particularly strong anchoring effect on off-center neighborhoods."


It should be no surprise, then, that Ratner is at the center of BAM’s plans for a Cultural District in the slightly off-center neighborhood of Fort Greene. Ratner’s developments at MetroTech, Atlantic Center, and Atlantic Terminal encircle BAM’s proposed district. Ratner is also the former chairperson of the board of directors at BAM and is still a member of the board of both BAM and the LDC. Conveniently, Ratner also controls development rights to the first land set for development in the Cultural District. Judging from the billions he has already invested in and around Fort Greene as well as his control over future development, one can easily see how Ratner stands to gain the most from BAM’s plans being fulfilled: his investments would prosper as gentrification continues in and around Fort Greene. As he said, culture can be a "tremendous boon," indeed.


Ratner’s Future in Fort Greene


A high-ranking Forest City Ratner executive recently explained to me that the future is "very logical": "MetroTech is an anchor. Atlantic Terminal is an anchor." With this combination of office and retail space and transportation linking the rest of the city, there lies an "opportunity for residential growth in between."


Such residential growth would be perfect news to many in Fort Greene (and around the city) who have been clamoring for more affordable housing as one anecdote to displacement. Except that if Forest City is building on its BAM site (and I cannot see Ratner giving up the city-designated development rights), market rate rather than affordable housing will carry the day—and with it, the likelihood of higher housing prices and further gentrification in the neighborhood will greatly increase.


Bruce Ratner has said as much to people in Fort Greene, pointing to his company’s experience with Atlantic Center. A decade ago Forest City had the opportunity to build the affordable housing component for the Atlantic Center mall. Forest City passed, leaving the housing to another developer. The reason, then as now, is quite simple: At a maximum of ten percent, the profit margins on building affordable housing are simply too low to entice most private developers.


It is surely not a coincidence that KeySpan (and before it, BUG) has partnered with Ratner so frequently. With its need to ensure a steady supply of Brooklyn gas customers, the company has been at the center of downtown redevelopment plans since at least 1966. BUG’s role in founding the early Downtown Brooklyn Development Committee was not simply an act of beneficent civic mindedness. Nor is the decades-old Cinderella program it initiated in order to rehabilitate residential units and blocks around BAM.


In a moment of corporate honesty a decade ago, Robert Catell explained BUG’s interest in helping to establish a fund (with Ratner and others) to aid BAM. BAM "is good for the quality of life in Brooklyn," Catell explained. It was, "a matter of enlightened self-interest to help provide the amenities that will attract businesses and people to this community. The payoff of community development is more customers." Or perhaps what he really meant was, more affluent customers—which is just another way to say gentrification.


Whose Interests Matter?


The point is not that development or new amenities are automatically evil. Development can obviously provide jobs, repair broken streetscapes, and bring what can be enriching cultural, educational, and recreational resources to residents of neighborhoods like Fort Greene. But if self-interest is driving so much of the development going on in and around downtown Brooklyn, we should not be deceived by claims that such projects are purely serving the public good. Poor people of color and others are much more likely to suffer than benefit from gentrification, and they are the people who stand to lose the most when public funds serve the interests of developers, corporations, and powerful non-profits.


Most pointedly, with gentrification pushing so many residents out of neighborhoods already, affordable housing so scarce, and homelessness reaching new heights in New York, why are we investing such large public subsidies and offering support to projects that are likely only to exacerbate those very problems? Why are we supporting and helping to finance projects that will build loft housing and boutique hotels, when we could be investing in truly affordable housing aimed at people with low and moderate incomes?


Developers and the downtown elite will answer that their interest is the public interest. They will say that their development projects create jobs and prevent the departure of businesses from Brooklyn. Yet an examination of Metro-Tech by Long Island University’s Jan Rosenberg has shown that the more than $1 billion in development and the hundreds of millions in subsidies have created few new jobs and probably hurt, not helped, what has remained the poorest part of Fort Greene, located across from the complex.


Brooklyn’s new power brokers will argue that they support affordable housing, and, as Ratner recently said, housing for "a spectrum" of income levels. Yet at an Economic Development Summit in Brooklyn this past November, Ratner pointed to DUMBO—not exactly a shining example of a mixed-income community (unless you count rapidly disappearing illegal conversions)—as an "indicator" that it is "now time" for residential development in downtown Brooklyn. With DUMBO as his model, not to mention his resistance to building affordable housing in the first place, we should not be surprised if Ratner’s housing "spectrum" doesn’t dip so low after all.


Meanwhile, the Downtown Brooklyn Council, BAM, and others have likewise offered only vague promises about supporting affordable and mixed-income housing. The only guarantees when it comes to development lie in the usual incentive packages and tax breaks handed out by the City to developers and corporations. Waved left and right, promises to support affordable housing and mixed-income developments are in danger of becoming an even emptier rhetorical tool for justifying development other than culture and park space. The words will placate communities in their development proposals, but with ultimate decisions left to developers like Ratner, whose interests and profit margins will clearly dictate against it, affordable housing will evaporate as quickly as MetroTech’s promises of jobs for Fort Greene.


Building affordable housing and preventing further gentrification cannot be left to vague promises and lofty hopes. If it is going to get built, affordable housing must become a hard obligation: as a requirement of developers and corporations in exchange for subsidies; as a city funding priority more important than culture, parks, and Grade A office space; and, finally, as a central part of the set of badly-needed guidelines governing development throughout downtown Brooklyn. To be successful, such guidelines must not leave affordable housing construction to chance or rely on the self-interest of downtown’s power elite.

Contributor

David Vine

David Vine is a contributing writer for the Rail.

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