There was a time when politicians and civic groups would beat up on guys who wanted to build sports facilities in New York, supporting a rival’s plan for apartment houses—affordable ones! popular with voters!—even if the rival had no real-estate experience whatsoever (and a political ax to grind).
That was back in February.
Now a guy steps forth to defeat a stadium plan who is also an experienced real-estate man toting a portfolio of 26 buildings, and he still can’t get no respect.
This time around, the sports fan, Bruce Ratner, is offering the Metropolitan Transportation Authority $50 million for land on which to build a stadium and a cluster of retail and residential buildings. The rival bidder, Gary Barnett, wants to buy the same land for $150 million—and he’s not building a stadium.
Follow the money, right? But the choice, which the board of directors could make as early as this morning, is harder than it might seem.
No one really knows much about this season’s rival, Gary Barnett. He’s not part of the cozy New York City developers’ club, where you avoid overt fisticuffs by making back-room deals. Nor is he someone to fool around with.
About five years ago, Mr. Barnett entered a contract to develop a parking lot off of Times Square. When the land was about to be seized by the Empire State Development Corporation to make way for the new New York Times tower—which was to be created by none other than Bruce Ratner—Mr. Barnett ended up bankrolling the parking-lot owner’s lawsuit. He, and the parking lot owner, lost. Just wait till next year!
So is Mr. Barnett bidding on Vanderbilt Yard, the eight-acre M.T.A. parcel in Central Brooklyn, just because it’s payback time? Is he just another James Dolan, the Cablevision C.E.O. who bankrolled the opposition fight on the West Side stadium and who, when it looked like he was losing, decided to bid on the land himself and proposed a housing-and-office complex for the site? That’s the $100 million question.
Then again, who else but a lone wolf would dare upset the apple cart of prearranged subsidies and Mayoral endorsements to actually respond to the M.T.A.’s request for proposals? No one else bothered.
The Expert Upstart
Newspapers have taken to calling Mr. Barnett an upstart, or an unknown, but he’s actually been working in real estate for about 15 years, first as an investor and more recently as a developer. Previously known as Gershon Barnett—and, before that, as Gershon Swiatycki, according to court papers—Mr. Barnett bought and sold diamonds for several years before starting a property investment company. Extell, which was called Intell until a year ago, started out investing in the Midwest in the early 1990’s. (Mr. Barnett, through a spokesman, declined a request for an interview.)
He bought and sold the former Enron headquarters in Houston, started a hotel- condominium complex on Boston Harbor, and did a 1.5 million-square-foot renovation in downtown Chicago.
He owns 19 properties in New York, all of them conversions or renovations, aside from the W Times Square Hotel, which he built back when it was the Planet Hollywood Hotel. Mr. Barnett was half of the team, along with the Carlyle Group, that recently bought 77 acres of land and three buildings from Donald Trump and his partners. And it was his contractor, preparing the site for a 31-story tower, that was demolishing a supermarket on upper Broadway when it collapsed on July 14, just in time to give him bad P.R. for his fast moves in Brooklyn.
“The difference between him and other New York City developers is that his is a very quiet company,” said Nancy Ruddy, president of Cetra/Ruddy Architects, the firm designing the Vanderbilt Yard plan and several other Extell projects, including the 550-unit Orion on West 42nd Street and the co-op conversion of the Stanhope Hotel across from the Metropolitan Museum of Art. “He hasn’t wanted the publicity of certain developers who want to be in the papers. He prefers to operate quietly. He’s a very genteel, soft-spoken person.”
It’s pretty hard to operate quietly when you enlist the Carlyle Group to buy out Trump, isn’t it?
On the other hand, what developer would agree to personally appear before a community board and endure three hours of verbal abuse from that peculiar New York species known as the irate neighbor? And yet he did.
On June 15, Mr. Barnett strode into the Community Board 7 meeting in the basement of an Upper West Side synagogue. The gathering was standing-room-only, bringing out typically less-active members of the community who saw the flyers pasted up and down Broadway. Concerned residents wanted to find out what was happening in their backyard. Following a PowerPoint presentation, which included a quick peek at the renderings of two 30-plus-story condominiums, the dark-haired, bespectacled developer addressed the irate crowd wearing a fine dark suit, according to audience members.
This wasn’t Brooklyn, where well-heeled activists would welcome Extell’s proposed 28-story buildings. The residents living near 100th Street and Broadway can’t stand the idea of a couple of towers just a few stories higher. They’ve formed groups called Stop Extell and Westsiders for Responsible Development. Mr. Barnett’s critics often cited increased traffic, the height of the buildings and an influx of a wealthier demographic that may drive out local businesses as reasons to stop the proposal—all the things, by the way, that Mr. Barnett’s allies in Brooklyn complain about in Mr. Ratner’s plan.
“When they went through the presentation, people were stunned,” said Toni Cindrich, an Upper West Side resident who turned into an activist four days after the meeting. “When the architect’s renderings were projected on the screen, there was an audible gasp. People could not believe it.”
But Mr. Barnett and company left the synagogue unscathed, and—despite the Gristedes collapse one month later—he still plans to go forward with the luxury development. Unlike in Brooklyn, Mr. Barnett already owns that property on the Upper West Side, and he can build that high as of right.
The array of civic groups and government watchdogs that came out against the Jets stadium earlier this year have been a lot quieter about the arena in Brooklyn. In large part, that’s because Mr. Ratner is proposing the type of feel-good development that earned Cablevision such civic accolades. Affordable housing? Check. Mixed-use? Check. And all right near a busy transit hub that just got renovated and would have to be renovated yet again? Jackhammers are music to these people’s ears.
Forest City spent months negotiating agreements with local groups that promise jobs to minority-owned firms, as well as a training program and a housing scheme for low- and middle-income folks.
“Forest City has been very clever at gaining community support,” said Gene Russianoff, staff attorney for the Straphangers Campaign, a transit advocacy group that opposed the West Side stadium. “With the Jets, there wasn’t even an attempt at outreach.”
Indeed, though Forest City Ratner gained Mayor Bloomberg’s support, Hizzoner hasn’t stumped for Mr. Ratner’s project nearly as much as he did for the Jets stadium. Mr. Ratner’s support is more grassroots. Instead of Mike, he got Marty Markowitz, Brooklyn’s teddy bear of a borough president, who can’t pass up a Junior’s cheesecake because eating one just might generate another job. Mr. Ratner also got 15 other elected officials, from Senator Chuck Schumer on down, to write letters of support that were included in the bid book submitted to the M.T.A.
Some of these supporters even wrote identical letters.
“Although the benefits to Brooklyn will be enormous, we shouldn’t lose sight of the tremendous state- and city-wide benefits this project will provide.” So saith Senator Schumer, Representative Edolphus Towns, Assemblymen Roger Green and Joseph Lentol, State Senator Carl Andrews, and City Council members Lewis Fidler and Bill deBlasio.
Where’s the Beef?
Forest City has claimed that its bid actually represents $329.4 million in revenue for the M.T.A. But that includes not just the $50 million in cash, but all the money that Forest City will spend on cleaning up the land, moving and covering the rail yards, and creating open space—and also an estimate of the portion of sales taxes from all the money spent at the shops at Atlantic Yards that will go to the transit agency.
Extell’s bid also represents much more than the $150 million in cash. Mr. Barnett pledges to maintain the new rail yards and abide by all other requirements set down by the M.T.A. He predicts that he can move and cover the rail yards for $150 million—which seems unrealistically low compared to Forest City’s plan, which sets aside $281 million for the effort. Then again, the M.T.A.’s own appraiser thinks it can be done for a mere $57 million. Mr. Ratner’s supporters point to Extell’s lack of specificity as a weakness—though Mr. Barnett had just six weeks, instead of a year and a half, to work up his bid and garner community support.
Mr. Barnett subscribes to the 33 principles of development adopted by a coalition of community groups headed by Develop—Don’t Destroy Brooklyn. These principles include certain items, like limiting the height of the buildings and forbidding the use of eminent domain, that Forest City Ratner expressly violates. Mr. Barnett also subscribes to certain elements, such as hiring minority- and women-owned firms and providing job training and affordable housing, which are considered the pluses of Forest City’s plan—although his offer is neither as specific nor as extensive as the agreements that Forest City put together over the past 18 months.
Mr. Barnett also tells the M.T.A. in his bid that he hasn’t had time to do an economic-impact analysis. No matter what the results of that analysis show, however, it’s hard to imagine that it would generate more tax revenues than the $2.1 billion that Mr. Ratner is claiming his project will earn over the next 30 years. Forest City’s plan is simply bigger than Extell’s, which means more jobs, more housing and more tax revenue.
To Mr. Ratner’s supporters in Brooklyn, Extell’s plan looks pretty wimpy.
“The reduced amount of opportunity is unacceptable,” said Marie Louis, vice president of Brooklyn United for Innovative Local Development, or BUILD, a group that came together a year and a half ago to support the Forest City project. “We can’t afford to trade 2,250 units of affordable housing for 573. We can’t afford to trade 15,000 jobs to less than a third of that from Extell. You can’t see that when you’re a member of a household with a $100,000 income.”