"The Yankees’ $700,000 Play: ‘It Is Not A Shakedown.’" in The Observer, 4/10/6

The Yankees’ $700,000 Play: ‘It Is Not A Shakedown.’

By Matthew Schuerman

Back in the late 1980’s, developers of controversial projects were so desperate to get into the good graces of the locals they bought off local chambers of commerce, senior centers and neighborhood groups, writing out fat checks to get their endorsements.

Remember when the Alexander’s department-store chain and the Kravco real-estate company offered $250,000 to the mysterious Forest Hills Chamber of Commerce? They wanted to build a shopping mall in nearby Rego Park.

Condemned as shakedowns, those practices largely died out when they were hauled before the public in the press.

Who better to bring back the good times than New York’s great 1980’s mogul, George Steinbrenner?

The Yankees, courting support in the City Council for a new stadium, have proposed giving $700,000 a year to be divvied up by “an individual of prominence” to “Bronx resident not-for-profit institutions,” according to a draft of a side agreement between the team and elected officials from the borough.

The stadium deal, which would give the Yankees more than $200 million in state and city grants and many years of tax-free living, is likely to sail through the City Council when it comes up for a vote April 5.

But the arrangement smells like a shakedown to City Council member Tony Avella. It has convinced the onetime booster to vote against the legislation.

“There is a fine line between negotiations trying to address a community impact that a particular project might have and shaking down a developer,” Mr. Avella told The Observer. “I am getting a little bit concerned about it: A sizeable amount of money is being distributed in return for the project.”

Mr. Avella’s dissent, first reported April 3 in the Metro free newspaper, will have little overall impact on the vote, but it signals trouble ahead for these deals, called “community benefits agreements,” which—like the “amenities” of the 1980’s—are becoming standard tools to win community backing for projects. Pioneered five years ago in Los Angeles, C.B.A.’s are supposed to stand outside of the normal government process, as private, legally binding contracts between community groups and the developer.

Forest City Ratner signed an extensive agreement for its Atlantic Yards complex in Brooklyn last summer, promising affordable housing and a union apprenticeship program.

The Related Companies signed one in February for a shopping mall at the Bronx Terminal Market.

Yankees president Randy Levine told The Observer that the eight-page draft obtained by The Observer has been revised.

But he wouldn’t go into detail, saying on April 4 that it was still being negotiated.

“It is not a shakedown. The Yankees do not feel that they are part of a shakedown,” he said. “We want to be very, very good neighbors. We want to participate in the life of the community. This is nothing new. The Yankees over the years have participated in helping many organizations in the community in a whole host of valid causes.”

The 1980’s controversy over what were then called “amenities” ended with a flurry of bribery investigations (none of which resulted in charges) and official reports. At the request of Mayor Edward Koch, the Association of the Bar of the City of New York published a set of recommendations in 1988, which said that any such goodie should be one that “addresses a need directly arising from the project, i.e., which has a nexus to the project.”

That could mean adding a street lane if the project will exacerbate traffic or, conceivably, moving residents who have been displaced by eminent domain. It’s unclear whether $700,000 in donations to nonprofits would qualify as representing a “nexus.”

Tellingly, the draft Yankees agreement is called the “Participation and Labor Force Mitigation and Community Benefits Program.” The name struggles to cast these amenities (which also include the promise that 25 percent of stadium workers would be Bronx residents) as compensation for the negative impacts caused by the new stadium.

But, oddly, the agreement says nothing about one of the biggest complaints that nearby residents have: The new stadium will take away 22 acres of parkland. The city, rather than the Yankees, will pay to replace that parkland, and the city says it will add another six acres.

The Bar Steps Up

As a sign of just how worried real-estate developers and their lawyers are getting that this new wave of community-benefits agreements may get out of hand, the bar association is again “considering possible policy recommendations,” according to Margaret Stix, chairwoman of the bar’s committee on land use, planning and zoning.

Last month, the committee sponsored a panel, during which Carl Weisbrod, the former president of the Economic Development Corporation and a general go-to guy on getting things done, strongly criticized the use of C.B.A.’s in tax-subsidized projects. What such agreements essentially do, he argued, is to put taxpayer money into the hands of a company like the Yankees, to be distributed to supporters rather than to groups whose priorities match those of the city.

“If the public is putting money into the project and the developer is allocating that money in private deals with the community, it is not government setting the priorities,” Mr. Weisbrod said. “Generally speaking, it is city taxpayer dollars that are being spent in not necessarily high-priority areas.”

Mr. Weisbrod couldn’t be reached to explain whether the Yankees deal would fall under that rubric, but team owner George Steinbrenner certainly is counting on public money. Along with outright public funds to replace the park that the new stadium would occupy, build a parking garage and make “infrastructure improvements,” Mr. Steinbrenner will not have to pay taxes to the city. Instead, he will direct so-called “payments in lieu of taxes” to pay off the bonds that will be used to build the new stadium. The watchdog group Good Jobs New York says that direct and indirect subsidies from city, state and federal sources could reach $480 million.

On April 4, Mayor Bloomberg and Governor Pataki announced their support for a Metro-North station near the new stadium, which will also add to the bill. Messrs. Bloomberg, Pataki and Steinbrenner all say that the $800 million stadium is an unprecedented investment in the Bronx and well worth the public’s support.

But Mr. Weisbrod’s comment makes one wonder: If the Yankees are willing to give away money to nonprofit groups in the city, why not pay those taxes after all?

Well, for one thing, the donations are a lot cheaper.

Perhaps these community-benefits agreements are one more Reagan-inspired symptom of the loss of confidence in government. The whole system of elections, parliamentary procedures, committee hearings, and ways and means is so broke, why not give developers deep tax breaks and force them to hand over some of what they are saving to politically connected private charities?

The New York Times reported April 4 that New York State has secretly given away $1.7 billion since 1997 to private hunting clubs and Elks lodges, all as part of the official budget process determined by elected leaders. What does it matter whether the slush fund is handled by Messrs. Silver, Bruno and Pataki, or by a political crony in the Bronx?

Even Mr. Avella concedes as much. “Maybe in some communities, there is a feeling that they have been shut out of the political process.”

Mr. Levine also said that it was unfair to characterize the agreement as something the Yankees were doing to buy support from the community, saying that he was trying to wrap up negotiations by April 5, before the Council vote, but didn’t feel it was mandatory to complete it by then.

The draft doesn’t mention that signatories will have to publicly support the project, the way the Atlantic Yards agreement does, and officially, these C.B.A.’s are supposed to stand outside the land-use decision-making process.

That distinction has been lost on the myriad City Council members and state legislators who have cited the provisions in these C.B.A.’s as reasons for supporting the Atlantic Yards and the Bronx Terminal Market.

In the Yankees’ case, Mr. Levine said that the team was negotiating not with community organizations but rather with “Bronx elected officials.”

“When you say ‘negotiate,’ that’s an inappropriate word,” he said. “We have been getting feedback from hundreds of community organizations; who we’ve been negotiating with are elected representatives of the people. The thing that you should really take note of is all the public participation we have had. We’ve had seven public hearings. We’ve had as open and transparent a process as we could.”

So which elected officials are negotiating with the Yankees?

“We are not going to get into that,” he told The Observer.

Crumb-Scattering

The situation that the Yankees find themselves in is a weird one: Criticized by Mr. Avella, who represents an affluent Queens district, for giving away too much, they are being attacked by Bronx Council members for being too stingy. Borough President Adolfo Carrión is also part of the negotiations.

“The offer itself is insulting,” Councilwoman Helen Diane Foster told The Observer. “It is just crumbs. They are asking people to fight over crumbs.”

Ms. Foster said she wanted the Yankees to spend $3 million over three years on job training and to give away a minimum of $2.5 million a year to community groups, including money for maintaining the parks. The new stadium would go on a city park, and the city would replace the lost parkland over a series of years.

Ms. Foster didn’t attend a negotiating session on April 1 because Mr. Levine was not going to be there, but according to an informed source, City Council members were pushing for $1.4 million a year total, for park maintenance, sports equipment and donations to nonprofits, along with resident parking permits.

The City Council as a whole is reported to be overwhelmingly in favor of the stadium, but a majority of Bronx members have to come out in favor for the rest of the votes to follow, according to Council sources. The April 5 vote is not the only one, after all. Another one scheduled for April 10 addresses many of the financing aspects.

In other words, the Yankees would do well to appease these holdouts.