Forest City Enterprises gave slightly less than $9 million to political candidates and lobbyists to push through two of its developments —Brooklyn’s $4.9 billion Atlantic Yards and a mixed-use project in Albuquerque, N.M. – but failed to make good on its promises to create jobs and affordable housing, according to a new report by a conservative watchdog group.
Forest City denied the accusations and told The Real Deal that it will fulfill its commitments to the community. The developer’s spokesperson Joe DePlasco criticized the report, authored by Cause of Action, as a “political manifesto” and noted that “unionized workers built the [Barclays Center] arena – hundreds on average each week for two-and-a-half years – and unionized workers are now building B2, the 32-story residential building that will be 50 percent affordable.”
The report states that in exchange for $277.2 million in city and state subsidies for the two projects, Forest City vowed to create 70,000 permanent jobs and 3,750 units of affordable housing in Brooklyn and Albuquerque; so far, the number of jobs stands at 3,000 and no affordable housing units have gone up, according to Cause of Action.
More so than any other developer, “Forest City’s business model seems to be the government,” the group’s executive director, Daniel Epstein, told TRD.
Epstein is a former staff member of the House Oversight and Government Reform Committee, led by Rep. Darrell Issa, R-Calif., and was a legal associate at the Koch Foundation, which promotes free-market and limited- government groups.
When Forest City proposed the Atlantic Yards project in 2004, its officials estimated the project would create 10,000 permanent jobs and would add 2,250 units of affordable housing. The numbers convinced the city and state to give the developer $270 million. Though the Barclays Center, a major component of Atlantic Yards, opened in September 2012, only 2,000 permanent jobs have been created and 1,900 of them are part-time, according to the report.
“What, ultimately, did the taxpayer get from these subsidies?” Epstein said. “The report shows not very much. Forest City made all these promises, and there’s no return on them.”
But DePlasco said that “the delays in this project were caused primarily by lawsuits” brought by its opponents. “Despite these obstacles and the worst economic crisis in a generation, FCRC continued to build the project and fulfill its commitments,” he said. “We anticipate a steady schedule on the housing going forward.” He added that the sale of a large stake in Atlantic Yards to Chinese developer Greenland Holdings Group would “help tremendously with the ongoing build out of the project, including the housing.”
Jonathan Furlong, of the Pratt Area Community Council, a Brooklyn-based community group, said the delays were “par for the course in terms of this project,” “The community and the surrounding neighborhoods are really losing out.”
In Albuquerque, Forest City promised 60,000 permanent jobs and 1,200 units of affordable housing at its 12,900-acre Mesa del Sol if the city and the state kicked in $630 million, according to the report. Forest City hired lobbyists to push for the subsidies and gave $150,000 in campaign contributions and the use of its corporate jet to then-Gov. Bill Richardson, the report states.
In May, Forest City sold its Mesa del Sol stake; at the time, the developer had received $7.2 million in subsidies but only created 2,000 jobs and delayed the construction of affordable housing until at least 2019.
“These are not isolated incidents, but endemic of an intentional method in which FCE does business,” the report states. “This pattern is poised to continue in the proposed project in New Rochelle,” the report adds, where Forest City intends to build a waterfront redevelopment project known as “Echo Bay” with 285 market-rate apartments and 25,000 feet of retail space.
The nonprofit Cause of Action is calling on the government to make these promises legally binding, Epstein told TRD. As it stands, he said, Forest City “makes these promises, gets subsidies, and then bows out of the project.”