CB2 Land Use Committee Member's Open Letter About Dock St Dumbo

 

[UPDATE 2: Kenneth Fisher, the Two Trees’ Land Use Counsel responds to Andrew Stengel’s letter.]
[UPDATE: David Yassky’s office sent us the following statement in response to Andrew Stengel’s letter below: “I commend Andrew Stengel, my appointee to CB2, for making the FOIL request that uncovered disturbing documents from the School Construction Authority. His diligence and engagement in this critically important issue for our community has shined a bright light on a clearly flawed process that has not taken the best interest of our kids and all New York City taxpayers into full account. I reiterate my urging for SCA and DOE to comply with the FOIL and release all documents that were requested five months ago before the vote in the City Council.”]

The below is an open letter on the proposed Dock Street Dumbo project by Andrew Stengel, who is a member of the Brooklyn’s Community Board #2 and its Land Use Committee and Dumbo resident who opposes the Dock Street Dumbo project, which was a subject of the City Council meeting last week, which is at the final stages of the Uniform Land Use Review Procedure for rezoning. The land use committee is expected to vote on the proposal within the next two weeks. It then goes to the full City Council for a vote on June 10th.

The content and opinions expressed in the letter do not necessarily reflect the views of nor are they an endorsement against (or for) the project by DumboNYC. To be fair, please visit Two Tree Management’s website to read letters from the supporters of the plan.


An Open Letter on the Proposed Dock Street Dumbo Project:

I am a Dumbo resident who sits on Brooklyn’s Community Board #2 and its Land Use Committee. I oppose the Dock Street Dumbo project, and when the Uniform Land Use Review Procedure (ULURP) application was before the our committee I proposed a resolution—that passed 10-1 with two abstentions —- to limit the development on the site to no higher than the 75-foot-high Brooklyn Bridge roadway, as the community board decreed unanimously in 2004. I am also the person who made the Freedom of Information (FOIL) request that resulted in the release of several troubling documents by New York City’s School Construction Authority (SCA).

[Please click the link to view full letter.]

The Dock Street developer and their high-priced lawyer-lobbyist-public relations retinue have claimed the project’s opposition is limited to a few people whose views of the Brooklyn Bridge are threatened. That is false. (For the record, my apartment does not face the Brooklyn Bridge.)

The opposition is about appropriate context in an area immediately adjacent to a National Historic Landmark where there are currently one- and two-story buildings, as well as large appropriations by New York City, i.e., taxpayer money, without what any sane person could claim is due diligence.

The Dock Street proposal is 18 stories tall, two stories higher than the 2004 version, and would rise to over 200 feet with mechanical. In addition, $400,00 in lobbying and undisclosed campaign fundraising by intermediaries raise the potential and ugly issue of pay-to-play politics.

I was heartened to read the coverage of the recent New York City Council hearing on Dock Street Dumbo and the attention paid to the documents I obtained from SCA. For those who are unfamiliar with FOIL, the law’s intent is actually written into the statute: “The legislature hereby finds that a free society is maintained when government is responsive and responsible to the public, and when the public is aware of governmental actions.”

I filed the FOIL request because, as a taxpaying resident of New York City, I want to know how DOE allocated nearly $44 million to a public middle school and why it chose Dock Street Dumbo as the best site, as written in its Five-Year Capitol Plan released in November 2008.

Note to members of the New York City Council: be careful what you vote for because you may get it—without having all the information necessary to make your decision.

The FOIL request, which was made five months ago almost to the day, was actually two similar requests of the New York City Department of Education (DOE) and New York City School Construction Authority (SCA). I asked for all documents relating to a new middle school in Brooklyn’s District 13 or a new middle school at the Dock Street Dumbo Site dating back to 2004.

Why did the Council hearing not focus on documents from DOE? Because DOE did not turn over a single page of material relating to my request. Instead, DOE sent five pages of correspondence relating to a middle school in District 14. That is despite the conclusion in DOE’s Five-Year Capitol Plan (page 23) that: “The analysis indicates that five districts in Brooklyn will see growth over the next five years. District 13, contains a substantial surplus of space given current enrollment levels but is projected to need a school building in the DUMBO/Navy Yard/Fort Greene area. This is primarily due to projected housing growth.” And, the plan allocates $43.83 million to “PROJECT #1 @ DOCK ST.” (appendix C-7).

DOE obviously based this on something. The question is what and what are they potentially hiding?

And, thanks to SCA’s FOIL response, we know that the developer made SCA “a best and final offer” on May 20, 2008. (As an aside, Jed Walentas attempted to self-invoke one of the few exceptions to FOIL in that term sheet; at least SCA had the common sense to ignore that bogus claim.) That was the oldest document that SCA offered despite my request dating back to 2004. If that was the “best and final offer,” where are the records of prior negotiations? Are we to conclude that SCA did no due diligence as to alternative existing sites prior to entering into negotiations?

SCA has continually made the claim of a cost savings at Dock Street because a “core and shell” is being provided by the developer. But, when pressed at the recent hearing, SCA vice president Ross Holden admitted he couldn’t calculate it. Even if cost savings were not phantom, it would be moot if existing vacant buildings are considered for a middle school. Holden also admitted, “No one at all came to the SCA with a recommendation that would provide us with the…school at minimal costs.”

Contrary to SCA’s attitude it is their responsibility to find the best location for a middle school at the best deal for the City. Again, contrary to their assertion, several members of the community identified alternative existing sites for a potential school that SCA did not consider, including: One Brooklyn Bridge Place, which is in Brooklyn Bridge Park; the recently closed St. Charles Borroemo School on Sydney Place; and 470 Vanderbilt Avenue, which has over 700,000 square feet of vacant space. (One paper claimed that One Brooklyn Bridge could not house a school because that use is not included in the park plan. While correct, neither does the current zoning at Dock Street allow for a school, hence the need for the zoning changes. Just as Dock Street is going through ULURP, the park plan can be amended by the state.)

The required timeline for a agency response to a FOIL request is 20 days. Both DOE, which ignored my query, and SCA responded late. FOIL also allows for an appeal for denial of access to records, which I made on March 3. Agencies have 10 business days to reply to an appeal. The only response I received was from DOE on April 23, noting that it would conduct another search with a response for May 25.

DOE and SCA have yet to comply fully with my original FOIL request. However, the timeline for ULURP requires a vote in the City Council 50 days after the receiving the report by the City Planning Commission. That would be on or about June 12. I have now taken the last step under the law to compel DOE and SCA to respond. The silence from DOE and SCA leave the impression that they are trying to run out the clock until after the vote.

Sunday’s New York Times featured a column from Jim Dwyer that pointed out campaign contributions to New York City Councilwoman Melinda Katz, Chair the Land Use Committee. Dwyer wrote that the contributions were made: “Just before new rules severely limited campaign contributions by companies doing business with the city.” While there are new rules that limit the campaign contributions by individuals who are “doing business” with the City, there remains a giant loophole.

Under the City’s “doing business” restrictions phased in over 2008, those who are seeking City contracts or have filed a ULURP application are limited to a contribution of $400 for a citywide office like mayor, comptroller or public advocate, for the primary and general election combined. Everybody else can give a maximum of $4,950 for a citywide office. However, there is nothing that prevents those who are “doing business” with the City from fundraising on behalf of a candidate, which is commonly know as an “intermediary.” And when intermediaries raise money for candidates in the City, the disclosure requirement is virtually meaningless.

David and Jed Walentas, the developers of Dock Street Dumbo, serve on the Finance Committee for Melinda Katz for New York City Comptroller (see attached invites for 2007 and 2008). Members of campaign finance committees typically act as intermediaries raising money from friends and associates. Have the father-son developers raised contributions for the comptoller candidate and if so how much? The statute is written so loosely that neither they nor the campaign is required to disclose the amount, if anything.

The 2007 law that created the “doing business” contribution limits, defined an intermediary as not including: “…any hosts of a campaign sponsored fundraising event paid for in whole or in part by the campaign. Where there are multiple individual hosts for a non-campaign sponsored event, the hosts shall designate one such host as the intermediary.”

In other words, if somebody raises money for an event that is paid at least in part by a City campaign, the intermediary is not required to report the funds raised. And, if the event is private, where there are multiple hosts, only one intermediary is named—even if that person did not raise all the money. That is the equivalent of defining a duck as duck, unless it walks like a duck or quacks like a duck.

This conspicuous loophole in the City’s campaign finance law, intended or not, should be closed. Connecticut, which banned all contributions from the equivalent of those who do business with the state after a number of corruption scandals, also banned fundraising by those parties. The City should extend the “doing business” contribution limits to intermediary fundraising and require complete disclosure.

In conclusion, I do not support the Dock Street Dumbo project for the reasons I outlined. I hope that the public, and more important, the City Council, will receive all the information from DOE and SCA about the site selection and budget process for Dock Street Dumbo before the final vote.

Supreme Court Justice Louis Brandies wrote that “sunlight is the best disinfectant.” Unfortunately, much of the process around Dock Street Dumbo has proceeded mostly when the only light is that of the moon.

Andrew Stengel

42 Comment

  • Brilliant.

    This project should NOT go forward… This is one of our last National Monuments and would be defaced purely due to greed.

  • Brilliant.

    This project should NOT go forward… This is one of our last National Monuments and would be defaced purely due to greed.

  • **The Scene Now At Two Trees Ministry of Propaganda**

    Red Alert! Red Alert! That gadfly Stengel just wrote a highly literate piece to City Councilmembers that cuts through all of our distortions and BS!

    Quick, get super lobbyist on the Blackberry! Work the phones, write more checks, grease more palms!

    And make sure Carlos and DuhVoyager spin spin spin on the blogs. Did their 1099s go out?

  • **The Scene Now At Two Trees Ministry of Propaganda**

    Red Alert! Red Alert! That gadfly Stengel just wrote a highly literate piece to City Councilmembers that cuts through all of our distortions and BS!

    Quick, get super lobbyist on the Blackberry! Work the phones, write more checks, grease more palms!

    And make sure Carlos and DuhVoyager spin spin spin on the blogs. Did their 1099s go out?

  • Thank you Mr. Stengel.

  • Thank you Mr. Stengel.

  • Pingback: Brooklyn Heights Blog » CB2 Member Comes Out Swinging Against Dock Street DUMBO

  • Pingback: Brooklyn Heights Blog » CB2 Member Comes Out Swinging Against Dock Street DUMBO

  • Thank you Mr. Stengel for connecting the disgusting Dock Street dots. Please make sure to send all documents to Mr. Bloomberg, the Department of Investigation and all members of the City Council.

  • Thank you Mr. Stengel for connecting the disgusting Dock Street dots. Please make sure to send all documents to Mr. Bloomberg, the Department of Investigation and all members of the City Council.

  • Wow you guys are really earning your coin today Yassky, Stengel and other bought and paid for pols. Perhaps your only paid with invites to posh parties up in the condos with views. If so you are definitely a cheap date. Cha-ching!

  • Wow you guys are really earning your coin today Yassky, Stengel and other bought and paid for pols. Perhaps your only paid with invites to posh parties up in the condos with views. If so you are definitely a cheap date. Cha-ching!

  • As I said before: This whole email flap is just the latest smoke screen thrown up by the increasingly desperate condo owners and their allies who have been steamrolling the opposition to this perfectly reasonable project. Of course the SCA wasn’t interested in other sites. They told us last year there was no money to build, rent, or buy a school for the foreseeable future. The only reason they were at long last going to give us a school was because TT was giving this gift worth an estimated $43 million. No other site even remotely equaled that gift. If Yassky was serious about helping the children of the 33rd he would grab this gift with both hands instead of kowtowing to his rich friends and campaign contributors over at 30 main and 70 washington.

  • As I said before: This whole email flap is just the latest smoke screen thrown up by the increasingly desperate condo owners and their allies who have been steamrolling the opposition to this perfectly reasonable project. Of course the SCA wasn’t interested in other sites. They told us last year there was no money to build, rent, or buy a school for the foreseeable future. The only reason they were at long last going to give us a school was because TT was giving this gift worth an estimated $43 million. No other site even remotely equaled that gift. If Yassky was serious about helping the children of the 33rd he would grab this gift with both hands instead of kowtowing to his rich friends and campaign contributors over at 30 main and 70 washington.

  • I’m so turned on right now.

  • I’m so turned on right now.

  • DV:
    The only ones “earning their coin” are the politicians who voted for this project… and that has been demonstrated.

    You are making these assertions about the opposition, but all the evidence of payola is on Walentas’ side.

  • DV:
    The only ones “earning their coin” are the politicians who voted for this project… and that has been demonstrated.

    You are making these assertions about the opposition, but all the evidence of payola is on Walentas’ side.

  • DA, you use the world’s most worst logic.

    You say “no money to build, rent, or buy a school” while you know full well that what they’re offering is a shell which will require a similar amount of money to build out and furnish. Where is that money going to come from?

    And you should know from past “deals” that when Walentas says “shell” they mean nothing extra… down to non-included closet doors in condos, so don’t count on their charity to go any further.

  • DA, you use the world’s most worst logic.

    You say “no money to build, rent, or buy a school” while you know full well that what they’re offering is a shell which will require a similar amount of money to build out and furnish. Where is that money going to come from?

    And you should know from past “deals” that when Walentas says “shell” they mean nothing extra… down to non-included closet doors in condos, so don’t count on their charity to go any further.

  • NOOC,

    The money for the buildout would come from a sale-leaseback of the condo interest. As an alternative, the city could opt for the 99-year lease at $1 a year and fund the buildout themselves.

    The $43 million in the proposed budget seems high. That’s $940 per square foot. I’m sure the SCA has cushion built in. Let’s engage the SCA and DOE with the help of our local councilman and get some answers – solve our problem – get the best deal we can.

    Get the specifics in writing – including a detailed description of “shell”. This is the job of our city council.

    Sincerely.

  • NOOC,

    The money for the buildout would come from a sale-leaseback of the condo interest. As an alternative, the city could opt for the 99-year lease at $1 a year and fund the buildout themselves.

    The $43 million in the proposed budget seems high. That’s $940 per square foot. I’m sure the SCA has cushion built in. Let’s engage the SCA and DOE with the help of our local councilman and get some answers – solve our problem – get the best deal we can.

    Get the specifics in writing – including a detailed description of “shell”. This is the job of our city council.

    Sincerely.

  • Seems to me like the sale-leaseback option is akin to the BS that the financial and real estate sectors have pulled which has the economy where it is now. Maybe I don’t fully understand it, but how would they sell/leaseback the condo space and use it at the same time?
    The alternative you propose, would still require cash (or sale of bonds?) to finance, and is what I was talking about in my previous post. I believe the numbers I’ve seen bandied about are in the $43-50MM range.

  • Seems to me like the sale-leaseback option is akin to the BS that the financial and real estate sectors have pulled which has the economy where it is now. Maybe I don’t fully understand it, but how would they sell/leaseback the condo space and use it at the same time?
    The alternative you propose, would still require cash (or sale of bonds?) to finance, and is what I was talking about in my previous post. I believe the numbers I’ve seen bandied about are in the $43-50MM range.

  • Sale-leaseback transactions are very common in corporate America. I can’t recall any expert who has cited sale-leasebacks as being a contributor to the recession.

    Respectfully, let me try to explain it.

    Walentas gives the DOE the condo ownership interest in the 45,742 square foot middle school space. He builds the shell as agreed to in writing. Typically, shell includes walls, windows, doors, roof, floor, basic plumbing, electric and HVAC. The DOE determines what the market rental rate is for the space and how long a lease they’d like to sign. The term might be 50 years with options to renew. The market will determine how the DOE can maximize the return.

    Once those key variables are determined, the DOE markets the sale-leaseback to the investment community. The investor pays the DOE a lump sum of cash in exchange for signing a long term lease with the obligation to make future lease payments.

    It’s done all the time by the DOE. It gives the government the ability to raise much needed funds today to open new schools. It’s done everyday in corporate America. Corporations would rather deploy their capital in areas other than real estate.

    As you point out, alternatively, the DOE could take the 99-year lease for a $1 and yes – they would have to come up with the cash or issue bonds to raise the money to build out the school.

    I can hear the “shill” callers already but it’s important to make this point – Walentas’s financial stability is another advantage he has over the competition. So called alternative sites 20 Henry and 360 Furman are reportedly over leveraged to the point of foreclosure. Those may be examples of the “BS that the financial and real estate sectors have pulled”, as you have put it. More the reason to negotiate with Walentas – he knows what he’s doing.

    Sincerely.

  • Sale-leaseback transactions are very common in corporate America. I can’t recall any expert who has cited sale-leasebacks as being a contributor to the recession.

    Respectfully, let me try to explain it.

    Walentas gives the DOE the condo ownership interest in the 45,742 square foot middle school space. He builds the shell as agreed to in writing. Typically, shell includes walls, windows, doors, roof, floor, basic plumbing, electric and HVAC. The DOE determines what the market rental rate is for the space and how long a lease they’d like to sign. The term might be 50 years with options to renew. The market will determine how the DOE can maximize the return.

    Once those key variables are determined, the DOE markets the sale-leaseback to the investment community. The investor pays the DOE a lump sum of cash in exchange for signing a long term lease with the obligation to make future lease payments.

    It’s done all the time by the DOE. It gives the government the ability to raise much needed funds today to open new schools. It’s done everyday in corporate America. Corporations would rather deploy their capital in areas other than real estate.

    As you point out, alternatively, the DOE could take the 99-year lease for a $1 and yes – they would have to come up with the cash or issue bonds to raise the money to build out the school.

    I can hear the “shill” callers already but it’s important to make this point – Walentas’s financial stability is another advantage he has over the competition. So called alternative sites 20 Henry and 360 Furman are reportedly over leveraged to the point of foreclosure. Those may be examples of the “BS that the financial and real estate sectors have pulled”, as you have put it. More the reason to negotiate with Walentas – he knows what he’s doing.

    Sincerely.

  • Thanks, I also (should have in the first place) looked it up on wikipedia.

    To simplify it, Walentas gifts the space to DOE. DOE sells to another party, which then leases the space back to DOE. DOE uses proceeds from the sale to pay for the build-out. DOE pays annual(?) rent to the purchasing party.

    You are correct about the over-leveraging of other properties. I also wouldn’t necessarily attribute financial stability to Walentas as they would need to secure financing to complete the project. Perhaps you are saying that they are not over-leveraged on their properties (that we seem to be aware of, at least).

    The problem I still see with the sale-leaseback is that it is still contrary to the statement of “no money to build, rent, or buy a school” as in the end they’re still paying rent to someone.
    This is where the political shenanigans come into play… how is it that suddenly paying this rent is affordable?
    Based on what we know from the FOIL docs and lobbying (in all its forms) it is not unreasonable to conclude there is something fishy going on.

  • Thanks, I also (should have in the first place) looked it up on wikipedia.

    To simplify it, Walentas gifts the space to DOE. DOE sells to another party, which then leases the space back to DOE. DOE uses proceeds from the sale to pay for the build-out. DOE pays annual(?) rent to the purchasing party.

    You are correct about the over-leveraging of other properties. I also wouldn’t necessarily attribute financial stability to Walentas as they would need to secure financing to complete the project. Perhaps you are saying that they are not over-leveraged on their properties (that we seem to be aware of, at least).

    The problem I still see with the sale-leaseback is that it is still contrary to the statement of “no money to build, rent, or buy a school” as in the end they’re still paying rent to someone.
    This is where the political shenanigans come into play… how is it that suddenly paying this rent is affordable?
    Based on what we know from the FOIL docs and lobbying (in all its forms) it is not unreasonable to conclude there is something fishy going on.

  • Walentas is not in great as shape as you might think. TT has over $100m sunk into their Hell’s Kitchen project which is also facing major difficulties. In fact, they just did a cash out refi on one of their Dumbo buildings to free up funds for that HK project. I don’t know the intricacies of their financial situation but at this point in time I don’t think we can assume any company is all that stable.

  • Walentas is not in great as shape as you might think. TT has over $100m sunk into their Hell’s Kitchen project which is also facing major difficulties. In fact, they just did a cash out refi on one of their Dumbo buildings to free up funds for that HK project. I don’t know the intricacies of their financial situation but at this point in time I don’t think we can assume any company is all that stable.

  • Two Trees has been trying to sell their Bridgehampton farm since August 2008 (still on the market), possibly to raise some extra cash to make these projects happen. It was listed for $95 million, but I think it’s been reduced since.

    http://www.27east.com/story_detail.cfm?id=160648

  • Two Trees has been trying to sell their Bridgehampton farm since August 2008 (still on the market), possibly to raise some extra cash to make these projects happen. It was listed for $95 million, but I think it’s been reduced since.

    http://www.27east.com/story_detail.cfm?id=160648

  • At the December 2008 CB2 meeting, when Jeb Walentas was directly asked if Two Trees has financing lined up for the Dock Street Dumbo project, he flatly said “No.”

  • At the December 2008 CB2 meeting, when Jeb Walentas was directly asked if Two Trees has financing lined up for the Dock Street Dumbo project, he flatly said “No.”

  • Pingback: Dumbo NYC, Brooklyn » Archive » Two Trees’ Land Use Counsel’s Response to CB2 Land Use Committee Member’s Open Letter (DumboNYC.com)

  • Pingback: Dumbo NYC, Brooklyn » Archive » Two Trees’ Land Use Counsel’s Response to CB2 Land Use Committee Member’s Open Letter (DumboNYC.com)

  • Pingback: Dock Street Press Conference in DUMBO tomorrow « Fulton Ferry Landing Association

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  • i have a property in dumbo 90000sf ready to go for a school and a good price dumbobridge@gmail.com

  • i have a property in dumbo 90000sf ready to go for a school and a good price dumbobridge@gmail.com

  • Pingback: Dumbo NYC, Brooklyn » Archive » New FOIL Docs from SCA Reveal its Own Architect Didn’t Give Dock St. School a Passing Grade in 2007 (DumboNYC.com)

  • Pingback: Dumbo NYC, Brooklyn » Archive » New FOIL Docs from SCA Reveal its Own Architect Didn’t Give Dock St. School a Passing Grade in 2007 (DumboNYC.com)