Experts slam Ratner’s ‘dribble-down’ study

The Brooklyn Paper
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A sports economist hired by Atlantic Yards developer Bruce Ratner to study the financial feasibility of the basketball arena, office tower and housing plan released his results this week to a great deal of criticism.

Ratner commissioned the study by Andrew Zimbalist — some call it his “dribble-down theory” — and it used numbers and assumptions largely provided by the developer’s project planners. It concludes that the entire project would net $812 million of additional revenue for the city and state over the next 30 years.

Zimbalist, a professor at Smith College in Massachusetts, has written several books on sports economics and has regularly described arenas and stadiums as having no direct economic benefits on local economies.

He says the Ratner project is different because of the residential and commercial component.

But this week many of Zimbalist’s peers came out challenging some of his figures and assumptions.

According to the report, released Monday, the city and state will pitch in $18 million per year for the arena and will take in about $17.7 million from the sports complex, intended as home to Ratner’s recently purchased New Jersey Nets.

Zimbalist estimates that infrastructure costs, including a platform that would have to be built over the rail yards, and eminent domain property takings, will cost $187.73 million.

The large-scale development only becomes profitable when the housing and commercial properties are taken into consideration.

According to Zimbalist, the 17 residential towers, including 4,500 units of housing, would generate an average of $60 million in city and state taxes per year. The more than 2 million square feet of commercial space would bring in close to $15 million, Zimbalist says.

Gustav Peebles, a researcher at Columbia University who lives in Fort Greene, sent the study out to a team of sports economists across the country following its release this week.

At Tuesday’s City Council public hearing on the plan, Peebles, who is working with Develop Don’t Destroy-Brooklyn, a group of residents fighting the plan, blasted many of Zimbalist’s assumptions.

“Based on conversations with former budget officials [Forest City Ratner] concludes that the increment in fire and police budget would be negligible,” Zimbalist writes.

Peebles questioned the logic of that when adding 8 million square feet of development, roughly four times the size of the Empire State Building.

“Just the traffic cops at Atlantic and Flatbush avenues alone will have to be increased,” Peebles said.

In calculating how many non-season-ticket-holder Nets fans will travel to Brooklyn, Zimbalist uses numbers based on the New York Jets football team, which has played in New Jersey for more than two decades but retains its New York identity.

“That’s ridiculous, the Jets have always been a New York team,” said Peebles, adding that New Yorkers have to travel to New Jersey if they want to watch professional football, unlike basketball where they can just go to Madison Square Garden in Manhattan.
Peebles also wondered why if 60 percent of the people moving into the housing at Atlantic Yards, as Zimablist says, are coming from out of state, New Yorkers should pay to subsidize the project.

“We should be asking New Jersey for money to subsidize these buildings if that’s whose going to be moving into them,” Peebles said.
Neil deMause, author of “Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit” also questioned the study’s outcome.

“His conclusions are that the arena would be a money loser but the housing would be so great that it would more than make up for the money you’d lose on the arena. So why are we building the arena?” asked deMause.

To make way for the plan, Ratner is also asking the state to use the power of eminent domain to condemn more than two square blocks of privately owned land. He is also seeking air rights to develop over the 11-acre Long Island Rail Road yards.

Asked if the borough would be losing out if it only got housing and no basketball, deMause said, “From a fiscal standpoint we’re winning because we don’t have the fiscal debt.”

Andrew Alper, president of the city Economic Development Corp., said at the council hearing that he still did not know how much in public funding would go into the project.

Even so, Zimbalist says the plan would be an overall boon to the city and state.

“Even under the least favorable assumptions in my sensitivity analyses,” Zimbalist concludes, “the fiscal impact of the Atlantic Yards project is a significant plus for New York City and New York State treasuries.”

Updated 4:00 pm, November 10, 2010
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