Field of Schemes

February 03, 2005

No way to run a railroad

As someone said to me following this morning's state assembly hearing on the proposed New York Jets stadium: "Brodsky runs a good hearing, doesn't he?" Though technically a hearing of the assembly's public authorities committee, the day's event was mostly a two-hour grilling of Metropolitan Transportation Authority chair Peter Kalikow by committee chair Richard Brodsky, on the topic: Why on earth is the MTA agreeing to accept between $35 million and $300 million from the Jets for a parcel that its own appraiser says is worth $930 million?

Kalikow has played a weird role in the stadium debate, alternately boosting the project and insisting that he won't let the Jets get off cheap. At today's hearing, he presented an image of a man squirmingly aware that he's serving two masters: a mass transit system that's billions of dollars in the hole, and a governor who appointed him who just wants to get this stadium done, never mind the details. And while he delivered all the appraisal documents that Brodsky had subpoenaed last week, it soon became clear that a lot of details are still very much up in the air. Let's go to the highlight reel:

BRODSKY (addressing the issue that the MTA land must be rezoned before the stadium can be built, or excess development rights can be sold off): How soon could you get a rezoning if you sought it?

KALIKOW: I don't know.

BRODSKY: Is there a ULURP [land-use procedure] component to the zoning process?

KALIKOW: I don't know.

BRODSKY: Has anybody tested the market for the transfer of development rights in that amount in that area? Does your appraisal do that?

KALIKOW: I don't know.

BRODSKY (later): Whose idea was it to go to arbitration?

KALIKOW: I actually don't know. It just kind of came up.

BRODSKY (later): Suppose the arbitrator comes back with $35 million, which is what the Jets think [the parcel is worth]. ... You'd take the $35 million and go home?

KALIKOW: I wouldn't be happy about it, no.

BRODSKY: I didn't ask you if you'd be happy about it. Would the board be bound by the arbitrator's decision?

KALIKOW: The board has to decide what it will and will not be bound by.

And so on. Where things got really juicy was when the committee members began pressing Kalikow on why the MTA was pursuing this odd tack of going to arbitration with a single developer to determine the value of its land. Brodsky first pointed out that the MTA could easily find out the land's fair market value by having the city condemn it, which would result in a well-established public process for determining a price. (Arbitration, suggested Brodsky, was by comparison more like Big Julie's craps game.) Then Assemblymember Richard Gottfried raised the issue of opening up the process to competitive bidding:

GOTTFRIED: Why would you not say, we're going to go out to the marketplace and do a [request for proposals], and see what developers would pay for the privilege of building on this site? Why would you not do that?

KALIKOW: If I build a condo, if a guy comes and says I want to buy 20 apartments cash up front, I do it every time. It's called hedging your value. In addition to that, we are relieved of the responsibility of building the deck.

Kalikow came back to this point again and again: The current Jets proposal is a good deal for the MTA because the city and state, not the MTA, would be paying the cost of decking over the site's rail yards. In effect, the city and state governments are offering the MTA a $375 million - "bribe" is such an ugly word, let's call it an "enticement" - to hand over its land to the Jets, and not another developer. While not technically a subsidy to the Jets - it would, in effect, be a public subsidy of the local transit system, which is arguably a good use of city and state dollars - it's still awfully odd public policy for one government body to be paying off another in order to free up land for a private football stadium.