Wednesday, March 28, 2007

On Drug Crimes And Business Plans

Crime Scene On Dean
Originally uploaded by Gringcorp.
Mayhem in N. Slope! Those of you wondering whether the gentrification of the north end of fifth avenue is terminal have more to chew on. This rather terrible cameraphone picture is of the crime scene on Dean and Flatbush last night around 8pm.

There are more details on the incident at Gothamist, but the essence is that a cop stopped a pot smoker, and the pot smoker shot the cop in the ankle. No-one was killed, but it was enough for the mayor to issue a plea, with a strangely bantering tone, for people to stop taking shots at cops. Anything to keep the City's finest safe, and all that, but the performance just made the mayor look nervous.

But I digress a little. I was walking back from the Pacific Street subway when I noticed the telltale yellow tape and klieg lights infesting the upper reaches of Fifth Avenue. I could have lingered and found out the reason, but a hearty late dinner of Mrs. Cutesome's goulash stew and pierogis awaited.

This morning, as I have already related, the reason became clear. I had speculated that there was some to link to a shooting at a Mexican restaurant on the same block a few years back, but that was a crime passionnel, and not likely to spawn follow-up violence.

Let's take a look at the collateral damage to the gentrification debate. The plus? Possible drop-off in foot traffic at the rather spiffy, but rather crowded new Alchemy. The minus? Bruce Ratner's claims of some kind of hellish warzone in the N Slope/P Heights nexus are somehow lent credence. As a quick postscript to the preceding dose of flippancy, I wish the injured officer a speedy recovery.

But staying on the Atlantic Yards debacle for a moment [those from outside the Borough may stop here], I was pretty gobsmacked to learn that the developer had not submitted a business plan to the state when asking it for all kinds of juicy subsidies and the power of condemnation and so forth. This is pretty much project development 101, and gives you a pretty good idea of how much Bruce Ratner is winging it.

I'd left a comment at Norman Oder's place a few months back, looking at how a comparison of the Mets and Yankees stadium financings might give us an idea of how Ratner would cobble together his suite of tax-exempt bonds for the project. Oder, old line journo that he is, either missed or rejected the comment (which I'm fairly certain was not as rude as much of what I've written on this subject).

But the point stands. A business plan would give the interested reader an idea of what revenues Ratner is devoting to repaying what sources of financing, and which parts of the project are included within the scope of the naming rights cash, tax-exempt debt, taxable debt, state subsidies, state money towards infrastructure improvements and so forth. It is, wearingly enough, often withheld as commercially sensitive, and I'd assumed that the state could stonewall in this fashion for ever.

But no, Forest City has not actually bothered to put a business plan together for its public partners, partly because it wants to be able to slosh its capital expenditure towards whichever use is most lucrative, and partly, I suspect, that it wants to dedicate as little of the project revenues towards servicing the taxable debt as possible. This would indeed have a substantial effect on the project's internal rate of return (a number, expressed as a percentage, that is not the same as "profit", or many other accounting concepts, but both do correlate with a large number of the same inputs, per a discussion here).

But anyway, I need to put a business plan together before spending more than a couple of grand of my employer's money. It is abject lunacy that Ratner cannot assemble one of these for a sprawling mixed-use development that threatens to gut the prettiest county in the United States. [Actually I can't get sign-off on a few hundred in expenses from my employer right now as a result of some tedious interdepartmental feuding. Wonderful]


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