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COURTESY CITY OF LAS VEGAS
The elaborate deal for a new city hall, rendered above, between Las Vegas and Forest City includes a land swap and a construction project to be named later.
Saturday, Feb. 7, 2009 | 2 a.m.
At a City Council meeting last year, several councilmen went out of their way to praise Forest City Enterprises, the primary developer in the deal to build a new Las Vegas city hall.
Also in Today's Sun
Beyond the Sun
The vaunted Cleveland-based company, with massive development projects in the works from Brooklyn to Albuquerque, is known to be progressive-minded, they boasted, shepherding projects that support job creation, environmental sustainability and affordable housing.
“We’re betting on the right horse,” said one councilman, as a beaming Mayor Oscar Goodman looked on.
Since then, Forest City has been hit by a torrent of bad news, both in Las Vegas and nationally.
In December, the developer announced $18.5 million in quarterly losses, leading some analysts to conclude it was facing potential bankruptcy. The next month, the developer was embarrassed when its six-figure campaign donations to New Mexico Gov. Bill Richardson were mentioned in stories about his stepping aside as President Barack Obama’s choice for a Cabinet post.
And locally, the Culinary Union, locked in a battle royale with the city over new city hall plans, has accused Las Vegas of lavishing Forest City, a $9.2 billion company, with millions of dollars in unnecessary financial incentives to take on the project.
As the city hall project moves forward, Forest City’s record — both positive and negative — is coming into better focus.
Though the developer is rightly known for building high-quality projects, observers say, it also routinely and effectively uses the strength of its name to gain huge subsidies and tax breaks from local governments.
Las Vegas is the latest example, claims the Culinary, which is pushing for two ballot measures that have enraged city leaders — including one designed to stop the city hall project by requiring voter approval of “lease-purchase” construction projects, and another to put clamps on the city’s redevelopment agency.
One of the company’s ongoing projects in Albuquerque, called Mesa del Sol, may hold lessons for Las Vegas. The project ultimately will comprise a 12,900-acre tract of land, four town centers and 100,000 residents.
Forest City has been extolled for concentrating on bringing a wide array of businesses to the area.
“They’re pretty accomplished. They’re putting the jobs first and the homes second, which is pretty phenomenal,” said Gabriel Nims, former executive director of 1,000 Friends of New Mexico, which monitored the project as a sustainable-growth advocate. He credits Forest City with helping to bring 12,000 jobs to the area.
And yet there has been a serious downside to dealing with Forest City, he said — its bulldozer approach to taxpayer financing. Forest City demanded it, and got it. The company pulled together a powerful team of lobbyists to get a new tax increment law passed, which allows future gains in tax revenues to finance the improvements that will create those gains.
Tax increment financing allows developers to profit as communities underwrite the costs of new development projects. It’s often used to reward developers who agree to build in low-income or blighted areas.
By winning approval to float $500 million in infrastructure bonds — backed by the revenue from significant shares of future state and local taxes — Forest City will make hundreds of millions of dollars over a 25-year period, Nims said.
Forest City lobbyists “rewrote the law to favor themselves entirely,” Nims said. “We’re now struggling to close some loopholes and reform the legislation.”
(That Forest City subsidiary, called Forest City Covington, plus its officials and members of their families, donated almost $300,000 to New Mexico Gov. Richardson’s campaign committees over a six-year period, according to news reports. Richardson later supported the Forest City bond deal.)
Forest City spokesman Jeff Linton said his company is proud of its record. Ultimately, he said, the company has found a way to support communities through such projects and the benefits they bring — including jobs and new life to blighted areas — while making money.
“We’re a for-profit company,” he said. “The numbers have to make sense to us. But when we become involved in a community, it becomes a win-win.”
Linton said that despite the recession and its effect on the company, Forest City is committed to its Las Vegas project.
Apparently, Forest City recognizes the threat from the Culinary Union’s challenge to the city hall project. Linton said he’ll be in Las Vegas on Monday and Tuesday to interview local public relations companies, one of which soon will mount an effort to support the city and its deal with Forest City.
The city hall deal, involving a land swap with the city, is intricate. If one piece stalls, the whole project is put at risk, city officials say.
In July 2007, Forest City announced that it, along with another developer, LiveWork Las Vegas, had purchased a 12.7-acre site downtown, near First Street and Clark Avenue, for $136 million. Forest City acquired a 60 percent stake in the site; LiveWork has the remaining 40 percent.
The plans for that site include not only the new city hall, but a regional transportation terminal and several commercial properties that will include retail and office space.
Forest City will earn a 5 percent “construction fee” for its work on the project, according to the city. That’s 5 percent of the city hall project, which is pegged at $150 million but could run up to $267 million with possible additional construction costs.
If and when the city hall building is completed, the city would swap 6.5 acres of the adjacent Union Park, “Parcel P-Q,” worth $40 million, to Forest City in return for the 2.7 acres beneath the new city hall, which the city values at $33 million.
According to Scott Adams, head of the city’s business development office, Forest City would be obligated to make up the $7 million difference by constructing something of benefit to the city — possibly a fire station — at Union Park.
Forest City will not own the P-Q site and cannot begin developing it until the new city hall is completed, which the developer noted recently wouldn’t be until 2011 at the earliest.
Whatever the date, the company plans to build a 47-story hotel/casino on the Union Park site, the first new casino downtown since 1979. The resort would be 1.6 million square feet and include up to 1,000 hotel rooms and 120,000 square feet of casino space.
The Culinary claims that, like other cities before it, Las Vegas has given up far too much to Forest City for what it’s not getting in return — wage and benefits guarantees for workers in the future developments that other cities often have been able to procure from prominent developers like Forest City.
For starters, the union claims the city agreed to sell the P-Q site for far less than it’s worth. It points to the Master Development Agreement between the city and the developers, which says that a recent “high” appraisal found the land was worth $62.5 million — more than the $40 million the city agreed to.
Perhaps more substantively, the city has agreed to a tax increment subsidy of $3 million-$4 million per year for 19 years. This annual tax refund would funnel tax money back to Forest City, which in turn would use it for street and neighborhood improvements for the area surrounding the new city hall.
Through the tax increment, the city would be returning about $37 million to Forest City over 19 years after various obligations are deducted from these annual tax increment subsidies, including a portion for affordable housing, Adams said.
“There’s no need for a tax increment,” said Chris Bohner, research director with the Culinary. “We think this deal can be done in a much more taxpayer-friendly way.”
Bohner also said the claims coming from the city and Forest City regarding the number of jobs and other benefits the deal would produce — including projections of 1 million square feet of new office space — are “unrealistic and utterly trumped-up.”
These benefits include a predicted 13,000-plus new jobs and $4.1 billion in private investment. That’s what the city thinks it will be getting not just from the Parcel P-Q and city hall-area developments, but from the other projects tied to them — including a proposed arena for the vacated city hall site, as well as refurbishment of the shuttered Lady Luck.
Adams said the Culinary’s claims are off-target, and the city’s deal with Forest City clearly benefits Las Vegas, not just because of the jobs and investment money that will be funneled into a long-struggling downtown.
He said the $40 million price for the P-Q parcel is fair, given that the three most recent appraisals of the land prior to the 2007 agreement averaged $43.3 million. So for what the city knew at the time regarding the land’s worth, it got a good deal, he said. The $62 million appraisal came afterward, Adams said.
The tax increment, he said, is contingent on developers making sufficient progress.
In a broader sense, the new city hall and surrounding office buildings will have a “catalytic impact” on the surrounding area, Adams said.
“We’re transforming a very blighted area into a mixed-use development,” Adams said. “We have one of America’s great developers going into a bombed-out area. This is a very good thing.”
This is an example of the kind of jobs creation fuzzy think that is going into Harry Reid-Nancy Pelosi Stimulus II package. They are pulling job number out of spending plans as if they are real.
The Union apparently know that job numbers are fake.
"There's no need for a tax increment," said Chris Bohner, research director with the Culinary. "We think this deal can be done in a much more taxpayer-friendly way."
Bohner also said the claims coming from the city and Forest City regarding the number of jobs and other benefits the deal would produce -- including projections of 1 million square feet of new office space -- are "unrealistic and utterly trumped-up."
These benefits include a predicted 13,000-plus new jobs and $4.1 billion in private investment.
When do we wake from the dream and realize the goods we were sold before the last election were just glitz advertising of a mail order product made of plastic. Obama is grouping everyone that made his election possible to feed at the public trough while the eating is good.
Does anyone have any simple deals?
I'd like some simple deals please. A few pages,
12 point type, no hidden agendas.
Where is the "Obama" promise of transparency and accountability of taxpayer dollars? We need all the information out in the open. Don't be shafted by spin.
Future2012,neiman1 You amaze everyone. Harry Reid and Obama are not involved in this foolishness. Most of your ridiculous posts criticize unions and you now have the Culinary trying to save your bacon and you nilly wiilys are singing their praises.
Where were you when Bush and his boys bailed out banks,securities and insurance companies, and America got screwed good? Of course the Bush family is well known for their participation in bank fraud. Just check out Neil and his fine work in Denver with the savings and loan industry. You had no idea your hero was shoving it to you so hard and McCain could not get his uly mug back to Washington quick enough to save the day and vote for the bailout himself. It is amusing McCains kid slipped out of town here in Las Vegas in the middle of the night after he took his payolla for his contribution to the Siver State Bank failure. Both of you are the most simple minded nit wits in town.
I would hope these guys continue doing what they are doing. I don't agree with the cities reaction. I think the city shouldn't fret abuot the hundreds of millions the companies going to make, but they should see opportunity in it. It's taxed money... our money. The city should negotiate/partner with the company and find a way they would need to reinvest the "hundreds" of millions they make into our economy, especially if it's tax driven, our tax money. The constitution never said separation of "business" and state. But I wonder, would the partnership of business and state cause the same revolution as the church and state did that affected our forefathers so much???
Homer, you are right on target. These nitwits will try to blame everything on Obama. This is a a corruptionissue with the City Council and Mr. Goodman.
Their boy Bush was in pace for a select few to make a profit and a profit they made. They brought down the United States doing it.
Obama is trying now to rebuild and make us strong again by limiting expenditures by banking CEO's and by bringing jobs for families.
Rush said it all -- He hopes Obama fails. What a mindset the right wing has with Rush as their leader now.
A progressive minded redevelopment firm means they screw taxpayers with the most expensive projects they can think of. Politicians are always happy to spend other peoples money, these companies are more than happy to take it and progressive dupes are almost always willing to give a reason why the money should be blown.
One day, some of the smarter progressives, will realize they've been used to grant unwarranted profits to unscrupulous corporations.
"Smarter progressives" (whatever that is)
don't seem to choose Southern Nevada as a residence, so it seems the "screw-ers" are in the majority. God bless democracy. (sarcasm)
I know the plan is for an eight story city hall initially, does anyone know how many square feet this building is planned to be?
City Hall should be built like a giant slot machine.
Vegas councilmen need to do their homework. There is nothing to "praise" about Forest City Enterprises anymore.
Our organization called Citizens United Against Corporate Corruption never liked them even when the economy was good. We lived on their largest property called the Pavilion in Chicago. It was obvious from the get-go they liked to cut corners.
In California 10 years ago they tried to cut corners and save 1.5 million dollars. In the process they were sued for 100 million for intentionally exposing their workers to large amounts of asbestos.
Now with the economy struggling this company has gone from bad to utterly despicable.
Don't take my word for it. There's numerous sites that will serve as Forest City's current resume.
Let's start with neulandlord.com. As of this writing they are rated the VERY WORST landlords in the country. Read some of the individual reviews on this site. On an empty stomach please.
On Google check out "Horrible Forest City Enterprises, "Forest City Enterprises Slumlords" and "Brooklyn No Land Grab" just to name a few.
Then check out the latest reviews on "Chicago Pavilion Apartments Reviews." The last review and its response will tell the tale the most.
Forest City goes beyond Corporate Greed. These people use their political clout to destroy the lives of people they don't like. I can honestly say in my personal dealings with them, they are far and away the most evil people I've dealt with in my life.
There's only one way Forest City can improve our nation: By getting forced out of business.
I'm following up on my own comments sent on 2-17-09. I had to set up a new account with a different user name.
Citizens United Against Corporate Corruption is very surprised to hear that Las Vegas is doing projects with Forest City Enterprises.
Please don't put the lives of citizens in danger here. It is that bad!
For one the Ratner family are compulsive liars. Secondly a member of their family is the president of an organization which supports terrorism. Third, mold on their properties is becoming deadly. Several deaths have already been reported. It also appears they're in violation of federal law in terms of asbestos.
I have many photos to back what I'm talking about and did send some to the SUN by email. I'm surprised they weren't published. Meanwhile, here's a few links I think everybody should read. They cover what I've been talking about.
I could supply many more links, but I think folks will get the idea from these...
http://jmw.typepad.com/political_warfare...
http://www.neulandlord.com/index.php?opt...
http://www.neulandlord.com/index.php?opt...
http://www.neulandlord.com/index.php?opt...
http://www.dailygotham.com/blog/mole333/...
http://www.brooklynpaper.com/stories/31/...
http://www.brooklynpaper.com/stories/31/...
http://www.fansforfairplay.com/
http://www.brooklynpaper.com/stories/30/...
http://www.southoxford.com/pages/rants1....
http://www.apartmentratings.com/rate/IL-...
http://www.neulandlord.com/index.php?opt...
Well, I think we soon find out if the *SEC led by an Obama appointee will do a full investigation on Forest City's connection to ACORN and Obama. I handed them the goods on this. If they do their job like they're supposed to, Bruce Ratner should get indicted while Forest City gets put to rest for good. Too bad all the mold on their properties won't go away on its own.
Anyway, to make a long story short Forest City gave ACORN a 1.5 million dollar donation...er (cough) loan in exchange for lobbying Obama for stimulus for their huge Brooklyn project. Only problem is they told almost everybody else including workers they laid off that they were going bankrupt, with the NY Times apparently covering up. After a horrible 4th quarter earnings report and an overall grim outlook, their shares have skyrocketed. But will it take skyrocketing science to figure out if there's an insider scam?
Meanwhile, ACORN is being investigated for many things right now and Obama will have questions to answer as well, especially if John Conyers, a fervent Democrat and head of the Judiciary Committee sticks to his guns and follows through on his call for a full House investigation of ACORN's role in the presidential election...etc.
There's several different links on this if you Google in "Forest City ACORN Connection Covered Up"
*In this part of the country, I don't think it's necessary to explain which "SEC" I'm talking about. ;-)
Okay, I'm back a fourth time to talk about the wonderful Forest City Enterprises. This time with plenty of gruesome pictures to prove my point. Check out these two websites. After reading them, don't think you'd even want to be on the same planet as these monsters.
Please read this one first:
http://cuaccforestcitypixetc.com/
The read our followup site:
sequel.cuaccforestcitypixetc.com/