Staten Island To See World's Largest Ferris Wheel; But What About Transit?

Staten Island will soon become home to the world's largest Ferris Wheel, when a 625 foot tall wheel will be installed adjacent to the Richmond County Ballpark (home to the Staten Island Yankees) in St. George. Accompanying the amusement ride will be new retail development, plus a hotel. The location is ideally located for tourism and visitors will be treated to stunning views of New York Bay, including the Statue of Liberty, Lower Manhattan, and the rest of the New York City metro region.

The New York Wheel is coming to Staten Island, along with a retail and hotel complex featuring designer outlet shops that will pump nearly $500 million in private investment into the St. George waterfront and spur economic development, tourism and job growth into the future.

Mayor Michael Bloomberg on Thursday is set to announce that the world's tallest observation wheel and an outlet mall will be built on 14 acres next to the Richmond County Bank Ballpark at St. George, transforming the North Shore waterfront.

"Our administration has made major investments all along the North Shore of Staten Island, because we know this area is full of potential for economic growth," Bloomberg said. "But this newest plan is the most exciting of all -- it's a once-in-a-generation opportunity for economic development."

At 625 feet, the $230 million New York Wheel will exceed the height of the Singapore Flyer, currently the world's tallest observation wheel, and will also eclipse the London Eye and a "High Roller" wheel planned for the Las Vegas Strip.

The ride is also expected to exceed a wheel planned for the New Jersey Meadowlands Xanadu/American Dream project. Critics are busy blasting the plan because of a lack of transit options - and most notably a lack of parking.

The new plan would clear existing parking lots to make way for the amusement ride, and there's no clear indication of where those spots would be relocated (if at all). The lots are used by commuters who park there because of a lack of transit options to commute to Manhattan by means other than the Staten Island ferry or express buses.

Staten Island has long been a backwater when it comes to transit options, and a new MTA plan to build a park-n-ride and new station in Tottenville isn't going to solve the problems either. The new station will be ADA compliant and have intermodal links with a bus stop, but it will replace two nearby stations that will be shuttered.

Staten Islanders need more transit options, and bus rapid transit is seen as one option, but more must be done to make commuting to Manhattan and the rest of the city easier. That would include more subway access, or light rail - particularly over the Bayonne Bridge to link up with the Hudson-Bergen light rail that includes a terminus at Hoboken (with links to PATH and ferries). It's not exactly a one-seat ride, but it would better integrate Staten Island transit options with the rest of the region and reduce pressure on the already overcrowded bridges.

Sadly, the Bayonne Bridge reconstruction to permit bigger ships to pass will not include a light rail option, and the construction has been expedited to make sure the Arthur Kill channel is ready for super Panamax shipping. Transit options take a back seat to other projects.

Some local residents are complaining about the lack of transit options and increased vehicle traffic that would result from the new amusement ride, but with most visitors expecting to arrive by ferry, the impact is seen as being minimal. The problem will be what to do with those cars hoping to park near the ferry terminal for their daily commute and there's no easy answer for that.

UPDATE:
A map of the area:


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At Least 300 Killed In Pair of Factory Fires In Pakistan

When you get a chance, take a look at the garments you own. You may see quite a few that are made in Pakistan or places like Vietnam or Bangladesh. Now understand that there are unseen costs for having clothes made on the cheap. Pakistan was wracked by a pair of deadly factory fires at a garment factory and an illegal shoe factory.

The garment factory fire in Karachi killed at least 289 people, while the shoe factory fire killed at least 25 people.

And the death tolls are rising as more bodies are removed from the carnage.

The death toll there rose to 289 people Wednesday, as firefighters battled the flames for hours, said senior government official Roshan Ali Sheikh. It was one of the worst industrial accidents in Pakistan's 65-year history, and Sheikh said the death toll could rise because rescue workers were still pulling bodies out from the site in Karachi.

Most of the deaths were caused by suffocation as people caught in the basement were unable to escape when it filled with smoke, said the top firefighter in Karachi, Ehtisham-ud-Din. There were no fire exits, and at least one of the main doors leading out was locked, he said. It's unclear what caused the fire.

Workers on higher floors of the five-story building struggled to make it out of windows that were covered with metal bars. Many were injured when they jumped from the building, including a 27-year-old pregnant woman who was injured in the fall.

Another injured factory worker, Mohammad Ilyas, speaking from the hospital, said he was working with roughly 50 other men and women on one of the floors when suddenly a fireball came from the staircase.

"I jumped from my seat as did others and rushed toward the windows, but iron bars on the windows barred us from escaping. Some of us quickly took tools and machines to break the iron bars," he said. "That was how we managed to jump out of the windows down to the ground floor."

The eyewitness and victim testimony mirrors those from our own experience in the US and New York City in particular. You could get similar testimony from those who survived the Triangle Shirtwaist Factory fire in 1911, where 146 people, mostly immigrants, were killed because the factory operators locked egress doors and emergency exits and failed to provide a safe working environment. Lint and other flammable materials were allowed to pile up and all it took was a cigarette or match thrown into a scrap pile to cause the conflagration.

In the aftermath of the Triangle fire, New York engaged in a massive overhaul of workplace safety laws, and we are much better off for it.

One can only hope that the Pakistani government takes a similar tact.

Federal Judge Rules Airlines Must Stand Trial On 9/11 Negligence

American Airlines and United Airlines have been trying to get a negligence case thrown out against them over their actions on 9/11 that led to the destruction of the World Trade Center in New York City. World Trade Center Properties, which is Larry Silverstein's company, had sought to hold the airlines liable for the destruction of the WTC and claimed damages of $8.4 billion.

Judge Alvin Hellerstein ruled that the airlines couldn't get the case dismissed on summary judgment, but also capped the damages sought to $2.8 billion (the amount that Silverstein paid for the 99-year lease).

Judge Hellerstein said at this stage he could not reasonably determine the defendants' claim that insurance payments received by WTCP covered the damages the company is seeking from them.

"On this record, before trial, I am not able to make such findings," Judge Hellerstein said in a court filing.

The case is in re September 11 litigation, Case No. 21-MC-101, U.S. District Court, Southern District of New York.

Part of the airlines argument was that Silverstein has already recovered insurance proceeds.

What the ruling indicates is that there's a material issue of fact and summary judgment wasn't warranted.

If Silverstein were to recover at trial, I'd expect the airlines to immediately appeal. A ruling in Silverstein's favor would seriously hurt the airlines' bottom line, which is still on shaky ground (American is in bankruptcy and a judge just threw out the pilots' union contract deal). There's no way that this would settle since so much money is at stake and the airlines' financial situation is perilous.

If Silverstein doesn't win at trial, it would reduce his ability to build at WTC and elsewhere (though the real issue regarding construction of the stalled 2WTC and 3WTC is a lack of tenants who have committed to leasing at the unfinished buildings. Silverstein had also been hoping to build a skyscraper a few blocks away on Church Street, but that too has stalled after demolition of the former Moodys building.

NJ Transit Releases Latest Customer Survey Results

Before we get to the details, let's get to how NJ Transit released the results. For those who have participated in the past, you get emails acknowledging when the new results have been tabulated. Here's what the email said:

Dear NJ TRANSIT Customer,

Thank you for participating in our quarterly Customer Satisfaction Survey. You were one of 15,710 respondents providing feedback to help us focus our time, talent and resources on the things that matter most to you. In the June 2012 survey you told us that the most important areas for us to improve are: On-time Performance, Fares and Weekday PM peak and Evening schedules.

We hear you. With your help, NJ TRANSIT was able to improve scores across the board! Helping us to meet our overall satisfaction goal of 6.0. Best of all, over 3 out of 4 customers would recommend our services to a friend or relative!

In the next twelve months, NJ TRANSIT is once again committed to conducting quarterly customer satisfaction surveys. Please continue to assist us in this effort. This regular feedback will enable us to provide you the quality transportation service you deserve, one trip at a time!

For detailed survey results visit the NJ TRANSIT website by clicking here.

NJ TRANSIT

Anyone see what's wrong with that picture. Since when is it acceptable in a customer service setting to accept an overall goal of 6? That's what the agency is striving for? A 6 out of 10?

So, without further ado, here's the results. While the results show quarter over quarter improvement, there's a long way to go before customer service is where it needs to be. On-time performance, particularly on the Northeast Corridor has room for improvement. But perhaps the biggest problem is how the agency handles disruptions. It's all too common for equipment or signal problems to throw timetables into complete disregard. Yet, the agency still can't timely inform commuters of problems and how to make alternative arrangements. After all, NJ Transit will initially say that there's 10 to 15 minute delays, and in the blink of an eye, it's 30-40 minutes.

The single best way to improve things is for NJ Transit to spend more on infrastructure to bring it up to a state of good repair. That means upgraded and improved signals, overhead lines in conjunction with Amtrak, and new railcars. On the latter front, NJ Transit has bought new multilevel cars, but that's not a cure-all since those trains are still subject to antiquated signals and equipment that is prone to failure (think Portal Bridge).

American Dream Developers Propose Significant Mass Transit Improvements

American Dream is the new name for the former Xanadu project in the Meadowlands across from the new MetLife Stadium where the World Champion New York Giants share the field with the New York Jets. American Dream is now run by the same developers, Triple Five Worldwide, who operate the massive Mall of America and were brought in to rescue the bankrupt developers who pushed the hideous Xanadu project.

One of the major impediments to getting the project completed is dealing with the millions of people who are expected to come to this destination center. Existing highways are maxed out in capacity, particularly on game or event days at MetLife stadium. That means that mass transit has to be a central feature of bringing in people to the area.

NJ Transit built a spur line between the Meadowlands Stadium and Secaucus Junction, which currently operates only during event periods. I've used this service to go to concerts there, and it does a fairly good job of getting people to the Stadium, though it wasn't nearly as efficient as it could have been; it was designed as a spur stop, rather than a through stop, meaning that trains would have to backtrack to Secaucus for commuters or customers seeking to run up the Pascack Valley Line adding an unnecessary delay. One of the justifications for this was the added cost of cleaning up contaminated land on a route allowing a through stop.

However, this is a stop that has potential for significant growth and would add value to the existing Secaucus Junction location (both as a customer transfer point and development of parking and business opportunities there).

Triple Five Worldwide says that they're going to boost mass transit, but one has to wonder how they're going to achieve this. Are they going to pay for the 7-day rail service, or expanded bus service to the site particularly when NJ Transit just cut four bus lines to save costs.

Janna Chernetz, the New Jersey advocate for the Tri-State Transportation Campaign, an organization dedicated to reducing car dependency, questioned how NJ Transit would pay for increased service to American Dream. The public transport corporation cut four bus routes in July.

Seven bus routes make regular stops at Westfield Garden State Plaza in Paramus, the current titleholder for biggest mall in the county. The Plaza draws about 20 million shoppers a year, less than half of the expected annual turnout at American Dream.

"There's a lot of concerns as to whether or not or how New Jersey Transit's going to fund this," Chernetz said.

John Durso, a spokesman for NJ Transit, would not comment beyond one statement:
"Right now we're still in the process of finalizing our plan to provide robust bus and rail service to support this important economic development project."

Transportation advocates and officials from neighboring municipalities have questioned whether the region can handle the traffic that American Dream is expected to generate. Triple Five says on the American Dream website that the center will draw between 40 and 55 million annual visitors.

In July, Triple Five announced that it would partner with DreamWorks Animation company to create an indoor theme park at American Dream. Don Ghermezian, the president of Triple Five, said he expected the park to become a worldwide attraction.

The Giants and Jets have sued to block Triple Five's plans, claiming that they didn't consult the teams on the traffic plans, since it could affect game days.

Knicks Linsanity Ends In Disaster

Jeremy Lin was one of the feel good stories of the last NBA season. He came out of nowhere to be starting guard for the New York Knicks after injuries felled the starters. He managed more than respectable statistics in his 1/3 of a season's worth of starts, but then was felled with an injury that kept him out of the playoffs.

Despite the injury, Lin had a good chance of being the starter for the Knicks in the 2012-2013 season had the Knicks sought to keep him on the team. The Knicks thought it was a good idea to let Lin shop his skills around. That was the first of many bad moves the Knicks made this offseason.

Lin got a great deal from the Houston Rockets (the very team that had released Lin on waivers in 2011 when the Knicks picked him up). The Knicks claimed that they would match the offer; Lin apparently went back to the Rockets and reworked the deal with a third year that seemingly would have imposed huge salary cap considerations for the Knicks. The Knicks dithered, then picked up a boatload of over-the-hill, has-beens or never-weres and then ultimately refused to resign Lin.

Lin is now on the Rockets, and the Knicks are inspiring the ire of Knick fans who knew the value that Lin brought to the Garden - not only on the court but with the huge impact he made off the court. Linsanity will play out in Houston, but it didn't have to be that way.

The new CBA included a provision to make it much easier for teams to release players with bad contracts. It’s called the stretch provision. Here it is right out of Larry Coon’s invaluable CBA FAQ that can be found here: cbafaq.com.

Otherwise (if the contract or extension was signed under the current CBA), the remaining guaranteed salary is paid over twice the number of remaining years, plus one, per the Stretch provision:

If the player’s salary payments are spread-out using the Stretch provision, the team may elect to stretch the salary cap charge to match2. For example, if two seasons remain on the player’s contract when he is waived, and the payment is spread-out over five years per the Stretch provision, then the team may elect to spread-out the salary cap hit over those same five years.
In other words, the Knicks will have the option after the 2013-2014 season to waive Jeremy Lin, take his third-year $15 million salary and spread it out with its cap hit over the following three seasons. In each of those three seasons, the Knicks would have $5 million of dead money on the cap. Doing that would all but eliminate the insane luxury tax payment the Knicks would have to endure in 2014-2015, which is supposedly stopping them from re-signing Lin.

Obviously, this isn’t an ideal plan or scenario. The Knicks wouldn’t be resigning Lin with the idea of waiving him after 2013. Instead, this is simply a way out if Lin turns out to be nothing more than a backup quality point guard. Having dead money on the cap for three seasons is obviously a bad thing, but it’s nothing the franchise couldn’t survive.

Lin could have turned out to be above average as a point guard over full seasons, but he would be at least as good as his replacements (Felton and Kidd - both of which are not the draw Lin was, and in Kidd's case, without the worry of a DUI in waiting). Indeed, Kidd was barely named to the team when he was arrested on DUI.

The toxic locker room situation is nothing to sneeze at either. The pieces that the Dolans have assembled over the past couple of years was self-centered so that Lin's selfless play was freshening and worth watching. Now? It's anybody's guess, but I doubt the team will be nearly as fun to watch.

Knick fans are already indicating that they're going to consider the Nets over the Knicks, which is money to Jay-Z's ears.

Why Infrastructure Matters

Ever wonder where your drinking water comes from and how the water utilities set the rates that they do? Well, the Record put together a comprehensive report about Northern New Jersey water providers, and the resulting picture shines a light on the gross negligence carried out by these providers.

For far too long, the water providers, including United Water and Ridgewood Water and Ho Ho Kus water, ignored leaking water pipes unless they caused major disruptions (water main breaks), and that's cost everyone.

It's cost the providers because they're now drawing more water than allotted. They're treating more water than they can bill for. And it's costing rate payers because they're now on the hook for having to deal with the utilities' failures to deal with leaks for years on end.

No other industry would allow leakage (or shrinkage in a business setting) of 30%, let alone 20% or 15%, and yet that's what Ho Ho Kus water did.

Last year alone, United Water could not account for 26 percent of the water it treated and pumped. That amounts to 10.6 billion gallons, enough to fill the Oradell Reservoir three times over. “United Water has a lot of leaks in their system. It’s one of the leakiest systems I know,” said Robert Kecskes, a retired water supply expert for the state Department of Environmental Protection.

But United Water isn’t the only supplier with losses significantly above the industry standard of 15 percent. In 2011, Ho-Ho-Kus couldn’t account for 33 percent of the water it pumped and treated — one of every three gallons — according to state documents. Oakland lost 28 percent, while Ridgewood Water lost 20 percent. In fact, across the nation, water utilities lose billions of gallons of drinking water each year because of their aging infrastructure.

Some of that water gets used — when water mains are flushed or firefighters open hydrants. In addition, some utilities rely on old and faulty meters, which fail to detect all customer consumption. But experts say the bulk of the unaccounted water is wasted, spewing out of burst water mains or dripping through holes in corroded pipes or leaky joints.

One of the state’s worst loss rates occurred in Camden, where a 2009 state audit found that 45 percent of the drinking water couldn’t be accounted for. That figure was “more comparable to that of cities in developing countries,” the audit said. United Water, which operated the system at the time, blamed the losses on “leaks in the city’s aging pipes.”

Lost water is a serious issue in North Jersey, where drinking water is an increasingly scarce resource. Utilities are caught between the clashing realities of rising demand and chronically low reservoirs. The watershed is under so much stress that some utilities have been forbidden by the state from drilling new wells in their search for more water.

It's going to take billions of dollars statewide, and hundreds of billions to improve the state of water delivery across the nation. That's an infrastructure project worthy of serious investment - since everyone relies upon a safe water supply.

New York City is undertaking a multi-decade Water Tunnel 3 project so that they can build a redundant water supply system and check the other tunnels for leaks for the first time since they were built; neither of the other tunnels have been taken out of service since they were built because millions of New York City residents rely upon the water supplied. The City understands that it's losing millions of gallons a day from leaks, and the new tunnel is a first step at remedying the problem. They're also in the process of dealing with other leaks in the system with additional tunnel construction.

And that's only on the water delivery side. Transmitting and treating sewage is the other end, and that system is also broken around the nation. Far too much ends up in waterways without being treated, including in New York City where a combined sewer system means that rainfall can overwhelm treatment plants and shunt hundreds of millions of gallons of water into the waterways fouling them on a regular basis.

That needs to be fixed - and the problems aren't limited to New York City. It's just that New York City is among those places where the problems have been identified and solutions are being considered and implemented on a decades-long pace that should be accelerated.

Ruling Allows For-Profit Colleges To Continue Bilking Students

People who are considering higher education better think twice about going to a for-profit institution. You're more likely to end up with a whole load of debt and nothing to show for it since the degrees offered aren't worth the paper they're printed on.

And a ruling allows for-profit colleges to continue bilking their students with degrees that aren't worth the paper they're written on and can continue to get federal student loans to cover the costs (even as the students can't repay since they can't land jobs due to having degrees that aren't worth the paper they're written on).

Congratulations are in order for the for-profit college industry, which won a major court ruling this week—a judge ruled that the Department of Education could not penalize these fake schools just because they routinely destroyed the financial future of their graduates. Here are the outrageous DoE rules, which were struck down as "arbitrary and capricious," via the WSJ:

The rules would have required that a school meet one of three requirements for three of four years, or lose access to federal student aid: at least 35% of recent graduates are repaying their loans; loan payments eat up no more than 12% of graduates' average annual earnings; or payments consume no more than 30% of graduates' average discretionary income.

The problem is even worse when you consider that 10% of students nationwide are enrolled in for-profits, but they take 25% of federal student loans, and account for 50% of defaults (and see here).

A Not So Sweet Price Increase

If you're a baker, this is going to leave a sour taste in your mouth. Some producers are no longer packaging sugar in five pound packages, but rather shipping out four pound packages.

By itself, that wouldn't be so bad, but the prices aren't cheaper. They're simply selling the four pound packages at the former five pound price.

It was only a matter of time before 4-pound bags of sugar became the norm because we've been seeing some house brands, as well as brand names in fancy containers, packaged in 4-pound bags, 1 pound less than the longtime standard.

But Sunday, while doing my monthly Marketbasket Survey, the Domino and house brands of sugar at a local Stop & Shop came in 4-pound bags only.

If you looked, the smaller size was listed on each, but who bothers to look that closely, especially when you think you're getting a bargain. The price was $2.99, while ShopRite had sugar for $3.09 for 5 pounds and Pathmark had it for $3.29 — which were much better deals on a per-pound basis.

This is just the latest in a long line of shrinking packages, including tuna, cereal, orange juice, ice cream, coffee and most canned goods. It's a way for food companies to quietly raise prices while seeming to hold the line on the shelf price.

So, at $3 a package, it works out to about $0.7475 per pound for the 4 pound package, but $.598 per pound in the 5 pound package.

By my math, that's a not quite stealthy 25% price increase. Nicely done!

Call it inflation or passing along a not so stealthy price hike on to consumers, but this has become a staple in food and other consumer goods. Prices may look stable, but the product size has dropped, meaning that you'll end up having to buy more of that product over time.

It's yet another reason to pay attention to product size and the shelf information to see price per unit - to compare costs.

MTA East Side Access Schedule Delayed Again; Symptom of Larger Problems

While the MTA seems to be making incremental progress on carrying out routine maintenance using an expanded Fastrack program that shuts down entire segments of the subway system overnight during the week, its capital program remains in shambles.

In particular, the East Side Access program's cost has ballooned to $8.2 billion and the completion has been pushed back to 2019.

The LIRR extension to Grand Central Terminal may cost $920 million more than the MTA’s most recent estimate, officials said Monday.

The Metropolitan Transportation Authority also pushed back the East Side Access project’s expected completion date by three years to August 2019.

Officials cited the enormous complexity of a project that includes building new tunnels in Queens and Manhattan, and the reconfiguration of a massive juncture that’s being used by three different railroads.

But MTA Chairman Joseph Lhota also said authority staffers in the past had put forward unrealistic construction schedules and budgets.

“The era of underestimating the cost of big projects is over,” Lhota said after an MTA committee meeting. “We’re going to be realistic about the cost and we’re going to budget accordingly.”

That promise, however, may be of little comfort to Long Island commuters longing to take a train to Grand Central on the East Side of Manhattan rather than Penn Station.

“Frustration seems to be the commuters
’ daily lot,” said Mark Epstein, chairman of the Long Island Rail Road Commuters Council. “Fares are going up, service is cut, the commuter tax benefit is cut, and now ESA completion date pushed back yet again.”

That's completely unacceptable and the additional costs are being borne by an agency ill equipped to deal with the debt.

It should not be taking decades for incremental improvements to the subway system and mass transit. The blame isn't solely on the MTA; it's also on the contractors who underbid and underestimate the costs of the projects and know that as their costs balloon, they'll get picked up by the MTA and taxpayers.

There's no reason that construction costs for mass transit projects in New York City and the US in general should exceed those in Europe or Asia. We aren't getting the kind of value for the money spent. It means that projects take far longer to be completed, far fewer projects get undertaken, and the economy suffers.

Infrastructure is the backbone of the economy and failing to invest in the infrastructure has long term competitive costs. It means that other countries and cities around the world can gain a competitive advantage for everything from international shipping to affecting local businesses shipping cross-town. We need to radically rethink priorities on infrastructure and need a long term plan to reduce costs while expanding and improving existing infrastructure.

Congress, and particularly the GOP, in its myopic vision of trying to reduce debts without consideration of tax increases, is underfunding infrastructure projects across the nation and it is already having significant effects on the economy.

It should not take three days for a freight train to transit through Chicago, but because of the bottlenecks and grade-level crossings, that's precisely what's happening. It's quicker to walk across Chicago than for a freight train to make the trip.

Various ports around the nation are losing business to Canadian ports because they've undertaken dredging to deepen the ports or don't have structural impediments to bigger ships entering the ports. In the New York Metro area, the Port Authority is trying to fast track the Bayonne Bridge rehabilitation project that would increase the height of the bridge to allow post-Panamax ships to access the region's key ports in time to maintain or gain business when the new Panama Canal channel opens in 2014.

Other countries are racing ahead with new and improved infrastructure projects at a time when our nation is barely funding maintenance and rehabilitation of existing bridges, tunnels, rails, and even water/sewer projects.

That has to change.

As for the East Side Access, it should be noted that the delays and costs as noted by the MTA are now in line with the federal estimates given several years ago. How is it that the federal government had a better grasp of the costs than the MTA on its own project?

It should be a reminder too that when NJ Transit claimed that it could keep the costs for its ARC Tunnel project to under $10 billion, that it wasn't supported by the federal estimates, which ran as high as $12.8 billion - or $4 billion more than the $8.7 billion accepted cost for the project when Gov. Christie killed the project due to leaving New Jersey taxpayers on the hook for all the overruns.

NYC Cuts New Deal To Redevelop Willets Point With Mets Owners

New York City has cut a new deal to redevelop Willets Point with the Mets ownership group. Willets Point has long been eyed for redevelopment. It's a neighborhood that is largely off the grid - it lacks sewer hookups and is a warren of junkyards and repair shops in the shadow of the gleaming new CitiField. Since construction got underway to build the stadium a few years back, Mayor Bloomberg had looked to get the redevelopment going.

Those efforts had stalled until now.

A new deal between the Bloomberg administration and a group of developers, including the owners of the Mets, will call for the remediation and redevelopment of a 20-acre area of the blighted neighborhood next to Citi Field, adding retail and ultimately new housing in a time frame that extends past an initial proposed 10-year plan, a person familiar with the agreement told The Associated Press.

The person requested anonymity because the person was not authorized to discuss the matter ahead of an announcement.

Under the agreement, the developers, Related Companies and Sterling Equities, would clean up the area and construct a mall on the west side of the ballpark. A 200-room hotel and “two retail strips” are part of the plan for the opposite end of the stadium, the New York Times reported.

Then, no later than 2025, they would start construction on a mixed-use component that would include housing and measure anywhere from 1.3 million square feet up to 4.5 million square feet. The founders of Sterling Equities are Fred Wilpon and Saul Katz, the owners of the Mets.

The redevelopment of the area, currently populated by auto-repair shops and junkyards and lacking infrastructure as basic as sewers, has long been a goal of Mayor Michael Bloomberg’s. In 2007, he announced a 10-year initiative that would bring homes and commercial space to the area.

The new agreement extends past that period, but the person speaking to the AP said that by the original end point of 2017, much would have been done including the vital first step of cleaning the area up and construction of some of the retail spaces.

Sterling Equities is run by Mets owners Fred Wilpon and Saul Katz, both of whom are embroiled in the ongoing fallout of the Bernie Madoff Ponzi scheme that defrauded investors. The Wilpons have been claiming that they were as much victims of the scam as everyone else, but the trustee has targeted funds owned by the Wilpons for reimbursing other victims.

The Mets have had a serious cash crunch for the better part of the past couple of years, and it's limited their ability to field competitive teams. They've also sold off minority ownership shares to investors to help raise funds for operations on and off the field.

So, how is it that the City thinks that Sterling Equities is in a financial position to make any of this happen?

One has to wonder whether they're actually going to be putting up any money of their own and are instead hoping for others to pay the way for them to move ahead on a deal that would benefit them financially in the long run.

Related Companies has deep pockets, and their real estate ventures includes getting another one of Bloomberg's pet redevelopment projects underway - the Hudson Yards. They've got the ability to get this done and they have the experience to build out combined retail and commercial space.

It would be really interesting and insightful to figure out the real working relationship here - and how it is structured.

(Bovis) Lend Lease Admits Fraud, Avoids Criminal Charges

Lend Lease (formerly known as Bovis Lend Lease) admitted to bilking major clients out of tens of millions of dollars by overcharging on projects around the New York City metro area. It will be fined $56 million, but only one person will go to jail despite the widespread practice.

You might have heard of a few of the projects on which Lend Lease worked (or is working): Citifield, the World Trade Center reconstruction, the demolition of the former Deutsche Bank building (where a fire killed two firefighters due to lack of fire suppression equipment being active in the building and corruption/negligence among those deconstructing the building) and renovations at Grand Central Terminal.

The practice that led to the overbilling is so widespread in the construction business that it has a name: eight plus two. Behind the fraud was James Abadie, 55, who faces up to 20 years in prison plus fines:

At the heart of the overbilling scheme is a practice that investigators contend — and many construction executives concede — is so widespread that it even has a name: eight plus two. The company, Lend Lease, routinely paid labor foremen for one or two hours of overtime every day that they never worked, according to court papers. The payments were an incentive for the more skilled foremen to stay on a project while the company billed clients for their fictitious labor.

In announcing the charges and what she called the largest construction-fraud settlement in New York City history, Loretta E. Lynch, the United States attorney in Brooklyn, suggested that the conduct went beyond Lend Lease, saying the investigation was continuing and “encompasses the wider part of the industry.”

The scheme carried out by the company defrauded government agencies and private developers of about $19 million, much of it tax money, Ms. Lynch said at a news conference. She was joined by officials from several other agencies to announce a deferred-prosecution agreement.

But the amount is most likely far higher because prosecutors said they believed that Lend Lease conducted the practice for decades and that it extended to other companies.

Indeed, in a sign of the extent of the corruption, the public-works projects on which Lend Lease admitted billing city, state and federal agencies for fictitious work included the new federal courthouse in Brooklyn, where the charges against the company and its former leader were filed.

The projects also included the renovation of Ms. Lynch’s offices in Brooklyn and the demolition of the Deutsche Bank building at ground zero, where a blaze in 2007 killed two firefighters.

During the three-year inquiry, investigators pored over more than a million documents and conducted hundreds of interviews, said Jan K. Fedarcyk, an assistant Federal Bureau of Investigation director, who spoke at the news conference with Ms. Lynch and the inspector of the Port Authority of New York and New Jersey, Robert Van Etten.

Prosecutors say that Lend Lease had changed its practices by the time it began working on the September 11th Memorial, but the fact remains that only Abalie will see the inside of a jail cell. Others were involved in the practices, and there was a culture that encouraged these actions.

The overbilling involved the following projects:

the United States Post Office/Bankruptcy Court in Brooklyn, New York; the Bronx Criminal Courthouse in the Bronx, New York; Grand Central Terminal; the Deutsche Bank building deconstruction in New York, New York; CitiField in Queens, New York; and the very United States Courthouse in which Bovis was charged and Abadie pled guilty this morning.

The fraud extended beyond mere overbilling. The company contended that it met terms of women and minority participation on construction projects, but it never did. The company merely shifted around its own workforce to suit its needs:

The government said the company also duped the states of New York and New Jersey into believing it had complied with programs designed to boost the participation of small construction companies and companies owned by women or minorities on public construction projects when it had not.

Although New Jersey eliminated its minority and women-owned portion of its program in 2003, obligations incorporated into contracts for public construction projects remained intact, court papers said.

As an example of how minority hiring requirements were dodged, prosecutors described an instance in which Lend Lease US Construction falsely claimed that a company certified as a minority hiring unit would perform 100 per cent of the general contract work on construction at the Bronx Criminal Courthouse.

In reality, Lend Lease US Construction performed most of the work itself by directly managing the union, the government said.

It said the company placed many of its long-term union employees on the minority-hiring compliant company's payroll, hired other workers and relegated the smaller company's role to providing paycheques for work performed by or at the direction of Lend Lease US Construction employees.

These practices also point to the reason why some projects cost as much as they do, and why cost estimates on major construction projects always seem to go overbudget. Does it address all the reasons? Not at all. But eliminating overbilling on construction projects is a start.

Are the NY Mets Screwed On Day One of 2012 Season?

The New York Post is reporting that the prospect of empty seats at today's season opener has the team management freaked out:

The Mets are so terrified by the embarrassing prospect of playing to empty seats at today's opener, they've made an Amazin' "buy one get one free" pitch.

Some 15,000 of their fans have been offered one free seat for Saturday's or Sunday's Atlanta game in exchange for every ticket they buy for today’s opener.

Plenty of the 41,880 seats for this afternoon’s game at Citi Field against the Braves were still available early today.

If the Mets don’t sell out, it will be the first home opener since 1997 that didn’t fill their stadium.

The Mets sent more emails yesterday, cutting ticket prices to today’s game by between $4 and $22, depending on the seat.

At this rate, the Mets are going to be offering anyone who buys a game-day ticket season tickets for all remaining games by June 1. That’s just bad. Real bad.

The team isn't expected to be very good, but this is the first day of the new season and fans should be optimistic that they've got baseball to look forward to in a great ballpark (which in many respects has more creature comforts and better food including the Shake Shack than the new Yankees Stadium, which was built at the same time) and finally has enough Met memorabilia to make one think that the Mets actually play there. The Mets ownership also finally realized that they needed to bring in the fences and reduce their height because they simply couldn't generate runs at home.

So, what else can the team do to get fans in the stands? Reducing ticket prices further seems to be the way to go, including on those games that the team charged more in the tiered pricing scheme that charged more for games against some division rivals (and the Yankees of course).

It might make sense for the Mets to seriously cut ticket prices, and to include other incentives for those who already bought season tickets or ticket packs, because they’ll be able to make it back on concessions. If no one is at the games, they aren’t making money on concessions.

Then again, if no one is going to games, it might make the Citifield Shake Shack the only one in the chain where you wont have to wait on line for a great burger or shake in the chain's presence across the city.

GM Throws $400 Million At Peugeot With No End-Game

This story should get wider coverage. General Motors, which is still trying to shed its legacy costs and has shown some strength in the current fiscal year, made the decision to invest in flagging French automaker Peugeot to the tune of $400 million.

There's absolutely no reason that GM should have made the move. It doesn't help GM in the slightest and adversely affects GM's bottom line. Peugeot has crummy credit ratings from the ratings companies, and there is no upside.

Yet, American taxpayers now have exposure to the ailing French company. Why?

Peugeot can undoubtedly use the cash. Last year, Peugeot’s auto making division lost $123 million. And on March 1 – just a day after the deal with GM was announced – Moody’s downgraded Peugeot’s credit rating to junk status with a negative outlook, citing “severe deterioration” of its finances.

In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.

GM has said the deal is designed to give GM access to Peugeot’s expertise in small car and hybrid vehicle technology and ultimately allow both GM and Peugeot to save money by pooling their resources. But auto industry analysts find the deal mystifying.

An analysis by auto industry consultants IHS said it is “somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalise its European production, cut costs, or deal with labour rates.”

The deal will allow the Peugeot family to reduce its share of the family business. The family, which Forbes estimated to be worth more than $2 billion, still owns about 30 percent of the company. The Peugeots declined the opportunity to buy a piece of GM.

GM’s European operations have not enjoyed the same kind of rebound as its US operations. In fact, GM’s European operations, primarily the carmaker Opel, lost more than $700 million last year.

GM doesn't benefit nearly as much as their spinmeisters would love people to believe. GM has economies of scale that Peugeot doesn't have, and it would take years for GM to incorporate any Peugeot technologies into GM branded cars. Meanwhile, GM's European division is suffering from huge losses (offset by the rebounding American car market), and the money would have been better put to use investing in the company or setting aside a rainy day fund in case the markets go south again.

To say that the decision was baffling is an understatement. It makes no sense. This exposes the company to tons of downside risk, and little rationalization of existing GM assets in Europe. It's $400-$450 million that could be used to help shore up the Opel division and freshen/update models that are in need.

Yankee Stadium Parking Deal A Disaster For New York City

In their efforts to build a new stadium, the New York Yankees convinced the Bloomberg Administration that more parking was needed for the stadium. So, the Bloomberg Administration lined up financing for building parking garages and lots around the new stadium.

Well, it turns out that fans have avoided the parking like the plague and it's such a disaster that the parking lot bonding may default costing the City $237 million in the process.

Time is running out, in other words, to avoid one of the biggest failures in decades of bonds issued by a New York City agency.

The simple fact is that Bloomberg and his aides made a costly mistake when they succumbed back in 2005 to the Yankees’ demand for a 9,000-space garage system. It was all part of the deal for the team to build a new stadium in the Bronx.

But Yankees fans have shunned the garages, where gameday self-parking rates soared last year to $35 — up from $23 previously and more than double the original $14 charge. Valet parking now goes for $48.

So many fans are staying away, in part due to the lure of cheaper local competition, that Bronx Parking Development now projects only 3,500 paying customers per game for the upcoming season.

And that occupancy rate — a measly 38% — will exist only on days when the Bronx Bombers take the field. For the rest of the year, the garages will remain a ghost town, since a mere 70 South Bronx residents currently park there each day.

At the same time, Bronx Parking Development has turned into a giant tax deadbeat. The firm, which is not connected to the Yankees, has failed to pay any rent or property taxes, even though the garages sit on 21 acres of leased public land.

It currently owes the city a whopping $25 million.

The City's solution to this mess? Another bond proposal to build a hotel complex around the stadium.

I'm sorry, but the better solution is to restore parkland that was destroyed as part of relocating Yankee Stadium across the street, and to open up bidding for prime locations for affordable housing and combined retail/residential development. This is a prime location in the City, and the proximity to both a Metro North train station that leads directly into Grand Central Terminal and subways means that it's an easy commute to the heart of the city. Parking should have taken a back seat considering that fans are doing whatever they can to avoid paying through the nose for parking - even circling streets nearby to find on-street parking or lower cost lot alternatives.

The City and the agency that issued the bonds (the IDA) claims that the city and IDA aren't going to be on the hook for the costs. Instead, they claim that the bondholders will be stuck with any potential default. I don't find that completely reassuring, and it also means that the IDA will have a harder time issuing bonds in the future on more worthwhile projects, and bondholders might be more leery of IDA bond issuances.

Thus far, developers have not put forth proposals for hotels or housing on the affected lots, unless they receive sufficient incentives (read as tax credits). Due to the way that the City has mismanaged this resource, the City will have a hard time getting top dollar for the properties.

MF Global Clients May Never See $1.2 Billion Recovered

MF Global, the company that was headed up by prominent Democrat and former New Jersey Governor Jon Corzine, may never know what happened to the $1.2 billion in mission client money even though investigators thought they were making progress in unwinding the company's actions immediately prior to the bankruptcy:

Previously it looked as though regulators and probably the company's CEO Jon Corzine knew where that shortfall ended up without saying where they thought it went publicly. Some news outlets reported that, for example, roughly $200 million of the missing customer money went to JP Morgan. And today, The Journal's Scott Patterson and Aaron Lucchetti make the case for why that missing $1.2 billion is gone forever. One hypothesis floated again is that MF Global employees dipped into customer money to improperly use in other parts of the company. Another theory is that the company simply lost customers' funds on bad bets outside of the European bond market: "Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money."

That's right; no one knows what happened to the money and they are characterizing the money as having been "vaporized". If the trustee in bankruptcy can't find the money, then the clients whose money was stolen will have to figure out the next steps. I can't imagine them not suing Corzine and other key figures in the company for fraud and breach of fiduciary responsibility in both their individual and corporate obligations.

Still, the money wasn't vaporized; it was misappropriated and stolen from client accounts. That's a criminal matter, and I concur with the view that a grand jury should be investigating filing charges against key individuals at MF Global, up to and including Corzine.

MF Global so completely ignored general accounting principles and the first rule of investments and brokerages - to keep corporate and client funds separate. Their malfeasance is overwhelming and Congress will once again hold hearings on the situation on February 2.

Cornell University's Bid To Develop Tech Campus On Roosevelt Island Just Improved

Earlier this year, New York City promoted an effort to redevelop a portion of Roosevelt Island as a tech campus/incubator for tech firms. Several major universities submitted bids, including Cornell University and Stanford. The Cornell bid was a joint effort between Cornell and Israel's Technion University.

Stanford has dropped out of the running.

The university and its Board of Trustees "have determined that it would not be in the best interests of the university to continue to pursue the opportunity," according to a press release from Stanford that just landed in the Curbed inbox. Stanford had submitted a 600-page proposal for a $2.5 billion, 10-acre campus (rendered at right) housing 200 faculty and 2,000 students that would open in 2016 and take 30 years to develop. But apparently "the university could not be certain that it could proceed in a way that ensured the success of the campus" and so decided to withdraw.

This decidedly improves the chances that the Cornell bid wins. I don't give Columbia University's bid much of a chance, since the university has been busy trying to expand its campus in Washington Heights and needs to devote its resources there; a Roosevelt Island campus would be a distraction to the efforts already underway.

Kill The Mobile Phone Robo-Call Bill (H.R. 3035)

Legislation was introduced in Congress that would allow businesses to robo-call cell phones with unsolicited advertising. Proponents claim that this is an important upgrade to phone technology and existing law:

If you like getting those automated messages on your home phone, then you’re just going to love a proposal in Congress. The bill (H.R. 3035) would allow these “robo-calls” to your cell phone — even if you didn’t give a company permission to contact you at that number.

Supporters of the “Mobile Informational Call Act of 2011” include the U.S. Chamber of Commerce and the Air Transport Association, as well as groups that represent bankers, mortgage lenders, college loan programs and debt collectors.

In a letter to Congress, they claim H.R. 3035 is needed to “modernize” existing law by enacting “limited common-sense revisions to facilitate the delivery of time-sensitive consumer information to mobile devices, while continuing to protect wireless consumers from unwanted telemarketing calls.”

They say robo-calls to cell phones would be used to alert you to food and drug recalls, data breaches, flight delays and appointment cancellations.

Howard Waltzman, an attorney representing the business groups supporting H.R. 3035, says this “non-marketing commercial information” is important to people. He tells me the ability to make contact via a mobile phone is “critical” because so many people now use a wireless device as their primary or only means of phone communication.

That's quite a bit of misinformation packed into a few paragraphs. Right now, as a Delta customer, I can get notifications of flight delays or issues to my phone - and I can give them that information.

There's no reason that a company with whom I do no business should be able to call my cell phone unsolicited. Fact is that most people pay for airtime - both in minutes outgoing and incoming. If these businesses are able to make these unsolicited calls, people are going to see their minutes used up that much quicker because these robo-calls will quickly fill up the airtime and are a direct cost imposed on the cell phone owner. It would also adversely affect those who use prepaid wireless plans (the majority of which are lower income users).

That's absolutely inexcusable.

People can opt in to receive all kinds of product updates and warnings, including food and drug recalls. There's no reason to give companies the right to make unsolicited calls. However, some of these businesses are seeing their revenues drop as an increasing number of people and businesses eliminate their land-line service and switch to cell-phone carriers.

That's the real financial impetus for the change.

UPDATE:
Added a link to the MSNBC story. Also, here's a direct link to the text of the legislation.

Corzine; MF Global Executives Testify Before Congress Again Today

It's another day of testimony before Congress for disgraced former New Jersey Governor Jon Corzine and several top MF Global executives. They'll again have to state that they have no idea where nearly $1.2 billion in customer money went. They'll claim that they aren't responsible for the accounting of the monies, despite being in a position to not only be responsible for the company policies, but are fiduciaries for their clients and made the decisions that sank MF Global in the first place.

Bradley Abelow, MF Global's president and chief operating officer, and Henri Steenkamp, the chief financial officer, are also scheduled to testify to the Senate Agriculture Committee.

All three say they don't know where the money is, according to prepared remarks and Corzine's previous testimony to a House panel last week. Nor do they take responsibility for authorizing the movement of money out of customer accounts.

Depending on the circumstances, transferring money from customers' accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.

MF Global collapsed into the eighth-largest bankruptcy in U.S. history on Oct. 31 after a disastrous bet on European debt. Corzine stepped down as CEO on Nov. 4.

Corzine told the House Agriculture Committee last week that he didn't know what happened to the money. He said he didn't become aware of the shortfall until Oct. 30, one day before the firm filed for bankruptcy protection.

In his prepared testimony, Steenkamp says he had no direct involvement in the transfer of funds.

"Direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties," Steenkamp says.

Abelow says he cannot explain what happened to the money without having access to MF Global documents, which a trustee now controls.

They'll try to distance themselves from the scandal, but that's frankly impossible to do. They are going to do their best to avoid falling into a perjury trap, so the amount of information that they can shed on the inner workings at MF Global in the runup to the collapse will be at a minimum.

Anything they say can and will be used against them in what is likely to be a series of criminal and civil suits, but so too is the fact that they simply claim ignorance, being outside the loop of those responsible for the transactions that led to the missing $1.2 billion.

Corzine, despite his attempts to fall on his sword, continues to claim that he isn't a responsible party in the missing money. Is it possible that some underling undertook the illegal actions that led to the missing money? Absolutely. However, it was a policy initiated by Corzine to expand trading on sovereign debt that pushed MF Global to the brink. Corzine took the risks, removed those involved in managing risks and were warning about the downside, and pushed ahead despite the sovereign debt risks increasing MF Global's exposure.

Groupon Allows Companies To Reinvent Ways To Fail

I have no sympathy for this company. A company working through Groupon didn't think of the consequences of offering a too-good-to-be true deal; the deal wiped out the bakery's profits for the year because they couldn't do basic math.

Brown's Need a Cake bakery, which employs eight staff in Reading, U.K., had to bring in temporary workers through an employment agency to fulfil the orders, at a cost of $19,500 (£12,500) — wiping out her profits for the year.

She also lost between $2.90 (£2.50) and $4.70 (£3) on each batch she sold, the BBC reported.

"Without doubt, it was my worst ever business decision," she told the BBC. "We had thousands of orders pouring in that really we hadn't expected to have. A much larger company would have difficulty coping."

It works out great for the consumer, but it sucked royally for the bakery.

Let's do the math:
Rachel Brown offered a 75% discount on 12 cupcakes, which normally cost $40 (£26), the BBC reported.

However, Brown under-estimated the popularity of the deal and was unable to cope when 8,500 people signed up for the $10 (£6.50) bargain.

Had she limited the numbers sold to several hundred people (which is quite common on these deals), or reduced the discount to say 50% (again quite common), they wouldn't have gotten into the financial pickle and may have picked up new customers for the long haul. If she had kept her underlying costs in mind when making the deal, she would have realized that each batch would need to be sold at no less than £13 to maintain her profit margin and stay ahead of her costs. In reality, she could have sold the coupons through Groupon for £15, which was still £11 less than their normal price. That's a 42% discount. Not shabby at all, but one that allows the company to still make money (or at least not completely eat up the year's profits.

The flipside is that consumers become accustomed to these kinds of deals and wont buy unless they get comparable discounts.

So, this bakery has figured out that it can't offer discounts that it can't afford. Will someone tell that to the auto industry?

That's one of the problems that continues to hamper car sales; consumers get used to major rebates, deals, cash allowances, and other enticements and if the car company doesn't come up with them, the consumers sit on the sidelines. Few car models, let alone brands, are able to pull off auto sales without an incessant barrage of incentives. Consumers get addicted to the deals and are more likely to buy a car when the cars go on sale with the incentives than when there are no incentives for the same make/model.

But all those deals hit the bottom line for the automakers even if it moves the car off the lot. The inability to move cars helped lay low the auto industry and brought GM and Chrysler into bankruptcy (though it wasn't helped by legacy worker costs, health care costs, pensions, and lackluster product lines).