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January 26, 2007

News Analysis: Ratner Bumps a Numbers Grinder

Brooklyn Downtown Star

Norman Oder explains the things your mayor never told you about the financing of Bruce Ratner's Atlantic Yards:

Hailing the Barclays Center naming rights agreement last Thursday at the Brooklyn Museum's Beaux-Arts Court, Mayor Mike Bloomberg declared, "Over the next 20 years, they will be putting more than $300 million into Brooklyn."

But Barclays wouldn't be giving the money - up to $400 million, according to some press accounts - to the city or the state, the latter of which would create a local development corporation to be the nominal owner of the arena. Rather, as went distinctly unmentioned at the press extravaganza, the money would go to Forest City Ratner and, presumably, defray the costs of the project, notably the $637.2 million arena price tag - the most expensive arena in the country.

Oder recounts how he was boxed out by team Ratner and took an elbow (what, no foul?!) as he was trying to ask Ratner if the Barclays bucks would pay for nearly half of the arena's constuction costs.

And speaking about paying for the arena's construction, what about the PILOTS (Payments in Lieu of Taxes)?

Rather, it would offer payments-in-lieu-of-taxes, or PILOTs, sufficient to cover debt service on the [arena] bonds, including "excess PILOT payments" to defray the cost of operating and maintaining the arena.

The rationale for such financing deals is that, absent the project, tax revenues for the land would be much lower. However, no public officials has explained how much the taxes might be, and whether the PILOTs would be more or less than the taxes.
...
The financing for the arena and project remains murky. "I want to know how much these tax breaks are," said Bettina Damiani of Good Jobs New York, which monitors government subsidies. "That's our bailiwick. How have public officials been able to support a project when they don't know what the costs to taxpayers are going to be, and they don't know what the expenditures for services are going to be? That should be a bipartisan question."

And the "community events?"

How many such community events would there be? It's too soon to be sure, but a traffic planning document that the developer shared with the Department of City Planning in December 2005 listed only eight college sports events and two high school events. There might be 19 graduations, though the KPMG audit cautioned that a projected arena cost of $100,000 would be untenable. In addition, as promised in the Community Benefits Agreement (CBA), there would be ten community events at a "reasonable" rental.

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Posted by lumi at January 26, 2007 8:18 AM