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March 8, 2007

“Unclean hands”? Judge raps Boymelgreen, Ratner in AY lease dispute

WeinsteinBuilding02.jpgAtlantic Yards Report has been following property owner Henry Weinstein's claims that Atlantic Yards developer Bruce Ratner didn't "control" his property, despite the fact that Ratner convinced the Empire State Development Corporation that he did.

A state judge has backed charges that developer Forest City Ratner has “unclean hands” in a dispute over property in the planned Atlantic Yards footprint.

For months, Henry Weinstein—who owns some key properties in the proposed Atlantic Yards footprint—has protested in state court that his tenant, developer Shaya Boymelgreen, improperly assigned leases to a Pacific Street building and adjacent parking lot to an affiliate of Forest City Ratner. And that assignment, he argued, allowed the Empire State Development Corporation (ESDC) to deceptively portray—since October 2005—that Forest City Ratner “controlled” the land, thus suggesting a lesser need for eminent domain.

Why does this lawsuit matter, and why did Ratner go through all this trouble if he was going to use eminent domain anyway?

The ruling can't stop the state from using eminent domain to take the properties. But it might make it more costly. Boymelgreen had argued that Weinstein is using the legal fight to shore up his negotiating position with Ratner, while Weinstein responded that Boymelgreen’s deal with Ratner would diminish the value of his property.

Weinstein claimed that Forest City Ratner executive Jim Stuckey made a verbal offer to buy his property but wouldn’t put in in writing, and threatened that if no agreement was reached, the state would use eminent domain. FCR denied making any threats or raising the issue of condemnation, according to Harkavy’s decision.
DDDB, in a statement, observed that Forest City misled not only the ESDC but also the Public Authorities Control Board by claiming control of Weinstein's properties.

The state’s willingness to portray the properties as “controlled” by Forest City Ratner may be used in the federal eminent domain case to argue that the developer has benefited from favoritism.

Norman Oder's article is well worth reading because it offers details that won't appear in other press accounts, including * the dog-ate-my-homework excuse given by Boymelgreen to justify closing a the deal with Ratner without the property owner's consent, * how Forest City Ratner refused to disclose any financial information even though the company desperately wanted to be Weinstein's new tenant, and * Judge Harkavy's ruling, which sided with Weinstein on all points.

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Posted by lumi at March 8, 2007 9:19 AM