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June 21, 2007

DDDB PRESS RELEASE:
Albany 421-a Reform Bill Hands One-of-a-Kind, Special Favors to Forest City Ratner

Bruce Ratner’s Atlantic Yards Project Would Be The Only Project to Receive Tax Breaks for Luxury Condos Under Bill
Where Does the Favoritism and Backroom Dealing End?

BROOKLYN, NY— Bruce Ratner is about to join his own exclusive developer’s club, once again at taxpayer expense.

Forest City Ratner has often claimed that it’s not getting anything that any other developer can’t get. That was never the case, but now the development firm has positioned itself to get something that no other developer is getting.

Albany is creating a special loophole exclusively for Forest City Ratner’s Atlantic Yards project as part of its bill “reforming” the 421-a tax breaks for development originally enacted in 1971. With this special legislation Forest City Ratner’s market-rate luxury condominiums will be the only such units in the entire reform zone receiving the 421-a tax break, saving the developer untold millions.

“This is the cherry on top of all of the special treatment and sweetheart deals Forest City Ratner has been gifted for its Atlantic Yards project. This exclusive clause in the 421-a reform bill, benefiting Bruce Ratner alone, is an astounding example of absolute governmental favoritism, at odds with the very principles for which the reform bill is supposed to stand,” said Develop Don’t Destroy Brooklyn (DDDB) spokesman, Daniel Goldstein. “There is no valid justification for this favoritism, and clearly there has been an utter lack of transparency in the decision to award one developer a special corporate-welfare package. Is there any end to the favoritism and backroom dealing that consistently benefits Bruce Ratner? Will Governor Spitzer choose to allow passage of such backroom special dealing?

The special clause within the reform bill does not specifically name the Atlantic Yards project but rather describes “a multi-phase project that includes at least 2,500 dwelling units and (i) being implemented pursuant to a General Project Plan adopted by the New York State Urban Development Corporation and approved by Public Authorities Control Board.” There is only one such project in the state fitting that description, and that’s Atlantic Yards. Forest City Ratner is also seeking an extraordinary $1.4 billion in government backed, tax-exempt housing bonds.

"There should be an immediate Independent Budget Office (IBO) evaluation of all of the financial and tax benefits flowing to Forest City Ratner for affordable housing to determine the cost per unit, how many units are being deferred from other areas of the city, and how many units this level of funding could provide if it were dispersed without favoritism," said former City Planning Commissioner and DDDB Advisory Board member Ron Shiffman.

On his Atlantic Yards Report, watchdog journalist Norman Oder wrote, The final version of the bill apparently came down to two men in a room, Brooklyn Assemblyman Vito Lopez (and surrogates) and Real Estate Board of New York (REBNY) executive Steve Spinola (ditto). And in those backroom negotiations emerged a nice plum for Forest City Ratner's Atlantic Yards project. (The lack of an obligation to build affordable housing in [Atlantic Yards] condo buildings adds to the developer's bottom line in multiple ways.)”

To make matters worse, this special legislation granting exclusive and extraordinary tax breaks to Forest City Ratner would force lower-income residents of the proposed Atlantic Yards subsidized “affordable” housing to shell out at least 35% of their incomes for rent. This runs completely counter to accepted standards for “affordable housing,” which typically involves a resident paying 30% of income towards rent – the very principle behind the “Atlantic Yards” housing deal negotiated privately between Forest City Ratner and ACORN.

“With all due respect to ACORN, it’s confounding that they are supporting this special benefit to Ratner, making a mockery of the very reform bill they fought so hard to push forward,” Goldstein said. “It makes no sense for ACORN to support tax breaks for luxury condos when that is precisely what the reform bill was supposed to eliminate. Also, ACORN and Forest City Ratner had promised that each Atlantic Yards building would be mixed affordable and market-rate, but that is another broken promise by Ratner that ACORN appears willing to overlook.”

On the Atlantic Yards Report Brad Lander, the director of the Pratt Center for Community Development and an appointee on the mayoral task force that recommended reforms last year, said, “There shouldn't be special side deals for particular developers. Buildings that include 20 percent affordable housing should get a tax break and all market-rate buildings should pay their taxes.”

On December 20, 2006, the City Council’s 421-a reform bill increased the Geographic Exclusion Area (GEA), in which developers would be required to build 20% affordable housing in exchange for the subsidy, extending it to Brownstone Brooklyn and including the proposed “Atlantic Yards” project site, among other locations. This bill, along with the forthcoming Albany bill, requires that each building include a percentage of affordable units in order to qualify for the lucrative tax breaks called “corporate welfare” by State Senator Liz Krueger in May. Only Bruce Ratner would receive the tax breaks for his mixed income buildings and his market rate buildings.

“It takes a special developer, with special lobbyists, to get special legislation. This exclusive ‘Ratner clause” benefits only Forest City Ratner’s bottom line, while keeping intact the exact breaks the bill was meant to eliminate,” DDDB’s Goldstein concluded.

Posted by lumi at June 21, 2007 10:39 AM