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July 10, 2007

Fair warning? State knew AY land tab was rising when lowball MOU was signed

Atlantic Yards Report

Here's the latest revelation from the documents obtained by Assemblyman Jim Brennan's office:

The government was warned that the public tab for Atlantic Yards would likely be more than the public pledge--and that the tab would almost surely rise, as it has. But the public wasn't told.

The City and State signed the non-binding Atlantic Yards Memorandum of Understanding (MOU) on 12/18/05, each pledging $100 million, even though:

More than seven months before the MOU was signed, a 6/28/04 business plan (excerpt above; click to enlarge) submitted by developer Forest City Ratner (FCR) indicated that infrastructure and condemnation costs had reached $221.2 million, up more than one third in the four months between February and June 2004.

The costs for general infrastructure/sewer and transit connections had more than doubled. Also, the costs of condemnation and site acquisition for the arena block had risen from $60 million to $85 million in those four months. There was no suggestion that costs would stop rising.

There are more details in the full article, including more documents which indicate that costs have and will continue to rise, increasing the public tab.

This revelation clears up one mystery:

No wonder the city agreed this year to provide $205 million, instead of the original $100 million pledged, to the Atlantic Yards project, for a total of $305 million from the city and state. That would appear to cover increasing costs for both land and infrastructure.

An EDC official told City Council May 8 that $100 million would go to land acquisition, which apparently represents a portion of the $135 million already incurred.

But the City Council and the public should have been told, before Mayor Mike Bloomberg's budget was proposed this year, that the original $200 million pledged would not be enough.

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Posted by lumi at July 10, 2007 7:15 AM