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July 5, 2007

Would the city and state pay for school and community arena use? That was the plan

Atlantic Yards Report

ArenaFinancingSumm.gifRatner's lawyers contend that a new arena for the Nets represents a public use, which made no sense when documents released last December indicated that community groups would have to pay a $100,000 rental fee.

In the documents obtained by State Assemblyman Jim Brennan's office, Norman Oder discovers that:

There was once a plan to guarantee more public use--but it would've cost the city and state $18 million a year. Over 40 events, that would be $450,000 an event. Over 80 events, that would be $225,000 an event.

A 10/22/03 presentation by FCR to the Empire State Development Corporation, unearthed via Assemblyman Jim Brennan's lawsuit, sets out a plan in which the Local Development Corporation running the arena would offer three leases, two to government agencies and one to the developer. The developer would pay just $1. (The nominal rent is a thank you for the increased tax revenues the arena should generate, though it doesn't take into account, say, the developer's $400 million deal with Barclays Capital for naming rights.)

The document states:

One lease will be from the LDC to the City and one to the State (the "Public Party Leases") to use the arena facility at specified times for indoor state-of-the-art amateur sporting events of the Boards of Education and Higher Education, private secondary schools and colleges and community organizations. The term of the leases will be equal to the term of the LDC bonds. The City and the State would each pay $9 Million per year for a total annual rent of $18 Million for the Public Party Leases. It is anticipated that these payments would be offset by the new incremental sales and other taxes generated by the arena.

That, apparently, didn't fly. Government negotiators must have recognized it was not exactly a good deal.

Gratuitous snark alert: The reason it didn't fly is that Ratner usually convinces the City or State to bailout his project AFTER it's built, not before. [NY City is the largest tenant in MetroTech and NY State is the largest tenant in Atlantic Center.]

Why bother splitting hairs over the usage of the arena? Norman explains:

On the other hand, the failure to guarantee use by nonprofit entities would make it harder to argue that the arena, in fact, is a "civic project," an issue in dispute in the pending lawsuit over the Atlantic Yards environmental review.


Posted by lumi at July 5, 2007 7:12 AM