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May 15, 2008

DDDB PRESS RELEASE: Tonight: Ratner to Show Off Atlantic Yards Arena Luxury Suites

Back in Reality:
Atlantic Yards and Barclays Center Are On Precipice of Failure

BROOKLYN, NY— Tonight, as reported last week in Crain’s, Bruce Ratner’s New Jersey Nets will “debut a prototype of their Frank Gehry-designed, $300,000-a-year Barclays Center corporate suites at a splashy party in their New York Times Building showroom.”

Meanwhile, back in reality, Bruce Ratner’s Atlantic Yards development proposal—including the arena for which Barclays Bank has purchased naming rights for $400 million—is on the precipice of failure and currently cannot be built.

“Bruce Ratner once promised ‘affordable’ housing. Now, all he is promising are luxury arena skyboxes, and he’s in no position to build even those,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “Tonight’s luxury skybox party vividly represents the Atlantic Yards bait and switch. The proposed ‘affordable’ housing was the bait to enlist the support of many elected officials backing the project, as well as ACORN; the switch is that those in need of an affordable home are left hanging while the ridiculously expensive luxury skyboxes will be given full priority over everything else Ratner once promised.”

Developer Forest City Ratner (FCR) does not own all of the properties it needs to build its proposed arena. Some of that property is in the hands of other private owners or tenants. New York State’s intention to seize those properties by eminent domain, and hand them over to Forest City, is currently being challenged in the courts. Back on March 31, 11 property owners and tenants filed a petition to the US Supreme Court in their case alleging that New York State’s use of eminent domain violates the US Constitution. If the Court takes their case, it would be heard by the end of the year, and a decision would be rendered roughly one year from now. If the Court does not take their case, the plaintiffs intend to file their challenge to eminent domain in New York State court.

In addition to this ownership problem, Forest City Ratner’s Atlantic Yards proposal faces other substantial obstacles, including:

  • FCR needs at least $1.4 billion in tax-free housing bonds, but they are not available.

  • FCR does not have the bond it needs for its $950 million arena—more than double the price tag of the most expensive arena every built.

  • The credit market is in crisis.

  • Construction costs have increased astronomically, and continue to rise.

  • New York City’s real estate boom is over, and Brooklyn has a large oversupply of condos.

  • Political opinion has substantially shifted against the project. (See: May 3rd protest rally)

  • A coming appeal of the community lawsuit challenging the project’s environmental review and overall approval.

  • Other outstanding litigation and the possibility of new litigation beyond that.

Posted by eric at May 15, 2008 3:40 PM