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September 10, 2008

Brooklyn Arena Builder Plans to Break Ground in December After Delay

The NY Times
By Charles V. Bagli


This must-read update on Bruce Ratner's controversial Atlantic Yards arena-'n'-high-rise megaproject contains two breaking-news bombshells:

  1. Ratner has been trying to close on the deal and has been telling the press all year long that the company plans to break ground in November because "the naming rights contract [with Barclays Bank] requires Forest City to close on the land and the financing by the end of November."

    [Ratner is now telling the Times's lead real estate reporter that groundbreaking will be in December.]

  2. Bruce Ratner is asking for MORE OF YOUR MONEY TO BUILD THE ARENA.

Mr. Ratner has asked government officials recently for as much as $100 million in additional cash for the project, citing rising costs and problems in the bond markets, according to two officials who would speak only on the condition of anonymity because they were not authorized to discuss the negotiations. The city and the state have already agreed to provide $300 million in subsidies and tens of millions in tax breaks.

[More specifically, the tally is $305 million ($100 million from the state and $205 million from the city).]


NoLandGrab: For the online version of the article, the photo is captioned, "Bruce C. Ratner in Brooklyn at the Atlantic Yards, which he has hopes to transform." Technically, he is overlooking "the Vanderbilt Yards."

"Atlantic Yards" is the brand name Ratner made up for the project he hopes to build, which, as you can tell by the photo, hasn't been built.

From Develop Don't Destroy Brooklyn (DDDB), Atlantic Yards: The Deal is Coming Un-done

The group spearheading the legal fight against Ratner's landgrabbing megaproject highlights three important points from the Times article, the two listed above and the issue of whether or not the IRS will reopen the tax loophole to allow for tax-exempt bond financing.

Citing Ratner's troubles, the group calls for a time-out on demolitions so that alternative plans can be considered:

The Atlantic Yards project is hanging by a thread, yet Ratner continues to demolish a whole section of Prospect Heights and spend taxpayer dollars on project-specific infrastructure work. It's time for that to stop. It's time to move forward with a new feasible and superior vision to develop the rail yards.

DDDB thought that Joe DePlasco was "spun by his own spin for too long," when the Ratner pr flack sounded a little punch-drunk in the Times, calling Atlantic Yards "the most exciting project in the country and the most exciting arena in the world."

Atlantic Yards Report, Times: Barclays naming deal has November deadline; FCR seeks $100M in subsidies

Some analysis of the Times article from Atlantic Yards watchdog Norman Oder:

It's doubtful that [November] deadline will be met; while it doesn't mean that the Barclays Center deal is on death row, it could lead Barclays to reconsider and/or renegotiate the deal. (FCR wouldn't comment.)

The article also states that CEO Bruce Ratner "has asked government officials recently for as much as $100 million in additional cash for the project, citing rising costs and problems in the bond markets," according to anonymous sources. (Remember, Chuck Ratner of parent Forest City Enterprises told investment analysts in April that "we still need more" subsidies.)

NoLandGrab: Regular readers will remember that the Chuck Ratner quote was excavated out of a transcript and reported on by Oder.

Despite the article's fairly critical view, Oder suggests that Bagli should have been more skeptical:

The article doesn't define "break ground." While the developer obviously could hold a ribbon-cutting ceremony, it's hardly guaranteed that pending legal cases would be dismissed, or that additional appeals or legal challenges wouldn't emerge.

The article quotes Daniel Goldstein of Develop Don't Destroy Brooklyn: “There’s no way they’ll get control of the land they need, get the financing, end the litigation and break ground by December." Indeed, even in the event the two lawsuits are cleared this year, it would still take additional time to acquire properties via eminent domain.

Note that the Times's phrase "will feature" suggests that the current plan for 16 towers is a go; evidence suggests the project is seriously in flux.

Oder fills in some blanks in response to DePlasco's confidence-building quote:

The FCR spokesman Joe DePlasco offers some spin:

While it is a tough market, we have secured more than $1.5 billion in construction loans this year so far,” Mr. DePlasco said. “And this is the most exciting project in the country and the most exciting arena in the world.”*

Well, part of that total is Liberty Bonds; another part is state housing bonds. Such tax-exempt bonds are a much better deal than taxable bonds.

NoLandGrab: In other words, the "construction loans" cited by DePlasco come from government programs and were NOT secured in the actual marketplace, which presumably will take a less sanguine view of the project.

Posted by lumi at September 10, 2008 5:40 AM