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October 15, 2008

Economy, uncertain financing plague Brooklyn arena

From the Associated Press, via San Diego Union-Tribune
By Amy Westfeldt

This report was picked up by media across the nation, including during yesterday evening's local-news break on WNYC, today's metroNY (right), and in brief in today's amNY:

Bruce Ratner's $4 billion dream for a new Brooklyn will have to wait, at least until next year.

The New Jersey Nets owner and developer has been plagued by a string of problems that have delayed his plans for a new NBA arena, office towers and thousands of apartments in Brooklyn.

Ratner continues to blame a recent court ruling for delays, but financial experts paint a fairly grim picture regardless of the local opposition to the project:

“It's got more of an economic stall than a political or a legal stall,” said Michael Rowe, a sports management expert and former president of the Nets. “I think he missed the curve on when that project was financially viable and now he has to wait for it to come back.”
...
The Internal Revenue Service in 2006 proposed tightening the regulations of tax-exempt bonds to severely limit their use to pay for sports stadiums. A final decision, which could affect the arena as well as the bonds used to build stadiums for the Yankees and the Mets, is still pending. An IRS spokesman wouldn't say when a ruling is expected.

Goldman Sachs Group Inc., the lead bond underwriter for Atlantic Yards, declined comment on prospects for the arena financing. Barclays Capital, which signed to a $400 million deal to name the arena the Barclays Center, remains committed to the project, spokesman Brandon Ashcraft said.
...
Ratner has appealed to government officials, citing the difficulties of financing the project in a downturn, but no more help has been promised.

“Without relief from the IRS, the project will be significantly more expensive, and even more challenging,” said Janel Patterson, spokeswoman for the city's Economic Development Corporation. “But we all remain committed to seeing the project move forward.”
...
“In this credit climate, it's going to be very challenging,” said Marc Ganis, a sports finance expert in Chicago, though he and others think Ratner will eventually succeed. “It's made lending far more challenging and far more expensive, at least in the sports industry.”

Atlantic Yards Report, The AY inevitability meme turns; will a "plagued" project "eventually succeed"?

Though Norman Oder finds the Associated Press reporter Amy Westfeldt's skepticism of Ratner's recent statement noteworthy, he doesn't think the doom-and-gloom scenario is on the mark:

In the closing paragraph, in fact, the article quotes Marc Ganis, a sports finance expert in Chicago, as saying the project is seriously challenged, though he and others think Ratner will eventually succeed.

So it's a bit presumptuous for the project's leading opponent, Daniel Goldstein of Develop Don't Destroy Brooklyn, to say "This is just merely a fantasy that they're going to build this project. Yet they're moving forward as if everything's fine."

Sure, it's a fantasy that FCR would build the project at the timing and scale as announced. But, as I've written, the project--at least the arena--is very much in play. Yes, the Barclays Center naming rights deal was tied to gaining financing by November, but Barclays has said it's still committed to the project.

And, while the AP cites "penalties" attached to delays in the project, the article doesn't mention that those penalties are hardly punitive.

Posted by lumi at October 15, 2008 6:48 AM