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October 1, 2008

Wall Street crisis puts Nets' future Brooklyn home in jeopardy

The Star-Ledger
By Ian T. Shearn and George E. Jordan

Four months ago, Goldman Sachs assured all financing would be in place for a $950 million professional basketball arena in Brooklyn by today.

Bruce Ratner, owner of the New Jersey Nets and developer of the ambitious, $4 billion Atlantic Yards project, said he was "inches away from completing the deal."

That was before prestigious investment firms started to fall and credit markets went into full-scale panic, triggering a financial crisis on Wall Street unseen since the Great Depression.

Tuesday, a spokesman for Goldman Sachs offered only a "no comment" when asked about the financing for the nearly $950 million arena, fueling persistent doubts about the viability of Ratner's plan, which has been systematically downscaled and delayed since it was first rolled out more than four years ago.

The result of the latest delay for New Jersey fans and residents:

That leaves the Nets playing at the aging Izod Center in the Meadowlands for at least the next three years, which will perpetuate competition with the Prudential Center hockey arena in Newark.

While the November deadline approaches for the Barlays Bank naming-rights deal for the Brooklyn arena:

Neither Barclays nor the Nets responded to email requests for interviews.

article

Atlantic Yards Report, Star-Ledger: Goldman Sachs mum on AY arena financing

Norman Oder adds some additional analysis to the Star-Ledger article:

But the big question, as a lawyer quoted by the newspaper says, is whether tax-exempt financing will be available, since it remains attractive in this investment climate. The Internal Revenue Service has been asked by the city and state to grandfather in arena financing under more lenient rules than proposed; an IRS official said regulations would be issued "soon."

Meanwhile, Rep. Dennis Kucinich (D-OH), chair of the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, has asked the IRS and Treasury Department to desist from approving any more sports facility deals based on PILOTs (payments in lieu of taxes), pending further clarification of their policies, a subject of an ongoing subcommittee investigation.

Posted by lumi at October 1, 2008 7:04 AM