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January 9, 2009

Shifting sands at Atlantic Yards

AtlanticLotsCrop.jpg It seems that every few weeks, Atlantic Yards developer Bruce Ratner has to do pr damage control, as the sands shift under the immense taxpayer-funded boondoggle-slash-largest single-source private development project in NYC history.

In December, the developer insisted that the project was still going forward, even though work had stopped. Now Ratner's pr henchmen are trying to convince reporters that Frank Gehry is still on the project, even though Gehry dismantled the project team just before Thanksgiving.

This morning, Norman Oder references "Atlantic Lots," created by the Municipal Art Society to warn New Yorkers and politicians of the likely future for the project. The most recent news indicates that we are already heading in that direction.

Here are today's headlines:

NY Daily News, Brooklyn Nets Arena cutbacks? Bruce Ratner scales back plans; Star architect Frank Gehry may go

Forest City Ratner has brought in "value engineering" companies to review architect Frank Gehry's blueprints to save money and keep the project afloat amid a cash crunch that has stopped all work at the site, sources said.

A Forest City Ratner spokesman denied rumors that Gehry had been axed.

"Frank Gehry has not been removed from the project," spokesman Joe DePlasco said.

NoLandGrab: "Value engineering" company is code for "less expensive architect." "Gehry has not been removed from the project" sounds like doublespeak for "we didn't quit Gehry, Gehry quit us."

Sources said Ratner is "looking to value engineers to do the arena less expensively and get that dollar amount down...They are looking at the arena from inside-out and upside-down to see how to bring the arena to life less expensively."

Cutting costs could include using less expensive materials, a different configuration or bringing in a different architect to do the project more cheaply, a source said.

"The question is how to deliver the arena that meets the specs and do so in a way that isn't going to cost a billion bucks," the source said.

NLG: Let's pause for a reality check. No arena has EVER been built for the tune of a BILLION DOLLARS. Bruce Ratner has NEVER demonstrated how he was going to defy established pro-sports economics to make it work in the first place. Ratner gets to use the credit crisis as cover for what was inevitable — figuring out how to drive the cost down (or the subsidies up) regardless of the economic climate.

The Wall St. Journal, Developer May Scale Back Plan for Nets' Brooklyn Arena

The Journal hints at the point we just made:

The price tag of other recently developed arenas has been much lower than Mr. Gehry's design. For example, The Prudential Center in Newark, New Jersey, home of the National Hockey League's Devils, cost about $400 million. It opened in 2007.

The business journal also checked in with the ESDC:

A spokesman for New York's Empire State Development Corp., the site manager for the project, said it had little control over the ultimate design of the arena.

"The aesthetic choices are Forest City Ratner's," said Warner Johnston, the ESDC spokesman.

DDDB.net, Who is in Control? ESDC Says They Are Not

Develop Don't Destroy Brooklyn makes a point about the ESDC's comments to the Journal:

The ESDC actually has control over nearly every aspect of the project; whether it chooses to use its control, rather than leave the steering wheel in the hands of the reckless driving Ratner, is another story.

For now, it seems, they are willing to enable yet another Ratner bait-and-switch: we'll sell you on a Frank Gehry design but won't build you one.

The NY Times, Atlantic Yards Developer Denies Removing Architect

Charles V. Bagli, the lead real estate reporter at the Times, is keeping tabs on the latest developments in the paper's NYC blog.

amNY, More trouble for Atlantic Yards?

Newsday's commuter daily merely cites the Times's blog coverage.

Atlantic Yards Report, As FCR scales back arena cost, Gehry's role recedes; ESDC, which once touted architect, says developer controls aesthetics

Norman Oder wraps up the coverage with some analysis and gives props to Bob Guskind from Gowanus Lounge:

The Gowanus Lounge's Bob Guskind on December 31 was prescient (and I wasn't):

Our prediction: Developer Bruce Ratner will have difficulty obtaining financing for a nearly $1 billion Gehry arena and the arena will either be scraped [sic] or a new version from an off-the-rack firm for $500 million will be built.

Would the arena look more like the Atlantic Lots design produced by the Municipal Art Society than Gehry's latest design? Or would it just look more ordinary, like the Prudential Center in Newark, which cost under $400 million, and is increasingly being suggested as an alternative?

There's another reason behind the "value engineering," I surmise. There's just no way the land underneath the arena could be valued high enough for the foregone taxes to be sufficient to match the PILOTs, or payments in lieu of taxes, needed to pay off a $950 million arena.

Will valuations have to be "jacked up," as with Yankee Stadium, to pay off a $500 million arena? Stay tuned.

Posted by lumi at January 9, 2009 5:27 AM