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May 30, 2009
As Plans for Atlantic Yards Evolve, Government Benefits Don't
The New York Observer
By Eliot Brown
The promised benefits from the proposed Atlantic Yards project continue to diminish. State and city subsidies make less and less sense.
The M.T.A. has now publicly acknowledged that it expects less upfront cash from Forest City and less costly transit improvements made by the developer, a point that was enumerated at a raucous state Senate hearing on the project Friday afternoon. Further, figures released by the Independent Budget Office suggested the fiscal impact for the city of the arena would turn from net positive to negative given the substantial government subsidy added since the last analysis, done in 2005, which then showed a $25 million benefit to the city.
M.T.A. interim head Helena Williams said at the hearing, held by Senators Bill Perkins and Velmanette Montgomery, that she expects Forest City will give the agency less than it initially pledged to the agency in its bid for the project, $100 million, in an upfront cash payment. She also said the agency had reached a tentative agreement over the new LIRR rail yard that Forest City is expected to build for the agency, one that would cost Forest City less than the $350 million or so that it included in its bid. She said it was “value engineered,” and included modifications such as a decrease in the number of planned tracks to seven, from nine. Asked at how much she valued this yard, she said the final number was still being negotiated with Forest City.
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THE NEW IBO NUMBERS, which take into account an extra approximately $100 million the city added in subsidy in 2007, put the 30-year fiscal impact of the new arena on the city in the neighborhood of a $65 million loss. This assumes the subsidy is all going directly for the arena, though the project as a whole is far larger—it calls for 6,400 units of housing and a commercial office tower—and Forest City sold the project as one large package.
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The IBO testimony, made by deputy director George Sweeting, also included an observation that appraised land values of the area have tripled in the last three years. And while he did not specifically allege wrongdoing, he suggested those figures would create controversy given the complex financing agreement needed for the deal, which requires a high assessed land value to get tax-free bonds:
NoLandGrab: The testimony of George Sweeting of the IBO was one of the highlights of yesterday's hearing. His written testimony (in PDF format) can be found here.
Posted by steve at May 30, 2009 8:30 AM