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May 31, 2009
For Nets, Barriers to Brooklyn Fall Slowly
The New York Times
By Richard Sandomir
The Times gives its assessment of the state of the Atlantic Yards fight.
Will the Nets ever play basketball in Brooklyn?
The question is impossible to answer nearly six years since Bruce C. Ratner hatched the idea when he led the successful bid to acquire the Nets for $300 million.
Troubled by litigation, Forest City Ratner, Ratner’s real estate development company, has not fully cleared the full 22-acre site where the arena, the Barclays Center, would rise.
No work has been done since the end of last year on land that is a hodgepodge of empty lots and buildings and the Long Island Rail Road’s Vanderbilt Yards. Forest City has neither begun to pay the Metropolitan Transportation Authority the $100 million they agreed to for development rights over the yards — and is, in fact, negotiating the price sharply downward — nor begun to move the tracks to a far end of the site.
Brett Yormark, Nets CEO wants us know that, this time, really, truly, he double-swears that the proposed arena will be built:
“It’s done, inevitable, it’s imminent, it’s going to happen this year,” said Brett Yormark, the Nets’ chief executive. After a number of failed predictions for when the Nets would move into the arena, he said: “We’re on schedule. There’s more certainty than there’s ever been.”
His confidence rests on two factors. First, a state appellate court’s May 15 dismissal of a lawsuit filed by an alliance of 21 community groups, Develop Don’t Destroy Brooklyn. If the appeal it expects to file fails, the state can use eminent domain to seize the remaining properties.
Second, the recession that appeared to level the hope of financing the arena is abating, opening up clogged credit markets to the possibility of selling up to $600 million in bonds.
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But Forest City must break ground by Dec. 31 to meet the Internal Revenue Service’s deadline to sell tax-exempt bonds. If the developer misses the deadline, financing costs will leap. “Bruce and I have never talked about missing that deadline,” Yormark said.
The same deadline appears to loom for the 20-year, $400 million naming-rights deal between the Nets and Barclays. Barclays extended the sponsorship beyond last year because of continued construction delays, but a spokesman refused to say if it would do so again.
Daniel Goldstein, a leader and spokesman of Develop Don’t Destroy, said he did not believe Forest City would meet the deadline, not with his group’s appeal of the eminent domain decision and intention to file more lawsuits to delay the project until its death.
“They’re not going to get financing this year or control of the land this year,” Goldstein said during an interview in his condominium on Pacific Street, which would be about midcourt of the proposed arena. He, his wife and baby daughter are the only occupants of the nine-story building, the other 30 unit owners having long ago accepted Ratner’s buyout offers.
“I don’t even think they know what will make them give up,” he said.
Meanwhile, the Nets continue to be a financial drain on Forest City:
Since acquiring the Nets, Forest City Enterprises, Ratner’s parent company, has sustained pretax losses of $111.9 million, including $76 million in the year ended Jan. 31.
The team’s dozens of investors have sustained $353 million in pretax losses, about half of it from amortization. Forest City became responsible for 54 percent of the team’s losses in the year ended Jan. 31, a larger share than it had ever absorbed. On the positive side, it has future sponsorship commitments for the arena of $500 million, 80 percent of it from Barclays.
And where is Frank Gehry? He was supposed to be the architect for the arena, except that now he isn't.
The team desperately needs the arena, which was designed by Frank Gehry. But to reduce its cost to $800 million or less, it could lose Gehry, the architect of the Guggenheim Museum in Bilbao, Spain. The arena was to be sheathed in glass and topped with a running track and an ice skating rink. But Forest City has consulted with other architects, including Ellerbe Becket, in Kansas City, Mo., to slash the price and make it easier to finance.
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Gehry, who declined to comment through a spokesman, recently cast doubt on the Atlantic Yards, for which he is the master architect, ever coming to fruition. He quickly retracted his statement. But if the shape and look of the arena changes enough to meet economic needs, it may not meet Gehry’s standards.
Posted by steve at May 31, 2009 7:31 AM