June 1, 2009
DDDB PRESS RELEASE: At State Senate Hearing on Ratner's Atlantic Yards Proposal:
NYC IBO: Nets Arena Would Be Money-Loser for NY City
MTA: Will Bail Out Ratner from Financial Commitments
ESDC: Modified Project Plan Will Require New Hearing & Vote
BROOKLYN, NY— The NY State Senate Committee on Corporations, Authorities and Commissions, chaired by Senator Bill Perkins, held an oversight hearing on Friday on the beleaguered and indeterminate Atlantic Yards project proposed by developer Bruce Ratner in Prospect Heights, Brooklyn.
Bruce Ratner, CEO of Forest City Ratner, refused Senator Perkins' invitation to testify before the committee, which was seeking answers to questions about the project's past and future viability. Though the developer did not deign to testify, he did send his flacks Joe DePlasco and Bruce Bender to orchestrate ongoing disruptions of the Senate hearing by people claiming to be union construction workers.
But key agency heads did testify, including: Marisa Lago, Chair of the project's lead agency the Empire State Development Corporation (ESDC); Interim MTA Chair Helena Williams; and NYC Economic Development Corporation President Seth Pinsky.
The biggest news to come out of the hearing is that:
The $800-900 million Barclays Center Arena, with its $400 million in naming rights for Ratner, will be a money-loser for New York City;
The sweetheart deal the recently bailed-out MTA gave to Ratner in 2005 is about to get sweeter for the developer and sour for the transit riding and taxpaying public;
The ESDC will release a modified project plan in the coming months, which will require a new public hearing on the project and a new unanimous vote by the Public Authorities Control Board (PACB) comprised of Governor Paterson, Assembly Speaker Silver and Senate Majority Leader Malcolm Smith.
(Here is a roundup of key, but simple, questions that were not asked and, thus, not answered.)
"Had the MTA and ESDC chosen the higher competing bid, and viable development proposal, from Extell Development Company in 2005, we would have affordable housing going up over the rail yards now, rather than an impossible development plan, pie-in-the-sky talk about a money-losing arena, and a negotiated developer bailout on the backs of MTA riders and taxpayers," said Develop Don't Destroy Brooklyn spokesman Daniel Goldstein.
"Ratner and the ESDC continue to blame our opposition for their problems, but had they listened to us in 2005 they wouldn't be in their self-made mess. They must learn from history and stop trying to prop up the zombie Atlantic Yards project. It's a debacle harming the public interest while draining public resources and energy.”
The most enlightening testimony of the day came from George Sweeting of the New York City Independent Budget Office (IBO), who said that the project's proposed Barclays Center Arena would be a financial loss for New York City. Since the IBO's last report in 2005 the City subsidy had more than doubled from $100 to $205 million. Sweeting said, "This change alone therefore eclipses the $25 million net positive benefit to the city that we previously estimated for the arena."
Norman Oder on the Atlantic Yards Report dug deeper:
(He didn't provide the math, but it's apparently a $66 million loss.) The bottom line, Sweeting told Perkins, was that all the assumptions about benefits touted by the city and state officials need to be recalculated based on current numbers, and they're not available yet. Notably, most of the gains in tax revenue come from commercial space, and there are no plans to build an office tower as of now.
More shocking is the news from the MTA. Ms. Williams confirmed in her testimony that a tentative agreement has been reached with Ratner, pending MTA board approval which will come as a rubberstamp after a public comment session during their June 24th board meeting. In 2005 the MTA appraised the Vanderbilt Rail Yard at $214.5. Eighteen months after Atlantic Yards was announced and Ratner anointed the MTA site, the transit authority issued an RFP which, unsurprisingly due to the stacked political deck, received only one other bidder. Extell Development Company outbid Ratner $150 to $50 million. The MTA, which was just bailed out by taxpayers, forced Ratner to up his bid to $100 million still well below the Extell bid and the appraisal.
The MTA justified acceptance of the lowball cash offer because of the benefit the developer promised to the MTA of a new "state of the art" rail yard. Of course Extell was offering the same thing, but Ratner inflated the value of that new yard. Now, the MTA is set to allow Ratner to build a scaled back version of that promised yard, and, depending on which rumor pans out, pay only $50 million for the 8-acre site in the heart of Brooklyn, or require only $20 million at closing of the deal with the balance to come in "delayed payments."
"It is not apparent how saving $50 million overall or $80 million up front puts Ratner over the top in his effort to build the project, those don't seem to be make or break numbers. So, apparently, it's just another giveaway to Ratner and a fleecing of the public," Goldstein said.
The ESDC's Marisa Lago declared with near certainty that there will be a modified General Project Plan coming out sometime in the coming months, which will trigger a new public hearing, a new vote by the ESDC board and a unanimous vote by the PACB. This would require Governor Paterson to put his stamp of approval on the project for the first time, which would be difficult to do considering the state of the economy, budget cuts, public opposition to the project and changed political perspectives since it was first approved in 2006.
Finally NYC EDC Presdient Pinsky spent his testimony using outdated financial data to continue the city's outdated argument for the project and the New York City Housing Development Corporation testified that they do not know how many "affordable" housing units the project would include or when those units would be built.
Though Forest City Ratner did not bother to come before the Senate Committee, his partners at the MTA confirmed that the developer has a December 31, 2009 deadline to float the tax-exempt bond for the arena. If that deadline is not met, Ratner would lose the tax-exempt option costing him an estimated $150 million, severely jeopardizing the project.
For complete, comprehensive coverage of the hearing visit the Atlantic Yards Report:
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Posted by eric at June 1, 2009 10:38 AM