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September 10, 2009
DDDB PRESS RELEASE: On Day After New Arena Designs Released…
NYC Independent Budget Office Study Shows Ratner’s Arena a Financial Loser for NYC
Warns That Planned Bond Arrangement Won’t Work
BROOKLYN, NY— Fresh off a glitzy new design release by developer Forest City Ratner, a new study concludes that the Barclays Center Arena will be a money loser for New York City if built.
New York City’s Independent Budget Office released a fiscal analysis of the Atlantic Yards arena, which shows that the arena would be a $39.5 million loss for New York City over 30 years, with an additional loss of $180 million in opportunity costs (foregone gains due to tax exemptions and below market land sales).
The fiscal analysis also calculates a $726 million taxpayer subsidy and government benefits package for developer Forest City Ratner on the arena alone.
The report, “The Proposed Arena at Atlantic Yards: An Analysis of City Fiscal Gains and Losses,” is available for download on the IBO website.
“Between the IBO’s study showing the arena is a loss for the city, and the lack of any plans or guarantees for affordable housing in the project, it is clear that the highly subsidized Atlantic Yards proposal has a negative benefit for the public while providing enormous financial benefits to Forest City Ratner, including $726 million in subsidies and special benefits for the arena alone. That stark imbalance is an important part of our eminent domain argument in the Court of Appeals,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “The project is the result of a corrupt and illegal process and is a financial disaster that destroys our community. We will not let it stand and will continue to fight it by every means possible.”
The IBO study also warned that the foregone property taxes on the arena site would not be sufficient to generate PILOTs (payments in lieu of taxes) to pay off the $700 million arena bond Ratner is trying to float for the arena. The IBO estimates that the PILOT payment, based on a reasonable land assessment, would be about $15 million short of the necessary bond debt service.
“The question is will the arena land assessment be illegally inflated by the City’s Finance Department to meet Ratner’s desired debt service or will the bond amount be lowered, requiring a greater investment by the developer. This complicated issue is precisely what Assemblyman Richard Brodsky investigated with hearings and subpoenas on the new Yankee Stadium, and he should play the same watchdog role with the Nets arena PILOT situation,” Goldstein concluded.
This issue is raised in a side bar on page 4 of the IBO study.
The IBO study is at:
http://www.ibo.nyc.ny.us/iboreports/AtlanticYards091009.pdf
Posted by eric at September 10, 2009 12:33 PM