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September 23, 2009

Wiggle room for Ratner and a reason for ongoing scrutiny: expedited funding for closing and a potential tax break for five towers

Atlantic Yards Report

With the ESDC, what you see is not necessarily what you get. Norman Oder digs into the paperwork from the board meeting at which the ESDC approved the Modified General Project Plan for Atlantic Yards, and new twists keep popping up.

The memo to the Empire State Development Corporation Board of Directors on September 17 described--but didn't quite explain--why developer Forest City Ratner would get the remaining promised $40 million in state and city payments accelerated:
Expedited State funding and City funding (described above) is being requested to achieve the goal of closing on the initial phase of the Project by the end of the calendar year.

In other words, FCR needs the money because it's got cash-flow difficulties.

And, as I describe below, the lesson of the Times Square redevelopment is that continued scrutiny of the deal is required, because, even after initial passage, the deal keeps changing.

More tax relief?

There even more wiggle room in another section of the memo. The rent for the 16 non-arena development leases would be as follows:
$1 per year; provided that the tenants for Site 5, Block 1129 and portions of Pacific Street between Carlton Ave. and Vanderbilt Ave. must also pay PILOT [payments in lieu of taxes] equal to full real estate taxes unless otherwise agreed to by the City.
(Emphasis added)

Block 1129, the southeast rectangle of the project site, would include four towers, and Site 5 would include one tower. Wouldn't Forest City Ratner argue that, if the other buildings are tax-exempt--because they would be built on the currently tax-exempt MTA railyard--shouldn't the others be too? The Bloomberg administration has been accommodating, despite the mayor's claim of no more direct funding.

Note that the memo disregards Building 15, which would be built on Block 1128, east of Sixth Avenue between Dean and Pacific Streets, on land that is also not tax-exempt. Was it just an oversight or is there no plan to construct that tower any more?

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NoLandGrab: Sure, we sound like a broken record, but this is yet more evidence that a Supplemental Environmental Impact Statement is absolutely necessary — along with a never-gonna-happen real cost-benefit analysis by the ESDC.

Posted by eric at September 23, 2009 11:03 AM