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December 9, 2009
As challenge to MTA deal awaits a judge, did Forest City Ratner really have the MTA over a barrel, or was it the other way around?
Atlantic Yards Report
Here's a must-read piece from Norman Oder on the lawsuit challenging the giveaway sale of the Vanderbilt Yard to Forest City Ratner.
All the legal papers have been filed in the case challenging the Metropolitan Transportation Authority's revision of the Vanderbilt Yard deal with Forest City Ratner. As we await a decision by the judge--no oral argument is expected, and a decision could take weeks--two things must be kept in mind.
First, as the MTA reminds state Supreme Court Justice Michael Stallman, the standards of review in such an Article 78 proceeding is "highly deferential to agency action."
So, no matter the facts, it's an uphill climb for the plaintiffs, AY opponent Develop Don't Destroy Brooklyn, joined by four elected officials and the Straphangers Campaign, in charging that a state law (the Public Authorities Accountability Act, or PAAA) passed in 2005 requires an independent appraisal of the property and that a seller seek out competitive offers.
If successful, the lawsuit (which also names Forest City Ratner as a defendant) could force the MTA to seek a new bid for the railyard. But the lawsuit is not seen by state officials as stopping either the bond sale or the pursuit of eminent domain.
...Who's over a barrel?
In the MTA's eyes, Forest City Ratner had the agency over a barrel. That's why the MTA didn't get a new appraisal of the railyard, figuring a new valuation—due to the decline in real estate values and the increased cost of building a platform--would inevitably be less than in 2005, exposing it to a worse deal.
But maybe it was the other way around. Didn't the MTA have Forest City over a barrel?
The developer--well, its principal and its parent--has a major stake in the money-losing Nets basketball team that it wants desperately to move. The developer faces a December 31, 2009 deadline to get tax-exempt bonds issued for the Atlantic Yards arena. In April, in fact, a FCR executive privately confessed to being "a freaked out developer with an arena that must start this year."
As the suit noted, Dellaverson acknowledged that the transaction had to be approved quickly--the board had 48 hours--because, as he said at a June 22 MTA Finance Committee meeting, "it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]."
Posted by eric at December 9, 2009 11:22 AM