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December 23, 2009
Ratner Seals Deal for Atlantic Yards, Clearing Path for Nets Arena
The NY Observer
by Eliot Brown
Given the fact that there are just a handful of shopping hours left until Christmas, and the fact that we're not going to let Atlantic Yards ruin our holiday, we'll be publishing very truncated coverage of today's master closing. [We note that Governor Paterson and Bruce Ratner have already completed their gift-giving and gift-getting today, respectively.]
The first word goes to Eliot Brown at The Observer.
If Atlantic Yards is Bruce Ratner's Odyssey, he's approaching Ithaca.
More than six years after the ambitious project was unveiled to the world, the Brooklyn developer announced Wednesday that he had completed a "master closing" for the project, executing mountains of contracts with numerous governmental agencies and finalizing the financing of $511 million in tax-free bonds to help finance the new $900 million Nets basketball arena.
...This removes all obvious hurdles to the start of the $4.9 billion project, which initially envisioned housing towers, an office building and an arena, all Frank Gehry-designed, shooting up from the Prospect Heights neighborhood simultaneously. Now, with an economic collapse and a lending drought, the project will start only with the arena, the piece previously viewed as the least profitable. Mr. Gehry is gone, as are many of the initial deals struck for Atlantic Yards: After it was initially approved in 2006, the city put in another $100 million to help the project. Earlier this year, the M.T.A., which owns some of the land, renegotiated its deal to give Mr. Ratner its most valuable parcel for just $20 million and the cost of a new rail yard, rather than $100 million for that parcel and another that is more difficult to develop.
But beyond Mr. Ratner's uncanny ability to wrest more from government, what is most surprising is that the project was not swallowed by the economic crisis, as Mr. Ratner's Forest City Ratner and its investors continued to pour money into the development and the Nets. Forest City reports around $70 million a year in pre-tax losses on the Nets, and its revenues have plummeted recently; the team started the season with a record 18 consecutive losses.
A Forest City executive said this summer that the company and its investors had spent $500 million thus far on the project, only with very preliminary levels of construction on infrastructure to show for it.
...With respect to the arena, there are still a number of lawsuits pending challenging the process--though one was rejected last week--and there may still be more. Jeff Baker, an attorney for Develop Don't Destroy Brooklyn, said Monday that he expects a lawsuit in coming days that would challenge the process of approving the tax-free bonds, though he did not say who would bring it. Recently, opponents and critics of the project, along with State Senator Bill Perkins, have criticized the bond approval process, for which the state's development created an entity that avoided having to seek approval from the Public Authorities Control Board, apparently circumventing another level of review.
NoLandGrab: It's amazing how much the ESDC seems to get done around the holidays. Must have a workshop full of elves.
Additional coverage...
Curbed, Revenge of the Megaprojects: Atlantic Yards Officially Closed for Business
Though, as previously reported, the documents won't be made publicly available for a week or two, the Atlantic Yards master closing scheduled for today has happened, a Curbed tipster reports.
City Room, Documents Signed, Atlantic Yards Moves Ahead
Sometime after 9:49 Wednesday morning, the developer Bruce C. Ratner put down his pen after signing 640 separate documents relating to the closing on his long delayed 22-acre Atlantic Yards project in Brooklyn, and let out a long sigh of relief.
After six long years, his planned project is showing big signs of moving forward.
At roughly the same time, the proceeds from selling $511 million in tax-exempt bonds for the development’s first project, an 18,000-seat arena for the Nets basketball team, went into an escrow account. And the state filed a petition in court to condemn a portion of the 22-acre parcel, including some parcels owned by residents who oppose the project and the state’s use of eminent domain. Also, Mr. Ratner and his partner, the Russian billionaire Mikhail D. Prokhorov, put up about $230 million for the next stage of the project.
“It’s incredible,” Mr. Ratner said. “I always told everyone that it was going to get done, but there were moments when I don’t think I really believed it myself.”
Brownstoner, Atlantic Yards Signed, Sealed, Delivered
The Daily Fix [WSJ Blog], Nets’ Brooklyn Arena Appears Inevitable With Financing Deal
WSJ.com, Developer: Brooklyn Arena Project's Participants Close Deal
NetsAreScorching, CLOSING BELL: RATNER CLOSES ON BROOKLYN PROJECT
Gothamist, Ratner Finally Closes On Atlantic Yards Deal
Posted by eric at December 23, 2009 2:09 PM