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June 17, 2010

At Forest City's annual meeting, talk of "de-risking the business," the huge improvement over 2009 for AY, and a "very profitable" arena

Atlantic Yards Report

The unencumbered development opportunity with Atlantic Yards and its expected “very profitable arena” were among the highlights cited by Forest City Enterprises (FCE) executives yesterday at the corporation’s homey annual meeting in Cleveland. (I listened via a webcast.)

Referring to the corporation’s efforts as a whole, CEO Chuck Ratner said “we have de-risked the business,” surely an important message to shareholders but a statement that should raise questions among the developer’s governmental partners and the public.

If they’ve gotten rid of risk, has it simply evaporated, or been shifted?

In the case of Atlantic Yards, run by subsidiary Forest City Ratner, evidence suggests it’s been shifted. The New York City Independent Budget Office, for example, considers the arena a net loss for New York City. (It calls the arena a modest gain for the state, but that’s without considering the naming rights the state gave away.) Penalties for delay are slight.

Forest City's CEO got to indulge himself in a fantasy sequence.

Chuck Ratner said, “Look folks, we’ve come a long way… Think about the fact that one year ago, standing right about where [Executive VP] David [LaRue] is sitting, was one Mr. Goldstein, who had come to our annual meeting to take on our board over the Atlantic Yards transaction, and how unfairly we were treating him and his neighbors, and why don’t we just leave and go away.”

(While Goldstein did cite “staunch and widespread community opposition, ongoing and potential new litigation, diminished political support, and an extremely challenging economic environment,” he didn’t complain about unfair treatment but asked Forest City executive to tell shareholders its contingency plans “if and when you don't break ground in 2009 and can't open the arena in Brooklyn in 2011?”)

“[Co-chairman] Albert [Ratner] handled him, I thought, extremely well, and he basically left,” Chuck Ratner continued. “And here we sit one year later, and for an exorbitant price, we bought him and his interest out.”

Exorbitant? That’s the official line, but it’s pretty much what they paid speculators five years earlier for the buildings containing Freddy’s Bar & Backroom.

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NoLandGrab: "Exorbitant" is the bill being hung on the taxpayers — and the cost to property rights in New York State.

Posted by eric at June 17, 2010 11:10 AM