Ratner promises Atlantic Yards arena redesign
The Forest City Ratner chief said the Atlantic Yards basketball arena renderings leaked to the media last month were premature and do not reflect his intentions for the project.

By Erik Engquist. Crain's

Bruce Ratner, chief executive of Forest City Ratner, has told senior members of the Bloomberg administration that the Atlantic Yards basketball arena renderings leaked to the media last month were premature and do not reflect his intentions for the project, city sources say. While Mr. Ratner is said to have reaffirmed his commitment to a "world-class" design, he faces the challenge of improving it without substantially raising the cost.

Frank Gehry had designed a $1 billion arena that impressed architecture critics but proved unaffordable when the economy tanked and credit markets froze. Missouri-based architectural firm Ellerbe Becket was brought in and proposed a $772 million arena that resembled an airplane hangar. To say that the design did not meet the expectations of Amanda Burden, chairwoman of the City Planning Commission, would be a vast understatement.

"One of the key goals of the Atlantic Yards project was to transform an area with development that incorporates world-class architecture, a dynamic streetscape, and significant public amenities," she said in a statement issued by her spokeswoman. "Bruce Ratner has given the city a commitment that he will design the Atlantic Yards in a way that respects both the letter and the spirit of what was envisaged in 2006, when the project received its original approval."

The project's original schedule called for the New Jersey Nets to begin playing in the arena this fall. Forest City is now simply trying to break ground by Dec. 31, the deadline to qualify for tax-exempt financing. Lawsuits by project opponents have stymied the development for years.

Atlantic Yards project faces roadblock from New York State Court of Appeals
By Erin Durkin. Daily News

The New York State Court of Appeals agreed to hear an appeal by nine plaintiffs who sued to prevent the government from taking their homes and businesses under eminent domain to make way for developer Bruce Ratner's long-delayed Nets arena and 16 residential and commercial towers.

When a lower court ruled in his favor, Ratner told the Daily News it was the "last hurdle" to the project and vowed to break ground in September. The latest court action will likely push that date back.

"You can't start building until you own the land and demolish the buildings," said Daniel Goldstein, whose Pacific St. home sits in the middle of the site of the planned arena. "It's just not possible for that to happen in '09 with this ruling."...

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State’s highest court sees some ‘appeal’ in Yards eminent domain case
By Mike Mclaughlin. The Brooklyn Paper

In a twist that could be disastrous for Bruce Ratner, New York’s highest court surprised many and agreed to hear an appeal that the state has illegally used its power of eminent domain to spearhead the embattled $4.9-billion Atlantic Yards project.

Previous eminent domain cases have gone well for Ratner, but even if he wins another court battle — this time in the Court of Appeals — he could still lose hundreds of millions of dollars in possible construction and financing delays stemming from another round of litigation.

To qualify for tax-exempt financing that could save him millions, Ratner must begin construction by Dec. 31 on the Barclays Center, now a $772-million basketball arena no longer designed by Frank Gehry. Also on the line is the British bank’s agreement to pay $400 million to have its name on the Nets’ now-generic future home court, another deal that turns into a pumpkin at the end of this year.

The high court’s decision on Monday to hear the case from property owners in the Atlantic Yards footprint — who are seeking to prevent the Empire State Development Corporation from condemning their land and turning it over to Ratner — surprised many people, including Ratner himself.

In May, Ratner said after a unanimous lower court victory in the same case that “this is really the last hurdle that we have and now we can do what our company does best and build an arena and houses,” the Daily News reported at the time...

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State’s Top Court Will Hear Appeal Against Atlantic Yards
NY Times. By Charles Bagli

New York’s highest court has agreed to hear a case challenging the state’s use of eminent domain on behalf of the Atlantic Yards project in Brooklyn.

The decision by the top court, the Court of Appeals, to hear arguments in October came as something of a surprise to the project’s developer, Bruce C. Ratner, who had expected a clear path after a lower court rejected the case in a unanimous decision in May.

The Court of Appeals’ involvement, announced on Monday, is the latest hurdle to Mr. Ratner’s plans to build a $772 million basketball arena, the centerpiece of the project. The developer and his bankers intend to sell about $650 million in bonds for the arena in late September.

Both sides expressed confidence that they would prevail. The project’s supporters said the lower court’s decision would most likely be affirmed because it was both unanimous and emphatic in upholding the state’s right to condemn the property. But opponents contended that the Court of Appeals seemed to recognize that constitutional issues were at stake.

Matthew Brinckerhoff, a lawyer for the project’s opponents who filed the suit, said the court had an opportunity “to continue its proud tradition of interpreting this state’s Constitution in a manner that affords more protection to individual rights and liberties.”

Mr. Ratner must finance the project and begin construction by Dec. 31 to qualify for tax-exempt status, which would save him millions of dollars in borrowing costs. Most analysts say it is unlikely that conventional bonds would sell in the current market.
...

Landowners and the group Develop Don’t Destroy Brooklyn challenged the state’s plan to use eminent domain to acquire private property at Atlantic Yards on behalf of Mr. Ratner, who has received more than $300 million in cash subsidies and tax breaks.

The Appellate Division of the State Supreme Court dismissed the suit, saying, in part, that the public would benefit from the affordable housing at Atlantic Yards. The landowners appealed.

State officials asked the Court of Appeals to reject the appeal, saying the project had received state and city approval. The state said in a letter that further litigation “will likely adversely affect the pricing and marketability of any tax-exempt bond financing that is concluded.”

On Tuesday, the developer and his bankers expressed confidence. A spokesman for Mr. Ratner, Joe DePlasco, said, “We intend to be in construction before the end of the year.”

...Just after the [May 15] appellate court decision last month in the developer’s favor, Forest City seemed to be working under the assumption that the project opponents would be unsuccessful in their final appeal. Hours after the appellate decision was announced, Mr. Ratner broke months of press silence and told reporters that he would break ground on the arena later in the year.

At the time, in response to a set of questions I had for Forest City, the developer’s spokesman characterized the opponent’s chances as slim.

“The decision was pretty definitive—in fact, unanimous and strongly written,” the spokesman, Joe DePlasco, said in an email at the time. “They can seek to appeal but it is unlikely it will be granted and we are proceeding based on the victory that we won.

“We are proceeding with the financing. While ESDC [the Empire State Development Corporation] will handle eminent domain issues, we believe that we can finance this deal even if there is an appeal—but we do not anticipate an appeal.”

Public hearing set for July 29 & 30; arena due 2012, 25 years to get Phase 2 started

An Empire State Development Corporation (ESDC) legal notice, which takes some three-quarters of a page in today's New York Post announces a public hearing on the Atlantic Yards Modified General Project Plan to be held from 2-5 pm and 6-8 pm on July 29 and July 30.

The location: the Klitgord Auditorium (285 Jay Street) of New York City Technical College, where the epic 8/23/06 hearing on Draft Environmental Impact Statement and General Project Plan was held.

Speakers will be limited to three minutes. (Let's see if that's strictly enforced.) Comments will be accepted for 30 days after the close of the hearing. That suggests that the ESDC board will vote to approve the plan in early September.

The schedule is related to developer Forest City Ratner's need to tax-exempt bond financing for the arena by the end of the year. The financing would last approximately 33 year...

After five years of trying, the Metropolitan Transportation Authority has sold the naming rights to a subway station. As of 2012 the M.T.A. will add the name Barclays to the Brooklyn station currently known as Atlantic Avenue-Pacific Street.

Yes, Barclays as in the British bank. Or more to the point, as in the British bank that bought the naming rights to the sports arena being built as part of the Atlantic Yards project. The buyer in this case is Forest City Ratner, the developer for Atlantic Yards. It will pay $200,000 a year for 20 years.

We know that is a goodly sum and times are very tough for the M.T.A. But there’s reason to be skeptical about all of this, which probably explains why it took so long to sell even this one...

...After five years, the defeat of 23 lawsuits and an economic meltdown, he is pushing to start the $4 billion development's first component: an 18,000-seat arena, home to the Nets and a major entertainment venue. ...

Are the Nets for sale?
Sports Illustrated. Ian Thomsen

Four groups are positioned to invest in the Nets, a highly placed source in the league office confided this week.

Two other league sources told me that minority owner Vincent "Vinny" Viola is moving to buy out majority owner Bruce Ratner and take control of the franchise.

But the senior-level source named Viola, the senior startegic advisor of the New York Mercantile Exchange, as one of four potential suitors, while adding that Ratner may remain involved with the Nets and could even retain majority status. "It's all up to negotiation," said the source, emphasizing that all the interest is based on the promise of the Nets' long-anticipated move from New Jersey to Brooklyn.

The most intriguing group of potential new investors is headed by the Russian oligarch Mikhail Prokhorov, who, until this season, was the financier of the Euroleague champion CSKA Moscow. The league source predicts that Prokhorov would survive the league's vetting process as a potential owner. Prokhorov is 6-foot-9 but didn't play basketball past elementary school. He was listed by Forbes last year as the 24th-richest man in the world, and his involvement with the Nets could eventually lead to the NBA arrival of Ettore Messina, the Italian coach who ran Prokhorov's CSKA teams.

Another potential investment group is headed by hedge-fund managers, while the fourth is drawn from the private equity field...

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MTA approves deal 10-2 despite warnings from Brennan, Straphangers, RPA; DDDB offer disdained; see video of testimony and board justifications

Despite a warning by veteran Assemblyman Jim Brennan that they were squandering their assets, a recommendation of caution by the Straphangers Campaign, and even a request by the Atlantic Yards-supporting Regional Plan Association that the deal be renegotiated, the board of the Metropolitan Transportation Authority (MTA) yesterday voted 10-2 to allow Forest City Ratner to stretch payments for the Vanderbilt Yard over 22 years, at a generous interest rate, and to build a smaller railyard worth $100 million less than originally promised. A diminished temporary yard could persist more than twice as long as originally planned.

Board members--who were reported (see WNYC) to have been under pressure from the mayor and governor who appointed them--agreed that this was the best deal they could get at a time when development is difficult. 

They ignored questions from state Senator Bill Perkins, including the need for an appraisal. While several opponents suggested board members were violating their fiduciary duty, the board was told that MTA legal counsel backed their vote.

They went though some convoluted defenses of their failure to challenge FCR further. "The market is what the market is," declared board member Jeff Kay, disregarding the failure to actually test that market. 

As for the last-minute character of the deal, which was aired only on Monday, board member Mark Page, claimed unrealistically that, because MTA staff had been busy working on the deal, "it's not as though it's something that's been dropped in our laps suddenly to consider."

Also, confirming the "done deal" aspect of the vote, they disregarded without discussion a last-minute--and, understandably, hardly fleshed-out--proposal from Develop Don't Destroy Brooklyn (DDDB) to pay $120 million for the Vanderbilt Yard, $20 million more than FCR's offer.

"It is highly probable that we will sue the MTA as a result of their actions," DDDB spokesman Daniel Goldstein said afterward.

(The Times covered the vote online, missing several important details--see the comments. The news story for print skates over the vote and the value of Ratner's savings, and focuses on the not-so-certain chances for arena financing. DDDB contends that, despite the revisions of the deal that suggest the opportunity to accelerate, the developer has taken steps backwards, with a looming December 31 deadline to issue arena bonds.)...

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MTA APPROVES ATLANTIC YARDS BAILOUT PLAN
NY Post. By Rich Calder

Bruce Ratner got his own MTA bailout today.

The agency approved a revised plan for Brooklyn's controversial Atlantic Yards project that lets the mega-developer pay off $100 million he owes the agency over 22 years.

The deal -- approved after a heated three-hour meeting at MTA headquarters in Midtown -- also allows him to shave off more than $100 million of the $345 million in transit improvements he had promised.

Board member Mitchell Pally, who voted against the deal, said it wasn't because he opposes the $4.9 billion project to bring an NBA arena and 16 residential and office towers to Prospect Heights.

"The only issue facing me is whether the MTA is getting a fair market deal for its property ...," he said. "I did not believe it four years ago when I voted against it, and I believe the same thing today."

The board approved by a 10-2 margin the plan that will allow Ratner to pay $20 million up front for eight acres he needs for the project, and then spread out $80 million in payments over 22 years at a bargain interest rate of 6.5 percent.

Ratner in 2005 agreed to pay the cash-strapped Metropolitan Transportation Authority $100 million up front, plus provide upgrades to Vanderbilt rail yard in exchange for various state approvals needed for the project. He cut that deal despite being outbid for the rail yard site.

The new rail yard would be reduced from what was to be nine tracks with a capacity for 76 cars -- and worth $250 million -- to seven tracks that could handle 56.

MTA officials valued the cheaper rail yard design at $147 million, but said it will still meet straphangers' needs. They also said other transit improvements in the new plan were worth about $67 million.

The deal was renegotiated because Ratner is scrambling to break ground on the arena by the end of the year to secure crucial tax-exempt financing, so any delayed MTA action could have doomed Atlantic Yards, officials warned.
...

The at-times contentious meeting featured 45 speakers, including Councilwoman Letitia James (D-Brooklyn), a staunch Atlantic Yards opponent who cited today's Post editorial calling for the MTA to reject the revised plan.

"It's the first time in my life I've agreed with the Post," she said, holding up a copy of the paper.
...

The opposition group Develop Don't Destroy Brooklyn - which has held up the project through various lawsuits -- raised eyebrows by announcing it was offering $120 million for the rail yard site. The group claims it has $5 million secured and wants to partner with developers and nonprofit groups on a smaller, mixed-use plan without an arena.

The MTA refused to address the offer.
...

A majority of the board is comprised of appointees by Mayor Bloomberg and Paterson, who support the project.

Ratner's $100 million bid for the site in 2005 was $50 million lower than a rival proposal by Extell Development. An agency appraisal found the rail yard worth $214.5 million.

Ratner won after convincing the board this deal was worth $445 million with the transit upgrades.

A revised $4.9 million Atlantic Yards plan re- introduced by the Empire State Development Corp. yesterday promises Ratner will deliver a project similar to the $4 billion plan approved in December 2006.

But the new plan is filled with holes. It anticipates the entire project being completed by 2019, but leaves the door open to further delays.

There's also no new renderings or models to address the project's many recent changes, including the replacement of "starchitect" Frank Gehry's glass-and-steel arena design, to shave its costs from $950 million to $772 million.

THE ORIGINAL DEAL -- OR NONE

After pleading poverty, jacking up fares and squeezing $2 billion from Albany, the MTA is now flush with cash.

Or so one might think -- if the agency OKs a plan to let a developer pay for air rights over the Atlantic Avenue rail yard on a 22-year layaway plan.

It better not. When its board votes today, it should nix the plan -- and demand that Forest City Ratner stick to the old deal.

Forest City and CEO Bruce Ratner had agreed to pay $100 million up front for the rights. Now, it seeks to put just $20 million down, paying the rest over the next 22 years.

Plus, it wants a below-market interest rate. And it would scale back work to develop the yard for the agency.

This would be a bum deal even if the MTA was rolling in dough. It's surely not a bank or finance company, able to peddle valuable property rights on the installment plan.

Indeed, the agency lacks funding for its own critical needs -- like maintaining and upgrading equipment.

Sure, times have changed since the deal was reached in 2005.

But if the climate is so bad today that a major developer with a solid track record like Forest City can't raise $100 million, what hope is there that it'll be able to raise $4 billion-plus to cover the entire project's costs?

Make no mistake: We backed the Atlantic Yards development, including a new basketball arena for the Nets and 16 new buildings, from the start. We still think investment there will benefit Brooklyn.

But the MTA needs to watch its wallet. It can't afford to subsidize private developers, and it shouldn't try.
A "no" vote on the revised plan today will send that message clearly.

New York, New York — On Wednesday a Brooklyn community organization, Develop Don’t Destroy Brooklyn, Inc. (DDDB), made a firm offer of $120 million to the Metropolitan Transportation Authority (MTA) to purchase the development rights for the 8-acre Vanderbilt Yard in Prospect Heights, Brooklyn. The group proposes a mixed-use development plan over the rail yards based on the UNITY Plan framework. (See: www.unityplan.org and download the full PDF.)

To complete their offer, the Vanderbilt Yard would be placed into a trust (modeled after the successful Hudson River Trust), for the purposes of financing and managing the development over the yards. It will be called the UNITY Trust.

The UNITY Trust would be administered by local community organizations, a subsidiary of the Empire State Development Corporation, and local elected officials. The Trust would be mandated to bid the yards out in smaller, manageable parcels (6-8), for development and payment over a far shorter timeline than developer Forest City Ratner’s proposed 22-year Atlantic Yards timeline. The UNITY Trust will seek out both for-profit and not-for-profit development teams.

The group estimates—based upon comparable efforts elsewhere and extrapolating the 2005 MTA appraisal and rail yard construction cost projections—that the project can be completed in approximately 12 years.

Benefits to the MTA

• The offer is secured by the land; there is no risk of default.

• The amount paid to the MTA for this valuable asset will exceed the amount promised to the MTA in a proposed agreement between the MTA and Forest City Ratner. It will be paid over an accelerated timeframe (about 12 years vs. 22 years by Forest City Ratner).

• The MTA will directly control the newly built, permanent rail yard under the development and will be able to construct it to their capacity needs. There will be no need to waste money on a temporary solution, since Forest City Ratner’s urgency to build its proposed arena—the only reason for a temporary rail yard—will not be an issue. The MTA will be reimbursed for the rail yard construction costs.

• The UNITY Trust will not be forced into an immediate disposition of development rights into an uncertain economy (which undervalues them); it will be able to coordinate the sales and construction over time in order to obtain the best value for the UNITY Trust.

• In aggregate the payments to the MTA will be over $200 million, and the net present value of the payments will be nearly $120 million. Both amounts exceed MTA’s renegotiated proposal with Forest City Ratner’s.

Public Benefits

The project will result in true public benefits (affordable housing skewed towards lower income levels, union labor, open public space designed for public use, a community center, a school, small retail space for local businesses, light industry and new roads connecting neighborhoods):

• Eminent domain will not be used;

• Streets will not be removed, new neighborhood connecting streets will be constructed;

• There will be true affordable housing for low and moderate incomes delivered in the early phases of the project;

• 10,000 construction job years;

• A legally binding, city and state guaranteed Community Benefits Agreement will be negotiated, involving all community stakeholders in the project’s impact radius;

• It will be a less risky project than Atlantic Yards by including multiple developers and the financial resources that each would bring to the UNITY framework;

• The project will be financed, in part, with tax-free municipal funding in a legitimate fashion (rather than the murky use of PILOTS contemplated by Forest City Ratner), reducing overall costs;

• Community organizations in Central Brooklyn have signed on to the UNITY framework and strongly support it. They would not challenge it or litigate against it.

The group has secured working capital in excess of $5 million towards this effort.

DDDB’s proposal will provide the MTA with a more attractive financial return than the Forest City Ratner offer, and on the basis that DDDB’s proposal will likely engender widespread community and civic support, DDDB hopes and expects that the MTA will provide the opportunity through discussion and negotiation for further refinement of the UNITY proposal.

“DDDB is certain that our offer would receive stiff competition if the Vanderbilt Yard were put out to bid with a Request for Proposal and underwent a competitive, fair bidding process. But we feel fortunate that we can make such a discounted offer, for such a great piece of real estate, due to the absence of a competitive bidding process,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “The MTA Board must table any decisions on the Vanderbilt Rail Yards sale until it has time to review our offer along side its renegotiated agreement with Forest City Ratner. The Board has a fiduciary duty to do this.”

ATLANTIC YARDS BUDGET BALLOONS BY NEARLY A BILLION
NY Post. Rich Calder

All the bells and whistles have been stripped from it -- most notably "starchitect" Frank Gehry and his expressionist building and arena designs -- but the cost of developer Bruce Ratner's controversial Atlantic Yards project has ballooned by nearly a billion dollars, state officials said today.

The now-$4.9 billion plan re-introduced by the Empire State Development Corp. claims Ratner will deliver a project similar to the $4 billion plan approved in Dec. 2006 that called for an NBA arena and 16 residential and office towers.

But the new plan is filled with many holes. It anticipates a 2019 project completion date for the long-delayed project but leaves the door open to future delays.

There's also no new renderings or models to address the project's many recent changes, including the replacement of Gehry's magnificent glass-and steel arena design to shave its costs from $950 million to $772 million.

Only a few renderings of the new arena design have surfaced. Renderings of the entire plan have yet to be produced.

Following today's meeting, critics of the plan, many of who supported the original Atlantic Yards concept, questioned whether the 2,250 units of affordable housing Ratner promised to help win community support are now a pipe dream. Some even accused the state and Ratner of trying to dupe the public with a "bait and switch."

"The sweeping promises of affordable housing made by the developer at the onset of this project have now evaporated to a mere whisper," said Assemblyman Hakeem Jeffries (D-Brooklyn), who supported the original project plan.

"At this point, it is not clear that the developer plans to build anything other than an arena and a few affordable apartment units, and that is simply unacceptable."
...

opponents say the plan is so dramatically different that the ESDC must start the state environmental review process from square one -- a process that could delay the project by months if not years.

That could be its death knell as Ratner, who is scrambling to break ground on the arena by the end of the year to secure crucial tax-exempt financing, hopes to have his New Jersey Nets playing there for the 2011-2012 season.

ESDC Senior Counsel Steve Matlin told the corporation's board that the project "can't move forward without these changes" and, that based on the economic downturn, Atlantic Yards "is probably even more important to the city and state now than when it was approved in 2006."

Ratner has already convinced the Metropolitan Transportation Authority to cut him a break.

The cash-strapped agency Wednesday is planning to help bail the project out by giving Ratner 22 years to pay off $100 million he owes the MTA and by letting him shave off more than $100 million of the $345 million in transit improvements he promised in exchange various state approvals.

As the Post reported online Sunday, the new plan divides the use of eminent domain to acquire private land still needed for the 22-acre project into two phases rather than one.

The state in phase one later this year would secure enough property for the arena and four towers. No set date for phase two is listed except that it's sometime after 2011, which critics said raises questions about whether the developer plans to only build part of the project.

Ratner has said he plans to eventually deliver the entire project. The agency's board is expected to rubber stamp the new plan within 60 days after soliciting additional public input.

Daniel Goldstein, spokesman for the anti-Atlantic Yards group Develop Don't Destroy Brooklyn, warned that the ESDC and MTA could soon be facing lawsuits over the modified plan.

"The ESDC engaged itself in a charade today that the project it approved in 2006 would still be built. It won't be," said Goldstein, whose group has delayed the project through previous litigation.

Would you sell your property today to a guy who told you 4 years ago that he'd pay you $100 million for it but came back to you today and said he wanted to pay $20 million and the rest over 22 years?

Or would you say get lost and put your property up for sale again?

We're just wondering.

Straight from the Empire State Development Corporation's Website:

Atlantic Yards Arena and Redevelopment Project
Updated Documents (6/09):
2009 Modified General Project Plan (MGPP)
Technical Memorandum
Figures 1-9
Figures A1-7

These documents were presented to the ESDC board meeting today and adopted. Not a single board member asked a question. The adoption triggers a 60-day public comment period and a public hearing yet to be scheduled.