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Atlantic Yards to Multifamily Housing, Open Space: Drop Dead?
June 25, 2009 by Neil · Leave a Comment
Armed with a set of concessions wrung from state officials this week for his Atlantic Yards development in Brooklyn, the developer Bruce C. Ratner faces what may be his most daunting challenge. He is trying to raise more than $500 million over the next four months to build the $4.9 billion project’s centerpiece: the most expensive basketball arena in the country.
Mr. Ratner, chief executive of Forest City Ratner, the company that is to build the development, still must get final state approval and withstand any new lawsuits, while selling about $586 million in arena bonds by Dec. 31 in order to qualify for tax-exempt status.
On Wednesday, the board of the Metropolitan Transportation Authority voted 10 to 2 to revise a deal to sell Mr. Ratner a railyard that sits within the 22-acre development. Instead of insisting on a $100 million lump-sum payment, the authority gave Mr. Ratner 21 years to pay the money in increments. It also allowed the developer to build a more modest replacement railyard than he had once promised.
Critics, and even some supporters, have complained that the Atlantic Yards project’s public benefits are disappearing before construction even starts. Much of the housing at Atlantic Yards, including 2,250 units for moderate- and middle-income tenants, has been delayed, along with the creation of eight acres of open space.
Nonetheless, Gov. David A. Paterson and Mayor Michael R. Bloomberg have been eager to ensure that Atlantic Yards, which will eventually include more than 6,000 apartments in 16 buildings, remains alive at a time when projects across the city have been halted by the recession.
“Nearly all the alleged public benefits are gone,” Daniel Goldstein, a spokesman for Develop Don’t Destroy Brooklyn, the project’s leading opponent, told The Times. “It’s highly likely that we’ll sue the M.T.A. as a result of their actions.”
Mr. Ratner has already defeated a string of lawsuits, although courts are expected to rule in the fall whether two cases brought by opponents can be appealed.
In the coming weeks, Mr. Ratner must complete the documents for his deals with state officials and weather what promises to be a raucous public hearing in late July sponsored by the Empire State Development Corporation. He is lining up construction contracts and designs for the $772 million arena, which would be home to the Nets.
But Mr. Ratner’s highest hurdle may be in securing tax-exempt financing, which would reduce his borrowing costs by tens of millions of dollars. If he fails to meet the Dec. 31 deadline, Mr. Ratner would have a short grace period to secure more expensive conventional financing, but most officials and bankers say that that is unlikely given the still frozen state of the credit markets.
Atlantic Yards could collapse if that happens.
“In the event they are unable to secure financing under those terms,” Gary Dellaverson, chief financial officer for the Metropolitan Transportation Authority, told The Times, “the agreement is no longer valid and the M.T.A. would have to decide what to do with the property.”
Source: Ratner’s Atlantic Yards Project Enters a Crucial Period, Charles V. Bagli, New York Times, June 25, 2009
