In this issue:
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> Atlantic Yards Flounders and Faces Obstacles, But A Eulogy is Premature
> Independent Budget Office Says Atlantic Yards Not Feasible
> Carlton Avenue Bridge: Yet More Unaccountability From NY City and State
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> Atlantic Yards Flounders and Faces Obstacles, But A Eulogy is Premature
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The last time we communicated with you, one month ago, it was reported that Forest City Ratner has indefinitely halted all work on Atlantic Yards. During the past month a lot has happened on the Atlantic Yards front.
The economy and some news reports may lead you to believe otherwise, but the fact is that the Atlantic Yards project is not dead. Far from it.
Forest City Ratner's project is wounded and floundering, but the developer is continuing to make every effort to build some version of the development proposal that would include an arena, controlling 22 acres in the heart of Brooklyn and speculating on the land (and blighting the neighborhood) until they feel the market can bear more skyscrapers and condominiums.
We can't let this happen.
Reports of the project's death are misleading. Ratner can only be stopped if we keep the pressure on politically and especially in court
But, certainly, Ratner's development proposal is facing major obstacles on multiple fronts, and has had nothing but bad news of late. We'll list just a few examples:
> Forest City Ratner is facing the worst recession perhaps since the Great Depression and a frozen credit market.
Legal Challenges
> The eminent domain lawsuit organized by DDDB, and funded through thousands of donations from the community, awaits an argument yet to be scheduled by the court. The project cannot be built without the properties of the 10 brave plaintiffs—homeowners, tenants, and businesses. Forest City Ratner doesn't own the land it needs to build the project, not the arena, not the skyscraper superblocks.
> DDDB, along with 25 community-group co-plaintiffs, is awaiting a ruling on our appeal of the case challenging the state's designation of the project site as "blighted," as well as the project's overall environmental review and approval. The case was argued more than four months ago and we are cautiously optimistic about the ruling.
(You can follow the status of the lawsuits here.)
Bye-bye World Famous Architect Frank Gehry – and Calls for a Cheaper Arena Design
> On January 8th the Daily News, Wall Street Journal, and NY Times all reported on rumors that Frank Gehry is no longer working on the Atlantic Yards project and that Ratner is desperately trying to reduce the cost of the arena, currently priced at nearly $1 billion. Ratner denied that the "starchitect" is off the project, but didn't exactly say that he is still working on it either. Considering that Gehry was used as a major Atlantic Yards marketing and political tool over the past 5 years, his rumored and actual removal is a big problem for the whole Ratner crew.
> A few days after Forest City Ratner announced they are trying to reduce the cost of their billion dollar arena, the project's biggest political booster, Borough President Markowitz, called for...Ratner to reduce the cost of the arena and give it a more "brownstone feel." (An arena with a "brownstone feel?")
Debts, Losses, Falling Stock Prices, and MTA Problems
> Forest City Ratner has a $153 million bridge loan (accrued to $177 million) coming due to Gramercy Capital Corporation in February. Gramercy, a public company, has seen its stock drop from $22 to $1.28 during 2008. The loan was used by Forest City to buy some of the properties they acquired under the threat of eminent domain.
> Forest City Enterprises, the Cleveland-based parent company of Forest City Ratner, has seen its stock price fall from $72 to $7.90 in the past year and a half.
> Forest City Ratner is still carrying a $60 million loan taken in 2005, at interest rates reportedly over 10%, to help cover operating losses on the New Jersey Nets basketball team.
> The New Jersey Nets, owned in part by Forest City Ratner, lost well over $30 million in 2008.
> Barclays Bank, which signed on to a $400 million naming rights deal for the Atlantic Yards arena, is facing substantial problems.
> Forest City Ratner needs to float the arena bond before the end of 2009 or the IRS will no longer grant the triple tax exemption that the developer is depending on—losing the tax exemption would cost them an estimated $170 million.
> Numerous news outlets, most recently the NY Post, have reported that Forest City Ratner is trying to renegotiate its agreement with the MTA to purchase the Vanderbilt Rail Yard and build a "state-of-the-art" new rail yard. The developer doesn't want to pay their low-ball $100 million bid (the 8.3-acre yard was appraised at $214.5 million) up front and wants to build a much cheaper rail yard than they had committed to constructing. The deal between Ratner and the MTA has not closed and no money has exchanged hands on the purchase.
While it is a daunting set of factors working against Ratner, to date the Empire State Development Corporation as lead agency and the Paterson Administration have been completely hands off the state-sponsored debacle brewing at Flatbush and Atlantic, leaving Forest City Ratner in the driver's seat. They have been loath to intervene, and because of that, Ratner trudges onward in his speculative blighting of Prospect Heights.
We strongly believe that it is high time for the state to take action, and start over with the community's plan to develop the rail yards, with truly affordable housing. We urge you to contact the Governor and tell him it is time to pull the plug on the floundering Atlantic Yards plan (mail and phone are best):
Governor David A. Paterson
State Capitol
Albany, NY 12224
Phone: 518-474-8390
Email form.
Other elected officials are here.
Finally, we need, and appreciate, your financial support more than ever to pursue the legal challenges to this ill-conceived project. Without your help in stopping it once and for all, the Atlantic Yards plan remains a daunting threat to our neighborhoods.
You can donate online at this link: www.dddb.net/donate.
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> Independent Budget Office Says Atlantic Yards Not Feasible
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More and more officials are pointing out that the Atlantic Yards proposal has become a money pit. Now, the City's own Independent Budget Office (IBO) is saying that the entire Atlantic Yards deal needs to be renegotiated.
City budget whiz says Bruce’s Yards deal needs retooling
The Brooklyn Paper. By Gersh Kuntzman
Add another voice to the chorus of city officials who say that the city should renegotiate its deal with developer Bruce Ratner, whose Atlantic Yards mega-project is in jeopardy due to the economic crisis.
George Sweeting, deputy director of the city’s Independent Budget Office, sent a shockwave through Tuesday morning’s Brooklyn Chamber of Commerce annual “Economic Outlook Breakfast” when he stated that “it may be time for the city to take another look at the mix of incentives” that it offered to Ratner because “it doesn’t look like there will be much progress in the next few years” on the $4-billion mini-city.
Sweeting said that the escalating costs of the proposed publicly financed basketball arena at the intersection of Flatbush and Atlantic avenues — now close to $950 million, from an original pricetag of $400 million in 2003 — might eliminate the supposed benefit to the city coffers. In 2005, an IBO study found that the arena would get $950,000 in surplus revenues every year during the arena’s 30-year financing period — puny revenue projections in a city whose annual budget is $60 billion.
The more-expensive version of the arena will now require more expensive financing by the public, Sweeting said. In addition, the New York Post reported that Ratner has been negotiating with the Metropolitan Transportation Authority to scale back $345 million in improvements that he promised to undertake as part of his winning bid for the Vanderbilt railyard over which he proposes to build the arena.
And the New York Times has reported that Ratner is seeking more public subsidies to keep his project afloat.
“If amenities are scaled back and the overall scale of the project is reduced, it’s reasonable to stop and look at whether the city’s contributions and the MTA land deal still show a positive in the cost-benefit calculation,” Sweeting said. “Some of the benefits to the public may now be less than originally assumed. A lot has changed since 2005, when we found that the arena was basically a break-even proposition.”
Sweetings dour look at Atlantic Yards comes two weeks after the project’s biggest booster, Borough President Markowitz, called on Ratner and the Empire State Development Corporation to scale back the grandeur of the Frank Gehry-designed arena so that it would be “economically feasible.”
The project, announced to great hooplah in 2003, has completely stalled as a result of lawsuits, the current economic and Ratner’s own inability to land tenants for much of the project’s office space when the economy was booming.
A spokesman for Ratner declined to comment for this story.
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> Carlton Avenue Bridge: Yet More Unaccountability From NY City and State
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The Empire State Development Corporation (ESDC) told an appellate court last year that the Carlton Avenue bridge, which is a major connector between Prospect Heights/Park Slope and Fort Greene/Clinton Hill, would be taken down by Forest City Ratner and reopened in 2 years. Forest City Ratner and the ESDC also made the same representation to the public and to elected officials—that this closure would only last two years from January 2008 to January 2010.
But Ratner and ESDC were knowingly misleading everyone as shown in documents acquired by Norman Oder and revealed yesterday on his Atlantic Yards Report. When those 2 year representations were made to the public, Ratner and NYC Department of Transportation (DOT) had already signed an agreement that Ratner could take at least 3 years to rebuild the bridge and potentially up to 5 years.
It's just the latest example of unaccountability and non-transparency by the state and city agencies and the "developer," where the community—people who walk or drive places and expect speedy emergency services unhindered by unnecessary street closures—gets the short end of the stick.
Read more about the Carlton Bridge closing on the Atlantic Yards Report.
