Blog

Brooklyn’s Atlantic Yards Takes More Money Than It Provides

Forest City Ratner Cos.’ proposed Atlantic Yards basketball arena in Brooklyn will cost the city nearly $40 million, according to a report released by New York City’s Independent Budget Office. Meanwhile, the developer stands to receive $726 million worth of public benefits for the project.

The report concluded that new revenue generated from the Barclays Center Arena would fail to compensate the city for its capital contribution to the project and lost property taxes. It said the project would cost the city $39.5 million over 30 years.

Meanwhile, the various tax benefits and capital contributions received from the city and state mean that Forest City’s savings would equal roughly 80% of the expected cost of the $900 million arena, which is slated to open in late 2011. The analysis also said that the state would net $25 million from the project.

“This deal gives an extraordinary advantage to the developer, and I think it is outrageous,” said New York State Assemblyman James Brennan, one of several elected officials who called for the study.

Nonetheless, he said he didn’t think the study would be enough to stop the project from going forward. He suggested the company should be forced to build all of its promised affordable housing immediately after the arena is completed.

The arena is the centerpiece of a 22-acre project in downtown Brooklyn that was supposed to include housing, an office tower and retail space. However, the combination of the recession and credit crunch has thrown the timetable into disarray. The office tower is on hold indefinitely. Currently, the company only has plans to start one residential building, and it isn’t sure how many of the 400 planned units would be affordable.

In a statement, Forest City said the analysis was wrong. The developer noted that the report seemed to intentionally lowball the city’s sales and tax revenues while applying all city and state subsidies to the arena alone, ignoring the rest of the project.

Forest City’s comments were echoed by a spokesman for the city’s Economic Development Corp., who said the analysis was flawed. He added that the project’s benefits transcend its impact on the budget, noting it will bring affordable housing, open space and the civic pride that comes with having a professional sports team in Brooklyn.

Later this month, Forest City is slated to begin selling roughly $700 million worth of tax-exempt bonds to finance the arena. The report said the arena may not generate enough cash to pay the debt services on the bonds, which would be a challenge for the company.

The developer must break ground on the project by the end of the year or lose its right to use tax-free bonds that will save it tens of millions of dollars in financing costs. Forest City said it will proceed with selling the bonds even though, on Oct. 14, the New York state Court of Appeals will reconsider a lower court’s approval of the use of eminent domain to clear the site.

Forest City didn’t have an immediate comment on the IBO report. But in an Wednesday interview, Chairman Bruce Ratner said he was confident of a court victory. Yesterday, it unveiled a new glass and steel design for the arena. The ousted noted architect Frank Gehry early this year because his $1.1 billion plan was too expensive.

Source: City gives more than gets at Atlantic Yards, study says, Theresa Agovino, Crain’s New York Business, 9/10/09

Related posts:

1. Five Shots (or $55 Million) and He’s Still Alive! Atlantic Yards Gets Another Subsidy For Make-Believe Affordable Housing. The developer of the troubled Atlantic Yards project is...
2. Atlantic Yards, The Arena & Brooklyn Multifamily If you’re going to overwhelm the downtown Brooklyn landscape,...
3. Atlantic Yards One Step Closer To Compromised Development New York’s highest court ruled 6 to 1 that...
4. Atlantic Yards to Multifamily Housing, Open Space: Drop Dead? Armed with a set of concessions wrung from state...
5. Court of Appeals to Decide on Eminent Domain for Atlantic Yards New York’s highest court has agreed to hear an...

Related posts brought to you by Yet Another Related Posts Plugin.