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The Last Nail In The Coffin For Atlantic Yards Resistance?

Developer Bruce Ratner now has most of the cash he needs to build a new Nets arena in Brooklyn for his Atlantic Yards project. Ratner sold $511 million in tax-free bonds to pay for the arena.

“The overwhelming support from investors is a good sign of confidence in this project and in the city,” he said. Ratner had to beat the clock to sell the bonds because the IRS has barred using such tax-free financing for sports stadiums starting January 1, 2010.

According to the developer, orders from institutional investors across the board were almost four times the supply of bonds, which generated $511 million at a 6.48% interest rate. Co-lead underwriters for the deal were Goldman Sachs and Barclays Capital. Earlier this month, the bond offering, issued through the Brooklyn Arena Local Development Corp., received investment-grade ratings of BBB- and Baa3 from Standard & Poor’s and Moody’s Investor Service, respectively. The agencies cited the poor performance this season of the Nets, which will be housed at the 18,000-seat arena, as one of several factors in their relatively low ratings.

The rest of the $904 million arena will be paid for by state and city subsidies and private investment.

Critics of the Atlantic Yards project found the timing curious. This week, the Metropolitan Transit Authority announced massive service cuts to the subway system. This decision, based on budget shortfalls, directly affects Brooklyn straphangers.

Critics noted that Ratner is only obliged to pay only $20 million of his promised $100 million lump sum for the right to build over the MTA’s Vanderbilt Yards. The $100 million lump sum has already faced scrutiny because the MTA never entertained multiple bids in an auction process that its own bylaws required.

“Transit riders should recognize that the MTA cuts are in large part due to this sweeter, sweetheart deal the authority needlessly cut this summer,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “It is not too late … to make the MTA strike a new deal with Ratner that requires him to pay what he committed to paying — $100 million at closing, rather than $20 million.” (Hat Tip: Brooklyn Paper)

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