http://www.nytimes.com/2009/08/10/ny...1&ref=nyregion
Atlantic Yards’ Developer Races a Court Hearing, a Bond Deadline and Opponents
By CHARLES V. BAGLI
August 9, 2009
As the usual tumult greeted the final public hearings on the Atlantic Yards development last month, it was business as usual for the developer Bruce C. Ratner.
He visited three rating agencies in preparation for selling bonds this fall to finance the first project in the 22-acre development near Downtown Brooklyn: an $800 million, 18,000-seat arena for the New Jersey Nets.
He flew to Moscow to meet with the billionaire Mikhail D. Prokhorov about investing in the money-losing Nets.
He went to and from City Hall and the state’s economic development offices on Third Avenue to complete the paperwork for the Atlantic Yards development and to start work on the arena.
“We are racing to the finish line,” Mr. Ratner said in an interview as the public hearing drew to a close. “Our sense is that while this project was important five years ago, it has become even more important given the economy and the job situation in the city.”
Aside from the rebuilding of the World Trade Center, Atlantic Yards is the largest project in the city moving forward. The redevelopment of the 26-acre Hudson Yards in Manhattan and dozens of other projects have been slowed or stopped by a flagging economy and a lack of real estate financing.
But
Mr. Ratner must clear a number of important hurdles before starting construction of the arena and the first four residential towers.
There is an Oct. 14 hearing before the state’s highest court, where opponents hope to scuttle Atlantic Yards by challenging the state’s use of eminent domain. Beyond that, there is a looming deadline: he must get the financing done and start work by Dec. 31 in order to qualify for a much needed tax-exempt bond status and hold on to a $400 million naming-rights deal with Barclays Bank for the arena.
Mr. Ratner acknowledged that he was also seeking additional investors for the Nets, but he said he and his company would retain a substantial stake in the team, which he hopes to move to Brooklyn during the 2011-12 season.
Mr. Ratner has already pared back the cost of the arena from $1 billion and replaced the original architect, Frank Gehry, with the firm of Ellerbe Becket, which has designed a number of basketball arenas. At the same time, he struck new agreements with both the Metropolitan Transportation Authority, which owns the railroad yard where Mr. Ratner wants to build the arena, and the state to revise his original plans.
Officials have given him more time to build eight acres of publicly accessible open space and as many as 16 buildings and 6,400 apartments, while allowing him to replace the railyard with a smaller, less expensive yard than originally planned. About 40 percent of the housing would be built for low-, moderate- and middle-income families.
Critics, led by the group Develop Don’t Destroy Brooklyn, contend that Atlantic Yards will overwhelm the neighborhood and unfairly benefit a developer who they say has received too many subsidies, including $305 million from the city and the state, along with tens of millions of dollars in tax breaks.
The Court of Appeals has set an Oct. 14 date for oral arguments: some local property owners are challenging a unanimous lower court decision approving the state’s use of eminent domain. Daniel Goldstein, a spokesman for Develop Don’t Destroy and one of the property owners, said “the project is dead” if their appeal is successful. A decision is expected in November.
Regardless, he added, “We plan on bringing at least two more significant lawsuits against the phantom project,” a reference to the developer’s failure to release new images of his buildings after scrapping the original designs.
Mr. Ratner said he expected to release new images of the arena before Labor Day. “I think the final architecture will be really beautiful,” he said.
The developer disputed critics who claim that he may never build the parks and affordable housing that he once promised, now that the expected completion date has been pushed out to 2019, from 2016. Mr. Ratner said there was a continuing need for affordable housing for the city’s teachers, nurses, firefighters and hotel workers.
“There is a stable and steady group of takers for work-force housing in the city,” Mr. Ratner said. “The goal is not just to create the required amount but possibly more than that.”
In recent weeks, the developer has sought additional housing subsidies from city officials, who have so far declined to go beyond the standard incentives for developers. The project’s underwriters, led by Goldman Sachs, are also preparing to sell about $700 million in bonds for the arena in October.
Some real estate executives and critics said it would be hard to sell the bonds for such an uncertain project. But Jay Abrams, a bond analyst at FMS Bonds, said there “is definitely an appetite for tax-exempt bonds in New York, and elsewhere.” The lawsuit, he added, “is not necessarily a game-killer. At the right price, there’s always a buyer for bonds.”