Over the last two and a half years, I haven’t said much on the Atlantic Yards deal. No Land Grab and Atlantic Yards Report have that beat more than covered. A development this week though warrants some discussion.
First, a recap. In 2004, when the MTA was considering selling the development rights to the land above the LIRR’s Atlantic Yards, the authority received a $214 million appraisal. At first, the MTA seemed ready to negotiate with Forest City Ratner for $50 million, but the agency faced some blowback under this below-market deal. With Extell offering up $150 million and some strings, Forest City Ranter up its price to $100 million, and the MTA accepted.
The public cried foul over this sweetheart deal. How could a cash-straped agency accept over 50 percent less than the market value of the land? Over the years, nothing has happened there, and Bruce Ratner has yet to make a payment on the land. He and his company have been mired in eminent domain lawsuits and, with the recent economic downtown, may or may not have the funds on hand to start construction.
Flash foward to now. As the final lawsuits wind their ways through the legal system, the Nets and Ratner claim they will soon start construction on the planned arena for the Atlantic Yards area. But first, Ratner is going to get even more favorable terms from the MTA in an effort to boost his floundering projects. Mike McLaughlin of The Brooklyn Paper reports:
Atlantic Yards developer Bruce Ratner is poised to receive new generous terms from the MTA that could jumpstart his stalled mega-project even as a new report revealed that the city and state would actually lose money on the $4-billion arena, housing and office complex.
Helena Williams, president of Long Island Rail Road and the interim executive director of the Metropolitan Transportation Authority, told a state Senate committee on Friday that she’s in “intense negotiations” with Forest City Ratner to alter the deal to sell the Vanderbilt rail yards to the developer.
Ratner agreed to pay $100 million to acquire air rights to build over the trench between Atlantic Avenue and Pacific Street. But pleading hardship due to the global credit crunch, Ratner is looking to pay perhaps as little as $20 million up front and to spread the remainder out of over years.
And the MTA appears to be on board.
A report in The Post indicated that the MTA could get $50 million instead of the promised $100 million.
So let me get this straight. A few months after the MTA needed an Albany bailout to avoid Doomsday cuts, they’re going to accept $50 million less than they had originally agreed to and $164 million less than market rate for the Atlantic Yards land, and this is somehow acceptable? No wonder the public does not trust the MTA.
14 comments
If Ratner is back peddling on the terms, then what is the rush to sell off the rights now?
The land isn’t going to depreciate in value. It’s not going to go anywhere anytime soon. The MTA should tell Ratner to pay up the $100 million now or take a hike. Since he hasn’t actually made any payments yet, the MTA is actually in a really good position to get out of this deal.
The smart thing to do would be to wait a few years and see what else comes along. This current deal sucks, everyone knows it, so why are we continuing this charade. To sell off the air-rights for such a paltry sum is on the par with Steinbrenner buying the Yankees for the pittance he paid.
Maybe the people who pull their strings (i.e. the state government) are leaning on the MTA to basically approve whatever Ratner says. There’s no other explanation for this ongoing c———k.
Well, they need money. $50M is better than $0. Of course, the question is whether they could have gotten the $100M they were seeking anytime soon in this economy. If yes, it was a bad move. If no, it was a good one.
Competitive bid much?
Bear in mind, the $214m may not be real.
Well, sure. It’s just an assessment. But why settle for an amount less than 1/4th the assessment just to off-load the property in a down market? There’s no real reason to sell the development rights over the Atlantic Yards today undermarket, and the $50 million or $100 million is a drop in the MTA’s budget bucket. I’m all in favor of maximizing whatever potential revenue they can get for it.
at least the mta is consistent in that they always take the lowest bid.
The LIRR railyards are called “Vanderbilt Yards” and that’s the area that Ratner agreed to buy for $100 million. It’s about 8 acres, but Ratner also wants to get the streets, homes and businesses in a 22 acre site. That area he has called Atlantic Yards, but it’s only a name for the project.
I think the MTA’s goal, as well as the city and state, is to get this thing built. why? tax revenue from the businesses who operate out of there, taxes fRom those who are employed in those businesses and the Nets Basketball team of which will Bring in more tax revenue.
its not about how much they sell the land for, its the taxes.
Hey Secret Conductor~
You might want to do a cost-benefit analysis. Neither the MTA or the State has done a credible analysis if the costs will exceed the benefits. In fact, the most recent guess by the Independent Budget Office is that the arena will be a loss for taxpayers.
Here’s some recent info regarding this question:
http://tinyurl.com/rbrsuh
and
http://tinyurl.com/pljdn7
Those were 2 good links. So then the question would be why go ahead with the project? Greed? Whose greed if the money is not projected to pay much in the way of taxes from the many businesses (big and small), tickets sales and vendor licenses, parking, shopping, and so forth in trying to make downtown Brooklyn a major entertainment and business/work destination?
How is Ratner (gawd what a name for a situation like this) going to somehow get super rich off of this project if he can’t get the rents from tentents who may or may not move in? The state and the MTA may give him a discount, but will the creditors, note holders and bond holders do the same?
By definition a cost-benefits analysis (and any other manegerial accounting methods that can be used for this) is only as good as the info put in it (G.I.G.O.) and USUALLY needs adjustment due to cost variances.What happeneds when the cost and price variances effect the overall cost due to some situation out of the control of Ratner?
I would love, thought, to see the statistical control charts and their Recovery of Original Investment for this whole progrect for Ratner and the City/State/MTA
Nevertheless, it is very possible they are being very positive with their estimates. Who knows if more people than estimated or less will go to the Basketball games or want to somehow be associated with the downtown area. All I am saying is that for a project that won’t generate jobs, money and help develope downtown Brooklyn, they sure seem to want it built. Nevertheless I do see the gaping holes in how this whole project came about, but I still lean toward it getting built.
LOL thos responce could have been a whole blog post in itself.
at least the mta is consistent in that they always do it wrong.
can anyone show me an arena/stadium project which created hearty economic benefits for the public? as I understand it, these projects are always a money pit, unless of course you own the sports franchise or the building.
[…] this month, I explored how Bruce Ratner wanted a sweeter sweetheart deal for the Vanderbilt Yards, the MTA-owned railroads that make up a large chunk of his Atlantic Yards development. While the […]
[…] off, the MTA sold the air rights to Forest City Ratner for a horribly low amount: Ratner agreed to pay $100 million to acquire air rights to build over the trench between Atlantic […]