Opponents of Atlantic Yards say the ballooning costs of the Frank Gehry–designed basketball arena at the heart of the mega-project will require state officials to re-approve the project.
State officials, however, said that the arena’s now $950-million pricetag — up from the original $435-million and the $637-million figure approved in December, 2006 — does not require re-approval because Ratner is required to pay back the cost of the publicly financed arena through sales taxes generated on ticket, souvenir and food sales.
“An increase in the cost of the arena will not increase [state] funding, nor cause any increase in financial exposure to the Empire State Development Corporation,” said agency spokesman Warner Johnston. “The arena is to be financed with bond proceeds. … Accordingly, we do not anticipate further review by the Public Authorities Control Board.”
But opponents said Johnston was wrong.
“The reason the PACB exists is to look at the entirety of the financing package for this project,” said Lawrence Schillinger, a lawyer for Develop Don’t Destroy Brooklyn.
“A 50-percent increase in the cost of the arena substantially changes the financials of the project.”
Another DDDB lawyer, Jeff Baker, agreed, saying that the PACB’s approval of the project in December, 2006 assumed a 7.6-percent profit for the developer.
If his costs have skyrocketed, that profit will be smaller — making it less likely that the project is economically viable and will not require additional government subsidies to make it work.
“As such,” Baker said, “the PACB needs to review it again.”
Both lawyers said they were willing to take the matter to court, but, for now, were more interested in making their argument in “the court of public opinion,” Schillinger said.
“People need to look at how government spends money,” he said.
“This kind of bonding scheme is exactly what the state did 30 years ago. We don’t want to repeat those mistakes.”
©2008 Community News Group
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