Atlantic Yards dead

Atlantic Yards dead
The Brooklyn Paper / Sylvan Migdal

Bruce Ratner’s controversial Atlantic Yards project — which envisioned 16 skyscrapers, eight acres of open space, more than 2,250 units of below-market-rate housing, new top-of-the-line office space and a publicly financed basketball arena — now consists of little more than the arena and two scaled-back residential buildings, the developer told the New York Times last week.

In a bombshell front-page story last Friday, Ratner blamed the downturn in the economy for killing virtually all of his $4-billion mega-development.

As a result, many residents of Prospect Heights fear that areas already cleared by Ratner between Sixth and Vanderbilt avenues will remain empty for decades — in essence causing the urban blight that Ratner promised to fix.

The Times article also included these shocking developments:

• The cost of the publicly financed arena, whose original pricetag was $435 million, but increased to $637 million last year, has now ballooned to $950 million.

Opponents said that if the cost of the arena has indeed increased by such a large amount, it would have to be re-approved by the Public Authorities Control Board, an obscure state panel controlled by Gov. Paterson, Assembly Speaker Sheldon Silver (D–Manhattan) and Senate Majority Leader Joe Bruno (R–Rensselaer).

The panel approved the project in late December, 2006, just before Gov. Pataki left office, though Silver later admitted that he voted “yes” without being shown key financial documents.

Under the current plan, Ratner’s arena would be paid for by New York state and city taxpayers, who were told to expect to get their money back via tax revenue from the sales of tickets, food and souvenirs — though analysts have long questioned the economics of publicly financed arenas and stadiums.

Ratner says he still intends to begin construction of the arena “by the end of the year.”

• The proposed “Miss Brooklyn” skyscraper at the intersection of Flatbush and Atlantic avenues — a building Ratner and his architect Frank Gehry once wanted to be the tallest in Brooklyn — does not have an anchor tenant and will not be built, even in its scaled-back, 511-foot form.

“Until we get a tenant, we won’t start Miss Brooklyn,” Ratner told the Times.

It is very rare for developers to propose large towers without an anchor tenant, experts said. And Ratner’s difficulty in finding a major business to relocate to Miss Brooklyn may have been exascerbated by the imminent increase in office space currently being built along Flatbush Avenue between Fulton Street and the Manhattan Bridge as a result of the city’s 2004 upzoning of the area.

Ratner has been having so much trouble finding a main occupant for Miss Brooklyn that his company recently had Gehry write a solicitation letter inviting the city’s biggest corporations to move to Miss Brooklyn, the Times reported.

“Forest City’s approach was akin to cold-calling to solicit interest, a possible sign … that the developer was struggling to find tenants,” the Times stated.

Real estate insiders said Ratner’s failure to snare an anchor tenant was deadly.

“Anchor tenants are vital to the success of any complex real-estate project,” said Christopher Krantz, senior vice president at Jones Lang LaSalle, a real-estate services firm. “When a developer has an anchor tenant, he can secure his financing. Without an anchor tenant, he’d be building on spec — and it’s much harder to get favorable financing under those circumstances.”

Krantz added that anchor tenants do not like to see legal problems at a site.

“Anchor tenants want a hard and fast deadline when the space will be delivered,” Krantz said. “If lawsuits could impact the date of delivery, that could affect [whether] an anchor tenant signs on.”

• The rest of the project — including nearly a dozen residential buildings, plus an office building at the current P.C. Richards site on the southwest corner of Atlantic and Flatbush Avenues — is “put off for years,” Ratner said.

It is in those buildings where the majority of the below-market-rate rentals were to be.

The Times article reveals that Ratner has virtually eliminated all of the supposed “public benefits” touted by the Empire State Development Corporation when it approved the general project plan in late 2006:

• The “thousands of rental units for low-, moderate- and middle-income New Yorkers”? There are merely a few dozen under the scenario Ratner has now described.

“I’d hope that the first residential building will be done within six months of the opening of the arena, and a second one a year after that,” he said.

• The “eight acres of publicly accessible open space” are currently not slated to be built, as they are in the now-eliminated Phase II of the project.

• “Eliminating the blight” of the area? By demolishing buildings and evicting tenants in areas where he now says he can’t afford to build, opponents say Ratner has actually created blight.

• A “comprehensive and cohesive” design by Frank Gehry? The Times story cast doubt on the notion of a Gehry mini-city.

“Given the current environment, some critics worry that Ratner will … sell off portions of the site to other developers who could use their own, less expensive designs,” the article said.

The public benefits of the project were cited repeatedly by boosters and government officials as a justification for the use of eminent domain to evict residents and hand over privately owned properties to Ratner.

Despite the evaporating public benefits, eminent domain would still be required to build the arena.

Ratner’s supporters in government and outside expended considerable political capital to support a controversial project — and on Friday, some said they were disappointed by what they read in the Times.

“Forest City Ratner made a commitment … to deliver on a historic plan for affordable housing,” said Bertha Lewis, executive director of ACORN, the housing advocacy group. “While the credit crunch and the downturn in the economy may lead to some delay, we continue to have every confidence they will live up to their commitment. This commitment was the basis for our support and the support of elected officials at the local, state and federal level.”

Some elected officials also hinted that their support could dry up as Ratner’s Atlantic Yards ends up being merely an arena and two residential buildings.

“My support has always been conditional [on] the creation of affordable housing and local union jobs,” said Councilman Bill DeBlasio (D–Park Slope). “Ratner’s comments are very troubling because they suggest a scaling back of the project that by definition could greatly reduce the amount of affordable housing. This raises the question of whether he’ll live by [his promises]. If he does not, I can not support the project.”

DeBlasio also warned Ratner against seeking additional public subsidies for the flagging project.

“There has already been very generous public investment,” he said. “I don’t see how we can go any farther.”

The project’s biggest cheerleader, Borough President Markowitz, suggested that Ratner’s public admission was nothing more than a momentary burp from the heartburn of a market downturn.

“I am obviously disappointed that some key components of the Atlantic Yards project may not be completed on the timetable we had envisioned,” he said. “But like Coney Island’s famous Cyclone, the economy goes up and it goes down—and I remain confident that Forest City Ratner, with its successful track record of development through all economic climates, will fulfill its vision of bringing the Nets, affordable housing, and a new city center to Downtown Brooklyn.”

Markowitz did not provide an example of Ratner’s prior “successful track record.”

Opponents of Atlantic Yards, many of whom have been saying it was too large and too ambitious from the start, saw some vindication in the Times story.

“The opening paragraphs of [the] article show that the Atlantic Yards project is shaping up to be the sham we have always said it would be,” Develop Don’t Destroy Brooklyn said in a statement. “To be very clear: a project that promised so much to the public, that appears now to be an arena (which only makes money for Bruce Ratner) and one tower (maybe), with very little ‘affordable housing’ at all, is a sham.”

Three days after the stunning Times piece, Ratner worked some positive spin for his project: Both the Daily News and the Post reported that the 130 Gehry-designed luxury suites at the proposed arena would range in price from $300,000–$540,000 per year — generating from $30 million to $39 million for the developer.

When combined with the $20 million per year that Ratner will receive from his deal with Barclays to allow the bank to have its name emblazoned all over the publicly financed arena, Ratner should just about be able to cover his bonding debt to taxpayers for building him the arena, according to the Atlantic Yards Report.