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City, state & Bruce agree: ‘Yards the place for Nets

Mayor Michael Bloomberg, Gov. George Pataki and real estate developer
Bruce Ratner signed a “memorandum of understanding” March 3
that officially spells out Ratner’s plan to build a basketball arena
and 17 residential and office high-rises on 21 acres of property emanating
from the intersection of Flatbush and Atlantic avenues.

The memorandum of understanding (MOU) calls for the city and the state
to each pay $100 million for the project.

A press release from the mayor’s office touted the agreement as bringing
“over 4,000 units of mixed-income housing,” and Bloomberg called
it an “historic project that will continue to energize the borough
of Brooklyn.”

According to the MOU, the developer’s Forest City Ratner Cos. will
move Ratner’s New Jersey Nets basketball team to Brooklyn for a period
of no less than 30 years. They will also develop mixed-use, multifamily
housing, and office and retail space, of which 4.4 million square feet
will be housing, 321,000 retail and up to 2.1 million square feet office
space.

In return, the Empire State Development Corporation, as a lead governmental
sponsor of the project, will use the state’s eminent domain powers
to condemn “portions of the private properties, and (subject to city
approval) the city streets necessary to facilitate the project,”
according to the MOU, which would include the disposal or purchase of
streets including Pacific Street between Carlton Street and Vanderbilt
Avenue, Fifth Avenue between Atlantic and Flatbush avenues, and a portion
of Sixth Avenue between Atlantic Avenue and Pacific Street.

The document states that 13 tax lots are privately owned, as are three
nearly full tax blocks. The entire project would require the acquisition
of seven tax blocks, although Forest City Ratner “represents that
certain parcels within the private properties are owned or controlled
by FCRC or cooperating parties.”

After seizure by the Empire State Development Corp., the condemned property
would be leased to Forest City Ratner for 99 years at the cost of $1.
According to the city’s agreement, the two city-owned lots and street-beds
to fall within the defined project site would be sold to the developer
for $1.

The signatories of the agreement include Empire State Development Corp.
CEO Charles Gargano, Deputy Mayor for Economic Development and Rebuilding
Daniel Doctoroff, and Andrew Alper, president of the city’s Economic
Development Corp.

But one key party was missing from the agreement — the Metropolitan
Transportation Authority (MTA). Since debates arose over the disposal
of a portion of the Hudson Rail Yards for a Jets stadium on Manhattan’s
West Side, the agency has been pressured to consider an open bidding process
to determine the highest value of its Atlantic Yards property, roughly
11 acres of Long Island Rail Road storage yards over which Ratner seeks
to build his arena.

This week, MTA spokesman Tom Kelly reiterated that the property was open
to any bidder.

Kelly said the MTA hopes to get an independent assessment of the site’s
value, but, referring to the Manhattan rail yards, he added that bidders
“still have to go with the precedent. Nobody ever gets the assessed
evaluation of the market.”

Because the issue had been so public, Kelly said, the agency did not need
to make a formal call for bids on the Atlantic Yards site.

“This is not a big place like that, where we’re able to do real
estate deals,” the MTA spokesman said. “But a barometer would
be, what do we get for the West Side yards?”

The Atlantic Yards development plans were announced more than a year ago,
although the specifics have been scarce, with the parties tending to defer
to a “lets wait until the MOU is signed” response.

The development won early and vehement support from Borough President
Marty Markowitz, who saw Ratner’s purchase of the Nets with the intention
of moving them to Brooklyn as a step towards restoring a lost glory to
the borough, slighted in 1957 when the Dodgers left their hometown for
Los Angeles.

“I’m thrilled,” said Markowitz of the MOU signing. “This
a huge step forward for a project that is great news for Brooklyn. Atlantic
Yards will give us a world-class arena, desperately needed economic development,
over 10,000 permanent new jobs, and thousands of units of housing that
will be available to low-income and middle-income Brooklynites.

“Now,”
he said, “the real work begins.”

Not so fast, said Councilwoman Letitia James, an ardent opponent of the
arena plan, whose district includes the planned development.
Calling the MOU the “fleecing of Brooklyn,” she pointed out
this week that the project will essentially be untaxed.

“The Local Development Corporation [designed for the project] would
issue bonds,” to help pay for the project’s construction, “and
the bonds would be paid for through PILOTS [payments in lieu of taxes],”
which she pointed out were allowed to go back into the project’s
LDC — the entity to assign the bonds in the first place.

[Legislation announced Wednesday by Council Speaker Gifford Miller proposes
to subject the allotment of the payments to council approval.]

What further annoyed James was that nothing in the MOU addressed public
benefits of the program.

“In housing, it doesn’t say anything about 50 percent,”
she said, referring to Ratner’s public promise that half of the housing
would be affordable. “It says there’s a ‘reasonable amount
of affordable units,’ and there’s a commitment in only general
terms to MWBE [minority-women based enterprise] hiring.”

James released a summary this week of the MOU to her colleagues in the
council, in which she calls for the council to back her in asking for
a series of bills, starting with mandatory council approval of any city
money dedicated to the project. She said she will also introduce a mandate
that any city money for property acquisition as part of the eminent domain
proceedings (which is now permitted in the MOU) be subject to council
approval.

James is also urging the council to encourage the MTA to open the Atlantic
Yards site to a competitive bidding process, and create a fair market
value for the site “exclusive of the benefits proposed primarily
for Forest City Ratner.”

“The legal question for me would be whether or not the mayor has
the authority to basically surrender all of this property, the city property,
the city streets, and usurp the role of the City Council,” said James.
“I’m certain this will be subject to litigation.”

So far, James has the support of at least one council member, Charles
Barron, who represents East New York.

“The opposition is against this MOU,” said Barron, not the economic
development.

“How dare the mayor be signing something to give away the land for
just $1,” he said. “It flies in the face of any democratic process
for giving away land.”

“Here we cut money from education — $1.3 billion — and
you’re going to have $100 million worth of welfare for Ratner,”
said Barron, who briefly threw his hat into the ring as a mayoral candidate
last year. “It is the height of hypocrisy to bring in the Nets and
the Jets and meanwhile be cutting the sports and athletics and cultural
programming in the public schools.”