RATNER DOUBLES DOWN Higher bid still far short of MTA site’s value

Forest City Ratner this week doubled its bid for development rights over
the Metropolitan Transportation Authority’s Atlantic Avenue rail
yards, but is still offering less than half of what the property is estimated
to be worth, according to a published report.

The right to build over the Long Island Rail Road storage yards in Prospect
Heights is a crucial component of the development company’s plan
to build a 19,000-seat professional basketball arena and 17 office and
residential high-rises, including several skyscrapers that would tower
over the surrounding area.

The development site of the proposed Atlantic Yards is bounded by Dean
Street and Flatbush, Atlantic and Vanderbilt avenues.

Citing unnamed sources, identified only as “two executives involved
in the talks,” the New York Times on Wednesday reported that a special
meeting might be held as soon as this Tuesday, Sept. 13, to approve the
deal because developer Bruce Ratner had upped his company’s bid from
$50 million to $100 million.

An appraisal of the property for the MTA put its value at $214 million.

The MTA put out a request for proposals, or RFP, for the site on May 26.
Although Ratner’s bid was the lower of the two bids submitted by
the July 6 deadline, the MTA board on July 27 chose to negotiate exclusively
with Ratner.

The competing bid, by Extell Development Company, was for $150 million
for the three parcels, and offered to pay to build platforms above them.

The MTA board is made up of 17 appointees, most of them direct or indirect
appointees of Gov. George Pataki.

At the July 27 MTA hearing, the board’s chair, Peter Kalikow, read
a prepared motion to further discuss the bidding solely with Ratner, a
Columbia Law School classmate of Pataki’s. The governor has been
a supporter of the Ratner plan since it was announced in late 2003.

Forest City Ratner executives argued at the July 27 meeting that their
bid was greater despite only offering $50 million up front, because it
included $29 million in renovations of the rail yards (to help pay for
their relocation required under the Ratner proposal), as well as $20 million
in environmental remediation of the property (which needs to be done in
order to develop the site for housing), $182 million to build a platform
(to build the housing and commercial properties over the shifted rail
yards), $25.4 million in MTA operating expenses and $23 million in projected
sales tax revenues.

The MTA board voted to give Forest City Ratner 45 days — until Sept.
10 — to negotiate exclusively with Kalikow and Katherine Lapp, the
executive director of the MTA and a former Pataki aide, leading to the
$100 million, according to the Times report.

Neither MTA nor Forest City Ratner officials would comment for this article.

Additionally, an MTA spokesman said that neither Lapp nor Kalikow had
been around when the Times story broke.

“I can’t verify that [the Times article is correct] because
I don’t know about it,” said MTA spokesman Tom Kelly, a spokesman
for the MTA.

“Kalikow has been away and Lapp has not seen a final [bid], so I
don’t know,” said Kelly, who insisted that whatever information
had been leaked was likely coming from the developer.

“This is not an MTA source,” Kelly said. “The ‘officials,’
as far as I can see, could be Ratner people; this could be their way of
getting this out there,” he said, as a test balloon to gauge the
MTA’s reaction.

“Based on what they’ve said [here], I’ve looked around,
but nobody knows anything about scheduling a special meeting. So far,
nothing has been changed,” he said.

Kelly reiterated that the approval for the sale might not occur until
the next full MTA board meeting, scheduled for Sept. 29.

A spokesman for Forest City Ratner, Barry Baum, was less forthcoming.

“We are not discussing the MTA bid,” he said.

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