The basketball arena at the core of the Atlantic Yards mega-project is actually a money pit that will cost city taxpayers nearly $40 million more over the next 30 years than they will get back in revenues, according to a new report issued last week.
Though the arena was approved in 2006 with promises that it would be a net gain for city coffers, the Independent Budget Office said today that it would soak taxpayers for $39.5 million over the next 30 years.
The report also concluded that developer Bruce Ratner is enjoying $726 million in “special government benefits.”
“The arena would cost the city’s budget $169 million (present value),” the study said. “These costs exceed the $130 million in new revenues from economic activity … over 30 years.”
The latest report by the non-partisan budget watchdog reverses the group’s own 2005 analysis that found new jobs and spending at Nets basketball games would raise $28.5 million in revenues for the city over 30 years.
But earlier this year, IBO Deputy Director George Sweeting started reconsidering those numbers because of the arena’s escalating costs, from its original $435 million to nearly $1 billion before architect Frank Gehry was shelved in favor of the new, cost-conscious team of Ellerbe Becket and SHoP Architects.
Opponents seized on the IBO study as evidence that one of the $800-million arena’s main selling points — that it would raise money for the city, not cost it millions — had vanished.
“It is clear that the highly subsidized Atlantic Yards proposal has a negative benefit for the public while providing enormous financial benefits to Forest City Ratner,” said Daniel Goldstein of Develop Don’t Destroy Brooklyn, who added that this “stark imbalance” will be a part of his group’s upcoming challenge in the state’s highest court.
The IBO report also raised a red flag over whether Ratner’s arena will generate enough revenue to pay back the $700-million tax-free loan that finances the arena. If true, the result would be either be an increase in the city’s assessment of the value of the arena land or the need for more money put into the project by its cash-strapped developer, Goldstein said.
“The question is will the arena land assessment be illegally inflated by the Finance Department to meet Ratner’s desired debt service or will the bond amount be lowered, requiring a greater investment by the developer,” he said. “This complicated issue is precisely what Assemblyman Richard Brodsky investigated with hearings and subpoenas on the new Yankee Stadium. He should play the same watchdog role with the Nets arena.”
A spokesman for Ratner slammed the report.
“The IBO’s analysis is wrong,” said the spokesman, Joe DePlasco. “Their assumptions … seem to be intentionally low-balling sales and tax revenue. Also, [the IBO is] conveniently applying the state and city subsidies to the arena while ignoring the benefits of the larger project: the development of the housing, office and other uses, creating jobs and tax revenues.”
City officials have also questioned the IBO’s decision to look only at the arena, not the larger project.
A cover sheet to the report did point out that the IBO understands that “estimates of fiscal costs or benefits are only one aspect of the many different factors [in] evaluating the overall merits of a project.”