Sunday, December 24, 2006

Forest City press release emphasizes Nets, downplays subsidies

The press release from Forest City Enterprises, dated December 21, a day after the approval vote, and headlined Forest City’s Atlantic Yards Project Approved By State Board:
CLEVELAND--(BUSINESS WIRE)--Forest City Enterprises, Inc. (NYSE:FCEA) and (NYSE:FCEB) today announced that New York’s Public Authorities Control Board (PACB) unanimously approved the Company’s Atlantic Yards project, a mixed-use development in downtown Brooklyn whose main attraction is expected to be a new sports and entertainment arena for the Nets NBA basketball team.

Note the use of "downtown Brooklyn."

Special benefits

The three voting members of PACB, representing the governor, Senate and Assembly, unanimously authorized public financing for the project. Based on the Board’s vote, government agencies are expected to provide tax-exempt bonds and subsidies to help finance the project, thus completing the public review process for Atlantic Yards.

Note the acknowledgement of tax-exempt bonds along with subsidies. But that's not the whole story. The Atlantic Yards web site acknowledges subsidies for infrastructure development and "[c]ertain as-of-right tax benefits may also be available to FCRC as they would be for any other developer."

That's still not the whole story. New York City's Independent Budget Office stated, in a September 2005 report:
Special Benefits for the Atlantic Yards Project. Under the MOU, Atlantic Yards would receive several special benefits not available as-of-right to development projects: capital contributions from the city and state, low-cost financing for the arena, extra property tax savings, a low-cost lease, and property obtained using the state’s power of eminent domain.

What about the condos?

The Forest City press release continued:
Charles A. Ratner, president and chief executive officer of Forest City Enterprises, said, “The Public Authorities Control Board’s action enables the Atlantic Yards project to move forward in a mutually beneficial public/private partnership. Our goal is to create a dynamic commercial and recreational destination complementing vibrant residential neighborhoods. This project will create jobs and help make Brooklyn an even greater place to live, work and play.”

Atlantic Yards is a long-term development project that is expected to include an arena to be developed by Forest City and designed by world-renowned architect Frank Gehry. Other uses are anticipated to include retail, office, apartments, and parks and open space. The arena would become an integral part of the local community, hosting local sporting events, concerts, family entertainment, and corporate and special events, in addition to serving as a professional sports complex and an international entertainment destination. Forest City is the principal owner of the Nets.

Maybe this is reading too much into it, but isn't the developer downplaying Gehry's role in designing the rest of the project?

And how can there be both parks and open space--does the developer plan to turn over some open space to the city's Department of Parks and Recreation?

And why exactly does "apartments" come third in the list since the project would be, in terms of square footage, some 80% residential, and the market-rate units would be the main source of the corporation's revenues?

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