Tuesday, July 03, 2007

The AY back story: the desired Devils, modest condemnations, "possible" govt.-backed bonds, and no blight

The original goal of the Atlantic Yards project was based on sports, not the creation of affordable housing or the elimination of blight, two goals stressed today. According to a 6/17/03 Forest City Ratner (FCR) presentation (2 MB PDF) to the Empire State Development Corporation (ESDC), unearthed via Assemblyman Jim Brennan's lawsuit to extract Atlantic Yards financial documents, the mission was to relocated both the New Jersey Nets and the New Jersey Devils to Brooklyn, "thereby stimulating economic growth..."

The document also predicts a modest need for the use of eminent domain, a quick approval and construction schedule, and "possible" government backing of bonds--all of which might be considered lowball estimates.

The desired Devils

It has been reported that developer Bruce Ratner was considering buying the Devils, but never that the Devils were, at one point, an equal element to the Nets in the Atlantic Yards plan. A 1/25/04 New York Times article headlined Ratner's Path To Buy Nets Had Pitfalls And Promise explained:
By the spring, Ratner was seriously examining the Nets, who had the unfettered right to move into New York. The team's holding company, YankeeNets, had floundered in trying to build an arena in Newark for the Nets and the Devils, in whom it owns a 30 percent stake. And tensions between the owners of the Yankees and the Nets were simmering, as were those within the Nets.

The Devils were losing money; a $50 million note, the final payment to the team's former owner, John J. McMullen, was due in August. Believing he could find a way to buy the Nets by investing in the Devils, Ratner began discussions with Lewis Katz and Raymond Chambers, principal owners of both teams


A 10/27/03 New York magazine article headlined Back to the Future described Bruce Ratner's goals:
He envisions the triumphant arrival of the Nets—and maybe even the NHL-champion Devils—at a gleaming pleasure dome on the very site where the O’Malleys once dreamed of building a new Ebbets Field. It would be the crowning achievement of his real ambition, he says, which is to help bring about one of the country’s great urban renaissances.

Two arenas

Now both teams have announced they will leave the Continental Airlines Arena for urban arenas, but in two different cities: Newark for the Devils and Brooklyn for the Nets.

And that means that another goal announced for the project--a "second venue in down state region for entertainment events"--is complicated by a competitor. Indeed, the financial projections for the Brooklyn arena's success, by Forest City Ratner consultant Andrew Zimbalist, assume no competing arena. (Then again, success refers to government revenue; Forest City Ratner, thanks to its Barclays Center naming deal and copious luxury suites, would seem to do just fine.)

Modest condemnations

Note that the developer originally predicted condemnation of 1+ blocks with approximately 91 housing units. That's because the condemnation map at the time did not include blocks between Pacific and Dean streets between Sixth and Vanderbilt avenues, much less Site 5. That soon changed, since the project map as we now know it was largely set by September 2003.

Also note the prediction that a Memorandum of Understanding (MOU) with the city and state would be signed in 60 days. (The MOU was signed 2/18/05.) State approval was to be completed by August 2004. (The approval by the Public Authorities Control Board came on 12/20/06.) The arena was to open in October 2006. (Now the prediction is 2009, but that's highly doubtful.)

"Possible" bonds

The presentation cites "Possible government backing of a portion of bonds."

As I wrote last month, more than half the project financing would consist of government-authorized bonds: $1.4 billion in housing bonds via the Housing Development Corporation and $637.2 million in arena bonds via the Empire State Development Corporation.

Project feasibility

The 6/17/03 statement of project goals noted that the size of the project, 7.5 million square feet of mixed-use projects, was "necessary for project feasibility, and also stimulates economic growth." By a 9/29/03 presentation (3.2 MB PDF), the goal was expanded, noting the project was "to respond to New York City's housing shortage and business.

Still, there was barely a mention of affordable housing--a reference to "mixed-income housing" is buried on p. 21 of that later presentation. And there's no mention of the elimination of blight, the ostensible justification for the exercise of eminent domain and a factor in both state and federal lawsuits challenging the project.

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