Monday, January 25, 2010

Is new subway entrance to arena block worth $50 million (as MTA claimed)? New mortgage doc says $28 million covers entrance plus Carlton Avenue Bridge

Among the voluminous documents that were part of the Atlantic Yards master closing, first made available today, is a mortgage agreement by the Empire State Development Corporation, as mortgagor, to the city of New York, as mortgagee.

The agreement casts significant doubt on claims in court by the Metropolitan Transportation Authority (MTA) that new subway entrance connecting to the Atlantic Yards arena block is would cost $50 million to build, since it requires the Atlantic Yards developer to pay only $28 million for both the subway entrance and the reconstruction of the Carlton Avenue Bridge.

Alternatively, it suggests that, if the developer walks away, the promised new subway entrance and bridge reconstruction would cost significant additional amounts of public funds.

From the lawsuit

In recent litigation, an affidavit (excerpted below; click on graphics to enlarge) by then-MTA Chief Financial Officer Gary Dellaverson and an MTA Memorandum of Law both insisted that the new subway entrance would cost $50 million.

That valuation was not disputed in the lawsuit challenging the MTA's June 2009 approval of a revised Vanderbilt Yard deal with Forest City Ratner, which a state Supreme Court judge dismissed in December. (An appeal has not yet been filed.)

From the mortgage document

As excerpted below, the mortgage can be satisfied by several actions:
  • substantial completion of the subway entrance and the Carlton Avenue Bridge
  • receipt from the Brooklyn Arena LLC (BALCC), the Atlantic Yards Development Company (AYDC) or affiliates of $28 million less amounts already spent
  • a $28 million letter of credit from BALLC, AYDC or affiliates
  • other satisfaction "reasonably acceptable to Mortgagee"

Questions pending

If $28 million can cover the cost of those improvements, what was the basis for the MTA's claims in the lawsuit?

If the city would get only $28 million to cover those improvements, and thus would have to kick in another $30+ million for a new subway entrance and reconstructed Carlton Avenue Bridge, wouldn't Forest City Ratner and affiliates be getting off the hook pretty easily?

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