Saturday, March 12, 2011

WSJ, regarding Kruger case, goes easy on FCR's obligation to rebuild bridge, reveals unmet request for additional city housing subsidy

In Atlantic Yards Efforts in View In Kruger Case, the Wall Street reports:
The wide-ranging federal complaint that accused state Sen. Carl Kruger and others of corruption on Thursday also shed light on the persistent attempts by one of New York City's biggest real-estate developers to secure more government subsidies for its signature project.

In a December 2010 conversation caught on wiretap, Mr. Kruger told a staff member that an executive at Forest City Ratner Cos. had asked him for $9 million in additional state aid for the Atlantic Yards project in Brooklyn, where a Nets basketball arena is under construction.

The request for the money—which would help fulfill Forest City Ratner's obligation to rebuild the Carlton Avenue Bridge—was not fulfilled, according to the complaint filed in Manhattan Federal Court.

But it illustrated the company's scramble to round up money for the project, even as construction of the centerpiece arena is under way.
It not only illustrated the company's scramble to round up money, it illustrated the company's unwillingness to pay for an obligation it assumed.

Request for housing subsidies

The Journal breaks some news, explaining that FCR's search for additional housing subsidies is one reason why the long-promised first residential tower is delayed:
In November, Forest City Ratner asked the city for an additional subsidy for its first residential tower in the project, citing a tough lending market that prevented the company from starting construction, according to multiple people familiar with the discussions.

More upfront equity was needed, the firm said, requesting $10 million in direct aid.

The request was denied in an email sent by the city's housing commissioner, Rafael Cestero, the people said.

The 400-unit tower has fallen behind schedule.

Initially pledged to start construction by late 2010 or early 2011, the firm now has selected an architect, and it says it aims to start construction by the end of the year, though it still has yet to secure necessary financing.

"Atlantic Yards is a large, complicated project with huge benefits for Brooklyn and the City," Joseph DePlasco, a spokesman for Forest City Ratner, said in a statement. "FCRC is working very hard in a difficult economic environment to make the dream of Atlantic Yards a reality, including the arena, scheduled to open in 2012, the affordable housing and the jobs."
(Emphasis added)

The Journal shouldn't let DePlasco spin without any effort at analysis, fact-checking, or an alternative view.

Is the newspaper trading access to the developer--as in news on EB-5--in return for gentle coverage?

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