Atlantic Yards/Pacific Park Report

The Empire State Development Corporation (ESDC), says the Brooklyn Arena Local Development Corporation is not going to issue tax-exempt bonds for Atlantic Yards infrastructure, as documents prepared in September suggested (as I reported this morning). The ESDC issued a statement: ESDC was at one time considering additional tax exempt bonds for infrastructure financing. Ultimately ESDC decided not to pursue that type of financing. Last week’s Board authorization of last week is the only financing under consideration by the Brooklyn Arena Local Development Corporation. Additional details of the bond sale will be released once documents are finalized. There will be a formal mid-December closing and we anticipate marketing the bonds prior to that time. I'm several hours late posting this because I was in transit, but the ESDC had a day and a half last week to tell me that the plan was off.

Eric McClure of NoLandGrab has the analysis of Richard Lipsky's Olympic-style gyrations, in which the AY lobbyist says the Court of Appeals decision on AY eminent domain was fine, but the fallout from the Kelo case in New London means that the courts should back property owners (whom he represents) in Willets Point. I'll just add that the plaintiffs in the Willets Point case, via attorney Michael Rikon, filed an amicus brief in the AY case supporting the AY plaintiffs.

According to a previously unrevealed action in September, developer Forest City Ratner could benefit from $400 million in state-authorized tax-exempt bonds for much more than the planned arena. The recently-formed Brooklyn Arena Local Development Corporation (BALDC) is prepared to authorize up to $400 million in tax-exempt bonds for Atlantic Yards infrastructure, thus allowing FCR to save tens of millions of dollars and filling a funding gap discernible in project documents. This raises significant questions: --When, if ever, would such bonds be issued? --What revenues would back bond payments? --Could the state be on the hook to pay off the bonds? --Would the bonds be used to build the new railyard? --Would the full $400 million be issued? --Why wasn't this funding mentioned in the Modified General Project Plan issued in 2006 or its update in 2009? --How could bonds be paid off in the "delayed buildout" scenario envisioned in the Technical Memorandum (p. 55) issued in J...

In a Crain's New York Business editorial, headlined Affirming Atlantic Yards: In every decision so far, the courts have held for Mr. Ratner , the errors start with the headline. The state eminent domain case case was filed against the Empire State Development Corporation (aka Urban Development Corporation), and the courts have held for the state, not the developer. Public good? The editorial begins: New York's highest court did more than affirm the right of the state to use eminent domain in last week's crucial ruling on the Atlantic Yards project. The Court of Appeals endorsed both the public good the project offers and the right of elected officials to implement development plans over the objections of a few holdouts. If bond investors are willing and New York politicians steadfast, Forest City Ratner will break ground in the coming months. The basic rationale for building Atlantic Yards has been forgotten amid financing problems, legal challenges and orchestrated opposi...

From the Spring 2009 issue of Development magazine, the quarterly publication of NAIOP , the Commercial Real Estate Development Association: [John W. Waldeck, partner and chair of the Real Estate Group at the Cleveland-based law firm Walter & Haverfield] observed that the commercial real estate industry is in the midst of its third major crisis in 30 years (the first two being the period from ’77 to ’80 and again in the early ‘90s). “If you’re an entrepreneur, is this what you have to anticipate? That once every eight to 10 years the industry will go through the ringer?” The answer clearly being yes, he advised owners and developers to “build up a substantial war chest.” In other words, even industry peers might say that Atlantic Yards developer Forest City Ratner and the Empire State Development Corporation aren't realistic in anticipating a ten-year buildout for the project. I've suggested several reasons for skepticism.

There was a method beyond Noticing New York blogger Michael D.D. White's running silent commentary on the Atlantic Yards bond deal Tuesday . Remember, and most importantly, no public comment was allowed. Here's part of White's message : Of course, you should be worrying that these bonds will default and consequently don’t deserve a good rating. A default will negatively affect the market for all New York issuers. But that is not all you should be worrying about. Moody’s has warned that the entire state is weeks away from a substantial downgrade of its credit rating if it doesn’t close its budget gap. Wall Street Journal editorial The Wall Street Journal, in an editorial headlined Property Owners Get Dunked On: Another victory for the powerful over property rights, grasped the issue: In allowing the property seizure, the Court of Appeals dodged some of the central challenges to the condemnation, including whether the Empire State Development Corporation's designation of...

At the Develop Don't Destroy Brooklyn press conference on Tuesday, held after the Court of Appeals upheld the use of eminent domain for Atlantic Yards, plaintiff David Sheets (left), a residential tenant, spoke so softly that only those close in could hear him, but the video below captures his words. In his pointed commentary, he referenced two court cases in Michigan, a state, unlike New York, where the highest court was willing to reverse itself on eminent domain. While those cases were raised in amicus curiae briefs to the court, none of the three opinions --majority, concurrence, dissent--acknowledged them. (Photo by Tracy Collins ) "It's a scam" "I'm not an attorney, but I am a paralegal. I know my way around a legal document," said Sheets, who as a tenant is in a precarious position serving as a plaintiff in the case, since comparable housing is not at all guaranteed. "This is a scam. It's sucking up to the public trough. These are welfa...

Libertarian law professor Ilya Somin calls the Atlantic Yards eminent domain decision "the first major state supreme court defeat for property rights on a public use issue since" the controversial 5-4 Supreme Court decision (2005) in Kelo v. New London , in which state courts and legislatures were invited to draw on local conditions to narrow the use of eminent domain. Somin wasn't surprised, given New York's history of court deference to agencies such as the Empire State Development Corporation (ESDC), the successful defendant in this case. He writes: To get around this problem, the Court held that “blight” alleviation is not limited to “‘slums’ as that term was formerly applied, and that, among other things, economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose” (pp. 15–16, quoting a 1975 decision). Obviously, virtually any area occasionally suffers from “economic underdevelopment” o...

New Jersey Nets CEO Brett Yormark appeared yesterday on WFAN's Boomer & Carton to talk about the team and Court of Appeals' dismissal of the Atlantic Yards lawsuit. "It was a big moment for all of us, especially Bruce Ratner," Yormark said, saluting his boss. "He's been fighting so many battles over the last couple of years and, yesterday gave him a chance to feel good about what he's done over the past couple of years." I guess that's one way of looking at it. Moving forward "We feel really good about the financing for the arena," Yormark added. "I think you'll hear some very positive news in the next couple of days from the rating agencies." He said the bond sale would be completed by mid-December and "We'll break ground this year." He said it was still the goal to move to Brooklyn and play basketball in the 2011-12 season. Upside of losing streak? Host Craig Carton pointed out the contrast between ...

From today's Times Sports section, and article headlined Nets Have Dug a Big Hole, but Their Foundation Is in Place : Ratner purchased the franchise in 2003 for $300 million, originally planning to transplant the Nets from New Jersey in time for this season. NoLandGrab's Eric McClure reminds us that the original move date was 2006 and also points out some other miscues. Would you believe that some bloggers in Brooklyn have a heck of a lot more institutional memory than the Paper of Record?

At Develop Don't Destroy Brooklyn press conference yesterday outside Freddy's Bar & Backroom, slated for condemnation, DDDB spokesman Daniel Goldstein was careful to describe Atlantic Yards as a "proposed project" and to say that "the fight against the abusive, corrupt Atlantic Yards development proposal is far from over." He read from Chief Judge Jonathan Lippman's majority decision: It may be that the bar has now been set too low -- that what will now pass as "blight," as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses. But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts. "It's also a matter for...

From Juan Gonzalez's column in today's New York Daily News about Daniel Goldstein (lead Atlantic Yards plaintiff and Develop Don't Destroy Brooklyn spokesman) and his family, headlined Brooklyn couple wants Gov. Paterson to stop Ratner's eminent domain win : But Goldstein is still in his condo, living in that dust-filled building. Only, Goldstein is no longer alone. Thousands of neighborhood residents and a slew of local politicians have joined the nonprofit group he launched to fight Atlantic Yards. The group, Develop Don't Destroy Brooklyn, has become one of the most effective grass-roots efforts this town has seen in a long time. It's true that DDDB has become an exemplary grass-roots effort, in significant part to Goldstein and his willingness to organize a media strategy. Local politicians? But "a slew of local politicians"? Nah. The only local elected officials that have consistently stood with DDDB are City Council Member Letitia James and State...

Developer Bruce Ratner said yesterday in a statement that "the intent [is] that the Nets will play ball in the Barclays Center in the 2011-2012 NBA Season." The New York Times reported today: The developer expects that it will take about 28 months to build the arena, enabling the Nets to move from East Rutherford, N.J., to Brooklyn around June 2012. The season's over by then. So if the Nets move to Newark as an interim stop on an expected transfer to Brooklyn, that would mean two years at the Prudential Center. Arena architects had said construction would take 26 months. But AY timing is always dicey.

There are some unsurprisingly dismaying aspects to the front-page New York Times article today, headlined in print "Atlantic Yards Wins Appeal To Seize Land" and online as Ruling Lets Atlantic Yards Seize Land . First, though the article correctly states that the state would exercise eminent domain, the shorthand headline inaccurately casts the inanimate "Atlantic Yards" as the actor. Public benefit? Second, the Times quotes developer Bruce Ratner, unrebutted, as saying "“The courts have made it clear that this project represents a significant public benefit for the people of Brooklyn and the entire city.” The courts have made no such determination. Rather, the Court of Appeals decision issued yesterday was based on a record compiled in 2006 by the Empire State Development Corporation. The assertions in that record have not been vetted by the courts and there's much evidence--such as from the New York City Independent Budget Office --casting doubt on offic...

The news at the meeting yesterday of the Brooklyn Arena Local Development Corporation (BALDC) was not that the special-purpose LDC was going to approve bonds for the arena, but the numbers and terms surrounding the bonds. And several important aspects of the bond sale remain unresolved. (In photo from video below, BALDC President Frances Walton, at center, begins the meeting, with Robert Godley and Arana Hankin in the foreground.) While the Empire State Development Corporation (ESDC) said in a statement that it had "secured investment-grade ratings" (and thus a lower interest rate) for the arena bonds, the Bond Buyer checked with Standard & Poor's analyst Jodi Hecht, who said no public rating had been made, leading ESDC spokesman Warner Johnston to acknowledge that the ratings had been "tentatively secured." Nor has an interest rate been set. Also, the bonds do not yet have insurance, a factor that adds a significant safety factor but adds to the cost. Off...

Why did the Court of Appeals accept the Atlantic Yards eminent domain case , Goldstein vs. ESDC , after it was decided unanimously at the lower court level, the Appellate Division? Well, the Court of Appeals was divided. It seems that Judge Robert Smith, who wrote the dissent, wanted to argue that courts should have more of a role in overseeing the exercise of eminent domain. Two judges, Susan Read and Eugene Pigott, didn't think the petitioners even belonged in court, so they concurred with the result but did not address the merits, which they said were decided in federal court. Should limitations "upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context" be "a matter for the Legislature, not the courts," as stated in Judge Jonathan Lippman's majority opinion? Generally speaking, yes. Legislative bodies can deliberate on the boundaries of a law in a way that courts cannot. However, in many other states courts have...