Atlantic Yards Tottering

The Atlantic Yards project is inching towards total collapse even as it continues to be propped up on dozens of gigantic government-sponsored crutches. One of those crutches includes eminent domain, but the problems facing the Forest City Ratner redevelopment project won't be fixed by condemnations.

When megadeveloper Bruce Ratner bought the Nets he pledged not only to move the NBA team out of New Jersey and into Brooklyn but also build an entire neighborhood around his proposed arena.  The neighborhood was to be designed by celebrity architect Frank Gehry and was to include thousands of units of affordable housing.  Ratner apparently did not think the fact that a neighborhood already existed at Atlantic Yards would matter too much. 

And he had good reason to believe so, due to New York’s horrendous eminent domain laws, which makes it nearly impossible for property owners to have an opportunity to defend what rightfully belongs them.  However, the community in Brooklyn, led by resident Daniel Goldstein, has tried every possible legal argument in the courts to overcome Ratner’s use of  state power for his own personal benefit.With the lawsuits and then the plummeting economy—Ratner appealed for a federal bailout earlier this year—Atlantic Yards still remains just a plan on paper. 

Although the fight continues to be about whether the state will condemn the remaining properties on the 21-acre site, it’s not entirely clear that Atlantic Yards will ever be built even if the developer obtains the rest of the properties.  Even the project’s former celebrity architect, Frank Gehry expressed his own doubts. Things continued to move down hill for Ratner in just the past month.

At the beginning of the month, the Empire State Development Corporation—the state agency with the power to condemn and hand over property to other private parties—said the project’s size would have to shrink.  In fact, the month before, Ratner tried to trim costs a bit.  He later tried again, this time by ousting Gehry as architect for the project. Gehry’s involvement in the project had been one of the major selling points.  Gehry’s guidelines for the project remain, even as the cost had more than doubled from $2.5 billion to $4 billion. Had Gehry remained, the cost of the arena alone was estimated to be a little less than $1 billion.One newspaper commented that Gehry’s firing “is the construction world equivalent of trying to save the patient by killing the patient,” while the New York Times' architectural critic called the move “a stunning bait-and-switch".  Nevertheless, Gehry leaves after six years of work and tens of millions in compensation.

A few weeks later, with Ratner’s financial situation worsening, state officials gave the developer an extra three years—until 2019, not 2016—to complete the project, and then the Metropolitan Transportation Authority produced a deal whereby Ratner gets 22 years to pay $100 million to the MTA for the development rights to the Brooklyn rail yards.

Part of the plan includes renaming the subway station after a British bank whose name will be on the arena.Goldstein, who continues to fight the project, has remained an important voice in the debate even as he continues to live, threatened every day by eminent domain, in his Brooklyn condo. He made it quite clear to the board of the ESDC just how much the project has failed: “The project appears to have no clothes.  When you approved [the plan] three years ago, there were grand designs all over the room of the arena and the rest of the project. I don’t see any here today, yet you are about to approve a modified plan when no one even knows what it looks like.” The ESDC this week, as expected, approved the revised plans. However, Ratner’s cost-cutting measures seem to have been a quixotic adventure, as the costs of the project have increased by nearly another billion to $4.9 billion. And some local officials think that the promised affordable housing may go the way of Frank Gehry, too.State and local officials continue to scramble to approve various measures because they’re on a deadline. 

If Ratner does not sell $586 million in bonds for the arena by the end of the year, those bonds lose their IRS tax exemption. Without the ability to obtain the tax-exempt financing the project could finally collapse.