If Atlantic Yards is Bruce Ratner’s Odyssey, he’s approaching Ithaca.
More than six years after the ambitious project was unveiled to the world, the Brooklyn developer announced Wednesday that he had completed a “master closing” for the project, executing mountains of contracts with numerous governmental agencies and finalizing the financing of $511 million in tax-free bonds to help finance the new $900 million Nets basketball arena.
“Today, what has long been a vision for the future of Brooklyn becomes a reality,” Mr. Ratner said in a statement. “Today’s closing represents a vital step forward for New York City, one that is all the more important because of the economic challenges our City faces.”
This removes all obvious hurdles to the start of the $4.9 billion project, which initially envisioned housing towers, an office building and an arena, all Frank Gehry-designed, shooting up from the Prospect Heights neighborhood simultaneously. Now, with an economic collapse and a lending drought, the project will start only with the arena, the piece previously viewed as the least profitable. Mr. Gehry is gone, as are many of the initial deals struck for Atlantic Yards: After it was initially approved in 2006, the city put in another $100 million to help the project. Earlier this year, the M.T.A., which owns some of the land, renegotiated its deal to give Mr. Ratner its most valuable parcel for just $20 million and the cost of a new rail yard, rather than $100 million for that parcel and another that is more difficult to develop.
But beyond Mr. Ratner’s uncanny ability to wrest more from government, what is most surprising is that the project was not swallowed by the economic crisis, as Mr. Ratner’s Forest City Ratner and its investors continued to pour money into the development and the Nets. Forest City reports around $70 million a year in pre-tax losses on the Nets, and its revenues have plummeted recently; the team started the season with a record 18 consecutive losses.
A Forest City executive said this summer that the company and its investors had spent $500 million thus far on the project, only with very preliminary levels of construction on infrastructure to show for it.
Going forward, the focus will likely shift to the market rate and subsidized housing, for which Mr. Ratner has requested additional subsidies from the city to help construct. He has also said the construction of the first tower would start in 2010.
With respect to the arena, there are still a number of lawsuits pending challenging the process–though one was rejected last week–and there may still be more. Jeff Baker, an attorney for Develop Don’t Destroy Brooklyn, said Monday that he expects a lawsuit in coming days that would challenge the process of approving the tax-free bonds, though he did not say who would bring it. Recently, opponents and critics of the project, along with State Senator Bill Perkins, have criticized the bond approval process, for which the state’s development created an entity that avoided having to seek approval from the Public Authorities Control Board, apparently circumventing another level of review.
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