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The Rail Yard to Nowhere: Ratner's Quest for an Atlantic Yards Federal Bailout
Developer Forest City Ratner (FCR) is reportedly lobbying federal and state officials
for a bailout to further prop up its heavily subsidized and massive $4 billion
Atlantic Yards proposal.
FCR is attempting to get a piece of New York State's share of the American Recovery
and Reinvestment Act (aka the "Stimulus Bill"). Former New York Senator
Al D'Amato is lobbying on the developer's behalf; presumably, other lobbyists
are hard at work talking with the Paterson Administration as well.
Bailing out the Atlantic Yards project with federal stimulus funds would turn
Ratner's project into the poster child for misuse and abuse of the recovery bill.
The project, of course, is already subsidized to the hilt at the expense of the
city, state and federal taxpayer, including the developer's effort to secure a
triple tax-exempt arena bond with a federal subsidy estimated to be worth $165
million.
FCR, apparently, is attempting to secure stimulus funds by claiming Atlantic Yards
is a "transit project," since they are obligated to construct a new rail yard.
They are arguing that this work is worthy of prioritization by the Metropolitan
Transportation Authority (MTA), which will oversee the disbursement of
a reported $1.3 billion in stimulus funds.
FCR secured the development rights to the MTA's eight-acre Vanderbilt Rail Yard, despite a bid less than half the site's appraised value, in part because it had committed to building a new, "state-of-the-art" rail yard. The sole purpose of the new rail yard, however, is to facilitate the construction of the proposed arena – not the fulfillment of any transit need expressed by the MTA in 2005 when it approved the sale to FCR; nor is a new rail yard outlined in the MTA's 20-year projected-needs assessment. FCR had committed to the MTA and the public to building this new rail yard and paying for it because the new yard was only necessary for its project.
It is clear that FCR committed to building and paying for a new rail yard in September
2005 (when the MTA agreed to sell the development rights to FCR) because the developer
needed a new yard, not because the MTA wanted or needed one. The
Brooklyn Paper
reported at the time:
...[Former MTA Chairman Peter] Kalikow argued that Forest City Ratner
would be spending its own money on a public railway that would be made state-of-the-art.
To that, [Former MTA Board Member, and sole dissenting vote, Mitch] Pally noted, "The MTA, alone, would never have built any modifications to the Atlantic Yards," and said he'd looked at the 20-year projected needs assessment for the agency, which mentioned nothing about upgrading the Long Island Rail Road yards at Atlantic Avenue.
"[The rail yard] works fine the way it is. Forest City Ratner money is not being
used to substitute for projects the LIRR wants to do," Pally said. "We're now
going to spend money on projects we don't want to do, never wanted to do and
don't need? It makes no sense."...
And NY1
reported at the time:
...An appraisal commissioned by the MTA, meanwhile, put the cash
value [of the Vanderbilt Yards aka Atlantic Yards] at $214 million, not counting
infrastructure improvements.
"If the appraisal is right, then we should get $214 million. We're not getting the full value," said Pally.
"The $214 is some guy's idea of what's it's worth," said MTA Chairman Peter Kalikow. "We don't have that deal. We tried to get it, we don't have it. This is what we have."
What the MTA also now has is a promise to make major improvements to the Atlantic
Yards, at a cost to Ratner of $345 million.
"That's not built with funny money - that's built with real cash,"
said Forest City Ratner Executive Vice President Jim Stuckey...
Now it turns out that FCR is lobbying hard to relieve itself of its commitment
to the MTA and the public – and to relieve the taxpayers of a large sum of "real
cash."
Apparently FCR's agreement to pay for a new $345 million rail yard was neither
‘real cash' nor ‘funny money,' but rather an IOU the developer never intended
to fulfill and would now like taxpayers across the nation to cover.
Prior to FCR's current effort to obtain stimulus funds, it was reported that the
developer was seeking new and additional cash subsidies from New York City and
State. An April 14, 2008 NY
Post
article noted that NY State Assemblyman Richard Brodsky (D-Westchester)
"warned that Ratner must deliver what was promised when the state approved the
project in December 2006."
"All the big projects -- the 7-line, downtown Manhattan, Hudson Yards,
Atlantic Yards -- they're all hanging by a thread, and the notion the
taxpayers are going to invest money while the developers don't meet their commitments,
if that's what people expect, there is going to be a fight about it,"
said Brodsky, who chairs the Assembly committee that oversees state entities
that approved these projects.
That fight is now engaged.
The Political Calculus
As reported by the New York Observer, Senator Charles Schumer and Governor Paterson both passed the buck when asked last week if Atlantic Yards would receive stimulus funds. Specifically, a conference call exchange went like this:
Reporter: There's been a lot of chatter on the blogs about whether
Atlantic Yards is a candidate for this infrastructure spending. Is it? Will
it receive...
Mr. Schumer: I don't know enough details to answer that. Governor?
Mr. Paterson: I have no idea. I thought that Schumer knew.
Mr. Schumer: I thought you knew.
As a sure sign of the political hornet's nest an Atlantic Yards bailout would
be, no elected official has been willing to suggest Atlantic Yards should receive
stimulus funds, except for the project's diehard
cheerleader, Brooklyn Borough President Marty Markowitz.
But in The Brooklyn Paper, new Brooklyn Congressman Mike
McMahon bluntly stated, "I do not see Atlantic Yards as a priority for the
money from this package."
Posted: 2.16.09
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