Official Sees Possible Risk in Big Project in Brooklyn
Ever since it was proposed, the Atlantic Yards project in Brooklyn has simultaneously been the borough’s biggest, most controversial and least understood real estate development.

Critics have long suggested that the project is a taxpayer-subsidized bonanza for the developer, the project’s promised jobs and subsidized housing a kind of Trojan horse for the thousands of high-end apartments that come with them. But the developer, Forest City Ratner, and state officials overseeing the project have resisted divulging much information about the project’s financial structure, confining those criticisms to the realm of speculation.

That debate may be revived because of a lawsuit that has wrung free hundreds of pages of internal documents from the Empire State Development Corporation, the state agency overseeing the project. An analysis of the documents suggests that the Atlantic Yards behemoth — 8 million square feet of apartments, offices, stores and an arena planned for 22 acres near Downtown Brooklyn — may in fact be a delicate beast.

"The documents confirm that the overall project is risky," said James F. Brennan, a Brooklyn assemblyman who, with State Senator Velmanette Montgomery, also of Brooklyn, sued the development corporation to obtain the documents. "This information should have been disclosed to the public before the project was approved."

Interviews with real estate developers and brokers not connected to the project indicate that estimates of the construction costs for the project’s 6,430 apartments are low compared with some other developments in Brooklyn, where a residential building boom is pushing up construction prices. And Forest City’s projections for the future sale of the project’s roughly 2,000 condominium apartments seem optimistic, forecasting high volume at prices that have barely been tested in Brooklyn.

Mr. Brennan said he worried that Forest City could be forced to scale back or even abandon later phases of the project if the real estate market sours, putting at risk some of the 2,250 units of subsidized rental housing planned. Most of those units are scheduled to be built during the project’s later years of construction, as are most of the market-rate units.

"The affordable housing is the weakest link in a project that is otherwise financially very tight," Mr. Brennan said. "This is disturbing, because the affordable housing was marketed as the main public benefit of the project."
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• Miss Brooklyn
  One error is that the huge Frank Gehry ego-trip, aka "Miss Brooklyn," will open in 2009. That is pure fantasy, considering the developer is terribly behind schedule due to lawsuits.


• Profitable Office Space
  One oddity is that the article claims Ratner plans on making his money from the office space rather than the lucrative 6,430 residential units. That can't be. If it were the case, why did the developer propose more residential units by reducing the office space to around 360,000 square feet down from the orginal proposal's 2.1 million squre feet? Not to make less money, one would presume.


• Ratner Return
  Additionally, since Forest City Ratner has not put up the $4 billion the project is said to cost, but rather likely something significantly less, the 5% developer's fee the article says Ratner will claim becomes a much higher return on investment when one considers, well, Ratner's investment. What this means is that Forest City Ratner is not putting up the entire $4 billion the project is said to cost, but rather is putting up a fraction of that cost--an unknown fraction. But since the developer's investment is substantially less than the $4 billion price tag, the 5% developer's fee is bound to be a much higher percentage when one considers Ratner's outlay.