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"Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall or any farm with a factory."

U.S.  Supreme Court, minus former Justice Sandra Day O'Connor, will not hear the Atlantic Yards case;  impact of Kelo felt.

In 2009, what is to prevent the state from replacing a Ritz-Carlton with a Motel 6? Maybe a Butler building?  Was it something we said?  New architect...bad news on the $$ side.

Russian tycoon to buy Nets, move team to Brooklyn
YAHOO
By TOM CANAVAN, AP Sports Writer Tom Canavan, Ap Sports Writer
Thu Sep 24, 2009, 4:08 am ET

EAST RUTHERFORD, N.J. – The NBA has truly gone global.  Russian tycoon Mikhail Prokhorov reached an agreement Wednesday to buy 80 percent of the financially strapped New Jersey Nets and nearly half of a project to build a new arena in Brooklyn.  The only thing that stands in the way is a nyet from the league's board of governors, and that doesn't seem likely with NBA commissioner David Stern already giving the deal his initial blessing.

The proposed blockbuster deal would give the Nets' current principal owner, Bruce Ratner, the needed cash to move forward with the Barclays Center, the centerpiece of his Atlantic Yards development, which includes plans for retail and residential projects.  It would make Prokhorov, a billionaire and former amateur basketball player, the NBA's first non-North American owner.

It would also mean the Nets really do seem headed to Brooklyn, a New York City borough without a major pro sports franchise since baseball's Dodgers moved to Los Angeles in 1957.

"Interest in basketball and the NBA is growing rapidly on a global basis, and we are especially encouraged by Mr. Prokhorov's commitment to the Nets and the opportunity it presents to continue the growth of basketball in Russia," Stern said in a statement.

Dallas Mavericks owner Mark Cuban, too, is ready to welcome Prokhorov to the NBA.

"I love it. I think he will bring fresh ideas and viewpoints, and hopefully this will be the start of a trend toward international investors," Cuban said in an e-mail to The Associated Press. "Plus, I took Russian in high school, so it will give me a chance to refresh."

Stern has long touted the NBA's international reach, boasting that two-thirds of the players on the medals podium at the Beijing Olympics were NBA players. The league plays preseason games in Europe and China, and its All-Star and NBA finals games have been televised in hundreds of countries.  In going global, Stern could be welcoming quite a globetrotter.

Prokhorov, who is 6-foot-6 and was an avid basketball player in his school days, is a fixture in glitzy European resorts and once was held in France for four days of questioning — but never charged — in a prostitution investigation. Even in Russia, he raises eyebrows for his penchant for private jets and a gorgeous entourage.  Prokhorov's love of the high life is rivaled by his devotion to basketball. He owns a share of the Russian team CSKA Moscow, and he said on his blog he wants to buy the Nets partly to get access to NBA training methods and help Russian coaches get internships in the league.

Russia has a proud basketball tradition, having won the Euro championship in 2007. CSKA is a perennial Euroleague power. Yet Andrei Kirilenko, a Utah Jazz forward, is the only Russian currently in the NBA.

Prokhorov has been ranked as his country's richest man in the Russian edition of Forbes, with an estimated $9.5 billion — even after shrinking by some $7 billion in the world economic crisis.  Another rich Russian oligarch, Roman Abramovich, is the owner of the British soccer power Chelsea. Uzbekistan-born billionaire Alisher Usmanov owns more than 25 percent of another British soccer team, Arsenal.

"In any sport nowadays, if you can bring someone in who is financially stable, it is great for the sport, and I think it will be great for the NBA," former player and current TV analyst Charles Barkley said.

The franchise started with the ABA in 1967 as the Americans and then the Nets, bouncing around to different arenas in New Jersey and New York before settling in East Rutherford in 1981-82. Their current home, the Izod Center, is 30 years old.  Nets president Rod Thorn said he expects little reaction about a Russian owner: "I don't think players really care who owns the team."

It's not clear how Brooklyn's sports fans might take to a team with foreign ownership.  There's already been community grumbling over the British bank Barclays buying the naming rights to the arena — and also the rights to name the subway station beneath it.

Brooklyn's famed Russian enclave of Brighton Beach is only a few miles from the proposed arena, but for many Russian emigrants Prokhorov symbolizes everything wrong in their homeland — a smooth operator who made a fortune when Russia sold off its state industrial treasures for a song.

Los Angeles Lakers guard Derek Fisher, who also is president of the NBA players' association, said the deal "speaks to the fact there's something that potential ownership groups still see about the NBA that is good because you wouldn't have anybody — European, Russian, American — buying into an NBA team at this point if they didn't see something that was a positive for them to get out of the deal."

Prokhorov's Onexim Group announced the deal jointly with Forest City Ratner Cos. and Nets Sports and Entertainment. According to the agreement, entities to be formed by Onexim Group will invest $200 million and make funding commitments to acquire 80 percent of the NBA team, 45 percent of the arena project and the right to buy up to 20 percent of the Atlantic Yards Development Co., which will develop the non-arena real estate.

The NBA will review the proposal, and the deal must be approved by three-fourths of its board of governors. Ratner and Prokhorov hope to have the sale completed by the first quarter of 2010.

"I have a long-standing passion for basketball and pursuing interests that forward the development of the sport in Russia," Prokhorov said in a statement. "I look forward to becoming a member of the NBA and working with Bruce and his talented team to bring the Nets to Brooklyn."

While the proposed deal would give Ratner's group an infusion of money for the arena project — he faces a December deadline to break ground or lose access to financing from tax-free bonds — there is fervent opposition to the additional 22-acre residential and commercial real estate development. It would create more than a dozen residential and office towers with more than 6,400 apartments built over property that includes a rail yard, warehouses and several blocks of homes and businesses.

Critics include homeowners who say the government is illegally claiming their property and thousands of residents who worry about how the skyscraper project will affect their neighborhoods.

New York's Court of Appeals is to hear an eminent domain challenge to the project next month.

City Council member Letitia James, a fierce critic of Atlantic Yards, said: "For Forest City Ratner to save this project by associating with someone who has been accused of being involved in a prostitution ring is an embarrassment. Let it go. Let it die."

Prokhorov, 44, shot to prominence in the chaotic early years of privatization deals that followed the collapse of the Soviet Union. In 1993, the Onexim bank he headed acquired Norilsk Nickel, one of Russia's huge but lumbering industrial conglomerates.

Under Prokhorov, Norilsk became more efficient and profitable. He resigned as Norilsk chairman in 2007 and sold his shares for $7.5 billion, but retains substantial interests in other metals companies through Onexim, including shares in gold-miner Polyus and Rusal, the world's largest aluminum company. Onexim's other interests include real estate, insurance and energy.

Report Finds Net Loss to City From Atlantic Yards Arena
NYTIMES
By Sewell Chan
September 10, 2009, 1:45 pm

Updated, 3:04 p.m. | The proposed basketball arena that has long been the centerpiece of the contentious Atlantic Yards development near Downtown Brooklyn would result in a net loss to the city of nearly $40 million over 30 years, according to a new report prepared by the city’s Independent Budget Office.

The report [pdf] stands in contrast to an earlier report in 2005 by the same office, which concluded that the 18,000-seat arena would result in a net fiscal benefit for the city. Since then, city subsidies for the project — now estimated to cost $772 million — have grown. So has uncertainty about the project, which would transform a 22-acre site that is currently centered around a below-grade railyard owned by the Metropolitan Transportation Authority.

The figure of a net loss of nearly $40 million comes from the budget office’s estimate that the project could the city $169 million over 30 years, while generating $130 million in new revenues from economic activity. (All figures are in present values.)

Interestingly, the report finds that the arena would result in a net gain to the state of $25 million over 30 years, as well as $6 million in new tax revenues for the transportation authority.

According to the report, the state would gain — even as the city loses — because the state has put up less capital money for the project and because the state can tax the personal incomes of the basketball players who will now be working in New York — instead of New Jersey, where the Nets are now based.

Sizable tax revenues granted to the arena mean that public entities will be denied some $219 million in foregone revenues — also known as opportunity costs: $181 million for the city, $16 million for the state and $22 million for the transportation authority. “Were governments not denied these revenues, the city would realize a substantial net fiscal gain from the arena instead of a net loss.”

The Bloomberg administration has staunchly defended the project for years now, saying it will yield numerous benefits, not least of them the transformation of a centrally located but haphazardly used site. City officials tried to play down the report’s significance on Wednesday.

David Lombino, a spokesman for the city’s Economic Development Corporation, said in a phone interview, “The report is sloppy and contains numerous inaccuracies.”

He said the report factored in costs associated with the entire project — the arena and the planned mixed-used development around it — while only counting the benefits from the arena.

“In addition, our investment was based on benefits that aren’t easily quantified, like job creation, affordable housing, school construction and open space — and all of this on a site that is now an open railyard without any public benefit,” he said. “That’s not in the report.”

Mr. Lombino added:
Even in the city, in the most pessimistic view that the entire project isn’t built and only the arena is built, the city is entitled to tens of millions of dollars in liquidated damages from the developer.

The budget office, which is independent of both the mayor and the City Council, said it focused on the arena because the arena “accounts for virtually all of the discretionary benefits flowing to the project.” Other benefits available to the project would be available “as of right” to any developer, not just Forest City Ratner, the report found.

The report does take into account an estimate of the direct and indirect economic activity that would be generated while the arena — which is supposed to be built for the start of the 2011-12 National Basketball Association season — is being built.

Construction would add an annual average of 3,282 jobs to the city, mostly in the building trades, and the arena would lead the permanent creation of about 955 new jobs, many of them part-time, and most of them in the performing arts and spectator sports, the report found.

Over all, the report will probably provide new ammunition to critics who have repeatedly questioned the use of public subsidies for the project, as well as its scale.

Warner Johnston, a spokesman for the Empire State Development Corporation, which along with the city’s Economic Development Corporation is supporting the project, said in a statement:

Empire State Development maintains an open dialogue with the public and external stakeholders on any given project. As such, E.S.D. will closely review the material presented in the I.B.O. report. We are pleased that progress on the Atlantic Yards development continues, evidenced by yesterday’s release of the Barclays Center designs.

Joe DePlasco, a spokesman for Forest City Ratner, the developer in charge of the project, criticized the new study. He said in a statement:

The Independent Budget Office’s analysis is wrong. Their assumptions are widely off mark, including for sales and other tax revenues. Also they are conveniently applying the state and city subsidies to the arena while ignoring the benefits of the larger project. A large portion of the public benefits are also realized through the development of the housing, office and other uses, creating jobs and tax revenues to both the city and the state.

The I.B.O. did not speak to or request information from the developer so we are further reviewing the document now.

An analysis conducted for opponents without speaking to the responsible parties is anything but independent.

The budget office said it had conducted the study at the request of James F. Brennan, Hakeem S. Jeffries and Joan L. Millman, all State Assembly members; Bill Perkins and Velmanette Montgomery, members of the State Senate; and Letitia James and David Yassky, members of the City Council. All have been critical of the project.

Architecture Review | Atlantic Yards
New Yards Design Draws From the Old
NYTIMES
By NICOLAI OUROUSSOFF
September 10, 2009

To say that the 22-acre Atlantic Yards development project in Brooklyn is in disarray is not a major revelation. That it may still be possible to save — and may even be worth saving — comes as news.

When Bruce Ratner, the project’s developer, fired Frank Gehry last year — after getting city approval on the basis of Mr. Gehry’s design — and replaced him with Ellerbe Becket, a firm known for churning out generic stadiums, it seemed like a cynical double cross. Ellerbe Becket’s bland proposal for a basketball arena replaced a much more ambitious scheme from Mr. Gehry, which cleverly integrated the arena into a surrounding group of residential and commercial towers. That design seemed destined to create a black hole at one of Brooklyn’s most lively intersections. Many were appalled.

Chastened, Mr. Ratner quickly hired Shop Architects, a young New York firm, to spiff up the arena, and the results, unveiled on Wednesday, are somewhat more promising. Some of Mr. Gehry’s original ideas, like opening views from the sidewalk into the arena, have been restored. Mr. Ratner has reduced the size of the structure, moving team offices to another site. And Shop has wrapped it in an appealing rust-colored steel skin, which will make it less harsh on the eye.

But it still falls short of the high architectural standards set by the design the city was originally promised. And too many questions remain unanswered about the overall plan — in particular, when and whether Mr. Ratner’s company, Forest City Ratner, will ever build the surrounding buildings, and, assuming it does, who will design them. Without them the cohesion of the original plan falls apart.

The brilliance of Mr. Gehry’s approach was not about the aesthetics of any particular building; it lay in the careful arrangement of diverse urban elements on a tight urban site. As in his design work on some of his early houses, Mr. Gehry began this project by breaking down the development program into a series of discrete forms — arena, residential and commercial towers, public zones — and then carefully reassembling them, a bit like a child playing with building blocks. The towers set around the arena became a way to hide its bulk. And the collisions among forms made for a number of startling urban moments: views between buildings that opened directly into the arena, a public park draped over the arena’s roof.

The final design did not satisfy many local activists, who felt it was out of scale with the surrounding neighborhoods, but it was a work of genuine urban complexity, drawing strength from the tensions created by the vibrant mix of elements.

The design by Shop and Ellerbe Becket tries to recapture some of that energy and relate the building to the neighborhoods around it. That rust-colored skin, woven out of weathered-steel panels, has the look of worn snakeskin; it is perforated with small openings that will make it glow at night, and it has a toughness that should fit well into its gritty setting.

The architects have set back the upper portion of the facade to break down the structure’s scale, and laid out a series of retail shops extending along Flatbush Avenue, the area’s main commercial strip. They have also replicated Mr. Gehry’s big glass windows along Flatbush, which will allow drivers to peer right through the lobby to the scoreboard suspended above the court.

Still, the larger project remains worrisome. In Mr. Gehry’s original design, all of the structures were conceived as part of a single cohesive scheme. (All five of the buildings’ foundations, for example, would have to have been built at the same time.) To defer additional costs, Mr. Ratner has divided up the design. The arena will be built first, and then, he says, the foundations for the residential and commercial buildings will be dug, once he is ready to start the next stage of construction.

This risks producing an oddly clunky composition. Although Mr. Ratner says he still plans to build the towers, possibly hiring an architect for the first one by the end of the year, the current design was clearly conceived to be able to stand alone, and it is hard to see how it would be integrated into a larger, convincing urban whole. Despite Mr. Ratner’s reassurances, it is also possible that one or two of the towers will never be built, which would take us back to square one.

And then, of course, there is the arena itself. Mr. Gehry took great care to disguise the ubiquitous corporate suites to create a more intimate space, tucking them into the ends of the arena and draping balconies over them. He also designed a ceiling that seemed to press down into the room, focusing the energy onto the court.

The new stadium has fewer suites (they are harder to sell in a poor economy), but they have become more prominent. And the room feels more conventional.

It is probably the best Mr. Ratner can do, given time and money constraints. But his problems, sadly, are now our problems too. And they may force us to live for decades with what is ultimately a compromised design.


August 5, 2009

Conversation: The Sports Recession

Andrew Zimbalist is the Robert A. Woods Professor of Economics at Smith College and an expert on the business of sports. He has consulted for players’ unions and franchises and for the Ken Burns documentary “Baseball.” We spoke last week about professional sports and the recession. An edited transcript of our conversation follows.

Has the recession shattered any driving assumptions about major-league sports?

It’s been a cliché that sports are too ingrained in the culture to be impacted by a recession. The idea was that if people get laid off or their incomes stagnate, they need distraction more than ever, and the best distractions are the sports they love the most. In the old days, when you used to be able to go to Yankee Stadium for three dollars and fifty cents to buy a box seat, that kind of assumption held. People would be able to find the extra money or substitute the ballgame for other kinds of spending.

But today, a box seat at Yankee Stadium isn’t three fifty; you pay twelve hundred and fifty dollars for the best box seat. It’s the same at other ballparks—the scale is different, but the jump is the same. Ballparks have been gentrified since Camden Yards, in 1992, when Larry Lucchino and the Baltimore Orioles moved their stadium downtown next to the business district. There’s been a drive to bring the corporate dollar, the corporate sponsorships, the corporate employees into the ballpark, and it’s been successful. It’s not as easy for the average fan to say, “I’m going to set aside enough money so I can still take my family to the ballpark.”

Another thing is that in the seventies and eighties the owners got the lion’s share of revenue from selling tickets and a little bit more from selling national television contracts through the league. Today, teams are increasingly earning revenue from other sources—corporate sponsorships, signage at the ballpark, catering at the ballpark, the Internet, and so on. All of these new sources of revenue lean more heavily on higher-income groups and discretionary spending, and are much more affected by forces in the macroeconomy.

And, to repeat something that’s been said a lot over the last six months, this recession is different. It can’t be sloughed off like the previous ones.

What kind of effects are we seeing in Major League Baseball?

Attendance is down about five per cent this year. That news comes on the end of a string of thirteen years where attendance went up and revenue went up at a clip of eleven per cent per year. That was the average annual growth of revenue in baseball since the strike of 1994-95. Now that growth has stopped, and we’re probably seeing a reversal.

At Yankee Stadium and Citi Field they have less capacity than they did at the old stadiums, and they’re still not selling out. A lot of sponsors have dropped out. Certainly the automobile sponsors are disappearing in baseball, as they have in other sports. Of course, the sport that has been hit most acutely by the recession is NASCAR—they depend most heavily on the automobile industry.

Did any of the leagues anticipate an end to the boom, or did they just assume that salaries and sponsorships would keep on rising? Did any league prepare itself well for the collapse?

Sort of. Other than Nouriel Roubini at N.Y.U., not many people saw a collapse coming. People in the financial sector certainly didn’t see a collapse coming. You’d hardly expect David Stern and Bud Selig and Roger Goodell and so on to anticipate something that the country’s leading economists and finance gurus didn’t anticipate.

But they did make some moves when they saw instances where the economic problems were creeping up on us. The N.B.A. laid off ten per cent of its front office, and the N.F.L. did something very similar. The N.B.A. is projecting lower basketball-related income going forward, which should, if it holds up, lower the salary cap. Baseball teams have heavily discounted tickets and have increased the number of comps that they’re giving out to the community.

For, say, an N.B.A. fan, how is following a team going to be different during the recession?

The main story for the average N.B.A. fan is that ticket prices are going to stay more or less where they’ve been. If you’re unemployed now and you used to be employed in a job that earned you a solid income, it’s going to be much more difficult to attend games. But if the unemployment rate is basically at sixteen per cent (that is, if you include discouraged and part-time workers pro rata), that means five out of six workers still have their old jobs. So when I describe the average fan not being able to do these things, I’m talking about only one-sixth of the labor force. The remaining five-sixths, I think, will still indulge their fandom.

How will leagues be affected by the rush to cut labor costs? You’ve already seen it this offseason in the N.B.A., where teams are focussing on cutting salary instead of trying to win, with very few exceptions.

You have to remember that in N.B.A., N.F.L., and N.H.L. they have salary caps. It’s a maximum amount, sometimes with some loopholes, that teams can spend on their players. They also have salary floors, which range from roughly seventy-five to ninety per cent of what the cap is—so teams don’t have the kind of flexibility that exists in Major League Baseball.

So you might see some tweaking at the margin. But most teams see themselves as having a decent shot of getting into the postseason, if not the championship, and teams are mostly maneuvering within the rigidities of the cap system in order to assemble the best roster they can.

If league revenue goes down, the cap will go down. Some of the reductions you may see will be out of anticipation that revenue will be lower next year than it was the previous year.

And what’s that going to do to the labor relationships between players and owners?

It’s going to severely challenge them. It’s easy to get along when times are good and money is flowing; it’s much harder to get along when you see stringencies and cuts. N.B.A. players, for example, have already challenged the revenue projections that David Stern put out for the next economic year. So they have a lot to talk about.

But I also believe that labor relations in all of the sports have matured enormously in the last ten or fifteen years.

How so?

Well, they introduced free agency in baseball in 1976, and the other leagues followed in the next decade. The players had been moving from a situation of profound exploitation to one where they were more or less developing the free labor rights that everybody else had. They had organized themselves into a very tight-knit union, and the owners kept trying to resist, even after free agency came into existence. So the players were geared for battle. That provided the makings of a tumultuous relationship.

Over time, though, the owners realized their revenues were growing by leaps and bounds, and if they imposed certain constraints, they could live quite well with the free agency system. The players, meanwhile, were getting richer and richer. Back in the days when free agency was introduced, the average player salary was below $100,000. Today, in baseball it’s 3.2 million dollars, in basketball it’s near five million dollars, and in football and hockey it’s about 1.7 million dollars.

These are guys who are extraordinarily wealthy, and also get a lot of endorsement income, which they wouldn’t be getting if there was a strike or a lockout, and the career of a professional athlete is relatively short. Most of them stay around for three or four years, and none of them want to see one-third of their career wiped out by a work stoppage. They want to keep playing.

Both sides, I think, have learned the lessons and been chastened by the work stoppages of the past and seen how fans react violently to them.

How did America develop these incredibly rigid sports institutions, while in Europe the leagues are just much more freewheeling? You can sell and trade players, teams move in and out of leagues and there aren’t restrictions, and it reverses every stereotype we have about our different economies.

Let me give a sense of what I think is going on. The European model of professional sports came out of British football. Initially in the nineteenth century there were all these local competitions, which were organized by what was called the Football Association into a national competition. Some of the local areas felt like they weren’t getting a fair shake and decided to form professional leagues. In order to give everyone a fair shake, the leagues were structured as a hierarchy, where if you finish at the top of a lower league you get to move up, and if you finish at the bottom you get demoted.

So it was set up as a model of sporting competition, and the teams, until recently, were always run as clubs, not corporations. Profit was never a motive.

In the United States, the model was established by the National League in baseball, which William Hulbert founded in 1876, and was driven by profit. Every institution in the league was supposed to be profitable. And you can make a league more profitable by limiting the number of teams in it, and strictly controlling the number of teams and where they play. And they introduced the reserve clause to keep player salaries down.

You were a consultant to Bruce Ratner on the Atlantic Yards project—

I haven’t consulted with him since I wrote my last report, which I think was in 2004.

Part of the idea was that building Atlantic Yards—the arena, all the development—would be a major boon for business. How much economic benefit do stadiums and arenas actually bring when they are built with public money?

Arenas and stadiums, by themselves, cannot be expected to produce an economic benefit to the local community. It can’t be expected to increase the employment level in the community, and it can’t be expected to raise per capita income. And that’s a straightforward conclusion that comes from detailed econometric analysis that spans thirty to forty years. That doesn’t mean there can’t be a modest benefit in particular cases, though.

But the research says that, on average, there’s no economic benefit. In regards to Atlantic Yards, there were two things that were different, as I studied it. You were moving the team—the New Jersey Nets—over the tax jurisdiction line to New York State and New York City. That meant that Brooklyn was going to be able to cannibalize New Jersey revenues. The second thing that was different, and this is more typical of recent stadium and arena deals, was that Ratner’s plan at the time was that he was going to build a $500 million arena and a $3.5 billion community development that would encompass twenty-one acres and involve retail and commercial space and mixed-use housing.

So there was going to be a lot of private investment. It wasn’t simply looking at the project as a basketball arena and nothing else, but it was looking at the entirety of the project, which was seven times larger than the arena.

Do you think there will be a backlash against publicly financed stadiums? If you were a voter in a cash-strapped state, what would you be looking for in a deal?

Cities don’t build a public park because they expect it will bring in higher income; they build it because they think it’s good for the social and cultural fabric of their community. A city might look at a ballfield or an arena in the same way—if you can make a case that building a stadium will be economically neutral, you might want to go ahead and do that, because you think a team will provide a source of cohesion, identity, wholesome family entertainment.

And how often does that happen?

If you interview most people who vote for stadium initiatives, they vote on that basis. One of the things that happens during a stadium drive is that the proponents go out and hire a consulting firm to come up with a predetermined conclusion that the stadium will be the cat’s meow for the local economy.

They hire this company, and then they publicize the results of the study, and there might be three or four or five per cent of the community, swing voters, that say, “I might not like baseball or basketball or football, but there’s a hard study that says this will help the local economy.” Those studies are used to get the people sitting on the fence, but most of the people are voting yes because they love sports and want a team.

If I had, say 500 million or a billion dollars, and I wanted to buy a sports team, would it be worth it? Where do you think I could find value?

Bruce Ratner wants to sell a piece of the Nets. Want me to call him up? I’ll tell him you’re interested.
FG/CH News: Court of Appeals to Decide AY Suit
NYTIMES
By Andy Newman
June 30, 2009, 9:55 am

The Court of Appeals, the state’s highest court, has agreed to hear the eminent domain lawsuit against Atlantic Yards, Develop Don’t Destroy Brooklyn reports.

Six weeks ago, the state’s second-highest court, the Appellate Division of the State Supreme Court, unanimously upheld a lower court ruling that rejected the eminent domain challenge. The lower court did not buy the argument by the project’s opponents that the Empire State Development Corporation’s decision to condemn and seize land under the eminent domain statute was largely made to benefit a private developer, namely Forest City Ratner.

But the Court of Appeals notified the parties late last week that it would hear arguments on the case in October. Briefs are due to be submitted by July 31.

The suit was filed by nine property owners and tenants, including DDDB spokesman Daniel Goldstein, whose corner of Prospect Heights was deemed “blighted” and whose homes and businesses in the proposed Atlantic Yards footprint have been slated for government seizure.

The opponents of Atlantic Yards have yet to win a major legal victory in the handful of suits that have been filed so far.
Developer Seeks to Defer Payments on Atlantic Yards Site
NYTIMES
By Michael M. Grynbaum
June 22, 2009, 1:38 pm

The Metropolitan Transportation Authority, as expected, has offered the developer Bruce C. Ratner, a break on the sale of the Atlantic Yards site in Brooklyn.

Mr. Ratner had agreed to pay $100 million to the authority for a nine-acre site where a railyard is located, but with the economy slumping, the developer had asked to defer some of the payment.

The revised agreement, which became public on Monday at a meeting of the authority’s finance committee, would call for Mr. Ratner to pay $20 million up front for the property, and $80 million in deferred payments for the air rights.

Mr. Ratner, the chief executive of Forest City Ratner, would pay $2 million a year for four years, beginning in 2012. In 2016, the yearly payments would rise to $11 million for 15 years. Under the deal, Mr. Ratner would be paying less in the short run, and more in the long run.

The new terms are currently being discussed by the finance committee; if the committee approves the agreement, as it is expected to do, it will go to the full board of the transportation authority on Wednesday.

The agreement also changes some of Mr. Ratner’s requirements to build a replacement railyard for the Long Island Rail Road, which currently uses the nine-acre site, the Vanderbilt Yards. Instead of building a nine-track yard that can accommodate 76 train cars, the new plan calls for a seven-track yard that accommodates 56 cars.

Much of Mr. Ratner’s original vision for the Atlantic Yards has changed. The $4 billion development was to feature a $1 billion glass-walled basketball arena and 17 buildings that combined office and residential space, all designed by Frank Gehry.

But Mr. Gehry’s design for the arena has been replaced by a less expensive design by the firm Ellerbe Becket, and Mr. Gehry will not longer be designing any of the 17 buildings for the 22-acre development.

Mr. Ratner, who has been plagued by lawsuits and a flagging economy, has already delayed the office building and most, if not all, of 6,000 planned apartments — 40 percent of which were set aside for low-, moderate- and middle-income families. He is racing to start building the arena by the end of the year to qualify for tax-exempt financing.
Developer Drops Gehry’s Design for Brooklyn Arena
NYTIMES
By CHARLES V. BAGLI
June 5, 2009

Citing financial concerns, the developer of the long-delayed Atlantic Yards project in Brooklyn has scrapped plans for a Frank Gehry-designed $1 billion glass-walled basketball arena for the Nets in favor of a less expensive arena.

The new design, which will cost about $200 million less, comes from Ellerbe Becket, an architectural firm based in Kansas City, Mo., that specializes in convention centers, stadiums and arenas and designed Conseco Fieldhouse in Indianapolis, where the Indiana Pacers play. Officials who have seen the design say that while it resembles Conseco Fieldhouse it also bears a likeness to an “airplane hangar.”

The developer of Atlantic Yards, Bruce C. Ratner, the chief executive of Forest City Ratner, scrapped Mr. Gehry’s plans primarily for economic reasons. The arena is the centerpiece of a $4 billion development that has been hobbled by lawsuits, a recession and its own ambitious goal to build 6,400 apartments, 40 percent of which would be reserved for low- to middle-income families.

Mr. Ratner, whose project won a major court victory over opponents to Atlantic Yards last month, is racing to pare costs and start construction of the 20,000-seat arena by the end of the year, when his right to use tax-exempt financing expires. Officially, the developer says the Nets will move to Brooklyn from the New Jersey Meadowlands for the 2011 season.

“The current economic climate is not right for this design,” Mr. Ratner said of the Gehry design in a statement released Thursday afternoon, “and with Frank’s understanding, the arena is undergoing a redesign that will make it more limited in scope.”

Mr. Ratner has said he is eager to get started with what he says will be a world-class project.

Mr. Gehry, the award-winning architect behind the Walt Disney Concert Hall in Los Angeles and the Guggenheim Museum in Bilbao, Spain, added that while he regretted the demise of his arena design, he remained “extremely proud of our work on the Atlantic Yards master plan and on the original arena.”

The switch met with the approval of David Stern, the commissioner of the National Basketball Association, who said that Ellerbe Becket had designed “some of the finest sports and entertainment venues in the world.”

If the arena is built, however, it will most likely take more than two years to complete. Unlike the Gehry design, the new arena would not accommodate a professional hockey team.

Mr. Gehry remains the master planner for the 22-acre development, at the intersection of Atlantic and Flatbush Avenues. But in a concession to the collapsing real estate markets, the developer has delayed most of the housing and a proposed office tower. In an interview last month, Mr. Ratner said that he planned to start the first residential tower, which would contain a large percentage of units for low-, moderate- and middle-income families, about six months after work begins on the arena.

With projects across the city slowed or scuttled by the recession, Mayor Michael R. Bloomberg and Gov. David A. Paterson are eager to push Atlantic Yards forward. But Mr. Ratner has also opened himself up to criticism by scuttling Mr. Gehry’s design in favor of a less glamorous arena and delaying the office tower and much of the housing, while modifying other elements of the development.

“The current Atlantic Yards plan bears increasingly less resemblance to the project that was approved in 2006,” said Vin Cipolla, the president of the Municipal Art Society. “The replacement of Gehry further reduces the public benefits of the project, which urgently needs re-evaluation and oversight.”

Atlantic Yards emerged late in 2003 when Mr. Ratner bought the Nets for $300 million and announced plans to move the team to Brooklyn. Although he was not a basketball fan, Mr. Ratner saw the arena as a lever for a much larger development of housing, parks and office space directly across from a major transit center.

Forest City Ratner, which was the development partner for the Midtown headquarters for The New York Times Company, has had to contend with vigorous opposition led by a group called Develop Don’t Destroy Brooklyn, which has challenged what it said was the oversized nature of the development and the state’s plan to condemn private property on behalf of Mr. Ratner.

The city’s building boom has fallen silent during two years of litigation, and financing for real estate projects is hard to come by. Last year, Mr. Ratner said that the development of the area would be slower than once promised, because of the recession.

The developer is under pressure to get government approval for changes to the development’s master plan and to start the arena by December, before he loses the ability to use tax-exempt bonds. Mr. Ratner must also hold together a group of corporate advertisers at a time when companies are trying to shed those kind of financial obligations.

His 20-year, $400 million deal for the arena’s naming rights with Barclays Bank also expires at the end of the year. He has secured an additional $100 million in sponsorship and advertising deals with eight companies, including Anheuser-Busch and Foxwoods, and is expected to announce another major deal next week.

On June 24, Mr. Ratner plans to go before the boards of the Metropolitan Transportation Authority and the Empire State Development Corporation for changes to the approved plan for the development. Instead of making an upfront payment of $100 million to the transit authority for a nine-acre railyard that is part of Atlantic Yards, Mr. Ratner is asking the authority to accept a $20 million down payment, while he delays construction of a permanent replacement railyard for at least several years.
U.S. Supreme Court Refuses to Hear Atlantic Yards Case  
NYTIMES
By SEWELL CHAN
Published: June 24, 2008

The United States Supreme Court on Monday declined to hear an appeal by about a dozen New York City property owners and tenants whose homes and businesses are scheduled to be taken over by the government and demolished to make way for the $4 billion Atlantic Yards project in Brooklyn.

The justices, without comment, refused to hear the plaintiffs’ argument that the seizure of their property would violate the United States Constitution. (The court’s case list indicated that Justice Samuel A. Alito Jr. noted that he wanted to hear the case; such notations are common.) In February, the United States Court of Appeals for the Second Circuit upheld a trial judge’s dismissal of the landowners’ and tenants’ suit.

However, the plaintiffs, including Daniel Goldstein, the leader of Develop Don’t Destroy Brooklyn, which opposes the Atlantic Yards project, vowed to continue their legal fight by pursuing other arguments in the state courts.

Matthew D. Brinckerhoff, the lawyer for the plaintiffs, said in a statement, “We are, of course, disappointed that the court declined our request to hear this important case. This is not, however, a ruling on the merits of our claims. Our claims remain sound. New York State law, and the State Constitution, prohibit the government from taking private homes and businesses simply because a powerful developer demands it. Yet, that is what has happened.”

Mr. Brinckerhoff said that he planned to file a different suit in New York State court.

The plaintiffs noted that Monday was the third anniversary of an influential Supreme Court decision, in the case of Kelo v. City of New London, which affirmed the power to use eminent domain for private economic development.

The Supreme Court’s decision on Monday was a victory for the developer Bruce C. Ratner and for Mayor Michael R. Bloomberg, who supports the project. The centerpiece of the $4 billion plan, which includes 16 high-rise office and apartment buildings, is a basketball arena intended to house the New Jersey Nets. Brooklyn has not had a professional major league sports team since the Dodgers left for Los Angeles in 1957.

Mr. Ratner, whose company was a development partner in the Midtown headquarters of The New York Times Company, said in a statement, “We are gratified that the Supreme Court has decided to put an end to this lawsuit. The opponents have now lost 20 court decisions relating to Atlantic Yards, and we are now one step closer to making these benefits a reality for the borough and the city.”

Lawyers for the mayor and other governmental defendants in the case argued that the project “serves multiple undisputed purposes,” including the transformation of blighted areas in Brooklyn. But, in fact, the area has already been rapidly gentrifying. Moreover, the faltering economy could slow down the construction of the project, doing what opponents of the project have so far failed to achieve in court.
High Court Won’t Hear Appeal on Atlantic Yards
NYTIMES
By Sewell Chan
June 23, 2008,  11:48 am

Updated, 1:18 p.m. | The United States Supreme Court on Monday rejected an appeal by 11 New York City property owners and tenants whose homes and businesses are scheduled to be taken over by the government and demolished to make way for the $4 billion Atlantic Yards project in Brooklyn.

The justices declined to hear the plaintiffs’ argument that the seizure of their property would violate the United States Constitution. In February, the United States Court of Appeals for the Second Circuit upheld a trial judge’s dismissal of the landowners’ and tenants’ suit.

However, the plaintiffs, including Daniel Goldstein, the leader of Develop Don’t Destroy Brooklyn, which opposes the Atlantic Yards project, vowed to continue their legal fight by turning, once again, to the state courts. Matthew Brinckerhoff, the lawyer for plaintiffs, said in a statement:

We are, of course, disappointed that the court declined our request to hear this important case. This is not, however, a ruling on the merits of our claims. Our claims remain sound. New York State law, and the state constitution, prohibit the government from taking private homes and businesses simply because a powerful developer demands it. Yet, that is what has happened. Recent events have revealed that the public, and the Public Authorities Control Board were sold a bill of goods by Ratner and the Empire State Development Corporation. We now know that Ratner’s project will cost the public much more than it will ever receive. Now we will turn to the state courts to vindicate our rights. We will soon file an action in New York state court under state law as we were expressly permitted to do by the rulings of the federal courts.

The plaintiffs noted that Monday is the third anniversary of an influential Supreme Court decision, in the case of Kelo v. City of New London, which affirmed the power to use eminent domain for private economic development.
 
The Supreme Court’s decision today was a victory for the developer Bruce C. Ratner and for Mayor Michael R. Bloomberg, who supports the project. At the center of the $4 billion development plan, which 16 high-rise office and apartment towers, is a basketball arena intended to house the New Jersey Nets. Brooklyn has not had a professional major league sports team since the Dodgers left for Los Angeles in 1957.

The Brooklyn borough president, Marty Markowitz, who supports the Atlantic Yards project, said in a statement:

The U.S. Supreme Court has correctly and wisely chosen not to hear the appeal from the lower court, thereby affirming the public benefits of the Atlantic Yards project for Brooklyn—including affordable housing, the creation of union jobs, the enhancement of a vibrant cultural center over the borough’s largest transportation hub, and a new arena for our soon-to-be Brooklyn Nets. This is a major victory for the futures of Brooklyn and New York City.

Mr. Ratner said in a statement:

We believe, and the courts have repeatedly agreed, that Atlantic Yards provides significant public benefits including thousands of affordable homes and much needed jobs for Brooklyn. We are gratified that the Supreme Court has decided to put an end to this lawsuit. The opponents have now lost 20 court decisions relating to Atlantic Yards and we are now one step closer to making these benefits a reality for the borough and the City.

Lawyers for the mayor and other governmental defendants in the case argued that the project “serves multiple undisputed purposes,” including the transformation of blighted neighborhoods in Brooklyn. But in fact the area has already been rapidly gentrifying. Moreover, the faltering economy could slow down the construction of the project, doing what opponents of the project have so far failed to achieve in court.
Opponents of Atlantic Yards Lose an Appellate Ruling
By THE NEW YORK TIMES
Published: February 2, 2008

A federal appeals court ruled on Friday that a lower court was correct last year in tossing out a lawsuit challenging the Atlantic Yards construction project near Downtown Brooklyn.

The decision by the United States Court of Appeals for the Second Circuit to uphold the dismissal of the suit was another blow to the plaintiffs in the case — more than a dozen property owners who stand to lose their homes and businesses under eminent domain as the project moves forward.

The developer, the Forest City Ratner Companies, has begun preparing the property to make way for a 22-acre complex that will include more than 6,000 apartments, a basketball arena and office space.

In a 24-page ruling, the appellate judges said that the project could move forward because it would provide benefits to the public, including the creation of park space, new housing units and improvements in the mass transit system.

The plaintiffs had argued that such benefits were merely a pretext for the real goal of plan: to enrich the developer, Bruce Ratner.

Matthew D. Brinckerhoff, a lawyer for the plaintiffs, said he planned to appeal the case to the Supreme Court.