Apartment Finance Today

PARTING SHOTS

Mr. Developer's Nightmare

APARTMENT FINANCE TODAY • June 2008

Years behind schedule and millions over budget, Forest City Ratner still struggles to begin construction on the first buildings at Atlantic Yards.

BY BENDIX ANDERSON

Brooklyn, N.Y. - Daniel Goldstein has some advice for developers: “Don’t treat the community as the enemy.”

Goldstein might as well have completed the sentence with a warning: “Or else.” Goldstein is a founding member of Develop Don’t Destroy Brooklyn (DDDB), an organization created to oppose the biggest development project ever planned for the borough.

Lawsuits filed by DDDB and a coalition of 51 other community groups have put Forest City Ratner’s 8-millionsquare- foot, 22-acre Atlantic Yards project more than two years behind schedule and hundreds of millions of dollars over budget.

DDDB believes the project should have begun with a public request for proposals that brought community stakeholders into the process even before the developer was chosen.

By the standards of New York City— where for decades infamous Parks Commissioner Robert Moses built huge projects despite massive neighborhood resistance—Forest City Ratner seemed to have ample community support for Atlantic Yards when it was first announced in December 2003. Elected officials from the governor to the mayor to the borough president made public statements in favor of the project. Local and state agencies pledged funding. Respected low-income advocacy group ACORN also supported the project after the developer pledged to include 2,250 units of housing affordable to low- and moderate-income families.

However, Forest City Ratner missed an important set of extremely motivated local stakeholders: 11 owners and renters who live within the proposed footprint of the project and who became founding members of DDDB. “My home is where center court would be,” said Goldstein.

DDDB became the nucleus of a coalition that now includes 51 organizations that oppose or are “deeply concerned” about the proposal, including local affordable housing developers Pratt Area Community Council and the Fifth Avenue Committee. Celebrities also joined DDDB’s advisory board. Opponents criticize the scale of the project, its use of public subsidies, and its plan to tear out existing streets to make room for new buildings.

Construction can’t start until the lawsuits are resolved. This summer, the Supreme Court will decide whether to hear arguments challenging the developer’s use of eminent domain. In the fall, lawyers will argue another suit challenging the project’s environmental review. The legal fight could eventually cost $900,000, according to DDDB. The nonprofit raises the money to pay its legal bills through contributions and fundraisers.

Delays have cost the developer more than just time. The price of steel and concrete has more than doubled over the past four years. The project’s signature 850,000-square-foot arena, originally expected to cost $600 million, is now estimated at $950 million.

The market has also softened for the 336,000 square feet of office space and 6,430 mixed-income condominiums and apartments planned for Atlantic Yards. These parts of the project have been delayed indefinitely. If the developer can clear its legal hurdles, Forest City Ratner plans to start building a scaledback first phase of the project—just the arena—by the end of this year.