A state judge today sided with the MTA in a lawsuit challenging a “sweetheart deal” it gave developer Bruce Ratner to bail out his controversial Atlantic Yards project that includes an NBA arena for Brooklyn.
The suit, filed by several lawmakers and other project opponents, sought to annul the Metropolitan Transportation Authority’s revised deal with Ratner in June that allows the developer to pay off $100 million he owes the agency over 22 years for the 8.5-acre Vanderbilt rail yard site in Prospect Heights and also shave off more than $100 million of the $345 million in transit improvements he had promised there.
It also alleged the cash-strapped agency violated the Public Authorities Accountability Act by failing to obtain an independent appraisal of the site or solicit competitive offers before agreeing to a new deal.
But Judge Michael Stallman in his decision wrote the petitioners didn’t prove the revised plan “gives the MTA less than the estimated market value” or that the MTA “did not attempt to obtain competitive offers.”
The revised MTA plan allows Ratner to pay $20 million up front for the rail yard, and then spread out $80 million in payments over 22 years at a bargain interest rate of 6.5 percent.
The Atlantic Yards-opposition group Develop Don’t Destroy Brooklyn alleged that massive MTA service cuts approved today – including student discounts – were in part the result of the MTA leaving $80 million on the table when it negotiated the new deal.
“The MTA has no shame — while giving a sweetheart deal to billionaire developers, leaving at least $80 million on the table and widening its budget gap, its board gives a big lump of coal to school kids, disabled New Yorkers and all transit riders. It’s disgusting,” said DDDB’s spokesman Daniel Goldstein, adding the petitioners are considering an appeal.
The group has already lost a key suit last month challenging the project’s use of eminent domain to take private land yet to be secured build the 22-acre, $4.9 billion project, which includes an arena and 16 residential and office towers.
Ratner in 2005 agreed to pay the agency $100 million up front, plus provide rail yard upgrades in exchange for various state approvals needed for the project. He cut that deal despite being outbid.
MTA officials have valued the cheaper rail-yard design at $147 million, but said it will still meet straphangers’ needs. They have also said other transit improvements in the new plan were worth about $67 million. The deal was renegotiated because Ratner was scrambling to secure crucial tax-exempt financing by year’s end, which he did yesterday, so he could move forward with the arena’s construction.
Ratner today announced that he had finalized his deal to sell majority interest in the New Jersey Nets and 45 percent control of the planned Barclays Center arena to Russian billionaire playboy Mikhail Prokhorov now that the financing was in place.
The deal is expected to be signed off by the NBA, and Ratner hopes to move the Nets to Brooklyn for 2012.
Ratner’s $100 million MTA bid for the Vanderbilt rail yard site in 2005 was $50 million lower than a rival proposal by Extell Development. An agency appraisal before that deal found the rail yard worth $214.5 million.
Ratner won after convincing the board the offer was worth $445 million with the transit upgrades.