NEW YORK, June 24 (Reuters) - New York’s mass transit agency on Wednesday approved a sweetened deal for its Brooklyn Yards developer, Forest City Ratner RTNR.PK, which critics said shortchanged riders because the price was too low.
The upfront payment for the multibillion-dollar project that will bring Brooklyn its first professional sports team in decades was slashed to $20 million -- one-fifth of the original amount.
Forest City Ratner now has more than 20 years to build 16 office towers and apartment buildings at the site that will house a new arena for the New Jersey Nets basketball team.
The firm is required to start the arena construction this year or lose $700 million of tax-free financing that a state agency says it will sell in the fourth quarter via Goldman Sachs (GS.N).
New York City’s real estate developers have stalled or axed numerous big and small projects since the credit crunch pushed the country into a recession, and demand for outer-borough properties including in Brooklyn has been chilled markedly.
The Brooklyn project is a novelty because it calls for building a platform over the Atlantic rail yards to support the thousands of new offices and apartments. A similar plan for Manhattan’s rail yards is on hold. [ID:nN03546702].
Metropolitan Transportation Authority board members, at a webcast meeting, did not respond to a competing $120 million offer from a partner of one of the project’s opponents, Develop Don’t Destroy Brooklyn.
A group calling itself The UNITY Trust said it was not only offering more money, but its plan for affordable housing, public space, shops and a school will take just 12 years.
MTA Chairman Dale Hemmerdinger later told reporters the UNITY offer would not be considered. Develop Don’t Destroy Brooklyn has vowed to sue as it has before.
“I think that in this economy, jobs and an arena are good,” he said.
Bruce Ratner, chairman of Forest City Ratner, in a statement said, “Delays due to litigation and a difficult economic environment required the approved changes.” Some 17,000 construction and permanent jobs will be created, he said, and 2,250 out of 6,430 apartments will be affordable.
The project’s supporters, speaking before the vote, stressed how badly Brooklyn needs construction jobs. Critics said the board may violate its fiduciary duty if it fails to secure a higher price and allows the developer to slice promised rail yard improvements by tens of millions of dollars and cut the number of train tracks by two to seven.
The Regional Plan Association said it could not support the revised deal, urging the MTA to get more money upfront and a share in the developer’s future earnings. The nonprofit, pro-competition group, said the public benefits appeared “too meager” to sacrifice the MTA’s long-term interests.
Andrew Albert, a nonvoting board member of the biggest U.S. transit agency, faulted supporters for putting economic priorities ahead of the MTA’s primary role -- transportation.
He echoed politicians who said the cash-strapped MTA risked damaging its credibility by not driving a harder bargain after it recently persuaded the state government to enact new taxes to support it.
“I am very concerned it looks like an agency that just got bailed out by the state is now not getting the very best deal we can get for the land that we own,” Albert said.
The MTA carries nearly 8 million people a day and in June hiked bus, subway and railroad fares as well as bridge and tunnel tolls: [ID:nN11538521].
Editing by Kenneth Barry