What about the Yards part of Atlantic Yards? (Dope on the Slope, flickr)

In the last few months, the battle cries of the Atlantic Yards opponents have quieted—or been drowned out by the hubbub of basketball games and concerts at Barclays. There has been a subtle shift in tone and subject matter, with the conversation turning away from Atlantic Yards and the bitter debate that has characterized so much of the development's history.

But despite the shift in focus, the eastern end of Downtown Brooklyn remains scarred by an open railyard—an 8.5-acre tear in the urban fabric that Forest City Ratner is supposed to someday heal.

The platform over Vanderbilt Yards, as it's known, is the difference between a highly challenging "blighted" development site—arguably deserving of special subsidies, tax breaks and the seizure of private land through eminent domain—and a prime development site in a plum location.

The Atlantic Yards Report—the tireless, fine-tooth comber of all documents related to Forest City Ratner—has unearthed what appears to be confirmation that the deck over the 8.5-acre Vanderbilt Yards will not be built until after four other towers are completed on Southeast Block 1129.

Quoting from the annual report that Forest City Enterprises filed with the Securities and Exchange Commission, AYR accuses Forest City of shifting around its sequencing and phases, moving the construction of four towers on Southeast Block 1129 from Phase I to Phase II, effectively prioritizing the easier, terra firma construction over the thornier deck building, and thereby delaying it. Delays are a rather touchy subject, as wobbly deadlines (ahem, 10 years) have been a problem for the project.

"That leaves the below-grade railyard waiting for an expensive deck and furthering development on the main piece of terra firm beyond the arena block," writes the Atlantic Yards Report.

In other words, Forest City would not be getting to that "scar that divided the neighborhood" anytime soon.

But Forest City denies that anything has changed in the timeline or the phases.

"The four buildings on Block 1129 are still, as they have always been, part of Phase II," spokesman Joe DePlasco told The Observer. Sequencing for Phase II, he added, had yet to be determined and would be discussed as part of the environmental impact studies.

But what of the seeming discrepancy between Block 1129 being designated as part of Phase I in the annual report?

Mr. DePlasco cited a tangle of legalese, but the takeaway was that different documents "have different descriptions for different purposes."

So Block 1129 is sometimes part of Phase I and sometimes part of Phase II, but it has always been part of Phase II and its sequencing in relation to the deck has yet to be determined. Got that?

As for a timeline on when the platform would be completed, Mr. DePlasco pointed The Observer toward the penalties outlined in the SEC report if Forest City does not commence construction on the Permanent Railroad by December 31, 2013 and "substantially complete" construction by September 30, 2016: "[I]f we do not commence construction on the Permanent Railyard by December 31, 2013 we will be in default of various MTA project agreements and the MTA will have the ability to draw down our $86 million letter of credit. We would also lose approximately 3.3 million square feet of development rights for Phase II of Brooklyn Atlantic Yards."

kvelsey@observer.com

[Ed. Note: The Observer has removed the characterization of "sometimes conspiracy theorist" from a description of the Atlantic Yards Report published in an earlier version of this story. The Observer had used the description to characterize the tone—and suspicious worldview—that the blog occasionally takes. This was incorrect and we did not intend to impugn the accuracy or quality of either AYR reporting or of Norman Oder's work.]

Yesterday, State Supreme Court Justice Marcy Friedman ruled that the Empire State Development Corporation erred in producing a modified timetable for the project last year, when it finally won state approval, and thus violated the state's environmental review process.

The courts have criticized the project before, but none have ever ruled against it, arguing that it is the legislature and its constitutionally mandated authorities, such as the ESDC, whose responsibility is to determine right from wrong when it comes to eminent domain and the like. This time, though, Friedman found the fecklessness to be actionable:

The Development Agreement has cast a completely different light on the Project build date. Its 25 year outside substantial completion date for Phase II and its disparate enforcement provisions for failure to meet Phase I and II deadlines, read together with the renegotiated MTA Agreement giving FCRC until 2030 to complete acquisition of the air rights necessary to construct 6 of the 11 Phase II buildings, raise a substantial question as to whether ESDC's continuing use of the 10 year build-out has a rational basis.

Plaintiff and Atlantic Yards chief adversary Develop Don't Destroy Brooklyn was thrilled with the news, but others were skeptical it would matter much, except for posterity. "Nothing was announced today that's going to impact construction," Jeff Linton, a spokesman for Forest City Enterprises, told Businessweek.

Yet skeptic of skeptics Norman Oder believes that the requirement for ESDC to issue new findings could impact the project's later phases, which are already struggling, and he even points out today that, at its Investor Day, Forest City showed marked caution toward the ruling.

-The company's efforts to start construction on the Nets arena faces another previously unreported hurdle: Forest City stopped sending in required payments on a $162 million loan--the mortgage on its property for the $4.9 billion Atlantic Yards project, of which the Nets arena is a part. While Forest City didn't provide immediate explanation, the move appears to be another display of the penny-scrounging that's been going on over the project (the company is negotiating sped-up subsidy payments from the city, along with payment of infrastructure money). The company said it missed a $5 million payment on the loan, and had been granted an extension until Dec. 10, which it was negotiating. (The Atlantic Yards Report has more on the risks, which Forest City is required to report.)

-Through Oct. 31, well before the Nets achieved their current 1-19 record, revenue for the team was down $10 million for the same nine-month period from the year before (expenses dropped by $10 million as well). Last year, Forest City reported $59 million in revenue at the time, which itself was down slightly from $62.8 million in 2006. Pre-tax losses were mostly stable at $53.6 million (compared with $54 million last year), of which Forest City's share is $33.1 million.

-Should the Atlantic Yards project collapse, according to the filing, Forest City estimates its costs would be $580 million, including repaying subsidies, writing off investment, and restoring the M.T.A.'s rail yard.

-A press release notes that "challenges remain" for the project, though its overall tone is optimistic. After all, the number of barriers for the development are indeed falling, and Forest City has been on a "road show" in recent days in an attempt to find buyers for $500 million in tax-free bonds, one of the last major hurdles remaining. 

ebrown@observer.com

Among the agency's worries was Forest City Ratner's more-than $4 billion signature project, a Frank Gehry-designed complex that includes a new basketball arena for the Nets, more than 6,000 units of housing and a commercial tower. Forest City has spent about two years fending off a string of lawsuits, while watching the financial markets stagnate. Moreover, the developer has yet to close on the deal with the state. Nor has it received financing for the arena or other portions of the site.

"We remain particularly concerned about the effect the weak and uncertain capital and real estate markets may have on the company's ability to close, finance, lease, and ultimately profitably complete the high-profile Atlantic Yards mixed-use project," the analyst report said, as the stock was downgraded from "BB+" to "BB." Forest City has invested $250 million so far in the project, the report said.

The rating agency's outlook on Forest City: "negative."

But don't cry too hard, because the building, the target of an unsuccessful landmarking attempt, will come back in its next life as an insect or something: Some 75 percent of the demolition debris will be recycled.

The full release after the jump.

- Matthew Schuerman

FOREST CITY RATNER TO BEGIN DEMOLITION OF FORMER WARD BREAD BAKERY

Over 75% of Building to be Recycled as Part of LEED Certification

(Brooklyn, NY) - March 22, 2007 - Forest City Ratner Companies (FCRC), the developer of the Atlantic Yards project in Brooklyn, today announced that abatement and demolition of 800 Pacific Street (also known as the Ward Bread Bakery building) will begin on Monday, March 26, 2007. As part of its sustainability efforts and LEED (Leadership in Energy and Environmental Design) certification process, at least 75% of the demolition debris is expected to be recycled.

"Obtaining LEED certification for Atlantic Yards is one of the highest 'green' standards we can achieve," said Bruce Ratner, President and CEO of FCRC. "Whether it is recycling building materials, using low emission vehicles or reducing storm water overflows into the Gowanus Canal by more than 2 million gallons per year, we are seeking out every possible way to make Atlantic Yards as eco-friendly and environmentally responsible as possible."

FCRC has committed to seek LEED certification for all of the buildings in Atlantic Yards, including the first ever LEED Silver certified arena, the Barclays Center. LEED certification is the Green Building Rating System, developed by the U.S. Green Building Council (USGBC), which recognizes excellence in sustainable design and construction. As part of the demolition phase, FCRC recycles as much of the demolition waste as possible. For example, 95% of the materials in the building formerly located at 179 Flatbush Avenue were recycled.

Abatement of 800 Pacific Street, which will consist of removing hazardous substances such as asbestos, will take approximately two months. Following the abatement, the building will be demolished. It is anticipated that demolition will take approximately four months. FCRC owns the building. Gateway Demolition has been contracted to demolish the building and has subcontracted Topline Management to remove the asbestos.

In addition, abatement of a dozen buildings, which was announced earlier this month, is continuing and demolition of these buildings is expected to commence in the next few weeks. FCRC's goal is to recycle at least 75% of these buildings as well.

About Forest City Ratner Companies
FCRC is a subsidiary of Forest City Enterprises, Inc., an $8.5 billion NYSE-listed (ticker: FCEA & FCEB) national real estate company. Forest City Enterprises is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, please visit www.forestcity.net.

Safe Harbor Language
Statements made in this news release that state the Company or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, real estate development and investment risks, economic conditions in the Company's core markets, reliance on major tenants, the impact of terrorist acts, the Company's substantial leverage and the ability to service debt, guarantees under the Company's credit facility, changes in interest rates, continued availability of tax-exempt government financing, the sustainability of substantial operations at the subsidiary level, significant geographic concentration, illiquidity of real estate investments, dependence on rental income from real property, conflicts of interest, competition, potential liability from syndicated properties, effects of uninsured loss, environmental liabilities, partnership risks, litigation risks, risks associated with an investment in a professional sports franchise, and other risk factors as disclosed from time to time in the Company's SEC filings, including, but not limited to, the Company's annual and quarterly reports.

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(Via NoLandGrab.)

- Matthew Schuerman

- Max Abelson

"What happened was that Bruce was getting to the point in his life where he wants to do some philanthropy,"
Rich Moore, managing director at RBC Capital Markets, told us. "There is no liquidity to joint ventures because he has to sell a building in order to make any money."

In return, Ratner is getting $60.8 million to play around with, a 3.9 percent stake in Cleveland-based Forest City Enterprises, as well as a seat on the parent company's board of directors.

Since last Thursday's after-close announcement, the cousin company's stock price has fallen about $4.

-Matthew Schuerman

-Matthew Schuerman