M.T.A. Approves Less Lucrative Atlantic Yards Deal

Bruce Ratner can now cross a major task off his to-do list.

For months now, Mr. Ratner, the developer planning the $4.9 billion Atlantic Yards apartment and arena complex in Brooklyn, has been seeking financial relief from an agreement he struck with the M.T.A. in better times.

Lawsuits and other issues have pushed back the project, which involves selling the rights over an M.T.A.-owned rail storage yard, by years. The old deal from 2005—$100 million upfront and a $250 million new rail yard for the Long Island Rail Road—imposed too much burden on the developer, Mr. Ratner’s firm argued, and a less financially straining deal was needed so the project could move forward.

On Wednesday, he was successful, at least to a certain point.

Voting 10-2, the M.T.A.’s board approved a new deal that involves $180 million less in upfront payments and early expenditures for the project than was pledged in 2005, accepting a reduced-size rail yard and $20 million at first, with another $80 million (in today’s value) to be paid in pieces over the next 22 years.

The deal allows Mr. Ratner and his Forest City Ratner the rights to build on the most valuable of three M.T.A.-owned blocks in the project footprint before the other payments begin. If for any reason he pulls out of his agreement to build on the other parcels, Forest City would still retain the rights to build on the first parcel, having paid probably less than market value, and Forest City would owe $86 million in severance, which would go toward building a replacement rail yard.

In a statement, Mr. Ratner praised the M.T.A. and the Empire State Development Corporation, from whom he also received an approval for a revised design.

“The MTA approval today, along with ESDC Board authorization yesterday, was critical to this project going forward. Delays due to litigation and a difficult economic environment required the approved changes. We have worked very hard, however, as have our colleagues in government, to ensure that these changes would in no way impact the overall benefits of the project. We’re are extraordinarily appreciative of the professionalism and vision of these two agencies and all who believe that development is good for the City, that jobs are good and that affordable housing is good should applaud their actions.”

This now lessens the load for Mr. Ratner, who is seeking to clear the road for his planned Nets arena to go forward—which acts as something of a foot in the door for the 16 planned towers on the site.

The biggest question remaining is whether Forest City will be successful in securing financing for the arena by the end of the year, when an I.R.S.-imposed deadline for tax-free bonds expires. The developer is trying to button up the public approvals now in part to clear any potential hurdles that could dissuade investors. The firm said it intends to market the bonds in the fall. 


M.T.A. Approves Less Lucrative Atlantic Yards Deal