Tenants Services Article

Delays in $4 Billion Brooklyn Development Are Challenged in Tenants’ Lawsuit

Published: May 1, 2008, NYTimes.com

The ever-lengthening timeline for completing the $4 billion Atlantic Yards project near Downtown Brooklyn is not just bad news for those who hoped to see the project’s basketball arena, office towers and apartment blocks completed quickly.

It is also, according to a lawsuit filed Wednesday, illegal.

The suit challenges an agreement between the project’s state sponsor, the Empire State Development Corporation, and the developer, Forest City Ratner, that gives Forest City at least 12 years to complete just the first phase of the project and an unspecified amount of time after that to build the second, final phase.

The agreement, the suit says, violates a provision in the state’s eminent-domain law, under which the state agency intends to seize private buildings on Forest City’s behalf. The law says a seized property must be offered back to its prior holder if it is not “materially improved” in 10 years.

The agreement between the agency and Forest City was signed in 2007 but not publicly released until March of this year, on the same day that Forest City’s chief executive, Bruce C. Ratner, was quoted in The New York Times as saying that the hobbled economy could hold the project up for years.

The suit, filed in State Supreme Court in Manhattan on behalf of 13 tenants whose apartments face condemnation, asks the court to void the parts of the agreement that give Forest City more than 10 years to build Atlantic Yards.

The lawyer for the tenants, George Locker, said fixing the problem would not be as simple as changing the deadlines in the agreement from more than 12 years to 10 years.

“They could change the language,” Mr. Locker said. “But changing the language doesn’t mean changing words on a piece of paper. It means Phase 2 of the project would be declared abandoned. Because we know he’s not even starting it for more than 12 years.”

The state agency declined to comment on the suit; a spokeswoman said officials had not had the opportunity to review it.

The suit is at least the sixth filed against the project, but the first in more than a year. All the previous suits have lost at least one round in court. The 8-million-square-foot project — more than 6,000 apartments, office space and an arena for the Nets on 22 acres near the intersection of Flatbush and Atlantic Avenues — has been widely opposed for its huge size, effect on traffic and the use of eminent domain to condemn property on behalf of a private builder.

Forest City was also a development partner in the new Midtown headquarters of The New York Times Company.

More than half the structures on the site have been demolished and more than $42 million in contracted work is nearing completion, Forest City said Wednesday.

But Mr. Ratner’s recently conceded difficulties — he has indefinitely delayed the project’s signature skyscraper, known as Miss Brooklyn — have energized his opponents, in a particularly bitter, told-you-so way.

The second phase of the project is to contain most of the 2,250 units of moderate-income housing that helped Atlantic Yards win political support and more than $300 million in state and city subsidies, and critics have questioned all along whether most of the affordable housing will ever be built.

“When you spend hundreds of millions of dollars in public money on something you know the developer is never in a position to deliver,” Mr. Locker said, “and government bodies take votes and appropriate hundreds of millions of dollars of taxpayer money, which is in short supply, based on the promise of affordable housing and jobs, and it’s not going to be built in the statutory 10 years, it’s really a fraud on the public.”

The standing of the tenants to be plaintiffs in the suit is owed to an earlier ruling that went against Mr. Locker, which held that tenants, and not just owners, were considered “condemnees” under eminent-domain law.

Norman Oder, author of the Atlantic Yards Report blog and a critic of the project, noted that Forest City’s agreement with the state, and one with the city that he wrote about Wednesday after obtaining a copy through a Freedom of Information request, both appear to impose relatively minor penalties if Forest City starts missing its deadlines.

“It seems to me,” Mr. Oder said, “that Forest City has reason to be more concerned about losses from the Nets and from construction cost increases than from the penalties posed in these agreements.”

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