In the letter, DDDB says that as part of its approval process, "the PACB is directed to determine that there are commitments of funds sufficient to finance the acquisition and construction of the project." The letter says that on Dec. 20, 2006, the PACB adopted Resolution No. 06-UD-953 approving the Atlantic Yards Project submitted by the Empire State Development Corp. "The project identified as the subject of the resolution included the Barclay's Arena with identified financing of $637.2 million. In considering the request from ESDC, the PACB relied in large part upon a Dec. 2006 report from KPMG LLG Economic and Valuation Services, which evaluated the financial viability of the arena. Based upon the expectation that construction of the arena would cost approximately $637 million, KPMG found that the projected return on investment would support the development and maintenance cost."

The letter went on to say that since that time the estimated cost of the arena, as well as other elements of the Atlantic Yards proposal, has increased, "either as a result of increased construction costs or initial underestimation. As of March of this year the estimated cost of the arena itself, according to Forest City Ratner, has increased to $950 million. This represents a 50% increase over the original estimate," the letter said, although when provided these figures, FCRC did not return confirmation.

The letter states that the "source of the nearly $320 million of additional construction costs has not been identified….Therefore, given the major change in the assumptions underlying PACB's 2006 approval, and the lack of an identified source for additional needed funds, we believe it is mandatory that the PACB reconsider the ESDC funding resolution before ESDC undertakes any binding commitments for the project." The letter asks that the PACB review the matter within 10 business days.

Bruce Ratner, chairman and CEO of FCRC, recently admitted that construction hasn't happened as fast as he would have liked on the project, but has also pointed out that FCRC has had to overcome the hurdles presented in court challenges, which pushed "us into a time when the economy has slowed, and both financing and tenant commitments are more challenging to obtain," he said. "We will build Atlantic Yards--and deliver on all of our commitments to Brooklyn."

Instant Insights /

Atlantic Yards Opposition Seeks Further Approval

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