court challenges"time out,"

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[IMGCAP(2)]The letter demands that the PACB--comprised of Gov.David Paterson, Speaker Sheldon Silver and Majority Leader JosephBruno--exercise its "statutory obligation to approve the financingand construction of the project." When asked about financialssurrounding the project, a Forest City Ratner spokesperson tellsGlobeSt.com that they have "no comment at this time," and also saysthat they have no comment regarding the DDDB letter. DDDB legaldirector Candace Carponter says that "we fully expect the PACB andGov. Paterson to agree that the change in Atlantic Yards financingneeds a new approval decision, based on the need for sound andprudent fiscal policy."

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In the letter, DDDB says that as part of its approval process,"the PACB is directed to determine that there are commitments offunds sufficient to finance the acquisition and construction of theproject." The letter says that on Dec. 20, 2006, the PACB adoptedResolution No. 06-UD-953 approving the Atlantic Yards Projectsubmitted by the Empire State Development Corp. "The projectidentified as the subject of the resolution included the Barclay'sArena with identified financing of $637.2 million. In consideringthe request from ESDC, the PACB relied in large part upon a Dec.2006 report from KPMG LLG Economic and Valuation Services, whichevaluated the financial viability of the arena. Based upon theexpectation that construction of the arena would cost approximately$637 million, KPMG found that the projected return on investmentwould support the development and maintenance cost."

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The letter went on to say that since that time the estimatedcost of the arena, as well as other elements of the Atlantic Yardsproposal, has increased, "either as a result of increasedconstruction costs or initial underestimation. As of March of thisyear 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," theletter said, although when provided these figures, FCRC did notreturn confirmation.

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

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Bruce Ratner, chairman and CEO of FCRC, recently admitted thatconstruction hasn't happened as fast as he would have liked on theproject, but has also pointed out that FCRC has had to overcome thehurdles presented in court challenges, which pushed "us into a timewhen the economyhas slowed, and both financing and tenant commitments aremore challenging to obtain," he said. "We will build AtlanticYards--and deliver on all of our commitments to Brooklyn."

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.