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[IMGCAP(1)]NEW YORK CITY-Whistles, shouts and the big inflatable rat used by construction unions to mark non-union work-sites greeted attendees of a New York State Senate “fact finding” hearing that attempted to have a look at the controversy-laden Atlantic Yards project this past Friday at Pratt Institute in Brooklyn. One fact did emerge: the project will be smaller in scope, specifically the centerpiece Barclays Center Coliseum. Like the day itself, the hearing in the basement auditorium of Higgins Hall turned hot, as job-hungry hecklers dressed in hard hats and orange vests–reportedly union construction workers–tried to drown out critical questions and answers from state and city officials, activists and politicians.

Convened by Harlem state Sen. Bill Perkins–chair of the Senate’s committee on Authorities and Commissions–and Brooklyn State Sen. Velmanette Montgomery, the panel sought answers from representatives of the Independent Budget Office, Empire State Development Corp., the Metropolitan Transportation Authority, the New York City Economic Development Corp. and the New York City Housing Development Corp. No one testified from project developer Forest City Ratner Cos., although a Perkins spokesman tells GlobeSt.com that FCRC was invited.

Acknowledging economic reality of “now” and the challenges it presents, ESDC CEO Marisa Lago said “there is not one of us who works in economic development who isn’t aware of the impact the economy is having on economic development projects.”

That said, she added the project would be going through a value engineering process. Lago compared the project’s current budgeting for the project’s centerpiece arena–around 10% of the original plan–to a wish list one makes when planning the renovation of a 45-year-old kitchen. Suddenly faced with the sobering realization that the wish list is too expensive, Lago says of the centerpiece stove, the planned “six- burner stove becomes a four-burner.”

That may explain why last month, developer Bruce Ratner said he was scaling back costs for the $950-million arena to $800 million. Lago told the hearing that the trimming would be in amenities like luxury boxes and the project’s finishes. Albeit a less exciting vision, Lago said “it will be an arena for a national sports franchise.” In January 2007, it was announced that British Bank Barclays had purchased the naming rights to the arena. Reportedly, the bank would pay $400 million over 20 years.

Despite the “basic-ness” of the scaled-down arena, Lago stressed the overall long-term project’s footprint remains the same as it did when first proposed. As a spokesperson for ESDC told GlobeSt.com, last month, “clearly the design of the arena will impact costs and have an impact on financing requirements.” So far, there’s been no confirmation on when construction will begin, despite the fact that as recently as April, an ESDC spokeswoman was telling GlobeSt.com that FCRC hoped to see Barclays Center Coliseum open by 2011.

[IMGCAP(2)]Also partaking in the quizzing was State Assemblyman Hakeem Jeffries, who asked Lago if it was more economically feasible to construct the arena or housing. Lago responded that the economics of the arena “will be borne by the folks who buy the bonds.”

At Friday’s hearing, MTA interim executive director Helena Williams said FCRC had “proposed a smaller upfront cash payment for the land,” where the Vanderbilt Yards now sit. She said that FCRC was negotiating a smaller amount, plus “additional payments over time.” In 2004, the 8.5-acre railyard was appraised at $214 million. FCRC’s bid of $100 million was $50 million less than a similar bid by competing developer Extell Corp.

After pointing out that the Long Island Rail Road started operations in Brooklyn back in 1836, the interim MTA head told the hearing that FCRC sought to reduce the $100 million it had promised for the MTA land’s air rights. When Perkins said he’d heard a rumor that the $100 million had actually shrunk down to $50 million, Williams pointed to ongoing “intense negations” between the agency and Ratner, joking with Perkins that “between what you heard and what was in the paper, I like your number better.”

Williams said MTA anticipates a “restructuring” of the deal in June if the outcome of negotiations between the MTA and Ratner are approved by the MTA board at its meeting on June 24. She promised to let the panel know what happens.

Williams also confirmed that the MTA would allow Ratner to scale back $445 million in improvements at the LIRR’s new Vanderbilt Yards. “The new yard will have seven tracks plus an eight-car drill track,” she said. The original plan had called for nine tracks.

When George Sweeting, deputy director of the city’s Independent Budget Office spoke before the panel, he cited a 2005 report that said the arena would generate “a modest positive fiscal impact for the city of about $25 million net present value over 30 years.” In prepared testimony, he noted a few changes that include an increase from $100 million to $205 million in the city’s capital contribution, although some of that will go to infrastructure.

He said those changes “alone therefore eclipse the $25 million in net positive benefit to the city that we previously estimated for the arena.” Addressing the use of tax-exempt bonds for financing, Sweeting said that at “the price and the current interest rate environment, IBO estimates that the public-sector cost in foregone tax revenue from the bondholders would be $200 million,” with $193 million of that borne by federal taxpayers. The city cost, he said, would be about $1.5 million. “FCRC’s savings would amount to $191 million,” Sweeting testified.

[IMGCAP(3)]Sweeting noted that current plans call for the Atlantic Yards arena, much like Yankee Stadium and Citi Field, to be financed through an “aggressive interpretation of Internal Revenue Service regulations that will make it possible to use tax exempt bonds for most, if not all, of the arena’s construction costs”–provided they break ground by the end of the year. However, he said, in the previous stadiums’ cases, the city finance department indicated what the property tax assessments would be prior to the start of construction. In the case of Atlantic Yards, he said no similar announcement had been made. But he did say it was notable that the land assessments for the parcels under the arena have more than “tripled in the last three years.”

One of the more drama laden moments at Friday’s hearing came when, in a surprising turn, State Sen. Marty Golden showed up midway through the hearing, announced by two men who shouted, “Marty Golden’s here.” Golden was scolded by Perkins for making such a loud and grand entrance. Golden responded that he couldn’t help who follows him around.

[IMGCAP(4)]Regardless, Golden makes no secret of his support for the construction of Atlantic Yards noting the thousands of jobs it is projected to create. Bringing the crowd to its feet, Golden led a pep rally moment saying the project would bring millions in tax revenue and jobs. Golden asked if there was any federal stimulus money allocated for the project. When told by Lago that ESDC would request federal money if asked, Golden told her he’d make the request, the crowd rose and the chaos began.

Controversy and questions surrounding Atlantic Yards’ design, size and scale details go back years. Perhaps the biggest setbacks to the project’s groundbreaking have been lawsuits that sought to stop the ESDC from using eminent domain to clear the project’s footprint of current residents and business owners. But more recently, as the economy went bad and credit markets froze, obstacles to developer financing added to doubts about the $4-billion project’s fruition.

Further fostering public skepticism and controversy is a series of vague answers to questions concerning simple project details over size and scope, questions that remain unanswered. For example, neither ESDC nor FCRC will say if the arena’s architect is still Frank Gehry, despite FCRC’s receipt of an estimated $300 million in taxpayer funded subsidies.

However, reports have circulated that Architectural firm Elllerbe Becket would replace Gehry as architect at the arena. In a Tuesday call to GlobeSt.com, Bill Crocket, AIA, principal at the firm said, “We are working with Forest City Ratner, doing some analysis, and as far as any decision is going to be reached, I can¹t tell you.” He added that he didn’t think any decisions about timing, or anything else, had been made at this point.

For its part, FCRC said in a statement passed around at the hearing that “after five years of public debate and countless hearings, it is time to get to work. The arena and an NBA team in Brooklyn will create jobs and excitement and the affordable housing is sorely needed in the borough. Opponents have significantly delayed this project, including the jobs, housing and tax benefits. Now is not the time for re-debating the project. It is time to get to work.”

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