MTA Negotiates with Forest City Ratner on Atlantic Yards Bid

The agency chooses a proposal that includes a new arena for the NBA's Nets over an all-residential plan by a rival bidder.

Forest City Edges Second Bidder

The Metropolitan Transportation Authority decided in July to enter into exclusive negotiations with Brooklyn-based Forest City Ratner Cos. for development of the Atlantic Yards site, despite a rival bid from New York-based Extell Development Corp.

Forest City has proposed building a $3.5 billion residential and commercial complex on the site anchored by a new arena for the National Basketball Association's Nets franchise, currently based in New Jersey.

Extell, led by Gary Barnett, had offered $150 million, tripling Ratner's $50 million cash bid to develop over the MTA-owned railyard. But the MTA announced it would only consider Extell's offer after 45 days of exclusive talks, citing other advantages in the Forest City bid, such as long-term economic development opportunities.

Forest City's Atlantic Yards plan includes the Frank Gehry-designed basketball arena, 16 office and residential towers up to 60 stories high with housing for 18,000 people, and potentially a hotel on site as well. The development, which would require the use of eminent domain to acquire nearby private homes and businesses, would be built out by 2011.

Extell's plan, which could be completed by 2009, would have 11 buildings up to 28 stories high. The development would run along an S-curve above the yards and feature landscaped walkways and recreational areas. Designed by the husband-and-wife architectural team of John Cetra and Nancy Ruddy, based in New York, the plan does not require using eminent domain to acquire additional land and would house 4,800 residents in 2,000 apartments, including 573 subsidized rentals.

Develop Don't Destroy, a community group opposed to the Forest City plan, has supported the rival bid. Meanwhile, two New York City council members, James Brennan and David Yassky, have urged the MTA to postpone the deal until the city approves a development plan.

Barnett had once unsuccessfully sued Bruce Ratner, who heads Forest City Ratner, over development rights for the site where a new headquarters tower for the New York Times is rising in Manhattan. Forest City is now co-developing the building with the newspaper company.

Trump Sues Partners for $1 Billion

Donald Trump filed a $1 billion lawsuit in late July against his partner on the 74.6-acre Riverside South complex on Manhattan's West Side. The news came only weeks after the partnership, Hudson Waterfront Associates, confirmed it was selling undeveloped portions of the property for $1.76 billion to the Carlyle Group of Washington, D.C., and Extell Development of New York.

Trump said he was suing the Hong Kong-based Cheng Group in the U.S. District Court for the Southern District of New York for allegedly selling the property for less money than it is worth. The Cheng Group, through an entity called New World Associates, is the general partner of Hudson Waterfront.

"This case arises from a staggering breach by defendants," Trump's suit read. "In breach of the stringent fiduciary duties defendants owed to Trump, the defendants - over Trump's repeated loud protests - agreed to sell the property for $1.76 billion, at the same time that they had unsolicited offers from leading real estate investors to pay almost double that amount."

The Cheng Group issued statements calling Trump's suit groundless and filed a motion to dismiss the lawsuit early last month.

Hudson Waterfront expects to close a deal with Carlyle and Extell later this year to sell a 14.6-acre area from 59th to 65th streets between West End Avenue and Riverside Boulevard, which encompasses nine remaining undeveloped sites. The deal would also include three rental unit buildings already completed on the site.

The current build-out plan for Riverside South calls for a 7.9-million-sq.-ft. development. Construction began in 1997, and seven residential buildings are complete.

Bill To Stop Drinking at Sites

A proposed New York City Council bill would make it illegal to operate construction equipment while impaired by alcohol or drugs or even to enter a construction site while intoxicated or in possession of alcohol. The measure is expected to go to the full council this month.

Sponsored by Council Member Peter Vallone of Queens, the bill would impose fines of up to $250 or a sentence of 15 days in jail for violations such as impairment or possession of alcohol or drugs on site. It reserves stiffer misdemeanor charges and one-year jail sentences for those caught operating machinery or vehicles.

Vallone cited a U.S. Occupational Safety and Health Administration study that found up to 20 percent of construction workers who died on construction sites had tested positive for drugs or alcohol. In addition, the U.S. Department of Health and Human Services found that the construction and mining industries have the highest percentage of problem drinkers out of 11 ranked industries. One of every seven construction workers has an alcohol abuse problem, according to department data.