MTA Faces Atlantic Yards Suit

NEW YORK CITY-A group of politicians, activists and transit activists have filed suit in New York State Supreme Court in Manhattan, saying the Metropolitan Transportation Authority violated the Public Authorities Accountability Act of 2005 when it sold the air rights over the agency’s Vanderbilt Yard to Forest City Ratner Cos. for development at the Atlantic Yards Project. The latest suit was filed one day prior to Wednesday’s hearing before the Court of Appeals in Albany, which seeks to challenge the Empire State Development Corp.’s use of eminent domain for the same project.

According to the lawsuit, which names the MTA and FCRC as respondents, the MTA violated state law by failing to obtain an independent appraisal for the Vanderbilt Yard property and failing to seek out competitive bids. The group is now asking the court to annul the MTA’s June agreement with FCRC. It’s reportedly the first Atlantic Yards suit brought in part by politicians.

The plaintiffs include Assemblyman Jim Brennan, Assemblyman Joan Millman, New York City Councilwoman Letitia James, NYPIRG/Straphangers Campaign and State Sen. Velmanette Montgomery. Also among the petitioners is Develop Don’t Destroy Brooklyn, the group appealing the ESDC eminent domain action. Daniel Goldstein, one of the landowners appealing the ESDC action and a spokesman for DDDB, tells GlobeSt.com that since the MTA didn’t undertake the two required actions, “the deal needs to be annulled.”

The FCRC-MTA deal was approved on June 24 of this year, when the transit agency’s board voted to allow developer Bruce Ratner to pay $100 million for the 8.5-acre Vanderbilt Yard, which sits in the middle of his planned project. Terms included scalebacks, among them the level of improvements to the Long Island Rail Road terminal by FCRC. The deal also gives FCRC 22 years to pay the MTA for the property.

The cheaper selling price came despite previous iterations by MTA CFO Gary Dellaverson, who had earlier valued the property at $240 million to $250 million.

A spokesman for Montgomery tells GlobeSt.com that “all this would be funny if it weren’t the Atlantic Yards project.” He adds, “The MTA’s actions are shocking. The fact is that the public is being hit with fare hikes and schedule cuts while giving developers a free ride.”

A NYPIRG/Straphangers spokesperson tells GlobeSt.com that it’s “the riders who are getting it in the neck. They are going to lose out on improvements like new subway cars, buses and track improvements.”

As the NYPIRG spokesman points out, the MTA functions under five-year capital programs, the current one set to end this year. Portions of the $21.5-billion budget come from federal, state and other special taxes. But around $1 billion was set to be generated by MTA’s sale of property assets.

“In plain English, that means the sale of Vanderbilt Yards in Brooklyn and Hudson Yards in Manhattan,” says the NYPIRG spokesman. “Every dime that comes in under the projection of $1 billion from this sale is money that won’t be available for new cars, buses and train stations.”

He called the deal, which is $180 million less upfront, “rotten,” and refers to the 22-year payback period as “the greatest mortgage that’s ever been written.”

When asked by GlobeSt.com for reaction, an MTA spokesman said the agency would not be commenting at this time. A spokesperson for Gov. David Paterson told GlobeSt.com that it “would not be commenting today.” Spokespeople for Mayor Michael Bloomberg had not returned queries by press-time.

“There’s a lot of mystifying questions when it comes to what’s gone on at Atlantic Yards,” says Goldstein. He says, “when people rush, they cut corners. In this case, they didn’t follow the rules of the accountability act, and that act’s purpose is to have accountability when disposing of public land.”

A Regional Planning Assoc. spokesman tells GlobeSt.com that this latest suit and the controversy-laden development site raise complicated subjects. At the core, when selling high value public properties in the hopes of stimulating development, are the public benefits of the project worth the amount of public investment that’s being put into it? “To any degree the MTA subsidizes something like this, it comes out of money that could go into the transit system,” he says.

But he adds that it depends on the particular circumstances in each case. He says if the property being sold can easily be developed in a booming real estate market, then there’s no reason why the property should not be sold for full value. But, if the property is being sold to stimulate an entire downtown area, the seller may have to sacrifice on value on the front end.

More particularly, of the Atlantic Yards project, the RPA spokesman says there are benefits that would come back to the MTA and city in terms of housing and job creation. However, “whether or not the MTA or city is going to get the value of what they are putting into this, is really questionable at this point,” says the spokesman. He adds that this project “was conceived at a different point in the real estate market. Now, it’s trying to be retrofitted to save whatever core elements it can move forward.”