“Brooklyn Wars” excerpt: How the Nets arena changed Brooklyn

Hey, everybody, my new book The Brooklyn Wars is out today! (Yes, I know I said tomorrow, but I figured I’d give you all a chance to order it before tonight’s presidential debate numbs your mental capacities beyond the ability to read.) It’s a look at the ongoing transformation of Brooklyn, something that is not only inseparable from many of the issues we discuss here — public subsidies, skewed economic and political power, dunderheaded elected officials — but that involves two specific sports venue projects: There’s a long chapter on the Brooklyn Nets arena that spawned a boroughwide debate about development and eminent domain; and in the Coney Island chapter, the Brooklyn Cyclones stadium turns out to have been surprisingly (to me as well) pivotal to the reinvention of that famed beachfront neighborhood.

You’ll be seeing book excerpts popping up this week on a couple of major news websites, but I’ve saved a good bit just for Field of Schemes readers: a section on the aftermath of the construction of the Nets’ Barclays Center and the surrounding Atlantic Yards/Pacific Park development, and what it did for — and to — the existing neighborhood. Enjoy, and if you’d like to read more, please buy the book!

On September 28, 2012, the Barclays Center arena opened its doors for the first time, for a concert by co-owner Jay-Z. Outside, concertgoers mingled with a few dozen protestors and various onlookers, including a Columbia University class on urban design. Inside, ticket buyers ogled the black-and-grey color scheme and three layers of luxury suites — two forming a vertical wall between the lower and upper decks, the other ensconced at floor level and dubbed “the Vault,” with a half-million-a-year price tag — while high-definition video boards flashed a pre-show message of gratitude: “Thank You Bruce Ratner.”

The building itself by then looked nothing like architect Frank Gehry’s original designs. The odd angles were gone, replaced by a perforated rust-colored steel façade designed by fill-in architects SHoP. (To prevent the rust from dripping on passersby on rainy days, the steel was “pre-weathered” in Indiana before installation; it ended up staining the sidewalks below with orange splotches regardless.) Its size had been trimmed as well, as part of a “value engineering” to cut costs during Ratner’s bond crisis, leading to a shape that fit fine for basketball, but not hockey, a condition that would lead to many obstructed views when Islanders owner Charles Wang chose to move his team in from Long Island anyway in 2015. A promised jogging path and public ice skating rink on its roof, floated as public benefits of the project, had faded away as well, replaced by a plain roof with the logo of naming-rights sponsor Barclays Bank on it, the better to be viewed from airplanes on the approach into La Guardia.

On event nights, the blocks around the arena were utterly transformed, as the surrounding streets swelled with traffic and the subways disgorged thousands of arriving fans wearing Nets shirts, Islanders jerseys, or rainbow-colored Barnum & Bailey circus hats, then reabsorbed them three hours later. (The arena developers had purposely built little parking to discourage car use; as Forest City Ratner senior vice president Jane Marshall explained at one community meeting during the planning process, “There’s a healthy fear that’s already there in potential attendees, and we’d like to encourage that.”)

For a sports arena, though, that’s a minority of the time. In its initial year, the Barclays Center was open for business about 200 nights, which is at the high end for most arenas. The other 165 days a year, plus most mornings and afternoons, it sat like a great beached robot whale at the intersection of Atlantic and Flatbush. An oblong video board tucked beneath its “oculus” — a kind of metal awning with a large hole in the middle, which was just as useful for protecting waiting fans from weather as it sounds — flashed promotions for upcoming events and for various building sponsors: the Daily News App, GEICO, Starbucks, Calvin Klein, Zappos, Bud Light. (Giant animated beer bottles hovering over Flatbush Avenue would normally require special city permission, but the state’s control of the site meant it could trump city billboard laws.)

The surrounding blocks, meanwhile, were an odd mix of the brand new and the remarkably unchanged. Across Flatbush from the new arena, a row of small shops had been converted into outlets of the Shake Shack upscale fast-food chain and the True Religion boutique clothing chain; other storefronts remained vacant, awaiting more revitalized uses. Across Pacific Street to the north, a PC Richard electronics store — itself put in place in the 1990s after a controversial deal to partially relocate a community garden that had been planted there during the previous decade, when the site was an underused parking lot — was fighting the state’s attempts to displace it via eminent domain for an office tower of unknown height. To the south, the former Triangle sporting goods store — named for the shape of its building, isolated on a tiny block bounded by Flatbush, 5th Avenue, and Dean Street — had been sold after ninety-six years in business for $4.1 million to a pair of real estate investors, but remained empty three years later, a wraparound cellphone ad covering its vacant windows.

South again across Dean, the owners of a Patsy’s pizzeria — a newly opened branch of the original East Harlem fixture that claims to be the first pizza place in the city to sell single slices — explained that the arena had been a great boon to their business, but they’d come to grab a slice of the greater Park Slope market as well. “Building a restaurant anywhere, if you have a quality product, you could be a back alley and people will come to you,” said Joe Juliano. “But it could take two-three years — and I don’t have two-three years to pay rent. So over here we have a captive audience across the street, and three nights a week we have the games. That really helps while you’re trying to pay the bills.” Not that capturing an arena audience that only arrives in three-hour bursts is easy, he explained: “You have 100 seats, they all want to be fed in one hour. Our pizza only takes a minute and a half to cook — that helps.” His partner, the Bensonhurst-born Anton Reja, put down his cigar to chime in: “Between this one, the corner, what’s happening over there, you got six thousand families coming into the neighborhood. But this is not working for everybody. People who are coming to see the game but going to eat, they don’t want to go four blocks away. They want to go fast.”

In fact, said Reja, while the arena was a nice bonus, his bottom line was reliant less on spillover from the arena than from the growing aura of Brooklyn as a whole. “I get a lot of locals, and then I get a lot of people who come in from Long Island, and from lots of different countries,” he said. “One night, in my restaurant, I had five tables, five different countries: New Zealand, Australia, France, Mexico. It was unbelievable. They came because of Patsy’s, maybe go to the games. And they’re just coming to see Brooklyn. Just coming to see Brooklyn!”

One block to the east, on a once-residential block of Dean Street now dominated by a police station, a fire station, and the arena’s hulking backside, the owners of Dubai Mini-Mart were finding themselves to be somewhat less of a destination. “The stadium went up, families moved out,” said Abdul Ibrahim, one of a group of cousins who opened the small grocery store in around 2005. Ibrahim, who grew up in part with his mother in Cleveland, in part with his father in East New York, said his family chose the site after the city renovated a small park nearby, building baseball and soccer fields that drew families to the block.

His main clientele, he related, still came from these families, plus police and firefighters at stations on the block, as well as workers at the arena and those erecting the pair of apartment towers that were being squeezed in on two of the arena’s sides. But even they couldn’t provide the same customer base as the now-vanished full-time residents. “Now groceries stand on the shelf. People just buy drinks sometimes,” said Ibrahim. “It’s not like when the neighborhood was a neighborhood.”

Smack up against the arena’s southern side, a bright-red 32-story tower was close to being finished, after years in the works; it had been held up when the contractors chosen to run Ratner’s new “modular” construction plant quit in a huff, saying there was no way to operate it without losing money hand over fist. (The modular technique, in which components of the building would be assembled off-site and then stacked like Legos, raised concerns about whether the project’s promised 17,000 construction jobs would ever materialize.) A couple of blocks to the east, a pair of housing towers — rebranded “Pacific Park, Brooklyn’s newest neighborhood” to avoid the taint of the Atlantic Yards name — were playing rapid catch-up, having broken ground with the aid of Chinese investors, attracted in part after Ratner sought financing via the federal government’s “EB-5” program, which doles out a fast track to green cards for foreign investors who provide low-interest loans to American development projects.

Once those buildings opened, Ibrahim would no doubt see an influx of new customers, but his landlord had warned him not to expect to be around to see much of it. “He told us he’s not going to renew our lease,” said Ibrahim. “We got to do the next four years, and then he’s going to push us out.”

Around the corner, the Slope Food Market had already shut down, shuttering after seventeen years on the spot. Its owner, who gave his name only as Khalid, had packed up and started over with a small luncheonette in the Department of Motor Vehicles building in Coney Island. “I took the store for three years, and the rent started going up high — five hundred dollars escalation every year,” he said there, while ringing up customers. An employee accidentally sold cigarettes to a minor, causing him to lose his Lotto and cigarette licenses for six months; after more losses and more rent increases, he chose to shut down. As for the arena, he said, its impact was almost unnoticeable: “Barclays Center, I tell you the truth, it has an advantage and a disadvantage. It improved the area, and made it look high-class. But as far as business impact, I would say it did not really make a big difference, because the only people we used to get from the Barclays Center were the employees coming into the deli to buy hot sandwiches.” The expansion of the Atlantic Avenue train station to bring more people to the arena, meanwhile, had meant fewer riders disembarking at the next stop, Bergen Street, which happened to be in front of his store. “We lost all the people coming into it. We didn’t see any people coming from the train.”

Two blocks away, the easternmost outpost of Pacific Park, a seventeen-story condo tower sheathed in grey fake brick, was going up on a double-sized superblock at the corner of Vanderbilt and Atlantic Avenues. Vanderbilt, long the main shopping drag of Prospect Heights, was now jammed tightly with new stores and restaurants, including Ample Hills, a homemade ice cream parlor that had soon expanded throughout the borough, and Empire Mayonnaise, an artisanal mayonnaise store that attracted media attention for its $8 jars of white truffle mayonnaise, though it had few visible walk-in clients. After Saturday Night Live lampooned them in a sketch about gentrifying Brooklyn, co-owner Elizabeth Valleau told Good magazine: “We got a whole bunch of new customers because of that skit, so we’re very happy about it.”

Valleau, who said the opening of the arena “had little to no effect on our business” — the location, she explained, had been selected mostly because it was near to her and her business partner’s homes — was somewhat less happy about being painted as a harbinger of neighborhood doom. “People are trying to politicize us, but ultimately we’re just a couple folks from the neighborhood who have a condiment business and we’re making it in the neighborhood instead of in a big warehouse out in New Jersey,” she told Good. Gentrification, she continued, had changed in Brooklyn in recent years, from being “more about new families and small businesses that actually cared about growing a future with the neighborhoods they moved into. [But now] we have these machine-style corporations eating up real estate and literally pushing people out of their homes and businesses the second a new community garden or cupcake shop appears.” Some change was inevitable, she indicated, but the city could be doing more to mitigate the impact. “What it is, is depressing.”

In a subsequent email interview, Valleau reiterated that her store should be seen as “a part of the community that could be pushed out by further gentrification, as opposed to a driver of it” — even at $8 a jar, apparently, mayonnaise sales could only pay so much in rents. (In fact, the storefront eventually closed in summer 2016, though its owners planned to relocate their wholesale mayonnaise business elsewhere.) “I understand how our business could seem frivolous from the outside, but that’s only if the viewer doesn’t realize that we manufacture every jar that we sell worldwide in a 300-square-foot space. There is nothing fancy happening here whatsoever.”

It was the typical New Brooklyn quandary: The minute you arrived in a new neighborhood, it was time to start looking over your shoulder for who was coming after you. Back at the mini-mart, Ibrahim noted that the process had taken a toll on his upstairs neighbors as well: In the past decade, his building’s landlord had already raised apartment rents from $900 a month to $3500 a month. “I’m not mad at him, because development is always good,” he insisted. “But I just feel bad because of the families that we lose. The people that live in the neighborhood, kids, that’s what I’m used to growing up. Not all these big skyrises that could have stayed in the city. But I guess you can never stop change.”

His business partner Ahmed Khtri was more cynical. “To run a business and establish a business, have it in a poor neighborhood,” he advised. “More secure, reliable people. You have it in a rich neighborhood, it comes out greed, and people who love money more than humanity.”

“If they want people to move out of the city, they should make a place for them,” said Ibrahim. “New New York, for the middle class and the broke.”

Print and electronic copies of The Brooklyn Wars (Second System Press, 2016) are available for purchase from brooklynwars.com.

Islanders owners discussing new arena in Queens or LI, all hell about to break loose

So when new New York Islanders owner Jon Ledecky answered questions last week about the team’s future — previously planned to include staying in Brooklyn but playing six games a year in a renovated Nassau Coliseum — by saying “Barclays Center is our home,” I called it “noncommittal,” on the grounds that 1) Ledecky was still pretty gripey about the flaws of the Brooklyn arena and 2) “Barclays Center is our home” could mean either “we would never leave a place with so many important memories made over the last nine months” or “it’s where we live, we have to deal with it until we figure out something better. It sounded like typical owner weasel words, a way to keep your options open without actually saying you wanted to keep your options open.

But even I didn’t expect this, just a week later:

The New York Islanders are in talks with the owners of baseball’s New York Mets about building a hockey arena adjacent to Citi Field in Queens, people with knowledge of the discussions said.

Willets Point is emerging as a persuasive alternative to the team’s current home at Brooklyn’s Barclays Center if the Islanders’s owners and arena officials can’t agree on a series of hockey-specific improvements, said the people, who asked for anonymity because the negotiations are private.

That was from Bloomberg News, but the anonymous sources were soon talking as well to Newsday (which cited “two people familiar with the situation”) and the New York Post (just “sources” — the Post doesn’t get too hung up on attribution). The Post’s article also included this tidbit:

But if that doesn’t work out, Islanders owners Jonathan Ledecky and Scott Malkin could move the team to Elmont, LI, sources said…

A state source confirmed the Islanders have made preliminary inquiries about moving the club to vacant state-owned land near Belmont Park. That is near another parcel being eyed by the Cosmos for a soccer stadium.

With all this, a clearer picture is starting to come into focus. When Ledecky and partner Scott Malkin bought the team from Charles Wang earlier this year, they inherited Wang’s lease on the Barclays Center, which he had agreed to despite the building’s problems for hockey — it was deliberately “value engineered” to be too small for the sport, in order to save on construction costs — because he was sick and tired of fighting with Nassau County officials over a new arena there. They also, however, inherited the opt-out clause that Wang had negotiated to allow the Islanders to break their lease in 2019 — and that’s the kind of leverage that you’d have to be crazy as an owner not to try to use.

So is an arena next to the Mets stadium feasible, and what would it take to build one? The parking lot to the west of Citi Field is already designated for the giant “Willets West” mall, but that’s currently held up in court because the lots are technically still city parkland. Could the Mets try to build an arena instead if the mall is nixed? Would the courts allow that more readily? Who knows?

Then there’s Willets Point proper, to the east of the Mets stadium, a melange of auto repair businesses that the city has been working to seize and evict for years to make way for a mixed housing and commercial development. Could the city agree to incorporate an arena as well? And on either site, would it provide the land for free, and leave it exempt from property taxes, which might be enough to entice the Mets and Isles owners to actually build this thing? And if they did, could it possibly be successful in a metropolitan area already glutted with arenas (Madison Square Garden, Barclays Center, the New Jersey Devils‘ Prudential Center in Newark, plus soon the redone Nassau Coliseum) and only so many concerts to go around?

Of course, Ledecky and Malkin may never have to determine if a Queens (or Elmont) arena project is feasible, if they can use the mere possibility as a hammer to get Brooklyn Nets owner Mikhail Prokhorov to redo Barclays for hockey. The Isles owners haven’t come out and said what “improvements” they want, but to make a genuinely NHL-scaled space you’d need to knock down the entire west end of the structure and build it out another 50 feet or so, which wouldn’t be cheap, and would also entail shutting the arena for an offseason or two and losing out on revenue from those dates. So to get it done would require quite a formidable threat, and “we’re going to take our puck and go to Queens” might be the kind of thing that gets the attention of their current landlords.

Either way, though, it looks like we have a war on, one that’s likely to drag out for months or years as the various combatants (Ledecky and Malkin, Prokhorov, the Wilpons, the city, maybe Elmont) jockey for position and remake alliances. That should at least help tide everyone over until the final season of Game of Thrones.

Brooklyn Nets arena lost money in 2015, is probably no good for anything for anybody

Russian billionaire Mikhail Prokhorov, who already owned 80% of the Brooklyn Nets and 45% of the Barclays Center where they play, bought the remaining shares of those two items from developer Bruce Ratner over the holidays. (If I’m doing the math right, Prokhorov paid $285 million in cash, plus $344 million in promised future payments.) But the interesting part of the transaction, as uncovered by Atlantic Yards Report’s Norman Oder, is that the financial documents released then show that the Barclays Center is continuing to lose money:

The Barclays Center had a terrible year financially in the fiscal year ending June 2015. Net revenues plummeted, to less than half the total once projected, and the arena lost some $9 million in what was (roughly) its third year in operation…

The arena’s net operating income (NOI) fell well behind expectations, to $38 million, due to declines in event and related revenues, while operating expenses remained high.

We’ve heard this before, particularly two years ago when it was revealed that despite being one of the top-selling arenas in the U.S. in its first year, the Barclays Center was still barely breaking even after paying off its construction debt, thanks to high operating costs and discounts being offered to performers to lure them to Brooklyn instead of one of the New York area’s many other arenas. That seems to be even more the case now, and while the arrival of the Islanders provides more dates for 2015-16, that’s not necessarily a good thing: It also displaces nights that the arena could be rented out for concerts, and the arena’s weird rent deal with the Islanders (the arena pays team owner Charles Wang a flat negative rent, but keeps all ticket and other revenues) means that if ticket sales are slow, the arena could end up taking a loss on the NHL.

All of this means it’s a good time to wonder what the hell exactly Ratner and Prokhorov got out of this arena that has turned a large swath of Brooklyn upside down for more than a decade now. The purchase price on the last chunk of the arena valued it at slightly less than the construction cost, so Ratner’s not quite breaking even on the money he poured into the arena itself. (Yes, he got a pile of public subsidies, but those were in the form of discounted land and tax breaks, so not anything he can actually put in the bank now that he doesn’t own the building.) He also got the development rights to a bunch of land where he can erect apartment towers, but that isn’t going all too well either, though at least a couple of buildings are now close to completion.

Prokhorov, meanwhile, has put in somewhere around $1 billion in order to own a historically awful NBA franchise plus an arena that might just, if you squint, be able to break even. Of course, he might see this as a perfectly reasonable price to pay to be able to hang out with NBA players and do whatever the hell this is. He has more billions where that came from, anyway.

As for Brooklyn residents, we now have a terrible basketball team to watch, and a pretty decent hockey team, and a garish arena and some growing housing towers on a site that otherwise would probably have something similar anyway, given that pretty much every possible site in Brooklyn now has a giant apartment tower going up on it. And any revitalization effect on the surrounding neighborhood has been mixed at best: There’s a  Shake Shack and other new restaurants, certainly, but then, there were new restaurants opening in droves in that area even before the arena was planned; meanwhile, the site of the old Triangle Sports sporting goods store, which was cited as the harbinger of a land rush when its owners closed it and put the building up for sale, is still vacant almost four years later.

It’s probably too simplistic to say of the Brooklyn arena that everybody ended up a loser, but certainly there are no clear winners. I’m going to be spending some more time shortly digging into some of these questions so I can wrap up the final chapter of The Brooklyn Wars (which means, yes, there’s actually a publishing date visible at the end of the tunnel), at which point I can probably provide some firmer answers. But for now, man, was that an epic train wreck, or what?

Brooklyn Nets’ “affordable” apartments will cost up to $3500 a month

Those who recall the original Brooklyn Nets arena slogan of “Jobs, Housing, and Hoops!” may have been wondering when the “housing” part will enter the equation, what with development still halted on the modular housing tower whose builder quit saying it was financially unfeasible. Down the block from the arena, though, there’s another building going up, and New York City Mayor Bill de Blasio was excited to announce yesterday that it will be all affordable units:

“There are very few phrases I like better than 100% affordable housing, so this program is off to a good start.”

As Crain’s New York reports, though, “affordable” doesn’t actually mean so much affordable:

The 298 apartments at 535 Carlton will be available to tenants from five different income tiers: half for tenants who earn up to 165% of the area median income for a family of four, which is $83,900 a year; 15% for tenants earning up to 145% of the AMI; 5% for those earning up to 100%; 25% for those earning up to 60%; and 5% for those earning up to 40%. More than half the tenants in the new building will pay rent of about $3,500 a month for a two-bedroom apartment.

Yes, it’s still housing, and yes, there’s some benefit to getting more apartments of any kind in a borough that’s facing rising demand. (Though there’s also a growing amount of evidence that new upscale development tends to drive even more increased demand than it helps to quench.) But it still means that the overall project is getting something on the order of $2 billion in cash and land and tax breaks to build a private sports arena and an unknown number of apartments that will mostly be way more expensive than most locals can afford. But at least you can’t put a price on giving Brooklynites the chance to watch … er, professional basketball?


AEG reportedly looking to buy two-year-old $1B Nets arena for $500m, wants Isles out

The New York Post is reporting that the arena-management giant AEG (still owned by Philip Anschutz, contrary to what he suggested two years ago) may be looking to buy the Brooklyn Nets‘ arena, according to those ever-popular “sources.” Also, that he doesn’t want to pay what arena majority owner/Nets minority owner Bruce Ratner of Forest City Ratner wants to get for the building:

AEG is said to be willing to spend up to $500 million on the 19,000-seat concert and sports arena, or slightly more than 12 times Barclays’ roughly $40 million in expected 2014 operating profits, sources said.

However, Forest City, which last month forecast that profit number would soar 63 percent to $65 million in 2016, is said to be seeking a lot more than $500 million.

Those projections sound awfully optimistic, given that the Barclays Center only took in $30 million in its first year of operations, barely enough to pay off its $29 million a year in construction debt. AEG would undoubtedly love to have its own concert facility in New York City — though given that right now the company gets to play the Brooklyn arena and Madison Square Garden off against each other when bidding for events, it can’t be too unhappy with the status quo, either. Though maybe with the Islanders due to arrive next fall, they might be worried about not having enough open dates at both arenas to keep the bidding wars going, maybe?

And speaking of the Islanders, buried way at the bottom of the Post article is this:

AEG believes Yormark is paying too much to keep the arena booked, sources said. It was Yormark who guaranteed $50 million a year to the New York Islanders once they move to Barclays next season.

“AEG sees the Islanders deal as too risky,” the source said.

After roughly five years, Barclays can get out of the Islanders contract, sources said.

This is the first I can recall hearing about a $50 million revenue guarantee for the Islanders — the highest number I’d seen previously was $10 million in annual payments from the arena to the team, while the arena kept most hockey revenues — and definitely the first I’ve heard about the Islanders having a five-year out clause. (And the first Islander fans have heard of it, too, apparently.) That would make the decision to move the Islanders to Brooklyn make a bit more sense — if there’s an out clause, both Ratner and Isles owner Charles Wang get to effectively conduct a trial run in Brooklyn. And if it turns out no one wants to go see hockey in a basketball arena 20 miles from their traditional home base, the Islanders can conceivably move back to a renovated Nassau Coliseum, currently set to be downsized to 13,000 seats (but at least 13,000 seats placed properly for hockey) by … Bruce Ratner.

All of this is a hell of a lot of speculation based solely on a report based on unnamed sources in a newspaper that doesn’t have a great track record with its “exclusives.” Take it all with a grain of salt for now, though if you want to jump to conclusions of the “almost brand-new arena can’t even sell for more than half what it cost to build” variety, don’t let me stop you.

Ratner puts debt-ridden Brooklyn Nets arena up for sale after just two years

Bruce Ratner, the developer who spent ten years buying the New Jersey Nets and then fighting a bitter court battle to tear down houses in Brooklyn to make way for a new arena and brought in a Russian billionaire partner to help pay the bills, is celebrating his ultimate victory the only way he knows how: by putting the arena up for sale.

Developer Forest City Ratner is marketing its majority interest in the Brooklyn arena that is home to the NBA’s Brooklyn Nets, seeking a buyer for some or all of its 55% stake in the building, according to people familiar with the matter.

An arena spokesman declined to offer details, but said in an email that “Our goal is to identify a strategic partner as we continue to capitalize on the great performance of Barclays Center.”

“Great performance” sounds nice when shopping the place around to buyers, but the fact of the matter is that the Barclays Center hasn’t done great in terms of its bottom line: It just about barely broke even in its first full year of operations, 2013, despite record-setting ticket sales. (The Wall Street Journal’s Eliot Brown, who earlier reported that the arena turned a tiny profit, now says that the arena reported a small loss in 2013.) And while arena revenues were up in the first half of 2014, they’re still well below projections, and not likely to improve significantly as the Nets honeymoon wears off and a trade war for concerts heats up with the newly renovated Madison Square Garden. (Yes, the Islanders arrive in 2015, but as we’ve seen elsewhere, sports teams often cost as much in lost concert revenue as they pay in rent.)

The reason for all this red ink? The $29 million a year in debt that Ratner saddled himself with, while turning over majority ownership of the arena’s biggest money-maker, the Nets, to Mikhail Prokhorov in exchange for more cash to feed the arena’s $1 billion construction budget maw. Even the most successful arenas don’t churn out that kind of profit margin year after year, which is no doubt one reason why Ratner is looking to cash out, though it’ll be extremely interesting to see what price he gets for a building saddled with $500 million in debt, not to mention Brook Lopez’s tender feet.

There’s much more, as you’d expect, at Atlantic Yards Report, including the observation that Ratner is really only selling operating rights to the arena, since it technically belongs to the state of New York in a complicated tax-dodge arrangement.

The big question remains, however: Why on earth did Ratner care so much about this project that he moved heaven and earth (and Daniel Goldstein), plus assumed half a billion dollars in debt, to make it happen? The man has never shown any interest in basketball, and ditched control of the team as soon as possible after the project was approved. There was the theory that the arena was a loss leader for getting hold of valuable Brooklyn land to develop with housing, but Ratner’s planned housing towers are doing even worse than the arena, though he’s still shopping around in China for investors. That leaves … wanting to drum up foot traffic for his mall across the street? Wanting to make even more of a name for himself in Brooklyn real estate, even if it’s not an especially positive one? Presumably he had something in mind all along — or maybe it’s just Hanlon’s Razor.

Brooklyn arena tower builder ups and quits, affordable housing back on “maybe someday” timetable

Skanska, the Swedish construction giant that previously stopped work on the first housing tower slated to accompany the Brooklyn Nets arena — which, so it happens, is right down the street from the library where I am typing this — has now quit the project altogether, on the grounds that it is a fruitless money suck:

Skanska USA Building canceled its contract Tuesday for the much-anticipated yet long-delayed modular apartment building at Forest City Ratner Cos.’ 22-acre Atlantic Yards project, which was recently rebranded Pacific Park—though the long-running legal dispute is far from over.

“We could not continue to incur millions of dollars in extra costs with little hope that Forest City would take responsibility for fixing the significant commercial and design issues on the project,” Richard Kennedy, co-chief operating officer at Skanska USA Building, a subsidiary of Swedish construction company Skanska, said in a statement.

The timing of the announcement was not accidental: As Atlantic Yards Report reports, Forest City Ratner and Skanska had a court date today to try to resolve the construction contract, which has now officially expired. Instead, Skanska wants FCR to re-bid the work back out to them as a job (enabling them to keep running the custom modular construction unit factory — aka GIANT LEGO FARM — at a price they’re happier with), while FCR wants the judge to order the factory to reopen, and let FCR run it, or something like that. The judge, from the sound of it thoroughly disgusted with the whole matter, ordered the two sides back to the bargaining table, but if all they’re going to say is “Screw you!” “No, screw you!” then this isn’t going to get very far.

And speaking of not getting very far, what likely happens next?

Scarpulla did give Forest City a smaller win, agreeing was a “Major Decision” for the LLC to change its managing member, and forced Skanska to hold a vote it had otherwise avoided.
That vote, presumably ending in a 3-3 tie, would trigger a months-long deadlock process contemplated by contract, leading to potential buyout of one or the other’s interests.
That, over time, also would jeopardize the modular factory’s future, given the need to rehire and/or retrain workers, and further delay the completion of B2.
No wonder Scarpulla several times urged the parties to consider mediation. “I’m not trying to scold anyone,” she said. “I’m just saying that the path you’re going down is just going to cost you more money.”

Yep, this is only going to get uglier from here. Good thing it’s just a private construction dispute, and not something that was being counted on as the payoff for hundreds of millions of dollars in tax breaks and other public subsidies — oh, wait.

Nets arena housing halts construction, as builder says newfangled design “just doesn’t work”

I’m not up to researching the Atlantic Yards section of The Brooklyn Wars just yet (current status report: wrapping up Coney Island chapter, starting to move on to Bushwick and Downtown Brooklyn), but I may have to make an exception for this news: Work on the housing tower next door to the Nets‘ arena, which in recent months had finally started to take shape as the first of the project’s promised housing component, abruptly shut down this week amid complaints by the builder that designer/arena owner Forest City Ratner massively underestimated costs.

Take it away, Charles Bagli of the New York Times:

Skanska on Wednesday unilaterally closed the factory in the Brooklyn Navy Yard where 157 workers assembled and built the steel-framed modules for the first of a planned 14 prefabricated apartment buildings, at Flatbush Avenue and Dean Street.

A day earlier, Skanska ceased work at the construction site, where the building rises to only 10 floors of its 32-story height, 21 months after work started.

“The purpose was to save time and money and they’ve done neither of those things,” said David Burney, a former commissioner of the city’s Department of Design and Construction.

For those who haven’t been religiously following the Atlantic Yards saga, this building was supposed to be a breakthrough in “modular construction,” where sections of the building are assembled offsite by assembly-line workers and then stacked up like Legos to make a giant apartment block. (As you can see from the work done so far, they even picked Lego colors.) This required building an entire factory to manufacture the modular units, which, surprise surprise, took a while; the finished building was originally supposed to open this summer, but remains only one-third completed.

And it looks like it’ll stay that way for a while, to hear Skanska tell it:

Richard A. Kennedy, co-chief operating officer of Skanska USA, was emphatic that, contrary to Forest City’s claims, it had not “cracked the code.” Its design, he said, was flawed.

“It just doesn’t work the way it was sold to work,” he said. “We’ve had real challenges with it that’ve delayed the project and led to cost increases. We finally came to the decision to stop work on the project until our significant commercial issues are resolved.”

Forest City, Mr. Kennedy said, had ignored its “design responsibility” under the contracts.

“It was represented to be a complete and buildable modular design,” he said. “That simply was not the case and that’s what we’ve been struggling with.”

None of this should be terribly surprising, given that using modular construction on anything over 20 stories is “quite out of the ordinary,” as Brooklyn modular architect James Garrison told me shortly after the project was first announced, since taller building require stiffer frames for wind resistance, which isn’t modular’s strong point. Still, here we are, two years after the arena opened, and the promised 6,430 units of new housing (one-third of which were supposed to be “affordable,” though it turned out most of those would go to families earning more than $100,000 a year) currently amount to one half-finished building that will now likely be tied up in litigation, or at least some really nasty out-of-court wrangling. According to a new deal negotiated in June to speed up development, Forest City Ratner will be subject to up to $2,000 per unit in penalties if the buildings aren’t completed by 2025, but the way things are going, it has to be a serious worry that FCR will just throw in the towel and take the fine.

New book “The Brooklyn Wars” to rake muck of Nets arena deal

I know I already ask my readers here to become Supporters of this site (which reminds me, I need to set my next members-only chat date soon), but I do want to alert you to another project I’ve just launched that may be of interest: “The Brooklyn Wars,” a book drawing on my decade-plus of reporting on the massive changes that my home borough has undergone.

I’ve launched a Kickstarter site where you can preorder the book and win fabulous rewards. (One FoS reader has already availed himself of the “Go to a Nets game with Neil and have him complain about the terrible sightlines the whole time” level.) And yes, there will be sports subsidy content: One of the four main sections will focus on the machinations behind the construction of the Brooklyn Nets arena and what it’s meant for its Prospect Heights neighborhood and Brooklyn as a whole since.

Please check it out if you’re interested — and given the way nearly every city seems to have its own burgeoning mini-Brooklyn, or at least is trying to create one by force of will, it’s a story that should have relevance far beyond the confines of one borough. Besides which, everybody is fascinated by Brooklyn, right?

Nets arena cheap seats should come with oxygen bottles

I attended my first Brooklyn Nets game last night, and my overall impression didn’t change much from my earlier visits to the Barclays Center for concerts: The design lends itself to major foot traffic jams both getting in and getting out, the acoustics are lousy, and the food is overpriced even by sports concessions standards. ($7 for a small container of popcorn, $6.75 for a square slice of pizza, beers starting at $8.50.) Mostly, though, since we had bought cheap tickets for the last rows of the upper deck, the overall impression was: Man, these seats are ridiculously high.

How high, exactly, is a question I’ve been trying to figure out since getting home from the game. The roof at Barclays Center peaks 137 feet above street level, and the floor is about 20 feet below. The New York Mets‘ Citi Field, by contrast, is 116 feet tall, with a field that’s pretty much at grade. Now, the last row of seats at Barclays isn’t quite up to the peak of the roof, but it’s pretty close — meaning that, at least by this rough guesstimate, the worst seat at the Nets’ 18,000-seat arena is just about as bad as the worst seat at the Mets’ 40,000-seat stadium.

If anyone out there has more precise figures, please share them, as this is a very rough back-of-the-envelope estimate. Still, it’s a reminder of just how bad a double layer of luxury suites can be for the views of everyone sitting above them, not to mention an indication that something went badly wrong in the design when Bruce Ratner was value engineering it. And, of course, it’s only going to get worse for hockey.