Atlantic Yards Project in Brooklyn Clears Legal Hurdle

By CHARLES V. BAGLI

The last major obstacle to a groundbreaking for the $4.9 billion Atlantic Yards development in Brooklyn fell Tuesday when New York’s highest court, the Court of Appeals, dismissed a challenge to the state’s use of eminent domain on behalf of the developer, Bruce C. Ratner.

Mr. Ratner, whose 22-acre development has been delayed for three years by a flurry of lawsuits, the collapse of the credit and real estate markets and a glut of luxury housing, plans to begin selling tax-free bonds next month to finance the development’s cornerstone project: an 18,000-seat basketball arena for the New Jersey Nets at the intersection of Flatbush and Atlantic Avenues near downtown.

The Court of Appeals ruled that the state could exercise eminent domain in seizing the 22 acres, much of which sits within an urban redevelopment area, for Atlantic Yards. Critics of the project had argued that eminent domain on behalf of a private developer was improper and a violation of the state’s Constitution.

“Once again the courts have made it clear that this project represents a significant public benefit for the people of Brooklyn and the entire city,” Mr. Ratner said. “Our commitment to the entire project is as strong today as when we started six years ago. Today, however, this project is even more important given the need for jobs and economic development.”

The developer expects that construction of the arena will take about 28 months, enabling the Nets to move from East Rutherford, N.J., to Brooklyn about June 2012.

Those opposed to the project said that the decision, while a setback, was hardly the end of the fight.

“The fight against the Atlantic Yards project is far from over,” said Daniel Goldstein, a spokesman for Develop Don’t Destroy Brooklyn, a community group that opposes the project. “The community has four outstanding lawsuits against the project and, meanwhile, the arena bond financing clock ticks louder and louder for Ratner. While this is a terrible day for taxpaying homeowners in New York, this is not the end of our fight to keep the government from stealing our homes and businesses.”

If construction begins in the coming weeks as expected, Atlantic Yards will stand out in a city where 530 different construction projects are stalled, sitting lifeless and without adequate financing in virtually every neighborhood.

Atlantic Yards would transform a busy intersection of two major thoroughfares dominated by a deep railroad cut where Long Island Rail Road trains are cleaned between rush periods. The billion-dollar arena would be the most expensive in the country and home to Brooklyn’s first major league ball club since the Dodgers baseball team left after the 1957 season. Plans also call for 16 high-rise towers on the adjacent blocks, mostly residential buildings with as many as 6,430 apartments.

Still, Mr. Ratner and state officials, who support his project, have to contend with at least three other lawsuits, an uncertain real estate market and a lack of construction financing. The developer has said that he will start the first residential building six months after beginning the arena. But with so many new apartments sitting vacant, analysts say it could be many years before demand would justify building so many units in one neighborhood.

The arena would be built on an 8.5-acre railyard and on adjacent property. Some of the owners of the property oppose the project, and brought the initial eminent domain lawsuit. On Monday, Mr. Ratner, chief executive of Forest City Ratner, turned over a $50 million temporary yard, just to the east of the original, to the Long Island Rail Road. (Forest City Ratner was the development partner for the new Manhattan headquarters of The New York Times Company.)

Also on Tuesday, a state-sponsored local development corporation approved issuing a combination of tax exempt and taxable bonds to finance construction of the arena.