Barclays Center Owners Say City Grossly Overvalued Arena
PROSPECT HEIGHTS — The owner of the Barclays Center has a low opinion of its high appraisal.
Developer Forest City Ratner says its taxpayer-subsidized arena is grossly overvalued — by more than $600 million.
In an unusual move, the firm went to Brooklyn Supreme Court last month to battle the city's appraisal of the Nets' home.
Earlier this year the Department of Finance placed the arena's value at about $741 million. The developer's subsidiary, Brooklyn Events Center, challenged that estimate in a petition filed Oct. 22, arguing that the Barclays Center is really worth a measly $111 million.
The Finance Department bases the market value of a commercial property like the Barclays Center on its potential income. The city then calculates taxes off that value.
Forest City Ratner declined to explain to DNAinfo New York why it is fighting the appraisal. The developer has netted a slew of public perks and doesn't even pay property taxes.
In a 2009 report, the city's fiscal watchdog, the Independent Budget Office, estimated Forest City Ratner received $761 million in subsidies and tax breaks from the city and state to erect the arena and develop the 22-acre Atlantic Yards.
Under the deal's terms, the city agreed to forgo collecting property taxes on the site. Instead Forest Ratner makes payments in lieu of taxes, or PILOTs, to the city.
The PILOTs cover the debt service on the $511 million in tax-exempt bonds that helped fund the Atlantic Yards development. The law requires PILOTs be less than or equal to the property taxes that Forest City Ratner would pay on the arena.
Normally, the Finance Department collects a property tax of about 10.3 percent of a property's assessment. An assessment is 45 percent of the determined market value.
In the petition, Brooklyn Events says the Finance Department gave the arena a property assessment of nearly $334 million. The subsidiary gives its own estimated market value of each block and lot that comprises the arena. By that account the assessment should be less than $50 million.
The petition says Brooklyn Events asked the city's Tax Commission in the spring to have the property assessment lowered, but the appeal was denied. The petition calls the city's assessment "illegal" and "erroneous."
On a stranger note, though Forest City Ratner is only supposed to pay PILOTs, the Barclays Center is on the city property assessment roll and is listed as owing taxes.
The city Finance Department did not respond to repeated requests to explain the property assessment or the arena's appearance on the city tax roll.