Mortgage loan lead

After being denied Liberty Bond financing, Bruce Ratner has found another way to pay for his $850 million New York Times Tower project.

GMAC Commercial Mortgage Corporation has announced that it will provide a $320 million construction loan for the 1.67 million s/f tower in the heart of Times Square. In addition, Ratner has filed an application with the Department of Environmental Conservation in the hope of getting additional tax breaks from the government because he claims the site on which the building will be constructed has been contaminated.

Ratner has had some difficulty arranging the financing for the project. After he failed to find a lender last year, the New York Times Company decided to postpone construction for six months. In addition, he has been hoping that Liberty Bonds would allow him to build at low interest rates, but New York State denied his application.

Though the terms of the GMAC loan were not disclosed, a representative from the company said the transaction was standard and "market rate."

"The primary term of our construction loan is 48 months," said Vacys Garbonkus, executive vice president and head of construction lending with GMAC. "As far as the pricing goes, the only thing I can tell you it's really market rate pricing. There is nothing unique about the loan, but I can't reveal the absolute specifics."

Garbonkus also denied that Ratner had difficulty finding a lender.

"It might be more appropriate to say that he had to negotiate the overall deal with the New York Times and the City of New York, and that process took a substantially long period of time," he said. "The deal didn't really come together from a financing point of view until about eight or nine months ago, when we began to take a serious look at the project. They weren't really asking us for financing proposals before then. From nay point of view, you have a premier developer in Bruce Rather, a premier building and name recognition in the New York Times. Given that and our strong understanding of the New York marketplace, we didn't have any problems lending the money."

However, Ratner is still hoping to lower the cost of the project. His application with the DEC claims that the tower will be built on a site that once contained several fuel oil tanks and that has shown signs of PCB and lead contamination. If Rather deans up the site, he might become eligible for 10 years of tax credits and remission insurance credits.

"Mr. Rather has already filed an application in accordance with the existing legislation," said Michele de Milly, a spokesperson for Forest City Ratner.

But de Milly denied reports that Ratner is aiming for $170 million in tax credits.

"$170 million is a fabrication, it's not a number that means anything," she said. "There is a very precise formula for determining whether the site is eligible for credits and how much of them. We have no idea what he would be eligible for and how long it will take for DEC to [reach a decision]. That is a determination made entirely by the state government."

There is a chance, however, that Ratner will not get anything from the DEC because his project would be completed regardless of whether he would get funding for contamination mitigation.

"I think the key issue is whether contamination is complicating the re-use or re-development of a property," said Larry Schaapf, of the Environmental Business Association Brownfield Taskforce. "In this case, it sounds like the project was going forward anyway, so there is a question of whether is should be eligible for tax credits. The state legislature is trying to attract people to redevelop properties, but to say 'I already have a project and the tax credits are the icing on the cake'--that's not what the program is intended for."

The New York Times Tower will be the centerpiece of the Empire State Economic Development Agency's Times Square redevelopment project. The 52-story building, located on Eighth Avenue between 40th and 41st Street, has been designed by renowned Italian architect Renzo Piano.

It will house the New York Times headquarters on the lower floors and a yet-to-be determined tenant on floors 29 through 52.