After years of controversy, the Atlantic Yards basketball arena project in Brooklyn yesterday received board approval to issue bonds next month and won a major lawsuit that sought to overturn New York State’s use of eminent domain.

The Brooklyn Arena Local Development Corp., a subsidiary of the Empire State Development Corp., yesterday approved the issuance of up tp $825 million of tax-exempt bonds backed by payments in lieu of taxes and taxable bonds to finance the construction of a basketball arena on behalf of developer Forest City Ratner Cos.

The corporation expects to sell roughly $650 million of tax-exempt PILOT bonds and $150 million of taxable rental bonds to finance the arena for the National Basketball Association’s Nets, who currently play in New Jersey. The final amount of issuance could be greater or smaller. A preliminary official statement and preliminary offering memorandum are expected to be released on Tuesday and the deal could price the week of Dec. 7.

The developer needs to sell the bonds before the end of the year or lose the ability to issue tax-exempt PILOT bonds for the project due to changes to  Internal Revenue Service rules.

Gregory Carey, managing director for Goldman, Sachs, & Co., the underwriter on the deal, said the firm would make a marketing push next week to bond funds that had bought PILOT bonds sold in recent years to finance the construction new  baseball stadiums in New York City for the Yankees and Mets.

“We’re planning on going on a roadshow to go around the country,” Carey said. “The targeted investors are the main buyers of New York paper ... it’s mostly going to be the bond funds — the Nuveens, the Rochesters, the Franklin Funds, the PIMCOs of the world — who will be the targeted base investors for a transaction like this.”

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is bond counsel.

The ESDC will own the land and arena and lease it to the local development corporation, which will in turn lease it to a subsidiary of Forest City Ratner. The developer’s subsidiary will make PILOTs and rental payments to a trustee. Those payments are security for the bonds and are subject to a 37-year lease between the issuer and the ESDC. The structure of the bonds was not available yesterday and a decision to use insurance could be made by the end of next week.

A spokeswoman for Assured Guaranty Corp. and Assured Guaranty Municipal Corp. said they were reviewing the deal.

The ESDC said in a statement that they had “secured investment-grade ratings” for the arena bonds. However Standard & Poor’s analyst Jodi Hecht said the agency did not have a public rating on the deal. ESDC spokesman Warner Johnston later said in an e-mail that ratings had been “tentatively secured.”

The ESDC declined to release projections for the revenue that will back the bonds. The arena will is one piece of a larger $5 billion development planned on the 22-acre site that will primarily consist of high-rise apartment towers.

The New York State Court of Appeals, the state’s highest court, yesterday upheld a lower court ruling that the state had the right to seize property on behalf of the private developer. Other suits are still pending and the bond proceeds will be held in escrow for up to one year after which they would be used to redeem the outstanding bonds if the developer has not secured possession of the land for the arena.

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