Ratner gets a last chance to fulfill Brooklyn dream.

In a decision that is likely to land it in hot legal water, the Metropolitan Transportation Authority has entered into an exclusive negotiations period with Forest City Ratner for the redevelopment of Brooklyn's Atlantic Yards.

The move is expected to result in at least one lawsuit from a local community group, Develop Don't Destroy Brooklyn, and has already upset Forest City's rival bidder, Extell Development Company.

"We are disappointed that the MTA decided to enter into an exclusive negotiating period with Forest City Ratner. They apparently are giving [Bruce Ratner] the opportunity to change his bid. We believe we should be extended the same opportunity. We are considering all of our options," the company said in a statement. "That the MTA decided to go into exclusive negotiations with Ratner, instead of negotiating with both, especially since Extell offered three times the amount of money, is unconscionable," said Daniel Goldstein, spokesman for the community activist group, Develop Don't Destroy Brooklyn.

"We are exploring all legal options--it's not a question of if, but when. It could be about the way MTA went about its business or it could most certainly be about eminent domain. We warned the MTA that there will be vigorous legal action taken which could tie up this site for years and years. They ignored that yesterday."

The 45-day negotiations period is supposed to give Ratner a chance to come up with additional funds--the MTA believes his $50 million bid falls far short of the land's estimated $214.5 million value. However, at least two members of the MTA board, Mitchell Pally and non-voting representative, Andrew Albert, reportedly feel that the agency should give Extell the chance to change its bid also. Extell has offered $150 million for the development rights.

Goldstein, said that the MTA's refusal to seriously consider Extell's bid could be grounds for a lawsuit filed against them, the Empire State Development Corporation and Ratner over the proposed use of eminent domain in the Prospect Heights section of Brooklyn.

According to real estate lawyers, Goldstein and other community activists might have a legitimate claim against the government agencies and Rather if they attempt to use eminent domain laws in a prosperous area for a project that hasn't been approved through a public review process.

Notwithstanding possible consequences, Bruce Ratner was thrilled about the MTA decision.

"We believe we submitted a very strong bid with operational and cash benefits for the MTA and the LIRR and look forward to further discussion with the MTA to provide even more benefits for the agency, transit riders and the surrounding communities," the developer said in an official statement. Forest City Ratner and Extell were the only two bidders to submit proposals for the redevelopment of the LIRR-owned tract of land located between Atlantic Avenue, Vanderbilt Avenue, Pacific Street and Carlton Avenue in Brooklyn.

However, while Bruce Ratner has long had his sights on the land, buying the Nets basketball team and hiring the renowned architect, Frank Gehry, in preparation for the project, Extell expressed interest in Atlantic Yards only last month. Its bid, submitted 24 hours before the MTA deadline, has been viewed by some as an attempt to get even with Rather for a prior business victory.

Ratner faces significant challenges in getting community support for his project, although government officials, such as Brooklyn Borough President Marty Markowitz and Mayor Michael Bloomberg, couldn't be more enthusiastic about it. Extell's bid to build a mix of apartment and community buildings at the site, as opposed to Ratner's high-rise office towers and sports arena, could have only added fuel to the fire.

However, according to Goldstein, Extell submitted its proposal so late in the game only because the MTA tried to prevent other developers from competing with Forest City Ratner.

"Their Request for Proposals gave 42 days for anyone to apply, which was not nearly enough time. They didn't advertise the RFP; the only reason Extell knew about it was because we sent out 100 letters to developers and they were the only ones who responded," Goldstein explained. "Most developers knew that everyone in government wanted Ratner."

Meanwhile, the MTA has been particularly secretive about the deal, even leaking to the press before the July 27 meeting that the Atlantic Yards decision was likely to be postponed. The agency's press office did not return calls for comment.