Momentum is gathering in both the House and the Senate behind bills that could bar a development firm, Forest City Ratner, from receiving federal subsidies for its proposed high-rise hub in the Atlantic Yards area in downtown Brooklyn.

The two bills come in response to a Supreme Court ruling late last month in the case of Kelo v. New London, in which the justices, on a 5-4 vote, upheld a ruling allowing state and local governments to exercise their power of eminent domain to seize private property for economic development purposes.

The bills would bar federal money from going to projects that rely on the eminent domain powers granted to cities and states under the Kelo ruling. Forest City Ratner’s plan calls for construction of an arena for professional basketball, a half-dozen skyscrapers, and about 10 other buildings in a 21-acre area.

The Ratner plan hinges on the approval of the Metropolitan Transportation Authority, which is looking to sell the 8-acre rail yard at the heart of the proposed development. Another bidder, Extell Development Company, also hopes to win control of the rail yard. Governor Pataki and Mayor Bloomberg have both endorsed Forest City Ratner’s plan. For the Forest City Ratner plan to move ahead, city and state officials would have to evict some local landowners who have declined to sell their property to the firm.

More than 90 members of Congress have signed on as co-sponsors to the House bill, which was written by a Wisconsin Republican, F. James Sensenbrenner. His position as chairman of the Judiciary Committee increases the likelihood that the legislation will be brought before the full House. In the Senate yesterday, a Republican from South Carolina, James Dement, became the 20th cosponsor of the upper chamber’s version of the legislation, which was written by a Texas Republican, John Cornyn.

The Senate Judiciary Committee could be sidetracked in the coming weeks, however, by a potentially bruising confirmation fight over President Bush’s as-yet-unnamed nominee for the Supreme Court post vacated by Justice Sandra Day O’Connor, who announced her decision to retire.

Forest City Ratner could save $76 million over three decades if it finances the Brooklyn project through tax-exempt bonds issued through an arrangement with the Empire State Development Corp. That estimate comes from the director of the city’s Independent Budget Office, Ronnie Lowenstein, who testified before a City Council committee hearing on the Ratner project in late May.

Even though federal taxpayers would effectively be subsidizing the Atlantic Yards development, and it does appear that the exercise of eminent domain will be needed to secure at least some of the land, legal experts said the Sensenbrenner and Cornyn bills, if passed, might not prevent Mr. Ratner’s firm from receiving a lucrative tax exemption.

The language of two bills refers to denying “federal funds” to projects that involve property seizures under the Kelo ruling. A law professor at Columbia University, Thomas Merrill, said: “To my mind, that conjures up the receipt of a federal grant, not a federal tax preference.”

In conversations with The New York Sun yesterday, neither House Judiciary staff members nor aides to Mr. Cornyn could say definitively whether or not the proposed legislation would prevent a developer from receiving federal tax-exempt status on a project for which eminent domain was invoked.

The House has already approved a measure that would block some federal funds from going to projects that involve the use of eminent domain powers for economic development purposes. The measure, written by a New Jersey Republican, Scott Garrett, passed earlier this month by a 231-to-189 vote as an amendment to a housing and transportation appropriations bill. But a Garrett spokesman, Eric Cullen, said yesterday the legislation would not affect tax-exempt status for developers.

Forest City Ratner is expected to seek tax breaks under the Low Income Housing Tax Credit program, an indirect federal subsidy designed to provide incentives for builders who sell 20% of units in their developments to residents earning less than half the median area income, according to the director of the Pratt Institute Center for Community and Economic Development, Brad Lander. While federal taxpayers ultimately shoulder the cost of credits, the credits are distributed by state agencies.

If Mr. Ratner and his firm lose eligibility for tax-exempt bonds and Low Income Housing credits as a result of the Sensenbrenner and Cornyn bills, “At a minimum, it would make it very difficult for him to advance the affordable housing element of his plan,” Mr. Lander said.

Forest City Ratner has pledged to build 6,000 residential units -of which about 20% would be targeted for low-income tenants and 30% for middle-income residents. The associate director of the Pratt Institute Center, Mafruza Khan, said Forest City Ratner “has historically been very aggressive and successful in getting subsidies at all levels – city, state, and federal.”

The firm drew some criticism when it applied for $400 million in Liberty Bonds to finance construction of a Midtown office tower for the New York Times Company in 2003. The tax-exempt Liberty Bonds had been designated for rebuilding efforts in the wake of the World Trade Center attacks. Forest City Ratner ultimately withdrew its application for the bonds.

Meanwhile, a City Council member whose district includes Atlantic Yards, Letitia James, and who has been an outspoken critic of the Ratner plan, told the Sun she is “encouraged” by the bills in the House and Senate and is “looking to introduce similar legislation in the City Council.” Ms. James said she is drafting the legislation with the help of a Washington-based advocacy group, the Castle Coalition.

A spokesman for Forest City Ratner, Barry Baum, said he did not know how many properties might be seized by eminent domain for the project and declined to comment on the legislation pending in Congress and on the developer’s possible plans to seek federal subsidies for the project.