Skip to main content

Arena bonds authorization coming Tuesday: questions about transparency, PILOTs, and infrastructure spending remain

At a meeting Tuesday, the Brooklyn Arena Local Development Corporation (BALDC) surely will authorize arena bonds--which may not be sold immediately, pending the decision on the eminent domain case (which could come today, Tuesday, or next Tuesday).

Meanwhile, it's worth noting some big difference between this process and the recent process for stadium bonds. No board materials are made available before Tuesday's meeting and no public comment is permitted.

By contrast, the New York City Industrial Development Authority, which issued bonds for the new Yankees and Mets stadiums, is required to allow public comment in public hearings prior to board meetings. It also posts project materials ahead of time.

The web site states:
State law requires the NYCIDA to hold a public hearing (with notice published 30 days prior) before providing assistance. For bond transactions, this hearing will also satisfy federal law requirements.
Arena bonds

So, why the above requirements don't apply to the BALDC?

Empire State Development Corporation spokeswoman Elizabeth Mitchell responded:
IDA generally issues private activity bonds for which federal law requires a hearing. In contrast, we are issuing governmental bonds and there is no federal or state requirement for a hearing. The distinction is based on the fact that governments are already subject to a public process, in our case ESDC's prior hearings, for governmental projects. Even if BALDC was subject to the open meetings law, the law does not require that the public be offered a right to comment, only to observe and attend.
Well, the IDA may "generally" issue private activity bonds, but those are taxable. The main bonds for the Yankees and Mets stadiums are tax-exempt (see Congressional hearing testimony by Dennis Zimmerman), as would be the bonds for the Brooklyn arena. So the IDA apparently went beyond the minimum requirements.

Moreover, the ESDC's public process for Atlantic Yards didn't give people an opportunity to comment on the arena bonds themselves, given the lack of specifics about the terms and the ratings.

Size of PILOTs

One thing to keep watch on: how big will the tax-exempt arena bonds be? (There likely will be taxable bonds, as well.) While it's in developer Forest City Ratner's interest to have as much of the arena paid for via tax-exempt bonds, given the estimated (by the New York City Independent Budget Office) $193.5 million in savings, those bonds are repaid via PILOTs (payments in lieu of taxes).

Those PILOTs can't exceed the foregone property tax that would be paid if the land were not tax exempt. The New York City Department of Finance got into serious shenanigans in assessing the land for Yankee Stadium arena.

And the New York City Independent Budget Office, in September, estimated "that a typical property tax assessment would result in a PILOT that falls short of the payments needed to cover debt service in the early years of the project." So, look to the arena bonds to be tailored to respond to this concern.

Mitchell added that certain Board materials will be available at Tuesday’s meeting, but not in advance.

BALDC background

As I wrote in January 2009, The BALDC was authorized by the New York State Job Development Authority (JDA), a sibling agency of the ESDC, “to facilitate financing for the arena and certain infrastructure improvements related to the project.”

Why the JDA? “ESDC and JDA have differing statutory powers,” spokesman Warner Johnston explained. “JDA has the authority to create LDC's; ESDC is more limited.”

The BALDC is not a subsidiary of either agency; rather, the structure is similar to that of the Liberty Bonds Development Corporation. Its role will be limited to the financing of arena bonds and possibly the financing of project infrastructure.

Project infrastructure?

Will there be LDC infrastructure bond financing separate from arena bond financing? "A ‘development fee’ (similar to a rental payment) will be the source of repayment of the infrastructure bonds," ESDC's Warner Johnston said in January.

In January, I wrote that the 2006 Modified General Project Plan (MGPP) budgeted $544.4 million for project infrastructure, with $205 million coming from government funds but no particular source for the rest.

The 2009 MGPP, passed in September, budgets $717 million for project infrastructure, again with $205 million coming from government funds but no particular source for the rest. Will that gap be filled by new bonds?

Board members

The board of directors consists entirely of state officials:
I don't think we should be expecting them to ask many tough questions in public.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…