Skip to main content

Curious omissions of the BALDC in most press coverage of the arena bond sale

There was a curious omission in most of the press coverage of the sale Tuesday of bonds for the Atlantic Yards arena: the issuing agency, the Brooklyn Arena Local Development Corporation (BALDC), an entity that deserves a lot more scrutiny.

The press release didn't claim that Forest City made the sale, but rather announced "pricing" and omitted mention of the BALDC, which, as a government-created not-for-profit corporation, is able to issue tax-exempt bonds to save the developer well over $100 million.

(When the tax-exempt bonds were supposed to total $678 million--rather than $511 million, as it turned out--the New York City Independent Budget Office estimated the savings to the developer at $193.5 million.)

Some--as I delineate below--ignored the role of the LDC completely, while others omitted its name, perhaps taking a cue from the New York Times, which, in initial CityRoom coverage, declared that developer Bruce Ratner sold the bonds, later adding "and a local development corporation."

Precise coverage of the bond sale

Bloomberg, Brooklyn Arena Sells $511 Million in Tax-Exempt Bonds:
Brooklyn Arena Local Development Corp., the state arm created to help finance a new basketball facility in New York City, sold $511 million of tax-exempt bonds at yields lower than a comparably rated deal last week.
The Record, Atlantic Yards project developers complete bond sales:
The Atlantic Yards project developers announced Tuesday that the sale of $511 million worth of bonds had been completed, further increasing the likelihood of a New Jersey Nets move to Brooklyn in 2012.

...The bonds were sold through the state-run Brooklyn Arena Local Development Corp., with repayment through annual revenue streams such as ticket sales, luxury suite and premium seat revenues, and $10 million annually in naming rights revenue from Barclays.
Not incorrect, but with the name omitted

Field of Schemes, Nets bonds are sold, beating IRS deadline:
Any thoughts that disinterested bond buyers might yet torpedo the Brooklyn Nets arena evaporated today, as a state development corporation sold $511 million in tax-exempt bonds today for the project.
New York Post, Atlantic Yards passes funding obstacle, clearing way for Brooklyn Nets arena:
The last major hurdle to bring the New Jersey Nets to Brooklyn cleared today when developer Bruce Ratner and a state-created local development corporation were able to sell more than $500 million in tax-exempt bonds to fund the team’s new arena.
Not incorrect, but incomplete

New York Observer, Ratner Wins Bond Financing for Nets Arena:
Mr. Ratner, owner of the Nets, has successfully marketed $511 million in tax-free bonds to build the arena, clearing the largest remaining hurdle to the project. Mr. Ratner's firm, Forest City Ratner, announced the news Tuesday afternoon, saying the bonds were priced at 6.48 percent.
NY1, Investors Grab Up Brooklyn Arena Bonds:
Investors made a fast break for bonds Tuesday that will help finance the New Jersey Nets' move to Brooklyn. The $511 million worth of tax-free bonds will help pay for part of the Atlantic Yards development.
Associated Press, Bonds for new Nets arena sell well:
A developer's plan to move the New Jersey Nets to Brooklyn has gotten a boost from Wall Street.

Investors quickly bought up $511 million in tax-free bonds that went on sale Tuesday to pay for part of the much-delayed project.
Incorrect

These articles suggested that Ratner sold the bonds, rather than marketed them via the BALDC.

New York Daily News, Developer Bruce Ratner sells $511 million in tax-free bonds to pay for new Nets arena :
Developer Bruce Ratner now has most of the cash he needs to build a new Nets arena in Brooklyn.

Ratner sold $511 million in tax-free bonds to pay for the arena Tuesday, clearing a major hurdle for the centerpiece of the Atlantic Yards project.
Crain's New York Business, Atlantic Yards bonds sell for $511M:
Forest City Ratner Cos. said Tuesday that it had completed the sale of $511 million worth of bonds that will be used to construct the sports arena that is at the center of its controversial Atlantic Yards project in Brooklyn.
Brooklyn Paper, Bonds away! Ratner’s tax-free bonds are snapped up fast:
Bruce Ratner scored roughly half the money he’ll need for his Atlantic Yards arena in a matter of hours yesterday, selling out $511 million in tax-free bonds that were snapped up by investors thanks to their high interest rate and investors’ faith in the project.

Comments

Popular posts from this blog

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.