Friday, December 04, 2009

Updated again: Is the city kicking in an extra $31 million for property acquisition? Yes

Update: "The $131 million referenced is part of the total original commitment (not new money) and will go to FCR for site acquisition and infrastructure work," says New York City Economic Development Corporation spokesman David Lombino.

Updated 1/25/10: It's all for land.

The below was written earlier on 12/4/09.

Has New York City contributed an additional $31 million subsidy for Atlantic Yards land? While I haven't been able to get an answer from city or state officials, language in bond documents is ambiguous but suggests that conclusion.

According to the Barclays Center Preliminary Official Statement (p. 563) prepared by Goldman Sachs:
City Capital Contribution – The City will make a capital contribution to the project through the appropriation of City funds from the City’s fiscal budget, totaling approximately $131 million, for certain costs incurred and to be incurred in connection with acquisition of the Premises by ESDC [Empire State Development Corporation].
For the acquisition of project land, the city has allocated $100 million, not $131 million. See for example the ESDC's 2009 Modified General Project Plan:
The City is also expected to fund $100 million of Project costs. City funds may be used for infrastructure improvements and for site acquisition costs related to the Project Site (other than for the acquisition of properties owned by the MTA/LIRR).
In other words, while the city has also allocated $105 million for infrastructure, it does not look like that any of that is being used for land acquisition.

More on the $131 million

The Official Statement refers to the New York City Economic Development Corporation (NYCEDC). It also makes a distinction between the initial $100 million, of which $15 million remains to be disbursed, and the additional $31 million. Only the former is subject to the City Funding Agreement.
The City’s capital contribution for the Arena Project, in the aggregate amount of $131 million, will be made available to NYCEDC for transfer to ESDC and disbursement to the Developer upon the satisfaction of certain conditions. As of the date of this Official Statement, NYCEDC has disbursed approximately $85 million of the City Funding Portion, which amount has been disbursed to the Developer by ESDC. The funding and disbursement of the remaining City Funding Portion is subject to the satisfaction of certain requirements which include, without limitation, satisfying eligibility requirements for the types of expenditures requested for reimbursement. ESDC’s obligation to disburse any City Funding Portion is conditioned upon, and subject to, ESDC receiving the amount of such City Funding Portion from NYCEDC pursuant to the City Funding Agreement; accordingly, ESDC will be under no obligation to disburse any part of the City Funding Portion to the Developer except when, and to the extent that, funds for such disbursement have been released and made available to ESDC by NYCEDC. In addition, the funding and disbursement of $15 million of the City Funding Portion is also subject to the satisfaction of certain requirements set forth in the City Funding Agreement, including, without limitation, certification to the effect that at least $100 million of Total Project Costs have been or will be incurred on or prior to the Funding Date during the Third Contribution Period. The funding and disbursement of the remaining $31 million of the City Funding Portion is also subject, without limitation, to the occurrence of the later of the issuance of the Series 2009 PILOT Bonds and the filing of a condemnation petition by ESDC.
(Emphases added)

2 comments:

  1. Norman,
    The bottom line is that this additional $31 million is money that was never confirmed before you discovered it. Correct?

    ReplyDelete
  2. It's unclear.

    I don't think "certain costs incurred and to be incurred in connection with acquisition of the Premises" signals spending on infrastructure.

    But Lombino is saying that it does.

    ReplyDelete