Atlantic Yards/Pacific Park Report

According to a previously unrevealed action in September, developer Forest City Ratner could benefit from $400 million in state-authorized tax-exempt bonds for much more than the planned arena. The recently-formed Brooklyn Arena Local Development Corporation (BALDC) is prepared to authorize up to $400 million in tax-exempt bonds for Atlantic Yards infrastructure, thus allowing FCR to save tens of millions of dollars and filling a funding gap discernible in project documents. This raises significant questions: --When, if ever, would such bonds be issued? --What revenues would back bond payments? --Could the state be on the hook to pay off the bonds? --Would the bonds be used to build the new railyard? --Would the full $400 million be issued? --Why wasn't this funding mentioned in the Modified General Project Plan issued in 2006 or its update in 2009? --How could bonds be paid off in the "delayed buildout" scenario envisioned in the Technical Memorandum (p. 55) issued in J...

The news at the meeting yesterday of the Brooklyn Arena Local Development Corporation (BALDC) was not that the special-purpose LDC was going to approve bonds for the arena, but the numbers and terms surrounding the bonds. And several important aspects of the bond sale remain unresolved. (In photo from video below, BALDC President Frances Walton, at center, begins the meeting, with Robert Godley and Arana Hankin in the foreground.) While the Empire State Development Corporation (ESDC) said in a statement that it had "secured investment-grade ratings" (and thus a lower interest rate) for the arena bonds, the Bond Buyer checked with Standard & Poor's analyst Jodi Hecht, who said no public rating had been made, leading ESDC spokesman Warner Johnston to acknowledge that the ratings had been "tentatively secured." Nor has an interest rate been set. Also, the bonds do not yet have insurance, a factor that adds a significant safety factor but adds to the cost. Off...

Not only is the next Empire State Development Corporation (ESDC) meeting on November 19 , the week of November 16 is when the ESDC will be issuing bonds, including (apparently) bonds for the Atlantic Yards arena, Reuters reports : Frances Walton, chief financial officer of the Empire State Development Corporation, told reporters after a Citizens Budget Commission conference that she did not expect lawsuits filed by opponents of the multibillion dollar Atlantic Yards project would block the debt issue by a local development corporation. "The expectation is that they will be issued," she said. This would not be first time that bonds have been issued despite "legal challenges," Walton said. "We have begun discussions with ratings agencies," she said. In other words, they're not waiting for the resolution of the eminent domain case, nor do they think any other lawsuits could stymie the project. The driver is a December 31 IRS deadline. Bond buyers and the ...

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 ap...

Even as the Atlantic Yards project seems stalled, state officials have organized a local development corporation (LDC) to oversee tax-exempt bond financing for Forest City Ratner’s planned Barclays Center arena. But the odd thing about the Brooklyn Arena Local Development Corporation (BALDC) is that its scope contemplates financing for infrastructure improvements beyond the arena—a function not mentioned in the Atlantic Yards General Project Plan ( GPP ). That could help get the city and state off the hook for providing additional infrastructure while allowing Forest City Ratner favorable terms to pay for the infrastructure. Keep in mind that the GPP (excerpt at right) budgets $544.4 million on project infrastructure, while, as of now, $205 million would come from government funds, with no particular source for the rest. As the project approached approval in December 2006 by the Empire State Development Corporation (ESDC), no one--as far as I know--raised questions about full funding f...