On yesterday's Brian Lehrer Show, host Amy Eddings interviewed WNYC reporters Bob Hennelly and Matthew Schuerman about the efforts by Newark Mayor Cory Booker to ensure that the Prudential Center, not the Izod Center, gets state priority and thus is positioned as future home of the Nets, should the Brooklyn move fall through.
"Time might be running out for Atlantic Yards," Hennelly said in the lead-in to Schuerman's segment.
Scheurman said, "The New Jersey folks, it seems, are just positioning themselves to pick up the scraps that Brooklyn leaves behind." He noted that the Nets say they're moving to Brooklyn by 2011, but pointed out that the developer has steadily been promising a move.
"There will be a point where if they don’t complete the Brooklyn arena or get it into the ground, they may well decide to evaluate other options," he said.
There's an Internal Revenue Service deadline this December to issue tax-exempt bonds that could save Forest City Ratner $150 million, Schuerman said. (I've estimated $165 million, but all numbers are approximate.)
Not just lawsuits
Schuerman was asked what was keeping the bonds from being issued. First, lawsuits must be cleared. But even if they are, developer Bruce Ratner "might not be able to issue the bonds in this economic environment as it is. When he first bid on the MTA railyards, he submitted a letter of interest from the AMBAC corporation, saying AMBAC would back these bonds, but AMBAC has been downgraded to junk status… all the institutions he was relying on to finance the arena have really come undone, because of the banking collapse."
Well, Goldman Sachs, at least, is doing fine, and it was to issue the bonds, if not back them.
Other issues
Also during the show:
--Hennelly described how the Prudential Center works well in an urban area
--Schuerman noted that, while the Nets came in 25th in the league in announced attendance, the reported 76% ticket distribution meant likely much lower actual attendance
--Schuerman suggested Ratner could’ve accelerated the pace of the lawsuits and get them resolved more quickly.
That's not my understanding--what the developer could've done, I think, is accelerated the pace of work on properties not in litigation, while lawsuits (which have mainly have the Empire State Development Corporation as the defendant) were pending.
"Time might be running out for Atlantic Yards," Hennelly said in the lead-in to Schuerman's segment.
Scheurman said, "The New Jersey folks, it seems, are just positioning themselves to pick up the scraps that Brooklyn leaves behind." He noted that the Nets say they're moving to Brooklyn by 2011, but pointed out that the developer has steadily been promising a move.
"There will be a point where if they don’t complete the Brooklyn arena or get it into the ground, they may well decide to evaluate other options," he said.
There's an Internal Revenue Service deadline this December to issue tax-exempt bonds that could save Forest City Ratner $150 million, Schuerman said. (I've estimated $165 million, but all numbers are approximate.)
Not just lawsuits
Schuerman was asked what was keeping the bonds from being issued. First, lawsuits must be cleared. But even if they are, developer Bruce Ratner "might not be able to issue the bonds in this economic environment as it is. When he first bid on the MTA railyards, he submitted a letter of interest from the AMBAC corporation, saying AMBAC would back these bonds, but AMBAC has been downgraded to junk status… all the institutions he was relying on to finance the arena have really come undone, because of the banking collapse."
Well, Goldman Sachs, at least, is doing fine, and it was to issue the bonds, if not back them.
Other issues
Also during the show:
--Hennelly described how the Prudential Center works well in an urban area
--Schuerman noted that, while the Nets came in 25th in the league in announced attendance, the reported 76% ticket distribution meant likely much lower actual attendance
--Schuerman suggested Ratner could’ve accelerated the pace of the lawsuits and get them resolved more quickly.
That's not my understanding--what the developer could've done, I think, is accelerated the pace of work on properties not in litigation, while lawsuits (which have mainly have the Empire State Development Corporation as the defendant) were pending.
So Ambac had the mandate, did it? Would have helped to know that, since I've been spending the last two years banging on about bond insurers and Atlantic Yards.
ReplyDeleteFor what it's worth, Ambac ceased to have any relevance to the arena financing once it lost its Triple-A rating, which was January 2008. If a bond insurer doesn't have a triple-A rating, no-one wants to buy bonds that it insures. Well no-one wants to buy monoline-insured bonds much at all, but you get my point. Junk status is a big deal for uninsured corporate bonds, because a lot of institutions can't hold bonds with that rating, and they have to sell them. For bond insurers it leaves them in the embarrassing position of having a lower rating than most of the bonds they're insuring (the obvious exceptions being all those horrible structure finance bonds they were insuring, and which are the reason they're in such dire financial straits.) But it doesn't much affect existing bonds, except the small number of bonds which were also junk (the bond insurers didn't insure junk bonds, though they did insure quite a few investment-grade bonds that then became junk. I'll give you a real-life example: The Yankees, some of whose stadium bonds were insured by Ambac. The stadium bonds are now more highly-rated than Ambac, which is guaranteeing them.
There's one bond insurer left that could do the deal - FSA/Assured Guaranty (they're merging). I'm fairly certain it has less than no interest in doing the Nets bonds. But even FSA/Assured no longer has a pristine rating. I still don't see how a financing of over maybe $400 million gets done, and that gets done with the banks