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MTA report updated; note that Forest City Ratner's arena financing drives deal timing; questions about FCE's credit rating raised

I've updated yesterday's report on the Metropolitan Transportation Authority (MTA) Finance Committee meeting with some key verbatim quotes, including this exchange on the timing of the deal. (And here's more from Michael D.D. White's Noticing New York.)

Board member Doreen Frasca said, "This is just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," MTA Chief Financial Officer Gary Dellaverson responded. "It's entirely at the board's discretion to accept or reject or send back to the negotiating table... I think that, in terms of why must it be now in the summer versus in the fall, I think it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]. If the structure... is not such that allows for the marketability of the bonds, then the financial aspect of the transaction, as it relates to arena construction expenses that Forest City Ratner would incur, become less viable and perhaps not viable. That's not something that I'm prepared to say from my own knowledge... but I would be remiss if I suggested anything other--that's the principal driver of the timing."

"The arena?" Frasca followed up.

"Sure," Dellaverson responded.

Reliability of FCE

Frasca followed up: "Forest City Enterprises, the parent, do they have a public [credit] rating?

"They do," Dellaverson responded, but couldn't immediately provide an answer.

"I'll look it up," Frasca said.

(In December, Moody's identified the rating as B1, which is considered speculative grade rather than investment grade.)