If the BALDC gets a smaller slice of the arena bond fee than the ESDC, is the bond issuance some kind of organizational shell game?
One telling footnote to the Atlantic Yards arena tax-exempt bond deal is that the Empire State Development Corporation (ESDC) gets a larger cut of the agency financing fee than the Brooklyn Arena Local Development Corporation (BALDC), which formally issued the bonds and is officially--if not practically--quite separate from the ESDC.
The ESDC received a fee of $1 million and the BALDC received a fee of $533,000, according to an ESDC spokeswoman. Some $511 million in bonds were issued.
The BALDC is a "creation" of the Job Development Authority (JDA), an alter ego of sorts of the ESDC, and critics of the deal argue that the BALDC was used to evade scrutiny by the Public Authorities Control Board (PACB), which typically would scrutinize bonds authorized by the ESDC.
Remember, ESDC General Counsel Anita Laremont, testifying at a January 5 oversight hearing, wasn't even sure she was on the board of the BALDC.
Stadium comparison
How do those fees compare to other bond issues? The closest comparison, though not a direct one, concerns new stadiums for the Yankees and the Mets. The New York City Industrial Development Authority (NYC IDA) charged developers of the stadiums both an agency financing fee and a state bond issuance fee.
I got the figures for the second round of bonds, approved last year. For the January 2009 issuance of $371 million in bonds for Yankee Stadium, the NYC IDA charged an agency financing fee of $2,042,000, plus a state bond issuance fee of $2,989,076.
For $82 million in bonds for the new Mets stadium, the NYC IDA charged an agency financing fee of $436,000 and a state bond issuance fee of $571,956.
With the arena bonds, there's no state bond issuance fee, because local development corporations are not subject to that charge, ESDC spokeswoman Elizabeth Mitchell told me.
And while direct comparisons are impossible, it appears that Atlantic Yards developer Forest City Ratner got a better deal, since the agency financing fee for the arena bonds was a lesser percentage of the total bond issue than were the fees for the stadium bonds..
Calculations
I asked Mitchell how the figure and the split were calculated and whether the sum represents a standard percentage of the total of bond issues that ESDC/JDA typically does.
"Each fee was individually negotiated, taking into account myriad considerations," Mitchell responded briefly. "The amounts were informed by other transactions, including other conduit transactions; however, no other transaction was similar enough to be used as a typical precedent."
Use of funds: "legally authorized purposes"
And how would that approximately $1.5 million be used? "The fees can be used for legally authorized purposes of the respective entities," Mitchell responded.
As far as I know, however, the BALDC doesn't have a budget.
Lingering questions
If BALDC doesn't have a budget, what will it do with the money?
Why did ESDC get a greater share of the fee?
Why didn't JDA get any of the fee?
How separate are these organizations?
The ESDC received a fee of $1 million and the BALDC received a fee of $533,000, according to an ESDC spokeswoman. Some $511 million in bonds were issued.
The BALDC is a "creation" of the Job Development Authority (JDA), an alter ego of sorts of the ESDC, and critics of the deal argue that the BALDC was used to evade scrutiny by the Public Authorities Control Board (PACB), which typically would scrutinize bonds authorized by the ESDC.
Remember, ESDC General Counsel Anita Laremont, testifying at a January 5 oversight hearing, wasn't even sure she was on the board of the BALDC.
Stadium comparison
How do those fees compare to other bond issues? The closest comparison, though not a direct one, concerns new stadiums for the Yankees and the Mets. The New York City Industrial Development Authority (NYC IDA) charged developers of the stadiums both an agency financing fee and a state bond issuance fee.
I got the figures for the second round of bonds, approved last year. For the January 2009 issuance of $371 million in bonds for Yankee Stadium, the NYC IDA charged an agency financing fee of $2,042,000, plus a state bond issuance fee of $2,989,076.
For $82 million in bonds for the new Mets stadium, the NYC IDA charged an agency financing fee of $436,000 and a state bond issuance fee of $571,956.
With the arena bonds, there's no state bond issuance fee, because local development corporations are not subject to that charge, ESDC spokeswoman Elizabeth Mitchell told me.
And while direct comparisons are impossible, it appears that Atlantic Yards developer Forest City Ratner got a better deal, since the agency financing fee for the arena bonds was a lesser percentage of the total bond issue than were the fees for the stadium bonds..
Calculations
I asked Mitchell how the figure and the split were calculated and whether the sum represents a standard percentage of the total of bond issues that ESDC/JDA typically does.
"Each fee was individually negotiated, taking into account myriad considerations," Mitchell responded briefly. "The amounts were informed by other transactions, including other conduit transactions; however, no other transaction was similar enough to be used as a typical precedent."
Use of funds: "legally authorized purposes"
And how would that approximately $1.5 million be used? "The fees can be used for legally authorized purposes of the respective entities," Mitchell responded.
As far as I know, however, the BALDC doesn't have a budget.
Lingering questions
If BALDC doesn't have a budget, what will it do with the money?
Why did ESDC get a greater share of the fee?
Why didn't JDA get any of the fee?
How separate are these organizations?
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