An unusual meeting Monday of the Brooklyn Arena Local Development Corporation: arena bond refinancing, plus first taxable bonds
The purpose, not announced in the meeting notice but in a later-issued agenda (bottom), is to take various corporate actions, including the reissuing of tax-exempt bonds at today's lower interest rates, and the first-ever issuance of taxable arena bonds. The board will also take other actions, including hiring lawyers and adopting various policies.
The notion of refunding bonds means refinancing at a lower interest rate, or to change other terms. It's not an uncommon thing.
This refunding of bonds will benefit the arena operator, Mikhail Prokhorov's Onexim, which must pay off arena financing via those tax-exempt bonds--the payments in lieu of taxes (PILOTs) go not to public agencies but to pay off investors.
The board also will approve "Series 2016B Federally Taxable" bonds, which would be completely new. While the arena operators once contemplated such bonds, the interest rates were much higher, and presumably the rating would have been junk. Instead, Prokhorov--then the minority partner in the arena operating company--issued a loan. Presumably now taxable bonds would have a lower interest rate than contemplated in 2009.
First meeting in a while
It's the first public meeting, as far as I can tell, since November 2009, though it's possible that resolutions have been passed, as in 2009, without a public meeting.
RSVPs are due today--see below--though it also will be webcast. No agenda is available yet, though it may surface by the end of the business day.
The BALDC, which has no staff or budget, is a creation of an Empire State Development alter ego/affiliate, the Job Development Authority, or JDA, but is essentially an ESD alter ego. The use of the BALDC meant the bonds avoided the scrutiny of the Public Authorities Control Board.
There was a bizarre, aborted investor update call in February 2012, which was organized not by the BALDC but by Goldman, Sachs. Since then, public silence.
The press release
Yesterday came a surprising press release from Empire State Development, the state authority that oversees/shepherds Atlantic Yards/Pacific Park:
** MEDIA ADVISORY **
What: A meeting of the Directors of the Brooklyn Arena Local Development Corporation, a local development corporation created under New York State law.
When: Monday, August 8, 2016, at 11:00 a.m.
Where: Empire State Development
633 Third Avenue – 37th Floor Conference Room New York, New York 10017
With Video Conferencing to:
Stony Brook University Javits Building Administration Room 223 Stony Brook, NY 11794-1002
This meeting is open to the public.
To view the meeting online, please visit: http://www.esd.ny.gov/webcasts.
Due to 633 Third Avenue and Stony Brook University building procedures, those attending in New York City and Stony Brook must RSVP by 5:00 p.m. on Friday, August 5, 2016.
RSVP press line (800) 260-7313; RSVP NYC public line (212) 803-3766; RSVP Stony Brook public line (631) 632-6421.