Posted by Doug Turetsky, January 6, 2014
The deal now taking shape to score a new soccer stadium in the Bronx would bail out the bondholders of the failed Bronx Parking Development Company. But it would shut out the city from receiving any of the rent or other payments it is owed for the parking sites until 2056.
The Bronx Parking Development Company runs the system of 9,300 parking spaces in a number of lots and garages built at the behest of the Yankees as part of the deal for the new Yankee Stadium. To pave the way for the lots and garages scattered near the stadium, the city leased about 20 acres of land—including 3 acres of parkland—to the parking company, provided a $39 million direct subsidy (the state kicked in an additional $70 million), and issued $238 million in tax-exempt bonds.
The parking spots have been underutilized because of good mass transit options for getting to the ballpark and overpriced compared with nearby parking alternatives. As a result, the Bronx parking company has effectively defaulted on its bonds and failed to make any of the $3.2 million in annual rent as well as payments in lieu of taxes it owes the city since leasing the land in 2008. In need of new revenue, the company issued a request for proposals last spring to sublease and redevelop two of the sites near Yankee Stadium. Now a deal for a new soccer stadium has emerged, with a portion of the proposed 10-acre stadium site incorporating a third site leased to Bronx parking.
The New York City Football Club, a partnership of the Yankees and the Manchester City Football Club (a British Premiere League team), would pay the Bronx Parking Development Company $25 million for its part of the proposed stadium site. Under the terms of the so-called forbearance agreement between bondholders and the Bronx parking company, three new series of bonds would be issued to replace the originals as part of the restructuring of the company’s debt. No provisions are made for money owed to the city.
The lease the city signed with the Bronx parking company anticipated that revenue could fall short of needs and made debts to the city secondary to those of bondholders. The terms of the new bonds presume the city will get nothing for more than 40 years. All revenue received by Bronx parking, from the proposed soccer site as well as the parking company’s other sites, would go to bondholders. Two of the three series of new bonds would not reach maturity until 2056, meaning the city would not begin receiving lease or other payments from Bronx parking until then—foregoing about $150 million in lease revenue alone.
Even as the city would be giving up this revenue, published reports indicate taxpayers are being asked for more to support the construction of the proposed $350 million, 28,000-seat soccer stadium: tax breaks, additional public land, and more tax-exempt financing issued by the city’s Industrial Development Agency.
Whether or not the soccer stadium gets built as currently proposed, it may be decades before the city’s initial subsidy of the parking system delivers any of the expected returns to New Yorkers.