June 6, 2007
Huge deficit in tax-exempt bonds suggests Atlantic Yards delay
Atlantic Yards Report
What are the implications of Bruce Ratner's attempt to finance over half of the Atlantic Yards project through tax-exempt bonds (see AYR, "Privately financed? Court documents finally specify the housing bonds behind Atlantic Yards funding") and why are government officials and affordable housing advocates concerned?
Atlantic Yards may have been approved by the Empire State Development Corporation (ESDC) and the Public Authorities Control Board (PACB) last December, but the project faces a significant hurdle over which the agencies had no control. Nor did they apparently consider it in their deliberations.
The city and state agencies that fund affordable housing are drastically oversubscribed with developers seeking to draw on a limited pool of tax-exempt bonds. Testifying on May 24, city Housing Preservation and Development (HPD) Commissioner Shaun Donovan drew a stark picture before the House of Representatives’ Ways and Means Committee:
New York City is facing an immediate crisis in private activity bond volume cap, which we expect to deplete before the end of June. Without additional volume cap, 6,700 units of housing in our pipeline will not be built.
And those units precede the 2250 units promised for Atlantic Yards, involving $1.4 billion in bonds, a figure developer Forest City Ratner and government officials didn't reveal until after the project was approved.
Congress is considering proposals that would increase the “volume cap,” which limits the amount of bonds that can be authorized by state and city agencies around the country.
For now, a warning from Forest City Enterprises, parent of Atlantic Yards developer Forest City Ratner, grows in importance. In its latest annual report, the developer acknowledged several factors contributing to potential “increased costs and delays to the project,” including “our inability to obtain tax exempt financing or the availability of financing generally.”
In the city’s pipeline alone, there’s $1.8 billion in projects, which precede the yet-unrequested $1.4 billion for Atlantic Yards. Given the scarcity of city funding for such developments, some affordable housing supporters have begun to express dismay that Atlantic Yards would suck up a significant portion of the pool.
Posted by lumi at June 6, 2007 9:31 AM