September 6, 2008
Nets bonds to launch in November
Goldman Sachs is close to launching an $800 million bond issue for the Nets basketball team's new arena, the Barclays Arena, in Brooklyn, New York. According to sources close to the financing, the underwriter is now in the process of having the project rated, and expects the financing to be in place by the end of November 2008. The new 850,000 square foot arena will be part of a larger residential and retail complex at Flatbush and Atlantic Avenues, called Atlantic Yards, for which total expected investment is around $4 billion, and for which the developer is Forest City Ratner. The New Jersey Nets plan to relocate from Meadowlands Stadium in East Rutherford, New Jersey, and would then be known as the Brooklyn Nets.
Atlantic Yards Report sees more questions than answers in this "one-paragraph squib:"
For one, how easy is it to rate bonds for risk when major lawsuits remain outstanding?
The next question is whether the bonds will be tax-exempt or taxable. The assumption would be that he developer would prefer tax-exempt.
However, the strategy under which the Empire State Development Corporation (ESDC) and developer Forest City Ratner seek tax-exempt bonds for the Atlantic Yards arena has been acknowledged by the chief counsel of the Internal Revenue Service (IRS) as a “loophole” the agency moved quickly to eliminate.
Also, Rep. Dennis Kucinich (D-OH), who chairs the Domestic Policy Subcommittee of the House Committee on Oversight and Reform, has asked the IRS and Treasury Department to desist from approving any more sports facility deals based on payments-in-lieu-of-taxes, or PILOTs, pending further clarification of their policies.
Does Goldman Sachs believe that the IRS and Treasury Department will have clarified their policies by then?
Posted by amy at September 6, 2008 2:27 PM