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October 21, 2008
DDDB PRESS RELEASE: Bruce Ratner's Barclays Center Arena Not Qualified for Tax-exempt Bonds Under Today's IRS Ruling
New York, New York -- The IRS today issued a long awaited decision on the regulation of triple tax-exempt bonds. Forest City Ratner’s Atlantic Yards Barclays Center Arena is reliant on $800 million in triple tax-exempt bonds.
Today’s ruling, including the rule titled “transitional rule for certain projects substantially in progress,” disqualifies the developer, Bruce Ratner, from getting these bonds for his $950 million arena.
"Ratner does not qualify for the tax-exempt bond he wants under the IRS ruling's requirements. There was no official government action on the Atlantic Yards arena prior to October 19, 2006 as required by the ruling. The project's approval was in December, 2006. There were also no 'significant expenditures' on the arena prior to the October date as required by the ruling," said Develop Don't Destroy Brooklyn spokesman Daniel Goldstein.
The IRS ruling can be downloaded at:
http://www.dddb.net/documents/IRS/IRS_REG.PDF
The relevant clauses follow:
(3) Transitional rule for certain projects substantially in progress.
Paragraph (k)(1) of this section does not apply to bonds issued for projects for which all of the following requirements are met:
(i) A governmental person (as defined in §1.141-1) took official action evidencing its preliminary approval of the project before October 19, 2006, and the plan of finance for the project in place at that time contemplated financing the project with tax-exempt bonds to be paid or secured by PILOTs.
(ii) Before October 19, 2006, significant expenditures were paid or incurred with respect to the project or a contract was entered into to pay or incur significant expenditures with respect to the project.
(iii) The bonds for the project (excluding refunding bonds) are issued on or before December 31, 2009.
Posted by eric at October 21, 2008 9:04 PM