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November 28, 2009
Picturing What Could Have Been Said If Public Officials Accepted Public Comment at the Atlantic Yards Bond Approval Meeting
Noticing New York
This past Tuesday the Brooklyn Arena Local Development Corporation (“BALDC”) met in the offices of the ESDC, the tool of developer Bruce Ratner. The purpose of the meeting was to approve the issuance of bonds.
Michael White attended the meeting and found that there was no opportunity for public comment. As a way to make his objections known, he brought a set of graphics with him that he held up in succession during the meeting.
This blog entry is a way of presenting the commentary that was not permitted by the state.
In addition to objections to a money-losing arena, there are also questions to the BALDC that should make anyone who is considering the purchase of bonds for the proposed Nets arena be wary.
There are of course many questions to be asked about why you are issuing bonds with so many tell-tale loose ends. We could ask you why, for instance you aren’t reviewing and approving the involvement of Mikhail Prokhorov as a proposed principal in this transaction?
Of all the multiple loose ends that make this so transaction dangerous, perhaps the most important to ask you about is this: Why are you financing an arena that is different from the one that the ESDC board and the PACB actually approved and which will be so much more risk for the bondholders? You are financing an arena which, among other things is so much smaller that it won’t be able to host a second team playing hockey.
Of course, you should be worrying that these bonds will default and consequently don’t deserve a good rating. A default will negatively affect the market for all New York issuers. But that is not all you should be worrying about. Moody’s has warned that the entire state is weeks away from a substantial downgrade of its credit rating if it doesn’t close its budget gap. Governor Paterson is asking the legislature to take steps to close that gap but who can take the governor seriously when on his behalf you are still pursuing this supremely wasteful financing that is driving the state into a deeper financial hole. You are responsible for the misapplication of billions of public money to Atlantic Yards.
A Goldman Sachs banker's remarks suggest that the bonds might not be very tasty.
Before the meeting we were talking with one of the Goldman Sachs bankers involved in issuing the bonds, commenting that this must be the weirdest transaction on which they had ever worked. We were told that they had worked on some pretty weird transactions. We challenged them to name one as strange or involving so many oddities. Various other transactions were named. . . and discarded as candidates. We never came up with a transaction that even marginally approached eing comparably strange. We commented that this transaction probably had within it every element of every weird deal that had been done anywhere else that strange things were going on in New York. Our banker mentioned that he sometimes tells people he does “Tutti Frutti” deals. Then he sighed, and perhaps realizing what was more apropos to this deal, he said, “Or I sometimes tell them I do `Rocky Road.’” “This,” we said certainly involves more than one scoop of “Rocky Road.” And god knows how many scoops of something else.
Posted by steve at November 28, 2009 5:38 AM