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December 14, 2009
Forest City's Longshot Bond Issue in Brooklyn
Huffington Post
By Steve Ettlinger
As that bastion of moral rectitude and good judgment, Goldman Sachs, prepares to market Forest City Enterprises' just-above-junk-rated bonds for the very controversial Atlantic Yards development in Brooklyn -- which includes the most expensive basketball arena in the country (and history, I suppose) -- I'm struck by how tenuous the whole thing is. The bonds are being issued by Brooklyn Arena Local Development Corporation.
When you think about it, you really have to wonder how Bruce Ratner has found the stamina to persist. I wondered, that is, until I saw how much profit there is to be made when the government gives you much of what most developers would have to buy themselves.
Let's see: There's the deal for acquiring the air rights to the MTA's rail yards for $100 Million less than their estimated value (at a time when the MTA is missing $200 million cash from its budget -- arrrggghh). There's the $100 Million or so that Bloomberg put in the NYC budget for land acquisition assistance. There's those wild payments instead of taxes (PILOTS) if FCE manages to sell the bonds in three weeks, saving them millions. What stinks is that the IRS found such deals so bad for us taxpayers that they've outlawed them, but not until Dec. 31, hence Ratner's rush. Those are just the obvious ones, the things that normal developers, who lack Ratner's tight links to Bloomberg and Pataki, could not easily get.
Now FCE is desperate to sell these bonds before Dec. 31, and the tension must be high considering the numerous obstacles to the successful completion of the project.
[Photo of author Steve Ettlinger at today's demonstration by Tracy Collins.]
Posted by lumi at December 14, 2009 7:47 PM