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December 3, 2009
It came from the BONDosphere...
Atlantic Yards Report, Could Prokhorov become majority owner of the arena, too? If he buys the subordinated bonds and they fail, so it seems
Could Russian billionaire Mikhail Prokhorov control not just the majority of the Nets (of which he would buy 80%) but also the Atlantic Yards arena (of which he's slated to own a 45% stake)?
Maybe, but two not-at-all assured things have to happen: 1) he buys the riskier subordinated bonds and 2) there's not enough revenue from the project to make the bond payments.
(Remember, there would be $500 million in tax-exempt bonds, which were rated by the ratings agencies, and $146.8 million in unrated taxable bonds, likely at junk bond interest rates.)
...The upshot, though, is that the enormous state effort to get the project going--the Blight Study, the use of eminent domain, the tax-exempt bonds, etc.--could turn out to provide the most significant benefits to Russia's richest man.
Atlantic Yards Report, When it comes to tax-exempt bonds (for BALDC and WTC), the ESDC shows inconsistent transparency
The New York Liberty Development Corporation, another special-purpose subsidiary (more or less) of the Empire State Development Corporation (ESDC), is having a meeting today at 9 am (webcast) regarding $2.6 billion in tax-free bonds for the use of World Trade Center (WTC) developer Larry Silverstein.
Except the bonds were already approved yesterday. Reuters reports:
Following its "common practice," the board approved Silverstein's Liberty bonds one day before holding a public hearing on the offering, she said.
"In case there is a large amount of public testimony, then the board is asked to meet again to review the testimony and the board will deny or affirm the sale," the spokeswoman said.
Bettina Damiani, project director for Good Jobs New York, an advocacy group, criticized the state agency for not waiting until after the public had a chance to comment.
"For the corporation to approve the bonds before a public hearing is the height of hypocrisy," she said.
Compared with BALDC
That seems both worse--and better--than the process last week by which the Brooklyn Arena Local Development Corporation (BALDC) approved tax-exempt and taxable bonds for the Atlantic Yards arena.
However much the decision was preordained, the BALDC did not meet a day ahead of time. On the other hand, no testimony was allowed; it was a public meeting, not a public hearing.
The Brooklyn Paper, Bonds away! Bruce’s bond rating means sale of notes is imminent
Attention investors! Now that the key bond-rating agencies have signed off on the financing for Bruce Ratner’s Atlantic Yards arena, $500 million in tax-free notes are poised to go on the market any day now.
Yes, the bonds will be on sale any day now; whether they do sell remains to be seen.
The state must sell all the bonds before the end of the year, when new IRS rules go into effect that would bar the use of such tax-free bonds for projects such as Ratner’s.
If the developer misses the deadline, the costs to finance his project would be prohibitively expensive.
Experts said that bonds of this type will easily sell out before that deadline.
"Experts" who are not named, apparently.
Posted by eric at December 3, 2009 9:50 AM