"Curveball thrown at public with Yankee Stadium garages" Daily News 10/10/7
Curveball thrown at public with Yankee Stadium garages
Wednesday, October 10th 2007, 4:00 AM
Taxpayers got a double whammy yesterday when a city agency approved $225 million in tax exempt bonds for a nonprofit group to build parking garages for the new Yankee Stadium.
First, the city's Industrial Development Agency, which approved the project, quietly inserted new provisions that guarantee millions more in taxpayer subsidies if the garages don't make a profit, documents show.
Second, the little-known nonprofit group picked to build the garages failed to list on its city application a previous foreclosure on another upstate project financed with tax-exempt bonds.
In 2002, the city of Syracuse foreclosed on $7 million in bonds issued to the Community Initiatives Development Corporation, the Hudson, N.Y.-based group chosen to build the Yankee garages.
CIDC, a little-known organization used by some local governments around the state as a vehicle for tax-exempt financing, built an apartment complex for senior citizens with the money. When the Syracuse complex failed to produce enough revenue, that city foreclosed on the bonds.
In March of this year, in a disclosure form to New York City's Economic Development Corp., CIDC chief William Loewenstein checked "no" to the question: "Has real property in which Applicant, or Affiliate or Principal, holds or has ever held an ownership interest ... now or ever been the subject of foreclosure."
Loewenstein did not respond yesterday to a call for comment.
"We are aware of the CIDC transaction in Syracuse," a spokeswoman for EDC said. The spokeswoman said the firm's "credit-worthiness" has nothing to do with the bond issue.
"The bonds [for the parking garages] will be supported entirely by the operating revenues from this project," she said.
Well, if the financial magicians at EDC are so sure the garage project is a guaranteed money-maker - even though it has ballooned in price to nearly $300 million - why did they insert a provision in the plan at the last minute sticking taxpayers with any losses?
Don't take my word for it.
Here's what an internal memo from EDC staff says about any payments-in-lieu of taxes (PILOTS) the garage owner would normally be required to pay:
"If in any year the project cash flow is insufficient to make a full payment of PILOT, payments will be deferred with interest ...."
Same goes for the rent the parking garages are supposed to pay. Right now, the city gets $3 million a year as its share of the Yankees parking revenue.
The new garages, the ones with thousands of additional spaces, the ones that will be charging $25 per game for parking, will be required to pay $3.2 million annually in rent to the city.
But that's only after the bond service and expenses are paid.
"If in any year, the project cash flow is insufficient to pay full rent to the city," says the EDC memo, "such rents will be deferred with interest ...."
In other words, after the bondholders get theirs, after all the management fees for the garages and employee salaries and the maintenance and overhead is taken care of, then and only then will city taxpayers see a dime for all the land and financial support given to the new Yankee Stadium garages.
Here's betting we never see a nickel.
"This is another huge giveaway," a stunned senior city official said when told the details of the garage financing.
Nothing of the sort, claims Mayor Bloomberg's EDC.
"To the extent that the cash flow is not sufficient to pay those amounts in full, the unpaid portions will accrue with interest to be paid later," the agency spokeswoman said.
Try that one on your credit card company.