Friday, March 25, 2011

Yankee Parking Garages Narrowly Avoid Default - Again. Debacle Continues

Bronx Parking Development Company's revenues are so dismal that it will most likely have to dip into its debt reserves for the second time in a year just to pay the interest on its bonds.

Results from Aggressive Yankee Parking Revenue Forecasts Promoted by the City's Economic Development Corporation (EDC) and the Bloomberg Administration Priority To Make A Deal At Any Cost Are Finally Hitting Home For Some. Bronx Parking Development Company's revenues are so dismal that it will have to dip into its debt reserves for the second time in a year just to pay the $ 6.9 interest on its bonds due April 1. Bronx Parking issued $237.6 million of municipal bonds in 2007 through New York City’s Industrial Development Agency to build three parking garages and renovate two others. Last week the debt traded at about 60 cents on the dollar. (Photo: Simmons/NY Daily News)

On top of that, the firm - a nonprofit the Bloomberg administration selected and the state subsidized to operate the stadium garages - owes the city $17 million in back rent and taxes for the 21 acres of public land it uses.

The funds were "supposed to" make up for lost city revenue Bloomberg gave away to the Yankees in their deal to build a new stadium. The City received revenue from owning the old Yankee Stadium.

"The public will never see a dime of rent and taxes from this project as it now exists," one official close to the garage company told the New York Daily News.

The company was thrown a life-line at a Monday night meeting when directors agreed to a set of demands from the bondholders in exchange for a one-year "waiver" from a complete default and takeover.

"The agreement will give BPDC and the bondholders time to evaluate potential remedies to the current shortfall," said Bloomberg head cheerleader for the project EDC's Seth Pinsky.

"Over the next year we will be in discussions with all parties involved to evaluate potential alternatives, and should those parties agree, all options will be considered."

A default could set up a seizure by bondholders and would leave the garages' future in question. For the City and the bondholders this embarrassing and potentially very costly situation could mean attempting to develop one or more of the unprofitable garages into something else.

Apparently not all that concerned about the prospect of facing community wrath over the loss of more than 25 acres of public parkland, one option that Bronx Borough President Ruben Diaz Jr. has been advocating is to tear down one of the big garages and build a new hotel.

The Bloomberg and Pataki administration fought to seize 25.3 acres of public parkland in the South Bronx in order to accommodate the building of a new stadium for the New York Yankees, including the building of thousands of additional parking spaces in the asthma capital of America. The Bloomberg administration selected Bronx Parking in 2007 to build and run the garages after the Yankees demanded a minimum of 9,000 spaces to stay in the Bronx. As predicted the Yankee organization's insistence of building more parking turned into a nightmare for the city's taxpayers and community residents. - Geoffrey Croft


The operator of parking garages at the new Yankee Stadium, whose revenue is running 40 percent below projections, will make its April 1 debt payment, according to Nuveen Asset Management, which holds about half of the bonds, according to Bloomberg.

Bronx Parking Development Co., a subsidiary of a non-profit development agency, will make the payment through a combination of operating revenue and a draw on its debt-service reserve fund, John Miller, Nuveen’s chief investment officer, said in an e-mail. According to Bronx Parking’s 2011 budget, it owes $6.9 million on April 1. The reserve fund will decline by a $5.5 million draw, according to the budget.

April 23, 2010 - Parking Lot A- (Former 2.9 acre ball field in Macombs Dam Park) No Surprise. For years critics of the Yankee Stadium redevelopment project have predicted the city's tax-payers would be on the hook for the $340 million parking garage system deal negotiated by the Bloomberg administration. A default could set up a seizure by bondholders and would leave the garages' future in question. Compounding the problem, the administration gave the Yankee organization 600 free spots in the VIP garage. (Photo: Geoffrey Croft/NYC Park Advocates) Click on Image to enlarge.

Bronx Parking issued $237.6 million of municipal bonds in 2007 through New York City’s Industrial Development Agency to build three parking garages and renovate two others at the 50,287-seat stadium, home of the New York Yankees Major League Baseball team. The stadium, which opened in 2009, was built across the street from the original ballpark.

The garages and parking lots managed by the non-profit have generated 39 percent less revenue in the first nine months of 2010 than projected, according to financial statements.

The public financing of the garages, which included $102 million from the city and state, was assailed by neighbors who said the facilities would lead to more traffic congestion and pollution in the South Bronx, while providing no benefit to the community. Labor-backed groups said the city and state shouldn’t subsidize low-wage jobs.

Subway Service

The parking garages face competition from public transportation, as most city dwellers take the subway to games. Fans who live in New York’s Westchester County or Connecticut can take theMetro-North commuter rail.

For the nine months ending Sept. 30, Bronx Parking collected $6.2 million less in revenue and sales taxes than budgeted, according to a financial statement filed on Dec. 30. Bronx Parking plans to charge $35 per car this year, compared with $23 last year.

Nuveen, based in Chicago, owned $116.5 million of the bonds as of the end of February. The debt traded March 17 at about 60 cents on the dollar, according to data compiled by Bloomberg. Bonds maturing in 2037 yield about 10.2 percent.

Bonds Attractive

In a March 18 note, Morgan Stanley said the bonds look attractive and are worth at least 80 cents on the dollar. The start-up parking system hasn’t reached its full potential, wrote Peter Block, a Morgan Stanley executive director, in fixed- income trading.

“Bonds are worth at least 80 to the extent the Yankees continue to draw consistently strong attendance as they have done historically, and Bronx Parking Development Co., the project owner, continually monitors and adjusts parking rates as needed over time,” Block wrote.

The Yankees led all Major League teams in attendance last year at 3.77 million, according to ESPN. The garages and lots have 8,428 spaces available to the public. The Yankee stadium garages had an occupancy rate of 60 percent last year, which will continue in 2011, according to Morgan Stanley.

Bronx Parking’s debt service reserve fund will shrink to $11 million from $16.6 million, according to its 2011 operating budget. The debt-service coverage ratio, or the amount of cash available to meet annual interest and principal payments, is 0.56, according to the budget.

Pricing Power

Morgan Stanley’s Block wrote that he wasn’t concerned about the draw on the debt-service reserve because 63 percent of trips to games at the stadium during weekdays are made by car and drivers have limited parking options, giving the garages “adequate” pricing power to raise rates.

To avoid a default, Bronx Parking would have to raise parking rates to $42 in 2013 and to $55 by 2016, Block wrote. The garages will have enough revenue to fully pay debt service by 2015, Block wrote.

William Loewenstein, president of the Community Initiatives Development Corp., the non-profit parent of Bronx Parking Development Co. based in Hudson, New York, about 100 miles (160 kilometers) north of the Bronx, didn’t return a call seeking comment.

Read More:

Yankee Stadium Parking Garages to Make April 1 Debt Payment, Nuveen Says

Bloomberg - March 23, 2011 - By Martin Z. Braun

New York Daily News - March 25, 2011 - By Juan Gonzalez

A Walk In The Park - March 15, 2011

A Walk In The Park - October 29, 2010

A Walk In The Park - September 10, 2010

A Walk In The Park - June 16, 2010

Field Of Schemes - June 16, 2010 - By Neil deMause

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