Bondholders of Yankee Stadium Garage Bonds Get Extra Innings
The April 1 deadline for the Bronx Parking Development Corporation to get its act together is no prank. Thanks to a glut of parking space at the new – subsidized to the hilt - Yankee Stadium, the parking garages, also subsidized to the hilt, have gone so unused the owners are struggling to pay its bondholders. It was widely reported that the $237 million in private activity bonds to finance the garage were going to default at the end of next week. However, today Juan Gonzalez at the Daily News reports that directors at the firm agreed to dip into its debt reserves (again) to pay the bondholders as well changes to its operations, like getting approval for expenses from an appointee chosen by the bondholders.
We can’t say New Yorkers didn’t see this coming.
In 2007 the New York City Industrial Development Agency (IDA) allocated the bonds to a non-profit organization, the Bronx Community Initiatives Development Corporation. Needless to say, alarms sounded from many residents, community and environmental groups. First, there were too many parking spaces for a stadium (smaller than the original) that has exceptional access to the city’s subway system. Second, the city and state had invested in a new Yankee Stadium station for the Metro North (a commuter railroad) to help give suburbanites access to games. Thirdly, at about the same time, Gateway Mall (also subsidized) opened next to the stadium with cheaper parking than what is charged at the stadium. The plan to make the project profitable in the coming years is to raise parking rates. But, charging more for parking sounds counter intuitive since it might encourage fans to park at Gateway Mall or to take public transportation, (which could be a silver lining in a neighborhood with some of the highest asthma rates in the city).
Aside from these obvious reasons why the Yankee Garages was an outlandish public investment, the choice of a non-profit entity, Bronx Parking Development Company, to develop and operate the garages seemed peculiar. As GJNY cited in a 2007 report on the project:
“BCIDC is not a Bronx organization nor can it be said to have been initiated by the community. Instead, it is a “special purpose” limited liability company whose sole member is a national entity, the non-profit Community Initiatives Development Corporation (CIDC). CIDC works in multiple states and exists to secure tax exempt financing for a variety of developments, a small portion of which are parking garages. CIDC is headquartered in Hudson, New York over 100 miles north of the stadium and apparently it has never worked in the Bronx before.”
Making matters worse, CIDC had a mediocre track record. For example, the Syracuse IDA issued bonds for CIDC to develop a senior citizen housing development but the project defaulted on its mortgage, and a year after it opened, the project got a new owner.
Now the question on people’s minds is what should be done with the underused parking spaces? Park advocates and some residents want part of their parkland returned (the Yankee Stadium project removed about 24 acres of natural public parks). Borough President Ruben Diaz, Jr., (not in that office when the project was negotiated), is pitching the idea of a hotel. However these discussions proceed, we hope the public process for returning the land to the public is more accountable than the one that took it away.