Ratner's Yards Bonds Rated 'Barely' Investment Grade
On the heels of last week’s eminent domain ruling, Forest City Ratner took another step towards realizing its vision for a basketball arena in Brooklyn when Moody’s Investor Service gave the $500 million in tax free bonds being used to finance the Barclays Center a crucial investment-grade rating. According to a largely positive story in…
On the heels of last week’s eminent domain ruling, Forest City Ratner took another step towards realizing its vision for a basketball arena in Brooklyn when Moody’s Investor Service gave the $500 million in tax free bonds being used to finance the Barclays Center a crucial investment-grade rating. According to a largely positive story in Crain’s yesterday afternoon, “the Baa3 rating reflects several factors, including the strength of New York City as a media market, existing sponsorship support for the team, the large amount of equity the developer and its partner are putting in the project and strong reserve funds.” And check out this quote in The Times from a vice president at Moody’s: The lawsuits are not an issue as far as the rating is concerned. The rating assumes that the lawsuits will be settled and that the project will move forward.” A more skeptical article in the New York Observer noted that while technically investement-grade, the bond rating was only one step above junk level, reflecting significant risk factors like relocation, weak team finances and “uncertain demand for premium seating.” And Atlantic Yards Report points out that the Moody’s rating assumes 225 events per year but Ratner’s on record as predicting only 200. Crain’s says that bond sales are expected to begin sometime this week.
New Nets Arena Wins Another Court Challenge [NY Times]
Moody’s Gives $500M in Nets Bonds Thumbs Up [Crain’s]
Nets Arena Wins Needed Bond Rating, Mostly [Observer]
Atlantic Yards Debt Gets Rated [The Bond Buyer]
the “small business survival act” (the ironic name for commercial rent control) will not kill NYC (it will hurt) what it will do is destroy small businesses – no LL will ever rent to any business that has under 100 employees – since such businesses are not covered by law…and if the LL is forced to rent to a small business it will charge higher rent…..essentially the Act should be named…The End of Small Business (except those that already have leases) Act.
fsrg– I’m there with you. And yes, it might be too much for Brownstoner posters to understand that tax exempt bonds don’t destroy value or cost the city money (it’s not a tax cut, it’s an abatement).
Here’s what I was trying to get at:
Not having grown up in this country, the thing that always strikes me as strange about Americans is that they’re very penny-wise and pound foolish, which is very strange to me because growing up in Europe we always thought that Americans were very big-picture oriented.
Big projects and big sweeping changes (whether an arena, investment in a train line or increased taxes in a business improvement district or the creation of a special economic zone) rarely make money on their own, but in conjunction with other things they can improve the economic standing and quality of life of an area. Everything builds on everything else, making new things possible.
The problem with AY, admittedly is that it isn’t part of a bigger vision, but my only point is that for a place like Brooklyn, a big vision is needed. It should be the great American city of the 21st century but it’s too caught up in sniping itself to death over b.s. like Bjork putting in new windows.
fsrq:
The same communists who oppose AY undoubtedly support commercial rent control. If that passes, NYC and especially Brooklyn will be finished. Property tax revenue and values will plummet.
On a side note – why are these bonds being downgraded? It isn’t due to lack of demand for housing, it is due to political uncertainty. Why would anyone risk investing in a city ruled by communists?
Ditmas – I assume you are being provacative – but it isnt evasion, since it is part of the deal – and a good one at that I might add…
While you may moan and groan about the lack of taxes AY will pay for the next 25 yrs (I believe) – the reality is that the weeds and uhaul lots that existed there before, barely paid any taxes either….so unlike the normal Goverment MO which takes the $ today and puts the tax burden on our children, our children will eventually see the tax coffers filled by the taxes from a billion dollar arena, in a place where there would otherwise be essentially zero taxes coming in. (BTW this is also how 421(a) works and why in about 10 years NYC property tax revenues will skyrocket)
> instead of paying taxes, the arena will be making bond payments
Shall we add tax evasion to the list of flaws this project contains?
havelc – are you new – here is the talking point response (even if it is totally false)
‘Yes I am embarrassed that Ratner took a organically developing neighborhood and purposely blighted it for his greedy pursuit of taxpayer money, we want the area to develop and it could have if only the city wasnt bought and sold to Bloomberg’s cronies like Ratner. ‘ blah,blah, blah blah’
long and short havelc – this subject is well past rational discussion
CG-ups – I dont care what the cost to finance is, its irrelevant to me – if the Bonds get bought, Ratner builds, if they don’t, it won’t
The Bonds are backed by the revenue of the arena – instead of paying taxes, the arena will be making bond payments – PILOTS
I know we all gripe about what to do with this space and how to pay for it… but can I just ask if anyone else is embarrassed when they drive/ walk from Flatbush/Atlantic to Prospect Park?
That stretch should be one of the proudest parts of Brooklyn as you come up to the park, yet it’s run-down and thoroughly lacking in charm and personality. It’s certainly not pre-Disneyfied West/East Village charming. It’s not even Williamsburg raggedy-chic, it’s just raggedy.
Please don’t respond with a comment of the arena is out of scale or the money is whack– I’m just talking big picture here and not about the arena specifically. At what point do you simply have to try something bold?
> Anyone know what the bonds are backed by?
I’m guessing about as much as those issued by Dubai World.
I believe the technical term is “bupkis.”