Daily News columnist Juan Gonzalez has this to say today about the $237 million in tax-exempt debt behind the overly luxurious parking “system” near Yankee Stadium in the Bronx:

If [the garage defaults], the Bloomberg administration faces the biggest default of a tax-exempt bond in this city since the 1970s. The mayor’s people downplay the problem, saying the city is not directly on the hook for these bonds, and bondholders will just have to eat some losses.

Such claims ignore that City Hall, as part of a deal with the Yankees for a new stadium, fostered the creation of Bronx Parking Development because team execs wanted a 9,000-space garage system.

That’s why members of the city’s Economic Development Corp., the Parks Department and the Bronx borough president’s office sit on the garage company’s board of directors.

Gonzalez further states that Ruben Diaz, the Bronx Borough President, “wants Bloomberg to come up with a rescue plan that helps [Bronx] residents and bondholders,” perhaps with the city paying the bondholders off, taking possession of the garage, and building something else.

Hmmm. New York City bondholders should absolutely not be on the hook for bondholder losses related to the garage.

Bondholders may whine that the city put its moral support behind this project. As Gonzalez reminds us, former deputy mayor Dan Doctoroff told city council members five years ago that the parking “system” would all but print its own money.

Yet bondholders should have known that the debt carried no explicit government guarantee. Rather on rely on crony capitalism, they should have done their due diligence — which would have illustrated that the parking garage’s owners had little hope of wringing $23 from game-goers when there’s plenty of cheap space nearby in store lots. (The owners have since hiked the price to $35, but succeeded only in driving a few more of their scarce customers away; imagine that.)

If it makes sense for the lenders of the parking “system” to foreclose and sell the property at auction, then the lenders should do it — and take their warranted losses in the meanwhile. The city, of course, is free to purchase the written-down property at auction, if it feels the need to control yet more real estate in New York.

But City Hall should head off any attempt by Bronx pols to exercise a bondholder bailout in the guise of another government-subsidized community development project.

Tags:

You may also like

A glimpse into slush guidelines

New York State’s $1 billion capital project slush fund is dispensing borrowed money across the state outside public scrutiny, but two local governments have inadvertently given New Yorkers a glimpse of its inner workings. Read More

“Smart” sounded good to 62%

Who could be against “smart schools”? The unsurprising answer: not nearly enough New Yorkers to defeat Proposal 3 on yesterday’s statewide ballot, which authorizes $2 billion in state borrowing to finance local school district purchases of computers and other classroom technology; expand schools’ high-speed and wireless Internet capacity; install “high-tech security features”; and build new classrooms for pre-kindergarten programs. Read More

Google guy to weigh in on school tech funds?

Eric Schmidt, executive chairman of Google, has been named by Governor Cuomo to a commission “charged with advising the State on how to best invest the Governor’s proposed $2 billion Smart Schools Bond Act in order to enhance teaching and learning through technology,” as announced by the governor’s office today.* Read More

Oink!

New York’s newly enacted state budget includes what looks like the biggest, juiciest capital pork pie Albany has cooked up since before the Great Recession. The State and Municipal Facilities Program first popped out of the budget oven last year in the form of a $385 million appropriation, of which $26.65 million was spent. Read More

Pensions, infrastructure and Albany billboards

The Cuomo administration reportedly is talking with labor leaders about tapping public and private pension funds to help pay for state infrastructure projects, including a multi-billion-dollar replacement for the Tappan Zee Bridge... Read More

Record new state borrowing proposed

Key state lawmakers are introducing what would be the largest state bond issue in New York’s history — a $5 billion environmental bond act. Read More

Still more backpedaling on arbitration

The ink was barely dry on Governor Andrew Cuomo’s local government “restructuring” bill yesterday when the governor made two more concessions to unions on the issue of binding arbitration. Read More

Take the A train – updated

The good news is that despite increasing pressure on both revenues and expenses, Standard and Poor’s has affirmed the Metropolitan Transportation Authority’s “A” rating, with a stable outlook. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!