New York Daily News columnist Juan Gonzalez reports on an until-now overlooked piece of the proposed $350 million NYC F.C. soccer stadium deal in the Bronx, which is that it would require the city to give up its future rent payments from parking garages built for the Yankees:
Under the bailout plan approved Dec. 18 by Bronx Parking’s board of directors and the holders of its debt, the reorganized company would pay no rent until 2056 for more than 20 acres of city-owned land where its other stadium garages are located.
The Yankees garages, which received $70 million in state funding, were supposed to be paying $3.2 million a year in rent to the city (initial reports had it as $2.3 million, but the city Independent Budget Office confirms that it’s actually $3.2 million), but when the garages went all but bankrupt, city officials effectively gave up on ever collecting on its debt, given that there are a whole lot of angry bondholders in line ahead of them. So the city could argue that it’s just burning some IOUs it’s never going to collect on.
For the garage company, though, it’s still getting out from under debt, even if it’s debt it was planning on skipping out on. Gonzalez notes that the city is already owed about $50 million in back rent; the IBO, meanwhile, calculates that tallied up through 2056, the forgiven rent payments would add up to about $150 million, though in present value it’d be closer to $50 million. So if we count the forgiven garage rent as $100 million total, and add in probably another $150 million or so in tax breaks and free land for the stadium, we’re now looking at the city — if new mayor Bill de Blasio goes ahead with the deal started by his predecessor Michael Bloomberg — providing more than $250 million in subsidies for a project that only costs $350 million to build. Now where have we seen this before?