Sections

Bonds away! Bruce’s bond rating means sale of notes is imminent

The Brooklyn Paper
Share on TwitterTweet
Share on Facebook
Subscribe

Get our stories in your inbox, free.

Like The Brooklyn Paper on Facebook.

Attention investors! Now that the key bond-rating agencies have signed off on the financing for Bruce Ratner’s Atlantic Yards arena, $500 million in tax-free notes are poised to go on the market any day now.

On Tuesday, Moody’s and Standard and Poor’s rated the state’s tax-free bonds as Baa3 — meaning that they are as risky an investment as previous New York sports projects like Yankee Stadium and Citi Field. Still, the fact that the rating is just above junk bond status — a term all too familiar from the economic crisis — is sure to provide fodder for those opposed to the project.

The $500 million figure is significant because it reflects the still-struggling economy and the project’s current viability.

Several years ago, Ratner and his partners at the Empire State Development Corporation believed they could issue up to $900 million in bonds because the project appeared more likely turn a handsome profit, and thus pay back investors with little risk.

But the ratings agencies are more skeptical of arena projects of this nature because Ratner is going to have more trouble selling his advertising and luxury boxes. Additionally, Ratner has far less equity in the project, having sold 80 percent of the team — at a huge loss — to Russian billionaire Mikhail Prokhorov earlier this year.

Friend and foe alike of the mega-project were anxiously awaiting the rating, which is the final step before the bonds go on the market. The state must sell all the bonds before the end of the year, when new IRS rules go into effect that would bar the use of such tax-free bonds for projects such as Ratner’s.

If the developer misses the deadline, the costs to finance his project would be prohibitively expensive.

Experts said that bonds of this type will easily sell out before that deadline.

As a result, Ratner will have the $500 million raised from the bond sale, plus the city and state’s long-promised contribution of $273 million to build his hardball Xanadu at the intersection of Atlantic and Flatbush avenues.

That leaves Ratner responsible for anywhere from a few million to a few hundred million, depending on the final cost of constructing the arena, which is in the $800 million to $1 billion range.

The bond-rating announcement is yet another signal that the Atlantic Yards project is entering a new phase — one that the opposition has fought tooth and nail to avoid.

Last week, New York State’s highest court ruled that developers could legally use eminent domain to seize the property of the remaining holdouts in the Atlantic Yards’ footprint.

Updated 9:44 am, December 10, 2009: Updated to really explain this bond stuff.
Today’s news:
Share on TwitterTweet
Share on Facebook
Subscribe

Get our stories in your inbox, free.

Like The Brooklyn Paper on Facebook.

Reader Feedback

Paul from Park Slope says:
Oh, yeah, these bonds are a cinch to sell...nobody would insure them, they don't dare to issue the full amount that was OK'd by the ESDC, and the big winner could be a Russian billionaire...this is such a slam dunk...NOT!
See www.atlanticyardsreport.com for the latest
Dec. 3, 2009, 10:45 am
Peter from Clinton Hill says:
Why would anyone invest in Bruce Ratner and his basketball team? Has anyone seen their record? Worst start for a team in NBA history. It shows you how Bruce Ratner feels about his property. He buys something for show, some cheese cake to wave in front of Marty and other sports deprived Brooklynites, and then allows it to be run into the ground. Ratner's history is putting out an ugly product. Look at the examples: Dead-on-the-weekends Metrotech and Atlantic (the ugliest mall in America) Mall. Now what do we have to look forward to: the crappiest basketball team in league history, ten-plus blocks of parking lots, and a stadium shaped like an S & M fanny paddle? Brooklyn, keep backing Ratner and you can continue to be taken out behind the woodshed for a paddling.

Wake up Brooklyn!
Dec. 3, 2009, 11:47 am
Bayof from Biscay says:
Hey Peter. Atlantic Mall is dead ugly and impossible to access directly from the otherwise beautifully renovated Atlantic Avenue/Pacific Street subway station. Its pubic furniture is flimsy and its plaza shabby. Ratner's involvement doesn't bode well for aesthetics or civic grandeur. However, did not latter day Mary Bienstocks and spineless, loud mouthed, unimaginative politicos kill Gehry's sparkling arena design? Besides, Brooklyn revels in modest, self effacing public spaces----witness the new LIRR terminal.
Dec. 3, 2009, 3:24 pm
Peter from Clinton Hill says:
Bayof, If you believe that Ratner intended to keep Gehry on as the architect of this project then you bought into his bill of goods. I'm sure Ratner raised a glass the day that he cut Gehry from the project. Luckily for him he could blame the litigation and economy on his decision. Gehry initial inclusion in the project was intended to attract Brooklyn's aesthetic elites. Now it's a win-win for Ratner because he can control the property and build more of his crappy architecture. Which of Ratner's previous projects leads you to believe that he cares about architectural beauty? Please. The first chance he had he got rid of Gehry, just as he sold the Nets the first opportunity he got. He never intended to be a sports franchise owner and he never intended to build a utopia in the heart of Brooklyn. Ratner is a real estate developer. He wants to control the valuable property from the Brooklyn Bridge through Atlantic Yards. If you want to blame stuff on the opposition then you're having the wool pulled over your eyes. Keep buying the propaganda.

Wake up Brooklyn.
Dec. 3, 2009, 7:32 pm
Peter from Clinton Hill says:
p.s. I'm sick of people making Bruce Ratner out to be some kind of victim in this mess. Poor Ratner he's crying all the way to the bank. Give me a break!
Dec. 3, 2009, 7:44 pm
Jama from Brooklyn says:
What's offensive is that Ratner does commission good looking buildings in Manhattan (Beekman, New York Times tower). Yet he builds stuff like the Atlantic Mall and Metro Tech in Brooklyn.
Dec. 4, 2009, 12:33 am
Bayof from Biscay says:
True, Atlantic Terminal is ugly. Metro Tech's great sin is that it is cut off from the regurlar grid and denies that it is in the middle of an urban area. If not Ratner on this project, who else? Flimflam flake Joe Sitt? Benevolent despot Walentas? Shady, shoddy Bomilgarden? Maybe the folks who brought us Camden and Detroit?
Dec. 4, 2009, 1:45 pm
Roberto from Park Slope says:
Camden & Detroit are a far cry from Brooklyn with or without Mr. Ratner.
Dec. 7, 2009, 2:17 pm

Enter your comment below

By submitting this comment, you agree to the following terms:

You agree that you, and not BrooklynPaper.com or its affiliates, are fully responsible for the content that you post. You agree not to post any abusive, obscene, vulgar, slanderous, hateful, threatening or sexually-oriented material or any material that may violate applicable law; doing so may lead to the removal of your post and to your being permanently banned from posting to the site. You grant to BrooklynPaper.com the royalty-free, irrevocable, perpetual and fully sublicensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part world-wide and to incorporate it in other works in any form, media or technology now known or later developed.

First name
Last name
Your neighborhood
Email address
Daytime phone

Your letter must be signed and include all of the information requested above. (Only your name and neighborhood are published with the letter.) Letters should be as brief as possible; while they may discuss any topic of interest to our readers, priority will be given to letters that relate to stories covered by The Brooklyn Paper.

Letters will be edited at the sole discretion of the editor, may be published in whole or part in any media, and upon publication become the property of The Brooklyn Paper. The earlier in the week you send your letter, the better.

This week’s featured advertisers