Yankees: Citi and Nuveen ‘refuse to do what they agreed to do’
An eleventh-hour dispute between bondholders, New York City and the New York Yankees, has ruined a long-awaited, $1 billion project that would have resulted in the construction of a new professional soccer stadium, low-income housing and extensive redevelopment. One of the country’s poorest areas, Granthshala Business, has learned.
The dispute involves the nearly 5,000 parking spaces the city and bondholders agreed to give to the Yankees as part of the development project – a complex, multi-year effort to bring economic growth to the poor South Bronx neighborhood Yankee Stadium calls home. does.
The development includes a new stadium for New York City’s professional football team, New York City FC, a hotel and retail store, which is currently the home parking lot and garage for Yankee games under the team’s 2007 agreement with the city. mandatory to provide. . It will be financed with private funding arranged by a consortium that includes a housing developer and soccer team owners.
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Bonds issued in 2007 to build parking facilities have fallen into default in recent years, while parking garages owe the city millions of dollars in taxes. The consortium also agreed to pay $50 million to restructure the defaulted debt.
For years, city officials and bondholders have said they were eager to find a solution to the Yankee parking dispute and, until last week, all signs were that they had one.
But Yankee officials say the city and bondholders have backed out of a significant part of the deal, which has put the entire project on hold indefinitely and possibly forever. That deal included guaranteeing first-class parking for its fans, even if the team agreed to reduce the city’s initial 9,000-plus parking space commitment.
A term sheet providing details of the agreement between the bondholders, the city’s Economic Development Corporation (EDC) and the Yankees was reviewed by Granthshala Business.
“I am very disappointed,” said Yankee President Randy Levine, a former prosecutor and top city official under former mayor Rudy Giuliani, who was the architect of the redevelopment proposal. “It would go a long way to salvage the bonds and at the same time we were going to spend a billion dollars in private money to revive this sector that would produce thousands of well paying jobs.”
Levine said: “The deal collapsed when the bondholders and the city refused to do what they agreed to in the bond’s offer and terms sheets.”
A spokesman for New York City’s EDC said it was the Yankees who were backing down on promises made to complete the deal. She will not elaborate.
In a statement, EDC President Rachel Loeb said, “After years of negotiations with the New York Yankees and other parties, we are disappointed that they will not commit to the promises they have already made to the city and community and lead the deal.” Will try to change the conditions. A few days before the community board vote.”
A Nuveen spokesperson told Granthshala Business: “Nuveen remains committed to the transaction as stated in the term sheet and looks forward to an continued strong relationship with the Yankees and Citi.”
The breakdown of the agreement could have significant political repercussions for New York City’s next mayor, who will need to make economic redevelopment a top priority after the COVID-19 pandemic, which saw businesses close amid strict city-wide shutdowns.
Bill de Blasio, the current mayor, is stepping down next year under a mandatory term limit. It is expected that either Brooklyn Borough President Eric Adams or former New York City Sanitation Commissioner Katherine Garcia, the winner of the most recent Democratic primary, will become the next mayor in the heavily Democratic city. There is a tough fight between the two and the counting of votes is going on.
Controversy over parking for the Yankees has been a long-standing problem that began with the construction of the new Yankee Stadium in 2006. Under a deal with the city, 9,127 spaces are guaranteed to the Yankees by the nonprofit that runs the garage, the Bronx Parking Development Corp., documents show. Beginning in 2007, the company issued a loan of more than $200 million to build garages and other renovations to maintain “first-class” parking facilities for Yankee fans.
But garages are dilapidated and are nothing but first class these days. Many fans now use the nearby suburban trains and city subways to travel to Yankee Stadium. Parking bonds have been in default for years and trade at distressed levels.
The Yankees’ management, led by Levine, came up with a possible solution in 2018. Since the Yankees are part owners of NYCFC – a franchise with Major League Soccer – along with the Abu Dhabi royal family, Levine drew up an offer to finance the football stadium. Now with private money in the spaces occupied by Yankees parking. To achieve community buy-in, the Yankees teamed up with a developer to provide low-income housing, a new school, and other amenities in the neighborhood.
The document shows that as long as the parking lot was maintained, the Yankees agreed to give up their rights to 5,611 of the 9,127 spaces. Bondholders’ debt will be restructured as part of a new company.
Nuveen, which holds the majority of the bonds, will be the primary beneficiary of the $50 million payment.
The $1 billion project was expected to create thousands of jobs for a neighborhood that regularly ranks among the country’s poorest. All parties signed a term sheet, which described the city and the bondholder’s commitments to provide approximately 5,000 parking spaces for the Yankees. The neighborhood community board was expected to vote on the measure this month.
But the Yankees say the deal happened last week after the city’s EDC — the major city agency handling the deal — and NuVine also balked at a small number of parking space guarantees that the Yankees wanted in the redevelopment’s official contracts. .
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Both are said to have feared that such specific guarantees could open entities to litigation in the future and that specific “third party beneficiary rights” were never part of a deal. Yankees executives say all they were doing was codifying the guarantee in an earlier agreement, and in the term sheet, on a smaller number of blanks.
City economic development executives tell Granthshala Business they are still hopeful that a deal can be worked out that satisfies both parties and that the community board could vote on the project sometime in the fall.
But according to Levine, it appears the two sides are at an impasse over the semantics of considering the city and bondholders’ guarantees. “I tried to convince them that the company emerging from bankruptcy should guarantee these spaces because the bond issue was to provide parking for Yankee Stadium and the community,” Levine said. “It didn’t make any sense to us why the city and bondholders didn’t want to guarantee these places. They just didn’t want to guarantee what they agreed to in the past and that provides parking to Yankees fans and the community.”