Monday, December 21, 2009
Atlantic Yards bonds may be issued illegally
From Atlantic Yards Report:
The issue was unearthed by Amy Lavine, a staff attorney at the Albany Law School's Government Law Center who has been studying public authorities.
Typically, public authorities have to get their bonds approved by the Public Authorities Control Board--the governor, Senate Majority Leader, and Assembly Speaker hold the controlling votes--and the state Comptroller.
The BALDC [Brooklyn Arena Local Development Corporation] was authorized under § 1411 of the Not-For-Profit Corporation Law. The PACB approves the financing and construction of any project proposed by the ESDC or the sibling Job Development Authority, which created the BALDC.
"ESDC apparently did not want to go through this process," she said, and thus it created the BALDC, to which it will lease the arena land. The BALDC in turn will lease the land to the private company that will manage the arena.
The ESDC, she said, does have the authority to issue bonds, but "by skirting the process that's supposed to be followed, it seems that the bonds may have been issued illegally."
"Basically, the LDC is not a public entity," she said. "And it's controlled by different sections of the tax code in New York State. Either ESDC didn't think of the implications of this or they didn't think anyone would notice, because it is rather esoteric. It seems that, under the tax section that applies to the LDC, they're not eligible for exemption from property taxes." (The LDC is subject to §420-a of the property tax code.)
And if they're not exempt from property taxes, she said, there's no way to divert property taxes to pay for the arena bonds, via PILOTs (payments in lieu of taxes), and so nothing backing the bonds.
"To go forward, I believe that the process has to start over and ESDC will have to do this properly and get it reviewed by the Public Authorities Control Board and the state Comptroller," she said.
And that means they'd have to review the financial merits of the bonds, which hasn't happened, she said.
I'd add that the BALDC was also apparently set up to ensure that the bonds would be issued before the end of the year, beating a December 31 deadline, after which the arena would not have been eligible for such bonds.
(Yet the MTA is expected to close on this tomorrow.)
State Senator Perkins (D- Harlem), Chair of the Senate Committee on Corporations, Authorities and Commissions, sent a letter to Governor Paterson on Friday explaining the legal concerns, which the Senator described as "raising the spectre of fraud," and rendering the bonds "effectively worthless."
Senator Perkins said at a Saturday community meeting confronting eminent domain abuse that he spoke to the governor's counsel, Peter Kiernan, who was taking the matter seriously. He asked that the Governor halt reportedly imminent closing on Atlantic Yards project agreements. He said that if the state did not respond, legal action would be considered.
Wow, so if I am reading this correctly, this entire project may get derailed because the state fucked up on a technicality. Six years of court battles, buying up land and demolishing a neighborhood because they thought they had it in the bag when in fact what was being pushed was illegal. Nice work! How much did this folly cost the taxpayers of New York State?
Time to BRING IN THE FEDS.
Using this as evidence, we can also speculate why Claire's LDC was formed by the EDC. I kind of thought the agenda didn't stop with sending the old battle axe out there to lobby her fellow tweeders to simply vote "yes" on the Willets Point project...