Senator Perkins Raises Question of Potential Wrongdoing in $511 Million Bond Issuance by Brooklyn Arena Local Development Corporation for Nets Arena
Senator Bill Perkins, chair of the Corporations, Authorities and
Commissions Committee, is urging Governor Paterson to investigate the $511
million dollar bond issuance by the Brooklyn Arena Local Development
Corporation (BALDC) for possible wrongdoing and to halt the sale.
On December 15, 2009, the BALDC a not-for-profit corporation created by the
Job Development Authority (JDA), held a bond auction to fund the
construction of the arena component of the Atlantic Yards project.
However, the bond issuance is not valid on at least two grounds, outlined
in a letter Senator Perkins sent to the governor.
By issuing the bonds through the BALDC, the JDA (which is a unit of the
Empire State Development Corporation) avoided its statutory obligation to
receive approval from the Public Authorities Control Board and the State
Additionally, according to a recent Court of Appeals decision, the BALDC
does not have the authority to grant a property tax exemption for land
leased for the proposed Nets arena. “Consequently, payments-in-lieu of
taxes cannot be used to secure the bonds, and they are effectively
worthless. If ESDC knowingly misrepresented the legitimacy of these bonds,
this raises the specter of fraud,” Sen. Perkins writes.
“It is unacceptable that these entities would violate the public trust and
subject taxpayers to hundreds of millions in debt obligations and issue
debt outside the statutorily mandated review, especially during our current
financial crisis” argues Sen. Perkins. “I am equally concerned by the
fiction engaged in by the ESDC. Their purpose is to promote economic
development in the best interest of the people of New York, not seek murky
loopholes costing New Yorkers millions in property tax revenues from
wealthy private developers like Forest City Ratner.”
Furthermore, it appears the ESDC was in part motivated to issue the bonds
before the IRS tax exempt stadium deadline of December 31, 2009.
“Earlier this month Governor Paterson signed landmark public authority
reform legislation into law. However, it is clear that some have not
received the message. My committee will review these actions and continue
to seek transparency and accountability on behalf of the people of New
York,” Senator Perkins says.