The New York City Comptroller’s Office said that the Brooklyn Bridge Park Corporation (BBPC) may be able to issue tax-exempt bonds through a conduit agency to finance capital improvements.
Advocates say the use of bonds could conceivably eliminate the need to build two residential towers uplands of Pier 6, a project that has generated much controversy.
Opponents of the Pier 6 project say that the development would place an added burden on already overcrowded streets, schools and other infrastructure. They want to use the development site for parkland instead, and envision a more inviting Atlantic Avenue entrance there.
Park officials, however, have indicated they do not intend to consider the use of bonds. They maintain that the Pier 6 development is necessary to finance park maintenance, including the park’s 13, 400 pier pilings. In July, BBPC President Regina Myer wrote that “BBP borrowing for maritime maintenance and electing to never develop Pier 6 would increase the likelihood of bankrupting the Park.”
Unlike other city parks, Brooklyn Bridge Park is required to be self-sufficient through its commercial and residential projects. A central premise of the park’s General Project Plan (GPP) is the requirement that only the amount of development necessary to support the park would be built.
The city is attempting to change the GPP, however, in order to include affordable housing – a priority of Mayor Bill de Blasio — in the Pier 6 project.
The Empire State Development Corporation (ESD) is currently considering the city’s request to modify the park’s GPP. The modification has been strenuously opposed by local community groups, officials and residents, who say it will allow development that is not financially necessary to be built in the park.
Comptroller: Could issue bonds through a ‘conduit agency’
The Comptroller looked into the possibility of the park issuing bonds following a request from local officials State Sen. Daniel Squadron, Assemblymember Jo Anne Simon and Councilmember Stephen Levin.
“Because BBPC is a New York not-for-profit corporation, it may be able to issue tax-exempt bonds through a conduit governmental agency, such as Build NYC Resource Corporation (“Build NYC”) – an arm of the NYC Economic Development Corporation – to finance park capital improvements,” First Deputy Comptroller Alaina Gilligo wrote to BBPC on Sept. 16.
The Comptroller took no position on the feasibility of the park issuing the bonds, saying that the issue requires further analysis and legal advice. (See below for the full letter.)
Park stands its ground
A BBPC spokesperson told the Brooklyn Eagle last Thursday, “We’re pleased that the Comptroller’s office has commended the transparency of our financial model, which makes clear that Brooklyn Bridge Park would be in financial dire straits within a decade without the Pier 6 project.”
The spokesperson added, “Of course, not relying on public coffers for upkeep has always been fundamental to the Park’s premise, so we appreciate that the letter did not explicitly recommend any borrowing tools to fund the park, as well as the general guidance it provided.”
Squadron, who has long opposed the Pier 6 project, expressed frustration with the park’s stance.
“It’s disappointing the park is signaling it is so unwilling to consider this letter, just as it has been unwilling to consider all the changes that have occurred over the last decade,” he told the Eagle on Wednesday.
“The Comptroller’s finding that BBPC may be able to issue tax-exempt bonds through a conduit governmental agency to finance capital improvements is an important step in finding ways to fund our park — without turning to more luxury housing inside it,” he added. “The park should give this letter actual consideration and look at the feasibility of the type of bonding the Comptroller’s office raises.”
The Brooklyn Heights Association (BHA) also expressed disappointment.
“The City Comptroller’s analysis does a great service by dispensing with the question of whether debt financing is possible. Of course it is, and it is a critical tool for financing long-term capital improvements,” Patrick Killackey, President of BHA, said on Wednesday.
“Now BBPC and the community can focus on the real issues and policy choices at stake, and this clearer picture does not appear to favor the proposal for Pier 6,” he continued. “BBPC is proposing to make a decision that we’ll live with for 100-plus years based on self-imposed constraints and uncertain projections. Normally people take out a loan rather than sell the family jewels when they face temporary cash shortfalls. Our community is not going to stand idly by as this irrational decision-making process is imposed on us and all Brooklyn Bridge Park users.”
Negative balance or excess cash?
Opponents of the Pier 6 project say the bonds could fill a financial gap until the park generates a surplus from other projects and concessions in the park.
According to BBPC’s financial report, the “baseline model without the Pier 6 development” leaves the park with a negative cash balance for 47 years, with a minimum deficit of $161.1 million.
But opponents say that BBPC’s own projections show almost $400 million in excess cash over 50 years, including the Pier 6 project. This excess – roughly $3 million a year in current dollars from FY2035 to 2065, they say — would be swept over time to the City General fund.
First Deputy Comptroller Gilligo wrote that the Comptroller’s Office is aware that other tax-exempt municipal bond offerings have been secured, in part, by PILOTS (Payments in Lieu of Taxes). For example, the Hudson Yards Infrastructure Corporation issued bonds secured by various revenues, including PILOTS.
While being careful to note that the Comptroller’s Office “takes no position on the feasibility or advisability of BBPC or BPPDC [Brooklyn Bridge Park Development Corporation] using PILOTS to secure any bond offering,” such a mechanism “could be explored,” she wrote.