Skip to comments.Bronx bid for a bad bond bailout
Posted on 10/20/2011 11:38:28 AM PDT by neverdem
If the Zuccotti kids want to protest Wall Street bailouts, they should go occupy the Yankees luxury parking garages in The Bronx. Borough President Ruben Diaz Jr. wants to give the garages private investors a fat-cat rescue at the expense of Gothams Main Street mice.
Four years ago, the Yankees wanted a souped-up parking system for their new ballpark, and Mayor Bloomberg obliged. City Hall helped a previously unknown outfit, the Bronx Parking Development Co., borrow $238 million to build and run a $300 million parking paradise on city land under a long-term lease. (The state supplied the balance of the cash.)
But the mayor didnt put the citys credit on the line. Instead, the citys Industrial Development...
But bondholders need to be taught a lesson. Its bad enough national taxpayers have too-big-to-fail banks. Local taxpayers dont need too-big-to-fail parking lots.
Bloomberg isnt blameless, either. He shouldve stopped playing these coy debt games years ago. Now, the mayors office wont say much more than to point out that the bonds arent city obligations, and that the city is working with the company to try to generate more value from the project, if possible. That value would come in the form of speeding up affordable housing at the site -- housing that needs subsidies, too.
Bloomberg should say categorically that the city wont step in with any bailout money. Theres no sense leaving bondholders room to hope when the mayor, as fiscal steward, has no choice.
The city has used the same wink-and-nod process it used for the Yankees parking to help private entities issue all kinds of debt, from $680 million for the Mets stadium to $2 billion issued by the Hudson Yards Infrastructure Corp.
The city cant bail out everyone -- so it should bail out no one.
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What do you bet the city is looking to borrow from the same bond-holders that want a bail-out? This, after all, it how public debt really works.