More than half of the $370 million of additional bonds the New York Yankees are seeking to complete their new $1.34 billion stadium would be used to finance an expansion of the project that was not part of the original plan.
The issuer, the New York City Industrial Development Agency, won't say what the additions are yet. However, Moody's Investors Service identified them in a credit analysis in December 2007 as "revenue enhancing scope changes" that "include a banquet/conference center and other building improvements, as well as more costly audio/visual equipment, including the scoreboard and other technology enhancements."
Those additions would use $220 million of the bond issue that would include $260 million of tax-exempt bonds and $110 million of taxable bonds, New York City Economic Development Corp. spokesman David Lombino said. They reportedly also need additional enhanced security measures required by the New York City and for construction delays. The Yankees also plan to refinance $60 million of outstanding bonds.
The total is slightly higher than the $360 million that the Moody's report said the Yankees were expected to sell to complete the project. Standard & Poor's said in a credit report from December 2007 that "project costs have increased by more than 30%, mainly due to owner-directed scope modifications."
The IDA, which is an affiliate of the Economic Development Corp., sold $942.6 million of tax-exempt bonds backed by payments in lieu of taxes as well as $25 million of taxable bonds in 2006 to finance the project, which is being built by Yankee Stadium LLC, a bankruptcy remote corporation. The IDA is technically the owner of the stadium, which it is leasing to the Yankees.
The franchise is permitted to issue $100 million of "completion bonds" to finish the project, according to the official statement. They are also permitted to sell additional bonds if needed, provided that they have the same security and rating as the original 2006 issue, according to the OS. Moody's assigns the existing bonds an underlying Baa3 and Standard & Poor's assigns an underlying BBB-minus.
The IDA plans to announce this week a hearing to be scheduled next month for the additional bonds, as well as $82.3 million of tax-exempt bonds for the New York Mets to complete their new stadium.
The Yankee's project has come under increased scrutiny in recent months after U.S. Rep. Dennis Kucinich, D-Ohio, who chairs the House Oversight subcommittee on domestic policy, raised the question of whether the city had correctly assessed the value of the land and New York Assemblyman Richard Brodsky, D-Westchester, has launched an inquiry into the requests for additional financing.
The city has contributed $306.4 million of capital for parks and infrastructure spending.
The Yankees did not provide a response by press time.
