Restructure Bronx Parking Bonds, Workout Pro Says

A financial advisor for the struggling company behind the Yankee Stadium parking garage project urged investors in $237.6 million of related bonds to accept a haircut to help keep the company out of bankruptcy.

“The outstanding bonds must be restructured to reflect the present level of cash from operations, which will require reductions in the principal amounts of the bonds,” Edward Moran, chief restructuring officer for the Bronx Parking Development Corp., said in a report to trustee U.S. Bank posted on the Municipal Securities Rulemaking Board’s EMMA site. “Unless debt service costs are lowered through a voluntary restructuring, bankruptcy will be BPDC’s only available option.”

One legal expert said bondholders should dig in. “Without questioning the veracity of the advisor or the project, this will be a tough sell to the bondholders — and it should be. This is no ordinary parking garage entity,” said Anthony Sabino, a Mineola, N.Y., trial lawyer and business professor at St. John’s University. “Far more likely it’s due to extra expenses, poor cash management and a host other possibilities far better addressed by revamping the business, and certainly not by asking the bondholders to suffer for someone else’s mistakes. If I was a bondholder, I’d say, ‘No, you fix it from your end first.’ ”

In May, bondholders retained former New York City Mayor Rudolph Giuliani’s firm, Bracewell & Giuliani LLP, to negotiate a restructuring of the tax-free unrated and uninsured civic facility revenue bonds, which conduit New York City Industrial Development Agency issued in 2007. Neither the city nor the IDA are on the hook for the bonds,

The bondholders gave Bronx Parking 45 days to devise a repayment plan or be declared in default.

Bronx Parking, which is not affiliated with the New York Yankees baseball team, used the funds to build parking garages with 9,000 spaces near the site of the new Yankee Stadium in the South Bronx, which opened in 2009. The Yankees had demanded 9,000 spaces during their negotiations with the city for the new ballpark.

But the company, which nonprofit parent Community Initiatives Development Corp. of Hudson, N.Y., founded in 2007, has struggled. Revenue at the garages has underperformed, with lot capacity at about 40%, even during Yankee home games, prompting debt service reserve fund withdrawals and worries about a payment default by year’s end.

Additionally, Bronx Parking owes the city an estimated $25 million in back taxes for the garages, which consume 21 acres of leased public property.

The high cost of parking on game days — $35 for self-park, $48 for valet — has deterred many baseball fans from using the garage. Furthermore, the addition of a Metro-North Railroad station near the stadium and available parking at the new Gateway Center shopping mall nearby have cut into Bronx Parking’s revenue.

Moran urged an overhaul of Bronx Parking’s corporate structure. It “needs a dedicated manager and accounting person to control its operations,” he said, suggesting replacing CIDC and reorganizing its board of directors.

Messages seeking comment were left with CIDC’s attorney, Steven Polivy of New York’s Akerman Senterfitt LLC.

Moran also recommended coordinating marketing programs with the Yankees and possible revenue-sharing initiatives that might enhance a transition to a taxable entity.

Robert Boland, a sports management professor at New York University’s Tisch Center, said the project should eventually cover its debt, even if it involves a restructuring.

“There are some macroeconomic concerns, such as debt service, the economy and the cost of parking, but the salient takeaway from this project is that conditions under which sports stadiums are built and operated are subject to change and this is a long-term relationship,” he said.

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