Just three months after the operator of the parking garages at New York's Yankee Stadium defaulted on its debt, it faces another obstacle, this time with the Internal Revenue Service.
The IRS is auditing $237.6 million of municipal bonds used to finance parking garages at Yankee Stadium, which could potentially jeopardize the bonds' tax-exempt status.
The audit was disclosed by the issuer, the New York City Industrial Development Agency, in an event notice filed with the Municipal Securities Rulemaking Board's EMMA system on July 17. The IRS is examining the civic facility revenue bonds to "determine compliance with the federal tax requirements."
In April, The Bond Buyer reported that the operator of the parking garages at Yankee Stadium, Bronx Parking Development Co., which was formed in 2007 by the Hudson, N.Y.-based Community Initiatives Development Corp., missed a $6.9 million bond interest payment, defaulting on the debt. It hired Willkie Farr & Gallagher LLP in March as bankruptcy counsel and paid $18,750 for the law firm's services. Bronx Parking will pay the bankruptcy counsel a total of $180,000 per year.
Bronx Parking used $237.6 million of bonds, issued in 2007 by the New York City Industrial Development Agency, to finance a system of nearly 9,300 parking spaces related to the construction of the new Yankee Stadium, which opened in 2009.
Recently there was a request for proposals to sublease and redevelop the two lots near Yankee Stadium, according to the Independent Budget Office, a public funded agency that provides nonpartisan information about New York City's to the public and elected officials. It's unclear how many proposals were received or when a selection will be made, the IBO said.
Bronx Parking has failed to pay New York City any of the $3.2 million in annual rent that has been due since January 2008. The parking company's payment priority is to bondholders instead of the city, according to the lease agreement.
Attendance to Yankee's ballgames have been high, but use of the actual parking garage usage is lower than expected, partially due to the high price of parking and increased use of public transit. Drivers can pay as much as $48 for valet parking at the stadium.
Roosevelt & Cross, Inc., underwrote the bonds and Hawkins, Delafield & Wood LLP was bond counsel on the transaction, according to bond documents.