Yankee Stadium parking stalls out after developer shows signs that it may default on bonds
So many fans are shunning the network of 9,000 stadium parking spaces that revenue for the first half of 2010 was only $4.8 million - half of what was projected - according to a stunning financial disclosure by Bronx Parking Development.
The firm, which is independent of the Yankees and has existed for only three years, warned bondholders in an Aug. 18 letter that it currently has "insufficient funds" from operations to pay a $6.8 million interest bill due Oct. 1, and another $6.8 million due next April. And despite an additional $100 million in city and state grants it received on top of IDA bonds, Bronx Parking has failed for three years to pay its annual rent tab of $3.2 million to the city. It also has yet to pay any property taxes for the 21 acres of publicly owned land it is leasing to operate the parking system.
So why have these garages been such a fiasco? After all, the Yankees won a championship their first year in the new stadium and the team is currently exceeding its own revenue projections.
According to Bronx Parking, the garages have suffered from several unforseen problems:
- More than 800 fans are heading on game days to the Gateway Shopping Mall five blocks from the stadium, where they pay only $10 to park instead of the stiff $23 self-parking fee ($35 for valet service) at the stadium garages.
- A new Metro North station has lured many fans (about 5,000 per game) to ride the train.
- The Yankees prepaid for only 190 parking spaces this year for their season ticket holders instead of the 900 spaces they prepaid last year.
"If these garages are only at 60% of capacity after a World Series victory, you know it can only get worse from here," said one city official with direct knowledge of the project's finances. "There's just too much unused parking around the stadium."
The Bloomberg administration selected Bronx Parking in 2007 to build and run the garages after the Yankees demanded a minimum of 9,000 spaces to stay in the Bronx. The firm is subsidiary of a Hudson County nonprofit, Community Initiatives Development Corp. The parent firm defaulted on two previous bonds for projects in Syracuse and Monroe County. The firm's chief executive, William Loewenstein, did not return calls for comment. A spokesperson for the Yankees declined to talk about the garage problems.
The only way Bronx Parking will be able to meet its next two interest payments, the firm said in its letters to bondholders, is by drawing $4.5 million from a bond reserve fund. That would push the fund below its legally required level and trigger a time clock on a possible default.
One thing Yankee fans can be sure of: parking rates at the stadium will rise sharply next year.
Even with that increase, Bronx Parking does not expect to generate enough money to replenish the reserve fund, and that would mean "an event of default," its letter to bondholders said.
"The bonds are not a general obligation of the city or the IDA in any way, shape or form," said David Lombino, a spokesman for city's Economic Development Corp., and would not "necessarily affect IDA-issued bonds going forward."
Experts familiar with the stadium project are not so optimistic.
"If these bonds default, it will spook investors against any other IDA," said one lawyer involved in negotiations on the original deal.