The Yankees are playing hardball with a Bronx parking lot operator that’s failed to pay millions owed to taxpayers — charging the company is effectively obstructing big plans for a soccer stadium and affordable housing.
The Parks Department is threatening to terminate its lease with Bronx Parking Development Company LLC over the outfit’s defaults on $237 million in bonds issued in 2007 by the city Industrial Development Agency, documents show.
Meanwhile, Yankees officials contend the company is stalling a move that could help pull it out of the red: a deal that includes razing a four-level parking structure on 153rd Street to make way for a 25,000-seat soccer stadium for NYCFC. The plan also would provide for 2,000 units of affordable housing nearby, in the heart of the South Bronx.
Geoffrey Croft, president of NYC Park Advocates, said the current conflicts stem from overly generous deals surrounding the construction of the new Yankee Stadium, which opened in 2009.
“It’s a disgrace, and it’s only going to get worse, and it was known from Day One,” he said.
Since launching in early 2015, NYCFC has been playing its home games at Yankee Stadium. The possibility of a soccer stadium next door to the ballpark has been percolating since 2013, fueled by funds from the NYCFC’s Abu Dhabi royal family owner.
Ownership of parent company City Football Group later diversified to include minority stakes from a Chinese consortium and technology investment firm, according to the company.
But obstacles stand in the way.
Long Off Goals
One is the need to relocate an elevator parts factory, GAL Manufacturing, adjoining the parking lot where the stadium would sit, just south of Macombs Dam Park.
Another, the Yankees charged in a letter to the bank that serves as trustee for the IDA bondholders, is that the parking lot company won’t play ball.
In the July 20 letter to the president of US Bank, Yankees attorney Michael Mellis complained of dilapidated conditions and security lapses at the 11 sprawling lots and parking structures, which hold nearly 9,300 spaces.
The parking company “has materially failed on all counts” on its obligations to maintain its lots in a “safe, secure, clean and reputable manner,” Mellis wrote. Among the problems cited: poor lighting, out-of-order elevators, dirty surfaces and vermin running wild.
The Yankees lawyer wrote that the ballclub will not give its needed consent for the soccer stadium deal until the parking company cleans up its act. Bronx Parking Development Company “also has effectively brought the Project to a standstill,” Mellis charged, without providing specifics.
In February, Brad Sims, the president of NYCFC, announced to fans that the soccer club was partnering with the real estate developer MADDD Equities on the project that would bring 2,000 units of affordable housing to the South Bronx. In October, he told YES Network that the soccer club was optimistic about the team’s progress, noting the most important part would be working with local leaders and the community.
“We feel that not just the stadium, but the overall project that we’re going to be working on is something that’s going to be transformational for the South Bronx,” Sims said.
During a visit last week to the 153rd Street parking structure, THE CITY spotted rows of black for-hire vehicles parked near an overflowing trash bin. Concrete debris was scattered on a stairwell.
A red sign lists parking rates: $13.59 for up to three hours, $40.77 for events and $390.60 for a month.
Neither the Yankees, Bronx Parking, NYCFC nor the attorney for US Bank responded to THE CITY’s inquiries. US Bank declined to comment.
Taxpayers Owed Millions
The parking woes, observers say, are the product of too many spaces set aside for a 50,000-seat baseball stadium reachable by subway and Metro-North.
The Yankees aren’t on the hook for the parking structures, but the team reportedly demanded 2,000 additional spots as a condition for remaining in The Bronx. Local watchdogs had warned the spaces wouldn’t get filled.
Documents suggest the parking lots have turned into an expensive mess, a combination of a lack of customers and complicated bond deals that have put the company $133 million in debt to taxpayers.
City Parks Commissioner Mitchell Silver fired off a letter earlier this year to Bronx Parking executive Charles Lesnick citing the company’s bond defaults grounds to potentially terminate the lease. A deal that allowed leeway to repay bondholders expired at the end of 2019, the letter notes.
Financial disclosures released to bondholders last month show $99 million in rent and payments in lieu of taxes owed to the city from the parking company over the lifetime of the bonds, along with $34 million in interest on debts unpaid so far.
Under the bond deal’s terms, any buyout or restructuring of the debt will still put bondholders first in line to be paid, the city Independent Budget Office noted when the bonds first went into default in 2013.
“The pandemic has made the restructuring worse, but it was already a bad situation,” said Matt Fabian, a bond analyst for Municipal Market Analytics, which keeps tabs on troubled bonds.
The operation ran at a $30 million loss in 2019 alone, the new records show, bringing in just $14 million in payments from Yankees fans and other customers even while baseball, soccer and The Bronx were thriving in pre-pandemic times.
The losses bring the troubled parking venture $162 million into the red, the financial disclosures indicate.
“At some point they’re likely going to have to refinance all the debt, restructure,” Fabian said. “Bondholders will end up taking some sort of loss.”
The city Department of Parks and Recreation, owner of the parking-lot property, referred questions from THE CITY to the New York City Economic Development Corporation, which has been working to bring the city’s first Major League Soccer stadium to part of the property.
The unpaid lease remains in effect, according to EDC.
According to the most recent update from EDC on enforcement actions against firms it has deals with, “The Company is in negotiations with representatives of the holders of the majority of bonds on the terms of a restructuring agreement.”
‘We’ve Not Seen Anything’
In February, when the New York Times reported that a deal was ripening between EDC and the NYCFC soccer team’s owners, EDC signaled that it would do local outreach with Bronx residents and others before formalizing any stadium pact.
“A deal has not been reached, and more conversations are needed,” the statement said. “We are hopeful for a future where these lots can better serve the community. The first step toward achieving that is engaging the community on their needs and vision for this area.”
City lobbying records show that the owners have been represented in discussions with EDC President and CEO James Patchett by Marty Edelman, an attorney who is on the board of NYCFC.
The project is expected to need to go before the community board, borough president, City Planning Commission and City Council as part of the city land use review process. But since a January briefing from EDC, Bronx community leaders say they have been left in the dark.
“We’ve not seen a design of a stadium,” Paul Philip, district manager for Bronx Community Board 4 told THE CITY. “We’ve not seen anything.”
He added: “It’s been almost a year now since we’ve had any substance of conversations.”
The same was true for Councilmember Diana Ayala (D-Bronx), whose district includes the site of the proposed soccer stadium.
“There is currently nothing to report regarding a stadium,” Ayala emailed THE CITY. “I know that there has been interest but to date no proposal has been introduced, and I have not heard from anyone related to this proposal in quite some time.”
On Thursday, outside the parking structure on 153rd Street, Rahman Rahim, of Hunts Point, welcomed a new stadium for NYCFC fans, many of whom hail from countries where soccer is considered the top sport.
“If this is going to be a stadium made only for soccer, I don’t see anything wrong with that,” said Rahim, 52, originally from Ghana.