Replacement For Yankee Stadium Parking Will Still Have to Pay The Bills

Bronx Borough President Ruben Diaz is hoping that a new hotel can replace excess parking near Yankee Stadium. Photo: ##http://www.crainsnewyork.com/article/20110313/REAL_ESTATE/303139993##Crain's.##

As the operator of the taxpayer-financed Yankee Stadium parking garages heads toward default, there’s no longer any question that providing so much parking in such a transit-rich location was a mistake on the scale of Carl Pavano’s contract. The decision to give up $2.5 million in city taxes and $5 million in state revenue has proven a poor investment indeed. The question, at this point, is what comes next.

One idea, from Bronx Borough President Ruben Diaz, Jr., is to convert one of the garages into a hotel. “One of the older garages is perfect for hotel development,” said John DeSio, a spokesperson for Diaz. Diaz advocated for a new Bronx hotel in his State of the Borough address two weeks ago, saying that “a new hotel would create hundreds of good-paying jobs offering health benefits, pension plans, and a chance for its workers to have a better life.”

While the garages were built on what used to be public parks, the South Bronx is unlikely to see that parkland return. “We have to come up with a plan that not only benefits the neighborhood but is palatable for the bondholders,” explained DeSio. The bondholders will have to okay any new use for the garages, so it will have to be a revenue-generator.

In terms of parking policy more broadly, DeSio said that while there aren’t any major developments where parking is an issue currently being considered by the borough president’s office, “I’m sure that we’d have to take to heart what happened here in the future.” (Plans for a new East Bronx mall anchored by a Target are too preliminary to comment on for now, he said.) DeSio also suggested that the private sector will notice this high-profile case of wasting resources on providing an excessive supply of parking.

  • Westchesterite

    “The bondholders will have to okay any new use for the garages”

    This is another big lesson that we need to takeaway from this debacle. When you cede control of public land to a private entity, you have to live with that decision for decades to come — even if it turns out to have been a bad idea in the first place. Bondholders will dictate the future of the Yankee Stadium area, and not the residents or the government.

    Deputy Mayor Goldsmith: Please take note when you contemplate selling the rights to on-street parking management to private entities.

  • Larry Littlefield

    The question isn’t the bondholders. The question is the Yankees. Does the team’s deal with the city require all these parking spaces to be used only for the Yankees during games? And would bankruptcy end that agreement?

    If there is no prohibition, the garages could be converted to long term auto storage and rental cars, for Manhattanites who primarily use their cars outside Manhattan.

  • SoBronx Resident

    Long-term parking for Manhattanites? No thanks. Manhattanites who use cars that infrequently should be using ZipCar anyway. I’d much rather see a hotel, housing, a skateboarding megaplex, anything that reduces the number of unused parking spaces through repurposing. Why are we trying to find parking-based uses for these unneeded and unwanted spaces?

  • J:Lai

    SoBronx, I think Larry’s suggestion is consistent with a zipcar or other car rental/car share facility.
    I agree that there are many better uses than a parking garage for this space, but the garages are alreaady built there.
    Changing them into something else would require permission from the bondholders (future revenues from the garages were bonded already), as well as funding for the costs to remove or alter the garages and build whatever would replace them.

  • Larry Littlefield

    “I agree that there are many better uses than a parking garage for this space, but the garages are alreaady built there.”

    That’s the problem. Blame the Yankees, and the Bronx politicians who were willing to give them whatever they wanted.

  • Anon

    Here is the answer! Have EDC (City or State) condemn the garages as blighted, and then hand it over to the Parks Dept to put back the park. Perhaps maintenance for the “new” park can be paid for by the local concession, the NY Yankeees.

    Nice joke, right?

  • SoBronx Resident

    “but the garages are alreaady built there.”

    Clearly. But we should be supporting alternate uses that are attractive to bondholders and feasible for conversion. We should not be wasting our energy trying to figure out how to make irrelevant parking spaces relevant.

    The bondholders would go for whatever promises to bring in the most revenue. A hotel’s going to bring in a lot more revenue than long-term parking. So let’s get behind that as a starter.

  • Anon

    Let’s be serious. How many tourists are really going to stay in a hotel in what is still a mostly poor neighborhood (no hipsters or gentrifying Bugaboo stroller pushers in sight), which is still called the South Bronx? If a hotel would work, the private sector would have built them, as they have anywhere they could fit them near Brownstone Brooklyn. What this neighborhood needs is what was taken away — parks.

  • SoBronx Resident

    Anon, sure, let’s be serious. The private sector would build this one too, provided the borough president can help them acquire the land for the project.

    Certainly, not having a hotel built recently shouldn’t consign an area to never having one. You’ll have to agree that out of all of the hotels built in brownstone Brooklyn, one of them had to have been built first. In fact, I think it was the Brooklyn Bridge Marriott, which was heavily wooed/supported with government efforts if I remember correctly. (Anyone have better details?)

    But in fact, developers are already overcoming significant hurdles to put hotels in the Yankee Stadium area, despite the lack of hipsters and bugaboos. Days Inn recently built a hotel all the way over at 165th Street and Brook Avenue. (It was under construction when the Google van went by.) This is truly a marginal site for a hotel – it’s next to an overpass and surrounded by automobile junk yards, vacant lots and long-abandoned industrial buildings. It’s 11 blocks from the stadium, but it still calls itself Days Inn Yankee Stadium. The rates are about half of what you’d pay to stay at 94th & Broadway.

    But I’m not trying to argue that a hotel would be the be-all and end-all best use for this site. Heck, I, too, would definitely take a park over a garage. But bondholders wouldn’t.

    I guess I would sum it up this way:

    Hotel: Replaces surplus car infrastructure with jobs and economic revitalization. Would be supported by bondholders. Hotel operators already circling. Three cheers.

    Park: Reduces car infrastructure but wouldn’t be supported by the bondholders. (This gets back to Westchesterites point above.) One or two cheers for the thought, but not possible, realistically.

    Larry’s idea about repurposing empty parking spaces as filled parking spaces for occasional-use Manhattanites: Encourages car ownership, if not car use. Might even discourage ZipCar memberships and/or commuter rail weekend travelers. One big Bronx cheer.

  • The bondholders made a bad investment. They lose their money. So what? Give the community back their parks.

  • William Hurley

    Bondholders? Why? I know why, but exasperation demands it be typed.

    The fact that the capital-class has always loathed real risk but loved moral hazard is not only an historical truth, it’s capitalism’s version of “hate the sin but love the sinner”.

    Since bondholders )a.k.a. investors) made as well-informed but clearly sh!tty investment decision, the impulse to extract a “do-over” from the neighborhood is offensive on many levels.

    Under similar circumstances elsewhere, the retort to the type of complaint I’m registering is framed thusly: if we don’t help investors recover at least some of their money, they’ll be unlikely to invest in the future.

    EXACTLY – that’s the f#%#^king point! It’s also the impetus for the oft repeated, rarely followed “conservative” warning about risk evaluation being: don’t throw good money after bad.

    In the end, and pardon my naiveté if I err on a detail here, this circumstance seems to follow the all too common pattern of the capital-class enjoying subsidies that inflate privatized profits, but also socialize the costs of failure.

    I realize that I’m echoing Eric’s more concise version of my comment, but sometimes things need to be said loudly and often.

  • Larry Littlefield

    Then you can’t bail them out by buying it back to make it a park. And you can’t bail them out by allowing — in fact subsidizing another use. At least not at first — after 20 years, anything is possible. You have to make them eat it for now.

    Frankly, I don’t think the empty garages are tragic, other than the public investment in them. For the forseeable future there are going to be motor vehicles, at least for the use outside of walking/biking/transit distance.

    Making them rental car hubs seems a reasonably possiblity. Perhaps each of those shopping developments could benefit from rental car/Zipcar availability, as those using them might do some shopping on their way into or out of town. If parking is going to be built on the Far West Side, perhaps it is important that it could be repurposed as bus/truck layover space, which is scarce in the CBD.

    As for the loss of the park, again I say throw out all the Bronx politicians. I would have been happy to have the Yankees move to New Jersey rather than given in to their demands, or have the Mets and Yankeess share a transit-first stadium in Long Island City on the Far West Side.

    But we can agree on this. NO BAILOUT.

  • Walter

    Who wants to be that the powers that be gin up some “crisis” at the MTA or specifically Metro-North and declare that game day service to Yankees-E. 153rd Street will have to be “suspended temporarily.”

  • Larry, the tragedy of the empty garages is that they forestall any kind of livable-streets type promenade or plaza connecting 161st St with the Macombs Dam Bridge.

  • J:Lai

    Let’s be clear on how these different scenarios work.

    1. Parking garages remain as is. Revenues may fail to cover bond obligation. Bondholders (who by the way are not technically “investors”, but rather “lenders”) take a loss.

    2. Parking garages remain, but with addition of some car sharing/rental and long-term parking facilities. Additional revenue from these uses MAY allow bonds to be repaid without loss. This assumes that there is some demand for these additional services, and it keeps the garages from being entirely useless.

    3. Garages are converted to hotels. Bondholders would have to be made whole by the city in order to agree to this, so this is a de-facto bailout. Hotel revenues are generated by a private hotel operator, so there is little or no revenue from a hotel that the city can capture and use to pay bonds. In addition, it is likely that any hotel operator would demand concessions from the city in order to build in this location, as evidenced by the current lack of private hotel investment in this area. Furthermore, there are significant costs in re-purposing the site which the city would have to bear all or most of. So city ends up bailing out bondholders AND paying a hotel operator to come to the site.

    4. Garges are converted to parks. Again, bondholders would have to be made whole as there would be little or no revenue from a park that could be captured for the debt obligations. City pays for demolishing parking garages and converting the site back into a park. Possibly some portion of this could be covered by private investment (e.g. like Brooklyn Bridge park), but city would have to promise something to developers in order to get private investment. I’m not convinced there is enough demand from developers to get signifcant private money for such a project.

    Given the reality of the city’s budget, I do not think there are funds to pay for converting these garages into anything else, at least not anytime soon. The tragedy is that they city subsidized building these garages in the first place, but that is done and cannot be undone. I think it would be making the best of a bad situation to do something like what Larry suggests.

  • Larry Littlefield

    The scenario is something like this:

    The current operator defaults.

    The Yankees, the bondholders and the current operator demand that city subsidize the garage to meet their obligation to the Yankees and maintain access to the credit markets for “economic development” projects in the future.

    1) The city knuckles under, and raises property taxes or cuts other services to cover the shortfall (without making a like between the tax increases/service cuts and the garage). I think we are all opposed to this.

    2) The garage goes bankrupt and is taken over by the bondholders, who now have a piece of property they can do with as they want.

    a) They do not use it for parking, and the Yankees claim the city violated its promise of parking spaces and stop paying their bonds. This may or may not work. But unless the bondholders than, even after tearing down the garages and building something new, is worth more than the parking, this makes their loss even worse.

    b) They do use it for parking. With a lower cost basis, after the bondholders take a loss, they can cut the cost of the parking and still make money, thus making it attractive for other users like rental cars, Zipcar, long term storage of cars owned by people in Manhattan, park and ride, etc.

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