New York City has approved a $3 billion plan to develop the area adjacent to Citi Field and has awarded the contract to Sterling Equities and the Related Cos.
Everything I keep reading about the project is about the merits, or lack of same, to building in Willets Point. Also, what does the Queens community need versus what is being built, all of which are fair concerns to the residents of the area as public subsidies are to be included in the deal. But what I have not heard discussed is how New York City could hand a contract this large to Sterling Equities at this time considering the history of the last Willets Point project that the City partnered with Sterling on, Citi Field.
The Request for Proposal from the City for the Willets Point Development Project, in May 2011, includes the following conditions in the Proposal:
“Each Respondent must demonstrate sufficient financial resources and ability to Execute its Proposal.”
“Each Proposal must include a description of the management and/or development team, including:
“If available, the latest credit report for each of the principals and any relevant business entities and the most recent financial statements for the purchasing entity and each of its principals. Certified net worth statements must be submitted for every participant in a partnership or joint venture”
“Any additional documentation or information evidencing the strength of the Respondent and its ability to complete the Project.”
This would indicate that in May of 2011 Sterling Equities and the Related Cos. showed sufficient financial resources and ability to execute a $3 billion proposal. That either means that Sterling Equities has plenty of available cash or it is all coming from the partner. This leads to two either/or questions that I think the City Council should have been asking:
1. If all of the capital is coming from Stephen Ross (who heads the Related Cos.) why is Sterling Equities needed as part of this transaction?
2. If Sterling Equities is providing capital to the project shouldn’t they also be providing additional capital to the failing Citi Field project?
The bonds used to finance Citi Field have had their credit rating lowered to junk bond status by Standard and Poor’s. That indicates that the Citi Field project continues to be on shaky financial footing. We all know why. Since 2009 the amount invested in the Mets has plummeted, attendance and revenue have cratered, and the profits needed to pay off the bonds are nowhere near the estimates that Sterling Equities provided to creditors to receive the financing of the park. This isn’t ancient history, it is happening before our eyes. With all of the potential developers that could be working on a Willets Point project, why would New York City pick one who is proving to be a bad credit risk?
Maybe there are good answers to these questions, but I have not seen them. I’m concerned that the City is using the Willets Point land and future public subsidies to bail out Sterling Equities from a mess they created for themselves by investing with Bernie Madoff.
A major development in Willets Point might be a good idea for New York City.
But what has Sterling Equities shown to our City to indicate they are a good business partner?