On Nov. 16, the Board of Directors for Empire State Development (ESD), New York State’s economic development arm, voted to approve the agency’s $138 million capital loan to the Kingsbridge National Ice Center (KNIC).
Under the terms of the loan, KNIC agrees to pay a commitment fee totaling one percent of the loan’s principle (or, $1.38 million) at the loan’s closing. KNIC also has agreed to hire a construction monitor to be “selected at ESD’s sole discretion.”
KNIC must also contribute at least $20 million to the project’s development, which boasts a $353 million price tag. The capital loan will carry a seven percent annual interest rate at a 30-year term, and funds from the state loan will be given to KNIC, “when the project is substantially completed.”
The affirmative vote came a month after a public hearing at Lehman College on Oct. 12, where residents and Community Board 7 members largely expressed support for the state’s plan to intervene in the project. It also came after the Public Authorities Control Board (PACB), a five-member supervisory board that oversees state public authorities, approved the measure as well.
“After review and consideration of comments received, the ESD staff believes that the [ice center] is an important part of the local revitalization of the area,” said Thomas Conoscenti, ESD’s vice president of real estate development and planning. “The project is expected to have a positive impact on the community.”
In addition to the $138 million loan, KNIC is also expected to receive $26.4 million in tax credits and $20.7 million in other preferred equity.
ESD’s vote to approve the loan now advances the project, which has languished in delays since being approved almost four years ago by the New York City Council in a 48 to 1 vote.
Shortly after the ice center’s approval in 2013, KNIC chairman Kevin Parker, a former executive at Deutsche Bank, claimed that the project “was destined to awe and inspire,” but the years since have shown a much different story as KNIC has struggled to obtain the cavernous Armory’s lease from the city, which has owned the Armory since 1994.
Initially, the New York City Economic Development Corporation (NYCEDC) agreed to transfer the lease to KNIC, pending KNIC’s ability to bankroll the ice center’s construction. However, KNIC failed to satisfy NYCEDC’s demands despite insisting publicly that “fundraising [was] on schedule,” having only raised $30 million in private funds—well short of the $158 million NYCEDC demanded KNIC have to begin the first phase of the project.
In October 2014, NYCEDC decided to place the lease in escrow; without the lease, KNIC could not obtain construction permits from the city’s Department of Buildings, effectively delaying the project. An NYCEDC spokesperson defended the action, pointing out that “KNIC [was] obligated to demonstrate full funding to complete the first phase of the development before they start construction.”
Under the escrow terms, KNIC was required to demonstrate its ability to finance construction by March 2016. While ESD’s Board of Directors voted to approve a smaller $30 million loan to KNIC in January 2016, the city remained steadfast in their decision to withhold the lease.
As a result, the March 2016 deadline came and went with little progress made on the ice center’s development.
In September 2016, KNIC offered to purchase the Armory from the city, appraising the historic landmark property at $17.4 million, but NYCEDC refused, again leaving the dispute between the two unresolved.
Then, in January 2017, a breakthrough: Governor Andrew Cuomo announced that the state would provide an additional $108 million in funding to the ice center’s development in one of his many State of the State addresses. Cuomo’s public comments prompted Mayor Bill de Blasio to instruct the NYCEDC to transfer the lease to KNIC once the $138 million state loan received public approval.
With the loan now approved, it remains unclear what the timetable is for the city to transfer the lease to KNIC; however, according to Conoscenti, KNIC has informed ESD that “they’re in conversations with several lenders… [and] they hope to have a signed term sheet by Christmas.” Conoscenti also added that KNIC has received term sheets “from at least three construction lenders.”
According to ESD, the first phase of the ice center is scheduled to be completed in late 2020, three years behind schedule. The Kingsbridge Armory has remained vacant since 1996.
Even so, KNIC chief executive Mark Messier, a former New York Rangers captain, remained optimistic about the project. “Nothing has changed from KNIC,” Messier testified during the October hearing. “We’re using sports as a vehicle through education to inspire our children and, hopefully, give them a future.”