I am publishing a series of posts on the Destiny USA Debacle — the federally sponsored Green Bonds project that has failed to incorporate promised green building features. To read all of the posts at once, select the Destiny USA tag.
We have now set the scene for the Destiny USA debacle. The key players have been described. The federal Green Bonds program and the green building requirements have been reviewed. And we have reviewed the penalties if the Green Bonds requirements are not met.
But when construction started at Destiny USA, how did it go?
Then, problems arose as Citigroup pulled financing for the project, and construction ceased:
“Construction came to a halt in June 2009 when Citigroup stopped advancing money on a $155 million loan. The bank said it was concerned about cost overruns, construction delays and a lack of any signed leases for the expansion after nearly two and a half years of construction. It publicly called the project a failure.”
As reported by Stephen Del Percio at the Green Real Estate Law Journal, litigation ensued as a result of Citibank’s decision. Ultimately, as Del Percio explained, a New York appellate court upheld an Onondaga Supreme Court decision that Citigroup had to resume funding of Destiny’s construction loan because the project involved “unique” and “revolutionary” sustainable features. In hindsight, it is interesting that many of these sustainable features actually may not have been included in the finished project.
As reported February 20, 2011 by the intrepid Rick Moriarty, the Destiny USA project has scrapped many of the green building and renewable energy features that were originally promised to the federal government in exchange for $238 million in Green Bonds:
“There is no 45-megawatt electricity generating plant running on “biofuel” made from soybean oil and recycled cooking grease. If there were, it would be the largest such plant in the nation and consume more than one-third of the total U.S. biodiesel supply.
Nor are there 290,000 square feet of solar panels on the mall’s roofs and other surfaces, enough to blanket six football fields.
The fuel cells that were to make 7 megawatts of electricity, five times more than the nation’s largest existing commercial fuel-cell installation? Nowhere to be seen.”
The project has also reportedly not received LEED certification.
As you may recall, the bond issuer, the Syracuse Industrial Development Agency, was facing a February 28 deadline to report to the IRS regarding the Destiny USA project’s compliance with the Green Bonds requirements. If the IRS finds the project is not in compliance, the tax-exempt status of the bonds may be forfeited and a $2.38 million penalty would be assessed.
What do you think the Syracuse Agency will tell the IRS?