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October 20, 2006
IRS Haunts Stadium Deals
To get around having the public vote on bond debt for sports venues, local governments came up with Tax Incremental Financing (TIFs). The IRS struck down TIFS, so to get around that, local governments came up with Payments in Lieu of Taxes (PILOTS). Now it looks like the IRS isn't buying that one either.
From The Real Estate Observer:
The IRS is planning to revisit the financing scheme behind the new Yankees and Mets stadiums because, according to sources cited by The Bond Buyer, the arrangements looked "too much like a private loan."
What's the big deal? The new regulations will drive to the heart of the question about whether cities should be allowed to use their power to issue tax-exempt bonds for the benefit of privately owned sports franchises (which don't even make it into the World Series, to boot). And the new rules may imperil Forest City Ratner's deal to finance the Nets arena.
Posted by lumi at October 20, 2006 7:08 PM