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December 16, 2006
New ESDC fiscal impact memo raises more questions than it answers
Atlantic Yards Report:
In a memorandum dated December 14 but released yesterday, the Empire State Development Corporation purports to offer “a more complete description” of the economic analysis that led to a drastic drop of $456 million in net projected Atlantic Yards revenue, but the agency leaves numerous questions unanswered.Notably, the memo does not explain why the agency changed its methodology in projecting a more than fivefold leap in city tax revenues from construction (even as the total tax revenue plummeted) nor a significant discrepancy between the revenues in the memo and in the General Project Plan (GPP).
Also, it doesn't explain why the ESDC changed the discount rate--the interest rate used in calculating the present value of expected benefits and costs—from 6% to 3%. (Given that a higher discount rate means a smaller present value of future cash flows, lowering the discount rate would increase the present value, perhaps overinflating even the lowered revenue figures the ESDC released this week.)
Nor does the memo explain why the ESDC corrected some apparent errors in the previous memo, issued October 18, including an agency assertion that “25% of visiting team players salaries is earned in New York City.” (There are 30 teams in the National Basketball Association.)
Posted by amy at December 16, 2006 12:06 PM