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July 13, 2007

NYC (it seems) might lose money on the arena, as added pledge upends IBO prediction

Another MUST-READ from Atlantic Yards Report, and it's a quickie!

By revising NYC's Independent Budget Office's calculation of net fiscal impact of Atlantic Yards, Norman Oder has discovered that:

The Atlantic Yards arena, once estimated by the city's Independent Budget Office (IBO) to net $107 million in new revenue, now looks much closer to a wash--and worse for the city.

Oder explains:

I plugged the new number into the chart, adding, as the IBO had done, a slight adjustment for debt service, thus bringing the city's cost to $206.2 million.

(Graphic adapted by Abby Weissman/SouthOxford.com)

Yards-City-Table-1REV.jpg

That would leave the city with a loss of $77 million over 30 years, expressed in present value, defined as "today's value of a future payment, or stream of payments, discounted at some appropriate compound interest, or discount, rate." Even if a minimum oft $28.5 million of the city's additional $105 million were devoted to the arena block--and that's likely--the city tab turns into a loss.

Meanwhile, if all the new city money were devoted to the arena block, the total public contribution would only barely be offset by the revenues to the state and the Metropolitan Transportation Authority, leaving a net fiscal impact of little more than $1 million. (That number is likely higher.)

Oder admits that this exercise is inexact and explains how. Nevertheless, this cursory examination shows a bleaker fiscal outlook and begs for a re-examination by the City's Independent Budget Office (or any qualified third-party not named "Norman Oder") based on currently known subsidies.

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Posted by lumi at July 13, 2007 11:35 AM