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December 25, 2007
Merry Christmas to Bruce!
What's wrong with Payments in Lieu of Taxes (PILOTs)?
As this photo illustrates, when a rat eats candy that is supposed to be shared with everyone, then everyone gets nothing and he gets fatter (i.e. when tax revenue is diverted to paying for the tax-exempt bonds on the arena for Bruce Ratner, then these revenues are not going to the general fund where they supposedly benefit everyone).
PILOTs are a sneaky way to get taxpayers to pay for stuff they don't really need.
Back in the day, sports team owners paid their own way. Then they figured out that they could threaten to move their teams if taxpayers didn't sweeten the deal by paying for new arenas or stadiums. After taxpayers realized that these deals were only a net gain for the team owners, several municipalities and states voted down ballot resolutions intended to issue bonds for sports venues.
Now politicians and team owners are exploiting some of the murkier ways to get around that problem. PILOTs, like their predecessors, Tax Increment Financing, are one of their favorites, because team owners and their political backers get to claim that they are not using taxpayer money to pay for the venue, which is an overly simple way of saying that they are using future tax revenue from the project to pay for the financing of the venue. Technically, it's not the same thing and most people are too busy to notice how the scheme works.
Posted by lumi at December 25, 2007 8:34 AM