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March 18, 2008
More Money for the Very Rich: An Unsporting Pursuit?
Huffington Post
Author Michael "Double D" White explains how Bruce Ratner beat George "Double U" Bush at one of the best rackets in town: subsidies, upon subsidies, plus bonus eminent domain, for already-very-rich team owners.
In a nutshell:
New York government officials are committing New York's public to pay subsidies of more than a billion dollars covering all of the escalating costs of a basketball arena that the politically connected Ratner and company will own. The subsidies were awarded on a no-bid basis and the developer is even being promised that after an initial 30-40 year lease term accompanied by tax exemption, Ratner can extend his lease up to a total of 99 years with continued tax exemption.
For you numbers folks, here's how Ratner does it:
The [$692.70 million in municipal] bonds are paid entirely with intercepted tax payments that would otherwise have been going to the public treasury. Other intercepted taxes can defray Ratner's cost of operating the arena, increasing his bottom line. Because the bonds are exempt from federal, state and local income tax an additional estimated subsidy of $129 million goes to the project. Including a $11.7 million exemption from sales tax, donations of public land (and excluding a number of other subsidies that could also be included) it adds up to an arena replacement cost paid for by the public of $905.72 million. From publicly available figures it can be discerned only that Ratner is paying for another $71 million with private money. But beyond this, the public is donating to Ratner the right to name the arena and the neighboring portion of Brooklyn, rights being sold for $20 million a year for 20 years, ($400 million). Just on the arena alone Ratner will clear at least $116.29 million in present value on day one.
And then there's the small feat of taking other people's property:
Bush needed 17 acres to build his Texas stadium. 200 acres were condemned. Ratner has similarly gone after gratuitous condemnations with a peculiar project footprint that would be inexplicable were it not for eminent domain's attractive windfall. The tilted playing field of eminent domain abuse attracts Ratner; the collection of special benefit through below-market acquisition of condemned land is essentially another form of subsidy collection.
NoLandGrab: To address all the apologists who point out that Ratner pays fair- or above-market-value for property in the footprint, consider that the property is valued under the current zoning.
Typically, local governments change the zoning, and original property owners benefit from any apperciation in value — but not in Ratnerville.
The Atlantic Yards project is technically a STATE ZONING OVERRIDE. Ratner purchases the property under current zoning, the State enacts a private rezoning — presto, the property is worth much more — and in effect, Ratner gets the property for a song. Thus the "special benefit" of eminent domain.
Posted by lumi at March 18, 2008 5:03 AM