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April 14, 2008
Your 'Net' Loss
New York Post
by Rich Calder
The Post fills us in regarding the more than $2 billion in public costs for the proposed Atlantic Yards project, and how we might expect to pay even more.
Developer Bruce Ratner's Atlantic Yards project in Brooklyn is boosted by so many sweetheart deals that the public stands to pay for more than half the cost of his controversial $4 billion plan, a Post analysis found.
The project - which would bring an NBA arena and 16 residential and office towers to Prospect Heights - is in line to receive at least $2,139,890,000 worth of government subsidies, according to project records and interviews with past and present state and city officials.
And the developer is gearing up to ask for even more corporate welfare.
The president of Ratner's parent company said in a conference call with investors last week that the project will "still need more" subsidies.
The state and city say Ratner has yet to ask for extra assistance, but the developer last month admitted that a sagging economy is holding up construction of the project's residential and office space.
Among the biggest revelation of the Post analysis is what project skeptics have feared for years - that Ratner can build the planned 18,000-seat arena for his New Jersey Nets to move to with little financial risk.
"The setup is basically like paying taxes on your home and then having the government use that money to help you pay off your mortgage," said Michael D.D. White, a former vice president and top lawyer for the state finance authorities.
The story features a handy, itemized list of Atlantic Yards subsidies:
RATNER'S NETS GAIN
PROJECTED ATLANTIC YARDS SUBSIDIES (SAVINGS TO BRUCE RATNER)
Arena real estate tax savings through 30-year Payment in Lieu of Taxes (PILOT) agreement with state = $1,032,740,000*
Taxes saved on $1.406 billion federal-state-local tax-free bonds to create affordable housing = $261.25 million*
Cash from New York City for infrastructure and/or land acquisition costs = $205 million
Taxes saved on estimated $1.032 billion fed-state-local tax-free bonds to finance $950 million arena = $191.9 million*
Tax credits through special 421-a "carve out" state legislation = $150 million
Savings from purchase of Atlantic Rail Yards at price less than MTA appraisal= $114.5 million
Cash from New York State for infrastructure costs= $100 million
Mortgage recording tax exemption (on residential buildings) = $39.37 million*
Value of city land under arena given to developer= $27.1 million*
Potential tax credits for low-income housing units= $18 million*
Sales tax exemptions (only arena) = $17.4 million*
Sale tax exemptions (other than arena) = Undetermined
Extra funds for "extraordinary infrastructure costs"= Undetermined
Credits for public utilities relocation= Undetermined
GRAND TOTAL=AT LEAST $2,151,890,000
*Estimations by Michael D.D. White, an urban planner and former top lawyer for New York State's finance authorities, after reviewing public documents. Other figures based New York Post examination of state records and interviews with government officials.
Note: Atlantic Yards is estimated to cost $4 billion.
Posted by steve at April 14, 2008 6:16 AM