June 27, 2008
No-property-tax status was supposed to raise the price of the Vanderbilt Yard
Atlantic Yards Report
There's another obscured benefit for Forest City Ratner in the bid for the Metropolitan Transportation Authority's Vanderbilt Yard. In its September 2005 report on Atlantic Yards, the city's Independent Budget Office (IBO) stated:
IBO’s estimate of new property tax revenue lost to the arena PILOT does not include a loss of property taxes for the MTA land that would be part of the arena building foot print. The city currently receives no tax payment from the MTA for the rail yard because the MTA, like other state entities, is exempt from local property tax. Under the MTA’s Request for Proposals, any developer acquiring the development rights to the site would probably enter into a long-term lease, leaving the MTA in place as the owner. Therefore, the property would likely remain off the city’s tax roll, resulting in no impact on the city budget. Indeed, the MTA has an incentive to make a deal that maintains the tax exemption in order to maximize the price it receives for the development rights.
That hardly happened. Forest City Ratner paid $100 million in cash, and values its total bid at $379.4 million, though that's questionable. Meanwhile, the developer expects tax breaks worth $800 million, as tax-exempt bonds are repaid by PILOTs (payments in lieu of taxes).
It doesn't sound like the MTA maximized much.
NoLandGrab: Not true! They appear to have maximized the sweetness of the deal for Forest City Ratner. Meanwhile, taxpayers and transit riders can expect MTA service cuts and fare hikes.
Posted by eric at June 27, 2008 9:47 AM