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June 13, 2008
'Soviet-Style' Tactics Said To Be Used To Help Yanks
In The NY Sun coverage of Wednesday's revelations that the Yankees, Mets and Nets are hoping for more tax-exempt bonds to finance their stadium and arena projects, reporter Peter Kiefer gives readers a brief history of the latest creative way to publicly finance new sports venues:
Since the 1986 Tax Reform Act was enacted during the Reagan administration, private development companies have faced tight restrictions when attempting to get access to tax-exempt bonds for sports facilities.
In 2006, with the support of the Bloomberg administration, the Yankees and the Mets were able to circumvent the federal regulation by employing a complex accounting technique that allows the bond debt to be paid by the city and state with money received from the private developer, known as payments in lieu of taxes.
Now the IRS is considering closing the loophole for future projects, a move city officials say would hinder development. They say that more private development projects should be able to get the benefits of tax-exempt bonding.
What's in it for NYC?
City officials see the bonds as a relatively inexpensive way to subsidize development, specifically because the federal government picks up a greater share of the tab.
"What is advantageous is that the vast majority is paid for by federal taxes as a result the city loses a small amount of money," Mr. Pinsky said. "We are leveraging a small amount of city and state funds to get a substantial amount of federal assistance."
NoLandGrab: Yeah, that's what sports franchises need, "federal assistance."
Posted by lumi at June 13, 2008 5:19 AM