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June 12, 2008

Yankees want IRS to reverse loophole to allow for more tax-free bond financing

"Allowance" would be boon to Bruce Ratner's Nets arena financing plan

YankeeStad-NYP.jpg Associated Press, Yankees may seek more public financing for new stadium

New York City officials confirmed Wednesday that the New York Yankees may be interested in seeking more public financing to build their new stadium, pending a regulation change by the IRS.

The team stressed, however, that its bid to change the Internal Revenue Service regulation wasn't going to affect the completion of the new Bronx stadium.
Janel Patterson, of the New York City Economic Development Corp., which is working with the Yankees, said the project isn't threatened. But she said the city is working to relieve an IRS regulation that prohibits more public debt to be incurred for the stadium. State Assemblyman Richard Brodsky, of Westchester, said that IRS change also is being sought to help stadium and arena projects for the New York Mets and New Jersey Nets.

NY Daily News, Can we have 400M more? Yankees ask

About $941 million in tax-exempt public bonds have already been issued for the $1.3 billion stadium, which is to open next year.

Internal Revenue Service regulations prohibit more public debt to be incurred for the stadium.

City officials have been lobbying in Washington for a change in the IRS regulations, which could benefit other local projects, including construction of new homes for the Mets and Nets, [president of the city Economic Development Corporation Seth] Pinsky said.

"The Yankees have informally expressed to us an interest in receiving additional financing for the stadium project. What we've told the Yankees is if [the IRS regulations] were to change, we'd be willing to consider the option."

MetroNY, Yankees ask city for $400M more

Yogi Berra might describe this latest request as déjà vu all over again: In 2006, the team got $943 million in tax-exempt bonds, but the city had to ask the IRS for permission, because Congress had restricted the use of tax-exempt bonds to build sports facilities. A loophole allowed the bonds to be paid off in the form of taxes, and the Yankees claimed the debt would be met with payments in lieu of property taxes, or PILOTs, though the team’s never paid property taxes.

While the IRS eventually gave the go-ahead, it then closed that loophole.


Team President Randy Levine said Wednesday night, "At some point, as stated and contemplated in the original transaction, the Yankees will seek additional bonding."

But he insisted, "This issue does not affect completion of the Stadium."

In a worse-case scenario, the Yanks could seek taxable financing, as opposed to tax-free bonds to complete the project.
"This isn't the biggest issue for the Yankees and Mets. It's a much bigger issue for the Nets and other development projects that haven't secured any financing yet," said a source.
Bettina Damiani, director of Good Jobs New York, said an IRS reversal "would be opening the floodgates. It defies all fiscal common sense to subsidize wealthy sports teams."

Posted by lumi at June 12, 2008 4:52 AM