July 28, 2008
Kucinich probes PILOTS for sports venues
Representative Dennis Kucinich is looking into whether or not the Yankees tailored the valuation of the team's new stadium in order to justify the amount of tax-free bond financing.
This additional scrutiny of Payment in Lieu of Taxes (PILOTS) could affect Bruce Ratner's Atlantic Yards arena, since he's seeking the same type of bond financing, which could save him perhaps as much as $165 million.
Reuters (via Yahoo), Rep. Kucinich probes Yankee Stadium debt data
Dennis Kucinich, the Democratic Chairman of the House Committee on Oversight and Government Reform, said in a statement that he "has broadened the Subcommittee's investigation of tax-exempt public financing of professional sports stadiums to include specific document requests relating to the valuation of the new Yankee Stadium."
The Yankees, which have won 26 World Series titles and are one of the world's richest professional sports teams, want a city agency to sell $350 million of extra bonds to help finance their new home.
But the Internal Revenue Service must approve the new debt. It stiffened its rules after $941 million of stadium bonds were sold for the Yankees in 2006.
The Yankees repay the bonds that were sold by making so-called payments in lieu of taxes. If the land and buildings are overvalued, the city agency can sell more debt because the payments in lieu of taxes can be higher.
The bond issue has gained new currency because the New Jersey Nets basketball team, who plan to move to a new stadium in Brooklyn, New York, also want the IRS to let a city agency sell more than $800 million of tax-free bonds for them. The new arena for the Nets would anchor a big development now struggling in a cooling real estate market.
MetroNY, Yankee Stadium’s worth?
To get the financing, the Yankees needed to pay off the debt with payments in lieu of property taxes, though the team has never paid property taxes. If the Yankees did pay property taxes, the IBO said, the amount would fall $29 million short of what the team needed to satisfy the debt. The city disagreed: The stadium would be valued at $1 billion, and the land underneath it was worth $200 million.
But a much lower number was offered when the city got that land appraised to satisfy a federal requirement to replace parkland with property of equal value. In a second set of appraisals obtained by NYC Park Advocates, the value of Macombs Dam Park was put at $21 million, just below the $25 million total of the replacement parcels.
The probe likely won’t affect the $943 million in tax-exempt bonds the Yankees have already sold, but it could stop the team — and the Mets and Nets — from getting similar financing.
Atlantic Yards Report covers the Metro coverage.
Posted by lumi at July 28, 2008 4:44 AM