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September 19, 2008
At Congressional hearing, criticism of Yankees deal and stadium funding; IRS says final regulation coming soon
Atlantic Yards Report
Norman Oder reports on what happened at yesterday's Congressional hearing on federal support for NY sports venues:
Piling on to Assemblyman Richard Brodsky’s report on the new Yankee Stadium, Rep. Dennis Kucinich (D-OH) said yesterday that his Subcommittee’s “still ongoing investigation has uncovered substantial evidence of improprieties and possible fraud” by the stadium’s financial architects.
Kucinich chairs the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, which yesterday held a hearing to which representatives of the Yankees and the city of New York were conspicuously absent, though they are expected to appear in the future.
Though the hearing, “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” focused on Yankee Stadium, the issues raised have direct applicability to the planned Atlantic Yards arena.
PILOTs (payments in lieu of taxes) can’t exceed the amount of foregone taxes, but PILOTs for the Yankee Stadium were based on an assessment inflated aimed to justify a certain quantity of bonds, Brodsky and Kucinich charged. The same tactic might be in store for Brooklyn, given that the expected arena PILOTs far exceed the foregone taxes for the comparable Madison Square Garden.
Moreover, the new ballparks for the Yankees and Mets rely on special Internal Revenue Service rulings that allowed fixed PILOTs that conform to bond payments, while the IRS has proposed changing the rule to make sure that PILOTs fluctuate with taxes--anathema to the bond market.
That rule, expected to be finalized soon, has city officials nervous. Indeed, according to Metro, the city yesterday issued a statement that “complained of the new hurdles” to financing other projects similarly, such as Atlantic Yards. Whether Atlantic Yards might be grandfathered in under the old rules, as the city and state have sought, remains unclear, but the benefit to Forest City Ratner would be significant; I’ve estimated $165 million on $800 million of tax-exempt bonds.
More coverage...
MetroNY, D.C. grilling for stadium
Associated Press, via amNY, Congress rips new Yankee Stadium deal
Posted by lumi at September 19, 2008 5:58 AM