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September 21, 2008
Brodsky Slides in Front of City's Stadium Plans
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The New York Observer
Eliot Brown
The focus of the two men [Brodsky and Kucinich] - one a loud and often relentless critic of many Bloomberg administration policies; the other a mousy, twice-failed far-left presidential candidate—is on a complicated mechanism the city used to win tax-free financing for the new Mets and Yankees stadiums (and plans to use to finance the new Nets arena). The Mets and Yankees already have obtained their financing, but both teams want more to cover additional costs. The Nets have yet to gain approval for the financing, with plans to break ground on a new arena before the end of the year. The I.R.S. has criticized the mechanism as a loophole and has yet to rule on whether the teams can get any additional financing through the city’s structure.Without the mechanism, for which the teams give fixed payments in lieu of taxes that pay off hundreds of millions of dollars in bonds, costs would rise substantially for each of the three teams, and in the case of the Nets, perhaps further upset an already troubled project.
At issue is the tax-exempt aspect of the financing. Under the Bloomberg administration’s arrangement, once the city-controlled Industrial Development Authority approves the financing plan, the teams are eligible to issue hundreds of millions in bonds that are free from city, state and federal taxes. Such savings can lower the cost to the teams by perhaps 15 or 20 percent.
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For their part, Bloomberg administration officials are proud of their work and say they have nothing to hide in the deal, which uses a tax-free structure with a relatively minor amount of city and state investment to leverage a major federal subsidy for city projects. The financing allowed for billions in private investment, officials contend, making Mr. Brodsky’s crusade a frustrating one, especially as the financing mechanism for the Nets is up in the air.
Posted by amy at September 21, 2008 11:04 AM