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September 17, 2008
Yankees’ Deal May Have Violated Law, Report Says
The NY Times
By Charles V. Bagli
New York City and the Yankees may have violated federal tax regulations and state laws in using $943 million in tax-exempt bonds to build the baseball team’s new stadium, according to a report issued on Tuesday by Assemblyman Richard L. Brodsky.
Saying the taxpayers are footing the bill for the $1.3 billion Yankee Stadium in the Bronx and are getting little in return other than higher ticket prices and the loss of parkland, Mr. Brodsky, a frequent critic of the deal, said that the report stems from a review of thousands of pages of previously unreleased documents.
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Mr. Brodsky and other critics have argued that the city violated federal tax regulations by manipulating the assessed value of the land beneath the stadium so that the team’s annual payment in lieu of taxes would effectively equal the annual payments to bondholders, or debt service, of $56.7 million beginning in 2010.Mr. Brodsky’s 34-page report previews testimony he plans to give on Thursday at a Congressional subcommittee hearing sponsored by Representative Dennis J. Kucinich of Ohio that is looking into public financing for sports complexes. The Yankees plan to testify next month, while the Bloomberg administration is negotiating a date.
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The Bloomberg administration successfully lobbied the Internal Revenue Service to approve the use of the tax-exempt bonds for the stadium, which did not initially qualify. But the I.R.S. later issued a proposal that would tighten the rules governing such bonds so it would be nearly impossible for this kind of financing to be used again by a profitable sports franchise.The Yankees are awaiting a ruling on whether they can issue a second bond offering of about $250 million.
“We do things for professional sports we wouldn’t do for any other business,” Mr. Brodsky said. “When it comes to professional sports, we become socialists; for everyone else, we’re capitalists.”
NoLandGrab: Atlantic Yards developer Bruce Ratner is seeking favorable treatment by the same loophole to finance a new Brooklyn arena for his New Jersey Nets basketball team. How the IRS rules on the second bond offering for the Yankees might affect Ratner's request for a handout.
Associated Press, via amNY, Pol: Taxpayers cheated in Yankees Stadium deal
[Brodsky] said the concerns about subsidies for private businesses without direct benefit to the public could also apply to proposals to help the New York Mets build a new stadium and for a Nets basketball arena in Brooklyn.
Brodsky's criticisms, based on city, IRS and Yankees documents, include:
- The city manipulated the assessed value of the stadium to meet requirements for an IRS tax exemption. That included using comparable land values in Manhattan rather than the Bronx to come up with the value for the new property.
NoLandGrab: Norman Oder of Atlantic Yards Report has explained how Ratner will likely seek to manipulate the assessed property value to maximize the potential for tax-exempt bond financing [link].
The Yankees plan to increase ticket prices, but won't offer more moderately priced tickets to New Yorkers whose taxes will help pay for the stadium.
City officials didn't disclose their purchase of a luxury box and extra game tickets and apparently there is no city policy on their use.
The $366 million in additional funding sought by the Yankees to complete the stadium would be for a large video screen, not structural costs.
The NY Sun, City Declines To Participate In Hearing on Stadium Financing
The Sun is reporting that amidst all of the scrutiny and turmoil, City officials have decided that they won't be going to D.C. for a turn in the hot seat:
The Bloomberg administration is scrapping plans to send one of its top economic officials to testify before a congressional panel that is investigating how sports stadiums and arenas receive public financing.
The president of the Economic Development Corp., Seth Pinsky, confirmed yesterday that he would not be testifying at a congressional hearing in Washington tomorrow called by Rep. Dennis Kucinich of Ohio.
Mr. Pinsky said no other representative from the city will be attending in his place.
"We have informed the congressman that it will not work for us," Mr. Pinsky said. "But we remain happy to speak to him about this subject."
MetroNY, City, Yanks no-shows in Congress
News about City officials ducking Congress focuses on the land-valuation discrepancy as documented in the Brodsky report.
The NY Times, For Stadium Seating, City Officials Demand Luxe
And if all the above hasn't pissed you off enough, here's an aside that will make your head spin:
Rank has its privileges everywhere else — so why not here?
That was the thinking, to hear city officials tell it, that drove them to demand free luxury suites and first dibs on the best available seats at the stadiums being built for the Yankees and the Mets.
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Mr. Brodsky said that the perks were negotiated in secret and that the city had yet to explain, despite repeated inquiries, why they were necessary and how they will be paid for.
Posted by lumi at September 17, 2008 6:34 AM