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October 22, 2008
Tax-Exempt Bonds: The Evening Wrap
Here's the rundown on today's coverage of the IRS's decision to tighten a "loophole" on the use of PILOTs to finance arenas and stadia — only the Yankees, Mets and, maybe, the Nets, have slipped the knot.
Gothamist, Atlantic Yards Project Gets Big Bond Break from IRS
These New York teams may be hard-pressed to find investors who will buy the bonds, given the current Wall Street turbulence. Not so incidentally, the ruling comes four days before Yankees president Randy Levine and city officials are expected to testify at a Congressional hearing investigating the tax-exempt financing of the new $1.3 billion Yankee Stadium. Representative Dennis Kucinich, who is holding the hearing Friday, has threatened to prosecute officials if they lied about the value of the land the new stadium occupies.
State Assemblyman Richard Brodsky, a Westchester Democrat, slammed the IRS decision, telling the Times and the AP, "This is the same kind of socialism for the rich, and capitalism for the rest of us that’s gotten us into the current economic mess...The rules don't apply if you've got enough juice."
Curbed, Atlantic Yards Crap Tossing V.3.5: Financing Edition
The IRS issued a ruling yesterday that has monstrously huge implications for anyone that will ever want to build a stadium or arena ever again (don't go to sleep yet...this is big). You wouldn't know it in NYC, though, because even though it impacts the new Yankee Stadium and Citi Field, it's playing out as an Atlantic Yards story. At issue is whether tax-free financing can be used to build Frank Gehry's $950 million arena. (Leaving aside the issue as to anyone will ever finance a facility that is sure to go above $1 billion given traditional Gehry cost overruns in the middle of one of the most massive credit meltdowns in history.) The ruling creates a loophole for projects that are "substantially in progress," while banning it for new ones.
The Angry New Yorker, Tax Free Stadiums
Hey if I want to build myself a new house, think I can get me some tax free bonds to pay for it?
Brownstoner, Treasury Dept. Hooks Up Ratner Big-Time
One potential snag for FCR: The new regs require that the bonds be issued by December 31, 2009.
Gowanus Lounge, So, Does Mr. Ratner Get Tax-Free Bonds for Atlantic Yards?
The key phrase is that it grandfathers in projects “substantially in progress.” We can see lawyers and bureaucrats arguing this point about Atlantic Yards until we live in Green-Wood Cemetery.
Be sure to check out Gowanus Lounge's reflections on the ethics of subsidizing arenas.
Develop Don't Destroy Brooklyn, Ratner Spokesman Vs. Treasury Department Spokesman on IRS Regulation
Bloomberg News, New York Yankees, Mets Get Approval for Tax-Exempt Bond Funding
Village Voice [Runnin' Scared blog], Atlantic Yards Gets Tax Break, Or Not
The Times spoke to Daniel Goldstein of DDDB, who "said it appeared to him that federal tax officials went out of their way to help the developer," the paper writes, "which he said 'makes no sense' when the federal government is in the midst of a costly bailout of the banking industry." Actually it does make sense: the bailout is an attempt by the powerful to restore a failed, obviously unsustainable confidence scheme to viability; this tax break (if it is a tax break), ditto.
Posted by eric at October 22, 2008 9:18 PM