January 15, 2009
Coverage of Yankees Bond Hearing
There was considerable coverage of yesterday's hearing held by State Assemblyman Richard Brodsky regarding public subsidies for the new Yankee Stadium. All news sources reflected the contentious nature of the hearing at which New York City Industrial Development Agency Chairman Seth Pinsky and New York Yankees President Randy Levine tried to justify massive public subsidies. Look for similar posturing from the City should the proposed Atlantic Yards project move forward.
Brodsky says taxpayers are paying for the new stadium, citing the city’s request to the IRS to permit an arrangement under which the Yankees would repay their tax-exempt bonds with “property taxes.”
But the Yankees have never paid property taxes, so “the city is no worse off,” explained Seth Pinsky of the NYC Economic Development Corporation, who viewed the project as a $1 billion stimulus package to the South Bronx.
Brodsky called this “bizarre bureaucratic arrangement” a gift to the Yankees that outweighs any public benefit. While the stadium project has resulted in thousands of construction jobs, it will create only 57 permanent, full-time jobs.
A central part of Mr. Brodsky’s argument is that the Yankees, by paying off bonds with payments in lieu of taxes (known as Pilots), are avoiding paying property taxes. He wondered if they had a “divine right” to not pay taxes. And he brandished a document from the newest report that said, “The city has determined to use its property taxes (in this case Pilots) to finance the construction and operation” of the stadium.
In his view, the property taxes are taxes owed and the Yankees, contrary to their contention, are using city money to repay their bonds, not their own. “The Yankees don’t pay taxes now,” he said to Mr. Pinsky. “Does that mean they should never pay taxes?”
In addition to exhaustive coverage, Norman Oder presents a tie-in to the fight against the proposed Atlantic Yards project.
Yesterday’s hastily-called Assembly hearing on the New York Yankees’ request for some $370 million in additional tax-exempt bonds featured antagonists who disagree fundamentally and easily reach the edge (and beyond) of civility: Assemblyman Richard Brodsky vs. New York City Industrial Development Agency Chairman Seth Pinsky and New York Yankees President Randy Levine, both present only via subpoena.
...the big news was the city Independent Budget Office upped its estimate of project subsidies significantly, to $854.7 million. Note that the IBO did not say that the PILOTs (payments in lieu of taxes) deal with the Yankees represents a cost to the city for the $1 billion-plus in foregone property taxes. (deMause disagrees, calculating $416.6 million in foregone taxes.) IBO does calculates the public costs for the first round of Yankees tax-exempt financing to be $205.2 million and the new round $72 million, with some 97% of that cost falling on federal taxpayers--which is why Kucinich is interested.
Nor did IBO say the PILOTs plan for the Atlantic Yards arena represents a full subsidy, though many AY critics think so. Brodsky hasn't opined on the issue, but if he's consistent, it seems he'd have to maintain the same posture that he has in the case of the Yankees.
There are some significant differences, however. Notably, because the land underneath the arena would be tax-exempt, and part of it is the MTA’s Vanderbilt Yard, “the MTA has an incentive to make a deal that maintains the tax exemption in order to maximize the price it receives for the development rights,” the IBO said in 2005.
It didn’t exactly happen, given that the MTA accepted a cash bid less than half the appraised value.
Posted by steve at January 15, 2009 6:24 AM