March 7, 2009
PILOTS and Wall Street Journal Opinion Piece
Atlantic Yards Report
While some people think that the weekend is a good time to relax a little, for Norman Oder, it's an opportunity to look even harder at Atlantic Yards. Today he gives us a double dose.
You'd think they'd be grateful, but it turns out that sport teams don't really like to acknowledge it when they receive public subsidies. This became obvious at yesterday's public hearing on Yankee stadium. Yankees president Randy Levine, when questioned by Assemblyman Richard Brodsky, insisted on saying at the same time that the Yankess received no subsidies, yet relied on PILOTS (payments in lie of taxes). PILOTS would be used to pay for the proposed Atlantic Yards project.
Brodsky contends that the public is paying for the stadium because the tax-exempt bonds are paid off by PILOTs. The Independent Budget Office (IBO), however, considers only the break on interest rates the subsidy.
"I’m going to read language from the IRS letter," Brodsky said to Levine, referring to a letter in which city officials wrote, "The city has determined to use its property taxes to finance the construction and operation of the stadium."
"Is that accurate," he asked.
"I don’t know, I’m not a bond lawyer," Levine demurred. "I’ve testified, over and over, in my opinion, the New York Yankees are paying every cent of construction of the new Yankee Stadium." He noted that the Yankees do not pay property taxes and no new stadium would have been built without the opportunity to use PILOTs.
Norman Oder takes a look at today's Atantic Yards piece in The Wall Street Journal and adds some perspective of his own.
In a Wall Street Journal op-ed today about Atlantic Yards, headlined A Hole Grows in Brooklyn, Manhattan Institute senior fellow Julia Vitullo-Martin argues, not unpredictably for the newspaper and author, that the private market should have been allowed to do its work.
She writes: Now, more than five years later, what's been brought to Brooklyn is a very large hole in the ground and a project that is coming to symbolize why large government projects can be riskier than allowing local residents to fix up their own communities.
Her conclusion: The ill-fated project in Brooklyn reflects a breakdown of the state and city's strategy of favoring big-government, centrally supported, highly subsidized projects over the kind of small, privately funded, unsubsidized, incremental development that was already occurring in Prospect Heights, as the area is officially known.
I think Vitullo-Martin gets the big picture right--and appreciate the citation of AYR in her piece--but I wish she'd further noted the importance of government action as a catalyst. For the blocks in Prospect Heights below the Vanderbilt Yard, conversions of former manufacturing buildings into housing required spot rezonings.
A wholesale rezoning would've been necessary for both those blocks, and the railyards, to catalyze development. And some measure of subsidy would've been necessary to jump-start development over the railyards.
The difference would've been that a subsidy to build a deck over the railyards could've been announced before a single bidder had been selected, as with AY, and instead could've spurred development in multiple parcels with multiple bidders, as in the proposed UNITY Plan.
As I wrote in December 2006, the Empire State Development Corporation, in a not credible statement, contended that, without Atlantic Yards, there would have been no redevelopment in the project site.
Posted by steve at March 7, 2009 7:30 AM