« If court rules wrongly, desperate times may call for desperate takings | Main | At the Board: Atlantic Terrace Coming Soon »
October 16, 2009
A Bloomberg Score Card: The Mayor's Hits and Misses
The Village Voice
by Wayne Barrett
The Voice's venerable political reporter weighs the plusses and minuses of a third Bloomberg act. One definite minus: arenapalooza.
As much as the city ought to name a hospital after Mayor Mike, it is more likely to name a stadium or arena. He has certainly spent enough of our money on them to pay for the naming rights. If he gets a pre-election Yankees World Series parade, the confetti should remind us of the bonanza of tax dollars that helped finance the stadium in which it was won.
...But the fact remains that the only major projects built or to be built in the Bloomberg era—the monuments to Mike—are Yankee Stadium, Citi Field, and the soon-to-be-bonded-by-the-city Nets arena in Brooklyn. Even the city-financed extension of the 7 subway line, ballyhooed by Bloomberg aides, is merely a potential pathway to Westside development, not a project itself.
That's a dismal track record, especially from a mayor who derided the job development benefits of stadium deals when he junked Giuliani's in 2002. The city is directly spending a half-billion on the two stadiums, largely for infrastructure improvements, some of which are still incomplete. It is also tapping its own supply of tax-exempt bonds, which are supposed to be used for projects of great public value, like hospitals, for $1.9 billion, subsidizing the two teams that are claiming to be building the stadiums themselves to the tune of $1.3 billion (a combination of the savings achieved through the bonds and other property, mortgage, and sales tax exemptions). The evidence that top officials of the Bloomberg administration reversed land assessments for the Yankees deal to artificially jack up the value in order to qualify for the tax-exempt financing is overwhelming and would—in a time when a good scandal had staying power in New York—make Bloomberg wince at the thought of an election eve parade. E-mails like one from a top aide to Deputy Mayor Doctoroff explicitly said they were making the assessment "so high" in an attempt "to support the tax-exempt financing."
By December, the Bloomberg administration will replicate its scandal-ridden history of bonding these projects by supporting the issuance of $678 million in state tax-exempt bonds for the Nets. The IBO estimates that the arena will also cost the city $350 million, combining direct and indirect subsidies, concluding that it will lose at least $40 million over the life of the deal, assuming the most optimistic revenue projections. Salty Mike's response to the unstated, apolitical IBO: "I don't know what the IBO studies would have shown back when they tried to establish the value of Central Park."
A Bloomberg hero, the late Senator Patrick Moynihan, attached an amendment to the IRS code in 1986 to try to bar cities from using tax-exempt bonds to finance stadiums, but the IBO reports that the city "found a way to circumvent these strictures" by technically structuring these two privately built and operated stadiums as publicly owned and leased for 99 years. The IRS originally OK'd this arrangement and then reversed itself, prohibiting such maneuvers in the future. Yet the city plans to do the arena precisely the same way, and the IRS grandfathered the arena in under its initial ruling, giving the city until the end of the year to sell the bonds. Incredibly, all of these resources have been used either to induce a basketball team to move across the river or to build stadiums with fewer and more expensive seats, neither of which is much of a public benefit. And every independent analysis re-establishes what the mayor once believed—nothing generates fewer real jobs than these television studios disguised as sports facilities.
Posted by eric at October 16, 2009 4:58 PM