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October 11, 2009
Sunday Morning Catch-up with the Atlantic Yards Report
Atlantic Yards Report
Today's New York Times covers public subsidies of a stadium in New Jersey. Norman Oder points to the missing Brooklyn connection.
Only in the last paragraph does the article take a wider view:
The Mets and the Yankees also make payments in lieu of taxes in New York City, the payments roughly equal to the debt payments the teams have to pay on their bonds. The owners of Madison Square Garden have been exempted from paying property taxes since 1982, costing New York City hundreds of millions of dollars.You'd think the Times also would include the financing scheme for the Atlantic Yards arena, which is essentially the same as that for the baseball stadiums.
And readers of the first sentence in the paragraph above might be led astray. The Mets and Yankees are not making PILOTs to the city along with the debt payments on their bonds. They're using the PILOTs to pay off the bonds. More here.
A bill for reform of state authorities passed by the New York State legislature this past July, but has still not been signed by Governor Paterson. The bill would keep authorities from selling public property below market value. The MTA has an agreement to sell the Vanderbilt Yards to developer Bruce Ratner for well below its assessed value.
The Bond Buyer reported on one crucial sticking point:
[Bloomberg's director of legislative affairs Michelle] Goldstein said that the ability to dispose of property for less than market value provides “crucial flexibility that is necessary to undertake economic development projects and other community initiatives.” Current rules already require transparency, she said.Requiring that property be sold or leased at fair market values allows the public to “know the real value of the subsidy,” Brodsky said. Instead of disposing of property at a discount to stimulate economic development, authorities would still be able to provide an equivalent grant, he said.
“There’s no reason in the world why an entity which is in the business of doing economic development deals could not take the proceeds of a fair-market sale and return it to the party involved in a simultaneous transfer,” Brodsky said.
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Brodsky's explanation seems logical, but it gets more complicated when the entity doing the economic development deal is not the entity that's making the sacrifice.
Remember, the MTA in September 2005 decided to sell development rights to the Vanderbilt Yard to Forest City Ratner at below-market rates --and before the MTA in June 2009 revised the deal to require a lower upfront payment and a 22-year payment schedule for the rest.
In both cases it was less of a boon for the MTA than a boon for the mayor, governor, and ESDC. In other words, the MTA's constituency--straphangers--bore a disproportionate impact. Had the fiduciary duty kicked in, the board members might have had cause for pause.
From ESPN Page 2 columnist Bill Simmons' Mailbag:
1. You know the NBA is in at least a little trouble financially when it allows a Russian billionaire [MikHail Prokhorov] to buy a team. Five or six years ago, how fast do you think David Stern squashes the idea when someone says to him, "So, I guess the best way to describe him is that he's like a Russian Mark Cuban"? Two seconds? One second?Which raises the question: Did Stern just open the door to all foreign billionaires, or was this a one-time thing? I'd argue that the NBA was soooooooooo desperate to fix this Nets situation and salvage the Brooklyn complex that it didn't care where the money came from. This was a one-time exception. We need a cash buyer. Period. I think a Saudi oil sheik would have been approved as an owner. I think Tom Cruise would have been approved. I think everyone short of a Pablo Escobar-type buyer would have been approved. It's the NBA and it's faaaaaaaaaaaaaaaaaan-tastic … ( … -ally in need of some cash).
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Still, Simmons thinks the Nets, assuming a move to Brooklyn, might now nab the hottest free agent of 2010:
This completely changes the landscape of the LeBron [James] Sweepstakes. Before, the Clippers and Zombie Sonics were the best basketball situations for him (no way for both); the Lakers were out; the Bulls seemed far-fetched; and the Knicks are such a mess that adding LeBron would have been like reliving Gretzky and the Kings all over again. But Russian Mark Cuban's deep pockets coupled with Brooklyn and a decent young Nets roster? Intriguing!
Posted by steve at October 11, 2009 7:41 AM