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October 7, 2009
Forest City Ratner's 2005 PILOTs dodge and the IBO's 2009 recognition that tax-exempt status did not drive a higher railyard price
Atlantic Yards Report
In its 5/26/05 presentation (above) to the City Council, Forest City Ratner claimed it would voluntarily pay taxes on the Atlantic Yards arena, even though the building would qualify for an as-of-right tax abatement under ICIP, or the Industrial and Commercial Incentive Program (now ICAP).
That sounds civic-minded. From a corporate perspective, it almost sounds foolhardy: why would a profit-seeking corporation voluntarily pay taxes when it could get away with not paying them?
Taxes vs. PILOTs
Well, because they're not actually taxes. And because the savings are much greater if Forest City voluntarily pays such "taxes."
A payment in lieu of taxes (PILOT) is not a tax payment. The PILOT wouldn't go into city coffers. Rather, it would be used to fund arena construction.
Why go through this Rube Goldberg exercise? Because by maintaining the site as tax-exempt, but having voluntary PILOTs, the city and state allow for the issuance of tax-exempt bonds to build the arena.
Forest City Ratner would save nearly $200 million on tax-exempt bonds, with almost all of the loss absorbed by the federal treasury, not the state or city, according to the New York City Independent Budget Office.
Click thru for more on the convoluted dance performed by Forest City and the Bloomberg administration as they strive to justify the blatant ripping-off of taxpayers.
Posted by eric at October 7, 2009 1:02 PM