August 6, 2008
Flashback 2005: sports economist Zimbalist on the AY exception
Atlantic Yards Report
Norman Oder pokes more holes in the increasingly shaky reputation of one-time hole-poker sports economist Andrew Zimbalist.
In the June 2005 issue of the Brooklyn-based 'zine Stay Free, an interview (headlined Hoop Schemes) shows sports economist Andrew Zimbalist poking holes in sports facility studies, but insisting his study for developer Forest City Ratner was an exception.
However, a paired interview with Zimbalist's intellectual foil, Neil deMause of Field of Schemes, shows some contradiction in the professor's calculations.
...Yet Zimbalist on the Brian Lehrer Show recently insisted incorrectly that Forest City Ratner was merely relying on as-of-right benefits. And, of course, he ignored costs for additional security and incorrectly speculated there would be no additional public contribution.
Posted by eric at 8:03 AM
July 30, 2008
Field of Schemes: Congress Probes How New Sports Stadiums Turn Public Money into Private Profit
A congressional committee is investigating whether New York City and the New York Yankees wildly inflated the value of the site for the team’s new stadium to float nearly $1 billion in tax-free bonds.
Democracy Now
Congressman Dennis Kucinich, Good Jobs New York's Bettina Damani and Field of Schemes author Neil deMause join host Juan Gonzalez to discuss subsidies, funny stadium math — and Atlantic Yards.
REP. DENNIS KUCINICH: I think that it’s very important to understand that we’re looking at a public policy matter here that relates not only to New York and not only to the Nets and the Atlantic Yard project, but it also relates to the whole country, as your other guests have said, because it’s quite possible that there are billions of dollars in tax benefits that should be going to municipalities for the purposes of repairing their infrastructure and for schools and other things and that are instead being diverted for these private sports complexes.
And the question is one of public policy, one of the IRS, and in the case of the New York Yankees, questions of securities law, because of the various amounts of the appraisal, $45 a square foot versus $275 a square foot, which have a bearing on the overall cost of the project. And if the cost of the project is inflated, that’s going to be of interest to the SEC, as well as the IRS.
...JUAN GONZALEZ: Right. And then, of course, the final irony with—because most of these stadiums have luxury boxes that are for corporations that go from $500,000 to $800,000, in the case of the Yankees, per year to rent these boxes, and of course, my newspaper, the Daily News, reported yesterday that in this deal, the City of New York arranged to have its own luxury box at Yankee Stadium available, presumably to city officials, as part of the deal for the financing. Bettina, your response to that?
BETTINA DAMIANI: It’s aptly coined the landlord suite. And it’s just another example of how local elected officials almost seem to be void of feeling that they have responsibility to the public, because they’re going to get nice seats, in the long run.
article/video/audio/download MP3
NoLandGrab: "The landlord suite." Nice. If we taxpayers are funding the lion's share of the costs, doesn't that make us the landlords? That being the case, NLG's got dibs on the first Mets-Yankees inter-league game next season.
Posted by eric at 7:12 PM
Typo? City/state letter on tax-exempt bonds backdates MTA RFP by three years
Atlantic Yards Report
Maybe it's just a typo. Maybe it's a calculated slip. But there's another misleading element in a letter that, as I and Develop Don't Destroy Brooklyn have contended, deserves serious scrutiny.
The 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department from the New York City Industrial Development Authority and the Empire State Development Corporation backdates the issuance of the Metropolitan Transportation Authority's request for proposals (RFP) for the Vanderbilt Yard by three years, to 5/24/02.
The MTA's RFP was issued on 5/24/05.
...What's the value of the 2002 date, compared to 2005? Well, maybe it's none, given that 2005 still would fall well before the October 2006 cutoff.
Then again, a 2002 date suggests that momentum for the project--which the letter says commenced in 2003--reached back even earlier.
Also, the 2002 date avoids potential consternation should regulators wonder why, if the project began in 2003 and the MOU was signed in February 2005, the Vanderbilt Yard was put out for bid only in May 2005.
That sequencing issue has been at the heart of the AY federal eminent domain case, which was dismissed by a district and appellate court and refused a Supreme Court hearing--but was never really addressed by the courts.
NoLandGrab: Typo or obfuscation? We don't know, but we do know that once the tale-telling starts, it gets easier to do it again and again, and it's been going on with Atlantic Yards since about "May 24, 2002."
Posted by eric at 8:12 AM
Questions Raised Over Financing Deals of New Yankees Stadium
WNYC News Radio
By Matthew Schuerman
Details about the Congressional inquiry into the Yankee Stadium financing might seem a little off-topic, but keep in mind that the Yankees have requested additional bond financing and that Bruce Ratner hopes to take advantage of the same in order to finance the Nets arena.
The story about the Yankees deal took an interesting turn yesterday when WNYC reported the following scoop (full transcript):
The new Yankee Stadium is receiving more than $600 million in city, state and federal subsidies. Almost half of that money came in the form of tax exempt bonds issued by the city's Industrial Development Agency, or IDA. Under the bonding agreement, the IDA would have permanent access to a luxury suite at the new stadium. Westchester Assemblyman Richard Brodsky says the agreement is another reason to question what public interest the new ballpark is serving to deserve such a high level of taxpayer support.
Though a spokesman for the Mayor has said the City hasn't decided whether or not to accept this gift, our guess would be NOT, now that WNYC has blown their cover.
Develop Don't Destroy Brooklyn explores the possibility of thank-you gifts from Bruce Ratner (link):
If Bruce Ratner ever builds his Barclays Boondoggle Arena (fat chance) one can presume that he'll make a gift of free luxury skyboxes to numerous officials, either because:
1. He owes a lot of people in government for his boondoggle land grab, and/or 2. He can't seem to find buyers for his luxury suites, so why not give them away.
Good Jobs First's blog Clawback is reporting that Bettina Damiani, journalist Neil deMause, columnist Juan Gonzalez and Rep. Kucinich are scheduled to appear this morning to discuss the controversy on Democracy Now (9 a.m. on BCAT channel 34/67.).
Additional Coverage:
AP via amNY
NY assemblyman queries Yankees on stadium subsidy
State Assemblyman Richard Brodsky wants the New York Yankees to explain why the proposed value for land under Yankee Stadium appears inflated in an Internal Revenue Service tax estimate.
He also wants to know if the city agencies considering the team's request for public funds will get a luxury suite in the new stadium.
The Westchester Democrat raised the questions in a letter to Yankees' President Randy Levine released Monday. Brodsky has questioned the Yankees' request to subsidize the new stadium using $336 million in public funds issued by the city's Industrial Development Agency.
...
"This goes to the heart of whether it is a public project or a private project," Brodsky said in an interview. He said his review of documents concerning the project differ from public comments about the deal that would use public support to help the Yankees build their new stadium in the Bronx.
Newsday via amNY
Panel to probe land appraisals for Yankee Stadium
A congressional subcommittee hearing centered on the use of public financing to build sports complexes like the new Yankee Stadium was postponed, allowing the panel to probe deeper into why the value of land under the Bronx stadium appeared inflated on tax reports, an official said Tuesday.
The Domestic Policy Subcommittee of the House Oversight and Government Reform Committee -- chaired by Rep. Dennis Kucinich (D-Ohio) -- had scheduled the hearing Wednesday. It's now planned for sometime in September.
On Friday, Kucinich sent letters to Yankee officials, the Internal Revenue Service and various city agencies inquiring about the accuracy of land appraisals reported to the IRS. In the letter, he requested documentation detailing land value estimates and how they were calculated. He wanted the documents no later than Aug. 6.
But Assemb. Richard Brodsky (D-Westchester) had already obtained some of the information Kucinich had sought and on Monday released land value estimates he said bared discrepancies.
...
Kucinich, a longtime skeptic of public subsidies for sports complexes, and Brodsky, a critic of public authorities, have questioned the Yankees' request for an additional $336 million in tax-free bonds to help complete the new $1.3-billion stadium. The Mets are also seeking about $52 million more in tax-exempt-bond financing for its new stadium. Brodsky, who earlier this month held a hearing in Manhattan on tax-free-bond financing, said he was invited to testify in the September hearing.
Posted by lumi at 4:38 AM
July 28, 2008
THAT '70S WOE IN RERUN
GOV WARNING OF WORST ECONOMY IN DECADES
NY Post
by Fredric U. Dicker
The Post's political maven claims an exclusive on the news that Governor Paterson is going to toss a bucketful of cold water on New York's already-ailing economic psyche.
Gov. Paterson, convinced the state faces its worst fiscal crisis since the mid-1970s, will deliver the grim news in an unprecedented special address to New Yorkers as soon as tomorrow night, The Post has learned.
The governor's address - which his aides hope will be televised by public and cable news stations - will say that plunging state revenues will force painful cuts in state services, necessitate a reduction in the state work force, possibly through layoffs, and require other difficult economic measures, source said.
Paterson is also expected to announce that he's ordered state agencies to slash spending beyond the relatively modest 3.3 percent cuts he ordered in late spring.
NoLandGrab: So, what'll it be? We need this luxury-suite-filled arena more than ever in these tough economic times? Or, Atlantic Yards, an unsupportable commitment of public funds at a time when we all need to be tightening our belts? You can bet that Forest City Ratner's lobbying machine is going all out to convince the Gov that the Net's net is positive for state coffers.
Posted by eric at 12:38 PM
Congress probing whether city wildly inflated value of land for new stadium
NY Daily News
by Juan Gonzalez
The News columnist probes two divergent opinions of the value of the land underlying the new Yankee Stadium — both emanating from New York City officials!
A Congressional committee has launched a probe into whether the city and Yankees wildly inflated the value of the site for the team's new stadium to float nearly $1 billion in tax-free bonds.
Rep. Dennis Kucinich (D-Ohio) last week demanded "specific documents and reports" that could show the city claimed the land beneath the new Yankee stadium was worth nearly seven times its true value.
The massive switcheroo allowed the city to sell $941 million in bonds for the stadium, which must by law be linked to a site's actual value.
...Kucinich, who heads the House Committee on Oversight and Government Reform, is zeroing in on dramatically different estimates the city offered for the stadium land - one of $275 per square foot and another of just $45. A hearing is set for September.
...Why such wildly different values for the same property?
"Our assessors jacked up the numbers and the comparables for the Council to justify the stadium bonds," said a Finance Department official familiar with the project.
NoLandGrab: Vacant land in the Bronx? $275 per square foot.
Vacant land in the Bronx? $45 per square foot.
The possibility of the United States Congress denying tax-exempt financing to the Yankees, Mets and Atlantic Yards developer and Nets owner Bruce Ratner? Priceless.
Posted by eric at 11:43 AM
Kucinich probes PILOTS for sports venues
Representative Dennis Kucinich is looking into whether or not the Yankees tailored the valuation of the team's new stadium in order to justify the amount of tax-free bond financing.
This additional scrutiny of Payment in Lieu of Taxes (PILOTS) could affect Bruce Ratner's Atlantic Yards arena, since he's seeking the same type of bond financing, which could save him perhaps as much as $165 million.
Reuters (via Yahoo), Rep. Kucinich probes Yankee Stadium debt data
Dennis Kucinich, the Democratic Chairman of the House Committee on Oversight and Government Reform, said in a statement that he "has broadened the Subcommittee's investigation of tax-exempt public financing of professional sports stadiums to include specific document requests relating to the valuation of the new Yankee Stadium."
The Yankees, which have won 26 World Series titles and are one of the world's richest professional sports teams, want a city agency to sell $350 million of extra bonds to help finance their new home.
But the Internal Revenue Service must approve the new debt. It stiffened its rules after $941 million of stadium bonds were sold for the Yankees in 2006.
The Yankees repay the bonds that were sold by making so-called payments in lieu of taxes. If the land and buildings are overvalued, the city agency can sell more debt because the payments in lieu of taxes can be higher.
...
The bond issue has gained new currency because the New Jersey Nets basketball team, who plan to move to a new stadium in Brooklyn, New York, also want the IRS to let a city agency sell more than $800 million of tax-free bonds for them. The new arena for the Nets would anchor a big development now struggling in a cooling real estate market.
MetroNY, Yankee Stadium’s worth?
To get the financing, the Yankees needed to pay off the debt with payments in lieu of property taxes, though the team has never paid property taxes. If the Yankees did pay property taxes, the IBO said, the amount would fall $29 million short of what the team needed to satisfy the debt. The city disagreed: The stadium would be valued at $1 billion, and the land underneath it was worth $200 million.
But a much lower number was offered when the city got that land appraised to satisfy a federal requirement to replace parkland with property of equal value. In a second set of appraisals obtained by NYC Park Advocates, the value of Macombs Dam Park was put at $21 million, just below the $25 million total of the replacement parcels.
...
The probe likely won’t affect the $943 million in tax-exempt bonds the Yankees have already sold, but it could stop the team — and the Mets and Nets — from getting similar financing.
Atlantic Yards Report covers the Metro coverage.
Posted by lumi at 4:44 AM
July 26, 2008
Was Yankee Stadium value "gamed" to issue PILOTs? Congressional probe could affect AY
Atlantic Yards Report
Was the valuation of the new Yankee Stadium "gamed" so that the foregone taxes exceeded the expected bond payments, thus allowing a PILOT (payment in lieu of taxes) financing deal?That's the subtext of the inquiry launched yesterday by the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee, which in March 2007 and October 2007 held hearings regarding tax-exempt financing for sports facilities.
And should the subcommittee, chaired by Rep. Dennis Kucinich (D-OH), find the procedures sketchy, that could cast doubt on similar financing plans for Atlantic Yards arena and the new Mets stadium.
Posted by amy at 12:58 PM
July 25, 2008
On further review, O'Malley got bum rap
Case can be made that Dodgers owner was pushed
Albany Times-Union
by Brian Ettkin
In a lengthy and interesting piece on Walter O'Malley on the cusp of the former Brooklyn (and L.A.) Dodgers' owner's enshrinement in baseball's Hall of Fame, reporter Brian Ettkin repeats the too-often repeated error about the precise location of the Ebbets Field successor that never came to be, with a twist.
O'Malley continued asking for help to acquire the Atlantic and Flatbush site (where Bruce Ratner would build Atlantic Yards five decades later).
Ettkin is actually right about the location for Atlantic Yards, but he's wrong about O'Malley, who actually wanted to build on the spot that's now home to Ratner's Atlantic Center mall. He's also off on his phraseology — "would build" is different than "wants to build."
The article does offer up a number of good tidbits, including:
O'Malley offered to build a 100-percent privately financed Major League Baseball stadium, the first since Yankee Stadium had been constructed in 1923, and the land once the city acquired it.
While O'Malley's willingness to privately finance the ballpark was much different than Ratner's dependence on subsidies, O'Malley's plan, like Ratner's, relied on the use of eminent domain.
Moses considered big-league sports of minimal value to a city.
In that respect, Moses and many economists would agree.
[T]he Chavez Ravine stadium deal wasn't valid until a vote of the people narrowly passed it on June 3, 1958, and even then O'Malley had to win several court appeals filed by stadium opponents.
Unlike residents of New York City, Angelenos actually got to vote on the Dodgers' stadium plan.
Posted by eric at 12:30 PM
July 23, 2008
IN THE FRAY: If You Build It, the Jobs Won't Come
The Wall Street Journal
by Mark Yost
More evidence that publicly financed stadiums and arenas are a poor investment for taxpayers, and it's no different in the nation's Capitol.
Just a few years ago, the corner of M Street and New Jersey Avenue was not somewhere you wanted to be after dark. It was part of Washington's notorious Southeast neighborhood, rife with drugs, crime and poverty. But today, about 30,000 baseball fans flock here 80 nights a year to watch the Washington Nationals play in their new $611 million stadium.
While the neighborhood is certainly undergoing a renaissance, what's uncertain is how much credit should go to the ballpark. It's a question that has been debated countless times before, over other stadiums, but the historical evidence is pretty clear.
Sports economists have long argued that publicly financed stadiums are a waste of taxpayer money. And they have the data to prove it.
Yes, stadiums do create high-paying construction jobs for a year or two. But the vast majority of long-term employment is low-wage concession jobs. A Congressional Research Service study of the Baltimore Ravens stadium found that each job created cost the state $127,000. By comparison, Maryland's Sunny Day Fund created jobs for about $6,000 each.
...[U]nder terms of the deal, the city expects to see about $40 million a year in revenue. The smallest portion will come from the team, which is supposed to pay $5.5 million a year in rent. But just this week the Nationals began withholding payments, saying the city had failed to "complete" the stadium.
The vast majority of income is expected to come from the same people who financed the stadium: the taxpayers. An estimated $14 million a year is projected from taxes on tickets, concessions and merchandise. Another $24 million will come from a new stadium tax on D.C. businesses with gross revenues of $3 million or more. Indeed, with the exception of some housing and small businesses that have moved into the neighborhood, the vast majority of the "development" in Southeast is nothing more than taxpayer-funded public works projects.
So in the end, what did the taxpayers get other than a bill for $611 million? The Washington National's Web site advertises jobs for elevator operators, fan ambassadors and security guards. The pay is $7.50-$8.50 an hour.
Posted by eric at 10:03 AM
July 21, 2008
Asking feds not to approve tax-exempt bonds for AY arena, DDDB criticizes city/state letter
Atlantic Yards Report
Norman Oder posted the highlights from Develop Don't Destroy Brooklyn's (DDDB) letter to the IRS, in which the group made the case against reopening a federal tax loophole for Bruce Ratner's Atlantic Yards project.
Some of [DDDB's] criticisms were first reported in this blog: the letter overstates how much land Atlantic Yards developer Forest City Ratner actually controls and it fails to point out that, at least according to available evidence, the foregone property tax might be much less than the anticipated PILOT payment. Also, DDDB points out that the city and state overstate the amount of progress achieved on the project.
...
At stake is a benefit --the difference between tax-exempt and taxable bonds--to arena developer Forest City Ratner worth an estimated $165 million on $800 million worth of bonds for a $950 million arena. The burden would fall mainly on federal taxpayers--hence the interest of the city and state in getting it passed. Should the “loophole” not be preserved for the arena, there might be increasing pressure on the city and state to increase local subsidies for the facility.While DDDB’s concerns may be seen as more parochial than concerns about tax-exempt financing for sports facilities expressed by Rep. Dennis Kucinich (D-OH) and Assemblyman Richard Brodsky, the specific criticisms in the letter likely had not been raised previously in direct communication to IRS and the Department of the Treasury.
Posted by lumi at 5:29 AM
July 20, 2008
On the new Yankee Stadium, two very different calculations in the NY Times (Zimbalist vs. deMause)
Atlantic Yards Report
From a 1/22/06 op-ed in the New York Times by sports economist Andrew Zimbalist, headlined Fair Ball:
The Yankees are proposing a fair financial deal to the city. Nationally, during the last 15 years, the public share in stadium development costs (that is, the stadium plus roads, utilities and so forth) for professional sports has averaged around 75 percent. The Yankees are planning to spend $800 million of their own money on the new stadium (no major league baseball team has spent more than $300 million on their own playing field). The city and state together will spend about $210 million for improvements in the neighborhood. By this reckoning, the public share is only about 21 percent.A different view
From a 7/17/08 essay by Tommy Craggs, headlined Goodbye Ghosts, Hello Hefty Tax Bill:
As the excellent book "Field of Schemes" by Neil DeMause puts it, Steinbrenner’s tenure has been "little more than one long plea for a new city-financed ballpark," a wish that will be fulfilled when the new stadium next door opens in 2009, at a public cost that DeMause estimates will be just south of a billion dollars.Many of those public costs are not direct subsidies, as deMause explains. But the distinction sure is worth sorting out.
Why? If Zimbalist's narrow view, which excludes many benefits to the team owners, is incorrect, well, not only is his defense of Yankee Stadium untenable, so is his (easily-criticized) analysis of the impact of Atlantic Yards.
Posted by amy at 11:58 AM
July 18, 2008
Two Local Stadium Projects Face Different Futures
The NY Sun
By Evan Weiner
Mayor Bloomberg on Bruce Ratner's controversial Atlantic Yards megaproject:
"The development in Brooklyn is going ahead," Bloomberg said in an interview Monday. "I think, given the economy, some of the construction will be a little bit slower. But the arena is going to get done on time, and the New Jersey team is going to move over there.
"I think it is going to be great for Brooklyn," he continued. "Brooklyn is a sports borough if there ever was one. If you take a look at the new Shea Stadium, the design is based on Ebbets Field. It is really a continuation of the sports legacy that New York has had."
Either Mayor Bloomberg actually believes that local team owners are footing the bill for new venues or he doesn't know when to stop lying, to a reporter who covers the business side of sports no less! Amazing.
Bloomberg said he thinks sports "should stand on its own" and "can stand on its owner" when it comes to owners such as the Steinbrenner family in the Bronx footing the bill for a new Yankee Stadium, Ratner in Brooklyn, and the Wilpon family in Queens picking up the tab for a new Mets ballpark. But the city (and state) is still heavily subsidizing the two new baseball parks and the Brooklyn arena with significant tax breaks, tax incentives, and funding for infrastructure (Bloomberg declined to comment on city subsidies).
NoLandGrab: Is it possible that the Mayor doesn't know that NYC's direct contribution to the Atlantic Yards project can be spent on land acquisition?
Posted by lumi at 5:38 AM
July 17, 2008
In court, the not-so-credible Professor Zimbalist gets shredded twice
Atlantic Yards Report
Professor Andrew Zimbalist's interview with Brain Lehrer this week marks the second time in as many months that the well known sports economist has faced tough questioning.
[Zimbalist's] credibility was further undermined last month when he testified as an expert witness in a trial in Seattle over the departure of the Sonics for Oklahoma City.
...
One spur to the settlement, surely, was the poor performance of expert witness Zimbalist, whose stint on the stand provoked headlines like "Sonics defense shreds professor's report" and "Sonics lawyer stymies sports economist."
The Sonics' lawyer rubs Zimbalist's face in the professor's own boilerplate report:
Zimbalist was there to describe the tangible and intangible values of the team, but, as the 6/17/08 Post-Intelligencer reported, in a blog headlined "Defense rebounds with ugly flurry against plaintiff's economist," the going was tough:
Sonics lawyer Paul Taylor then tore into Zimbalist, basically accusing the author of taking the same report he wrote for the Los Angeles Angels of Anaheim in 2005 and using it for the Sonics, showing Zimbalist several passages from both reports and revealing striking similarities, almost to the word, nearly destroying Zimbalist's credibility.
Taylor, who lost out on many exchanges with former Seattle Center director Virginia Anderson on Monday, pounded away at Zimbalist, an embarrassing conclusion to a shaky day for the city.
Apparently the lack of peer review of Zimbalist's work has been an issue before:
Taylor even pointed to another legal proceeding in which Zimbalist lost credibility. In an opinion issued 1/7/08 in the antitrust case Kentucky Speedway vs. NASCAR and International Speedway Corporation, Kentucky-based federal judge William Bertelsman wrote:
Zimbalist’s approach… has not been tested; has not been subjected to peer review and publication; there are no standards controlling it; and there is no showing that it enjoys general acceptance within the scientific community. Further, it was produced solely for this litigation.
...
Still, the judge's criticism of Zimbalist’s novel approach sounds a lot like... Zimbalist’s not-peer-reviewed study for Forest City Ratner, produced solely to get the project passed.
Posted by lumi at 4:57 AM
Sports Economist Battered in Blogosphere
From Develop Don't Destroy Brooklyn (dddb.net):
[T]he interesting news event over the past two days has been watching the multimedia dust-up between Smith College sports economist Andrew Zimbalist (one-time sports arena critic and author of the laudatory FCR report on Atlantic Yards) and Norman Oder from Atlantic Yards Report, who needs no introduction in this space. The exchange has also been enlightening for students of the changing dynamics of the media landscape.
For Prof. Zimbalist it started innocently enough, with an appearance on the Brian Lehrer show in this All-Star week ostensibly to discuss the economics of baseball. But early on host Lehrer began to home in on Zimbalist's apparent new enthusiasm for the tax-exempt financing that the Yankees (and the Nets) are seeking, finally saying with some surprise "So you’re really a defender of the Steinbrenners, on these various controversies?"
Zimbalist began a quick verbal tap dance but it was too late.
Click here for a the highlight reel.
Posted by lumi at 4:51 AM
July 16, 2008
Author deMause on Zimbalist: "a lot of people don't take him as seriously"
Atlantic Yards Report
Journalist Neil deMause's thoughts on the impact of Professor Andrew Zimbalist's Atlantic Yards economic impact analysis:
I don’t think it's destroyed his reputation by any means, but I think there are a lot of people who don’t take him as seriously as they used to. I certainly don’t. I used to think he was somebody who you could go to and would give you a straight answer based on his years and decades of study. I’ve just seen too much work by him that seems to be bending over backwards to make a project look good. His response, when I ask him about it, is What do you know, you’re not an economist.
I’m like, Yeah, I know I’m a journalist. That’s why my job is to question the economists. So, if the numbers don’t add up, I’ve got a calculator. So it’s been very difficult. Andy has always been a prickly guy in the best of times and he’s never taken kindly to people disagreeing with him on stuff.
NoLandGrab: Yesterday, the prickly professor sent a follow-up note to Brian Lehrer, after facing tough questioning on the local weekday radio talk show.
Posted by lumi at 5:47 AM
Deconstructing Professor Zimbalist's dubious defenses of his radio appearance
Atlantic Yards Report
Apparently Professor Andrew Zimbalist got pretty rattled during an on-air interview with Brian Lehrer, who had done some homework and referenced Norman Oder's Atlantic Yards Report blog — rattled enough to send in a follow-up email trying to explain himself.
Norman Oder posted a rebuttal of Zimbalist's analysis in a running commentary.
AZ: Clearly, a group of people are angry about the economic impact report I wrote for FCRC. I stand by that report. It does not contradict anything in the scholarly literature and it does not contradict anything that I have written. I explain this clearly in my report. While it is true that I was paid for writing this report, it is also true that I voiced support for the project before I talked to anyone at FCRC. (Incidentally, the Mets are also using the same tax exempt/PILOT scheme to finance their new field and the team is also paying for the lion's share of development expenses.)
He stands by the report? That's an empty statement, given that he claimed that "Forest City Ratner was simply taking advantage" of existing tax exemptions rather than the special benefits noted by the Independent Budget Office's September 2005 report on Atlantic Yards.
NoLandGrab: "It does not contradict anything in the scholarly literature?" Yeah, and "mission accomplished" in Iraq, oil prices are at historical highs because of shadowy faceless "speculators" and jackalopes are real if you want them to be.
Posted by lumi at 4:35 AM
July 15, 2008
Sports economist Zimbalist criticizes "bogus" economic impact studies, fails to look in mirror
Atlantic Yards Report
Norman Oder follows up on yesterday's appearance by sports economist Andrew Zimbalist on WNYC's Brian Lehrer Show, and all we can say is that for the sake of his professional reputation, the Professor is lucky that Brian didn't open the phones to the speed-dialing AYR blogger.
So there he was, sports economist Andrew Zimbalist, on the Brian Lehrer Show yesterday to talk about the All-Star Game, and suddenly he had to defend his public statements supporting the Yankee Stadium deal and his not-peer-reviewed study endorsing Atlantic Yards.
Had there been an equal debate, Zimbalist would have been flattened. He continued to insist that the Yankees deserved praise for paying for their stadium, without acknowledging the host of special benefits to the team. He continued to insist that Forest City Ratner was using only as-of-right benefits for Atlantic Yards, despite ironclad evidence to the contrary.
And when challenged to resolve the inconsistency between his criticism of the West Side Stadium deal and his support for Atlantic Yards, he became defensive and suggested that the former might have emerged a decade ago, when it was actually several months after he issued his report for Forest City Ratner.
NoLandGrab: Like "jumbo shrimp" and "military intelligence," "sports economist" is obviously an oxymoron.
Posted by eric at 10:33 AM
July 14, 2008
The Future of Baseball
The Brian Lehrer Show
WNYC Radio
Atlantic Yards Report's Norman Oder dominates the comments section — and scores an on-air mention — during Brian Lehrer's interview with the author of the Forest City Ratner-commissioned "economic analysis" of the Atlantic Yards project.
Should taxpayers’ money fund gleaming new stadiums in a time of economic downturn? On the eve of the All-Star Game in Yankee Stadium, sports business expert Andrew Zimbalist gives his take on the future of America’s favorite pastime.
NoLandGrab: Zimbalist's claim that "the Yankees are paying the full freight" of the $1.3 billion cost of their new stadium is pure fantasy, and calls into question "the Ol' Professor's" credentials as an economist. Field of Schemes author Neil deMause has a far more realistic estimate, updated in June, which shows that it's the taxpayers, not the Yankees, who are carrying the load.
Posted by eric at 12:24 PM
Newark watching the finances as arena finishes its emergency system
The Newark Star-Ledger
by Maura McDermott
Next month, the Newark Downtown Core Redevelopment Corp. will launch a national search for a firm specializing in financial performance and maintenance of arenas, said William Crawley, the agency's chief operating officer. The agency oversaw construction of the arena and now must make sure it lives up to its promises.
The goal is to make sure the Devils pay the city what they owe, maintain the arena properly and stay competitive, Crawley said.
...Hiring an expert to analyze the arena's performance is a wise decision, said Howard Bloom, publisher of SportsBusinessNews.com.
"It's the responsible thing to do to make sure the taxpayers get as much of a return on their investment," Bloom said. "It's a matter of checks and balances."
The agency also aims to have the management firm measure how the venue stacks up against its competitors, Crawley said.
...The trouble would come if the Nets build their planned arena in Brooklyn, adding to the competition from the Izod Center in the Meadowlands and other nearby venues, Bloom said.
New Jersey officials have sought to attract the Nets to Newark, but owner Bruce Ratner insists he will break ground on a Brooklyn arena by the end of the year.
NoLandGrab: Should Bruce Ratner actually succeed in building Atlantic Yards, close monitoring of the revenue due taxpayers would certainly be wise. But if history is any guide, his elected and appointed enablers in City government would likely just take his word for it.
Posted by eric at 10:50 AM
FCR consultant Zimbalist (in 2003): "no rationale" for federal subsidy of projects like AY arena
Atlantic Yards Report
Ever wonder why Forest City Ratner consultant Andrew Zimbalist, the esteemed sports economist, titled his report (first issued in May 2004) on the developer's project Estimated Fiscal Impact of the Atlantic Yards Project on the New York City and New York State Treasuries?
Well, the report was aimed at getting city and state officials to back the project. And they did, like lemmings--as did editorialists.
But this was no "solid and verifiable analysis," as Frank Rashid of the Tiger Stadium Fan Club at a 3/29/07 hearing told Congress should be required for publicly funded projects.
After all, had Zimbalist calculated the impact on the federal treasury, well, he would've had to tell the truth and call it a loss from that angle, given that the subsidy for tax-exempt bonds--now worth perhaps $165 million to FCR--falls largely on federal taxpayers. (The arena has more than doubled in cost since Zimbalist issued his report in 2004, so the federal tax exemption has grown significantly.)
Posted by lumi at 4:51 AM
July 8, 2008
Our "by-the-numbers" mayor and his not-so-free-market approach to Atlantic Yards
Atlantic Yards Report
So yesterday, in an article headlined Titans Seek New York Mayor in Bloomberg’s Mold, the New York Times reported that leading business executives, including Jerry Speyer (#1 on the Observer’s list of most powerful people in real estate), hope for a mayor who has the luxury of “financial independence, his lack of party affiliation and his corporate, by-the-numbers approach to management,” and, in the words of one interviewee, “not beholden to special interests.”
Amid a general shower of praise for Bloomberg, the Times allowed that his “administration is considered an ally to many corporations, especially developers.”
What the newspaper didn’t do is examine how a by-the-numbers approach to management might be contradicted by a look at Bloomberg’s treatment of developments like Atlantic Yards, where he’s broken promises, failed to scrutinze the development closely, and falsely claimed the free market was at work, even as sports teams benefit enormously from monopoly rules that enforce franchise scarcity and provoke cities and states to bid against each other by offering subsidies, an issue to be discussed in detail below.
Meanwhile, his administration is busy lobbying in Washington to ensure that a “loophole” (in the words of the chief counsel of the Internal Revenue Service) remains to allow tax-exempt financing for the Yankees and Mets stadiums, both under construction, and the Atlantic Yards arena.
In other words, the Bloomberg who imposed the once-politically unpopular smoking ban and pushed for congestion pricing loses track of his principles when it’s time to construct monumental sports structures where, not coincidentally, there are ribbons to cut.
Posted by lumi at 4:07 AM
July 6, 2008
Kiss my grass, Mayor Bloomberg
NY Daily News
by Michael O'Keeffe
News sports columnist Michael O'Keeffe wonders why the City of New York refused to grant a permit for a 2004 Iraq War protest on Central Park's Great Lawn, but is more than happy to accommodate a Bon Jovi concert sponsored by Major League Baseball.
But given how Bloomberg has consistently put the greed of the sports teams - especially the Yankees, Mets and Nets - over the needs of ordinary citizens, you don't need a weatherman to know which way the wind blows.
As Daily News columnist Juan Gonzalez pointed out last week, City Hall is backing a Yankee request for $366 million in additional tax-exempt financing to complete the new Yankee Stadium - a very expensive handout for a private business that employs a tiny number of New York residents.
Lawyers for Willets Point businesses, meanwhile, say the city has refused to provide even basic services to the neighborhood for years. So is it coincidence or conspiracy that the city has decided to use eminent domain to throw out the junkyards and body shops just as the Mets are putting the finishing touches on their nearby new stadium?
Bloomberg, meanwhile, has been a shameless cheerleader for Bruce Ratner's Atlantic Yards project, which has become an international synonym for a shameless corporate land grab.
Posted by eric at 12:50 PM
July 3, 2008
Lawmakers Debate Public Funding Of New Stadiums' Construction
NY1
The plan to use public money to help build the Bronx’s new Yankee Stadium and the Mets' new CitiField in Queens came under fire at a state Assembly hearing in Downtown Manhattan Wednesday.
The city's Economic Development Corporation wants to use hundreds of millions of city-issued tax-exempt bonds to help finance the projects, but some lawmakers object to such use of the public purse.
...Two years ago, the city issued $920 million in tax-exempt bonds for Yankee Stadium and more than $500 million in tax-free loans to the Mets.
But now, the Bronx Bombers want as much as $360 million dollars more –- preferably through more city-issued tax-free bonds.
City officials defended the practice.
...But while supporters originally touted 1,000 new jobs would be created by the new stadium, the Yankees disclosed in this document that only 15 new permanent jobs would be created.
article/video [dialup/broadband]
Posted by eric at 9:56 PM
At Assembly hearing, Brodsky questions Yankees’ deal; more AY subsidies hinted
Atlantic Yards Report
At a joint hearing yesterday of several state Assembly committees regarding tax-exempt bond financing for the New York Yankees, New York City Economic Development Corporation President Seth Pinsky faced forceful scrutiny from Westchester Assemblyman Richard Brodsky, a vocal foe of “Soviet-style bureaucracies,” his term for the unelected city and state authorities and agencies that have steered such deals.
Though Brodsky said he still hadn’t made up his mind about the legitimacy of the Yankees’ request for additional tax-exempt bonds—under what the Internal Revenue Service describes as a “loophole”--he did offer this statement at the end of the three-hour hearing: “I dislike public benefits for private parties when the public at large is being starved in so many ways.” And if that’s a description of sports facility finance, he added, “so be it.”
The Atlantic Yards arena and the New York Mets stadium both were discussed only glancingly, but yes, there were hints of the additional subsidy request Forest City Ratner is expected to make.
Read the rest of the article to learn more about parallels to Atlantic Yards and how the Public Authorities Control Board approval of the financing of Atlantic Yards "occurred after a regulation was on the table that would effectively shut out tax-exempt financing for the arena."
ADDITIONAL COVERAGE:
amNY, Mets join Yanks in seeking tax-free funds for stadium
MetroNY, Fans forgotten part of Yanks’ new park
The NY Sun, Yankee Stadium Bonds Request Defended as Good for the Bronx
Posted by lumi at 4:29 AM
July 2, 2008
City on Yanks Bond Details: Reply Hazy, Ask Again Later
Runnin' Scared [The Village Voice blog]
by Neil deMause
Once again, we have to ask, if these deals are so good for us taxpayers, then why won't the public officials who orchestrate them just tell us the truth? The Village Voice's Neil deMause filed the following must-read report from today's Assembly hearing on subsidies for the new Yankee Stadium.
As promised, state assemblymember Richard Brodsky held a hearing this morning into the Yankees' latest request for $350 million (or so - see below) in city-backed tax-exempt bonds to help pay for extra doodads for their new stadium. The surprise: On the hot seat for the entire three-hour hearing was a single witness, Economic Development Corporation president Seth Pinsky, who at times struggled to come up with detailed responses to the questions posed by an increasingly impatient Brodsky.
Pinsky did explain one mystery right away: The reason no one can agree whether the additional Yankees bonds would total $350 million or $400 million or what is that the team hasn't submitted a formal request to the city, and won't until the Internal Revenue gives its blessing to the deal. "The Yankees have submitted a partially completed draft application to the [Industrial Development Agency] to put their project into the IDA queue," said Pinsky, and city lawyers have begun drawing up the paperwork, but nothing will go forward unless the IRS rescinds proposed rules that would have the effect of making the bonds more expensive. (Pinsky insisted no bond buyers would touch them at any price, effectively making them unusable for sports projects.) Likewise, a new set of bonds for the Mets (estimated by Pinsky at "tens of millions" of dollars) and promised financing for the Nets' Atlantic Yards project are on hold until the IRS comes to a decision.
Even the rough guesstimates in the Yanks' preliminary application, though, were not revealed at today's hearing - Pinsky's office had redacted them in the documents supplied to Brodsky. (At this point, visible steam all but shot out of the assemblymember's ears.) Pinsky insisted that letting on what the Yanks plan to spend their newfound money on could hurt their bargaining position with suppliers - leading Brodsky to snort that if the team wanted to keep the details a secret, CEO Lonn Trost shouldn't have gone bragging about them to reporters.
...Most of the hearing, though, was spent pressing Pinsky on why exactly the city needed to help finance the Yankees project in the first place. (Though the EDC chief rightly noted that the bulk of the tax-exempt bond costs would hit the federal government, the overall construction project is estimated to cost about $596 million in local subsidies, $419 million of that from the city.) Brodsky noted that in a "deviation letter" issued by the IDA to explain why the Yanks were being let out of the city's Uniform Tax Exemption Policy, the agency claimed that without public aid, the team would leave town:
Brodsky: Who in the IDA was told by the Yankees they would leave?
Pinsky: I don't recall.
Brodsky: Was anybody in the IDA told that?
Pinsky: I don't recall.
Posted by eric at 6:20 PM
Kavanagh to Question New York City Industrial Development Agency on Failure to Control Yankee Ticket Pricing
Kavanagh Will Question Agency Officials at Public Hearing on Yankee's Request for Additional Public Financing
Yonkers Tribune
At a public hearing today Assemblymember Brian Kavanagh (D-Manhattan) will continue his efforts to protect sports fans and taxpayers by questioning the New York City Industrial Development Agency on its failure to control ticket pricing at the new Yankee Stadium—a venue that has so far received $920 million in tax-exempt bonds to aid in construction.
"We're pouring hundreds of millions of dollars of tax-free bonds into a facility that no average New Yorker will be able to afford to get into. It's crazy." said Kavanagh, a member of the State Assembly's Committee on Corporations, Authorities and Commissions and Committee on Cities which are jointly holding the hearing with other Assembly Committees. "We need a law to require affordable tickets at the new Yankee Stadium, the new Shea Stadium, the Atlantic Yards Arena, and other venues around the state that seek public money. We have a responsibility to ensure that public money is used for public benefit."
Kavanagh and 30 of his Assembly colleagues recently introduced legislation (A11692) that would limit ticket price increases by sports franchises that receive public subsidies for their facilities and require that a percentage of tickets at these facilities be sold at prices affordable to people of modest means.
NoLandGrab: Better yet, how about just eliminating the subsidies?
Posted by eric at 4:07 PM
Does Beekman “blackmail” presage AY subsidy push?
Atlantic Yards Report
Even though Forest City Enterprises CEO and Bruce Ratner's cousin Chuck Ratner declared to investors, "We still need more” subsidies for Atlantic Yards, you don't really think that the Ratners would actually threaten and blackmail local government officials to make sure they got their way?
Once upon a time, "Bruce Ratner said that the project 'will be almost exclusively privately financed,'" and consider that the "Atlantic Yards project is not, however, as far ahead as Beekman Tower, which already has financing." Nevertheless, tantalizing clues remain.
Posted by lumi at 5:32 AM
So, why aren't naming rights counted as sports facility subsidies?
Atlantic Yards Report
From part deux of an interview with Neil deMause, the Brooklyn-based author of "Field of Schemes" explains why there's absolutely no good reason why the public shouldn't benefit from lucrative naming-rights deals, and how that relates to the creative financing scheme, dubbed PILOTs:
There’s no reason for this to be private money. If the public is building the stadium, if the public is owning the stadium, why should the team get to slap a name and get the money from it, or consider the money from it that pays off the stadium as paying off their share.
Y’know, I rent; if I decide to put a giant billboard on the roof of my house here--if my landlord lets me do it, I really don’t think he could let me keep all the money from it. If I say, I’d like to move into your apartment, but in order to pay my rent, I have to put a big billboard outside, he’s going to look at me as if I had two heads.
...
It’s very odd that the state will own everything about the arena except the part that makes money.
[Photo: Atlantic Yards developer and NJ Nets owner Bruce Ratner announcing the arena-naming-rights deal with Barclays Bank.]
Posted by lumi at 4:51 AM
Beveridge Fizzy On Future
The New York Observer
By Tom Acitelli
According to Dr. Andrew Beveridge, from an interview on demographic and socio-economic trends in NYC, projects like Atlantic Yards will be a burden to New Yorkers, or not, depending:
How will New York City be remembered from 2001 to the present? Like, the 1950s were extreme growth. The 1970s were a slow decay.
Let’s say we have a real problem. Things like Yankee Stadium, Atlantic Yards, Citi Field—the way in which those things have been financed … you’re looking at gimmicks that are kind of like gimmicks that happened before the last financial crisis, in the 1970s, where all the tax revenue goes to finance development projects and you don’t have any extra spillover. If it turns out we have a downturn, that may be what the Bloomberg years are remembered for: putting up a lot of projects that turned out to be very difficult to finance.
…If you had a real downturn, things could be really bad because you have all of these obligations that have been rolled up and it would be hard, probably, to meet them; so that’s sort of like the dark view.
If, on the other hand, even if we have a fairly short—what’d they call it—adjustment in the real estate market but the long-term growth continues, then this will all probably look like a real good idea.
Posted by lumi at 4:48 AM
July 1, 2008
Author deMause on tax-exempt bonds, PILOTs, & TIFs
Atlantic Yards Report
Sometimes Norman Oder isn't the brightest guy in the room, as revealed in his interview with journalist and sports-business reporter Neil deMause.
Regarding "the arcane world of tax-exempt bonds:"
Q. I’m flabbergasted that I and a lot of other people looking at Atlantic Yards didn’t really know this.
A. No one understands this. When it started coming up for the Jets project, they were going to use this end run, PILOT [payments in lieu of taxes] payments; instead of calling it rent, they would say, “OK, it’s PILOTs,” even though they claimed it wouldn’t actually be subject to property taxes, because it’s on public land. They said this isn’t rent, it’s tax money, even though it’s a special tax just for them. The Jets thing never happened, the Yankees and Mets used the same structure, got away with it and now the Nets are trying to use the same thing.
Click here to read what is probably the best explanation of the history of payment-in-lieu-of-taxes (or: How I learned to Stop Worrying and Love Building New Venues for Wealthy Team Owners).
Posted by lumi at 5:48 AM
Some questions for the Assembly hearing tomorrow on Yankees' tax-exempt financing (and what about the Nets?)
Atlantic Yards Report
On Wednesday morning, the Assembly Standing Committee On Corporations, Authorities And Commissions, chaired by Assemblyman Richard Brodsky, along with three other committees, will hold a joint hearing in Manhattan in order to look into "the request for increased public financing for construction of a new Yankee Stadium in New York City."
While a focus on the Yankees is understandable, an exclusive focus is curious, given that less than three weeks ago Brodsky issued a press release stating that the hearing would examine the New York City Industrial Development Authority's "practices and procedures for issuance of public debt with respect to sports facilities for the Yankees, Mets and Nets."
I asked Brodsky's office about the narrowing of focus; when I get a response I'll publish it.
Even if the hearing does not specifically address Forest City Ratner's expected request for $800 million in tax-exempt financing (though DDDB assumes it would), any scrutiny of the city agency's effort to get a "loophole" grandfathered in for the Yankees seemingly would apply equally to sports facilities sought by the Mets and the Nets.
Read on for the list of Norman Oder's questions for the hearing.
Posted by lumi at 4:27 AM
June 30, 2008
FCR consultant Zimbalist adds millions to AY subsidy total, calls for ULURP hearings (not quite)
Atlantic Yards Report
Norman Oder points out some glaring inconsistencies in the positions of sports economist Andrew Zimbalist, which seem, not surprisingly, to correlate with the source of his paycheck.
Andrew Zimbalist, the sports economist Forest City Ratner hired to produce a dubious study of Atlantic Yards costs and benefits, mostly dismissed a very big thing: the economic value of the tax-exempt bonds used to build the arena. And when writing about a very similar financing plan for the West Side Stadium, he called such bonds the equivalent of a public contribution.
So, would the $800 million in tax-exempt bonds for AY count as a public subsidy? Not under Zimbalist's logic, given that, in a 1/22/06 New York Times op-ed, he blessed a similar financing plan for the new Yankees Stadium, contrasting it with the West Side Stadium by noting that "the Bronx is already in a tax abatement zone."
But maybe that's not quite right--and it deserves scrutiny as the State Assembly takes up tax-exempt financing for the Yankees, if not the Nets, during a hearing on Wednesday.
There's increasingly less justification for such tax exemptions. Just as the city's longstanding 421-a tax exemption for outer-borough residential construction recently got an overhaul, given that the residential market had long since improved in certain neighborhoods, so have there been recent calls to reform the city's Industrial and Commercial Incentive Program (ICIP), on which the AY arena tax exemption would rely.
Posted by eric at 9:35 AM
Tax-subsidized stadiums vs. early childhood education? An expert's view
Atlantic Yards Report
Unlike so many of his colleagues in the House, Rep. Darrell Issa (R-CA) is not a lawyer, which may explain why he didn't follow the rule of never asking a question to which you don't already know the answer:
During the 10/10/07 hearing, Professional Sport Stadiums: Do They Divert Public Funds From Critical Public Infrastructure?, held by the Subcommittee on Domestic Policy of the Committee on Oversight and Government Reform, Arthur Rolnick, Senior Vice President and Research Director, Federal Reserve Bank of Minneapolis (but speaking for himself only), explained why early childhood education is a much better public investment than sports stadiums.
Ranking minority member Rep. Darrell Issa (R-CA) was a bit skeptical.
Issa: Did you also look at physical fitness, health and welfare, aspirations of young people, everything else that goes when they go to one professional baseball game and they say, "I want to be like that. I'm going to join my Pop Warner and I'm going to do this." Did you look at any of the other -- did you apply those same metrics to that?
Rolnick’s response didn’t mention, uh, steroids, but he still knocked it out of the park.
Rolnick: Yes, we did. Actually, we did. And we do know that baseball is going to exist in this country whether we subsidize it or not. It was interesting when the Minnesota hockey team left Minneapolis for Dallas a number of years ago.
So what happened with those kids who loved hockey? They started to go to the high school games, they started to go to the college games. It isn't that entertainment, sports entertainment disappears. They started to go to some of the minor league games.
Posted by eric at 9:02 AM
June 27, 2008
Gargano flashback: "no taxpayer money will go to build a sports arena"
Atlantic Yards Report
Develop Don't Destroy Brooklyn points to a 8/23/04 interview with Charles Gargano, then chairman of the Empire State Development Corporation, who seemed definitive that there would be no help for Forest City Ratner's Atlantic Yards arena:
The governor and I have made it clear for nine-plus years that no taxpayer money will go to build a sports arena. We will consider helping with infrastructure improvements, like a platform over the rail yards on the West Side or new subway stations, which helps the public at large.
Norman Oder unpacks that damn lie in the rest of the article.
Develop Don't Destroy Brooklyn has more on its web site, including Gargano's yarn about Yankee Stadium, which is turning out to be one of the most successful boondoggles for one of the most successful professional sports franchises in history.
Posted by lumi at 5:12 AM
Congressman offers unskeptical endorsement of Zimbalist's dubious AY study
Atlantic Yards Report
In Congress last year, Andrew Zimbalist's dubious study of Atlantic Yards for Forest City Ratner got a mindless endorsement from the ranking minority member of the Subcommittee on Domestic Policy of the Committee on Oversight and Government Reform of the House of Representatives, even though an expert witness warned that accepting studies that were not peer-reviewed was akin to federal drug regulators embracing reports created by the drug companies themselves.
...
[L]ater in the hearing, some non-peer-reviewed research, albeit with an academic gloss, was promoted by Rep. Darrell Issa (R-CA), the ranking minority member. He declared (see p. 123):Mr. Chairman, I would also like to put into the record an economist's study from the Robert A. Woods professor of economics at Smith College in Massachusetts. It is from May 1, 2004, and it specifically deals with Atlantic Yards, estimating that the total of $2.93 billion over 30 years or a net present value of $1.08 billion would be the advantage for that operation. Although it may not be the one that is going to carry the day, it certainly seems that independent bodies such as university economist very much believe that there can be a net economic benefit, and I ask that be placed in the record.
Except that Zimbalist was a consultant "retained" by the developer, not an "independent body," his study was deeply flawed, and it was never peer-reviewed (nor the subject of journalistic scrutiny).
NoLandGrab: When a report by a paid consultant makes it into the record at a congressional hearing, we'd say Atlantic Yards developer Bruce Ratner got his money's worth.
Posted by lumi at 4:51 AM
June 26, 2008
Who spent $219 million on AY? The city and state obscure the issue
Atlantic Yards Report
In a 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department, the New York City Industrial Development Authority and the Empire State Development Corporation (ESDC) argue that the PILOTs (payments in lieu of taxes) plan for arena financing should stand, even though the feds want to change the rules for tax-exempt bonds.
Part of the argument is that Atlantic Yards has already proceeded significantly. But on more than one issue, the city and state obfuscate rather than explain.
Posted by lumi at 4:39 AM
June 20, 2008
Given 50% arena cost increase, DDDB asks PACB to reconsider AY approval
Atlantic Yards Report
Develop Don’t Destroy Brooklyn (DDDB) yesterday asked the three-member Public Authorities Control Board (PACB)—comprised of Governor David Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno—to revisit its approval of the Atlantic Yards project, given “the dramatic increase in cost of Forest City Ratner’s Atlantic Yards arena and the development project as a whole.” The effort relies on an untested area of state law.
The PACB, which in 2006 derailed the planned West Side Stadium, is not supposed to evaluate the overall merits of a project, just whether the state’s investment is a sound one. DDDB contends that the nearly 50% increase in the price tag for the arena over 15 months—$637.2 million as approved in December 2006, but $950 million in March 2008—means the PACB should take another look. (The state has pledged $100 million of the project’s cost, estimated at $4 billion at time of approval but certainly significantly higher at this point.)
...I asked DDDB attorney Jeffrey Baker if anyone has successfully made this challenge and, if so, what was the increase in the cost of the project at issue. “As far as I know there is no case law directly on point on this issue with PACB,” he responded.
...Baker noted that the “source of the nearly $320 Million of additional construction costs has not been identified, and it is utterly unclear how the arena PILOT can be paid towards the bond based on assessed property taxes.”
The latter is a reference to a rule that says PILOTs (payments in lieu of taxes) cannot exceed the maximum amount of foregone property taxes. In terms of Atlantic Yards, those taxes may be significantly dwarfed by the potential arena bond.
What if PILOTs curtailed?
Indeed, the PACB’s approval, as with the KPMG study that led to the ESDC’s approval, was predicated on the use of PILOTs to pay off the arena bonds. Should the Internal Revenue Service be successful in curtailing the use of such PILOTs, that would strain the financial model significantly. The cost increase adds another strain.
Posted by eric at 8:28 AM
June 19, 2008
Socialized Sports
The NY Sun
Boston might not be the home of New York's favorite sports franchises, but this city had a reason to cheer as the Celtics claimed the NBA championship over the Lakers on Tuesday night. Boston's victory proves that sports franchises don't need tax subsidies to succeed, and in no city is that lesson more needed than New York, where multimillionaire owners regularly claim that their teams simply cannot compete unless a healthy dose of funding is forcibly taken from taxpaying residents.
TD Banknorth Garden, Gillette Stadium, and Fenway Park are all privately-owned and -funded, while the teams that play in those stadiums — the Celtics, Patriots, and Red Sox, respectively — have, in recent years, all won world championships. That is to say, all the joy generated in Boston sports stadiums hasn't cost taxpayers a dime.
...
[A]ccording to the New York Post, the public will foot the cost of more than half of the Atlantic Yards project in Brooklyn, which will house the New Jersey Nets in a $950 million arena, one the most expensive ever built.
NoLandGrab: Sure, our local teams are not playing by free-market rules, but to call it "Socialized Sports" is a little unfair to socialists.
The Sun is the one paper that has consistently covered the un-capitalistic nature of the Atlantic Yards deal, from massive public subsidies for a highly profitable development company to the abuse of eminent domain. An ardent capitalist recognizes the market-distorting nature of both.
On the other hand, any dyed-in-the-wool socialist would have a problem with allocating private property and public resources to the enrichment of a single developer.
Perhaps "oligarchy" best describes what's going on in Ratnerville, and with our local professional-sports-assistance progam.
Posted by lumi at 4:34 AM
June 18, 2008
Treasury official: Intangible benefits, political constraints fuel stadium deals
Atlantic Yards Report
The only parties who seem to be justifying the use of tax-exempt bonds backed by fixed PILOTs (payments in lieu of taxes) to build sports facilities are sports team owners and their municipal backers. Academic analysts of professional sports and a wide array of civic groups criticize the provision as a wasteful subsidy.
Even the Chief Counsel for the Internal Revenue Service, Donald Korb, called the plan the IRS (seemingly reluctantly) approved for the construction of stadiums for the New York Yankees and New York Mets a "loophole" the IRS tried quickly to close.
Rep. Dennis Kucinich, who chairs the Domestic Policy Subcommittee of the House Committee on Oversight and Reform, doesn't think the IRS should let the stadium deals go through in the first place and has called for a moratorium until the IRS and Treasury Department explain their positions.
After all, as testimony last year showed, the Treasury Department had trouble justifying the deals, suggesting that local decisionmaking was affected by perceived intangible benefits as well as political and fiscal constraints.
That suggests that projects like the Atlantic Yards arena are essentially political projects that require significant scrutiny in the news pages, not cheerleading in the sports pages.
Posted by eric at 9:14 AM
Working Families Party against welfare for new professional sports facilities (except for Ratner's?)
Atlantic Yards Report, As groups lobby against tax-exempt bonds for sports facilities, is WFP hamstrung by ACORN's AY deal?
One of these letters is not like the other one [hint, the one signed by Atlantic Yards supporter, ACORN NY Director, and Co-Chair of the Working Families Party Bertha Lewis].
There seems to be a consensus among good-government and neighborhood activist groups that tax-exempt bonding for sports facilities, as keyed to the PILOT (payment in lieu of taxes) deals crafted for the new Yankees and Mets stadiums, and planned for the Atlantic Yards arena, is bad public policy. The loss to the federal treasury often benefits sports team owners more than the public at large.
That's why two letters issues yesterday said very much the same thing--but with a curious discrepancy that suggests that the housing group ACORN's role in the Atlantic Yards project may have hamstrung the Working Families Party from explicitly criticizing tax-exempt bonds for the AY arena.
Develop Don't Destroy Brooklyn, Bertha Lewis, WFP Target Steinbrenner's Corporate Welfare With No Mention of Ratner's
The Association of Community Organizations for Reform now, aka ACORN, the key group supporting Forest City Ratner's arena and skyscraper proposal known as Atlantic Yards, is, of course, also a key player in the Working Families Party (WFP). Today the WFP has sent out an email signed by ACORN's Bertha Lewis (with a "take action" link to a letter to Mayor Bloomberg) reprimanding the Administration for going to bat for the Yankees in their attempt to get more triple tax exempt bond financing.
...
Are they suggesting that what is bad for one billionaire—Steinbrenner—is fine for the other billionaire, ACORN's partner Bruce Ratner? It appears so. Or at least they don't want to draw attention to Ratner's corporate sports welfare while shining the light on Steinbrenner's.
Posted by lumi at 5:38 AM
Letter Urges NY Congressional Delegation to End Tax Giveaways to Sports Teams
From Develop Don't Destroy Brooklyn:
Today a co-signed letter was sent to New York's federal representatives urging them to make sure that are no more giveaways for sports facilities, facilities which bring no economic benefit to the public but clear, lucrative benefits to the teams' owners.
The letter concludes: Rather than bending the rules for wealthy private interests, we need to ensure that public dollars are wisely invested in projects that will benefit all New Yorkers.
The letter, sent to Members of the New York City Congressional Delegation and Senators Hillary Rodham Clinton and Charles E. Schumer, was signed by the following groups:
Develop Don’t Destroy Brooklyn
Fifth Avenue Committee
Fiscal Policy Institute
Good Jobs New York
New Yorkers for Parks
New York Public Research Interest Group
NYC Park Advocates
Pratt Center for Community Development
Save Our Parks
Sustainable South Bronx
Posted by lumi at 5:26 AM
June 17, 2008
Another potential snag for AY arena financing: foregone property tax may severely cap tax-exempt bonds
Atlantic Yards Report
Norman Oder explores another probable arena-financing hurdle facing Forest City Ratner — it seems that, legally, Payments in Lieu of Taxes (PILOTs) on arena debt cannot exceed what the equivalent property tax payments on the underlying land would amount to.
Extrapolating from the amount of bonds and the PILOT payments for the Yankees, a similar 6% ratio suggests annual PILOT payments on $800 million in tax-exempt Atlantic Yards arena bonds would be about $48 million.
In 1/7/08 testimony to the City Council Finance Committee, Theresa Devine of the Independent Budget Office stated that owners of Madison Square Garden, who benefit from a full property tax exemption, were saving $11 million in the current fiscal year.
That’s a lot less than $48 million.
In its September 2005 report on Atlantic Yards, the IBO estimated the value of the Atlantic Yards arena at $100 a square foot, compared to Madison Square Garden at $125/sf. Based on the $100 figure, the IBO had calculated the foregone property tax at the Atlantic Yards arena at only $3.85 million.
The value of Madison Square Garden, IBO’s George Sweeting told me in a recent email, is now calculated for tax purposes at $250/sf. So even if doubled to $200/sf, the foregone property tax for the AY arena would be less than $8 million a year--a reasonable ratio if the figure for Madison Square Garden is $11 million.
Sweeting noted that the agency’s 2005 analysis “was based loosely on the Department of Finance’s official market value for MSG at the time, discounting for differences in land value. It is probably true that neither the MSG value assigned by the city, nor the AY arena value estimated by IBO, reflect the actual cost somebody would pay to buy the land and build a new arena. We based our value on an assumption that whatever the Finance Department is doing when valuing MSG, they would do for AY.”
If so, there would have to be a lot more taxable bonds than currently contemplated.
NoLandGrab: The whole PILOT and bond situation presents Ratner and his government enablers with an interesting quandary. On the one hand, Ratner, the ESDC and the City need the assessment of the land to be as padded as possible, in order to maximize the bond cap. On the other hand, such a valuation would theoretically raise — significantly — the "just compensation" paid to property owners whose land would be taken via eminent domain.
Stay tuned to see how the interested parties try to play this one to their benefit — it ought to be entertaining.
Posted by eric at 8:39 PM
June 16, 2008
As IRS moves to close "loophole," ESDC fights for AY funding scheme
Atlantic Yards Report
Norman Oder digs deeper into the background of the controversy over IRS rules and tax-exempt bond financing for stadiums and arenas. Surprised?
The strategy under which the Empire State Development Corporation (ESDC) and developer Forest City Ratner seek tax-exempt bonds for the Atlantic Yards arena has been acknowledged by the chief counsel of the Internal Revenue Service (IRS) as a “loophole” the agency moved quickly to eliminate.
Donald Korb’s testimony came at a 3/29/07 oversight hearing of the Domestic Policy Subcommittee of the House Committee on Oversight and Reform, headed by Rep. Dennis Kucinich (D-OH). The hearing, covering “Taxpayer Financed Stadiums, Convention Centers, and Hotels,” mainly focused on the stadiums, starting from the premise that they do not bring economic development and potentially divert funds from critical infrastructure.
The IRS in July 2006 issued two Private Letter Rulings (PLRs) related to financing for stadiums for the New York Yankees and the New York Mets. (Here's one.) In both cases, the IRS agreed that payments in lieu of taxes (PILOTs) used to pay off the bonds could substitute for property taxes, even though critics warn that they do not seem commensurate with such taxes but simply mirror debt service.
...However, [American Tax Policy Institute Projects Director Dennis] Zimmerman said, "those who benefit most from stadiums (owners of teams, players, fans, some related businesses) learned how to utilize pseudo-economic studies to argue that the economic benefits from stadiums generated sufficient additional tax revenue to pay for the public subsidy, a proposition that runs counter to an extensive economics literature.... Second, the monopolistic structure of professional sports leagues maintains excess demand for franchises, forcing cities to compete for a limited number of franchises with offerings of stadium subsidies. As a result, many stadiums were built for which local taxpayers, who receive limited benefits, paid at least 90 percent of the debt service on the bonds."
Posted by eric at 8:51 AM
School Budget Buster
Courier-Life Publications
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Develop Don't Destroy Brooklyn posted this clipping (link) from the Park Slope Courier with a reminder:
For years we, and so many others, have been saying that the Atlantic Yards sweetheart deal, funded largely on the backs of taxpayers, exemplifies an Administration that has prioritized the real estate industry and pro sports facilities over necessities, such as public shools.
Develop Don't Destroy Brooklyn started a postcard campaign to Governor Paterson back on March 13 (when it was clear he would become Governor), with that very message. Around 2,000 of the cards have been signed and mailed to the Governor.
Now elected officials from Park Slope to Bay Ridge are saying the same thing.
Posted by lumi at 6:19 AM
June 15, 2008
High End or Low, Ballparks Break Bank
NY Times
JIM DWYER
This week, word came that the Yankees want $250 million to $350 million more in tax-free bonds to complete construction of what is the most expensive stadium ever built in the country. With $943 million already in its bucket, the team is scratching around for additional public financing to bring the Yankees’ part of the project to about $1.2 billion.Add to that at least $500 million that the city is paying to build garages and to replace parkland, a figure that is likely to climb. By the time kids are at last playing in the new parks that will replace the ones handed over to the professional sports team, no one would be surprised if the whole stadium package came to $2 billion.
...
To build the [minor league] stadiums in Brooklyn and Staten Island for 12 weeks a year of minor league baseball, the city borrowed the $120 million over three decades. The debt service on those loans costs the city $6 million annually, or $500,000 for every week of play.And what does $6 million a year mean?
That is about $2 million more than the city pays for sports equipment and uniforms for 400,000 public high school students. And that means $10 a kid.
Posted by amy at 8:01 PM
Bloomberg to Raise Property Taxes on Everyone But Ratner and Steinbrenner
Develop Don't Destroy Brooklyn
Mayor Bloomberg is planning to raise property taxes on everybody but billionaire sports team owners.Bruce Ratner, George Steinbrenner While Mayor Bloomberg's economic development agency lobbies the Treasury Department to open a tax loophole for Bruce Ratner and George Steinbrenner on the one hand, on the other hand the Mayor wants to raise property taxes. Forest City Ratner would pay no property taxes on its 22-acre, 8 million square foot Atlantic Yards project.
If times are tough, shouldn't we all be sharing in the burden?
Posted by amy at 12:04 PM
So Ratner DOESN'T need tax-exempt bonds?
This week, Forest City Ratner performed an incredible high-wire act.
News that Atlantic Yards could further get bogged down if highly coveted triple-tax-exmpt bonds don't come through, undermined the development company's official posture that Atlantic Yards is a done deal.
From the Daily News:
A spokesman for Forest City Ratner, which is building the Nets' Brooklyn arena, said Ratner would break ground on the $950 million arena later this year even without tax-exempt bonds.
This no-worries pr strategy undermines the justification for the lucrative tax-exempt bond financing scheme.
Based on the un-named spokesman's statement, developer Bruce Ratner CAN build Atlantic Yards without the tax-exempt bonds, he's just looking for more free money.
Posted by lumi at 6:34 AM
June 14, 2008
Rep. Kucinich asks IRS, Treasury to hold off on approving financing deal for AY arena, other projects
Atlantic Yards Report
Who loses when triple tax-exempt bonds are used to finance stadiums for the Yankees and Mets, and the planned Atlantic Yards arena? Overwhelmingly the savings come at the expense of federal taxpayers, not state or city ones, which is why city and state officials are so eager to use such a financing mechanism--the costs are just too diffuse.Rep. Dennis Kucinich, a Democrat from Ohio, former maverick presidential candidate, and Chairman of the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform, yesterday released a letter asking the Internal Revenue Service and the U.S. Treasury Department to desist from approving any more sports facility deals based on PILOTs (payments in lieu of taxes), pending further clarification of their policies.
In other words: don't approve any deal involving the Nets arena just yet.
It's not clear to me whether Kucinich, whose letter was dated May 23, was piling on the recently-surfaced concern about such deals, or whether the original delivery of that letter triggered additional alarm among New York officials whose expectations of smooth sailing for AY arena funding and more bonds for Yankee Stadium had already been dashed.
Posted by amy at 10:22 AM
IRS Rule Coverage
The Real Estate: Cost of Extra Yankees Financing to the City: About $3.6 M.
The most at-risk project appears to be the Nets’ arena in Brooklyn, which is now seeking somewhere between $600 million and $700 million for the more than $900 million cost, though the final amount of financing has not been determined. Should the team and developer Forest City Ratner be unable to finance in the manner initially planned, it seems a new financing plan, likelier at a higher cost, would need to be devised.
Develop Don't Destroy Brooklyn: Ratner's Tax-exempt Atlantic Yards Bonds Worth $165 Million in Savings
We asked here: Why is Bruce Ratner telling NY1 "we don't see really a problem...there's not a problem" with new IRS regulations while his surrogates are in Washington lobbying for an IRS waiver so he can receive triple-tax-free bonds for his arena? Norman Oder provides the answer on his Atlantic Yards Report. Its pretty simple: Ratner was just doing some not very subtle spinning. They do have a problem if they can't get their triple-tax-free bonds—a $165 million problem.
River Ave. Blues: NY pols bemoan stadium subsidies
As Charles Bagli wrote in The Times today, the end game of this debate will probably lead to cost increases across the board for projects of this nature with the potential rule changes impacting the Atlantic Yards development, Citi Field and Yankee Stadium. But somehow I think the sports franchises will worm the money out of the public coffers one way or another.
Develop Don't Destroy Brooklyn: Ratner Says "No Problem" About Atlantic Yards. Twice in One Interview.
All news reports today said that the IRS tax exempt bond regulations may spell doom for Forest City Ratner's Barclays Center arena. So worrying are the regulations for the Ratner team that they, along with the city and state, are lobbying the Treasury Department in Washington to waive the rules for the Nets. But Ratner tells NY1 it's not true, there are no worries.
...
We don't see really sense being made here. If having to use taxable bonds, rather than tax-free bonds because of the IRS regulations, is not a problem for the developer, then why are his surrogates lobbying in DC and why did he go for tax-free bonds in the first place if he doesn't need them?
Atlantic Yards Report: The $165 million difference: why Ratner can't play it cool about IRS rules
The difference is worth many millions. The Yankees would save $189.9 million over the 40-year life of $920 million in tax-exempt bonds, according to the Independent Budget Office. (The Times, quoting the IBO, suggested $190 million savings on $943 million in bonds.)Though the IBO has not calculated the savings on the arena's new $950 million price tag, a similar ratio to the Yankees numbers suggests that those building the Atlantic Yards arena, for which $800 million in tax-exempt bonds are sought, would save $165.1 million.
So Ratner may tell the press that the arena might go forward with taxable bonds. But surely Forest City Ratner's investment plan assumes tax-exempt bonds and the attendant savings.
Posted by amy at 9:53 AM
June 13, 2008
New IRS Rule May Delay Development Of Atlantic Yards Project
NY1
Brooklyn’s Atlantic Yards developer Bruce Ratner downplayed today’s reports that a proposed Internal Revenue Service rule might stall the vast construction project.
..."We don't see really a problem,” said Ratner. “You know if the regulations don't change, do change, whatever the regulations will do, we'll be able to finance this. We've been assured of that. We've been working on it over the last two months, and it will take another three or four months to finish the documentation, but there's not a problem.”
article/video [dialup/broadband]
NoLandGrab: "We've been assured of that?" Assured by whom?
Bruce was apparently tracked down by NY1 while taking part in Forest City Ratner's "Community Day" clean-up of Prospect Park — which is not to be confused with "Brooklyn Day."
Posted by eric at 7:58 PM
Brodsky to hold hearing on bonds for Nets arena and two stadiums
Atlantic Yards Report has the breaking news that the New York State Assembly plans to hold hearings on the issuance of public debt for the new Mets and Yankees stadiums and, most crucially, the planned arena for the Nets.
Assemblyman Richard Brodsky (D-Westchester), Chairman of the NYS Assembly Committee on Corporations, Authorities & Commissions, and Assemblyman Sam Hoyt (D-Buffalo), Chairman of the NYS Assembly Committee on Local Governments, have today invited the New York City Industrial Development Authority (NYCIDA) to testify [before] a Public Hearing to be scheduled on either June 30, July 1 or July 2 in New York City. Final date and location will be announced shortly.
The Hearing will examine the NYCIDA’s practices and procedures for issuance of public debt with respect to sports facilities for the Yankees, Mets and Nets. The Committees have been investigating the facts and actions of the issuance of public debt by state-created entities that operate in secret and without the control of elected officials. Legislation to reform such practices is being considered by the committees.
Posted by eric at 3:57 PM
It came from the Blogosphere... (The Taxman Cometh edition)
More commentary from the blogosphere about those nettlesome IRS rules and their possible effect on Bruce Ratner's Atlantic Yards project.
Curbed, Will the IRS Strangle the Atlantic Yards Arena?
Brownstoner, Key Form of AY Arena Financing Appears Shaky
COMMUNITY BENEFITS AGREEMENTS, Atlantic Yards & Yankee Stadium face difficulties with tax-exempt financing
THE KNICKERBLOGGER, Oh, Now I know Why I have to Pay Tax on Amazon Purchases....
SmartBrief.com, IRS rules threaten future of New York basketball arena
SportsBusiness Daily, IRS Regulations Jeopardizing Construction On N.Y. Projects [Subscription required]
The View from the Bleachers, Politicians Hit Out at New York Stadia Funding
Develop Don't Destroy Brooklyn, IRS Loophole More Important for Nets Than Yankees
Posted by eric at 12:52 PM
Atlantic Yards Doomed If Ratner Can't Get More Corporate Tax Breaks
Develop Don't Destroy Brooklyn
DDDB offers its take on the shocking news that the deep-pocketed owners of local pro sports franchises want more of your money.
The richest team in sports (the Yankees), and the billionaire developer of the most expensive basketball arena ever proposed (Forest City Ratner's arena for his Nets) want more money and the IRS to bend the rules*...for them.
...Forest City Ratner is desperately trying to lobby the Treasury Department in Washington (along with NYC, NY State and the Yankees) to waive an IRS regulation that would make it very difficult for Ratner to get the triple tax-free bond he desires for his billion dollar arena.
This begs the question: If Ratner/Steinbrenner succeed in getting a waiver, opening up an IRS loophole they want for their respective sportsplexes, what then would the IRS do when the next team from, let's say Chicago, wants triple-tax-free bonds for their new sportsplex? Where does the waiving stop? Will the United States government actually break its fiscally prudent regulations just for Bruce Ratner and George Steinbrenner?
*Neil DeMause explains the intricacies of the IRS regulations and what the Yankees and Nets would like to see waived over at the Village Voice.
Posted by eric at 10:37 AM
A Question Mark Looms Over 3 Expensive Projects
The NY Times
By Charles V. Bagli
More than two years ago, the Bloomberg administration came up with an aggressively creative way to use tax-exempt bonds to finance two of the most expensive stadiums in the world, one for the Yankees in the Bronx and another for the Mets in Queens.
...The Internal Revenue Service initially approved the use of the bonds for the ballparks, but quickly issued a proposal in 2006 to tighten the rules governing the use of tax-exempt bonds so that it would be more difficult, and perhaps impossible, for this kind of financing to be used again by profitable, private enterprises like professional sports teams.
Much of the financing for the two ballparks, which are both under construction, is already in place. Atlantic Yards developer Bruce Ratner is hoping to score a huge windfall from Washington:
Now state and city officials say the proposed rules are jeopardizing what is planned to be the city’s next big sports palace: the $950 million Barclays Center, an 18,000-seat basketball arena for the Nets that is the centerpiece of the huge residential and commercial complex in Brooklyn known as Atlantic Yards. The project’s developer, Forest City Ratner, says it plans to break ground on the arena this fall and has long expected to use tax-exempt financing to reduce its borrowing costs by tens of millions of dollars.
Barclays Center is expected to be the most expensive arena in the world, and the lack of tax-exempt financing would substantially increase its cost. The $4 billion Atlantic Yards project already faces delays because of litigation, a sluggish economy, the lack of commercial tenants and the reluctance of lenders to finance large real estate developments.
...
In an interview this year, Bruce C. Ratner of Forest City said that he hoped to raise about $800 million through tax-exempt bonds. He acknowledged that “the tax changes would make it more difficult” to do the project, although he was still optimistic that he could break ground for the arena this fall.
...
[T]he proposed changes in the I.R.S. regulations are far more significant for the Nets and Atlantic Yards, which has not yet issued any bonds or started construction.
Some follow up to the story on The Times's City Room blog: I.R.S. Rule Change Could Imperil Atlantic Yards Arena
Posted by lumi at 10:12 AM
Funding the new Yankee ballpark
Behind the News
Eyewitness News (ABC 7)
The old "in for a dime, in for a dollar" theory may be what comes into play in the current flap involving the New York Yankees.
There are many people who expressed skepticism over any public contributions to the construction of the new ballparks for the Yankees or the Mets or the Nets, who want to move from New Jersey to Brooklyn as an anchor tenant of the new Atlantic Yards.
There's the valid argument that the presence of a new facility increases tax revenues, so the City gets money from these teams. But the truth is that these teams are cash cows and the profits redound not to taxpayers -- some of whom double as fans who pay the among highest ticket prices in the nation - but to the owners and highly paid players on the teams.
And so the critics say the teams should dang well fund these facilities themselves.
Posted by eric at 9:24 AM
NYCEDC Confirms: Ratner Wants More Subsidy for Atlantic Yards
Develop Don't Destroy Brooklyn connects the dots in the public discussion on more subsidies for Bruce Ratner's controversial Atlantic Yards project. Here's the gist of it:
Back on April 2nd, Forest City Ratner's parent company CEO Chuck Ratner said on an analysts conference call that "we still need more" subsidy for Atlantic Yards. (Atlantic Yards Report broke that story.) Ever since then, Forest City Ratner spokespeople have flat out denied that they would be seeking more subsidy. But NYC Economic Development Corporation President Seth Pinsky begs to differ, according to the Sun article, he confirms what Chuck Ratner said in April:
...He [Pinsky] also said that the developer Forest City Ratner Co. had expressed interest to the city about seeking additional tax-exempt funding, but that the request was being handled by the state...
...
Two key City Council members—David Yassky, running for City Comptroller and Bill de Blasio, running for Brooklyn Borough President—have already said "no way" to more subsidy for Atlantic Yards.
...
Who will stop this madness? We suggest a hearing before the members of the Assembly Committee on Corporations, Authorities and Commissions would be a good place to start.
Posted by lumi at 5:47 AM
As officials admit lobbying IRS for Nets arena, Lieber says AY groundbreaking by 2009 (at least)
Atlantic Yards Report
Whoopsie! You gotta love when public officials come down with a bout of the truth and go off message:
Deputy Mayor for Economic Development Robert Lieber, speaking at a Crain's New York Business breakfast yesterday, declared that Atlantic Yards would be "under construction by the end of 2009."
[Developer Bruce Ratner still claims it will be fall 2008.]
During the Crain's session, David pointed out that “the opposition which has dogged” Atlantic Yards had been inflamed by reports in March of delays in project construction, the developer’s call in early April for more subsidies, and the general question of what might be done with the site, as exemplified by City Comptroller William Thompson’s April 30 acknowledgement that “I’m not sure what that project is any longer” and his hint that it might be revived by bringing in additional developers.
Lieber said Atlantic Yards “is going through the last stage of litigation” and “we do believe it’s going to get under way.”
As to bringing in other developers, Lieber said the issue hasn’t come up: “Frankly, no, I don’t see any reason to do it.”
What about increased subsidies? “We have not received any kind of request," he said, "but we’re open-minded, and we’ll listen.”
NoLandGrab: We're listening — Forest City CEO Charles Ratner already stated in April 2008 that they'll "still need more" subsidies.
article [updated with extended verbatim responses from Deputy Mayor Robert Lieber]
Posted by lumi at 5:38 AM
'Soviet-Style' Tactics Said To Be Used To Help Yanks
In The NY Sun coverage of Wednesday's revelations that the Yankees, Mets and Nets are hoping for more tax-exempt bonds to finance their stadium and arena projects, reporter Peter Kiefer gives readers a brief history of the latest creative way to publicly finance new sports venues:
Since the 1986 Tax Reform Act was enacted during the Reagan administration, private development companies have faced tight restrictions when attempting to get access to tax-exempt bonds for sports facilities.
In 2006, with the support of the Bloomberg administration, the Yankees and the Mets were able to circumvent the federal regulation by employing a complex accounting technique that allows the bond debt to be paid by the city and state with money received from the private developer, known as payments in lieu of taxes.
Now the IRS is considering closing the loophole for future projects, a move city officials say would hinder development. They say that more private development projects should be able to get the benefits of tax-exempt bonding.
What's in it for NYC?
City officials see the bonds as a relatively inexpensive way to subsidize development, specifically because the federal government picks up a greater share of the tab.
"What is advantageous is that the vast majority is paid for by federal taxes as a result the city loses a small amount of money," Mr. Pinsky said. "We are leveraging a small amount of city and state funds to get a substantial amount of federal assistance."
NoLandGrab: Yeah, that's what sports franchises need, "federal assistance."
Posted by lumi at 5:19 AM
No more stadium tax breaks, pols howl
NY Daily News
By Adam Lisberg
At least somebody remembers that tax breaks and subsidies are supposed to go for people, programs and projects that really need them:
The Yankees, Mets and Nets can complete their new stadiums without more tax-free bonds, officials say - but the city and state are still pushing the IRS to reopen a loophole so they can get them anyway.
"It's a useful tool for economic development," said Seth Pinsky, president of the city Economic Development Corp. "We're constantly having projects brought to us that have a financing gap, and this could be a useful mechanism."
Critics, though, said the city and state economic development corporations have no business lobbying for stadium tax breaks while schools, hospitals and subways are starved for cash.
"We can't fund the MTA capital plan, and yet sports facilities seem to be able to get to the top of the list," said Assemblyman Richard Brodsky (D-Westchester). "Is this the best use of publicly supported debt?"
Local teams plus City and State officials are going to the mat for more tax breaks even though Yankees and Nets execs insist that they'll build without more tax-free bonds??? [Seriously, WTF?]
A spokesman for Forest City Ratner, which is building the Nets' Brooklyn arena, said Ratner would break ground on the $950 million arena later this year even without tax-exempt bonds.
The Mets declined to comment.
There's some big news that made it into the end of the article. Forest City CEO Chuck Ratner said back in April 2008 that the company would be looking for more subsidies for Atlantic Yards. Now City officials are listening:
Meanwhile, the city's deputy mayor for economic development said at the Crain's business breakfast that the city would consider giving more subsidies for Forest City Ratner's Atlantic Yards plan.
"We're open-minded, and we'll listen," Deputy Mayor Robert Lieber said.
Posted by lumi at 5:02 AM
Relief for wealthy teamowners?
The best quote from