February 3, 2010
Stadium Development: New Yankee Stadium Helps Lift Bronx to Poorest, Hungriest Place in America
Runnin' Scared
by Steven Thrasher
Our own Neil deMause, who literally wrote the book on the subject, has repeatedly tried to show what a boondoggle stadium-building can be for cities and neighborhoods.
Here's new evidence of what the new Yankee Stadium has brought to The Bronx. Not only is the borough home to one of the poorest congressional districts in America -- the home of the new, heavily-subsidized stadium and the current World Champs can also boast that their 'hood is also the hungriest Congressional district in the nation!
As of the last census, in 2000, the 16th Congressional District was the poorest in the nation, with 42.2 percent of residents living below the poverty line. Now, nearly a decade later, a new Gallup poll finds that more than 36 percent of people in the 16th have reported that there are times when they have not had money to buy food for themselves or their family.
This compares to a hunger rate of "just" 16.5 percent in the greater New York/New Jersey/Long Island area.
The Gallup poll from which this finding comes was begun at the beginning of last year, so economic relief from all the good jobs and economic activity spurred by opening the new Yankees stadium may not have been included. But wait! The Daily News also offers this telling metric of how well the boondoggle is floating The Bronx's boat: City Harvest says that while only 381,364 Bronx residents visited "emergency food programs" in the third quarter of 2008, in the third quarter of this year -- at the height of the first season in the new park -- that number had increased by 17 percent, to 445,900 people.
...There's also a Atlantic Yards harbinger in the News story: Brooklyn is home to the 6th hungriest Congressional district in America. You're in sixth place now, Brooklyn, but just wait! When you get the Nets Arena, maybe you'll compete with the home of the Bronx Bombers for the chance to become number one in poverty and hunger.
NoLandGrab: And let's not forget that while a third of residents in the Yankees' neighborhood are going to bed hungry, the money-minting, penny-pinching team consistently underpays the rent that it owes the city.
Posted by eric at 4:25 PM
Goooaaalll! K.C. Wizards Score a Home
The Wall Street Journal
by Maura Webber Sadovi
Kansas City, Kansas, managed to green-light a soccer stadium project without public approval, by repurposing an existing bond issue that was ahead of schedule due to higher-than-projected sales tax revenues.
Even as a stadium building boom is tapering off, some local governments are using creative financing to stay in the game. Among the most recent to write a big check: Kansas City, Kan.
About $147 million in bonds backed by the state of Kansas and local sales-tax revenue were recently approved by the Unified Government of Wyandotte County/Kansas City, Kan. The bonds will pay for much of the $165 million, 18,000-seat professional soccer stadium in which Major League Soccer's Kansas City Wizards are expected to play their 2012 season.
...The bond approval was seen by many as a major break for the stadium and for the Wizards, who currently play in a Kansas City baseball stadium.
To be sure, it isn't the only stadium to move forward during the downturn. A regular-season baseball stadium for the Florida Marlins that is expected to cost more than $500 million was approved last year by the Miami-Dade County commissioners. And in December, developer Forest City Ratner Cos. sold $511 million in tax-free bonds to finance a $900 million sports arena in Brooklyn, N.Y.
Still, the total value of open-air stadium projects started last year in the U.S. fell to about $1.3 billion from about $3.4 billion near the peak in 2007, according to McGraw-Hill Construction.
Posted by eric at 12:15 PM
February 2, 2010
Bronx, NY Focus
Mole's Progressive Democrat
Bloomberg to axe 934 city workers...Bloomberg axes more fire houses...Bloomberg axes another school...BUT, when it comes to giving tax money to Bruce Ratner: Bloomberg/NYC Gave $131 Million to Bruce Ratner.
Posted by eric at 10:58 AM
January 28, 2010
Bloomberg/NYC Gave $131 Million to Bruce Ratner
The Huffington Post
by Steve Ettlinger
This whole Atlantic Yards boondoggle thing is still getting more amazing. Turns out, when Ratner bullied people into selling out by using the threat of eminent domain--totally standard and understandable--he also knew he could pay top dollar because he was using our own money to help ease his pain. My pain is formidable.
...There is still a possibility that this scam will be stopped by a judge or Governor Paterson, and we could then expect a more rational private development or at least a more rational public/private partnership. If this happened, Mayor Bloomberg might exit his era with one less major blotch on his record.
Posted by eric at 12:17 PM
January 27, 2010
City shells out another $31 million to help developer Bruce Ratner buy land for Atlantic Yards
NY Daily News
by Erin Durkin
You can't make this stuff up. On the same day that Mayor Bloomberg traveled to Albany to argue that the proposed state budget would force the city to make $1.3 billion in cuts and lay off 19,000 workers, including police and firefighters, newly released Atlantic Yards documents revealed that the Mayor had kicked in another $31 million of the taxpayers' all-to-scarce money for Bruce Ratner's economically nonviable arena boondoggle.
The city has shelled out another $31 million to help developer Bruce Ratner buy land for his controversial Atlantic Yards project, new documents show.
That's on top of $100 million the city previously pledged to buy up property for the new Nets arena and 16-tower project, bringing the total to $131 million.
An updated funding agreement signed in October and released this week said the $31 million would be used to buy four properties on Dean St.
City officials said the subsidy won't cost taxpayers more money - instead, the $31 million will be subtracted from $105 million previously pegged to pay for infrastructure improvements around the 22-acre project site.
"No additional money has been promised or transferred," said Economic Development Corp. spokesman David Lombino.
The funding was moved because the cash-strapped developer needed more money up front - and Ratner will be contractually required to foot the bill for the infrastructure work down the road, officials said.
But project opponent Councilwoman Letitia James (D, WFP-Prospect Heights) dismissed that as an accounting gimmick - and said even if the city's bottom line remains the same, it's a slap in the face to use taxpayer money to buy property under the threat of eminent domain.
"It's a government Ponzi scheme," she said.
Related coverage...
Atlantic Yards Report, Did the city give Forest City Ratner $31 million more for arena land? Despite previous reports, the answer is yes (Updated)
Given that the city initially pledged $100 million in subsidies, then added $105 million, it's hard to believe there's a full ban on future subsidies, nor that future administrations would feel bound to not kick in for infrastructure subsidies.
Brownstoner, City Gives Ratner $31 Million for Dean Street Buys
The city claims that it hasn't increased the total amount of subsidies it's kicking in to the project (well, not since it first increased the total amount of subsidies from $100 million to $205 million); instead, the city argues, it just moved up some of the money that was originally allocated for later-stage infrastructure to help pay for the property purchase. The Atlantic Yards Report calls the legitimacy of the move "murky," because while it technically does not violate the letter of the 2005 non-binding Memorandum of Understanding (after all, it was non-binding!), it's clearly a bait-and-switch on the public.
Posted by eric at 11:51 AM
January 26, 2010
Finally, in landlord-tenant agreement, an official grant of arena naming rights; was there one in January 2007?
Atlantic Yards Report
Allowing Norman Oder access to the Atlantic Yards Master Closing documents is like giving a drink to an alcoholic. Because before you know it, he's posted one two three four five six seven entries.
When Forest City Ratner announced in January 2007 that it had signed a naming rights agreement with Barclays Capital for the Atlantic Yards arena, did it have the right to sign such a deal?
Even though I suspect that clearance for the deal was at some point secured--could they have just winged it without authorization?--documents that have surfaced as part of the Atlantic Yards master closing documents, first made available today, raise some questions.
Posted by eric at 12:38 AM
January 25, 2010
Did the city give Forest City Ratner $31 million more for arena land? Despite previous reports, the answer is yes
Atlantic Yards Report
The Atlantic Yards master closing documents were made available publicly for the first time today by the Empire State Development Corporation.
Betcha can't guess who's first to report on their contents?
Among the voluminous documents that were part of the Atlantic Yards master closing, first made available today, is one that confirms that, despite previous reports, New York City gave Forest City Ratner $31 million for arena land purchases on top of the $100 million it originally provided.
In other words, $131 million of Forest City Ratner's land purchases in the AY arena footprint, made under the threat of eminent domain, came from public funds.
And even if that represents a reallocation of city subsidies, rather than an additional subsidy--the evidence is murky--it opens up the possibility for additional city infrastructure subsidies at some point.
Figure surfaces in December
That number was first indicated in bond documents that emerged in December, which cited certain costs incurred and to be incurred in connection with acquisition of the Premises by ESDC.
David Lombino, a spokesman for the New York City Economic Development Corporation, in December told me, "The $131 million referenced is part of the total original commitment (not new money) and will go to FCR for site acquisition and infrastructure work."
That indicates both property acquisition and infrastructure. I erred in initially emphasizing that it was for infrastructure. But it appears Lombino misled me by stating that it would go for both land and infrastructure.
NoLandGrab: Lombino once did some decent reporting on the Atlantic Yards project for the New York Sun — before succumbing to the dark side.
Posted by eric at 8:47 PM
January 24, 2010
Professor Hill's Men Mobs, and Law
Natural Resonance Revolution
In this quote of a speech from 2008 by Professor Rebecca Hill of the Borough of Manhattan Community College, the proposed Atlantic Yards project again appears as what is wrong with priorities when it comes to spending public money.
"Mayor Bloomberg says that CUNY is 'asking for too much,'" Hill said, nodding her head in disgust. "However, the mayor has not experienced such sticker shock when evaluating whether or not to publicly fund private construction projects for the New York Yankees, New York Mets, the Bronx terminal market, and the New Jersey Nets arena in Brooklyn's Atlantic Yards. CUNY is at least as important to New York City as those wealthy sports teams and real estate developers who have taken billions of dollars in tax-abatements and incentives since 2001, don't you think?"
Posted by steve at 8:48 AM
January 1, 2010
What's missing in Times editorial urging Bloomberg to take care when "some bigwig wants a stadium"?
Atlantic Yards Report
Happy New Year, NoLandGrab readers! It appears that The New York Times has already broken its New Year's resolution (assuming they bothered to make it) to eliminate its big blind spot when it comes to the Atlantic Yards project of its development partner, Bruce C. Ratner.
A New York Times editorial headlined Mr. Bloomberg’s Third Term has a glaring omission:
Like all mayors, Mr. Bloomberg wants his share of monuments. He already has waterfront parks, two finished stadiums, a slew of high rises and tantalizing possibilities on Governors Island. Going forward, it will be hard for the public to stomach any big giveaways like Yankee Stadium, which, at the mayor’s urging, got billions of dollars of support, including taxpayer-backed debt, tax breaks and the use of city parkland.
“It’s a time for singles, not home runs,” said Mitchell Moss, a professor at New York University and informal adviser to the mayor. Mr. Bloomberg should use his business acumen to push for more developments with housing for moderate-income residents and public workers. The next time some bigwig wants a stadium or a fat new zoning change, the mayor should take care to demand more parks and public facilities as part of the deal. The bottom line for any development should be that it helps out more than the developer’s bottom line.
And, um, what if the mayor decides to let the state oversee the development instead, with major tax breaks, essentially free city streets and property, and an inside track on valuable public property like the Vanderbilt Yard?
Posted by eric at 1:14 PM
December 27, 2009
Bloomberg excited over money-losing project
Queens Crap
Mayor Bloomberg continues to ignore the cost-benefit analysis of the proposed Nets arena done by the City of New York Independent Budget Office (IBO).
From Atlantic Yards Report:
A statement from the mayor:
STATEMENT OF MAYOR MICHAEL R. BLOOMBERG ON PROGRESS OF ATLANTIC YARDS DEVELOPMENT
“While the rest of the country wrings its hands about the national recession, we’re building our way out of it. The $4.9 billion Atlantic Yards project - the most extensive development ever undertaken in Brooklyn - is moving forward, bringing thousands of units of housing and thousands of jobs for New York City’s middle class. In the past few weeks alone, we’ve made major investments or reached critical milestones on development projects decades in the making at areas like the Hudson Yards, Hunter’s Point South, Coney Island, Willets Point and other neighborhoods across the City. This is no time to wait and see what happens with the national economy and just hope for the best. We’re acting more aggressively than ever to create jobs and ensure New York City’s best days are still to come.”Well, as the mayor conveniently forgets, the New York City Independent Budget Office (IBO) found the arena--the only part of the project with a design--to be a net loss for the city. As for the thousands of units of housing, they depend on yet-to-be-announced city subsidies.
And while construction of the arena and other buildings surely would bring construction jobs, the number of permanent jobs projected has been steadily shrinking, with the market for office space questionable.
Posted by steve at 7:43 AM
December 25, 2009
Brutally weird holiday news from NYT: Stadium Boom Deepens Municipal Woes (no mention of AY or other NYC projects)
Atlantic Yards Report
Like us, Norman Oder finds The Times' stadium-finance story just a wee bit myopic.
There's no mention of New York City in the article.
Well, the sports facility financing schemes in New York are different and, to their architects, much superior: the amount of direct subsidy is much smaller, for land and/or infrastructure rather than construction, while the cost of construction is magically shifted to PILOTs (payments in lieu of taxes), given that the land is (and, in most but not all cases, was) tax-exempt. And the Internal Revenue Service has now banned such plans, after grandfathering in the one for the arena.
Of course the tax exemption for the Metropolitan Transportation Authority's Vanderbilt Yard was supposed to increase the price of the property when sold, but there was only one other bidder, given Forest City Ratner's head start. As the New York City Independent Budget Office (IBO) observed, "It is clear that the MTA’s ability to maximize its return from property sales has been constrained."
And the PILOTs in the case of the AY arena would rely significantly on the naming rights that the state simply gave away.
And Forest City Ratner has been good at getting the city, state, and MTA to modify agreements in its favor. Meanwhile, the IBO's analysis that the arena would be a net loss for the city has not been refuted, despite the Times's willingness to quote a deceptive response from the New York City Economic Development Corporation ( an agency that has failed to release a promised cost-benefit analysis).
Posted by eric at 9:54 AM
Stadium Boom Deepens Municipal Woes
The New York Times
by Ken Belson
Two days after the Atlantic Yards Master Closing, and after six years of editorializing in favor of Bruce Ratner's basketball arena (which New York City's Independent Budget Office projects as a money-loser for city taxpayers), The Times publishes a cautionary tale on the folly of taxpayer-funded sports venues. It's a must-read, but a bit late, no?
Years after a wave of construction brought publicly financed stadiums costing billions of dollars to cities across the country, taxpayers are once again being asked to reach into their pockets.
From New Jersey to Ohio to Arizona, the stadiums were sold as a key to redevelopment and as the only way to retain sports franchises. But the deals that were used to persuade taxpayers to finance their construction have in many cases backfired, the result of overly optimistic revenue assumptions and the recession.
Nowhere is the problem more acute than in Cincinnati. In 1996, voters in Hamilton County approved an increase of half of one percent in the sales tax that promised to build and maintain stadiums for the Bengals and the Reds, pay Cincinnati’s public schools and give homeowners an annual property tax rebate. The stadiums were supposed to spur development of the city’s dilapidated riverfront.
But sales tax receipts have fallen so fast in the last year that the county is now scrambling to bridge a $14 million deficit in its sales tax fund. The public schools, which deferred taking their share for years, want their money.
...In many cases, the architects of the deals are long gone by the time the bill comes due.
...Problems persist. In 2004, Todd Portune, the commissioner who unseated Bedinghaus, sued unsuccessfully to change the Bengals’ lease. In 2006, the Cincinnati public schools agreed to defer their payments from the sales tax fund for three years to help cover shortfalls.
Still, the gap between expected and actual sales taxes continues to grow, something the county administration had been warning for years. In August, the administrator predicted not only a $14 million shortfall next year, but also a $94 million gap in 2014, a year after interest payments on the stadium bonds rise 44 percent. By then, the Reds will no longer be paying rent.
...So they have ordered more cuts in basic county administrative services, something that creates a slippery slope, said David Pepper, the commissioner who voted against the proposal.
“It’s like the movie where the blob keeps growing and eating away at other elements of county government,” Pepper said. “We’re beginning to cross a line in the sand by taking money from the general fund to pay for the stadiums. Once you put that money in jeopardy, you put the whole county at risk.”
Posted by eric at 9:43 AM
November 24, 2009
Sometimes Sports Stadiums and Arenas Are Worth A Lot Less Than the Public Pays For Them: No Silverdome Lining to Gathering Economic Clouds
Noticing New York
In the wake of the announcement that the City of Pontiac just auctioned off the Silverdome for a mere $583K (a fraction of what it took to build it), the State of NY is poised to approve the issuing of arena bonds for Bruce Ratner's "new off-the-tax-rolls Nets basketball arena that is already calculated by the NYC Independent Budget Office to be a $220 [million] net loss to the public."
According to the Detroit News... the arena was “once called the most desirable property in Oakland County” and a quoted realty firm says the land itself “should have gone for more than that.” Apparently the arena was not considered worth its upkeep and the city of Pontiac was desperate to get the property “back on the tax rolls.” Sports stadiums and arenas on the tax rolls? There’s a novel concept that spendthrift New York City seems is absolutely unfamiliar with!
...
Considering the Silverdome fiasco, we here in New York we can’t help but think of our own wasteful stadiums and arenas that are taking property off the tax rolls and giving less than nothing in return.
...
This is a very clear warning: The mysterious value of team spirit sports euphoria that cannot, and generally is not, economically quantified is in all likelihood economic value that just doesn’t exist at all. The overall lesson to be learned is how these sports stadium and arena deals terrifically shortchange the public with stadiums and arenas that have very low true economic value.
Posted by lumi at 6:01 AM
November 17, 2009
Jane Jacobs Report Card: #28, 29, 30 & 31
Noticing New York
Bruce Ratner's Atlantic Yards overdevelopment is scoring abysmally on the Jane Jacobs report card. Today's installments examine the unintended consequences of directing massive public subsidies to a single megaproject.
Jane Jacobs was concerned with cities as working organisms. As one part of this concern, she wrote about consciously creating communities within cities that will have political access and effective influence to represent the interests of neighborhoods. Rather than respecting this as a goal, Atlantic Yards has progressed in the opposite fashion, stripping communities of their say-so about the project. When Community Board 6 voted 35-4 to disapprove of the project as proposed in the July 18, 2006 General Project Plan and Draft Environmental Impact Statement “because it will cause irreparable damage to the quality of life in the borough of Brooklyn,” the Brooklyn Borough President who stands apart in supporting Atlantic Yards removed members from that board on a wholesale basis. Jane Jacobs was also critical of the way that expenditures of public money were also sometimes used as a distracting sort of candy to try and nullify the political rights of voters.
Jane Jacobs Atlantic Yards Report Card #29: Using Public Participation in Shaping Cities? NO
Jane Jacobs viewed the people who live in city neighborhoods has having the most important (empirically derived) first hand expertise about their neighborhoods. She therefore believed that getting their input is a supremely critical aspect of the planning process. By comparison, she discounts the value that “experts” have to offer in the process. Normally, planning for big developments involves the public in the planning through the City’s ULURP process. In the case of Atlantic Yards, the process of involving the public through ULURP was sidestepped using a mechanism that people probably never expected would be used to sidestep projects of this magnitude after the City’s Charter was amended to create the ULURP process.
Jane Jacobs Atlantic Yards Report Card #30: Avoidance of Cataclysmic Money? NO
Part of Jane Jacobs genius was to point out that money could be destructive when it floods in faster than it can be constructively used. Even if good is “intended” by it, it can be too much of a good thing. She calls this “cataclysmic money” and identifies more than one form of it, but one of its most important forms, especially these days and in the case of Atlantic Yards, is public funding and subsidy. Even though or despite the fact that the Atlantic Yards area was, through natural economic processes, attracting substantial economic capital and creating million dollar co-ops and condos, Atlantic Yards is a supreme example of something with so many bad economic equations it would never happen except for public subsidy. That subsidy is overriding private enterprise in a huge way that ought to be offensive to conservative thinkers and liberal alike.
Jane Jacobs Atlantic Yards Report Card #31: Making Good Use of Gradual Money? NO
Jane Jacobs was supremely conscious of the good that money well and properly spent could create and was not, per se, against subsidies. However, she saw the most valuable form of money as gradual money spent slowly for gradual changes, building on and supplementing what exists. That money could come in through public spending and subsidy. Jacobs was also aware that in situations like Atlantic Yards where there is massive misdirection of public funds and subsidy into cataclysmic spending, each dollar the public spends cataclysmically creating destruction also represents a dollar that could, instead, have been spent gradually for public good. So, the misdirection of funds is, at least, a double loss to the public.
Posted by lumi at 11:15 AM
NY agency to start marketing Brooklyn arena bonds
Reuters is reporting that the ESDC expects to float the triple tax exempt bonds for the Atlantic Yards arena:
"Forest City Ratner Companies, along with Goldman Sachs, is in talks with rating agencies and finalizing the bond structure," a spokeswoman for the Empire State Development Corporation said by email. "The offering statement is being finalized; we expect to release bond terms in the next two weeks."
Well, "expect to" is not the same as "will." First, it's not clear whether the ratings agencies are on board. And surely the bond sale would go more smoothly if a Court of Appeals decision comes down--as is expected, in the coming weeks--in that pesky eminent domain case.
Posted by lumi at 6:26 AM
November 15, 2009
The Yankee’s Hoggish New Stadium Monopoly Taxes The Rest of Us
Noticing New York
A report from WNYC on October 28 spotlights how the new Yankee Stadium sucks up economic activity from the surrounding neighborhood. This is the jumping-off point for this exercise to demonstrate that the economic benefits from subsidizing professional sports facilities are illusory. Although not a perfect parallel with the proposed Atlantic Yards development, some of the same schemes would be used to subsidize an arena for the Nets.
Topics covered include:
- How Yankee Stadium sucks up economic activity from the nabe.
- How the new Yankee Stadium contains fewer seats than the old one in order to drive up prices.
- How monopolies seek to appropriate local culture.
The concept of Atlantic Yards as a "mega-monopoly" is also covered:
Mega-monopoly probably describes Atlantic Yards better than any other single word given that:
- The gestating seed of Atlantic Yards was a big league sports franchise. These franchises are exempt from antitrust rules and if you search the Atlantic Yards Report site you will find a lot of discussion of their monopolistic nature by economists and other experts.
(You will also find a lot of our own comments about Atlantic Yards as a monopoly.)- Atlantic Yards’ birth was midwifed by another monopolistic expedient, the award of the project to Forest City Ratner on a no-bid basis, which was essential to preclude any possible competition.
- Its succor and the basic of sinew composition is the eminent domain abuse that chases away all other competitors and transforms what was the competitors’ into Forest City Ratner’s.
- Atlantic Yards has been further coddled by government agencies that have lavished on it additional hundreds of millions of dollars from the taxpayers on a no-bid basis, given its extraordinarily valuable naming rights and exempted it (and these many gifts) from the requirements of appraisal and bids under the Public Authorities Accountability Act
You can also read how the Yankees have managed to avoid what would be the usual tax obligations while, at the same time, taxpayers pay for the new stadium.
Posted by steve at 7:15 AM
November 5, 2009
So, could the IRS deadline for tax-exempt bonds be extended? Unclear
Atlantic Yards Report
The Empire State Development Corporation and Forest City Ratner has been feeding the financial press the line that the triple-tax-free arena bonds could be parked in escrow waiting for the litigation over the project to clear. But that scenario is easier said than done and details on how the heck the bond issuers and insurers might swing this one are not forthcoming (remember these are "tax free bonds").
But what if the IRS just extended the end-of-the-year deadline?
Perhaps the deadline is firm, but the Atlantic Yards saga is always full of twists.
The relevant document is IRS Bulletin: 2008-47, Treatment of Payments in Lieu of Taxes Under Section 141, excerpted below.
(3) Transitional rule for certain projects substantially in progress. Paragraph (k)(1) of this section does not apply to bonds issued for projects for which all of the following requirements are met:
(i) A governmental person (as defined in §1.141-1) took official action evidencing its preliminary approval of the project before October 19, 2006, and the plan of finance for the project in place at that time contemplated financing the project with tax-exempt bonds to be paid or secured by PILOTs.
(ii) Before October 19, 2006, significant expenditures were paid or incurred with respect to the project or a contract was entered into to pay or incur significant expenditures with respect to the project.
(iii) The bonds for the project (excluding refunding bonds) are issued on or before December 31, 2009.As noted in the bold text, the transitional rule requires that bonds for the project be issued on or before December 31.
That seems pretty firm, but I asked the IRS if legal challenges persist, can that deadline be extended? (While I assume that no one has yet tested that deadline in an administrative proceeding, I suspect that IRS has some general rules about whether similar deadlines can be extended because of litigation or other circumstances.)
IRS spokesman Kevin McKeon replied: "We're unable to comment due to our Disclosure Rules."
Posted by lumi at 6:29 AM
November 4, 2009
In the Shadow of Yankee Stadium, an Off Year
The New York Times
by Patrick McGeehan
The Congressional district surrounding the old Yankee Stadium was the poorest in the country. How has the new Yankee Stadium changed things?
By all reckoning, this should be the moment Saeed Alawy was waiting for. His shop, Pin Stripe Collectibles, sits just beyond the right field wall of the new Yankee Stadium, where Game 6 of the World Series will be played Wednesday night.
But Mr. Alawy and other merchants nearby said they had not benefited from the new stadium. In fact, many said that business was down significantly from previous years — running counter to predictions that the stadium would be an economic generator in the Bronx neighborhood.
For some businesses, the new stadium’s location disrupted foot traffic patterns that had been around for decades. For others, the allure of the stadium and all of its shops and food stands teamed up with the recession to siphon away too much business.
Expecting sympathy from the Yankees? Not if spokeswoman Alice McGillion is any indication.
Asked how the recession had affected the Yankees’ merchandise sales, she declined to discuss whether the team had taken in more or less money from selling souvenirs this season. “We’re not going to get into the revenues,” she said.
NoLandGrab: Where do you think mall-owner Bruce Ratner is going to steer traffic from Bruce Ratner's planned arena?
Posted by eric at 8:43 AM
October 29, 2009
Why at least $7 million from New York City's Atlantic Yards budget doesn't belong
Atlantic Yards Report
On 9/2/08, I reported on the rather incomplete information released by New York City in response to my Freedom of Information Law (FOIL) request seeking information about the city's willingness to devote an additional $105 million to Atlantic Yards, on top of the original $100 million pledge.
The city stated that the additional $105 million "represents capital projects to support infrastructure and other capital needs in the area, some of which are independent of, but in the area of the planned Atlantic Yards project."
As I wrote, most of those capital projects did not seem independent of Atlantic Yards. Among them was $7 million for reconstruction of the Sixth Avenue Bridge. However, given changes in the plan for the arena block, the bridge will not need reconstruction, as noted on page 4 of the June 2009 Technical Memorandum produced by the Empire State Development Corporation (ESDC).
...
So, what happens to that $7 million? Is it simply redeployed or funneled to developer Forest City Ratner? I asked the ESDC, which told me to query the New York City Economic Development Corporation, which I did late on Tuesday, with no response as of yet.
Posted by lumi at 6:17 AM
October 28, 2009
Main Street NYC Returns to 161st Street in The Bronx
WNYC Radio
by Alisa Chang
How has a heavily subsidized, gleaming new sports stadium in the Bronx helped the local economy? It hasn't. In fact, it's had the opposite effect.
The first World Series in the new Yankee Stadium begins today. In the third part of our Main Street series, WNYC returns to the shopkeepers on 161st in the Bronx.
They’ve seen their businesses suffer in the shadow of the new stadium, and the playoffs didn’t improve matters much. Many of these shops expected to do better with the new stadium. But WNYC’s Ailsa Chang takes a look at how the new Yankee Stadium is getting Yankee fans to spend more money inside rather than outside the ballpark.
...Businesses just a couple blocks down 161st street didn’t think they’d be competing against a new mega-mall. Abdul Traore is managing a near-empty store called Jeans Plus. It sells Yankee souvenirs – many of them identical to the ones sold at the stadium, but about 30 percent cheaper. Traore’s been sitting on a stool by the door during the playoffs, as if waiting for customers to come in.
TRAORE: This playoff is different. Totally different. Like Saturday, I stay here until two o’clock in the morning – from the time the game start until two o’clock in the morning. I don’t even make thousand dollars.
REPORTER: Traore says in the days of the old stadium, he would make about five thousand dollars on a typical game night. His business is down 60 percent right now. And he says it’s not just the recession – it’s the new stadium. Fewer shoppers walk down 161st Street these days. For a lot of reasons. The new Metro-North station spits people right into the stadium. Fans who drive to games don’t park further down 161st and walk up anymore – they have new garages right by the complex.
...NOLL: The whole point of a modern athletic facility – whether it’s an arena for hockey and basketball or a stadium for football or baseball – is to get all of the money to be spent inside the stadium.
REPORTER: Economist Roger Noll at Stanford University has looked at every stadium built in the last 20 years. In each case, he wanted to find out whether the new stadium gave a real, substantive boost to neighborhood businesses. The answer? Not a single one did. In fact, many local stores ended up doing a lot worse.
Additional coverage...
Develop Don't Destroy Brooklyn, A Cautionary Tale for Local Businesses Around the Proposed Atlantic Yards Arena Site
WNYC radio has broadcast a disturbing story for anyone who thinks or hopes that the Barclays Center Arena will be good for local businesses on Flatbush or Atlantic or in Park Slope, Prospect Heights, Fort Greene, Boerum Hill or Clinton Hill. It won't be.
As the sports economist Roger Noll makes clear, and the report emphasizes and illustrates, the whole purpose of the modern day arenas, such as Barclays, is to keep its visitors spending and buying stuff inside the arena.
Posted by eric at 11:01 AM
October 25, 2009
Yankees Claimed a Park; Children Got Bus Rides
The New York TImes
By Jim Dwyer
Put this one in the "Should Have Seen This Coming From A Mile Away" folder. This article bemoans the promises not kept and the poor deal that the City struck with the Yankees to put the team in their new stadium.
Where were the critical articles from the Times when these deals were being made? If the proposed Atlantic Yards project moves forward, can we then expect the Times to expose the incredible public subsidies and eminent domain abuse for this land grab when it's too late?
Yankee Stadium is a kind of marker of civic values, and the end of the season is a good time to measure how those values have evolved. But it won’t be easy. More than most sports, professional baseball is marinated in the cheap liquor of nostalgia. People get drunk on it and lose their judgment. So this history cannot walk a straight line.
As mayor, one of Rudolph W. Giuliani’s jobs was to serve as landlord for the Yankees. Mr. Giuliani, who made his name as a corruption buster, was able to buy four World Series rings from the Yankees for about $16,000 — which might well be less than a fifth of their retail value. Who knows if he has bells on his toes to go with the rings on his fingers, but Mr. Giuliani promised the team a sweet deal on a new ballpark.
Then Michael R. Bloomberg became mayor and canceled the Giuliani arrangements. “Everybody understands that given the lack of housing, given the lack of school space, given the deficit in the operating budget, it is just not practical this year to go and build stadiums,” Mr. Bloomberg said in 2002. “You have to set priorities, and the priorities this year do not allow for the construction of sporting stadiums.”
That moment passed. The Bloomberg administration proceeded to negotiate a new deal — turning over parkland for 40 years with no rent and no taxes, rebuilding streets and roads and a commuter rail station and letting the team use the city’s tax-free bonding capacity.
Posted by steve at 8:12 AM
October 21, 2009
Islanders Foe or Prudent Politician? Hempstead’s Murray Stands Her Ground
The New York Times
by Ken Belson and Jeff Z. Klein
Depending on whom you speak to, Kate Murray is either an hard-headed obstructionist willing to drive the Islanders out of Long Island, a principled public servant protecting taxpayers or a Republican veteran holding out for a political ransom.
Murray has been tagged with these and other less flattering labels because as supervisor of the Town of Hempstead, she and her board have the power to block, delay or approve the zoning for the Lighthouse Project, a $3.8 billion plan to refurbish the Nassau Coliseum, the Islanders’ shabby home, and build thousands of homes, offices and stores nearby. The project was first proposed in 2003 and Murray is one of its last, and seemingly most stubborn, hurdles. She says she’s only doing her job.
...Politicians who get in the way of big real estate deals projects rarely get love letters from the business community, particularly during a recession when work is scarce. But when the projects include new sports venues and rabid fans are added to the mix, the pressure on politicians is even more pronounced.
...In their defense, Murray and her supporters point to Bruce Ratner, the owner of the New Jersey Nets, who has spent years and millions of dollars fending off lawsuits and other problems in his quest to build the $4.9 billion Atlantic Yards development in Brooklyn that includes the Barclays Center basketball arena.
NoLandGrab: The article does mention the planned Barclays Center as a potential home for the Islanders should the Lighthouse project fall through, though it correctly notes that the arena would need to be redesigned in order to accommodate hockey. With the Islanders committed to a lease in Uniondale until 2015, that seems unlikely.
Posted by eric at 11:26 PM
October 19, 2009
Small Businesses to NYC: Get Off Our Backs!
City Journal
By Steven Malanga
In Bloomberg's NYC, small businesses have had an increasingly tough time...
Morton Sloan feels besieged. Over the last several years, the Bronx-based entrepreneur has watched the property taxes on the ten Morton Williams supermarkets he runs in the city swell by hundreds of thousands of dollars. Increasingly aggressive city inspectors now linger in those stores for hours, writing costly citations for items that clerks accidentally mislabel. Some of Sloan’s suppliers say they’ll no longer deliver to New York City because of the Department of Transportation’s frequent parking-ticket blitzes. It gets worse: a new Bloomberg-administration program that encourages fruit and vegetable vendors to set up on street corners has left him scrambling to match prices with competitors who don’t have to pay rent, utilities, payroll taxes, and various other expenses. And now the city wants to plunk a 60,000-square-foot supermarket into a heavily subsidized new development just blocks from two of his stores. “I’ve never received a subsidy or asked anything of the city in 35 years, except to be left alone to do business,” Sloan says. “But everywhere I look these days, it seems like the city is trying to make life tough for me.”
...at the same time that the City has increased handouts to megaprojects like Bruce Ratner's Atlantic Yards:
Bloomberg is also seen—for good reason—as a friend to big, sweeping, government-designed economic projects that displace local businesses through eminent domain. He has supported everything from the Atlantic Yards project in Brooklyn to a massive new development in Willets Point, Queens, which would uproot hundreds of firms. Whatever the merits of these individual initiatives (and government’s record of picking winners in business is erratic at best), eminent-domain law as practiced in New York is a virtual death sentence to most small firms. “If government wants to displace a small business in New York and the business doesn’t own its own property, its chances of survival are slim because government pays virtually nothing to these businesses,” says Michael Rikon, an attorney at Goldstein, Goldstein, Rikon & Gottlieb in Manhattan, a firm that specializes in eminent-domain cases. “They come to me to represent them, and I often refer them directly to a bankruptcy lawyer.”
NoLandGrab: Bloomberg already increased the direct cash subsidy for Atlantic Yards from $100 million to $205 million.
Bruce Ratner is not slated to pay property taxes nor most of the other bothersome taxes that are a part of doing business in NYC. As Leona "the Queen of Mean" Helmsley was famously quoted as saying, "Only the little people pay taxes."
Posted by lumi at 6:19 AM
October 16, 2009
A Bloomberg Score Card: The Mayor's Hits and Misses
The Village Voice
by Wayne Barrett
The Voice's venerable political reporter weighs the plusses and minuses of a third Bloomberg act. One definite minus: arenapalooza.
As much as the city ought to name a hospital after Mayor Mike, it is more likely to name a stadium or arena. He has certainly spent enough of our money on them to pay for the naming rights. If he gets a pre-election Yankees World Series parade, the confetti should remind us of the bonanza of tax dollars that helped finance the stadium in which it was won.
...But the fact remains that the only major projects built or to be built in the Bloomberg era—the monuments to Mike—are Yankee Stadium, Citi Field, and the soon-to-be-bonded-by-the-city Nets arena in Brooklyn. Even the city-financed extension of the 7 subway line, ballyhooed by Bloomberg aides, is merely a potential pathway to Westside development, not a project itself.
That's a dismal track record, especially from a mayor who derided the job development benefits of stadium deals when he junked Giuliani's in 2002. The city is directly spending a half-billion on the two stadiums, largely for infrastructure improvements, some of which are still incomplete. It is also tapping its own supply of tax-exempt bonds, which are supposed to be used for projects of great public value, like hospitals, for $1.9 billion, subsidizing the two teams that are claiming to be building the stadiums themselves to the tune of $1.3 billion (a combination of the savings achieved through the bonds and other property, mortgage, and sales tax exemptions). The evidence that top officials of the Bloomberg administration reversed land assessments for the Yankees deal to artificially jack up the value in order to qualify for the tax-exempt financing is overwhelming and would—in a time when a good scandal had staying power in New York—make Bloomberg wince at the thought of an election eve parade. E-mails like one from a top aide to Deputy Mayor Doctoroff explicitly said they were making the assessment "so high" in an attempt "to support the tax-exempt financing."
By December, the Bloomberg administration will replicate its scandal-ridden history of bonding these projects by supporting the issuance of $678 million in state tax-exempt bonds for the Nets. The IBO estimates that the arena will also cost the city $350 million, combining direct and indirect subsidies, concluding that it will lose at least $40 million over the life of the deal, assuming the most optimistic revenue projections. Salty Mike's response to the unstated, apolitical IBO: "I don't know what the IBO studies would have shown back when they tried to establish the value of Central Park."
A Bloomberg hero, the late Senator Patrick Moynihan, attached an amendment to the IRS code in 1986 to try to bar cities from using tax-exempt bonds to finance stadiums, but the IBO reports that the city "found a way to circumvent these strictures" by technically structuring these two privately built and operated stadiums as publicly owned and leased for 99 years. The IRS originally OK'd this arrangement and then reversed itself, prohibiting such maneuvers in the future. Yet the city plans to do the arena precisely the same way, and the IRS grandfathered the arena in under its initial ruling, giving the city until the end of the year to sell the bonds. Incredibly, all of these resources have been used either to induce a basketball team to move across the river or to build stadiums with fewer and more expensive seats, neither of which is much of a public benefit. And every independent analysis re-establishes what the mayor once believed—nothing generates fewer real jobs than these television studios disguised as sports facilities.
Posted by eric at 4:58 PM
October 14, 2009
Post columnist Siegel: ask the mayoral candidates to justify "massive subsidies" for new sports facilities
Atlantic Yards Report
Atlantic Yards watchdogs aren't the only ones who are wondering how politicians waste taxpayer money on new sports venues with a straight face.
From fiscal conservative Fred Siegel's op-ed in the New York Post, headlined A wasted debate: B'berg, Thompson ignore economy: So here are a few questions that the panelists might want to ask if the next debate is not to be as hapless:
* Ask the mayor if his massive subsidies for the well-to-do owners of the Yankees, Mets and Nets for new stadiums can be economically justified when they're being paid for by a middle class bridling under what are already the highest taxes in the continental US.
Posted by lumi at 6:18 PM
October 11, 2009
In East Rutherford, N.J., New Football Stadium, but at Whose Cost?
The New York Times
By Ken Belson
This is an interesting item on how sport facilities receive public subsidies. This is a case of the new Jets and Giants stadium being built in East Rutherford, N.J.
The stadium, which is scheduled to open next year, is in East Rutherford, and the borough naturally wants to collect taxes that any private business in its borders would have to pay. But the stadium sits on land owned by the New Jersey Sports and Exhibition Authority, a tax-exempt organization created by the state in 1971 to run the sporta arenas in the Meadowlands and elsewhere in New Jersey.
For years, the authority has collected rent from the teams to use its publicly owned stadium, and payments of $1.3 million a year in lieu of taxes. In turn, the authority has made payments to East Rutherford in lieu of taxes that cover the football stadium as well as the Izod Center and the Meadowlands Racetrack.
This year, the authority will pay the borough $5.97 million, which is equal to 21 percent of what the borough would have collected if the land were privately owned. The first annual payments of $466,000 started in 1977, the year after the sports complex opened, and have been renegotiated every decade or so.
Now, however, the Jets and the Giants are building their own stadium, team offices and practice facilities, most of them in East Rutherford. Because the buildings are privately owned, James Cassella, the mayor of East Rutherford, said the borough deserves more than what it has been receiving, a point he plans to make in negotiations with the authority.
“If the poor guy trying to run a dry cleaner and struggling to make ends meet pays taxes, should it be any different for a couple of millionaire owners?” Cassella said. “I’m just looking for our fair share.”
NoLandGrab: Why can't the Times find the space to take a close look at similar shenanigans here in Brooklyn? Once again, The Times demonstrates that is has an enormous blind spot when it comes to scrutinizing public subsidies for an arena in Brooklyn for the benefit of its business partner, Bruce Ratner.
Posted by steve at 7:22 AM
September 21, 2009
In Miami, the Times finds public consternation over a sweetheart deal for a stadium
Atlantic Yards Report
Norman Oder follows up on The Times' sudden interest in bad publicly funded sports-venue deals — in Miami.
The New York Times, which treated the passage of the Atlantic Yards plan last Thursday as an event barely worthy of mention, much less scrutiny, today does some delving into a controversy about another sports facility.
...The situation in Brooklyn is both better and worse. The city and state are devoting $305 million in direct subsidies to Atlantic Yards, with--according to the IBO--about $250 million to the arena. The $726 million represents a combination of subsidies and tax breaks, including $194 million in federal tax breaks on tax-exempt bonds.
Arguably, however, Forest City Ratner is gaining even more of a benefit from opportunity costs--provisions that reduce the level of potential additional revenues--given that the state handed over all control of naming rights, a sum reported at $400 million.
Beyond that, the construction of an arena approaching $800 million would be paid by PILOTs (payments in lieu of taxes), which, according to Assemblyman Richard Brodsky--at least when describing a similar funding scheme for Yankee Stadium--counts as a public subsidy. (Sports facilities expert Neil deMause says instead that the property tax breaks are a subsidy.)
Posted by eric at 10:57 PM
In Lean Times, Miami Pays Most of Cost for New Ballpark
The New York Times
by Ken Belson
The New York Times has to travel all the way down to Miami to report in-depth about the folly of building a new ballpark largely with public money ("ignoring voter dissent and shaky economic forecasts, Miami and Miami-Dade County will help pay for most of a new stadium," the teaser says), while right here in its own backyard, the paper has been far less critical of its development-partner Bruce Ratner's gorging at the public trough.
The push for a new baseball stadium here began the day the Florida Marlins first took the field in 1993. While city after city worked with major league teams around the country to help build nearly two dozen stadiums, the Marlins were left to play — and endure countless rain delays — in a cavernous football stadium in front of thousands of empty orange seats.
Then the recession came along, and the team got what it wanted.
Miami and Miami-Dade County have agreed to cover three-quarters of the projected $645 million cost to build the Marlins a home with a retractable roof and four huge parking garages. In return, the city and the county will receive no new revenue from the park, and the team can keep all the money from the 50 luxury suites, concessions and advertising, as well as from naming rights, which alone could generate more than $100 million.
Three-quarters of $645 million, roughly $484 million, is a whole lot less than the $726 million that New York City's Independent Budget Office estimates the taxpayers will be kicking in for Forest City Ratner's Barclays Center arena.
Such generous terms were not uncommon during good times, before city and county officials faced yawning budget gaps, potential layoffs and cuts in social services. Yet they forged ahead, anyway, largely dismissing voter opposition and the lessons learned elsewhere that new stadiums sometimes fail to deliver the economic punch promised in forecasts and that the public financing for them can handcuff future generations.
The deal was a fresh reminder that even during a recession, sports hold sway over communities regardless of the potential costs.
“Outside of Fidel becoming part owner of the team, nothing would have stopped the deal,” said Carlos A. Gimenez, one of the three Miami-Dade County commissioners who voted against the agreement earlier this year. “I’m not anti-baseball, but I’m anti-bad deal. Anyone with any sense can see this is cockeyed.”
Even The Times.
The economic benefits could also prove illusory, analysts say, because spending at new stadiums often replaces money spent at old ones or comes at the expense of spending at theaters, restaurants and other entertainment sites.
...As the recession has revealed, some conservative forecasts elsewhere proved too optimistic. In 1996, officials in Hamilton County, Ohio, expected their local sales tax revenue to grow 3 percent a year when they agreed to add a half-penny to pay for stadiums for the Cincinnati Reds and the Bengals. Instead, it has since grown 1.6 percent per year on average and fallen nearly 10 percent this year, forcing lawmakers to consider cutting the schools budget.
“Cincinnati is a smaller market, but it underscores that all these projects have risks, and Miami has to understand in the depths of this recession it may take longer to recover than people think,” said Mark Rosentraub, the author of “Major League Losers,” which examined stadium deals nationwide. Rosentraub called Miami’s agreement “reckless.”
NoLandGrab: We bet Rosentraub, or Field of Schemes author, blogger and sports-boondoggle expert Neil deMause, would've told The Times the same thing about Brooklyn's agreement — if only The Times were willing to ask.
Posted by eric at 3:24 PM
September 11, 2009
IBO: Arena is Robin Hood in Reverse
New York City faces a whopping budget gap, the MTA is nearly broke, unemployment lines are growing, and, oh yeah, Bruce Ratner's "economic engine" is going to be a money-loser for taxpayers. Think that'll cause Mayor Bloomberg to pull his support? Think again.
NY Observer, After Negative Report, Bloomberg Cheers Louder for Atlantic Yards
Confronted Thursday with an Independent Budget Office report that alleges the centerpiece Nets arena is a net-money loser for the city—which is incentivizing the project with $169 million in discretionary subsidy—Mr. Bloomberg loudly hailed the project, implicitly comparing the private development to the city's finest public assets.
“I don’t know what the IBO studies would have shown back when they tried to establish the value of Central Park or Prospect Park or anything else,” he told reporters. “These are the kinds of projects you have to do because without that we don’t have a future, and we’re going to get this one done.”
NoLandGrab: If you're still trying to decide whether or not Mayor Bloomberg is an out-of-touch billionaire or not, this ought to clear it up. Does he maybe not know that Madison Square Garden and Madison Square Park are two different things?
Crain's NY Business, City gives more than gets at Atlantic Yards, study says
The [IBO] report concluded that new revenue generated from the Barclays Center Arena would fail to compensate the city for its capital contribution to the project and lost property taxes. It said the project would cost the city $39.5 million over 30 years.
Meanwhile, the various tax benefits and capital contributions received from the city and state mean that Forest City's savings would equal roughly 80% of the expected cost of the $900 million arena, which is slated to open in late 2011. The analysis also said that the state would net $25 million from the project.
“This deal gives an extraordinary advantage to the developer, and I think it is outrageous,” said New York State Assemblyman James Brennan, one of several elected officials who called for the study.
...In a statement, Forest City said the analysis was wrong. The developer noted that the report seemed to intentionally lowball the city’s sales and tax revenues while applying all city and state subsidies to the arena alone, ignoring the rest of the project.
NoLandGrab: Oh, well if Forest City says it's wrong, then that's good enough for us. 'Cause they're known for their straight-shooting. We suppose the IBO report still won't be enough to cause Crain's to editorialize against the project.
NY Daily News, Report: City may lose 40M in Atlantic Yards plan-Total subsidies $726M
It's a reversal from a 2005 report by the budget office that found the city would make $25 million more in tax revenues than it would spend on the arena. That's because the city's contribution to the arena has gone up, said office Deputy Director George Sweeting.
"The arena conceivably would make money for the city if you weren't doing the subsidies, although, then it might be hard for [Ratner] to finance it," he said.
The report found that the city will take an additional $180 million hit in "opportunity costs" - mostly property taxes it could collect if the arena weren't exempt.
This just in: Pot calls Kettle black.
Ratner spokesman Joe DePlasco noted the budget office did the report at the request of several elected officials who oppose the project. "An analysis conducted for opponents without speaking to the responsible parties is anything but independent," he said.
Gothamist, Nets Arena Will Be $40 Million Net Loss to Taxpayers
Just when you thought developer Bruce Ratner was about to turn the corner in the P.R. war over his proposed $800 million arena for the Nets in Brooklyn, along comes the city’s Independent Budget Office with a big bucket of ice water.
WNYC Radio, Report: Atlantic Yards Arena Will Cost City More Than It Receives in Taxes
But when the IBO, a nonpartisan agency, calculates what it calls opportunity costs, the picture is universally grim. The state, city and the MTA will lose out on a potential $220 million more, largely because they are giving away land for free, selling it for less than they could get otherwise, or foregoing property taxes on the arena property.
amNY, Report: Atlantic Yards arena a money sucker
The Atlantic Yards arena isn't looking like such a slam-dunk for the city.
metro, Taxpayers’ net loss on arena
The troubled Nets arena planned for Brooklyn was supposed to raise city revenue, but instead it’s going to be a net loss for taxpayers, according to a report released by the city’s Independent Budget Office on Thursday.
NY Post, Atlantic Yards a Net loss for city
The long-stalled Atlantic Yards project, sold as a surefire way to fill the city's coffers, is looking more like a money pit, according to a new study.
...The analysis also criticizes the cash-strapped Metropolitan Transportation Authority for selling Ratner the site at below-market value.
Brownstoner, IBO Reports Net Loss from Atlantic Yards Arena
Bloomberg Watch, Reading List: Bloomberg Pays for a Day in a Middle Class Home, Ignores IBO Report for Atlantic Yards
Posted by eric at 12:00 PM
September 10, 2009
DDDB PRESS RELEASE: On Day After New Arena Designs Released…
NYC Independent Budget Office Study Shows Ratner’s Arena a Financial Loser for NYC
Warns That Planned Bond Arrangement Won’t Work
BROOKLYN, NY— Fresh off a glitzy new design release by developer Forest City Ratner, a new study concludes that the Barclays Center Arena will be a money loser for New York City if built.
New York City’s Independent Budget Office released a fiscal analysis of the Atlantic Yards arena, which shows that the arena would be a $39.5 million loss for New York City over 30 years, with an additional loss of $180 million in opportunity costs (foregone gains due to tax exemptions and below market land sales).
The fiscal analysis also calculates a $726 million taxpayer subsidy and government benefits package for developer Forest City Ratner on the arena alone.
The report, “The Proposed Arena at Atlantic Yards: An Analysis of City Fiscal Gains and Losses,” is available for download on the IBO website.
“Between the IBO’s study showing the arena is a loss for the city, and the lack of any plans or guarantees for affordable housing in the project, it is clear that the highly subsidized Atlantic Yards proposal has a negative benefit for the public while providing enormous financial benefits to Forest City Ratner, including $726 million in subsidies and special benefits for the arena alone. That stark imbalance is an important part of our eminent domain argument in the Court of Appeals,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “The project is the result of a corrupt and illegal process and is a financial disaster that destroys our community. We will not let it stand and will continue to fight it by every means possible.”
The IBO study also warned that the foregone property taxes on the arena site would not be sufficient to generate PILOTs (payments in lieu of taxes) to pay off the $700 million arena bond Ratner is trying to float for the arena. The IBO estimates that the PILOT payment, based on a reasonable land assessment, would be about $15 million short of the necessary bond debt service.
“The question is will the arena land assessment be illegally inflated by the City’s Finance Department to meet Ratner’s desired debt service or will the bond amount be lowered, requiring a greater investment by the developer. This complicated issue is precisely what Assemblyman Richard Brodsky investigated with hearings and subpoenas on the new Yankee Stadium, and he should play the same watchdog role with the Nets arena PILOT situation,” Goldstein concluded.
This issue is raised in a side bar on page 4 of the IBO study.
The IBO study is at:
http://www.ibo.nyc.ny.us/iboreports/AtlanticYards091009.pdf
Posted by eric at 12:33 PM
September 8, 2009
An Atlantic Yards question the candidates haven't been asked: what about the Department of Finance's questionable tax assessments in the arena block?
Atlantic Yards Report
Norman Oder sets out to ask candidates what they think about the mysterious rise in value of property in the footprint of Bruce Ratner's Atlantic Yards project, which is in an area that has been declared "blighted."
Given the often-uninformed level of discourse about Atlantic Yards, I'm not holding my breath, but there's a significant issue that deserves discussion: the questionable tax assessments in the arena block.
I queried the four Public Advocate candidates--Bill de Blasio, Eric Gioia, Mark Green, and Norman Siegel--last week with the below information, but none offered a response (though Green's campaign asked for more time).
Check out the rest of the article for an explanation of how tax assessments are being used to game the system so that Bruce Ratner can take full advantage of triple-tax-free bonds allowed by the federal government.
Posted by lumi at 5:10 AM
September 7, 2009
New York Times hockey blog calls Zimbalist "sports-economist-for-hire"
Atlantic Yards Report
In a strong contrast to the New York Times's respectful and unskeptical treatment of sports economist Andrew Zimbalist, hired by Forest City Ratner to do a very dubious study of the Atlantic Yards project, consider coverage in the Times's hockey blog, Slap Shot.
Jeff Z. Klein, in a piece headlined Sunday’s News of Hockey, 9/6/09: Which Number Is More Absurd?, writes:
In documents filed with U.S. Bankruptcy Court judge Redfield T. Baum, the N.H.L. finally sets a fee for the relocation of franchises: $101 million to $195 million. Those are the figures two N.H.L.-hired consulting firms recommend, as the league at last puts a hard dollar number on the relocation fees called for in its bylaws.Those figures stand in sharp contrast to the estimate put forth by the sports-economist-for-hire Andrew Zimbalist, paid consultant to James L. Balsillie, the Canadian billionaire who has offered $212.5 million to buy the Coyotes and move them to Hamilton, Ontario. Zimbalist asserted in court papers that the relocation fee ought to be between $11.2 million and $12.9 million. Zimbalist’s assertion also maintains that a part of his recommended fee will suffice as the entire territorial compensation to the Maple Leafs and, presumably, the Sabres. Says the N.H.L. in its court filing, “The notion that a team in Hamilton would be worth only $11.2 million to $12.9 million more than a team in Phoenix is patently absurd.”
(Emphasis added)Such skepticism about Zimbalist is surely in order, given that four times since 2006 his testimony was discredited in a court case or thrown out of court.
NoLandGrab: We'd be remiss if we didn't point out that the Phoenix Coyotes' current ownership is the only thing standing between Bruce Ratner and the crown of "Worst Owner in Professional Sports."
Posted by eric at 10:11 AM
August 8, 2009
Fan or chump? New NY stadiums blur the difference, says Metropolis writer; also, did AY distract civics from stadium fights?
Atlantic Yards Report
Norman Oder notes an article by Mark Lamster in the July/August issue of Metropolis that wonders, after subsidizing stadiums, and paying exorbitant prices for game tickets, at what point does a sports fan begin to feel merely exploited?
The article looks at why criticism of the new stadiums for the Mets and Yankess might have been muted because of attention paid to other issues, including Atlantic Yards, though Norman Oder doesn't agree.
That fans are in essence paying for their own disenfranchisement has drawn harsh criticism from those who wished to save the old stadiums from the wrecking crews. “You have two ballparks that would never have been built if the people of New York had gotten to vote on it,” says Jim Bouton, an all-star pitcher for the Yankees in the 1960s and later a best-selling author and preservation advocate. “It’s against everything I believe about baseball and democracy.” The old ballparks were fully functional and, at least in the case of Yankee Stadium, of considerable historical significance. But the good-government activists who might have put the brakes on the two teams were distracted in the crucial months when stadium financing came up for debate. Preservationists were preoccupied with the fate of Edward Durell Stone’s kitschy Gallery of Modern Art, on Columbus Circle. The Atlantic Yards development, in Brooklyn, also commanded public attention. And, of course, there were elitists who couldn’t imagine why two crumbling baseball stadiums deserved saving at all. Against this backdrop, the most vocal critics of the two new parks, neighborhood groups in the Bronx and Queens, found themselves in the political and media wilderness. When the New York Times, in a March 2005 editorial, gave the new ballparks a backdoor endorsement—supporting them provided that the teams pay their own way—any hope of stopping the stadiums was lost. (Emphasis added)
I'm not so sure of his analysis. It was the battle over the West Side Stadium that wore out planning groups like the Regional Plan Association. Nor did Atlantic Yards, at least at the time, command so much public attention, though--given the vigor of the AY opposition and the presence of blogs like AYR and NLG--it's fair to say that the Atlantic Yards controversy produced much more homegrown media.
Posted by steve at 8:04 AM
August 6, 2009
CONVERSATION: THE SPORTS RECESSION
NewYorker.com
by Avi Zenilman
[NYer:] If I had, say 500 million or a billion dollars, and I wanted to buy a sports team, would it be worth it? Where do you think I could find value?
[Zimbalist:] Bruce Ratner wants to sell a piece of the Nets. Want me to call him up? I’ll tell him you’re interested.
There's actually much more to the interview, and we happily leave it to Norman Oder to dissect.
Atlantic Yards Report, The $6 billion lie goes unchallenged: forgetful sports economist Zimbalist gets gentle treatment in the New Yorker
A seemingly defensive Andrew Zimbalist, Forest City Ratner's paid consultant, gets gentle treatment from the New Yorker, which should've enlisted Neil deMause as the interviewer.
The online-only interview is headlined CONVERSATION: THE SPORTS RECESSION.
Q. You were a consultant to Bruce Ratner on the Atlantic Yards project—
A. I haven’t consulted with him since I wrote my last report, which I think was in 2004.
Zimbalist issued his main report in May 2004, just in time for a City Council hearing, then updated it in June 2005.
...Most importantly, Zimbalist's report relies on a bogus methodology: counting the incomes of new residents in a housing development. That methodology, coupled with Forest City Ratner's willingness to distort estimated tax revenues by adding them cumulatively as opposed to calculating present value (as is standard), contributed to the $6 billion lie.
Blatant hypocrisy
Zimbalist describes how stadium proponents distort the public debate:
One of the things that happens during a stadium drive is that the proponents go out and hire a consulting firm to come up with a predetermined conclusion that the stadium will be the cat’s meow for the local economy.They hire this company, and then they publicize the results of the study, and there might be three or four or five per cent of the community, swing voters, that say, “I might not like baseball or basketball or football, but there’s a hard study that says this will help the local economy.” Those studies are used to get the people sitting on the fence, but most of the people are voting yes because they love sports and want a team.
Other than the absence of an actual vote in New York, that's exactly what Forest City Ratner did. They hired the world's most famous sports economist, who still gets a pass, even though, putting Atlantic Yards aside, there's ample reason to be skeptical of his work: three times in one year his testimony was tossed out of court or disallowed.
Posted by eric at 10:36 AM
July 27, 2009
"Because it is shovel-ready construction": FCR's lame explanation for seeking federal stimulus funds for an essentially private arena
Atlantic Yards Report
It was one of the more astonishing exchanges at the informational meeting last Wednesday--Forest City Ratner's MaryAnne Gilmartin's explanation for why the developer has sought stimulus funds to boost its essentially private project.
Remember, the developer has lobbied for federal stimulus funds, and is almost certainly still lobbying for such help, even though former Empire State Development Corporation CEO Marisa Lago said at a May 29 state Senate oversight hearing that the ESDC hadn't sought such funds.
Why not? Because, as I note below--it's not a public project.
(Video shot by Jonathan Barkey; edited by Norman Oder)
“Can Forest City Ratner comment on why there have been public requests for federal stimulus funds to help with the construction of the arena?” asked moderator Craig Hammerman.
“It’s shovel-ready construction,” shouted Marie Louis of BUILD (Brooklyn United for Innovative Local Development), a Community Benefits Agreement (CBA) signatory.
Gilmartin at first looked a little uncomfortable with the question--perhaps because there's no good answer--but quickly recovered: “Because it is shovel-ready construction, and the fact of the matter is that the project, like other projects around the country, have suffered, based on the economic downturn, and it’s our responsibility to try to do what we can to make the project happen and to maintain its viability.”
Posted by lumi at 5:56 AM
July 17, 2009
A question for the Informational Meeting next Wednesday: how does the economic downturn affect tax projections?
Atlantic Yards Report
Forest City Ratner and the Empire State Developerment Corporation will only be answering questions submitted in writing at next Wednesday's informational meeting on Atlantic Yards, so don't bother raising your hand.
Here's a good question from Norman Oder, which we expect will garner a a stock non-answer:
How, given the downturn in the economy, the depressed office market in the city, and the numerous unsold and stalled condos in places like Williamsburg, can the expected office tower and 1930 condos (along with 4500 rental units, half of them at subsidized rents) be built on the projected ten-year schedule?
And, if not, how does that change the projections for tax revenues from Atlantic Yards, which the ESDC said last month would be higher than initially projected?
NoLandGrab: The real answer is that these types of projects NEVER come close to the projected tax revenues.
However this is proof that Atlantic Yards is getting dumberer: now we're supposed to believe that tax revenue projections have increased, even though the project has been scaled down.
Posted by lumi at 5:28 AM
July 13, 2009
Goodbye corporate handouts: How Arizona's "Taj Ma-mall" could end corporate welfare
Enter Stage Right
By Darcy Olsen
Congratulations Bruce Ratner! Your Atlantic Yards megaproject is now a national poster project for corporate handouts:
Feeling outraged about the billions of dollars pouring into GM and Chrysler's private pockets? Now take a look in your own backyard, where state and local subsidies cost over $50 billion annually—from Brooklyn's Atlantic Yards to everyday big-box retailers. Taxpayers have a long tradition of losing corporate handout battles, but a new court case could bring these boondoggles to a screeching halt: Arizona's Taj Ma-mall.
The article explains that many state constitutions have tougher provisions than the federal constitution for protecting against corporate giveaways.
For example, one of the points being argued in the case just accepted by the State Appeals Court has to do with the constitutionality of using eminent domain for uses other than low-income housing.
Posted by lumi at 5:55 AM
July 6, 2009
She could do better.
Examiner.com
By Matt Arnold
One commentator just woke up to Atlantic Yards developer Bruce Ratner's penchant for bait-and-switch (whadya expect from someone who still thinks that the basketball arena is a "stadium?"), and is having trouble with the idea that taxpayers should be forced to come up with more for less:
The strange thing is that after duping us, Ratner is coming back to New Yorkers and asking for a deal on the financing--on top of the millions of dollars in public support he’s already getting. And the Bloomberg administration appears to be caving in to his demand. It would be one thing if Ratner was financing this whole project himself, had the permits he needed, and decided that he was going to do what he liked with his money. But in this time of severe budget crisis, he’s asking us to dig deeper into our pocket so that he can build this monstrosity.
Posted by lumi at 5:34 AM
July 2, 2009
Atlantic Yards, 2010: the push for a second round of stimulus funds (I speculate)
Atlantic Yards Report
Watchdog reporter Norman Oder is getting the sneaking suspicion that Atlantic Yards developer Bruce Ratner is still after federal stimulus dollars:
Despite the statement by ESDC CEO Marisa Lago at a May 29 state Senate hearing that no federal stimulus funds had been sought for Atlantic Yards, the developer is still actively lobbying in Washington.
In 2006 and 2007, Forest City Ratner paid $200,000 a year to former Senator Alfonse D'Amato's firm, Park Strategies, to fight against restrictions on the use of eminent domain, as the Observer reported.
In 2008, FCR paid D'Amato only $80,000. This year, FCR is on pace to pay D'Amato double that sum, $160,000, at least based on the first quarterly filing.
And, as the Observer reported, the target is stimulus funds. If a new round of federal funds becomes available next year--and the Obama administration is keeping an open mind--Forest City Ratner might be arguing that the public should help with the infrastructure it promised.
Posted by lumi at 6:59 AM
June 26, 2009
DC Metro Crash Exposes Funding Strikeout
The Nation
by Dave Zirin
Nation sports editor Dave Zirin connects the dots among stadium giveaways, shortchanged infrastructure, mismanaged transit agencies and their catastrophic consequences. Monday, it was the District of Columbia. Next time, will it be New York City?
Who will be the next to die because our cities spend money on sports stadiums instead of basic infrastructure?
Two years ago, my former college town, the Twin Cities of Minneapolis-St. Paul, was the site of thirteen needless fatalities when the Interstate 35W bridge collapsed. The tragedy occurred the same month that ground was broken on a $500 million stadium. Now, a mere ten minute walk from my home, two Washington, DC, Metro trains collided, killing nine and sending more than seventy-five to the hospital.
...This is just too much to bear. My shock became anger as it became clear that none of these people had to die, that no one had to be hurt. This accident was about as predictable as the setting sun. The wreckage by my house is not an accident site. It is a crime scene. And it happened for one reason: the twisted policies of the underfunded Washington Metropolitan Area Transit Authority. The WMATA gets no dedicated federal funds despite the fact that it serves thousands of federal workers. In fact, it has no dedicated source of funds at all, depending on fares and ads for three-fifths of its budget.
The rest is a pittance from the District of Columbia, Maryland and Virginia, creating an underfunded, overstretched system called by the Brookings Institution "deficits by design."
All the dirty laundry that Metro riders catch whiffs of on their daily commutes is now in plain view. Employees have told the Washington Post that the first two cars of the striking train were two months overdue for maintenance on "braking components." In addition, the trains involved in the collision were recommended to be taken off the tracks altogether or significantly retrofitted back in 2006.
...Even worse, we now know that Jeanice McMillan probably pressed the emergency brake and it did not respond.
The Metro has now become our broken levee: an utterly preventable tragedy if only people in government had the will to do the public good. And as in New Orleans, whose Superdome sucked up public money better spent on flood control, if publicly funded stadiums hadn't become a substitute for urban policy, we wouldn't be mourning today.
The boondoggle of government-funded stadiums is just one example from a society that provides handouts to billionaires at the expense of ordinary citizens' needs.
NoLandGrab: On Wednesday, a spokesperson said the MTA was "pleased that we were able to reach an agreement with FCRC that acknowledges the current economic situation while still protecting the MTA’s transportation and financial interests."
Will that deal protect the MTA's riders, too?
Posted by eric at 5:32 PM
June 13, 2009
Celebrity Architect Dropped From Urban Renewal Scheme
Ground Report
by Richard Cooper
The exit of Frank Gehry from the proposed Atlantic Yards project provides an opportunity for Libertarians to remind us that they've never cared for this boondoggle.
Celebrity architects are nothing new in eminent domain and corporate welfare schemes. The new New York Times headquarters building was designed by Renzo Piano. Their partner in this scheme, which I dubbed "Time$cam" , was Forest City Ratner. Not suprisingly, the Times has supported Atlantic Yards. (See "NY Times Building Climbers Protest Wrong Causes" http://groundreport.com/articles.php?id=2862703 .
The financial difficulties of the Atlantic Yards scheme which led to Gehry being dropped by Forest city Ratner come as no suprise. See "Atlantic Yards Eminent Domain Abuse Scheme Confronts Reality" http://groundreport.com/articles.php?id=2857809.
As a Libertarian, I believe that corporate welfare and eminent domain are legalized theft. Because Libertarians believe in personal responsibility, I must regard Frank Gehry as an accessory profiting from the theft of land from the property owners and the theft of money from the taxpayers for this project. This comes despite my admiration for many of his designs including that for the Nets Arena for basketball. Let us hope that professionals like architects, bankers, lawyers, planners will take a pledge not to be accessories to the legalized crime of urban renewal.
Posted by steve at 8:41 AM
June 4, 2009
Study shows Atlantic Yards NBA arena project could cost city big-time
NY Daily News
By Jotham Sederstrom
Poof! The arena's slim $25M net benefit to NYC just evaporated. Now it looks like the arena is going to cost the city:
The Independent Budget Office released data Friday suggesting that the rising costs of a planned NBA basketball arena and increased public funding have chipped away at an estimated $25 million in revenues projected for the city.
"It now appears that given the additional city contributions and the higher cost of the arena that the net fiscal impact from the public investment for the arena will be negative," said Independent Budget Office Deputy Director George Sweeting.
The findings are a reversal from a 2005 Independent Budget Office analysis, which had determined that ticket sales and other spending in Brooklyn by out-of-towners coming to Nets basketball games would provide an estimated $25 million in tax revenues over 30 years.
With city funding to the project skyrocketing from $100 million to $205 million over the past four years, the economic benefit to the city has diminished significantly, Sweeting said.
NoLandGrab: Those original findings were specious to begin with, and counted on a certain percentage of the dwindling NJ fanbase to make the trip to Brooklyn and for players to live and pay income tax in NYC.
What was a joke has now graduated to a farce. Hopefully, the IBO will eventually present an honest accounting of actual benefits and losses to the city, but we're not holding our breath.
Posted by lumi at 5:57 AM
May 22, 2009
DDDB PRESS RELEASE: Ratner Losing Mayor's Support for Atlantic Yards
Bloomberg Pulls Plug on More Subsidies for Project
New York, New York – New York Mayor Michael Bloomberg said on Wednesday that the city would not give additional taxpayer subsidies to developer Bruce Ratner for his proposed Atlantic Yards project in Brooklyn.
Ratner has been lobbying the city over the past many months for more taxpayer subsidy, on top of the $205 million in direct taxpayer cash the city has committed to the developer’s beleaguered project.
The Brooklyn Paper broke the news about the Mayor’s comments:
"We've done everything,” he said in response to a reporter’s question at his daily availability on Wednesday. “We’re going to have a tough time surviving balancing our budget."
The mayor did add that the city needs the project, but said, "We’re not putting money in any of these projects. We're going to invest our money in better schools and in safer streets and in better parks and everything else."
"From the sound of the Mayor’s comments, Bruce Ratner has lost the Mayor's support for Atlantic Yards. Ratner was desperate for more money from the city, his rejection is a big blow for the project's viability," said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. "We applaud the Mayor for not allowing any more taxpayer money to feed the Atlantic Yards money pit. The Mayor rightfully sees far greater priorities for investment than Ratner’s failing Atlantic Yards project, an $800 million luxury arena where there is an arena glut, and broken promises to construct 'affordable' housing."
The city had committed to a $205 million direct taxpayer subsidy to the project, a portion of the well over $1.5 billion in taxpayer and government backed financing, breaks, exemptions and sweetheart land deals. It is unclear how much the City has already paid Ratner, but $100 million of the $205 million inexplicably reimburses Ratner for the properties he bought under the threat of eminent domain on the project's "arena block,” giving him all of that valuable land nearly for free.
DEVELOP DON'T DESTROY BROOKLYN leads a broad-based community coalition fighting for development that will unite our communities instead of dividing and destroying them.
DDDB is 501c3 non-profit corporation supported by over 4,000 individual donors from the community.
Posted by eric at 8:41 AM
May 21, 2009
Bloomy to Bruce: Enough already
The Brooklyn Paper
By Mike McLaughlin
The city has already pledged $230 million for infrastructure and land-acquisition costs at the embattled arena and skyscraper [Atlantic Yards] project — but Bloomberg dashed Ratner’s hopes for more.
“We’ve done everything,” he said in response to a reporter’s question at his daily availability on Wednesday. “We’re going to have a tough time surviving balancing our budget.”
The mayor’s thriftiness is bad news for Forest City Ratner, which in recent months had been lobbying for more taxpayer aid from the city and state, and even for a share of the federal stimulus spending to help revive construction on the $4-billion complex in Prospect Heights, where work has been stalled since December because of the current financing crunch.
Posted by lumi at 6:37 AM
May 19, 2009
Looking back at that IRS letter: did ESDC stretch the truth about the project timetable?
Atlantic Yards Report
Norman Oder explores another unanswered question:
So, if Empire State Development Corporation (ESDC) CEO Marisa Lago thinks Atlantic Yards would take "decades," as she said in April, when did she and other ESDC officials come to that unsurprising conclusion?
Because the ESDC said something very different last year to the Internal Revenue Service (IRS) when it was lobbying to get an exemption for Atlantic Yards as the IRS planned to tighten rules regarding tax-exempt bonds.
Somehow, during the course of a year, the project timeline went from "the Arena is anticipated to be completed in 2010, and the balance of the Project is expected to be built over the next decade," to the project will take "decades."
It begs the question, what did the ESDC know and when did they know it?
Posted by lumi at 6:20 AM
May 6, 2009
Yankee Stadium financial controversy back in court
The controversy over the financial details of the new Yankee Stadium headed back to court, with State Assemblyman Richard Brodsky going mano-a-mano with lawyers for the Yankees in hopes that the judge will force the team to release financial documents subpoenaed by the state legislator.
One point at issue is the valuation of the land. From an Albany Times Union article:
[Brodsky] was joined in court Tuesday by fellow Assemblyman James Brennan of Brooklyn, who chairs the Cities Committee. Among other arguments, Brodsky questioned the failure of accessible ticket prices and what he called an admitted violation of law in the tax assessment for the stadium grounds, which used to be a city park.
Either the land value was inflated so that the City could issue more tax-free bonds, or lowballed when the team determined the cost of the replacement park land. An examination of the "comps" used by the NYC Department of Finance suggest the former. If not for the fact that the Yankees had to replace the park land, the inflated value might not have come to light.
The same type of tax-free bond financing has been approved for Bruce Ratner's planned arena at Atlantic Yards. Watchdogs will be keeping a close eye on how NYC officials will justify the cost of the land under the arena.
Posted by lumi at 5:43 AM
May 4, 2009
Gary Bettman: Coliseum 'unrealistic' for Isles
NY Newsday
Hey, Atlantic Yards isn't the only misbegotten mega-plan mired in its own excess!
NHL commissioner Gary Bettman went to bat for the NY Islanders' owner, Charles Wang, who is seeking approval for his mixed-use Hempstead megaproject that is to include a convention center, the tallest skyscraper on "The Island," a shopper's paradise and a new arena.
NoLandGrab: These days, sports team owners not only want a new venue (citizens are no longer willing to foot the entire bill), so the owners are seeking the entire high-density mixed-use real estate boondoggle. If not for their limitless ambition, Wang could have already had his approval for a new arena to replace the one that everyone agrees is begining to look like THE Coliseum, and NJ Nets owner Bruce Ratner might have had shovels in the ground in Brooklyn.
Despite supporting Wang's unwelcome megaproject, Bettman went on to state the obvious; the brand-new Newark Prudential Center is already open while the Nets are still languishing in the Meadowlands:
Bettman also was asked about the possibility of the NBA's New Jersey Nets moving from the Izod Center at the Meadowlands to join the Devils at the Prudential Center in downtown Newark. NBA commissioner David Stern told APSE the Nets are fine where they are, but Bettman had a different view.
"I don't understand why the Nets aren't playing at Prudential Center now," the NHL commissioner said. "The Devils are drawing, and the atmosphere is great. It has to be costing the State of New Jersey a boatload of money to keep [Izod Center] open. I hope, at some point, the Nets decide to go there."
Posted by lumi at 5:50 AM
April 29, 2009
Finance Commissioner Stark resigns, but the Yankee Stadium issue is ignored
Atlantic Yards Report
More evidence that sex sells. Starkgate has resulted in the resignation of the NYC Finance Commish, but the papers are focusing on her questionable relationship with a subordinate, not the dubious Yankee Stadium land valuations they cooked up, possibly on orders from the Mayor's office, at the expense of taxpayers:
There's a brief mayoral statement. But none of the coverage so far--see, for example, the Times, Daily News, and Crain's--raises any questions about what may be the most significant cloud over Stark and her former subordinate (and current consort) Dara Ottley-Brown: their role in the swift and curious reassessment of the Yankee Stadium site.
NoLandGrab: Look for similar land-value shenanigans for Bruce Ratner's Atlantic Yards... hopefully without the sex scandal, though that would liven up the public conversation over the Prospect Heights megaproject.
Posted by lumi at 5:09 AM
April 26, 2009
Time to rethink arena revenue assumptions?
Atlantic Yards Report
A reader points me to pollster Zogby International's blog, in a post headlined Box Seats or Paying the Rent?:
The new Yankee Stadium is making news, but not for the reasons team management wants. In addition to building a stadium that, after a few games, seems to be allowing too many home runs, empty seats in prime viewing locations are painfully obvious.According to the Associated Press: “At the new Yankee Stadium, the best seats in the house have turned out to be the emptiest. The most expensive spots in America’s costliest ballpark have become an embarrassment packing a financial sting to the proud New York Yankees, as the Legends Suite section in the infield has been filled only once in the six games since the $1.5 billion stadium opened last week."
...A Zogby Interactive poll done on Feb. 23-24 found 70% saying have cut back on entertainment, recreation and eating out at restaurants. We reported then that: “The slashing of entertainment budgets isn’t just taking place in poorer households - around 70% of those in all household income brackets, including those with more than $100,000 in household income, said they have reduced their spending on entertainment and at restaurants in the past year. Younger adults are most likely to say they have cut back - 76% of those age 18-29 are spending less on entertainment, compared to 55% of those age 65 and older who say the same.”
Are the Yankees, and perhaps other pro teams, out-pricing the market for seats at games? Would you pay those prices to watch a ballgame?
Here's Neil deMause on "Seatgate."
The AY relevance: even if an arena could get funded (assuming lawsuits are cleared), all the assumptions about revenue require a rethink.
Posted by steve at 7:50 AM
April 23, 2009
Judge pressures Yankees to show stadium documents
AP, via Newsday.com
By Michael Gormley
While the City and State have dug in their heels, refusing requests from watchdogs for financial documents revealing the projected cost of Bruce Ratner's Atlantic Yards, there's a similar side-drama going on with the new Yankee Stadium.
A New York judge is ordering the Yankees to give him a catalog of financial records sought by state lawmakers investigating the use of public funds to help build the team's new stadium, or prove the data should remain private.
Two Assembly committees subpoenaed the records in January in the escalating fight with the team, but the Yankees withheld some key documents involving ticket prices and why some city officials received luxury box tickets
NoLandGrab: Common sense would dictate that the taxpayers ought to have knowledge of the finances of a project if taxpayer money is being used, but common sense is not so common.
Posted by lumi at 5:19 AM
April 22, 2009
Yankees handing over $68K in back rent
The New York Yankees agreed to pay the city some of the back rent owed on their old stadium, but negotiations on another $64,000 continue.
AP via Crain's NY Business
The team that committed $423 million to just three free agent contracts this past off-season, raised ticket prices 76%, and is receiving, according to Field of Schemes author Neil deMause [PDF], north of a billion dollars in public subsidies for its new ballpark, is haggling with the city over $64,000. Is it any wonder the team is cursed?
The Yankees say they'll pay New York City $67,574 in back rent on their old stadium.
Under its rental agreement, the baseball team can deduct some maintenance costs from its rent.
An audit being released Wednesday by Comptroller William Thompson found improper deductions, including some payroll, security and stadium repair costs.
The team and the city are still haggling over another $63,888 in rental credits from last year.
NoLandGrab: $64,000? Pay your #@%&ing tab!
Posted by eric at 12:34 PM
Is This Seat Taken? In Front Rows of New Ballparks, No
The New York Times
by Ken Belson
More evidence that the financial premises underlying Bruce Ratner's Atlantic Yards project, which were shaky to start with, now bear no relation to reality.
After spending $2.3 billion on new stadiums packed with suites, restaurants and the latest technology, the Mets and the Yankees expected fans to embrace their new homes and pay top dollar for the privilege. Almost every team that has built a new stadium in the recent past has seen an immediate surge in attendance.
Instead, the Mets and the Yankees face a public relations nightmare and possibly millions of dollars in lost revenue after failing to sell about 5,000 tickets — including some of the priciest seats — to each of their first few games after last week’s openers.
The empty seats are a fresh sign that the teams might have miscalculated how much fans and corporations were willing to spend, particularly during a deep recession. Whatever the reason, the teams are scrambling to comb over their $295- to $2,625-a-seat bald spots.
...But the slow start in New York is striking considering how much the teams here spent to build and promote their parks. Like airlines that break even on economy tickets and rely on first-class travelers to turn a profit, the teams need to sell their most exclusive seats to help repay the hundreds of millions of dollars of tax-free bonds they issued to finance their new parks.
NoLandGrab: Let's not forget how much the taxpayers kicked in, too. And all this stadium-building is supposed (wink, wink) to have a net positive effect on the city and state treasuries.
Posted by eric at 11:05 AM
April 19, 2009
Displaced by the Yankees, Some Bronx Athletic Teams Go Homeless
The New York Times
By Manny Fernandez
What happens when government is too eager to sacrifice the public needs for those of a privately-held sports franchise? There's no need to wait for the construction of Atlantic Yards to find out. The miserable results of this kind of experiment are on display right now in the Bronx.
The official opening of the new Yankee Stadium last week was greeted by rave reviews from many fans. But some parks advocates, community leaders and neighborhood residents have been less enthusiastic, frustrated by the loss of ball fields as well as the construction delays and rising costs of replacement parks.
The new stadium was built across the street from the old one on Macombs Dam Park and a portion of John Mullaly Park. State and federal law dictates that parkland removed from public use must be replaced by parkland of equal or greater value. The city’s Parks and Recreation Department originally said seven of the eight replacement parks planned for the area would be completed in time for opening day at the new stadium. But the agency later pushed back the schedule for some of the parks, and a report in January by the city’s Independent Budget Office found that the cost to replace the two parks had climbed to nearly $195 million, up from a 2005 estimate of $116 million.
NoLandGrab: Critics of the Yankee Stadium deal saw these problems approaching years ago. Then Bronx borough president Adolfo Carrión Jr. worked with the Bloomberg administration to squelch public discussion by effectively replacing Community Board 4 members who voted against building the new Yankee Stadium on public land. Moves to make the proposed Atlantic Yards a State project similarly kept the public from having any say in that project.
Posted by steve at 7:04 AM
April 15, 2009
The latest cloud over Finance Commissioner Stark: a romance with the (former) assistant in the middle of the Yankee Stadium controversy
Atlantic Yards Report has it all... sex, power, money!
Though the latest City Hall controversy reads like a steamy soap opera, Norman Oder explains how it runs straight through the scandal over the Yankee Stadium land valuation, which was likely jiggered to maximize the amount of tax-free bonds available for the construction of the project.
What does this have to do with Atlantic Yards? The city plans on issuing the same tax-free bonds for the Nets arena, but with the Yankees-City Hall financial scandal blowing steam, will watchdogs put a damper on free lunch for Bruce Ratner?
City Finance Commissioner Martha Stark is under a cloud again, this time for having a romantic relationship with a former assistant commissioner. Mayor Mike Bloomberg, formerly a staunch defender of Stark, says the city is looking into whether the relationship began while Dara Ottley-Brown was employed by Stark.
However, as I note below, no one is yet looking into the potential connection to an even more questionable episode: Ottley-Brown served as the Department of Finance's (DOF) point person in ensuring that the land under the new Yankee Stadium would be assessed--re-assessed, it turned out--at a figure sufficient to generate the foregone taxes to be repaid by PILOTs (payments in lieu of taxes).
And the DOF faces similar challenges in ensuring that the assessments of the Atlantic Yards arena site are sufficient to generate PILOTs sought by the developer.
Posted by lumi at 5:34 AM
After layoff threat, Bloomberg talks jobs
MetroNY
By Patrick Arden
From a sidebar, headlined "Long waits for high-profile projects," in an article about NYC's efforts to create jobs:
Moynihan Station won’t get stimulus aid because it’s not “shovel ready,” said Marisa Lago of Empire State Development Corp. Atlantic Yards is “challenging,” she added. Tax-exempt bonds for the Nets arena must be secured before an IRS deadline at the end of this year.
Posted by lumi at 4:43 AM
April 13, 2009
High-Dollar Stadiums In A Low-Rent Economy
All Things Considered
By Mike Pesca
Both New York baseball teams christen their deluxe new stadiums this week: The Mets on Monday and the Yankees on Thursday. But these high-dollar baseball palaces — designed to be financed in part by luxury suites and swanky seats — are arriving at what may be the worst economic time since Lou Gehrig retired.
Reporter Mike Pesca does a fairly good job of not letting Mayor Bloomberg off the hook, after Bloomberg tries to gloss over the cost of the ballparks to the taxpayers as a "relatively small amount for infrastructure," running into the hundreds-of-millions of dollars. However, Pesca totally missed the fact that future taxes are being divereted to paying back the bonds (sorta like striking a deal with the city to divert your property tax to help pay off your mortgage). This is significant because Bloomberg has also repeatedly asserted that the arena that Bruce Ratner wants to build is being privately financed.
Posted by lumi at 5:19 AM
April 9, 2009
Tax Foundation on Yankee Stadium: "the House the IRS Built"
Atlantic Yards Report
Have a quick look at how PILOTs (Payment in Lieu of Taxes) were fudged to benefit the Yankees' new ballpark (at a loss to taxpayers), because Bruce Ratner is poised to do the same thing in order to take advantage of low-cost financing for a new basketball arena.
The Tax Foundation's new report, From the House That Ruth Built to the House the IRS Built: New York City and New York Yankees Abuse PILOTs to Finance New Stadium, draws on reports from Assemblyman Richard Brodsky and hearings held by Rep. Dennis Kucinich.
The same criticisms could be launched at the Atlantic Yards arena, should it be built, given that the same regulations that allowed the financing scheme for Yankee Stadium were grandfathered in for AY.
Based on calculations from Brodsky, the $942 million in initial bonds would save the team between $231 million and $471 million--though the federal government bears the brunt of the cost. "Without this generous subsidy, it is unlikely that such an expensive stadium could have been built," the report states.
Click here for the rest of the article, in which Norman Oder breaks out the parts of the report that explain how and why this scheme was carried out.
Posted by lumi at 5:22 AM
Atlantic Yards YES! City Employees NO!!
While Mayor Bloomberg remains committed to subsidizing Bruce Ratner's Atlantic Yards plan to the tune of $205 million in direct cash payments (with more to come if development company CEO Charles Ratner has his wish), city employees are facing the possibility of layoffs:
AP via CrainsNY.com, City agencies trim budgets, layoffs likely
New York City agencies are being asked to cut their budgets again, and that likely means layoffs.
Mayor Michael Bloomberg's budget director, Mark Page, told agency heads in a letter Wednesday that they must slash their budgets again for next fiscal year, which begins in July.
Mr. Page said that likely means layoffs, because there isn't much left to cut.
Since when does sinking money into Bruce Ratner's Atlantic Yards plan, while the City is struggling to retain current jobs, amount to a net gain for New Yorkers?
Posted by lumi at 4:23 AM
April 6, 2009
Fair is Foul
The Brooklyn Rail
by Theodore Hamm
Rail publisher Ted Hamm critiques Mike Bloomberg's defense of the rich, and his lavishing of public funds on rich sports franchise owners.
Already flush outfits like the Yankees and Mets have received $1.2 billion in combined public subsidies to build new stadiums; and if the Atlantic Yards project goes forward, it will cost at least another $700 million (or more) in taxpayer support. In the mayor’s eyes, heavily subsidized private development is a good thing. Meanwhile, increasing taxes on the highest earners is wrong, because it may cause them to flee to Connecticut.
It’s a decidedly elitist vision coming from a determinedly anti-populist figure. Even so, most would say that Bloomberg’s reelection chances are pretty good—mainly because his threats to spend whatever it takes to get reelected have already knocked a leading contender out of the race, and also because his approval rating remains high. Yet the boom years are over, and the consequences of the frenzy of overdevelopment are only just beginning to sink in. So stay tuned.
Posted by eric at 6:28 PM
Wisdom from 1996...
Develop Don't Destroy Brooklyn
The New York Times fired up its way-back machine on Sunday to excavate a 13-year-old op-ed piece about, of all things, another billion-dollar sports venue boondoggle. Back then it was a new Yankees stadium on the West Side projected to hit the nine-figure mark, and Roger G. Noll, then a Brookings Institution visiting fellow, offered this pithy summary:
Independent studies of sports facilities invariably conclude that they provide no significant economic benefits. A sports team does increase overall income in a community slightly, but the increase never offsets the stadium's financing and operating costs. And because a team has relatively few (but very highly paid) employees, it usually causes overall employment in a city to fall because it can drive other entertainment businesses to cut back or close.
Stadiums are bad investments, which is why the teams themselves are never willing to pay for them. New York City would generate more cash by putting the money in a savings account.
The next year Noll went on to co-edit an influential and widely-praised book called Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums, which with considerable rigor came to the exact same conclusion as his op-ed. Noll's co-editor on the book was none other than Andrew Zimbalist. Four years ago, in a report written for Forest City Ratner, Zimbalist surprised observers by switching sides to conclude that Atlantic Yards would in fact be an economic benefit.
We've included the original op-ed piece after the jump.
Op-Classic, 1996: Wild Pitch
By Roger G. Noll
WASHINGTON
Even at a time when major league sports have become a cartoon of financial excess, the proposed new home for the Yankees is breathtaking in its audacity. Excluding land value, a multipurpose mausoleum on Manhattan's West Side would cost a billion dollars.
The debate has centered on two questions: Are sports facilities economically worthwhile? And should the stadium be single-purpose or multipurpose? A more fundamental question is why cities provide large subsidies to teams in the first place.
The Yankees have little economic effect on New York City. True, most fans would never visit the South Bronx were it not for the team. But few tourists come to New York just to see the Yankees. Thus, the Yankees generate a huge increase in economic activity within 100 yards of the Stadium, but not within the metropolitan area.
Nearly all spending at the Stadium is simply shifted from other forms of entertainment like restaurants and movies. Yes, the Yankees do draw suburbanites into the city, but many of these people would spend money in Manhattan or go to Mets games if the Yankees were not an option.
The city does make money by taxing tickets and concessions, but such revenues wouldn't come close to covering the Stadium's debt service. Even if the Jets agreed to play their home games on the West Side and the two teams combined drew four million fans a year, the city would need to collect an unrealistic $20 in taxes from each fan just to meet the mortgage payments.
Independent studies of sports facilities invariably conclude that they provide no significant economic benefits. A sports team does increase overall income in a community slightly, but the increase never offsets the stadium's financing and operating costs. And because a team has relatively few (but very highly paid) employees, it usually causes overall employment in a city to fall because it can drive other entertainment businesses to cut back or close.
Stadiums are bad investments, which is why the teams themselves are never willing to pay for them. New York City would generate more cash by putting the money in a savings account.
Assuming that New York decides to build the stadium, a multipurpose facility would make the most financial sense -- if the Jets and Yankees would agree to share it, which is unlikely. Single-purpose stadiums are more attractive and draw more fans. And the teams want their own stadiums so they can control and profit from other events in them. The city, of course, gains nothing by letting the teams have their way.
Why do cities pour hundreds of millions into new stadiums? With intense competition for sports franchises, not even New York can keep a team without subsidizing it. New Jersey and New York have at various times fought over the Giants, Jets, Yankees and Mets. The sad thing is that the states need not be competitors: Fans could easily support a third team in both football and baseball. But each league is a monopoly, doing what monopolists do best: making the product scarce to hike up the price.
There is a far cheaper way to keep the Yankees. Bribe them. A new stadium could give the Yankees an additional $10 million in profits each year. So instead of spending $80 million annually to finance and operate a new stadium, New York could just hand the Yankees $10 million. Or, even better, the city could pay $100,000 for each game won, with a million-dollar bonus for winning the pennant.
This plan would save the city money, improve the Yankees' bottom line and benefit fans, who would be less likely to have a team that collapsed in the stretch.
Roger G. Noll was visiting fellow at the Brookings Institution at the time of publication.
Posted by eric at 6:08 PM
April 4, 2009
Breaking With History in the Bronx
The New York Times
by Jim Dwyer
The About New York columnist hearkens back to the days when pro sports teams actually paid taxes.
The pharaohs would be at home in the new Yankee Stadium, if they could peel enough gold leaf off their sarcophagi to cover the costs of tickets. The monumentality of the place goes on display this weekend for the first games.
In dimensions and decor, the new stadium, handsome and comfortable, is meant to evoke the old one. But the resemblance is only concrete deep. This is not history, but a costume party, a rigging of familiar geometry. It disguises a radical departure from New York’s baseball history: the embrace of public subsidy — around a billion dollars when all the costs are added — for private wealth.
The first incarnation of Yankee Stadium opened in 1923. The owner, Jacob Rupert, bought private land, raised private funds for the construction, and maintained the place with money he made in ticket sales. Rupert and his successors paid taxes on the property: the land alone was assessed at $1.75 million in 1923. By 1970, the stadium and land were valued at $5 million.
If you were to page through the annual city tax rolls, you would find the valuation of Yankee Stadium — as well as the Polo Grounds in Manhattan and Ebbets Field in Brooklyn, the homes of the Giants and Dodgers — listed right alongside the other big properties in the city, like Rockefeller Center, the Metropolitan Life building and Loews Paradise theater.
What do those old tax rolls tell us?
Click through for the answers.
Posted by eric at 10:38 AM
Baseball and Bailouts
Condé Nast Portfolio
by David Levine
Does the opening of new ballparks for the Yankees and Mets herald the fall of the stadium boondoggle era?
Three years ago, at the height of the real estate boom, the wealthiest team in baseball persuaded the city of New York to help it build a luxurious and expensive ballpark. The city provided land for the stadium rent-free. It issued bonds to pay for the park’s construction and convinced the Internal Revenue Service to waive any taxes associated with the project. And when Yankees management needed more money to put the finishing touches on their luxe new marvel (to install, among other things, 1,100 flat-screen televisions), they came back to the city and got what they wanted. Viewed through the dark lens of our current recession, the Yankees deal seems absurdly lavish. Certainly, at a time when America’s largest city is bleeding jobs and slashing services, there are better uses for its money than coddling A-Rod and one of the richest teams in professional sports.
But the stadium plan is more instructive now than ever. What happened in the Bronx is reminiscent of what’s happened between teams and towns all across the country in the past decade or so, albeit on a less expensive scale. And it was, in a way, an early illustration of the flawed philosophy that has marked the recent bailout binge: If we open the public coffers to private industry, the thinking went, bounty will follow. Since then, the notion of public funding chasing private companies has become national policy, and the fallout grows uglier by the day. Wall Street received big bailout money (and was dragged before Congress to justify how it managed to pay bonuses even as consumer lending continued to stagnate). Detroit CEOs jumped on the bandwagon too, submitting their own restructuring plans in exchange for government money they hoped would stave off the insolvency of the American auto industry.
So far, none of the bailouts seem to be working. Federal handouts meant to translate into increased lending appear only to have kept the banks from collapsing; Detroit’s bailout money looks like it will just delay the inevitable.
...In the end, the big bailout may have been the only solution we could have reached. If we had let the banks fail, who knows where we’d all be today? But the thing that unites both efforts—the bailout on a large scale and the stadium on a small one—is our own faulty thinking: a philosophy that held that if we placed the public trust and funds in private hands, it would lead us to plenty.
Now, though, as questions arise and anger abounds over just how all of these firms are spending our money, perhaps the thinking has finally changed. It’s no longer such a given that industry knows best. And as improbable as it may seem, we might one day look at that edifice newly erected in the South Bronx in a different sort of light: not just as a glitzy new ballpark built at the end of an epic American boom, but as a brick-and-mortar remnant of a very old way of thinking.
Posted by eric at 9:40 AM
April 2, 2009
Past Will Touch Costly New Homes of Yankees and Mets
The New York Times
by George Vecsey
In the age of Madoff, in the age of bailouts, in the age of layoffs, comes the unprecedented spectacle of not one, but two heavily subsidized baseball stadiums opening in New York in the very same week.
...Were these new places really necessary? Yankee Stadium was cramped and outmoded but quite awesome. Shea Stadium was a horror, but it was the Mets’ fans beloved horror. Knowing what we know now about the economy, we surely could have lived with them indefinitely.
The main goal became turning ballparks into resorts, land cruises designed for A.I.G.-bonus-recipient wallets, the games lasting long enough to wring more twenties and hundreds out of the faithful.
Bread and circuses. Shrimp and pennant races. Luxury boxes and follies. Laugh and cry.
...Now we have these swanky new joints. The Mets and the Yankees have made their deals with the devil, the luxury-box trade.
Posted by eric at 3:30 PM
March 28, 2009
Atlantic Yards Submitted for Stimulus Spending
Nets Daily
Atlantic Yards, troubled but alive, has been nominated for federal stimulus money, according to a list prepared by New York State. The question is by who. Earlier, it was believed the Empire State Development Corp., the state entity behind the project, had nominated it. Late Friday, the governor’s office said a private citizen had suggested the funding; the ESDC had not.
Posted by steve at 6:06 AM
March 27, 2009
Correction: Yes, Atlantic Yards has been submitted for stimulus funds, but not by ESDC
Atlantic Yards Report
Norman Oder posts a "mea culpa" in which he explains how he jumped to the conclusion that federal stimulus funds were requested for Atlantic Yards by the ESDC.
I contacted Erin Duggan, who's handling press for the stimulus package, who responded, "That is a very draft list of the requests that have come in. That communication in particular was from a citizen, and was not any official request for the project. We have no requests for funding for Atlantic Yards."
Posted by lumi at 7:11 PM
Yes, Atlantic Yards has been submitted by the ESDC for stimulus funds, but is it eligible?
Atlantic Yards Report
It seems like Bruce Ratner's subsidy-laden Atlantic Yards megaproject magically made it onto NY State's "Second Draft List" (it wasn't on the first) for projects to receive federal stimulus funds:
Yes, apparently, Atlantic Yards is shovel-ready, according to the Empire State Development Corporation, which had gone back-and-forth on that issue.
A cryptic entry in the massive, 774-page Second Draft List - Project Proposals (PDF), issued March 25 by the New York State Economic Recovery and Reinvestment Cabinet, mentions AY but, in contrast to most other projects, without a budget or a description. (Click to enlarge)
NoLandGrab: Huh? A request for $0 for "Atlantic Yards" is supposed to be a placeholder, or something, for a figure to be filled in at a later date? You gotta be kidding.
Like everything Atlantic Yards, the actual amount of money that Bruce Ratner wants is another state secret.
Posted by lumi at 5:22 PM
Atlantic Yards YES! Jewish and Muslim Burial rites NO!!
While the City and State continue unfettered support for Bruce Ratner's Atlantic Yards plan, cuts in city services threaten burial traditions of observant Jewish and Muslim New Yorkers.
NY budget cuts could imperil Jewish burial rites
NEW YORK (AP) — New York City's medical examiner warns that proposed budget cuts could threaten Jewish and Muslim burial rites.
Dr. Charles Hirsch says the cuts could hamper his office in its efforts to expedite the burials of observant Jews and Muslims, whose religions call for burials within 24 hours of death.
The city has ordered the medical examiner's proposed operating budget of about $80 million for the fiscal year beginning in July cut by $7 million. And the state has threatened to withhold about $18 million in reimbursements.
Posted by lumi at 4:21 AM
March 24, 2009
DDDB Twofer Tuesday
Shouldn't Congresswoman Yvette Clarke Tax Bruce Ratner at 90%
Congresswoman Yvette Clarke was one of the co-sponsors of the approved House bill that would levy a 90% tax on the AIG bonuses. Those bonuses reportedly amount to about $165 milllion.
But Congresswoman Clarke has been silent about the counterparties AIG paid billions to, including Barclays Bank, which received $8.5 billion in taxpayer bailout funds funneled through AIG. Does she really oppose the bonuses but support AIG funneling 400 million bailout dollars to Bruce Ratner and his arena?
Barney Frank Had Said Naming-rights Would Be "Off Limits" For TARP Beneficiaries
New Jersey Congressman Pascrell's letter to Treasury Secretary Tim Geithner calls for an end to the Barclays naming-rights deal for Bruce Ratner's billion dollar Barclays Center arena because Barclays is a recipient of taxpayers' TARP funds funneled through AIG. Pascrell's letter reminds us of a quote from House Financial Services Committee Chair Barney Frank as reported in the February 13th New York Daily News:
...Naming rights deals will be off limits for firms taking taxpayer money in the next $350 billion installment of bailout money for banks and financial institutions.
"I'm confident you won't see anything like that going forward," in the next bailout round, Frank said.
We've gone forward. Now what?
Posted by eric at 12:59 PM
March 13, 2009
$70 Billion in Requests for $4 Billion in New York Stimulus Funds
ThePoliticker.com
By Eliot Brown
As part of the Paterson administration’s “Economic Recovery Update” on the stimulus spending, the governor’s office sent an email out this afternoon of a draft list of requests it has received for infrastructure-related federal stimulus funds.
The unranked list, a 461-page document with 11,842 projects, totals around $70 billion in requests, according to a spokeswoman for the governor’s office. The state has just $4 billion or so to dole out for infrastructure, said the spokeswoman.
Bruce Ratner's Atlantic Yards megaproject does not appear to be on the list; however, reporter Eliot Brown adds, "the list also notes that not all project requests have been included," so stay tuned...
Posted by lumi at 5:52 AM
March 9, 2009
Will we ever find out how much AY and arena now cost? More FOIL responses from NYC EDC and ESDC
Atlantic Yards Report
Norman Oder's FOIL request was... foiled again.
So I appealed the decision by the New York City Economic Development Corporation (NYC EDC), that the current cost of the Atlantic Yards project is exempt from disclosure because it is either a trade secret or its disclosure "would cause substantial injury to the competitive position of the subject enterprise."
And the answer from the appeals officer, Judy Fensterman: no way.
The Financial Materials, NYC EDC said in a letter, "contain proprietary assumptions, analyses and projections regarding the feasibility and performance of the Project and provide insight into FCRC's proprietary financial models and other business practices, which would be detrimental to FCRC's competitive position if disclosed."
And disclosure would frustrate ongoing negotiations "relating to all aspects of the Project." Those negotiations include "private parties."
...
But the cost of the project and the arena was a public matter when the project was approved in December 2006. If the cost is now a secret, that suggests that developers and public agencies can announce one set of numbers to the public, then turn around and keep the actual numbers secret.
NoLandGrab: You think that the total cost of the arena ought to be public knowledge, especially since the project is to receive hundreds of millions of dollars in City and State funding, and that, officially, the arena is to be owned by the public, though Nets owner and developer Bruce Ratner would lease it for A DOLLAR.
NOPE! This is a "trade secret" and would be "detrimental to FCRC's competitive position." Huh? Competitive with whom?
This doesn't pass the smell test and smacks of the fear of public outrage and political retribution if we knew what they really were up to.
Posted by lumi at 6:01 AM
March 7, 2009
PILOTS and Wall Street Journal Opinion Piece
Atlantic Yards Report
While some people think that the weekend is a good time to relax a little, for Norman Oder, it's an opportunity to look even harder at Atlantic Yards. Today he gives us a double dose.
At another Assembly hearing on the Yankees, PILOTs, taxes, ticket prices, and animosity
You'd think they'd be grateful, but it turns out that sport teams don't really like to acknowledge it when they receive public subsidies. This became obvious at yesterday's public hearing on Yankee stadium. Yankees president Randy Levine, when questioned by Assemblyman Richard Brodsky, insisted on saying at the same time that the Yankess received no subsidies, yet relied on PILOTS (payments in lie of taxes). PILOTS would be used to pay for the proposed Atlantic Yards project.
Brodsky contends that the public is paying for the stadium because the tax-exempt bonds are paid off by PILOTs. The Independent Budget Office (IBO), however, considers only the break on interest rates the subsidy.
"I’m going to read language from the IRS letter," Brodsky said to Levine, referring to a letter in which city officials wrote, "The city has determined to use its property taxes to finance the construction and operation of the stadium."
"Is that accurate," he asked.
"I don’t know, I’m not a bond lawyer," Levine demurred. "I’ve testified, over and over, in my opinion, the New York Yankees are paying every cent of construction of the new Yankee Stadium." He noted that the Yankees do not pay property taxes and no new stadium would have been built without the opportunity to use PILOTs.
WSJ on AY: "A Hole Grows in Brooklyn"
Norman Oder takes a look at today's Atantic Yards piece in The Wall Street Journal and adds some perspective of his own.
In a Wall Street Journal op-ed today about Atlantic Yards, headlined A Hole Grows in Brooklyn, Manhattan Institute senior fellow Julia Vitullo-Martin argues, not unpredictably for the newspaper and author, that the private market should have been allowed to do its work.
She writes: Now, more than five years later, what's been brought to Brooklyn is a very large hole in the ground and a project that is coming to symbolize why large government projects can be riskier than allowing local residents to fix up their own communities.
Her conclusion: The ill-fated project in Brooklyn reflects a breakdown of the state and city's strategy of favoring big-government, centrally supported, highly subsidized projects over the kind of small, privately funded, unsubsidized, incremental development that was already occurring in Prospect Heights, as the area is officially known.
...
I think Vitullo-Martin gets the big picture right--and appreciate the citation of AYR in her piece--but I wish she'd further noted the importance of government action as a catalyst. For the blocks in Prospect Heights below the Vanderbilt Yard, conversions of former manufacturing buildings into housing required spot rezonings.
A wholesale rezoning would've been necessary for both those blocks, and the railyards, to catalyze development. And some measure of subsidy would've been necessary to jump-start development over the railyards.
The difference would've been that a subsidy to build a deck over the railyards could've been announced before a single bidder had been selected, as with AY, and instead could've spurred development in multiple parcels with multiple bidders, as in the proposed UNITY Plan.
As I wrote in December 2006, the Empire State Development Corporation, in a not credible statement, contended that, without Atlantic Yards, there would have been no redevelopment in the project site.
Posted by steve at 7:30 AM
March 6, 2009
Luxury Strikes Out
The Wall Street Journal
by Ben Casselman
In a case of monumentally bad timing, this year three of the biggest names in pro sports -- the Yankees, New York Mets and Dallas Cowboys -- are opening three of the most expensive stadiums ever built, filled with premium-priced seats and luxury amenities. At a combined cost of more than $3.5 billion, the stadiums were conceived and financed in a vastly different environment, a time when corporations and municipalities were flush with cash. Now they're opening just as corporate America is going through a massive belt-tightening -- and trying to avoid the appearance of extravagance at all costs.
"Let's face it, if you're taking TARP funds, it's really hard to justify getting a [luxury] box," says Neal Sroka, a luxury real estate agent hired by the Yankees to help sell the team's premium seats, referring to the funds distributed to banks under the Troubled Asset Relief Program.
...Between corporate sponsorships, naming-rights deals and luxury suites, two-thirds or more of teams' revenue comes from corporations rather than ordinary fans, estimates David Carter, executive director of the University of Southern California's Sports Business Institute. Over the years, luxury boxes, once just a few glass-enclosed rooms high above the regular seats, have become as integral to a new stadium as concession stands -- more so, because companies pay for them up front, guaranteeing profits regardless of the team's success on the field. As team owners crammed in ever-more premium seats, corporations, eager for new ways to entertain clients, happily bid up the prices.
All that corporate money, Mr. Carter says, has created what he calls the "sports ticket price bubble." Now that bubble is in danger of bursting.
Posted by eric at 2:29 PM
March 4, 2009
Now we get it: Bloomberg thinks poaching companies over state lines is bad, but poaching teams is not so bad
Atlantic Yards Report
When Smith College sports economist Andrew Zimbalist, Forest City Ratner's paid consultant, calculated (report in PDF) expected tax revenues from the planned Atlantic Yards arena, one key element was what Zimbalist called the "recapture of tax revenues presently generated in New Jersey," current home of the Nets basketball team.
For Bruce Ratner's Atlantic Yards project to be a net gain for NYC, it MUST "recapture" enough tax revenue from NJ fans. But if NJ wanted to do the same, dems is fighting words:
Guess what: the same people who boosted AY now warn that recapture of tax revenues across state lines is a bad idea. Consider an article in Monday's New York Times, headlined New York Vulnerable to Poaching in Recession, which noted how New Jersey was offering incentives to companies to move there.
The Times reported:
Those discussions have infuriated Mayor Michael R. Bloomberg, who complained publicly about New Jersey’s efforts in a news conference last month. And they have been sharply criticized by some economists, who assert that such incentives mainly benefit established companies with lobbying clout and are not very effective in creating new jobs.
Posted by lumi at 5:33 AM
February 28, 2009
Atlantic Yards West
Have you heard about the proposal for a massive mixed-used development that features an arena for an NBA team? Surpise! It's not the proposed Atlantic Yards, it's a proposal being put forward in Sacramento.
This first article gives a gee-whiz overview of the new proposal, but manages to refer to the project as "Atlantic Yards West" without a whiff of irony. No Land Grab readers should get a very strong feeling of deja-vu :
Fanhouse - Sacramento Gets a Look at Potential New Home for the Kings
Hopes of keeping the Kings in Sacramento moved forward Friday, as the NBA unveiled its plans for a huge development with a new, privately-financed arena as the centerpiece. The plan is absolutely massive in scope ($1.9 billion, 8 million square feet), with a new state fairgrounds, condos, retail and office space all apart of the plan.
...
All told, officials call it a potential "city within a city." It is a truly massive undertaking, and any arena won't be ready until 2013 at the earliest. NBA representative John Moag said it will take at least a year to get a developer, and that shovels won't turn dirt until the economy improves. (The economy is worse in Sacramento than in most American cities, if you can believe it.) If you believe in the Sacramento Kings, keep your fingers crossing.
Luckily, the fine people at Field of Schemes are able to inject a whiff of reality.
Field of Schemes - Sacramento proposes Atlantic Yards West for Kings
The NBA and city of Sacramento officially issued their plans for a new Sacramento Kings arena on the site of Cal Expo yesterday, and you sure can't accuse them of thinking small: It includes a 350-acre "living village" with a new indoor fair space, and retail, office, and residential buildings, and a whopping price tag of $1.9 billion. If this sounds familiar, it's because it's a dead ringer for the similar office/residential/arena plan that is currently in the process of collapsing in Brooklyn, thanks to plunging demand for office or residential space.
..
Economist Claude Gruen, a specialist in these kind of giant development deals, called the plan's economic projections "too rosy," and said it wasn't reasonable to expect it could pay for itself. But at least it's created some much-needed jobs for architectural sketch artists.
NoLandGrab: People of Sacramento - be afraid. Be very afraid
Posted by steve at 4:50 PM
February 27, 2009
Isles file arena paperwork, financing still hazy
Field of Schemes
Neil deMause reports on the status of New York Islanders' owner Charles Wang's plans for a new arena (Wang released a 6,000-page environmental report on Tuesday).
Commenter Januz believes the only way the Isles remain in the area is if they relocate to Brooklyn (guess where), and he notes that Al D'Amato is the reason why.
Interesting enough, Al D'Amato is involved with BOTH Ratner and SMG (The managers of the Coliseum).
...A possible plan of D'Amato's, could be to have Atlantic Yards be considered "Shovel Ready" to help with funding. Move the Nets temporarily to the Coliseum, until it is built, then move them and the Islanders to Brooklyn. Then when the economy improves, sell the Coliseum and the land to a developer (Say around 2015, when SMG's management contract expires, and the economy is better?).
Posted by eric at 10:45 AM
February 26, 2009
Why Brooklyn arena tax revenues likely would be lower than projected (and why the IBO should take another look)
Atlantic Yards Report
Have you been wondering what gives with Norman Oder's unflagging obsession with NJ Nets attendance figures? Is the "Mad Overkiller" unable to ignore any of owner Bruce Ratner's exaggerations?
Today's post reveals the method to his madness:
New York City's Independent Budget Office (IBO) may not be ready to recalculate a cost-benefit analysis for the planned Atlantic Yards arena, but there's surely a reason to do so, because one key statistic has likely changed, and one key assumption was likely wrong from the start.
As I describe below, that could mean a 23.2% decline in expected new spending, and a significant--if not quite as high--decline in sales tax revenues. If so, there'd be even more evidence that the arena would represent a loss to the city rather than, as previously analyzed by the IBO, a "modest fiscal surplus."
And it would be another reason to tilt the balance between public and private benefit from the project....
The key assumption is that current NJ Nets fans would attend games in Brooklyn. However, if that reasoning was specious to begin with and attendance keeps dropping, the prospect that NYC would capture enough sales tax revenue from Jersey fans to make the project a net gain for the city pretty much goes down the tubes.
Click here to read the article as Oder walks readers through the math.
NoLandGrab: It's pretty much a given that these projects never pan out like the politicians promise, but very few reporters set out to try to prove it before the fact.
If the justification for hundreds of millions of dollars of direct cash subsidy is based upon this house of cards, Oder is right, it's time for the City to square with the public, especially during this fiscal crisis.
Posted by lumi at 5:38 AM
Atlantic Yards is Not in Compliance With The ARRA and Faces Enormous Statewide Competition
Develop Don't Destroy Brooklyn explains why, according to state and federal regulations governing the economic stimulus package, Bruce Ratner's ailing Atlantic Yards project does not qualify, no matter how much money the developer spends on lobbyists.
Forest City Ratner is lobbying for a bailout of Atlantic Yards from the stimulus bill.
But there are two big strikes against this effort that are not in compliance with the American Recovery and Reinvestment Act:
- Atlantic Yards is not shovel-ready according to the bill's provisions.
- Atlantic Yards is a no bid project. The bill does not allow this.
During the "Leaders Briefing on Economic Recovery" Timothy Gilchrist, head of the Economic Development Recovery Cabinet, laid out in detail the procedures and qualifications by which stimulus money will be apportioned.
Mr. Gilchrist said that there are statewide requests for infrastructure projects valued at $14 billion and $4 billion in stimulus funds available for the state. He said that the"Recovery Cabinet" and State agencies had identified over 1,900 projects in early January valued over $11 billion. Since that time an "equal number of projects had been identified" by agencies and municipalities valued around $3 billion, including about 200 projects "in the last few days."
Some will be eligible, he said, and some won't.
Is Atlantic Yards on that list? So far, it does not appear to be, but the lobbying must be intense.
Posted by lumi at 4:27 AM
Construction's Role in Picking Up the Pieces
The Epoch Times
By Charlotte Cuthbertson
“The stimulus bill will certainly be shaping construction this year,” said Robert Murray, vice president of economic affairs at McGraw-Hill Construction. As a result, the public works sector will be the “saving grace of construction” in 2009 and 2010, Murray said. Murray spoke at the McGraw-Hill “Managing Construction’s Financial Crisis” Conference in New York Feb. 24-25.
Interestingly, when the current state of the construction industry is talked about, Bruce Ratner's flagging Atlantic Yards megaproject tops the list:
Commercial building has been hit hard by the credit crunch. Large projects nationwide such as Atlantic Yards in New York, the Chicago Spire, and the Echelon Resort in Las Vegas have been put on hold.
[OK, so this list is in alphabetical order; however, industry leaders are keeping an eye on what's happening to the largest single-source private development project in NYC history.]
Construction industry leaders are bracing for another rise in costs:
Material costs could be shooting up again by 2010, driven by demand and transportation costs, said economist Simonson.
“By 2010, if economies like China and other developing nations get going again, they're going to add to that demand of materials that we need here for construction” and anytime there's a surge in shipping costs, or fuel surcharges, “you feel it on the construction site,” Simonson said.
NoLandGrab: It's worth noting that stimulus money spent on construction is going to create construction-industry jobs.
Brooklyn Borough President Marty Markowitz and developer Bruce Ratner are telling anyone who will listen that some of this money must be spent on Atlantic Yards in order to create jobs, but clearly these jobs would be at the expense of other jobs created by more essential projects.
Posted by lumi at 4:11 AM
February 22, 2009
ACORN's Lewis Says "Opponents" Should Be "Fair" and Let Ratner "Compete" For Stimulus Funds
Develop Don't Destroy Brooklyn
Below is an excerpt from an article in the Courier> papers. It is not online yet, but we'll post it when it is.The article calls Al D'Amato's lobbying for a bailout for Bruce Ratner's Atlantic Yards proposal a "counter lobbying effort" while "opponents" of the project are "stepping up their lobbying efforts."
Witt refers to opponents, only DDDB by name, writing a letter to the Governor which was "obtained by this newspaper." Perhaps his paper obtained the letter because it was publicized in a press release yesterday but overlooked the 38 signers including political clubs, good government organizations, neighborhood and community groups, and clergy members.
Perhaps ACORN's Bertha Lewis overlooked that too. Because it is Ms. Lewis whose astonishing comments overwhelm the article. We'll let her words speak for themselves, but it is necessary to remind readers that ACORN is contractually obliged to support the Atlantic Yards project in the public and in the press, and last Summer Forest City Ratner gave ACORN $300,000 and a $1 million low interest loan. And remember, Ratner isn't "applying" for stimulus money like small businesses and community centers will have to, he is lobbying the Governor, and who knows who else, directly along with Al D'Amato.
Posted by amy at 10:34 AM
February 21, 2009
Brutally weird: Courier-Life says "Yards opponents" are trying to block Ratner from applying for stimulus money
Atlantic Yards Report
We know Atlantic Yards isn't dead, because things still keep getting brutally weird. The Courier-Life's Stephen Witt, who brought us the story of "the real land-grabbers," this week suggests that the real manipulators in the political system are the volunteer groups opposing a bailout for Forest City Ratner.And the victim of the "counter lobbying offensive" is developer Forest City Ratner, which is paying uber-lobbyist Al D'Amato in an effort to get federal stimulus money for the Atlantic Yards project.
But the signers of the latest letter are not, as the headline suggests, "Yards opponents;" some are simply watchdog groups concerned with prudent infrastructure spending like the Straphangers Campaign and The Open Planning Project, as well as Good Jobs New York, notable for its scrutiny of subsidies, and the consultant Majora Carter.
Click through to the article to find out how DDDB is like the Republican party (according to Bertha Lewis.)
Posted by amy at 2:04 PM
When is democracy coming to Atlantic Yards?
NY Daily News - The I-Team Blog
Michael O'Keeffe
This is a perfect reason why so many people in Brooklyn think Bruce Ratner's Atlantic Yards proposal is little more than a back-room deal to enrich an influential developer.On the same day the Daily News' Pete Donohue and Elizabeth Hays report that Brooklyn beep Marty Markowitz has been lobbying for stimulus money to jump-start the Nets owner's stalled project, Norman Oder says on his Atlantic Yards Report blog that the New York City Economic Development Corp. has denied his Freedom of Information Law request for the current price tag of the proposed arena and surrounding skyscrapers.
The EDC told Oder that supplying that information "would cause substantial injury to the competitive position of the subject enterprise." In other words, it's a trade secret.
Huh?
NoLandGrab: O'Keeffe links to Leonard Cohen's song "Democracy" and asks when democracy will come to Atlantic Yards, but everybody knows the deal is rotten.
Posted by amy at 1:29 PM
February 18, 2009
BrooklynSpeaks, Straphangers say there should be no stimulus for AY
Atlantic Yards Report
Last Wednesday, District Leader JoAnne Simon asked a fundamental question of Atlantic Yards Ombudsman Forrest Taylor: "When is this project no longer this project and is so fundamentally altered that we need to look at it again and start over?"
Taylor said he'd take the question back, but BrooklynSpeaks, the "mend-it-don't-end-it" coalition of which Simon is member, yesterday issued a statement drawing on that issue to ask Governor David Paterson to reject any request by Forest City Ratner for federal stimulus funds.
...
“The original Atlantic Yards plan was conceived for the economy of 2004. In 2009, that plan is no longer feasible, and the current design, program and schedule for the project is unknown,” said Prospect Height Neighborhood Development Council (PHNDC) representative Gib Veconi. “Providing stimulus for Atlantic Yards now would amount to the Governor approving a new project before it’s been disclosed to the public.”It also would seem to bail out a developer for obligations previously committed.
...
BrooklynSpeaks, for reasons of pragmatism as much as principle, has been unwilling to join lawsuits challenging the fundamentals of the project, the approval of Forest City Ratner's role.Still, BrooklynSpeaks, which has proffered proposals for reform that haven't gotten much traction, at least has been praised by Brooklyn Borough President Marty Markowitz, the project's biggest cheerleader and a proponent of stimulus funds.
NoLandGrab: In the past, Marty Markowitz has attempted to highlight the differences between the coalition groups Develop Don't Destroy Brooklyn and BrooklynSpeaks, but even his own stumping for more public subsidy of Bruce Ratner's ill-fated Atlantic Yards plan hasn't managed to soften the consensus that it would be a shameful waste of precious taxpayer money.
Posted by lumi at 5:06 AM
February 17, 2009
Decoding "shovel-ready": AY railyard may seem eligible, but with a huge bailout asterisk (and wouldn't be "fully vetted")
Atlantic Yards Report
Recently, the Empire State Development Corporation was confused as to whether or not the Atlantic Yards was a "shovel-ready" project, and there was (perhaps calculated or cautious) confusion between Senior Senator Charles Schumer and Governor David Paterson as to whether Atlantic Yards would be eligible for federal bailout money.
Norman Oder explores the meaning of "shovel-ready" and whether or not the railyard work has been "fully vetted," which is a requirement, according to an overview released by the office of House Speaker Nancy Pelosi.
Posted by lumi at 5:26 AM
And where in the stimulus bill might money for AY come from?
Atlantic Yards Report
Norman Oder asks and answers the question of the day:
So, where in the stimulus bill might there be money for Atlantic Yards? There aren't too many places and there's surely much competition for relatively limited funds.
[Keep in mind that Atlantic Yards developer Bruce Ratner is currently spending thousands of dollars on lobbyists to answer the same question.]
Discretionary funding
There's some discretionary money for governors; the emphasis is on education but "other government services" are included.
...
Of $53.6 billion, 18.2% would mean $9.8 billion spread nationally--not a huge amount of money for each state. The National Association of State Budget Officers (NASBO) calls it the State Stabilization Fund, which has "flexible funding for governors’ priorities."Mass transit and housing
NASBO also identifies $9.3 billion in the bill for mass transit. (I couldn't find the reference.) The bill has provision for a "Public Housing Capital Fund." There's also $1 billion for a "Community Development Fund," but that money would go to grantees that received funding in FY 2008.There's an additional $2.25 billion nationally for "capital investments in low-income housing tax credit projects;" New York State would get a relatively small fraction.
Might that involve Atlantic Yards? Well, the December 2006 KPMG report (p. 21 of PDF) to the Empire State Development Corporation states that developer Forest City Ratner would be eligible for such tax credits, a benefit of $95,000 to $165,00 per unit. Then again, the stimulus bill says that not less than 75 percent of the funds would have to be committed within a year.
Overview in the press
The New York Times, provides an overview of the impact of the stimulus on New York, identifying "$24.6 billion for Medicaid, education, transportation, and other priorities."Drilling down, the newspaper reported $1.3 billion for transit projects, "nearly all of which would go to the Metropolitan Transportation Authority. About $500 million would go to the Fulton Street Transit Center in Lower Manhattan. As for the rest: The authority has a long list of other projects that could get some of the stimulus money, including subway and commuter rail station renovation and improvements to behind-the-scenes infrastructure like rail yards and shops.
The Vanderbilt Yard was not on the MTA's initial list, but the decision is apparently in the hands of Gov. David Paterson.
Then there's the matter of an amendment that seemingly would have precluded money being spent on stadiums, which never made it to the final bill.
Posted by lumi at 5:17 AM
February 16, 2009
Audit cries foul, says Yanks stiff city on rent - again
NY Daily News
by Adam Lisberg
Not content with a sweetheart deal funneling hundreds of millions of public dollars toward the building of a new Yankee Stadium, the Sultans of Swag still insist on trying to nickel-and-dime the city's taxpayers at every turn.
The Yankees shortchanged the city to the tune of $65,511 for Yankee Stadium rent payments in the first three months of 2008, a new audit from Controller William Thompson shows.
The Bombers do not dispute the audit and plan to repay the money, just as it has paid millions in rent charges after similar challenges in the past eight years.
"The Yankees consistently overstate their rent deductions, effectively underpaying the city the proper rent due," Thompson said in a statement. "The Yankees have understated the rent due to the city by more than $3.7million over 33 quarters, which indicates a pattern thatgoes beyond an accounting error."
Sneering Yankees' president Randy Levine continues his ongoing audition for the role of the villain in the next Batman film.
"If I was Bill Thompson, I'd start paying more attention to Mike Bloomberg than the Yankees," Levine told the Daily News, "or else he's going to find himself in a situation similar to a cellar-dwelling baseball team."
Posted by eric at 12:21 PM
February 13, 2009
Senate aims for swift vote on stimulus plan: Schumer
Reuters
By Joan Gralla
Though he is an ardent supporter of Bruce Ratner's ailing Atlantic Yards arena and highrise megaproject, Senator Charles Schumer hedges in his comments to a reporter on whether or not the project qualifies federal bailout funds:
The U.S. Senate plans to debate the compromise economic stimulus bill on Thursday night and vote any time from midnight to 8:00 a.m. on Friday, Senator Chuck Schumer told reporters on a telephone conference call.
Schumer, joined by fellow Democrat Governor David Paterson, outlined how much New York state and New York City stand to get from the $789 billion bill negotiated between the Senate and the House of Representatives.
...
Cautioning that some figures were preliminary, Schumer estimated the state would get $1 billion to modernize highways and $1.3 billion for mass transit upgrades. But the cash-strapped Metropolitan Transportation Authority, which runs New York City's buses, subway and commuter rails, cannot use any extra dollars it gets to avoid steep fare and toll hikes.A high-speed rail link to Buffalo might be funded. But Schumer said he did not know if the Metropolitan Transportation Authority's Atlantic Yards Brooklyn development would qualify. This apartment-office project, throttled by the credit crisis, includes an arena for the New Jersey Nets basketball team.
[Emphasis added.]
Develop Don't Destroy Brooklyn comments:
Of course the Atlantic Yards project is not the MTA's project it is Forest City Ratner's project. Unclear if that is the reporter's error or the Senator's. Presumably the MTA will use its stimulus funds for MTA projects.
Furthermore, our reading of the latest versions of the bill make it pretty clear that Atlantic Yards will not be eligible for stimilus funds for various reasons, including that the project is not "shovel ready" by any stretch of the imagination. And the bill is not supposed to supply funds to bail out a private developer and relieve him of his commitments.
NoLandGrab: Interesting — either Schumer doesn't want to deliver the bad news to Bruce yet, or he's still trying to figure out how to make his developer pal happy.
[Photo: Ratner and Schumer at press conference announcing the purchase of the NJ Nets in 2004.]
Posted by lumi at 5:26 AM
February 9, 2009
ATL. YARDS BIG WANTS PORK PIE
NY Post
By Rich Calder
Expect the developer whose motto is "no subsidy left behind" to work his ass off to get a chunk of the federal stimulus package.
City and state officials say they expect developer Bruce Ratner to lobby hard for a piece of the federal pork to help bail out his reeling $4 billion plan to bring an NBA arena and 16 residential and office towers to Prospect Heights, which is in jeopardy because of the economic downtown.
Cheerleader-in-Chief and Brooklyn Borough President Marty Markowitz insists that the project is "shovel-ready" and is exactly the type of economic stimulus that Brooklyn needs, while project opponent Dan Goldstein asserts that no more money should be used to bail out a private developer and the "Atlantic Yards money pit."
Could there be an arena loophole in the stimulus package?
State officials say the project would qualify for New York's share of stimulus funds, but no distribution decisions have been made.
Although stadium projects don't qualify to receive money through the stimulus bill, arenas are not mentioned in the document.
Though the Post repeats the "15K construction jobs" myth (it's really 1,500 jobs over 10 years), it is one of the few papers that has informed readers that the developer has "serious cash-flow problems":
The Post reported last month that Ratner is having such serious cash-flow problems that he's in talks with the Metropolitan Transportation Authority about cutting costs on a $445 million transit improvement plan he promised in 2005 in order to get the green light from the state for Atlantic Yards.
Posted by lumi at 5:38 AM
February 8, 2009
Atlantic Yards Bailout DOA?
Develop Don't Destroy Brooklyn
The federal stimulus bill awaits a Senate vote likely on Tuesday followed by heated negotiations for reconciling with the House so nobody can be sure yet what the bill will be and what it will allow.But currently the Senate version includes an amendment that has been passed that does not allow stimulus funds for, amongst other things, a stadium.
S.A. 309 page S1590 reads:
None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project.If that Amendment stays in the final bill, which is likely, Forest City Ratner will not be able to get stimulus funds for his billion dollar arena, though they will try. Will they argue that an arena is not a stadium? Probably. But an arena and a stadium are the same thing in the context of such a provision.
Posted by amy at 10:40 AM
ESDC Abruptly Changes Tune on Federal Stimulus Money to Bail Out Ratner
Develop Don't Destroy Brooklyn
DDDB has three questions after reading this week's Courier article by Stephen Witt:
1. Which day during the past week did Forest City Ratner tell ESDC and Johnston to "fix this" thing that Willner said last week? (If the statement was simply wrong, rather than offensive to Forest City Ratner, you'd think ESDC would have corrected it more quickly on its own.)2. Which Ratner lobbyists are courting which city, state and federal politicians to give them a piece of the action?
3. If, as Johnston states, the suspension of work at the Atlantic Yards site is "due to pending litigation," rather than financial difficulties, then why would Ratner need or deserve federal stimulus taxpayer dollars?
Posted by amy at 10:36 AM
February 3, 2009
Mets, Citigroup say stadium deal still on
Bank issues statement after report said it was considering move to back out of contract amid complaints from lawmakers.
AP via Crain's NY Business
Maybe they should call it Dupli-Citi Field.
The New York Mets and the financially troubled Citigroup said Tuesday that their $400 million naming rights deal for the team's new stadium is still on, despite a published report that Citi may be looking to back out.
The Wall Street Journal reported Tuesday that Citigroup was exploring the possibility of backing out of the 20-year marketing partnership, which includes naming the new ballpark Citi Field. The report quoted unnamed people familiar with the matter as saying Citigroup had made no final decision.
Citigroup Inc., which late last year said it planned to cut 53,000 jobs worldwide and received $45 billion in federal bailout aid, said in a statement: "Citi signed a legally binding agreement with the New York Mets in 2006." The bank said that none of the bailout money would be used for Citi Field.
NoLandGrab: Instead, the bailout money (aka "our money") is being used to fund things that otherwise would have had to be funded with the Citi Field sponsorship money — like bonuses.
Posted by eric at 10:11 PM
Citi Explores Breaking Mets Deal
Bank That Got Bailout Cash Revisits $400 Million Pact to Put Name on Stadium
The Wall Street Journal
by David Enrich, Matthew Futterman and Damian Paletta
You say Cit-ee, I say Cit-eye, let's call the whole thing off.
Citigroup Inc., eager to quell the controversy over how lenders are using government bailout money, is exploring the possibility of backing out of a nearly $400 million marketing deal with the New York Mets, say people familiar with the matter.
Officials at Citigroup have made no final decision about whether to try to void the 20-year agreement, which includes naming the Mets' new baseball stadium after the bank, say these people.
In a statement Monday, Citigroup said that "no TARP capital will be used" for the stadium -- referring to government funds from the Troubled Asset Relief Program. But as it revisits the pact, Citigroup is essentially acknowledging that the volatile political climate could make it untenable for the bank to proceed with the deal.
How exactly do they separate the TARP money from their other money? Marked bills?
If Citigroup parts ways with the Mets, other financial institutions may find themselves under pressure to reconsider sports-marketing deals. Bank of America Corp., which got $45 billion in government capital, signed a deal in 2004 for naming rights for the Carolina Panthers football stadium in Charlotte, N.C.
Bank of America's 20-year deal calls for the bank to pay the Panthers $7.5 million a year, making it one of the National Football League's most expensive naming-rights deals. The Houston Texans receive $10 million a year from Reliant Energy Inc.
Bank of America has been in talks with the New York Yankees about a major sponsorship deal for the new Yankee Stadium, though the company's name wouldn't be on the building. That deal appeared near complete in the fall, but neither side has discussed the matter since then.
NoLandGrab: The Mets have a ballpark, but may end up without a naming-rights deal. Bruce Ratner has a naming-rights deal (for now), but may not have an arena.
Posted by eric at 8:24 PM
February 2, 2009
Atlantic Yards YES! Teachers NO!
New York City is on the hook for hundreds of millions of dollars for Bruce Ratner's Atlantic Yards plan. Meanwhile Mayor Bloomberg just presented a budget that proposes laying off 15,630 educators citywide, much to the consternation of another Atlantic Yards supporter, United Federation of Teachers President Randi Weingarten.
This report from 1010 WINS News Radio by Terry Sheridan:
Bloomberg threatened the city's labor unions with 20,000 layoffs if they don't step up to renegotiate contracts and require workers to contribute more on their benefit packages.
"You can only get so much blood out of a stone'' with budget cuts and other measures, Bloomberg said. After that might come layoffs, he said. He is confronting a $4 billion deficit for the next fiscal year, which begins in July.
But the United Federation of Teachers is claiming city educators make up an unfair proportion of the proposed job cuts. The U.F.T. says the mayor's plan will see educators account for 15,630 of the proposed cut of 19,650 positions city-wide.
U.F.T. President Randi Weingarten said, "We know times are tough and that everyone needs to share in making sacrifices, but this is shockingly disproportionate and unfair."
Posted by lumi at 4:45 AM
February 1, 2009
ESDC Says Atlantic Yards Not Eligible for Federal Stimulus Money
Develop Don't Destroy Brooklyn
Unless it is a feint of some kind, the Empire State Development Corporation, for the first time ever, has made a declarative statement detrimental to the hopes and dreams of "developer" Forest City Ratner and its Atlantic Yards proposal.And rightly so.
The state development corporation and lead agency on Atlantic Yards stated unequivocally that Atlantic Yards is not a "shovel ready" project and therefore will not be eligible for any money from the non yet approved federal stimulus bill.
Congresswoman Yvette Clarke, who represents the district where the project has been proposed, also stated clearly that any decision on stimulus money for Atlantic Yards would be made by the ESDC, not by her office.
Posted by amy at 9:52 AM
January 31, 2009
Are Pro Sports Too Big to Fail?
The Wall Street Journal
by Jonathan V. Last
First there was the tech bubble. Then came the housing bubble. Could the pro-sports bubble be next?
In an economic crisis, the weak die first. So it was no real surprise that the first sports casualties of the current recession came from minor professional leagues: Last month the WNBA shuttered its premier franchise, the Houston Comets, and the Arena Football League, which had been scratching out a living since 1987, canceled its 2009 season. (The LPGA is cutting three tour stops and $5 million in prize money from the 2009 tour, so they're feeling the pinch, too.) The question is, were these failures part of a normal, recessionary, thinning of the herd? Or were they the early warning signs of a pro-sports bubble that may be about to burst?
...Yet teams keep building new stadiums. They're charging bigger premiums -- such as personal seat licenses -- for high-end and luxury seats. Parking, concessions and player salaries keep going up, too. Is it all sustainable?
Perhaps. America's obsession with sports has created a nearly continuous 90-year boom. There have been down moments, but neither the NFL nor MLB has ever contracted, i.e., eliminated, a team -- the ultimate sign of failure. The National Basketball Association hasn't eliminated a franchise either, since it took on its modern form in 1976.
During the Great Depression, baseball did take a significant hit: Attendance dropped 40% from 1930 to 1933 and didn't return to pre-Depression levels until 1945. Player salaries declined 25%. But no teams went belly-up.
Matters might be different this time.
First, franchises have become accustomed to the public financing of stadiums and arenas. During the construction boom of the 1990s, some 50 ballparks, stadiums and arenas were built in the U.S., according to BusinessWeek. On average, taxpayers footed 70% of the bill -- even though team owners reaped the benefits. In baseball, for example, Forbes calculates that the median ballpark is worth $100 million to a team, or a quarter of a franchise's total value. In the '90s, teams argued that new stadiums added to a city's economic vibrancy. Yet studies now show that subsidies for sports stadiums actually create a slight drag on the local economy. And even if cities wanted to believe the boosters, the bad times should now make the current crop of publicly financed stadiums the last. The Vikings, for instance, have started asking Minnesota lawmakers about building a new facility for their team. The response has been laughter.
..."The U.S. government is buying banks, major retailers are going under, and a half-a-dozen newspapers are folding up shop," [Fox Sports Radio's Steve] Czaban says. "Why is it we think this could never happen to sports?"
Posted by eric at 1:06 PM
CBA signatories seek federal stimulus money for AY; ESDC flatly says project is not "shovel-ready"
Atlantic Yards Report has the the scoop on the not-yet-online story from Courier-Life that breaks the news of ESDC's opinion of the Atlantic Yards status:
"ESDC spokeswoman Lisa Willner responded that Atlantic Yards is not a shovel ready project and thus would not be eligible for stimulus money."
The article also includes a confused statement from BUILD CBA signer James Caldwell:
"The way it [stimulus money] is being proposed is that it will go through the government and they will give it to unions and not to community based organizations that train and prepare people in our community," he added.I don't think the plan is to give the money to unions.
Posted by amy at 12:13 PM
Mayor's Budget Would Shrink Capital Plan by 30 Percent
The Real Estate
Eliot Brown
Mayor-for-life Bloomberg seems to be packing up the golden shovel that helped dig the city into an economic disaster:
Just as Washington is planning an infusion of spending on construction and infrastructure, Mayor Bloomberg has proposed a substantial cutback that would shrink the city’s five-year capital plan by more than $6 billion, or 30 percent.What’s in the capital plan? Money goes to roads, police stations, economic development projects (such as revitalization of Coney Island and the development of Atlantic Yards). These cuts to the plan come on top of what equated to a 20 percent reduction enacted last year, which spread out the four-year plan into five years.
Mr. Bloomberg has been a mayor who apparently loves capital spending, and for the past two years, the city has allocated record amounts to capital projects. New below-market-rate housing, new parks, improved infrastructure—all have been strongly emphasized in the Bloomberg administration’s early years, but all have come at a cost, bringing up the city’s debt burden as almost all the money was borrowed (this is a common practice for capital projects).
...
Just last week, City Comptroller Bill Thompson released a report warning about the city’s rising debt level, as tens of billions in added debt could leave taxpayers with an increasingly unmanageable burden each year in the form of debt payments. Debt payments are especially burdensome as they stay the same even if tax revenue shrinks, eating up a larger portion of the budget.
Posted by amy at 12:05 PM
January 30, 2009
IBO official: time for another look at AY incentives (but not for a cost-benefit analysis, yet)
Atlantic Yards Report
The Brooklyn Paper quotes George Sweeting, Deputy Director of the New York City Independent Budget Office (IBO), says, according to the Brooklyn Paper, "It may be time for the city to take another look at the mix of incentives.”
...
Still, it doesn't look like the IBO is ready to perform another cost-benefit analysis. (The initial one had its flaws, since the IBO mainly focused on the arena.) In September 2007, Sweeting told me, "It remains unlikely that we will re-work the entire fiscal impact analysis, given other demands on our resources."When I queried Sweeting yesterday, he responded, "We don’t have anything underway on Atlantic Yards at this time. As the plan evolves we may take another look--but we have to consider that in light of our own limited resources and other demands on them."
Indeed, the plan is hardly firm. However, that hasn't stopped Forest City Ratner from pursuing additional indirect subsidies. Shouldn't someone be calculating how this cuts into the originally promised benefits?
NoLandGrab: We'd bet that the IBO won't pursue any additional analysis, so as not to embarrass Bruce Ratner and project supporters.
Posted by lumi at 5:27 AM
NY1 Exclusive Poll: NYers Still Sour Over Term Limits
NY1
By Josh Robin
It appears that Mayor Bloomberg is vulnerable on an issue other than the extension of term limits... public funding of ballparks.
For Democrats eyeing toppling Bloomberg, like Congressman Anthony Weiner and city comptroller Bill Thompson, there's another angle -- baseball.
Fifty-nine percent of New Yorkers disapprove of financial deals to give the Mets and Yankees new ballparks. Just 14 percent approve while about a quarter aren't sure.
The poll was taken before recent reports that costs of recreational facilities that were part of the Bloomberg administration-brokered deal have ballooned by nearly $80 million.
Which means if perks for baseball teams emerge as an issue, this political game isn't over yet.
NoLandGrab: In the past, Mayor Bloomberg has contended that the teams are paying for new venues with their own money. As in the case of Bruce Ratner's Atlantic Yards arena, we know that isn't true.
Posted by lumi at 5:21 AM
Kucinich asks Citigroup to give up Citifield naming rights deal
Atlantic Yards Report
Norman Oder responds to news that:
Representatives Dennis Kucinich (D-OH) and Ted Poe (R-TX) have asked Treasury Secretary Timothy Geithner to demand that Citigroup dissolve its $400 million naming rights contract for the New York Mets, known as Citifield.
...
Essentially, the naming rights agreement is a marketing expense, and even banks that take federal money aren't being asked to stop marketing, are they? (Can egregious marketing expenses be regulated?)But it's probably not a marketing expense--at least at $20 million a year--that the bank would make today.
Barclays Capital has so far avoided nationalization. But the discussion about the Atlantic Yards arena naming rights deal might get interesting if the U.K. government does end up bailing out the bank.
NoLandGrab: That's a hard one. Can we expect a backlash if any automakers that accepted federal bridge loans pay premium rates to advertise during the Super Bowl?
Then again, if taxpayers are lending a hand in the construction of the ballpark, shouldn't naming rights proceeds go back to the government?
Posted by lumi at 5:10 AM
January 29, 2009
Pricey stadium stations
Metro New York
By Patrick Arden
Here's a further example of how the City and State governments' enthusiasm to subsidize private sports facilities costs taxpayers more and more.
When the MTA agreed to spend $40 million for a station to service the new Yankee Stadium, rider advocate Gene Russianoff suggested the team pay for naming rights to the stop.
...
The cost of the new Metro-North station has climbed to $92 million —the city’s kicking in $39 million — and keeps rising: This week Metro-North approved $800,000 to keep the station clean.
“The Yankees have refused to contribute,” said Andrew Albert, a rider rep. on the MTA board.
NoLandGrab: Meanwhile, the State refuses to back off from subsidizing the proposed Nets Arena which will eat up plenty of taxpayer money, but return little.
Posted by steve at 6:06 AM
Park replacement costs skyrocket
River Ave. Blues
Here is commentary on the announced delays in delivering parks for Bronx residents that are meant as a replacement for public parkland given away for the construction of the new Yankee Stadium. The proposed Atlantic Yards project gets mention as an example of poor planning.
According to a recent study by the city’s Independent Budget Office, the City of New York will have to pony up nearly $80 million more than originally expected to replace the 22 acres of parkland lost to the new Yankee Stadium. This project will now cost around $195 million. Who would have guessed?
...
In the end, this is of course no different from countless other city projects. Along Second Ave., the long-awaited Second Ave. Subway has run into countless delays and budget problems, the Atlantic Yards and Hudson Yards projects are a mess, and even the Fulton St. Hub, part of the Lower Manhattan post-9/11 redevelopment plan is stuck in neutral.
NoLandGrab: Atlantic Yards is a State project (the City having abdicated its responsibility years ago), but the pattern here is similar: Backroom deals result in huge public subsidies with little public benefit.
Posted by steve at 5:48 AM
January 27, 2009
Yankee Stadium rec area cost out of the park
Crain's NY Business
by Daniel Massey
More revelations about The Parks that George (and Mike) Stole from the people of the nation's poorest Congressional district.
The cost of replacing more than 22 acres of South Bronx parkland displaced by the new Yankee Stadium has skyrocketed 67% to nearly $195 million, according to a new report by the Independent Budget Office.
Design revisions, project additions, unanticipated cleanup of hazardous materials and construction inflation have driven costs up by $78.6 million, the report said. While the Yankees are financing the stadium — with the help of city and state subsidies — the parks are being paid for by the city.
...Eight smaller parks will replace Macombs Dam Park and a portion of John Mullaly Park, which were demolished to make way for the new stadium and parking garages.
...The parks were initially expected to be completed by December 2010, but construction delays at almost every facility means they will not likely open before the fall of 2011.
...The increases and delays came as no surprise to community members who believed all along that the city’s original plan was not feasible. They vigorously opposed the stadium, in large part because of its impact on neighborhood parkland.
Joyce Hogi, a member of Community Board 4’s parks committee and a longtime area resident, said community members told the city it was underestimating the amount of environmental remediation that needed to be done, but that its warnings went nowhere. “We knew the costs of the parks were going to escalate,” she said. “During our protests, we said ‘there are tanks under the soil, there’s remediation that needs to be done.’”
Even if there are no further delays, Ms. Hogi believes irrevocable damage has already been done. “The kids that played in these parks will be adults and parents by the time we get the replacements,” she said.
NoLandGrab: The phony claims by the Yankees and the Bloomberg administration that the new stadium will be a boon to the Bronx make the theft of the area's parkland all the more egregious.
Posted by eric at 4:15 PM
January 26, 2009
Sports of The Times: Tear Down Stadium and Build Up the Bronx
The New York Times
by Harvey Araton
Araton's scathing column appeared in Sunday's Times. Once again we ask, why do the sports beat writers and columnists see through the stadium swindles while the metro and editorial desks get writer's block?
Months after its rousing and official farewell, old Yankee Stadium stands strong, proud and in one piece, shuttered but not altogether silenced.
Twenty-two days until pitchers and catchers, its message board atop the outer wall reminded passers-by last week — one day before the Yankees finally left the building. Humble sorts they are, they made a publicized show of an administrative schlep across the street Friday that was months overdue, like the demolition of a ballpark so beloved that it almost sounds sacrilegious to ask, why is it still here?
A civic conscience trumps sentimentality, however. Enough is enough. To paraphrase Ronald Reagan: Tear down this stadium, Mr. Bloomberg!
“That’s going take at least two years because the city’s priority is the Yankees, not the neighborhood,” said Joyce Hogi, a member of the Community Board 4 parks committee.
She and her colleagues fought a long, losing battle of preservation best evidenced by two stadiums at the expense of cherished parkland, to be replaced here and there and on terms mostly beneficial to a private enterprise already worth in excess of $1 billion. All while the old and the new stand side by side, towering over what is commonly called the nation’s poorest Congressional district like some supersize baseball mall.
...The city and the Yankees say the area will benefit in economic development. Hogi said: “The Yankees have been there for 80 years and what’s been developed? The only thing they are building now is a fortress so the people coming in will never have to step foot in the neighborhood.”
NoLandGrab: Joyce Hogi raises a very good point. If the Yankees are so good for the people of the Bronx, why is this "the nation’s poorest Congressional district" after 80+ years of the Yankees?
Posted by eric at 10:18 AM
What's Happened to the Plant in the Park
Gotham Gazette
By Anne Schwartz
The controversy over the construction of a water filtration plant in the Bronx underscores the importance of ongoing scrutiny by politicians and watchdogs over largescale projects like Bruce Ratner's Atlantic Yards, even after they are underway:
The escalating cost of the facility, which will be one of the largest water filtration plants in the world, is one of a number of complaints raised by critics, who opposed ever placing it in the Bronx and say the city is mismanaging the project. As they watch over the construction of the plant as well as associated work at nearby Jerome Park Reservoir, they want to ensure that the city keeps its promises to provide jobs to local residents, minimize the environmental impacts of construction in residential neighborhoods and spend an additional $240 million on Bronx parks.
Local politicians and state officials agreed to let the city build the filtration plant after the Bloomberg administration made these promises. Other projects throughout the city -- from Willets Point to Atlantic Yards to Yankee Stadium -- also faced local opposition and entail similarly elaborate agreements for community improvements, affordable housing and more. The ongoing saga of the filtration plant in the north Bronx shows the need for constant vigilance by residents and elected officials to make sure these promises are kept.
Posted by lumi at 4:54 AM
January 23, 2009
"Negotiating against ourselves": Council Member Gioia offered a prescient warning about the city's embrace of AY
Atlantic Yards Report
While doing research on the political tidal wave of support for Bruce Ratner's Atlantic Yards megaproject, Norman Oder stumbles upon a moment in time when one politician was trying to think clearly:
Would you believe that, some four-and-a-half years ago, a top city economic development officials promised that the return on public investment in the Atlantic Yards project would be eclipsed by the impact of the New Jersey Nets moving to Brooklyn?
Or that an effort to "find a better deal" was seen to "discourage developers from coming to us," even though, since then, the city has held competitions for developers seeking to build megaprojects?
That's in the transcript of the 5/4/04 City Council hearing on AY.
There were two key exchanges between City Council Member Eric Gioia and Andrew Alper, then president of the New York City Economic Development Corporation.
(I augmented the transcript slightly with a look at some video.)
Posted by lumi at 5:18 AM
January 22, 2009
The Stadium controversy as a national bellweather
River Ave. Blues
This item discusses the issue of publicly financing stadiums in a time of financial difficulty. Not surprisingly, the proposed Atlantic Yards project gets a mention.
As New York, the center of the known universe, prepares to open two baseball stadiums in a few months, urban policy gurus and baseball economists have put the city and its stadium financing deals under a microscope. Meanwhile, with the U.S. economy in a deep recession, the national construction boom has all but ground to a halt.
Enter Maury Brown and The Biz of Baseball. In a multi-part series on Brown’s site, Pete Toms has explored the issues surrounding stadium construction and financing. Part I explored how stadium construction plans are couched in terms of mixed-use development. Part II examined how the current state of the U.S. economy has left the new Busch Stadium an island in an uncompleted and unfunded ballpark village. Yesterday, Part III hit the Internet.
In it, Toms looks at the impact the recession will have on stadium financing. Toms predicts that of the three major sports teams awaiting approval for stadium financing and construction — Nets, Marlins, A’s — at least one of those teams will never get its new home and the others may have to wait a while. With the Atlantic Yards plan in shambles, the Nets fit the bill, but I don’t think the Marlins and A’s will be enjoying new digs anytime soon.
Posted by steve at 6:32 AM
January 19, 2009
If it's Monday, the Yankees must be lying spinning
City tabloid sports columnists have no illusions about who's really paying for the new Yankee Stadium. Why is it that sports columnists seem to grasp injustice a lot faster than Metro beat writers?
NY Daily News, Yankee Stadium and Citi Field are the Houses That You Built
Mike Lupica, whose b.s. detector is as sharp as anyone's in the New York media, sums up the Yankees' subterfuge in a must-read column.
For the last time, the Yankees aren't building a new Yankee Stadium for the Bronx because it is the poorest Congressional district in the country. And they aren't building it for you anymore than the Mets are with Citi Field. This isn't about a grand slam home run for the city's economy. It is a grand slam for these baseball teams.
Yankees president Randy Levine - whom Hal Steinbrenner has somehow allowed to become the angry face and threatening voice of his organization - likes to scream about lies and distortions. He ought to know. You can start here: That the Yankees moved across the street as some sort of public service. They didn't. New ballparks and new arenas are never public services and never help the taxpayers, not in the Bronx, not in Queens, not in the Meadowlands.
Not anywhere.
NY Post, STADIUM WATCHDOG DESERVES ANSWERS
Post columnist Phil Mushnick isn't buying what Yankees president Randy Levine is peddling.
Says here that in the throes of a crisis that demands fiscal accountability, Westchester Assemblyman Richard Brodsky's call for a full accounting of New York's financing of the new Yankee Stadium should have been met by both Mayor Bloomberg and Yankee president Randy Levine with this: "Anything you want, and right away. We've nothing to hide."
Instead, Levine and the mayor's office threw a name-calling hissy fit, accusing Brodsky of political grandstanding, and, sounding more like John Sterling than John Sterling, accusing him of treason for trying to do dirt to the citizens of New York by asking none-of-his-business questions about New York's deal with the New York Yankees!
Levine said that Brodsky's "behavior in trying to hurt the people of this city is disgraceful." Indeed!
How dare anyone question a $370 million shortfall in the original estimate of public financing for the Yankees!
WFAN/YES Network, Francesa on the Fan
Levine keeps pushing the prevarication with WFAN radio host Mike Francesa, including this novel explanation for the massive taxpayer contribution to a new Yankee Stadium.
"For years and years, in the Bronx, people were complaining that the parkland in the Bronx was not adequate. So as part of this arrangement, the Yankees pay for the stadium, the city is building the infrastructure. So the city is building new and additional parkland.... The city are building beautiful brand-new parks."
Yup, it's all about the parkland — ballpark land, that is.
Posted by eric at 4:48 PM
January 18, 2009
Atlantic Yards YES! Schools NO!!
NY Times presents letters from New Yorkers to Obama:
ARTHUR GOLDSTEINTeacher of English as a Second Language, Francis Lewis High School, Fresh Meadows, Queens
I teach in a trailer in the back of a building. My school is built for 1,800 kids, and we have over 4,500. They build a wall in the middle of the room and say we have two rooms. It’s unconscionable.
There’s an entire school in the Bronx made of trailers. Meanwhile, we’re building more seats in stadiums down the street. What do you think will happen if we build stadiums and not schools? Kids get it. They’re smart.
Posted by amy at 9:42 AM
Bloomberg's economic plan
Crain's
Mayor Michael Bloomberg's plan to bolster the New York City economy is a major step forward on two counts. It provides a clear signal that city government is willing to take significant action amid the economic crisis. It also raises the bar for Mr. Bloomberg's likely opponents in this year's election—Comptroller William Thompson and Congressman Anthony Weiner—when they offer alternatives.
...
But the mayor failed to address some key issues. He never explained how he would continue major economic development projects such as Willets Point with diminished resources and a lack of commitment on the part of the private sector to move forward on these plans. He didn't mention the Atlantic Yards or West Side rail yards projects and whether he thought more government subsidies are appropriate to move them forward.
Posted by amy at 9:32 AM
January 17, 2009
The Yankees get their bonds, but questions remain
Atlantic Yards Report
The New York Yankees, as expected, got the tax-exempt bonds they sought, with one abstention among the board members of the New York City Industrial Development Agency, that of Comptroller William Thompson's representative. The New York Mets got their bonds, with no debate. Here's coverage in the Times.Questions pending
I wasn't there, but Good Jobs New York's Allison Lack was, and she observed:
Representatives for the Yankees and Mets each made presentations during the hearing, which goes against standard IDA practice. By the IDA’s own rules, comments in favor or opposition to projects are limited to public hearings (one took place yesterday). At all the IDA board meetings Good Jobs New York has attended over the years, never before have we seen project applicants speak in favor of their projects during these meetings.
Posted by amy at 10:58 AM
January 16, 2009
City Agency Approves More Funding For Yankee Stadium
NY1
Here's a big surprise.
The city's Industrial Development Agency approved another $370 million in tax-exempt bonds for the new Yankee Stadium today.
The panel voted 11 to one in favor of the additional funds. There was one absention.
It's been the subject of two days of heated hearings this week.
The IDA discussed the issue yesterday. On Wednesday, Yankees President Randy Levine defended the request before a State Assembly hearing.
The team says it needs more money to pay for rising construction costs.
Assemblyman Richard Brodsky has accused the Yankees and the city of working together in illegal secrecy. City Comptroller Bill Thompson has accusing the city of financial incompetence on the project.
link (with video)
The one "nay" was cast by the Comptroller's representative.
Posted by eric at 2:29 PM
At IDA hearing, Brodsky warns of "complete breakdown of the issuance of public debt"
Atlantic Yards Report
Norman Oder rounds up coverage of testimony from yesterday's "public hearing of the New York City Industrial Development Agency (IDA) on additional tax-exempt bonds for the New York Yankees and New York Mets."
State Assemblyman Richard Brodsky pointed out:
"This event and this vote and this hurried process is only greater evidence of the complete breakdown of the issuance of public debt in New York State."
One columnist believes that triple tax-exempt bonds are "hardly a handout," while Neil deMause points out that the New York Times has suddenly seen the light, practically after the fact (and in contrast to the paper's stance on Bruce Ratner's megaproject).
Posted by lumi at 5:53 AM
January 15, 2009
Is Yankee Stadium costing taxpayers too much money?
Crain's NY Business Poll
The Yankees' request for additional tax-free financing to finish its new stadium has generated criticism from some politicians, partly because much of the money will be spent on luxury add-ons. The city's Independent Budget Office places the cost to city taxpayers for the $1 billion-plus stadium at $363 million.
Is the stadium costing taxpayers too much money?
Yes. Mayor Michael Bloomberg claims he drives a hard bargain, but he gave away the store to the Yankees.
No. The new stadium is generating all sorts of economic activity in the Bronx, and in the long run, the city will come out ahead.
Click here to cast your vote.
Posted by eric at 4:58 PM
Whatever Yankees Want
New York Times Editorial
The new Yankee Stadium in the Bronx is still months away from the first pitch of Opening Day. But suddenly a lot of people are questioning yesterday’s package deal for this luxurious ballpark in light of today’s struggling economy.
Seats for $1,500 a game? Suites fit for the royal family? A scoreboard fit for the Big Board? A fabulous steakhouse and granite ramps (no ordinary cement for this crowd)? This $1 billion-plus pavilion and park financed with a lot of taxpayer help is beginning to sound like something fit for the Wizard of Oz.
To pay for many of these add-ons, the Yankees now want — surprise! — more help from the city. They have asked the Industrial Development Agency for an additional $400 million in tax-free financing to finish the project. Unless the city’s leaders show some courage, the agency is expected to rubber-stamp that request by the end of the week, after a pro forma hearing on Thursday.
...Mayor Bloomberg has — rightly — had to cut city budgets and increase property taxes and explain to residents how times are bad and how we all will have to share the pain. It is time for Mr. Bloomberg to make that same pitch to the Yankees.
If the Yankees can sign megamillion-dollar contracts (C. C. Sabathia just landed one for $161 million over seven years), they should be flush enough to contribute more toward their new stadium and to the parks for people living nearby.
NoLandGrab: And might The Times feel differently about hundreds of millions in subsidies for Atlantic Yards? Given that developer Bruce Ratner is the paper's real estate partner, and that The Times owns a 17.5% stake in the Yankees' arch rival, the Boston Red Sox, we're not sure we can expect the same point of view.
Posted by eric at 4:43 PM
Coverage of Yankees Bond Hearing
There was considerable coverage of yesterday's hearing held by State Assemblyman Richard Brodsky regarding public subsidies for the new Yankee Stadium. All news sources reflected the contentious nature of the hearing at which New York City Industrial Development Agency Chairman Seth Pinsky and New York Yankees President Randy Levine tried to justify massive public subsidies. Look for similar posturing from the City should the proposed Atlantic Yards project move forward.
Metro: Yanks play hardball at stadium hearing
Brodsky says taxpayers are paying for the new stadium, citing the city’s request to the IRS to permit an arrangement under which the Yankees would repay their tax-exempt bonds with “property taxes.”
But the Yankees have never paid property taxes, so “the city is no worse off,” explained Seth Pinsky of the NYC Economic Development Corporation, who viewed the project as a $1 billion stimulus package to the South Bronx.
Brodsky called this “bizarre bureaucratic arrangement” a gift to the Yankees that outweighs any public benefit. While the stadium project has resulted in thousands of construction jobs, it will create only 57 permanent, full-time jobs.
NYTimes: Hearing on Bonds for Yankee Stadium Gets Testy
A central part of Mr. Brodsky’s argument is that the Yankees, by paying off bonds with payments in lieu of taxes (known as Pilots), are avoiding paying property taxes. He wondered if they had a “divine right” to not pay taxes. And he brandished a document from the newest report that said, “The city has determined to use its property taxes (in this case Pilots) to finance the construction and operation” of the stadium.
In his view, the property taxes are taxes owed and the Yankees, contrary to their contention, are using city money to repay their bonds, not their own. “The Yankees don’t pay taxes now,” he said to Mr. Pinsky. “Does that mean they should never pay taxes?”
Atlantic Yards Report: Are PILOTs a subsidy? At Assembly hearing, Brodsky goes around and around with reps from city, Yankees
In addition to exhaustive coverage, Norman Oder presents a tie-in to the fight against the proposed Atlantic Yards project.
Yesterday’s hastily-called Assembly hearing on the New York Yankees’ request for some $370 million in additional tax-exempt bonds featured antagonists who disagree fundamentally and easily reach the edge (and beyond) of civility: Assemblyman Richard Brodsky vs. New York City Industrial Development Agency Chairman Seth Pinsky and New York Yankees President Randy Levine, both present only via subpoena.
...
...the big news was the city Independent Budget Office upped its estimate of project subsidies significantly, to $854.7 million. Note that the IBO did not say that the PILOTs (payments in lieu of taxes) deal with the Yankees represents a cost to the city for the $1 billion-plus in foregone property taxes. (deMause disagrees, calculating $416.6 million in foregone taxes.) IBO does calculates the public costs for the first round of Yankees tax-exempt financing to be $205.2 million and the new round $72 million, with some 97% of that cost falling on federal taxpayers--which is why Kucinich is interested.
Nor did IBO say the PILOTs plan for the Atlantic Yards arena represents a full subsidy, though many AY critics think so. Brodsky hasn't opined on the issue, but if he's consistent, it seems he'd have to maintain the same posture that he has in the case of the Yankees.
There are some significant differences, however. Notably, because the land underneath the arena would be tax-exempt, and part of it is the MTA’s Vanderbilt Yard, “the MTA has an incentive to make a deal that maintains the tax exemption in order to maximize the price it receives for the development rights,” the IBO said in 2005.
It didn’t exactly happen, given that the MTA accepted a cash bid less than half the appraised value.
Posted by steve at 6:24 AM
January 14, 2009
Yanks stadium cost passes $2B, subsidies near $1b
Field of Schemes
by Neil deMause
There were plenty of fireworks at today's Assembly hearing on the Yankees and Mets stadium projects, but behind all the smoke lay a giant bill for the taxpayers. Stadium-boondoggle expert Neil deMause was on hand for all the action, both for his own site and the Village Voice's Runnin' Scared blog.
Today's New York state assembly hearing on the Yankees and Mets stadium projects can best be summed up like this: City economic chief Seth Pinsky complained about hearing chair Richard Brodsky calling the city's procedures "Soviet-style," then later quoted Edward R. Murrow to implicitly compare Brodsky to Joe McCarthy; and Brodsky, in his closing statements, offered to take on both Pinsky and Yanks president Randy Levine in a fistfight. Not, in other words, one of democracy's finest moments.
The real story, in any case, came after Levine, Pinsky, and almost everyone else had gone home: Economist George Sweeting of the Independent Budget Office presented new detailed estimates of how much the new stadiums are costing taxpayers in subsidies, and how much the teams are benefiting. I'll be updating my stadium cost spreadsheet [PDF] with the new numbers shortly, but in the meantime, some highlights: The total cost of the Yanks' new stadium is now well north of $2 billion, with taxpayers picking up $854.7 million of that tab; for the Mets, the cost to the public is now a mere $371.5 million. And that's without even counting the fact that neither team will pay property taxes, ever, thanks to a nifty tax dodge involving public authorities and 99-year subleases. [Emphasis added]
Runnin' Scared, When Elephants Fight: Not-quite-liveblogging the Brodsky Yankees Hearing
Part 1 of deMause's running commentary.
Runnin' Scared, Brodsky Hearing: IBO Says Mets, Yanks Stadiums Costing Taxpayers $1.2 Billion
And Part 2, featuring the IBO's subsidy bombshell:
Without going into details (check the IBO's website for those), the totals come to a total public subsidy for the Yankees of $854.7 million, more than half a billion of which will come out of state and city coffers; for the Mets, the total subsidy is $371.5 million, with the state and city on the hook for about $230 million. And this, it's worth noting, is without counting any lost future property taxes. Levine would probably turn orange at this point, but he, along with most of the rest of the onlookers, has gone home.
More coverage...
NY Observer, IBO: New Yankee Stadium Costing City, State $528 M.
AP via SILive.com, Lawmaker offers to fight Yankees prez over stadium
The president of the New York Yankees asserted repeatedly at a combative hearing Wednesday that the team's new $1.5 billion stadium — backed by hundreds of millions of dollars in public subsidies — is a good deal for the city, and he accused a lawmaker who offered to fight him of grandstanding for headlines.
The legislator, Assemblyman Richard Brodsky, lashed out at team president Randy Levine and city economic development chief Seth Pinsky, challenging both to a "civil, in-your-face fistfight" over public financing of the stadium.
...The subsidies for the stadium have sparked outrage in the middle of a global economic meltdown that has crippled the city's budget and cut thousands of working-class jobs while the Yankees doled out hundreds of millions of dollars for new players. The team, which last season failed to make the playoffs for the first time in more than a decade, signed pitchers CC Sabathia and A.J. Burnett and first baseman Mark Teixeira to contracts totaling $423.5 million.
AP via International Herald Tribune, Yankees feed at taxpayer trough because they can
I don't live in New York, so I'll leave it to the taxpayers there to be outraged or simply figure that's not a bad price for entertainment. But at a time when the unemployment rate is at a 16-year high, Americans are losing their jobs at the fastest rate since World War II, and cities and states are struggling for enough money to provide the most basic services, I'd lean toward outrage.
NoLandGrab: AP sports columnist Tim Dahlberg should indeed be outraged, since Federal taxpayers will be picking up the tab on several hundreds of million in subsidies for the Yankees and Mets.
Posted by eric at 8:45 PM
Yankin' Our Chain
Here's a round-up of some of today's stories about the Great Yankee Stadium Swindle.
amNY, City's share of Yankee stadium costs double
The city’s costs for the new Yankee Stadium have more than doubled in two years, said City Comptroller William Thompson, who accused the Bloomberg administration of low-balling its original estimate.
The capital cost for the city is now $325 million, up from its estimate of $129 million in 2006, the comptroller’s office said today.
“It’s willful. Costs don’t just go up dramatically like this,” said Thompson, a mayoral candidate.
...“The Yankees have spent $423.5 million on free agents this offseason — for them and the city to ask New York’s hard working taxpayers to foot the ever expanding bill on the new stadium is nonsensical and unfair, especially in difficult economic times,” said Councilman Eric Gioia (D-Queens), a candidate for public advocate.
The New York Times, Yankee Stadium Burdens Mayor’s Campaign
With a vote set on Friday on whether to extend $372 million in additional tax-free financing for the new Yankee Stadium, challengers to Mayor Michael R. Bloomberg are trying to halt the subsidies. State lawmakers have subpoenaed team and city officials to an emergency hearing on Wednesday, and what once looked like a gleaming example of the mayor’s financial skill is suddenly looking like one of his biggest vulnerabilities.
...What could give the stadium issue traction this year, however, is the city’s dire financial condition — presenting a stark contrast between struggling, insecure New Yorkers who don’t earn major league salaries, and the hundreds of millions of dollars the new stadium complex is costing them.
NoLandGrab: Remember, Bloomberg engineered the overturning of term limits on the ridiculous premise that only he could guide us through the current economic crisis. By giving our money away to the Yankees?
The New York Times, A New Yankee Stadium, the Same Old Politics
The city is proud of the deal, officials say, because it will create “1,000 permanent new jobs.” If you scratch into the official filings, it turns out that there are actually only 22 new full-time jobs expected. The rest are seasonal positions — valuable, certainly, but only if they really exist.
And what if the team doesn’t create 1,000 new jobs? Does the city have any mechanism to hold the team accountable, to get back some of its investment?
Asked about this on Tuesday, Mr. Lombino, the spokesman for development corporation, said there is none.
The New York Times, Yankees Try New Strategy to Market Premium Seats
The Yankees have hired a division of a prominent Manhattan residential real estate brokerage, Prudential Douglas Elliman, to help sell some of their prime real estate: unsold premium seats and luxury boxes at the new Yankee Stadium.
...Levine said that hiring Prudential Douglas Elliman was not an indication of a slow sales pace on high-end seats at the $1.3 billion stadium. Seven luxury suites remained to be sold, out of 59, and about 1,000 of 4,000 premium seats were available.
NoLandGrab: Sure, Randy, they're sellin' like hot cakes. So why did you have to hire Prudential Douglas Elliman? The Yankees haven't gotten any better at telling the truth in the 30 years since then-manager Billy Martin said "one's a born liar, and the other's convicted," in reference to rightfielder Reggie Jackson and owner George Steinbrenner.
The Neighborhood Retail Alliance, YanKeys to the City
Our old friend Richard Lipsky, who loves the Atlantic Yards project, hates the idea of subsidizing Yankee Stadium. Just for fun, substitute "Atlantic Yards" for "Yankee Stadium" in the passage below:
So, as we anticipate another election cycle where Mike Bloomberg will once again break all spending records, dramatically injecting his own version of an economic stimulus into the local economy primarily for his own benefit, we will be able to add the Yankee Stadium development to a long list of mega projects launched by a mayor who has lost sight of the needs of average New Yorkers in the pursuit of monuments to his own ego.
Posted by eric at 10:30 AM
As hearing on Yankees' bond request approaches, Brennan questions tax-exemption for stadium
Atlantic Yards Report
The hearing this morning that Assemblymembers Richard Brodsky and Jim Brennan will hold on the New York Yankees' request for some $430 million in additional tax-exempt bonds will inevitably get contentious, as Brodsky assured the the attendance of New York City Industrial Development Authority chair Seth Pinsky and Yankees president Randy Levine only via subpoena.
With them will be city Comptroller William Thompson, a mayoral candidate, who issued his own scathing criticism of the Yankees's plan yesterday, and asked that the IDA's planned hearing Thursday on bonds for the Yankees and the New York Mets be postponed. The fourth person testifying will be George Sweeting of the Independent Budget Office.
Posted by lumi at 5:46 AM
January 13, 2009
PRESS RELEASE: Assembly Committees Issue Subpoenas to Randy Levine, Yankees President, and Seth Pinsky, Chairman of the NYCIDA Board, on Public Financing of the New Yankee Stadium
Committees Seek Testimony and Documents Which Yankees and NYCIDA Have Failed To Produce
Chairman Richard Brodsky (D-Westchester) of the Committee on Corporations, Authorities and Commissions, and Chairman James Brennan (D-Brooklyn) of the Committee on Cities, issued subpoenas yesterday to Seth Pinsky, Chairman of the Board of the New York City Industrial Development Agency, and Randy Levine, President of the New York Yankees, to appear at the Committees' hearing tomorrow, January 14th, 10:00 A.M., at 250 Broadway, Room 1923 (19th Floor), and deliver documents regarding the public financing of the new Yankee Stadium. The Yankees and the NYCIDA have continued to stonewall the Committees’ requests for documents pertaining to the request for an additional $430 million in public financing, in the face of a NYCIDA Board vote on Friday, January 16 on the additional money.
Assemblyman Brodsky said, “The Assembly investigations of the NYCIDA financing of the new Yankee Stadium have already revealed that taxpayers will pay up to $4 billion to construct the new Stadium; that City agencies cooked the property tax assessment; that secret negotiations gave the City, at taxpayer cost, a free luxury suite at the new Stadium, and that the number of new permanent jobs created at the Stadium in exchange for $4 billion of subsidy was 22. The City and the NYCIDA are now seeking to railroad an additional $430 million of taxpayer money, on which the Assembly Committees have been seeking additional information for months. The City, the Yankees, and the NYCIDA have refused to make these and other documents available. The legislative oversight and legislative functions of the Assembly require the City and the NYCIDA to tell the Committees and the public the truth about this deal. Subpoenas, as always, are a last resort, but in this case were necessary.”
"It is obvious that additional public subsidy for the Yankees is both inappropriate and unnecessary and the New York City IDA should halt further tax-exempt financings based on diverted property taxes," said Assemblyman Brennan.
Posted by eric at 9:12 PM
Comptroller opposes Yankees' subsidies
Crain's NY Business
by Erik Engquist
City Comptroller Bill Thompson said Tuesday he opposes further city subsidies for the new Yankee Stadium, which he had supported in the past, and will vote against additional tax-free financing for the team unless the terms are changed.
His vote as a board member of the Industrial Development Agency will be largely symbolic, since the board is stacked with appointees of Mayor Michael Bloomberg, who supports requests by the Yankees for more financing.
"We need to get more in return to allow the Yankees to issue another $400 million in debt," Mr. Thompson said at a press conference at his office. "Incredibly, the Yankees are asking for more money and the city is giving it to them without asking for anything in return."
The Bloomberg administration disagreed. "In exchange for the new tax-exempt bonds, the city will receive $11.5 million in capital from the Yankees that can be used for our parks and infrastructure projects. Similarly, the Yankees application discloses that the team is putting $225 million of its own equity into finishing the stadium, which creates tax revenue for the city."
NoLandGrab: Among the many problems with this deal is that the Bloomberg administration is quick to leave out details that might prove inconvenient.
As Neil deMause reported on his Field of Schemes blog yesterday ("Yanks bond request includes $11m tax break") the IDA will also be voting on granting the Yankees exemptions on mortgage recording and construction materials sales taxes, totaling — surprise — $11.1 million, almost equal to the $11.5 million "capital contribution" the Yankees are making.
You can read the entirety of Bill Thompson's statement opposing further subsidies for the Yankees after the jump.
THOMPSON: CITY MISMANAGED COST ESTIMATES FOR STADIUM FINANCING
Comptroller Cites Lack of Oversight and Financial Competency as Cause of Inflated Expenses
New York City Comptroller William C. Thompson, Jr. today accused Mayor Bloomberg and the New York City Industrial Development Agency (IDA) of financial incompetence during negotiations for a new Yankee Stadium, saddling City taxpayers with astronomically steeper costs.
Speaking at a news conference, Thompson highlighted the upcoming IDA Board of Director’s vote on a new stadium financing plan as an opportunity for the City to rectify earlier oversights and errors.
“While our financial review cannot determine intent, this incredible mismanagement begs the question: Was this plain old incompetence or a blatant attempt to mislead the public?” Thompson said. “Either way, New Yorkers now have a box-seat view of fiscal mismanagement.”
In July 2006, the IDA approved a financing package with the Yankees to allow for construction of a new stadium. The debt package totaled $967,555,000: $942,555,000 in tax-exempt bonds and $25 million taxable. Direct capital costs to the City for related infrastructure projects, such as new parkland, were estimated at the time to be $129.2 million. These costs do not include the construction of new parking facilities, for which the City is also responsible.
“The original City capital contribution now has ballooned to $325 million, two-and-a-half times the amount we were told in 2006,” Thompson said. “With this deal, New Yorkers lose. At a time when we can least afford it, the Administration is bending over backwards to subsidize an enormously profitable corporation, one that just signed three players to contracts worth a total of $423 million.”
Thompson cited the following as examples of faulty cost estimates:
- The demolition of the existing Yankee Stadium was estimated at more than 50% less than the true cost.
- Failure to conduct environmental reviews, which would have taken into account the existence of, and necessity to remediate, oil tanks on the waterfront site of a planned new park.
- Underestimation of the cost for a rooftop park and retaining wall resulting in cost escalations of 30%; the price tag now stands at $44.5 million.
“We cannot continue to let New Yorkers lose in order for the Yankees to win,” Thompson said. “Next season, more and more families will be priced out of the very stadium they helped to build, as the minimum cost of a box seat alone will at least double from $250 to $500.”
Thompson’s review also examined the City’s lost revenue, such as an agreement to surrender use of 250 parking spots to the Yankees as part of its negotiations for a luxury suite, resulting in a loss of $500,000 in revenue per year. These ongoing negotiations likely will result in an additional loss of $750,000 in annual revenue from three billboards, on which the Yankees want the rights to advertise.
Similarly, the cost to the City for a luxury suite will total $1,250,000 annually, while other luxury suite purchasers will pay between $600,000 and $850,000. Under terms of the new agreement, the City has agreed to let the Yankees market the suite with a minimum payment of $100,000 per year.
“Anybody can see that this is simply a bad deal for New York,” Thompson said. “Yet it is the kind of financial incompetence that the Administration has consistently demonstrated when it comes to the new Yankee stadium. And incredibly, the Yankees are asking for more money and the Administration wants to give it to them without getting anything in return.”
Thompson’s office has held meetings with IDA staff to discuss the new financing plan and the status of related projects. This Thursday, the IDA Board of Directors will hold a public hearing regarding the proposed issuance of $371.8 million of new bonds, including both tax-exempt and federally taxable, together with a $60 million refunding of the existing bonds to move debt service out to later years. The IDA Board will vote on the plan Friday.
Some elements of the $371.8 million are said to include:
- $40 million in extra costs to accelerate construction.
- $60 million additional security costs at the behest of the New York Police Department.
- $92 million in scope modifications.
- $75 million in true cost increases.
- $65 million in “soft costs.”
“For all these reasons, I am calling for the vote to be postponed so that the City can negotiate a better deal,” Thompson concluded.
In November 2008, an audit conducted by the Comptroller’s office found that the Yankee’s underpaid the City more than $11 million in rent over a two-year period. As a result, the Yankees have since paid the City $7,352,519 plus interest of $635,132. The Yankees still owe the City another $4,035,636.
The full audit report can be viewed at www.comptroller.nyc.gov.
Posted by eric at 8:46 PM
9th inning for Yanks, Mets handouts
MetroNY
Neil deMause explains how much a second Yankee Stadium triple-tax-free bond "handout" is going to cost federal taxpayers, if approved, and why the richest team in pro sports really, really needs the money.
Is the city giving the Yankees $259 million? No. It’s in essence extending a $259 million low-cost loan, with the cost of the discount being covered by taxpayers. Cost to the public: about $90 million, most of it charged to the federal treasury.
What’s it for? Bigger scoreboard, a Hard Rock Cafe, “bathroom improvements,” you name it. Most of which have already been built and paid for, since the stadiums open in fewer than three months.
Why should we pay the teams for stuff they’ve already built? The city says it’ll earn a few million dollars in new taxes from the extra construction, and that the Yanks have kicked in a $10-million gift to the Parks Department. Unless the team is threatening to return their new faucets and void their check to Parks if the bonds aren’t approved, though, it’s hard to see how this is a gain.
NoLandGrab: Though deMause doesn't blame the Yankees' payroll for the need for mo' money, why should taxpayers in other cities be made to help enrich a rival ball club concurrently snatching up the most coveted free agents?
Posted by lumi at 4:44 AM
January 11, 2009
Atlantic Yards Report - Two We Missed
Atlantic Yards Report
Was value-engineered arena driven by revenue analysis?
GumbyFresh, who notwithstanding the moniker is pretty well-situated to observe the financial markets, thinks the news of the value-engineered arena was driven by a cold hard look at the costs and revenues.The New York Times's Charles Bagli, who appeared on the Brian Lehrer Show this morning, suggested it was a question of financing--a not dissimilar thing.
Brodsky, Brennan to hold hearing on Yankees' bond request a day before IDA hearing
The latest sports facility deals may have hit a bump in the road. Yes, the New York City Industrial Development Authority (IDA) has scheduled a hearing January 15 on $342 million in new tax-exempt bonds the New York Yankees and the New York Mets are requesting from the city, with a board meeting on approval the very next day.Not so fast, say Assemblymembers Richard Brodsky and Jim Brennan, who chair the Committee on Cities and the Committee on Corporations, Authorities and Commissions respectively. They've scheduled a hearing January 14 "in the face of the refusal by the City to postpone a final decision until a full understanding of the law and the facts could be brought forward."
Posted by amy at 10:14 AM
January 7, 2009
News Round-up: Evil Empire Edition
We're having a hard time deciding if the Evil Empire is the one in Yankee Stadium or the one in City Hall (probably both), but there's plenty of news today about how they're once again teaming up to stick it to the taxpayers.
It's not every day that we can say that the voluminous Norman Oder has posted a digest version of the news, but in this case, he's summarized the key stories, which are also linked in their entirety below.
Atlantic Yards Report, Documents emerge about stadium subsidies; mayoral candidates shy away from criticism
The big news in today's papers is that, as the New York Times reports, in an article headlined City Gives Up Its Stadium Suite in Exchange for Cash: After intense criticism, the Bloomberg administration has given up a perk it worked fervently to secure: a free luxury suite at the new Yankee Stadium.
But lower down in the article there's a hint at the larger story:
“Does the Bloomberg administration really think that giving up a suite at Yankee Stadium is going to soften the blow that this project has had on city taxpayers?” said Bettina Damiani, director of Good Jobs New York....Indeed, though Rep. Anthony Weiner, a stated mayoral candidate, criticizes the suite deal in the Times, Tom Robbins in the Village Voice points out that both Weiner and Comptroller William Thompson, a fellow candidate, are unwilling to criticize the larger question of taxpayer funds supporting the stadium via tax-exempt bonds.
If they're unwilling to raise that issue, it's unlikely they'd look closely at a similar funding scheme for the planned Atlantic Yards arena. The main critic of the stadium deals is Assemblyman Richard Brodsky.
The Village Voice, Mayor Mike and the Yanks: How Suite It Is
Tom Robbins's story, sub-headed City Hall gift-wraps another present for baseball's richest team, is a must-read for those of you interested in what a colossal screwing of the public looks like.
The 2009 mayoral campaign begins this month when the richest sports franchise in America puts its hand out for one more bailout. The New York Yankees—strike that—Yankee Global Enterprises LLC, the mega-corporation that controls all things Yankee, has already received $942 million in triple tax-free bonds courtesy of the Bloomberg regime to build its fabulous new stadium on city land where a wonderful tree-shaded park once stood near the Harlem River.
The mayor's people are spending most of their time these days ordering the closing of day-care centers and firehouses, insisting that the terrible economic situation dictates no other course. But on January 16, Bloomberg's team will pause from these chores to order its representatives on the city's Industrial Development Agency to approve another $370 million in tax-free bonds to finish the stadium project. According to the city's Independent Budget Office, this new round of financing will cost taxpayers roughly $48.5 million in foregone revenues. This is on top of the $181 million the team saved by having the taxes excused on its first round of financing.
The New York Times, City Trades Its Yankee Stadium Suite for Cash
Westchester Assemblyman Richard Brodsky appears to be the only politician in the entire state willing to raise questions about the propriety of spending hundreds and hundreds of millions of public dollars on new ballparks.
Assemblyman Richard L. Brodsky, who had sought details about the deals the city was making, described the city’s about-face over its use of the suites as “a terrible embarrassment.”
“The taxpayers who are paying for the construction of Yankee Stadium cannot afford to buy tickets for the games, but the mayor was getting a luxury box, so he had to back off,” he said in an interview on Tuesday.
“But the reason he backed off,” Mr. Brodsky speculated, “is because next week, the city is going to give the Yankees more taxpayer money.”
On Jan. 15, the Industrial Development Agency will hold a hearing over a recent request by the Yankees and the Mets for about $400 million in municipal bonds and other money to pay for the final construction stages at their stadiums. In 2006, both teams received about $1.5 billion in bonds and subsidies to help them build the ball parks.
Runnin' Scared [Village Voice blog], City Releases 116-Page Obfuscation of Stadium Deals
Neil deMause tries to peer through the NYC Industrial Development Agency's smokescreen.
Amid today's hoopla over the Bloomberg administration's decision to give back its free luxury boxes at the Mets' and Yanks' new stadiums - about which it's probably best said that the city decided that partying it up in a suite while the great unwashed paid through the nose for tickets didn't look so hot, so instead chose to take the value on a gift certificate - there was another development in New York's ongoing baseball stadium melodrama. This afternoon, the city Industrial Development Agency also released its cost-benefit documents for the $342 million in new tax-exempt bonds the teams are requesting from the city, in advance of a public hearing on January 15 to decide the bonds' fate.
Covering 116 pages, the paperwork -- released at 5:49 pm, the traditional time to dump documents on an unsuspecting press corps, knowing that few will have time to read them let alone track anyone down for comment -- goes into mind-numbing detail on just what gewgaws the teams would be using the money for: For the Yanks, such items as $38,608,134 for "Counter Terrorism Structure Hardening" and $4,750.000 for "Perforated Metal Mesh Panels Upgrades"; for the Mets, "Structural hardening and upgrade perimeter security" and "Modification of office and rotunda flooring material" (no price breakdowns provided).
Newsday, Bloomberg backs off ballpark suite deals for city
"Other cities get boxes and through our negotiations we made sure New York got no less, but we've decided to take the value in cash payments to return it to the community," said mayor's spokesman Andrew Brent.
NoLandGrab: In this case, "New York" = "the Mayor and his chief lackeys." The Bloomberg administration's magnanimity appears to know no bounds.
Metro NY, City drops luxe box at Yankee Stadium
The city is giving up the perk just one week before it decides whether to give hundreds of millions more in tax-free financing to both teams during a budget crisis.
Posted by eric at 10:03 AM
January 4, 2009
Mayor needs an economic plan
Crain's
While no one would suggest the mayor can solve all the local economy's ills, he needs to come up with new programs that offer immediate aid and support. He should start with the city's vital tourism trade, as well as small businesses and emerging industries. He must rethink his affordable-housing plan, which can't succeed unless there is more new construction, and he has to explain how he will keep such crucial projects as the redevelopment of the West Side rail yards, Atlantic Yards and Willets Point on track.
article
NoLandGrab: Wouldn't it be more important to start with explaining WHY these projects should be continued in their current forms when alternate plans would make much more sense and not wreak economic havoc?
Posted by amy at 9:53 AM
In governors' request for federal infrastructure aid, only a hint of (indirect) help for Atlantic Yards
Atlantic Yards Report
So New York State Gov. David Paterson, along with governors from other large states, has asked the federal government for a total of $1 trillion in emergency aid over two years for all 50 states.Could any of that be directed to Atlantic Yards? The news coverage wasn't clear, summarizing the request as including $350 billion for infrastructure; $250 billion for anti-poverty programs; and $250 billion in flexible education spending to maintain funding for programs from pre-kindergarten to higher education; and middle-class tax cuts.
Given that the "ready-to-go" projects are the focus, Atlantic Yards could not be directly affected. However, it's possible that a change in rules regarding the Low Income Housing Credit Program could make it easier to fund affordable housing destined for the project.
Posted by amy at 9:51 AM
January 3, 2009
Brodsky to IDA: delay vote on tax-exempt bonds for Yankees, Mets
Atlantic Yards Report
Assemblyman Richard Brodsky has asked the members of the New York City Industrial Development Authority--the bonding arm of the New York City Economic Development Corporation--to delay a January 16 vote on an additional $454 million in tax-exempt bonds the new Yankees and Mets stadiums.Brodsky, who chairs the Committee on Corporations, Authorities and Commissions, gave the board members documents he uncovered regarding "legal failures of the initial funding for Yankee Stadium" and said he's still waiting for "documents that clarify and explain the request for additional funding, the role of the IDA, and the role of other parties."
A public hearing on the funding request is schedule for January 15, with a vote scheduled for 9 a.m. the next day, the switch enacted after complaints that it had been scheduled for Inauguration Day, January 20.
"The spate of taxpayer bailouts of large corporations was at least justified by the threat that they would otherwise go out of business," Brodsky said. "There is no reason to provide public assistance to these hugely successful businesses at a time when taxes are rising, services are being cut, and jobs are being lost."
Posted by amy at 10:15 AM
December 30, 2008
Markowitz's Time Warp
Develop Don't Destroy Brooklyn noticed that The Brooklyn Paper has Brooklyn Borough President Marty Markowitz on record casually changing the creation story of Atlantic Yards:
Let's zero in on one comment by Beep Markowitz in his interview with The Brooklyn Paper's Gersh Kuntzman:
MM: ...We’ll see what the future brings. I am confident that [Atlantic Yards] is going to happen. I really am. I really am. I was hoping it would have happened in 2006, 2007, 2008, 2009, so if it’s 2011, it’s 2011, as long as I know it’s on track.
GK: Is it on track?
MM: I hear that. The train is at the station. It’s moving very slowly. We have to see what the future brings. … It was always going to be over the course of 12 years or 16 years.
Actually, it wasn't "always going to be over the course of 12 years or 16 years."
The project that was approved in 2006 was to take 10 years. But now New York State's agreements with Forest City Ratner give the "developer" 6+ years to build just the arena, 12+ years to build just Phase One (the arena and 4 or 5 skyscrapers), and no timeline whatsover to build Phase Two, which would comprise the bulk of the proposed "affordable housing."
This isn't the first time Markowitz has delivered his own version of reality. A year and a half ago, Atlantic Yards Report filed a story on Marty's creation myth.
Posted by lumi at 4:45 AM
December 23, 2008
Good Jobs NY Press Release: Bloomberg’s Economic Development Office Announces Rushed Vote on More Bonds for Yankees’ and Mets’ Stadiums
Back Door Giuliani-Era Practice Revived
New York, December 23, 2009 – Good Jobs New York today denounced the New York City Industrial Development Agency (IDA) for announcing a rushed vote on $454 million in proposed additional tax-exempt financing for the new Yankee and Mets Stadiums.
In the wake of a statement by New York City Comptroller William C. Thompson, Jr. assailing the IDA for scheduling the vote on Inauguration Day, the IDA has rescheduled the board vote for January 16, the day after the hearing, not the normal five days after. The rushed voting process revives the IDA’s practice of secretive and questionable economic development deals that were the norm during the Giuliani administration.
The new date for this important meeting gives IDA board members less than 24 hours to consider the testimony presented the previous day on two major projects that have been widely considered to be egregious corporate giveaways. This raises other transparency concerns such as:
- Deviating from regular IDA calendar: The IDA’s hearing on proposed financing for the projects is being held outside the normal monthly public hearing calendar. The regularly scheduled IDA public hearing for January is on the 8th (where a separate project will be presented), while the board meeting originally slated on the 13th has been cancelled.
- Weak board attendance: Since few IDA board members attend the agency’s required public hearings, it is unlikely that the majority of the board will have heard public testimony prior to voting on these two projects. Those members not in attendance must rely on copies of testimony submitted and the IDA staff’s reporting, as there are no stenographers at IDA hearings.
Moreover, the public financing scheme approved by the IDA in 2006 for the new Yankee Stadium is under investigation by the U.S. House of Representatives’ Subcommittee on Domestic Policy and by State Assemblyman Richard Brodsky. Earlier this month, for example, Brodsky revealed evidence that suggests communication between City and Yankees’ officials led the city to artificially inflate land values to support more bond debt.
“It is outrageous for the Bloomberg Administration to rush additional public financing for the wealthiest teams in baseball while city, state and federal legislators are grappling with the worst budget crisis in decades,” said Bettina Damiani, Project Director of Good Jobs New York. “How do entertainment corporations outrank the city’s infrastructure and employment needs?”
This rushed vote is a giant step backward for transparency at the IDA. In 2006, the IDA codified policies it had practiced since 2004 that made significant steps forward, including allowing more time between hearing and board meetings, and releasing cost benefit analyses and project applications five days prior to public hearings. These policies have enabled New Yorkers to participate in meaningful debate, as evident at IDA hearings when financing was proposed for various post 9/11 projects and for the initial allocation of tax-free financing for the Yankees and Mets, for example.
“We urge the IDA and the Bloomberg Administration to reschedule the vote until after the Inauguration, so board members have sufficient time to review public comments and IDA materials associated with the projects,” said Damiani.
Should the IDA board approve this financing, it will cost more than $80 million in lost tax revenue, bringing total public costs for both the Yankees and Mets deals to nearly $1.4 billion, with most going to the Yankee Stadium project.
The public hearing will be held at 10:00am on Thursday, January 15 at the IDA offices in Lower Manhattan, 110 William St., 4thFloor. The Board meeting to vote is currently scheduled for January 16 at 9:00am at the same address.
Posted by eric at 2:32 PM
As analysts call Forest City Enterprises stock worthless, local elected officials get a vague update on Atlantic Yards
Atlantic Yards Report
In light of ongoing lawsuits, federal intervention in the credit markets and the news that Morningstar just rated Forest City Enterprises' stock as worthless, Norman Oder speculates about the development company's options for more subsidies and delays for Atlantic Yards, and concludes, "if Forest City Ratner seems to be fighting hard to maintain Atlantic Yards, it may be because the parent company itself is at stake."
Posted by lumi at 5:18 AM
December 21, 2008
Lupica on Yankee Stadium: "It's a wonderful lie" (and NY mag on "perversely perfect symbols")
Atlantic Yards Report
Most of Daily News sports columnist Mike Lupica's column today, headlined It's a wonderful lie, concerns the revelations, many from his collegue, Metro columnist Juan Gonzalez, about the strange and sudden leap in the valuation of the land under Yankee Stadium.He writes:
So how come no politician in New York except Rep. Richard Brodsky seems to be asking the questions and carrying the fight on this? Or maybe the cozy relationship between the Yankees and City Hall that began when Yankee groupie Rudy Giuliani was mayor was turned over to Bloomberg like a well-turned double play. As always with the current mayor, pay close attention to what he does, not what he says.And I'll add: And will any politician look closely at the valuation of the land under the Atlantic Yards arena, assuming the construction plan and issuance of tax-exempt bonds moves forward?
Posted by amy at 11:17 AM
December 19, 2008
Indirect subsidies: how Forest City Ratner might save another $8 million (and a whole lot more)
Atlantic Yards Report has a must-read post for those who are trying to "follow the money."
Norman Oder explains how the value of subsidies for Bruce Ratner's Atlantic Yards megaproject have already been lowballed. Plus, he identifies another area where NYC is on the hook for unspecified millions:
For example, I estimated last month that Forest City gained nearly $55 million when the city reimbursed the developer $100 million for property in the AY footprint for which it spent $103.5 million--but was more likely worth $158.1 million.
And think I've identified another $8 million, given the transfer of city streets and the conveyance of city property for just one dollar.
Beyond that, the use in project documents of a term known as "extraordinary infrastructure costs"--which Develop Don't Destroy Brooklyn has aptly called "a blank check"--leaves open the possibility of much more public subsidy.
Posted by lumi at 5:16 AM
December 18, 2008
Atlantic Yards Report Double-Dose Financial Report
Atlantic Yards Report
Two items on Forest City's gyrations in trying to figure out how to continue to build a publicly financed stadium in the midst of a World financial meltdown:
A good way to increase cash flow is to delay paying for public properties while receiving public subsidies more rapidly.
So, now we know what Forest City Enterprises CEO Chuck Ratner meant when he told investment analysts in April that "we still need more" subsidies.
I commented that such a request might generate pushback from some elected officials. It did, and since then, the hemorrhaging of city and state budgets means that direct appropriations are very unlikely.
However, as the New York Observer reminded us this week, there are more ways to skin a budget, including:
- a delay in paying the Metropolitan Transportation Authority the $100 million (not $1 billion) it pledged to pay for the railyard
- additional subsidies boosting the affordable housing
- a speed-up in the city's pace to deliver the $100 million pledged
Will Gramercy Capital, its stock tanking, easily renegotiate loan with Forest City Ratner?
A loan made by Gramercy Capital Corporation to Forest City Ratner is coming due. Will FCR be able to pay? Will the loan be renegotiated? Stay tuned!
The company that lent Forest City Ratner nearly $153 million to buy property in the Atlantic Yards footprint has seen its stock price tank, as has the stock of FCR's parent Forest City Enterprises, as it awaits repayment of $177 million it dearly needs.
While the stock of Gramercy Capital Corporation reached $28.51 for its 52-week high, it closed yesterday at $1.32. In October, it suspended its third-quarter dividend to save $32.3 million. (FCE acted similarly last week.) The company might be a little antsy about getting repaid promptly and in full.
Posted by steve at 6:34 AM
Smoking gun: emails show how Yankee Stadium valuation was "jacked up"
Atlantic Yards Report
Note is made of incriminating emails that show, despite Congressional testimony to the contrary, New York City worked for the Yankees to cook the books and show a higher value for the land under the new Yankee Stadium. This allows the Yankees access to more tax-free bonds.
Daily News columnist Juan Gonzalez continues to look into the astounding inflation (from $26.8 million to $204 million) in valuation of the land under Yankee Stadium, apparently aimed to qualify for the amount of foregone taxes needed to pay off construction bonds via PILOTs (payments in lieu of taxes).
(Yes, Atlantic Yards watchers are waiting to see if something similar happens with the land under the planned $950 million arena.)
...
If the city cooked the books, the IRS could conduct an audit--and strip the bonds of their tax-exempt status. (Is there political juice for that?)
Here is Juan Gonzalez's article from yesterday's Daily News referenced in this Atlantic Yards Report story (it helps boil the blood and keep you warm on these cold mornings): E-mails reveal how city went to bat for Yankee to inflate value of stadium land
Posted by steve at 6:00 AM
Yankees Find New Uses For Bond Money
amNew York
Here's an example of the voracious appetite of professional sports organizations for public funds, no matter what the economic climate.
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Posted by steve at 5:49 AM
December 16, 2008
Atlantic Yards YES! Education NO!
When New York Governor David Paterson asserted, "During one of the greatest fiscal crises in our state's history, that is a level of funding we simply cannot afford," he was talking about education funding, not Bruce Ratner's highly subsidized $4 billion arena and high-rise megaproject.
Quote from Daily News, "Gov. Paterson: No education cuts now means worse cuts next year," November 26, 2008.
Posted by lumi at 5:54 AM
December 15, 2008
Atlantic Yards YES! Day Care NO!
If you're for Atlantic Yards, it doesn't get better than this — New York "City Plans to Reduce Aid to 21 Day Care Locations" (NY Times) while still supporting Bruce Ranter's subsidy-sucking Atlantic Yards megaproject.
Atlantic Yards YES!!!
Posted by lumi at 5:41 AM
Will sports be next in line for handouts?
MetroNY
By Neil deMause
With sports teams and leagues hemorrhaging cash, "We may now be looking at the first bailout bill for pro sports."
NoLandGrab: It could happen — after witnessing the amount of City, State and Federal assistance Bruce Ratner is trying to line up for his arena and high-rise megaproject, we'll believe anything.
Posted by lumi at 5:16 AM
December 14, 2008
Atlantic Yards YES! Cops NO!
From NY1: As Budget Shrinks, NYPD Faces Possibility Of Layoffs
The mayor has ordered all city agencies to cut spending by 7 percent or $1.4 billion, on top of the 5 percent cut he ordered last month.Police spokesman Paul Browne says layoffs might not be necessary if they can find other ways to cut costs.
But Kelly says with 94 percent of the NYPD's budget going towards personnel, the department may find no other way.
"If we make additional reductions it has to come out of our personnel stream, and everything will be on the table," said Kelly Friday. "And obviously, since we've already reduced with the first round of cuts, the next round will require layoffs."
If we're not going to have real cops, can we at least get RoboCop 3 to protect us from Delta City Atlantic Yards?
Posted by amy at 11:40 AM
December 12, 2008
Yankees Need More City Money
WNYC Radio
by Matthew Schuerman
Wonder how the Yankees can afford to make C.C. Sabathia the highest-paid pitcher of all time? Here's how.
It looks like the Yankees are going to get a little more help in building their stadium. WNYC's Matthew Schuerman reports that Mayor Bloomberg gave his blessing to issuing another $370 million in tax-exempt bonds for the team.
REPORTER: The Yankees need the money to add extra features to their new stadium. The team will pay the bonds back, but the city won't collect taxes from them. A Bloomberg administration spokesman says the Yankees have agreed to pitch in $11 million in return for getting these new bonds, resulting in a slight net gain for the city treasury of $2.3 million. That's hardly enough to make up for the tens of millions of dollars in extra costs the city has incurred since agreeing to the new ball park three years ago. But the spokesman says revenues from associated projects, such as parking garages near the stadium, may well make up that difference.
NoLandGrab: Yet more tax breaks for the wealthiest sports franchise in the entire U.S. are surely an important priority in times of financial crisis.
[Update: Sources are reporting that the Yankees have reached agreement with free-agent pitcher A.J. Burnett on a five-year, $82.5 million contract.]
Posted by eric at 5:04 PM
Excellent
ShysterBall
It's been a few years since I've watched the Simpsons regularly. Like a lot of people have noted, it lost its fastball years ago. But it's still crafty and knows how to get people out. Like the one from last Sunday, in which the idea of publicly funded stadiums was caught looking.
...(dual hat tips: to Atlantic Yards Report for writing about and linking to the whole episode, and to Pete Toms, for letting me know that Atlantic Yards was writing about and linking to the whole episode)
NoLandGrab: Wait a minute! First Crain's credits us for an Atlantic Yards Report story, and now Norman Oder gets credit for our Simpsons' coverage?
Posted by eric at 2:15 PM
December 10, 2008
Brodsky announces expanded inquiry into aid for stadium projects
Atlantic Yards Report
Given news reports of additional ($342.1 million, according to the New York Times) tax-exempt bonds for the Yankees and Mets stadiums, Assemblyman Richard Brodsky, chair of the Corporations committee, issued a statement saying he'll continue his inquiries.
We don't know if the Assemblyman has been reading NoLandGrab's occasional "Atlantic Yards YES!" items, but here's an excerpt from his press release:
"We don't have the money to fund trains, schools or hospitals, yet two of the richest, most profitable companies in the world are turning to taxpayers for support," said Assemblyman Brodsky. "What public interest is served by these subsidies, especially when average citizens cannot afford the enormous increase in ticket prices? Who is protecting the public interest? How can we afford these subsidies when we can't find the money to fund mass transit or schools without enormous tax increases? We're going to get answers to these questions."
What about the "Barclays Center?"
Note that Brodsky has not indicated that the inquiry would extend to the planned Atlantic Yards arena. Though construction has not yet begun, presumably some of the same discussions between the team owner and city/state officials are occurring.
Posted by eric at 8:43 AM
December 9, 2008
As Stadiums’ Costs Rise, City Agrees to New Bond Offerings
The New York Times
by Charles V. Bagli
Here's one Federal (and State and City) bailout that hasn't gotten a whole lot of scrutiny. This is a must-read if you would like to learn how you and your fellow taxpayers are being screwed for the benefit of a few powerful and monied interests.
With opening day for the city’s two newest baseball stadiums only four months away, the price tag for taxpayers continues to rise.
The Bloomberg administration has issued fresh estimates for utility work, lighting and the cost of replacing the parks and ball fields that once stood where the new stadium for the Yankees is being erected.
The city also plans to issue $341.2 million in additional tax-exempt bonds on behalf of the Yankees and Mets to complete the stadiums, whose combined cost is about $2.2 billion.
The teams are responsible for paying off the bonds, but they pay tens of millions of dollars less in interest because payments to bondholders are exempt from city, state and federal taxes.
The city and the state are also investing more than $660 million in parks, garages and transportation improvements around the stadiums and are providing the teams with an estimated $500 million in tax breaks related to construction materials and other items. The city had planned to issue a public notice of the latest bond offering and a required public hearing on Monday but decided to wait at least a week until it completed a cost-benefit analysis. With public costs mounting, critics of the deals say the city will be hard pressed to demonstrate that the economic benefits of the stadium projects outweigh the cost to taxpayers.
The man who rammed through the overturning of term limits on the premise that only he can guide us through the financial crisis likes to pretend that this is a good deal.
Mayor Michael R. Bloomberg has insisted that the city will earn a profit on its investment. And based on the city’s 2006 cost-benefit analysis of Yankee Stadium, the city would earn a net return of slightly more than $40 million over the bonds’ life.
Since then, however, project costs have swelled considerably. For instance, the city says it will cost $194.7 million to replace Macombs Dam Park and the ball fields now covered by the new Yankee Stadium on 161st Street, up 50 percent from the 2006 estimate of $129.2 million.
The city is also contributing $39 million toward the $91 million cost of building a Metro-North rail station nearby, an item that was not part of the 2006 cost-benefit analysis.
...Economists generally take a skeptical view of public investments in stadiums because the costs are so great, while most of the jobs they generate are seasonal and part-time. George Sweeting, deputy director of the Independent Budget Office, said, “The additional costs that have emerged make it quite likely that that the city’s net benefit number is now negative.”
NoLandGrab: We can't wait to see that new cost-benefit analysis. Given the City's history of skewing the number to fit its goals, this one ought to be good.
We hope that the City's analysis will explain how the projects' costs have soared at the same time that the greatest concern among economists and regulators is falling prices and the ugly prospect of deflation.
Posted by eric at 10:50 AM
December 6, 2008
Answers From Brian Lehrer of WNYC, Part 3
NY Times City Room blog
Michael J. Gaynor
Question: I wonder if you happen to know if the Mets gave ANY serious thought to erecting their new ballpark in Brooklyn — rather than Flushing. We have Robert Moses to thank for the noisy, automobile-friendly, stadium-in-the-middle-of nowhere called Shea — but why did the Mets erect their NEW ballpark there?Had they put it in Brooklyn — where the Nets’ new arena is going up (ballparks belong downtown; football stadiums belong in huge parking lots), reporters from the four corners of the earth would be here to cover the fairy-tale-come-true story.
The Mets longstanding tradition of dropping the public relations ball … continues.
— Posted by Richard
Answer: I, too, like downtown baseball stadiums with cityscape views. Of all places, Pittsburgh’s PNC Park is a good recent model — beautifully situated with the Steel City skyline (such as it is) over the outfield wall. But in the case of New York, imagine the real estate battles à la Atlantic Yards, the pollution, and the additional public subsidies for anyplace that could fit the bill. Meanwhile, the name Citi Field is fast becoming a joke. Shall we rename it Taxpayer Field? Federal Reserve Park? Cover the infield with the Henry Paulson TARP?
Posted by amy at 10:23 AM
December 5, 2008
Atlantic Yards YES! Seniors NO!!
If you had to choose between maintaining funding for programs to help seniors and subsidizing Atlantic Yards, naturally you'd choose Bruce Ratner's $4 billion megaproject.
WNYC News Radio, Cuts to City's Elder Abuse Program Puts Weakest at Risk
With the city facing a budget deficit that’s expected to balloon to $4 billion over the next two years, city agencies have been instructed to cut 7.5 percent of their budgets. Everything from daycare slots for low income families to dental clinics for kids, have been put on the chopping block.
One program slated for elimination by the Department for the Aging helps elder abuse victims – seniors who are taken advantage of because their age has made them weak and vulnerable. WNYC’s Cindy Rodriguez takes a look at who the program serves.
Posted by lumi at 4:50 PM
Atlantic Yards YES! FDNY NO!
Just the other day we were telling our friends, "If only the Mayor could deacitvate more engine companies and cut back FDNY staff to ensure aid to developer Bruce Ratner and his floundering Atlantic Yards megaproject."
From today's NY Post, FDNY'S SLASH AND BURN:
The FDNY will be slashing nighttime staff at a handful of firehouses around the city in a belt-tightening move that critics say threatens to increase response times and that has residents and union officials seeing red.
The department expects to save $9 million by deactivating three engine companies and one ladder for the overnight shift when the plan goes into effect on Jan. 17.
Posted by lumi at 5:28 AM
December 4, 2008
What’s in a Name? A Mets-Citi Bond
The New York Times
by Richard Sandomir
Last week, the government came to Citi’s rescue with a stabilization plan that includes backing $306 billion in mostly real estate assets, agreeing to absorb potential losses on that portfolio, as well as buying $20 billion in Citi preferred stock.
Banks are well represented in the universe of naming rights — from Bank of America and Wachovia to Chase, Citizens Bank and TD Banknorth — but those deals did not go into effect during a dire economy or cost nearly as much as the record sum that Citi is paying (which was matched by Barclays in its deal for the Nets’ arena in Brooklyn).
Without falling into bankruptcy, Citi could not seek to abrogate its deal. It was only in federal bankruptcy court that the Houston Astros got the name of the felonious energy company Enron off its stadium, but it cost them a $2.1 million buyout fee.
The Mets are standing by Citi, and Citi is standing by the Mets.
“It’s a binding agreement,” [Citi Vice Chairman Lewis B.] Kaden said in a brief interview, “and a good deal” that still fits Citi’s local and global marketing and philanthropic goals.
NoLandGrab: "Philanthropic goals?" The only philanthropy we see at play here are the generous gifts bestowed upon Citigroup and the Mets by the taxpayers.
Posted by eric at 11:32 AM
December 3, 2008
Mets: Citi Field will remain name of new ballpark
AP via Yahoo Sports, amNY, Metro, etc.
by Ronald Blum
Citi Field will remain the name of the New York Mets’ new ballpark following a government bailout the team believes will help the struggling bank survive its economic crisis.
Citigroup agreed in 2006 to pay the Mets $400 million over 20 years for naming rights to the stadium, scheduled to open next year. Two New York City councilmen said last week that the $800 million ballpark’s name should be changed to Citi/Taxpayer Field.
“The company is still an ongoing company and a vital company that is doing business around the globe,” Mets chief operating officer Jeff Wilpon said Tuesday. “The taxpayers are backstopping what’s going on in the global economy. It’s not really Citi’s fault that they’re in this problem. There are a lot of other banks in the same situation—with naming-rights deals, also.”
NoLandGrab: Sure it wasn't Citi's fault. And let's remember the taxpayers aren't just "backstopping what’s going on in the global economy" — we're backstopping the construction of local stadiums and arenas, too.
Posted by eric at 6:19 AM
December 2, 2008
Seating the Mayor at the New Yankees Stadium
WNYC Radio
by Matthew Schuerman
Hundreds of pages of e-mails, made public over the holiday weekend, are detailing the Bloomberg Administration's efforts to secure the free use of a a luxury suite at the new Yankee Stadium.
The Mayor's press office originally said in July that the Bloomberg administration had not decided whether it would accept the box.
But the e-mails show that back in early 2006, no fewer than four different city departments or agencies were fighting for more than six months to get the suite included in the stadium's lease.
In return for the luxury box, the city finally gave the Yankees an extra 250 parking spaces and the use of three billboards.
City Hall spokesman Andrew Brent says administration officials could not have been seeking any personal benefit since at the time of the negotiations, they assumed they would only have been in office to see one full season.
NoLandGrab: All the more reason to seek a third term!
Posted by eric at 7:02 PM
Giving the Mets’ New Ballpark a Bad Name
The New York Times
by George Vescey
With a mixture of rage and pride, I drove past the Mets’ new ballpark Monday and noticed that offensive name still up there.
As Citigroup grovels for a bailout from public funds, the Mets insist the name will not change. Not to give free publicity to these jokers, but as of this moment, the new stadium is still Citi Field.
My rage gave way to pride, however, knowing that we are all, in a broad sense, shareholders in the Mets. Civic benefactors. Patrons of the arts. Sportsmen and sportswomen, as franchise owners used to call themselves, before we wised up.
We are paying for the government subsidy — socialism at the top — so that this failing institution can keep its name on the Flushing skyline where Serval Zipper once stood so proudly.
...New ballparks are a source of amusement in the Bronx as well as in Queens. It was recently reported that the Bloomberg administration had bargained 250 extra parking spaces to the Yankees in exchange for a larger luxury box and free food for the high-profile schnorrers from City Hall.
This disclosure makes it easier to understand why the Bloomberg administration was so compliant about the vanishing of a neighborhood park that was so inconveniently in the way of the new Yankees playpen. The city claims it will eventually put in tiny little parklets on top of garages, but at least the Yankees respect their brand and are not selling their naming rights to some shaky financial institution.
NoLandGrab: The egregiousness of the public's forced underwriting of sports facilities owned by multi-hundred-millionaires or billionaires is made even more egregious when we have to underwrite the naming rights, too, the income from which all flows to the aforementioned filthy-rich owners, all while our term-limit-overturning mayor is horse-trading public money for luxury suites — meals included.
Posted by eric at 1:00 PM
A $950 million arena? Either that cost is bogus (goosed for PILOTs?), AY might now cost $6 billion, or the ESDC math was off
Atlantic Yards Report
The Yankees Stadium deal is being scrutinized because local officials inflated the value of the stadium in order to issue more low-cost federal bonds.
Is Bruce Ratner trying to do the same for a new Nets arena in Brooklyn? If that's the case, then the dramatically escalating cost of Ratner's arena starts to make sense:
Why exactly was the Atlantic Yards arena supposed to cost nearly $1 billion? The numbers just don't compute.
The rapid escalation of the cost of the arena--from $400 million in 2003 to $637.2 million at approval in 2006 to $950 million this year--significantly outpaces local inflation in construction costs.
That leads to some troubling speculations--even if the cost may have dipped a bit recently.
Has entire project cost jumped 50%?
If the $950 million figure is in fact accurate, then the entire Atlantic Yards project has increased in cost nearly 50% from $4 billion, and government oversight agencies should be taking a second look at whether a $6 billion project is remotely viable, as Develop Don't Destroy Brooklyn suggested in June.
Was value of arena inflated?
Alternatively, if the project cost as a whole has not gone up commensurately, the value of the arena may have be inflated by adding improper costs, perhaps in the same way as Assemblyman Richard Brodsky and Rep. Dennis Kucinich have alleged in their recent investigations of Yankee Stadium.
Posted by lumi at 4:02 AM
December 1, 2008
Brutally weird: Why a vacant lot in Alphabet City is (not) like the land under Yankee Stadium
Atlantic Yards Report
Follow Norman Oder on a tour of Manhattan's Lower East Side, as he tries to make sense of New York City's citation of a vacant lot in that neighborhood in setting the value of the land under the new Yankee Stadium in the Bronx.
But wait, let’s return to that vacant lot. That vacant lot is what the New York City Department of Finance (DOF) says should be compared to the South Bronx site hosting the new Yankee Stadium. That vacant lot is 4324 square feet, just a little less than one-tenth of an acre, while Yankee Stadium, at least when the city first assessed the site, was more than 17 acres, more than 170 times larger.
Not only is that vacant lot not comparable in size, it is not comparable in location. That vacant lot, according to MapQuest (below), is 8.71 miles away by driving; that route is slightly indirect, but the distance easily exceeds seven miles.
A DOF "comparable"
Yet that vacant lot was included in a list of “comparables” chosen by the DOF in an effort to value the land under the new stadium. That, critics on state and federal oversight committees say, was used to inflate the value of the property and allow more tax-exempt bonds to be issued, aiding the Yankees.
And, should tax-exempt bonds be issued for the Atlantic Yards arena, the comparables chosen by the DOF will deserve a close look.
Posted by eric at 6:14 AM
November 30, 2008
So, the 2006 IRS ruling the city requested for the Yankees hinged, in part, on a free luxury box
Atlantic Yards Report
No major daily newspaper has been looking hard lately at Atlantic Yards, but the press keeps running with the Yankee Stadium story, thanks in part to new revelations via Assemblyman Richard Brodsky. E-mail messages from city officials acquired by Brodsky tell an interesting tale, as the Daily News reports:
Mayor Bloomberg's top aides engaged in a behind-the-scenes brawl to win a free luxury suite at the new Yankee Stadium that could wind up costing taxpayers, e-mails show.Joseph Gunn, a city lawyer, in fact warned that the city would refuse to request a ruling from the Internal Revenue Service to allow tax-exempt funding if the city did not get the luxury suite.
As we know, such a Private Letter Ruling was achieved in 2006 for the Yankees and for the New York Mets. And the city this year successfully went to bat to get those rules grandfathered in for additional tax-exempt bonds for the baseball teams and, most importantly to the city, for tax-exempt bonds for the Atlantic Yards arena.
Posted by amy at 8:58 AM
The investigation into the city's practices regarding tax-exempt bonds isn't over
Atlantic Yards Report
In response to those who've prematurely assumed that the Atlantic Yards arena is dead, I've asserted that it is, rather, very much in play. Indeed, the recommitment of the Barclays Center naming rights deal is a sign that the project has some juice, even as the stock of parent Forest City Enterprises slumbers. (It´s still down nearly 90% from its peak, but up some 50% from its low.)At the same time, the Congressional investigation led by Rep. Dennis Kucinich (D-OH) into questionable assessments of Yankee Stadium also remains in play, as Kucinich has vowed. (“We’re going to continue our work here, make no mistake about that," he said after a hearing October 24.)
Should further and more concrete evidence of dubious practices be found, that would cast doubt on the tax-exempt bonds issued for the Yankees and, inevitably, the still inchoate plan for tax-exempt bonds issued for the Atlantic Yards arena.
In other words, even though more lenient regulations for the arena bonds were grandfathered in, questions will be asked.
Posted by amy at 8:56 AM
November 25, 2008
Pols want new name for Mets home: Taxpayer Field
AP via Yahoo Sports
Two New York City Council members say that Citigroup should show its thanks for a federal bailout by sharing the naming rights to the new Mets ballpark in Queens.
The struggling bank is slated to pay $400 million over the next 20 years to name the stadium Citi Field.
The bank made the commitment years ago, when it was flush with cash. Now that Citigroup is getting billions of dollars in federal aid, Staten Island Republicans Vincent Ignizio and James Oddo say the ballpark’s name should be changed to Citi/Taxpayer Field.
Citigroup and Mets chief operating officer Jeff Wilpon have been saying that they have no plan to alter the naming-rights deal for the ballpark, which hosts its regular-season opener April 13.
NoLandGrab: Given the hundreds upon hundreds of millions of dollars in public subsidies for the planned Atlantic Yards project, perhaps "Barclays Center" should be changed to "Barclays/NYC-NYS-Federal Taxpayer Center," unless Barclays does end up accepting aid from the British government, in which case "British" could be slipped in there somewhere, too.
Posted by eric at 6:49 PM
November 24, 2008
Citi, AIG Won't Drop Big Sports Sponsorships
Critics Slam Bailed-Out Firms' Pricey Deals for Naming Rights, Logo Placement
ABC News — The Blotter
by Justin Rood
Just because taxpayers are having to bail out financial firms to the tune of hundreds of billions of dollars doesn't mean those firms are giving up their expensive stadium naming-rights deals.
AIG, Citibank and a number of other federally bailed-out financial institutions have no plans to cancel hundreds of millions of dollars in sports team sponsorships, even as they take billions in taxpayer support, ABC News has found.
...Struggling Citibank just sealed a multi-billion-dollar emergency "backstop" deal with the U.S. government. The financial behemoth, suffering with billions in bad mortgage-related assets on its books, recently shed 53,000 workers and saw its stock price lose over half its value. Yet it's in a 20-year contract to pay the New York Mets $400 million to name the team's new stadium "Citi Field."
"This type of spending is indefensible and unacceptable to Citigroup's new partner and largest investor: the American taxpayer," said Rep. Elijah Cummings, D-Md., in a statement Monday.
..."Up until now they were businesses who could invest or waste their money as they see fit," said Taxpayers for Common Sense's Ellis. "But now we're the shareholders. And frittering their money away with naming rights and ties to sports teams isn't a really good investment of taxpayers' money -- particularly when credit markets are collapsed."
NoLandGrab: Barclays, which has a naming-rights deal with Atlantic Yards developer Bruce Ratner, has thus far resisted taking funds from the British government; some allege that's because Barclays' top managers don't want to have their compensation limited by government regulators.
Also:
Daily Kos, You are funding CITI's marketing efforts (and the New York Mets)
Posted by eric at 6:04 PM
November 23, 2008
How taxpayers might help the Nets land LeBron James
Atlantic Yards Report
The issue came up on the CUNY-TV talk show City Talk regarding the new Yankee Stadium, which I wrote about yesterday.One guest was Baruch professor Neil Sullivan, author of The Diamond in the Bronx: Yankee Stadium and the Politics of New York (2001, updated 2008),
He pointed out how the San Francisco Giants privately financed PacBell Park:
Everyone was, 'Ohmigod, you can't build these things, you'll have no money left for the ballplayers.' They signed Barry Bonds, they went to a World Series, they functioned fine.The great question in the off-season, one of the great questions that the Yankees will be considering, is do they make an offer to Manny Ramirez, that's going to be 20 to 25 million dollars... for four or five or maybe six years. Where do you think that money comes from? In this stadium game, one of the ways I think about it, the state picks up, the public picks up the capital budget for this private business. All of that money, hundreds of the millions... goes over to the operating side. They can go chase anybody they want.
Remember, the direct subsidies for Atlantic Yards so far total $305 million. The savings on tax-exempt bonds could be $165 million. Other subsidies and tax breaks would be enormous as well, though no one's produced definitive numbers.
That could help pay for a few good hoopsters.
Posted by amy at 11:34 AM
"Bloomberg's bombast": historian Siegel says sports facility subsidies don't pass cost-benefit analysis
Atlantic Yards Report
Historian Fred Siegel, writing in the 11/17/08 issue of the conservative Weekly Standard, doesn't forget that New York City Mayor Mike Bloomberg, in his first term--the one that even the Village Voice's Wayne Barrett praised--supported welfare for sports team owners.Siegel's essay, headlined Bloomberg's Bombast: New York's mayor buys himself a third term, begins:
The folks over at Newsweek have a sly sense of humor. They put New York mayor Michael Bloomberg on the cover of their November 3 issue and let him dispense fiscal advice to the next president. In the article, Bloomberg, who has presided over record levels of spending and debt increases, chastised "Washington" for putting us in a hole by "spending with reckless abandon for years." The lofty Bloomberg told Newsweek's readers, "Programs that don't pass a cost-benefit analysis, that have been driven by politics rather than economics, should be cut."This is excellent advice. But Bloomberg has never taken it. One of the few things economists agree on, for example, is that subsidized sports stadia are a bad investment of public funds. They are also one of Bloomberg's passions. The mayor tried and failed to subsidize a West Side football stadium to the tune of roughly $600 million, but succeeded in sending similar sums toward his developer friend Bruce Ratner for a massive Brooklyn project, centered on a basketball arena, now stalled, for which there was no demand.
Posted by amy at 11:29 AM
November 22, 2008
On CityTalk: "How much welfare do you think the Steinbrenners should get?"
Atlantic Yards Report
The Yankee Stadium deal was the subject of a scathing episode of the CUNY-TV talk show City Talk, taped November 11, which raised many issues that should be pursued regarding the planned Atlantic Yards arena.
One hot topic was press coverage of the subject, Oder explains:
Well, the press always likes to piggyback on a governmental investigation, and recent reports from committees led by Assemblyman Richard Brodsky and Rep. Dennis Kucinich certainly have provided a jump-start. Yankee Stadium is probably the poster child for questionable behavior, but it's not too late to take a look at Atlantic Yards, as pre-construction demolition and utility work continues.
Another question was of public ownership:
The reason for public ownership is to provide the opportunity to issue tax-exempt bonds. The same goes for the Atlantic Yards arena, which a federal appellate court described in a 2/1/08 decision as "a publicly owned (albeit generously leased) stadium." Yes, the developer would use PILOTs (payments in lieu of taxes) to pay for construction. But rent would be nominal.
Read the full article for epic coverage including "A brief history of machinations," the CBA and lost parklands.
Posted by amy at 9:40 AM
November 20, 2008
Daily Dis
Headline from today's NY Times:
"City Plans to Reduce Aid to 21 Day Care Locations" ...yet remains firmly committed to funding Bruce Ratner's Atlantic Yards megaproject.
Posted by lumi at 6:18 PM
Bloomberg: Blank Check for Ratner, No Check for Homeowners
Develop Don't Destroy Brooklyn
Mayor Bloomberg has signed a blank check for Bruce Ratner.
But now, after his power grab, he won't sign the $400 homeowner tax rebate checks:
"We have no money. This isn't a legal issue; this is a fiscal issue,'' Bloomberg said at a Brooklyn news conference today. "Obviously, we're not going to send out checks, and we'll have to find a way to balance the budget.''
"We have no money," but the blank check to Ratner is still signed?
NoLandGrab: Look, we'd be the first to admit that curtailing the property-tax rebate in tough economic times might be wise, given the need for cash for the MTA, schools and myriad other critical areas. But until the city and state say, "hey, maybe we oughtn't be bailing out a money-hemorrhaging NBA team by subsidizing a billion-dollar basketball arena," we don't feel much like volunteering to play the sucker. So just give us our damned $400.
Posted by eric at 4:17 PM
Times columnist: hard data needed to support benefits of projects
Atlantic Yards Report
David Leonhardt's Economic Scene column in yesterday's New York Times, headlined Piling Up Monuments of Waste, suggested that funding for the nation’s infrastructure was less of a problem than the inability to set credible priorities.
Scattershot system
Leonhardt writes:
It’s hard to exaggerate how scattershot the current system is. Government agencies usually don’t even have to do a rigorous analysis of a project or how it would affect traffic and the environment, relative to its cost and to the alternatives — before deciding whether to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited a project’s potential benefits.There are monuments to the resulting waste all over the country: the little-traveled Bud Shuster Highway in western Pennsylvania; new highways in suburban St. Louis and suburban Maryland that won’t alleviate traffic; all the fancy government-subsidized sports stadiums that have replaced perfectly good existing stadiums. These are the Bridges to (Almost) Nowhere that actually got built.
Well, the Atlantic Yards arena wouldn't replace a "perfectly good arena," given that the aging Izod Center is in another state and, without public transportation, is not the easiest place to visit. But federal taxpayers would subsidize new construction, even while a new arena in Newark could use a basketball team.
And, while the environmental review process in New York was extensive, was it truly rigorous? After all, the Empire State Development Corporation counted benefits but not costs. And the press punted and never analyzed the study that Forest City Ratner paid for.
Posted by eric at 8:22 AM
November 17, 2008
Recession Is a Relative Term in Baseball
The New York Times
by William C. Rhoden
With much of the nation reeling, with banks failing, workers being laid off and homes being foreclosed, sports owners continue to build castles and pay players by the millions. At least one team, the Knicks, is paying a player millions not to play.
Recession? What recession?
...Sports leagues like the N.B.A., the N.F.L. and Major League Baseball are fairy-tale lands, an otherworld of packed stadiums, charter flights, multimillion-dollar training facilities, multimillion-dollar player contracts paid by multibillionaire owners.
Yet in a time of severe economic crisis, the leagues, at least for now, are holding forth, if not completely thriving.
NoLandGrab: Rhoden goes on to explore several reasons as to why pro leagues appear to be somewhat recession-proof, but he misses the the two most obvious: heaps of public subsidies and anti-trust exemptions.
Posted by eric at 11:13 AM
Why aren’t the Yankees making cuts, too?
amNewYork, Letters to the Editor
Supporters of public funding of local professional sports venues spew the same blah-blah-blah to justify the expense, but when the city is headed towards fiscal straights, pro-sports subsidies never seem to get cut:
I’ve got two questions for the Emperor of City Hall: 1. If “all” of NYC must take the pain of our government’s failures, what “sacrifices” are George Steinbrenner and the Yankees making? 2. If Bloomberg is telling the truth that stadiums are so profitable, why do the Yankees need hundreds of millions of our tax dollars? This has got to be the dumbest lie ever. And, if we taxpayers are paying for half of the new Yankee Stadium, why aren’t we getting half the eventual profits in return? Mike Antoinette better watch his head, because it seems like he’s losing it!
— Tanya O’Langan, Manhattan
Posted by lumi at 5:19 AM
November 15, 2008
NY State Never Sought Piece of Barclays Center Naming Rights Action
Develop Don't Destroy Brooklyn
Ratner's frivolous $950 million arena would supposedly be "privately owned" (it would be leased to Ratner for $1), yet the $400 million naming rights deal with Barclays bank (is it still $400 million?) is solely with the developer. The public gets nothing out of the lucrative naming rights deal on the arena it supposedly owns.Norman Oder did some FOIA searching to find out if NY State ever wisely tried to get any value out of the naming rights deal. What he found was that New York State was not wise. The state sure could have used that money.
Posted by amy at 10:19 AM
November 13, 2008
Did the state try to gain any value from arena naming rights? Apparently not
Atlantic Yards Report
Norman Oder tries to get at whether or not New York State even tried to get a piece of the naming rights for the Atlantic Yards arena, but finds that State and City agencies are not very forthcoming with answers. [Answer redacted]
Yesterday, Gov. David Paterson proposed $5.2 billion in budget cuts over the next 16½ months, with reductions in school aid, increased tuition at city and state universities, and reduced Medicaid reimbursements, among other things.
Perhaps administration officials--many of whom were not in charge at the time, actually--are wondering why exactly their predecessors allowed Forest City Ratner to claim the entire value of naming rights for the Barclays Center arena.
In response to a Freedom of Information Law request, documents received from the Empire State Development Corporation (ESDC) indicated that no effort was made to retain any such value, though at one point, a Forest City Ratner executive indicated anxiety about the developer being "punished" for the naming rights deal.
...Though the documents are scant, in several places they were redacted; the ESDC cited exemptions that allow agencies to deny access to records that are inter-agency or intra-agency materials which are not final agency policy or determinations and instructions to staff that that affect the public, among other things.
NoLandGrab: As far as those budget cuts go, it doesn't appear that Bruce Ratner has yet had to tighten his belt even one notch. What a surprise.
Posted by eric at 9:57 AM
November 11, 2008
And has the Atlantic Yards arena site been assessed? Not that I've been told
Atlantic Yards Report
In order to generate PILOTs (payment in lieu of taxes) sufficient for the Atlantic Yards arena bond, would the land under the arena be assessed in the same questionable way that the land under Yankee Stadium was assessed?
Norman Oder tries to get to the bottom of this question by requesting documents from various government agencies.
NoLandGrab: Regular readers may remember that, just last week, the City of New York refused to hand over documents concerning the Yankees Stadium deal to a US House Subcommittee investigating possible fraud.
Posted by lumi at 5:31 AM
Paterson's Billions in Cuts, As Bruce's Boondoggle Flounders Along
The mantra of "Schools, yes — stadiums, no" was wielded effectively by the Dolan family, owners of Madison Square Garden and Cablevision, in the fight against a Jets stadium on the west side of Manhattan.
Even though Develop Don't Destroy Brooklyn doesn't have the resources to launch a similar media campaign against Bruce Ratner's multi-billion-dollar boondoggle, during these tough economic times, the point still stands:
The New York Times reports:
Paterson Says Schools and Medicaid Face Cuts
Gov. David A. Paterson said in an interview on Sunday that he would almost certainly seek billions of dollars in cuts to Medicaid, as well as midyear reductions in school aid, to address New York’s worsening fiscal condition.
He also said he expected to urge labor unions to reopen the contracts they have struck on behalf of public employees as a way to avoid or decrease layoffs.
Such a step is reminiscent of measures taken by New York City in the financial crisis of the 1970s or moves made more recently by the Big Three domestic automakers to reduce their labor costs after years of granting steady raises and comprehensive health and pension benefits...
Still, New York State and New York City continue to sink hundreds of millions into Bruce Ratner's
frivolous billion dollar arena and parking lots Atlantic Yards projectmoney pit.
Posted by lumi at 5:11 AM
November 9, 2008
For Sports Teams, Mayors Play Ball at the City’s Expense
NY Times
JIM DWYER
The first incarnations of these deals came in the final hours of the administration of Rudolph W. Giuliani, and thus had the faint whiff of idolatry about them. (Mr. Giuliani was such a Yankees fan that he managed to buy four World Series rings from the team “at cost,” which apparently meant thousands of dollars less than their actual value. Somehow, the city’s chief executive can get discount jewelry from a sports company that was being subsidized with public funds, while the Conflict of Interest Board fined a school librarian $500 for displaying a book written by his daughter.)The Giuliani stadium deals were immediately canceled in 2002 when a new mayor took office — the hard-headed, clear-thinking businessman Michael R. Bloomberg. With the city facing a recession and the loss of income from the Sept. 11 attacks, Mr. Bloomberg said New York simply could not afford them. Maybe later, he said.
Over the next few years, Mr. Bloomberg proceeded to slather new layers of icing atop the Giuliani cakes. The stadium plans were reborn, richer than ever. As a result, on Saturday, there will be one of these hokey quasi-religious ceremonies moving home plate from the old stadium across the street to the new one.
This happens the same week that Mr. Bloomberg says he has to close health clinics, shut libraries one day a week, not hire a new class of cops and raise property taxes.
Atlantic Yards Report comments:
Perhaps he could turn his attention to the Atlantic Yards arena, for which Bloomberg claimed in 2004, "This will be done with private money, and any city monies of any meaningful size will be debt issues financed by the extra tax revenues that come from this."That was before the city pledged $100 million in subsidies, then added $105 million more. And the developer wants, at least, another $100 million.
Posted by amy at 11:47 AM
November 8, 2008
U.S. government bails out Bruce Ratner
dailyheights.com
One important piece of news lost in the din of election coverage was the federal government’s decision to free up millions of dollars in tax-exempt bonds for the Forest City Ratner (our old friend Bruce) development project at Atlantic Yards.The ruling gives Ratner access to $800 million in tax-free money to proceed with the construction of a new arena for the New Jersey Nets. The arena is only one part of a controversial $4 billion boondoggle that seeks to transform the yards into a sprawling commercial and residential complex.
But the joke may be on him — not to mention city and state officials that have blown taxpayer money fighting for him — because Ratner still needs to find investors willing to back the bonds. Jay-Z or no Jay-Z, the Nets were a hard sell before the market took a nose dive. With the economy writhing on the table right now, it’s going to be even more difficult to convince people to invest money in a basketball team that went 34-48 last year.
Posted by amy at 7:53 AM
November 7, 2008
City balks over Yankee Stadium documents
MetroNY
By Patrick Arden
Where there's smoke there's fire:
The Bloomberg administration is refusing to hand over documents requested by a Congressional subcommittee investigating how the city secured tax-exempt financing for the new Yankee Stadium. U.S. Rep Dennis Kucinich (D-Ohio) has claimed the probe discovered “substantial evidence of improprieties and possible fraud.”
NoLandGrab: The possible fraud lies in the fact that the City claimed a ridiculously high land value in order to justify the bond financing, but lowballed the land value in order to skimp on the replacement of the park land to the commmunity.
Aside from the fact that the deal may have cheated the federal government of future tax revenue, note that the high land valuation benefits the Yankees and the low land valuation cheats the community.
Is this why we need this Mayor more than ever to steer the City through these tough financial times?
Looking ahead, expect creative justifications for extraordinarily high valuations for the tax-exempt bond financing for Bruce Ratner's arena.
Posted by lumi at 4:23 AM
November 6, 2008
Higher Taxes for All...Except Ratner
Develop Don't Destroy Brooklyn presents a brief study in contrast:
From City Room:
Bloomberg Announces Layoffs and Tax Increase
Delivering a grim prognosis for the city’s economy, Mayor Michael R. Bloomberg announced plans on Wednesday to save $1.5 billion this fiscal year and next, by trimming 3,000 jobs from the city’s workforce, rescinding a popular 7 percent property tax cut and suspending the annual $400 property tax rebate checks that homeowners have come to rely upon...
Meanwhile, Bruce Ratner would pay no taxes on about 7 million square feet of housing and office space and an 18,000-seat arena, and collect hundreds of millions from the City treasury.
Posted by lumi at 5:36 AM
November 4, 2008
The Times takes a skeptical look at stadium construction figures (but not AY)
Atlantic Yards Report
If the Atlantic Yards arena moves closer toward construction, maybe the New York Times will take a skeptical look at the numbers behind it. Meanwhile, in today's article about baseball stadiums, headlined As Stadiums’ Costs Swell, Benefits in Question, there's a lot of skepticism.
NoLandGrab: While The Times's Charles Bagli didn't address the planned new arena for the Nets, anyone who still thinks that publicly funded sports venues are a swell idea should read the article.
Posted by eric at 12:16 PM
November 2, 2008
Barclays Taps Investors for $11.8 Billion in Capital (Update1)
Bloomberg.com
Barclays Plc, Britain's second-biggest bank, will raise 7.3 billion pounds ($11.8 billion) from a group that includes investors in Abu Dhabi and Qatar as credit-market writedowns deplete capital.Chief Executive Officer John Varley tapped sovereign wealth funds in the Mideast to avoid a U.K. government bailout plan that calls for overhauling management boards, capping executive salaries and banning dividend payouts. Barclays fell 12 percent in London trading today.
Posted by amy at 10:02 AM
October 28, 2008
Is "adoption" really "approval"? Looking more closely at ESDC board action in July 2006
Atlantic Yards Report
"Adopted?" "Approved?" "Accepted?" "Supercalafragilisticexpealedocious?" In ESDC World, the line between the real and the made-up seems a little fuzzy.
Norman Oder tries to ferret out the facts.
In the Atlantic Yards chronology, the meaning of one action by the Empire State Development Corporation (ESDC) is a key to whether tax-exempt bonds for the project would be grandfathered in under new Internal Revenue Service (IRS) rules.
Last week, I (like others) concluded that the ESDC's vote to adopt of the Atlantic Yards General Project Plan (GPP) at its 7/18/06 meeting likely constituted what the Treasury Department requires as "official action evidencing its preliminary approval of the project before October 19, 2006."
The issue may be more ambiguous. "Adoption" might also be seen merely as an agreement to release a "proposed" plan for public comment. On the other hand, "adoption" of a plan that receives no comment means it will go into effect, which does indicate approval.
Posted by eric at 8:16 PM
Jobs, housing, and (not) hoops: the city's justification for arena bonds
Atlantic Yards Report
Before a Congressional subcommittee hearing Friday regarding tax-exempt bonds for Yankee Stadium (and other projects), the New York City Economic Development Corporation, whose affiliate New York City Industrial Development Authority issues such bonds, produced a document called Yankee Stadium, Fact v. Fiction (PDF).
While the document only glancingly mentioned Atlantic Yards, the framework was quite curious. The tax-exempt bonds at issue would be used only to build the AY arena, not any other components of the project.
But what's the justification for the arena? Affordable housing and job creation. Most of the latter would be related to office, retail, and building services, not the arena. And affordable housing could be built without the arena.
Posted by eric at 7:40 PM
October 27, 2008
My Arena Bonds $1 billion's-Worth
Gumby Fresh
It's one thing for the IRS to give the nod to Bruce Ratner to seek triple tax-exempt bond financing for a new arena, but where is an overdeveloper supposed get these bonds and what are his prospects in a marketplace where investors are sitting on their hands?
Here are excerpts from Gumby's menu options for Bruce:
Let's look at the appetite for the arena's debt.... Here the omens are still fairly horrible. Broadly speaking, Ratner and his dudes at Goldman Sachs have four financing options:
1) Borrow the money directly from a bank. Tricky. We're mostly talking about foreign banks that would be lending him money, the same ones that are still on their knees and trying not to keel over, and such an option would not involve the use of a tax exemption, which Ratner's pretty much got in the bag now.
...
2) Go to a bond insurer to insure a tax-exempt bond issue. Things have been a wee bit quieter here.
...
3) Get a bank to insure the bonds. The Beekman Tower option. See above. You would get the tax exemption in this instance, but the capacity of the banks to support such a foolhardy venture as moving a second-tier franchise to a horrendously expensive arena in a crowded market in the middle of a downturn would be limited.4) Issue the bonds without any kind of enhancement. Or, could Goldman Sachs threaten enough of their municipal bond salesmen with firing to get the bonds to clear? Again, tricky. The universe of buyers for highly illiquid, low-investment grade infrastructure bonds is small and incestuous.
Posted by lumi at 5:52 AM
October 23, 2008
Bad Call: N.Y. Fans Are Getting Ripped Off
WNBC.com
by Gabe Pressman
The IRS has given the New York Yankees, Mets and New Jersey Nets the go-ahead to use tax-free bonds to pay for their new homes.
The new Yankee Stadium, the new Mets Citi Field and the Nets arena in Brooklyn will all benefit from this ruling and the taxpayers of New York will be ripped off. In baseball terms, it's a foul deal and the taxpayers are the victims of a bad call.
...Ultimately, of course, as ticket prices soar and the sale of luxury suites roll up millions of dollars in revenue for the teams, the citizens of New York will be deprived of money. We are a city of rabid sports fans, but New Yorkers will never be enthusiastic about money being taken out of their pockets.
It's a steal -- and not the kind to cheer about.
NoLandGrab: While the IRS's extension of this tax "loophole" will cost New York's taxpayers several million dollars, it'll cost the citizens of the nation's other 49 states hundreds of millions of dollars. And to think people are angry about bailing out banks.
Posted by eric at 2:20 PM
When AY GPP was "released" in July 2006, was that preliminary approval?
Atlantic Yards Report
Last we checked, words do matter. So what are we supposed to make of Norman Oder's latest discovery?
THE RULE
To grandfather in a project [for eligibility for triple tax exempt bonds], the [IRS] rule requires a governmental entity to have taken "official action evidencing its preliminary approval of the project before October 19, 2006."
"APPROVED" VS. "ADOPTED"
While the Modified General Project Plan for Atlantic Yards was formally approved in December 2006 by the Empire State Development Corporation (ESDC), a slightly different version, the General Project Plan (GPP), had been "adopted" (according to an agency press release) by the ESDC on July 18, 2006.
"PRELIMINARY APPROVAL"
Though that ESDC board action in July was likely cursory, the IRS rule still seems tailored to comments filed by the city and state regarding the definition of "preliminary approval." Thus I (and most others) concluded that the ESDC's "adoption" of the GPP qualifies as "preliminary approval" under the regulation.
"RELEASED"
Developer Forest City Ratner's Atlantic Yards web site does not use the term "approval" to describe the action at that July ESDC board meeting.
It does not use the term "adopted."
It uses the term "released," adding that the ESDC's action "formally started the public review process."
...
The New York Times's coverage that day used "release":The report’s release sets into motion a public comment period. The project faces a final vote by the development corporation’s board this fall, and if it is approved, it will face a vote by the state Public Authorities Control Board.
The IRS may well consider that "preliminary approval." But the public sure didn't know it.
NoLandGrab: Bruce Ratner and his political backers are having it both ways.
To satisfy legal requirements for NY State land-use review, the plan had to be "released", "approved" and "adopted," according to a timetable set by the State Environmental Quality Review Act (SEQRA).
On the other hand, to satisfy the recent federal ruling that grandfathered the project under old IRS rules for Payments in Lieu of Taxes (PILOTs), the project needed "preliminary approval" at some point before the IRS closed the loophole in October, 2006.
Swap "release" for "preliminary approval" and you've got a loophole in a loophole.
Posted by lumi at 7:14 AM
Did DePlasco really mean what he said?
Develop Don't Destroy Brooklyn highlighted the following from Forest City Ratner spokesperson Joe DePlasco's recently released statement on the IRS ruling on triple tax-exempt bonds:
The tax exempt financing was always part of the plan for the development of the arena and the regulation released today acknowledges that.
Atlantic Yards Report points out the IRS regulation says no such thing and the Associated Press noted that the IRS regulation specifically said nothing about Atlantic Yards.
Since no one can figure out exactly what DePlasco is talking about, might we assume that "the plan" "the regulation released... acknowledges" was something agreed upon behind closed doors?
Posted by lumi at 6:05 AM
IRS OKs Tax-Exempt Bonds For Barclays Center, Other NY Venues
SportsBusiness Daily (subscription only)
IRS officials this week ruled that Nets Owner and Forest City Ratner CEO Bruce Ratner for his planned $950M Barclays Center in Brooklyn "can use tax-exempt bonds to pay for the building, providing some rare good news for the delay-plagued project," ...
Posted by lumi at 4:51 AM
October 22, 2008
Tax-Exempt Bonds: The Evening Wrap
Here's the rundown on today's coverage of the IRS's decision to tighten a "loophole" on the use of PILOTs to finance arenas and stadia — only the Yankees, Mets and, maybe, the Nets, have slipped the knot.
Gothamist, Atlantic Yards Project Gets Big Bond Break from IRS
These New York teams may be hard-pressed to find investors who will buy the bonds, given the current Wall Street turbulence. Not so incidentally, the ruling comes four days before Yankees president Randy Levine and city officials are expected to testify at a Congressional hearing investigating the tax-exempt financing of the new $1.3 billion Yankee Stadium. Representative Dennis Kucinich, who is holding the hearing Friday, has threatened to prosecute officials if they lied about the value of the land the new stadium occupies.
State Assemblyman Richard Brodsky, a Westchester Democrat, slammed the IRS decision, telling the Times and the AP, "This is the same kind of socialism for the rich, and capitalism for the rest of us that’s gotten us into the current economic mess...The rules don't apply if you've got enough juice."
Curbed, Atlantic Yards Crap Tossing V.3.5: Financing Edition
The IRS issued a ruling yesterday that has monstrously huge implications for anyone that will ever want to build a stadium or arena ever again (don't go to sleep yet...this is big). You wouldn't know it in NYC, though, because even though it impacts the new Yankee Stadium and Citi Field, it's playing out as an Atlantic Yards story. At issue is whether tax-free financing can be used to build Frank Gehry's $950 million arena. (Leaving aside the issue as to anyone will ever finance a facility that is sure to go above $1 billion given traditional Gehry cost overruns in the middle of one of the most massive credit meltdowns in history.) The ruling creates a loophole for projects that are "substantially in progress," while banning it for new ones.
The Angry New Yorker, Tax Free Stadiums
Hey if I want to build myself a new house, think I can get me some tax free bonds to pay for it?
Brownstoner, Treasury Dept. Hooks Up Ratner Big-Time
One potential snag for FCR: The new regs require that the bonds be issued by December 31, 2009.
Gowanus Lounge, So, Does Mr. Ratner Get Tax-Free Bonds for Atlantic Yards?
The key phrase is that it grandfathers in projects “substantially in progress.” We can see lawyers and bureaucrats arguing this point about Atlantic Yards until we live in Green-Wood Cemetery.
Be sure to check out Gowanus Lounge's reflections on the ethics of subsidizing arenas.
Develop Don't Destroy Brooklyn, Ratner Spokesman Vs. Treasury Department Spokesman on IRS Regulation
Bloomberg News, New York Yankees, Mets Get Approval for Tax-Exempt Bond Funding
Village Voice [Runnin' Scared blog], Atlantic Yards Gets Tax Break, Or Not
The Times spoke to Daniel Goldstein of DDDB, who "said it appeared to him that federal tax officials went out of their way to help the developer," the paper writes, "which he said 'makes no sense' when the federal government is in the midst of a costly bailout of the banking industry." Actually it does make sense: the bailout is an attempt by the powerful to restore a failed, obviously unsustainable confidence scheme to viability; this tax break (if it is a tax break), ditto.
Posted by eric at 9:18 PM
Treasury Gets Tough On PILOTs
Tighter Regs Issued As House Panel Opens
The Bond Buyer
by Peter Schroeder
Some industry insight into yesterday's IRS ruling, including the news that said ruling increases the risk for buyers, which might in turn make the bonds tougher to sell — unless you're George Steinbrenner, Fred Wilpon, or Bruce Ratner.
The Treasury Department yesterday issued more restrictive final regulations for bonds issued by payments in lieu of taxes, just three days before a House panel is scheduled to hold a hearing questioning the use of PILOTs to finance the new New York Yankees stadium.
But the rules contain a transitional provision that appears to enable the New York Yankees, Mets and Nets to continue to issue PILOT bonds as planned without having to comply with the new rules.
...David Caprera, a partner at Kutak Rock LLP in Denver, said the new regulations will require a shift in how many market participants view PILOTs.
...Since the PILOTs must be tied to taxes, Caprera said the new regulations shift a small amount of risk to the bondholder, who cannot be guaranteed a fixed payment, and unexpectedly low tax revenues could jeopardize a timely payment.
Posted by eric at 1:39 PM
Bailout! Feds save Ratner millions with new ruling
The Brooklyn Paper
by Sarah Portlock
"Joe the Plumber" has been all the rage for the past week. Now, courtesy of the U.S. Treasury Department, we bring you "Bruce the Plunderer."
The Treasury Department has bailed out Bruce Ratner.
In a much-anticipated ruling issued late Monday, the federal agency exempted Ratner’s Atlantic Yards project from a ruling that bars the use tax-free bonds to finance stadium projects.
Atlantic Yards was apparently exempted because it is “substantially in progress” — a term defined as having received “preliminary approval of the government” and involved “significant expenditures” before Oct. 19, 2006; and having a finance plan in place that contemplated the use of tax-free bonds.
...“It’s a slight of hand that allows the city to stick it to taxpayers on behalf of developers,” said Neil DeMause, author of “Field of Schemes,” which focuses on the massive public cost of stadium financing.
Posted by eric at 1:11 PM
IRS to give Bruce Ratner a huge federal tax break to build arena
There's a lot of coverage of the IRS's ruling to grandfather in federal tax breaks for Bruce Ratner's Nets arena and a new round of bond financing for the Yankees and Mets ballparks.
Atlantic Yards Report, In IRS regulations allowing tax-exempt bonds, no need for messy democracy like an elective body
In short, the IRS decided that Payments in Lieu of Taxes would no longer be allowed for sports stadiums after October 2006. For the old rules to apply to the planned Nets arena, the project had to be underway before that. How is that possible when the project wasn't approved until the following January? Norman Oder explains the IRS's twisted logic:
Anyone watching 12/8/06 meeting of the unelected Empire State Development Corporation (ESDC), with all of four board members (of seven, with one vacancy) in attendance could conclude that the project was rubber-stamped. Moreover, some board members had but a vague notion of project details.
But that wasn't the key decision made by the ESDC board. The key decision was made July 18, 2006, when the ESDC announced that it had "adopted" the General Project Plan (GPP) and "accepted" the Draft Environmental Impact Statement (EIS).
...
In between, in October, the Internal Revenue Service (IRS) proposed new regulations to tighten tax-exempt bonds for sports facilities.
...
Apparently, the regulations don't require action by an elective body.A "governmental person (as defined in §1.141-1)" of the Treasury Regulations is "a state or local governmental unit as defined in §1.103–1 or any instrumentality thereof."
And what's §1.103–1? "[A]ny division of any State or local governmental unit which is a municipal corporation or which has been delegated the right to exercise part of the sovereign power of the unit."
In other words, a handful of appointees of Gov. George Pataki showed up at a meeting on July 18, 2006 and gave their OK to stacks of documents they hardly read--or didn't read at all. And that meant the project was on its way, even if the chronology sent by the city and state to the IRS was bogus.
The Associated Press, via International Herald Tribune, New tax rules would allow NYC teams to float bonds
Updated tax rules issued Tuesday limit the way tax-exempt bonds can be used to pay for sports facilities but don't block the New Jersey Nets, New York Yankees and New York Mets from using billions of dollars in bonds to help pay for their new homes, state and city officials said.
The NY Times, Developer of Nets’ Arena Can Use Tax-Exempt Bonds
Lead real estate reporter Charles V. Bagli filed a story today:
Under the new ruling, federal officials essentially gave a green light for the three sports arenas, among the world’s most expensive, to use tax-exempt bonds. But tax experts said that the ruling would not allow other governments to issue such bonds on behalf of professional sports teams. The rule was adopted on Monday by the Treasury Department and the Internal Revenue Service.
Still, the New York teams may have difficulty finding investors who will buy the bonds, given the current turmoil on Wall Street and in the credit markets.
...
[Develop Don't Destroy Brooklyn spokesperson Daniel] Goldstein said it appeared to him that federal tax officials went out of their way to help the developer, which he said “makes no sense” when the federal government is in the midst of a costly bailout of the banking industry.
The Real Estate Observer, IRS Gives Thumbs Up to Tax-Free Bonds for Yankees, Mets, Nets [Updated]
The new IRS regulations are here [Word doc]. They grandfather in any projects that had "preliminary approval" before October 19, 2006. The baseball stadiums were approved prior to then, though Atlantic Yards did not get a final approval until the end of 2006. Still, officials seemed to be under the impression that ruling cleared all three teams to qualify for tax-free bonds.
Also, here's Forest City Ratner pr guru Joe DePlasco's statement:
“We are of course very pleased with the Treasury Department regulation. The tax exempt financing was always part of the plan for the development of the arena and the regulation released today acknowledges that. The regulation will help us move forward with a project that is critical to the on-going economic vitality of Brooklyn and the City.”
NY Daily News, IRS clears way for tax dollars to help new stadiums, arenas
Critics blasted the taxpayer subsidy as a waste of money at a time when the city and state are cutting costs in schools, mass transit and more.
"We can't fund the MTA and we're cutting back on city hospitals," said Assemblyman Richard Brodsky (D-Westchester), whose committee is investigating the Yankees deal.
"This is more socialism for the wealthy, where taxpayers are asked to fund a stadium they can't afford to go to."
NY Daily News, Just call the new Yankee Stadium the House That Tax Subsidies Built
Columnist Juan Gonzalez examines the chicanery behind the Yankee Stadium financing, which just got a boost from the same IRS ruling that made Bruce Ratner happy.
The Star-Ledger, Nets get favorable ruling from IRS
The Empire State Development Corp. expects to issue an unspecified amount of tax-free bonds to fund the arena early next year, Warner Johnston, a spokesman for the agency, said.
...
Nets owner Bruce Ratner is seeking up to $800 million in tax-free financing. The IRS ruling means New York state can issue the bonds, Johnston said.The Brooklyn plans are being closely watched in New Jersey, where some elected officials have hoped the Nets will scrap their Brooklyn arena plans and move to the year-old Prudential Center in Newark or stay at the Izod Center in the Meadowlands.
Curbed, IRS Decides Tax-Free Financing for Atlantic Yards Okay
[The IRS ruling] may or may not help the Atlantic Yards project get financed if the credit market isn't interested, but the project has won a big victory today.
Nets Daily, IRS Approves Tax-Free Bonds for Barclays Center
The blog that tracks all things Nets calls it a "big win for Bruce Ratner."
Two blogs posted Develop Don't Destroy Brooklyn's press release, denouncing the IRS ruling on the basis that the project wasn't approved until after the October 2006 rules change:
Yonkers Tribune, IRS Today Rules Bruce Ratner's Barclays Center Arena Not Qualified for Tax-exempt Bonds
Daily Gotham, IRS to Bruce Ratner: No Way!
Posted by lumi at 6:34 AM
October 21, 2008
New IRS rules stoke Atlantic Yards fight
The Internal Revenue Service issued rules Tuesday on whether the Nets basketball arena planned for Brooklyn can access $800 million in triple tax-free bonds.
Crain's NY Business
by Erik Engquist
The Internal Revenue Service issued rules Tuesday that dictate whether the Nets basketball arena planned for Brooklyn can use $800 million in triple tax-free bonds. The developer, Forest City Ratner, says it can; arena opponents say it cannot.
A layman’s reading of the IRS rules seems to support the position of the developer and its partner in state government, the Empire State Development Corp.
The issue—which like everything else concerning Forest City’s Atlantic Yards project will probably be decided in a courtroom—could determine whether the arena gets built. Forest City has said it could get private financing to build the $950 million venue, but that might not be possible in the current credit market.
The IRS rules say one condition that the arena must have met is that “a governmental person took official action evidencing its preliminary approval of the project before October 19, 2006.” The board of ESDC, the state’s development agency, approved the general project plan of Atlantic Yards in July 2006.
But the arena’s opponents will likely challenge that stipulation.
“The general project plan wasn’t legally binding, and it wasn’t anything that [Forest City Chief Executive Bruce] Ratner could legally rely on to do his project,” said Daniel Goldstein, a spokesman for project opponents.
NoLandGrab: So if Atlantic Yards already had "preliminary approval" in July of 2006, why did we all stand in line for hours for the public hearing for the Draft Environmental Impact Statement on August 23, 2006, endure a fractious, mismanaged hearing, and submit volumes of written testimony?
We knew the whole process was bogus, but this takes the cake.
Posted by eric at 9:41 PM
October 16, 2008
If You Build It, Will They Pay?
Luxury stadiums are on the rise. A top seat can cost $150,000. Beer costs extra.
Newsweek
By Johnnie L. Roberts and Andrew Murr
[T]he Yankees are hardly alone in finding new ways to gouge fans; their premium seats are a bargain when compared with prices in Dallas just for the right to buy a season ticket: as much as $150,000. In the latest sign of hyperinflation in the sports business, a slew of ultraexpensive venues are rising, or have been built recently, across the country from Dallas to Washington to New York—where not only the Yankees, but also the Mets, Jets, Giants and New Jersey Nets will all be getting new digs (the New Jersey Devils got a new arena last year). The total price tag for the New York-area building boom alone: more than $5 billion.
Of course, with the nation's financial system teetering, all this construction couldn't be coming at a worse time. Many of the sports industry's most golden gooses, including financial-services giants and automakers—might have a tough time scrounging up thousands of dollars for a seat these days, and might have to slum it with the hard-pressed masses in the cheap seats (meaning under $100 each at Yankee Stadium). These new sports palaces were conceived in a more conspicuous era, and as such they're replete with luxury suites, upscale club seating, catered food and any number of high-tech distractions. Each stadium has an economically stratified seating scheme that will have fans scraping their pocket bottoms or, in a few cases, even mortgaging their homes (if anyone can get a loan these days).
Of course, Norman Oder has already posted this comment:
Though the article states that "not only the Yankees, but also the Mets, Jets, Giants and New Jersey Nets will all be getting new digs," construction has not begun on the new Nets arena in the Atlantic Yards project in Brooklyn, which faces various challenges (lawsuits, credit crisis, availability of tax-exempt bonds).
Posted by lumi at 7:37 PM
Kucinich schedules hearing October 24 on Yankee Stadium and future of PILOTs
Atlantic Yards Report
Rep. Dennis Kucinich (D-OH), Chairman of the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform, yesterday announced a hearing October 24 during which Seth Pinsky, President of the New York City Economic Development Corporation, and Randy Levine, President of the New York Yankees, are expected to answer tough questions about the deal to use PILOTs (payments in lieu of taxes) to repay bonds for the new Yankee Stadium. The hearing also may cast doubt on a similar plan for the Atlantic Yards arena.
...
The hearing will examine not only whether the [Yankees] stadium valuation was "gamed" but also "whether the City’s efforts to stop finalization of proposed U.S. Department of Treasury regulations that would effectively prohibit the use of PILOTs in this context serve the public interest."That larger issue points directly to the city's effort to get tax-exempt bonds for the Atlantic Yards arena grandfathered in under the same loose 2006 ruling--which the chief counsel of the IRS called a "loophole" the agency immediately proposed to close--that enabled PILOTs for the new Yankee Stadium and Mets stadium.
The difference, as I've written, is worth perhaps $165 million to Forest City Ratner on $800 million worth of tax-exempt bonds. And this issue, more than any other, may be the biggest hurdle facing the arena.
Posted by lumi at 6:01 AM
Stadiums and the Economy
The Washington Times, "Sports Biz" (blog)
By Tim Lemke
If there's one area that truly will impact the world of sports, its the credit markets, where lending has practically halted and no one is handing out tons of free cash like in the past. Any team looking to build a new arena or refinance is probably going to find themselves in a pinch.
The good news is that most of the teams entering new facilities in the next year or two had already nailed down funding before the big problems on Wall Street. The Cowboys, Giants, Jets, Yankees and Mets were well on their way to building their stadiums and should be in OK shape when their facilities open in 2009 or 2010.
The NBA's New Jersey Nets, on the other hand, are facing some problems in getting their new arena in Brooklyn.
Bruce Ratner's stalled Nets arena is the only example cited in the article, which reviews all of the recent roadblocks, from the credit crisis, to IRS rules governing tax-exempt bonds.
Posted by lumi at 5:52 AM
October 15, 2008
Kucinich Steps Up Pressure on NYC Officials
Develop Don't Destroy Brooklyn
Congressman Dennis Kucinich (D-OH) sent a 16-page letter to New York City Mayor Michael Bloomberg yesterday (with 12 additional pages of attachments), raising "serious questions" about Yankee Stadium land assessments, PILOTs and tax-exempt financing. Can similar questions about the still-known-as Barclays Center arena be far behind?
DDDB has the press release, along with a link to the Congressman's letter, which also includes a reminder to the Mayor:
I request that the City promptly fully comply with the Subcommittee's requests for documents that should have been produced on August 6, 2008 — over two months ago — and provide two witnesses for the upcoming Subcommittee hearing.
Posted by eric at 8:00 PM
Your Name Here?
What happens to a stadium name when the company goes bust?
ABC News
Remember Enron Field, the MCI Center and the Adelphia Coliseum? All three professional sports venues had to be renamed after the companies that owned the naming rights went bust or got mired in scandals. ABC New reports on what effect the current global financial crisis might have on stadium monikers (bonus points if you can guess the current names of the facilities above; answers below).
Enron Field = Minute Maid Park (Houston)
MCI Center = Verizon Center (Washington, DC)
Adelphia Coliseum = LP Field (Nashville)
Barclays Center = ?
Posted by eric at 12:46 PM
October 2, 2008
Safety in the Numbers You Pull Out of Hat: Club’s Number is 103
Noticing New York
You gotta love a blogger who has a bunny for a sidekick.
For today's magic trick, NNY and Bunny explain how to pull numbers out of a hat to get tax payers to help finance a new stadium for every team that wants one.
Who among us would consider it safe to come up with fictional numbers to present to the IRS?
I am thinking about this because I was reading another attorney’s anonymously offered justifications for the transcendently artificial stratagems currently being used to divert public moneys to the financing of sports venues like Yankee Stadium. In connection with this it seems that some rather fictional numbers were submitted to the IRS. It is doubtful that the numbers are any more substantiated than if they were simply pulled out of hat.
...
The Yankee Stadium financing presents an excellent example of what is wrong with sports stadium and arena financing in the country in general and in New York in particular. The proposed Atlantic Yards Nets arena is on obvious analog and cousin to the Yankee Stadium financing.
Posted by lumi at 4:45 AM
September 24, 2008
It's Time for all New Yorkers to Sacrifice, Unless You Happen to Own a Pro Sports Team
The headlines this week have been full of stories about the tough times facing New York, and how we're all going to have to tighten our belts, cut back, and suffer for the greater good. Unless, of course, your name happens to be Steinbrenner, Wilpon or Ratner.
The New York Times, New York City Wants Cuts by Agencies Across Board
With an eye on Wall Street’s turmoil and New York City’s fragile economy, Mayor Michael R. Bloomberg ordered city agencies on Tuesday to cut spending by about $500 million this year and $1 billion next year.
The cuts are to be made across the board, affecting agencies including the Police Department, which must cut costs by $95 million this year, and the school system, which needs to trim $185 million.
Over all, the reductions represent 2.5 percent of the agencies’ budgets this year and 5 percent next year.
The midyear budget cuts are intended to provide a financial cushion should the city’s tax revenue, which is heavily dependent on Wall Street’s profits, drop further, as many expect.
The timing of the announcement suggests that Mr. Bloomberg may be seeking to soften the political fallout of a possible 7 percent property tax increase, which he disclosed on Monday. The spending cuts, aides said, showed that everyone, including government, will feel the pain from a slowing economy. [emphasis added]
NoLandGrab: Actually, not everyone, since the Bloomberg administration is still doing everything in its power to help the the Yankees, Mets and Nets secure tax-exempt financing for their new palaces, a scheme that will place an added burden on the same taxpayers already in the cross-hairs.
The New York Times, In Fiscal Crisis, Mayor Considers Raising Property Tax 7 Percent
Unless your property happens to be a stadium or arena, in which case, of course, the land beneath it would be conveniently tax-exempt.
As if to underscore the seriousness of the situation, Mr. Bloomberg said that while he sat next to Christine C. Quinn, the City Council speaker, for a full inning at the final game at Yankee Stadium on Sunday night, “The economy was the only thing we talked about.”
NoLandGrab: Who wants to bet that the Mayor and the Speaker never once said, "hey, what if we eliminated the tax exemption on the land right beneath our arses?" Wonder how they scored those great seats?
And in related news...
The New York Times, Transit Agency Requests Review of How Contract for Special Bus Fuel Was Awarded
The MTA is launching an investigation into "a highly unusual contract that has added millions of dollars to the cost of buying diesel fuel for city buses."
NoLandGrab: Like us, you might still be waiting for the investigation into the MTA's agreement to sell the Vanderbilt Yard to developer Forest City Ratner for less than half the amount of its own appraisal — and $50 million less than rival bidder Extell Development Company was willing to pay.
Posted by eric at 12:51 PM
September 22, 2008
Foul Ball: Congressional Committee Criticizes New Yankee Stadium Deal
The AM Law Daily
by Brian Baxter
Ohio congressman and former Democratic presidential candidate Dennis Kucinich is not a fan of the New York Yankees.
Before the historic baseball franchise closed out its last game at Yankee Stadium on Sunday night with a 7-3 victory over the Baltimore Orioles, North America's most successful professional sports team was the target of political vitriol during a Capitol Hill hearing on Thursday.
Kucinich, chairman of the House Oversight and Government Reform Committee, claimed that the Yankees and New York City officials had conspired to misrepresent the value of city land to the IRS for purposes of obtaining sweetheart tax deals from the federal government for the construction of a new stadium in the South Bronx.
NoLandGrab: The article cites unidentified "lawyers with experience in stadium financings" who defend the Yankees and the practice of tossing subsidies at sports teams, but many years of experience have shown that doing so has little economic benefit — except, of course, for "lawyers with experience in stadium financings."
Posted by eric at 3:38 PM
(*)(*)(*)(*) Yankees
PoliticalForum.com
Bruce Ratner sneaks into a lengthy post regarding the Yankees, owner George Steinbrenner's sordid past, their current stadium swindle, and how it all ties in with the current Wall Street tumult.
Almost all Yankees games are broadcast in New York on the YES Network, a cable station formed after the Yankees and the NBA’s New Jersey Nets got into a pissing match with their previous television home and some of that station’s owners. The Nets have since landed in the pocket of wealthy real estate mogul Bruce Ratner, but the Yankees restructured the company with a new partner and kept YES a growing concern. Today, the television network is believed to be worth $1.5 billion (about $200 million more than the Yankees themselves).
Posted by eric at 3:22 PM
At Kucinich hearing, the question arises: why do cities give away naming rights?
Atlantic Yards Report
Though the Congressional hearing Thursday, “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” (video) focused on Yankee Stadium, the issues raised do apply the planned Atlantic Yards arena, as I wrote.
Atlantic Yards came up exactly once, near the end of the hearing, when Rep. Dennis Kucinich (D-OH), asked a basic but important question about naming rights--and got back an answer that actually underestimated the value of the Barclays Center deal.
..."Can you explain how cities who build stadiums for teams typically deal with stadium naming rights?" Kucinich asked. "I’ve always been mystified at how cities can make a rather enormous investment of tax dollars, whether it’s local, state or federal, into these facilities, and then have somebody else come along and put their name on it."
Good question. You'll have to read the article if you want to know the answer.
Posted by eric at 9:51 AM
An architect of the Yankee Stadium deal was an IRS insider
Atlantic Yards Report
The AmLaw Daily blog explains that the one architect of the Yankee Stadium financing deal was a real insider:
Nixon Peabody public finance partners Bruce Serchuk and Mitchell Rapaport were retained by the Yankees and the New York City Industrial Development Agency (NYCIDA), an arm of the New York City Economic Development Corporation (NYCEDC). Serchuk, who worked in the office of tax policy at the Treasury Department and in the IRS's chief counsel office, is considered one of the primary architects of the Yankees's strategy to obtain over $940 million in tax-exempt bonds to help finance construction for the team's new stadium, set to open on April 16 of next year.
Posted by eric at 9:42 AM
September 21, 2008
Brodsky Slides in Front of City's Stadium Plans
 |
The New York Observer
Eliot Brown
The focus of the two men [Brodsky and Kucinich] - one a loud and often relentless critic of many Bloomberg administration policies; the other a mousy, twice-failed far-left presidential candidate—is on a complicated mechanism the city used to win tax-free financing for the new Mets and Yankees stadiums (and plans to use to finance the new Nets arena). The Mets and Yankees already have obtained their financing, but both teams want more to cover additional costs. The Nets have yet to gain approval for the financing, with plans to break ground on a new arena before the end of the year. The I.R.S. has criticized the mechanism as a loophole and has yet to rule on whether the teams can get any additional financing through the city’s structure.Without the mechanism, for which the teams give fixed payments in lieu of taxes that pay off hundreds of millions of dollars in bonds, costs would rise substantially for each of the three teams, and in the case of the Nets, perhaps further upset an already troubled project.
At issue is the tax-exempt aspect of the financing. Under the Bloomberg administration’s arrangement, once the city-controlled Industrial Development Authority approves the financing plan, the teams are eligible to issue hundreds of millions in bonds that are free from city, state and federal taxes. Such savings can lower the cost to the teams by perhaps 15 or 20 percent.
...
For their part, Bloomberg administration officials are proud of their work and say they have nothing to hide in the deal, which uses a tax-free structure with a relatively minor amount of city and state investment to leverage a major federal subsidy for city projects. The financing allowed for billions in private investment, officials contend, making Mr. Brodsky’s crusade a frustrating one, especially as the financing mechanism for the Nets is up in the air.
Posted by amy at 11:04 AM
September 20, 2008
Fact vs. Fiction vs. Fact: City statement on Yankees vs. Brodsky statement
Atlantic Yards Report presents Assemblyman Richard Brodsky's response to the city's response to his report. The discrepancy highlights include jobs, land assessment, luxury boxes, process and cost to taxpayers. From Brodsky's response:
“FACT V. FICTION”, New York City’s non-denial denial response to the facts in Assemblyman Brodsky’s Yankee Stadium Report requires only a re-statement of the City’s own sworn statements to reveal the truth.JOBS
Now: “Yankees currently project 1,000 new, permanent jobs.”
Then: Page 7 of the Yankees sworn March 2008 Core Application to the IDA.
Number of existing permanent jobs: 125
Number of jobs after completion of new Stadium: 140
Then we did the math……………………net increase: 15
Now they scramble to change what the documents reveal. Nice pivot. What did you expect them to say once the sworn data was made public?
Posted by amy at 10:05 PM
A second look at the Kucinich hearing, the Yankee Stadium controversy, and the future of the Atlantic Yards arena
Atlantic Yards Report
It's worth a second look at some of the charges and countercharges that emerged Thursday in response to Assemblyman Richard Brodsky’s report on the new Yankee Stadium and the hearing held by Rep. Dennis Kucinich (D-OH), chair of the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, called “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York”. (Hearing video is now available.)What are the hurdles for Atlantic Yards?
1) Investigators from the committees headed by both Brodsky and Kucinich have concluded, at least on an interim basis, that city officials "gamed" the tax assessment for the new Yankee Stadium so it would be high enough to justify the amount of tax-exempt bonds requested by the team. If similar shenanigans were found regarding the Atlantic Yards arena, tax-exempt bonds might be scotched, costing the developer perhaps $165 million.
2) Even if no such subterfuge is found, the arena is still jeopardized by a proposed Internal Revenue Service (IRS) rule that would require that PILOTs (payments in lieu of taxes) fluctuate so they look like generally applicable taxes, rather than fixed so they look like bond payments. The city and state have lobbied hard to get the arena--as well as additional financing for the Yankees and Mets--grandfathered in. Develop Don't Destroy Brooklyn disagrees.
article
NoLandGrab: AYR goes on to answer 17 more of your burning questions about the hearing and Atlantic Yards such as "Can Atlantic Yards developers get arena bonds?" and "What exactly is Atlantic Yards?" Well, we do have an answer to the second question.
Posted by amy at 2:50 PM
September 19, 2008
The More Things Change..., Yankees Edition
The New York Times
by Richard Sandomir
This morsel comes from a story in today's Times about the coming auction of many of the original hand-drawn blueprints for the first Yankee Stadium, designed and built by the Osborn Engineering Company of Cleveland, Ohio, leading stadium architects of the early days of Major League baseball.
[Memorabilia dealer Mitch] Baker is also selling letters between the [Yankees] and Osborn, including one to Frank Osborn in which [then-Yankees' owner Jacob] Ruppert wrote, “Enclosed is a check for $3,332, minus the $88.20 you charged for taxes we don’t feel we have to pay you.” [Emphasis added]
Posted by eric at 1:58 PM
At Congressional hearing, criticism of Yankees deal and stadium funding; IRS says final regulation coming soon
Atlantic Yards Report
Norman Oder reports on what happened at yesterday's Congressional hearing on federal support for NY sports venues:
Piling on to Assemblyman Richard Brodsky’s report on the new Yankee Stadium, Rep. Dennis Kucinich (D-OH) said yesterday that his Subcommittee’s “still ongoing investigation has uncovered substantial evidence of improprieties and possible fraud” by the stadium’s financial architects.
Kucinich chairs the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, which yesterday held a hearing to which representatives of the Yankees and the city of New York were conspicuously absent, though they are expected to appear in the future.
Though the hearing, “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” focused on Yankee Stadium, the issues raised have direct applicability to the planned Atlantic Yards arena.
PILOTs (payments in lieu of taxes) can’t exceed the amount of foregone taxes, but PILOTs for the Yankee Stadium were based on an assessment inflated aimed to justify a certain quantity of bonds, Brodsky and Kucinich charged. The same tactic might be in store for Brooklyn, given that the expected arena PILOTs far exceed the foregone taxes for the comparable Madison Square Garden.
Moreover, the new ballparks for the Yankees and Mets rely on special Internal Revenue Service rulings that allowed fixed PILOTs that conform to bond payments, while the IRS has proposed changing the rule to make sure that PILOTs fluctuate with taxes--anathema to the bond market.
That rule, expected to be finalized soon, has city officials nervous. Indeed, according to Metro, the city yesterday issued a statement that “complained of the new hurdles” to financing other projects similarly, such as Atlantic Yards. Whether Atlantic Yards might be grandfathered in under the old rules, as the city and state have sought, remains unclear, but the benefit to Forest City Ratner would be significant; I’ve estimated $165 million on $800 million of tax-exempt bonds.
More coverage...
MetroNY, D.C. grilling for stadium
Associated Press, via amNY, Congress rips new Yankee Stadium deal
Posted by lumi at 5:58 AM
September 18, 2008
Yankees didn't blink when lawmakers swung
A congressional panel found the new Yankee Stadium to be a "waste and abuse of public dollars," but baseball executives and city officials stood by the project.
AP via Crain's NY Business
Crain's slapped the hugely misleading headline above onto this report from the AP, misleading because the reason the Yankees didn't blink was because they weren't even in the ballpark! No one from the Yankees was on hand to testify (it's reported that someone from the team may appear in front of the House Oversight and Government Reform subcommittee on October 7th), and city officials, as was reported yesterday, couldn't be bothered.
The original AP headline, which you can see here, was "Yankee Stadium deal criticized by lawmakers."
Rep. Dennis Kucinich said Thursday he found "waste and abuse of public dollars" in the financing of the new stadium under construction in the South Bronx.
Mr. Kucinich is an Ohio Democrat who heads a House Oversight and Government Reform subcommittee. He charged that city officials misrepresented to the IRS the value of the property, helping them to get special tax deals from the federal government and in effect dumping the cost of construction onto taxpayers. No one from the either the city or the Yankees spoke at the hearing.
..."In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees, but also we have discovered serious questions about the accuracy of certain representations made by the City of New York to the federal government," Mr. Kucinich said.
The panel's investigation found "substantial evidence of improprieties and possible fraud by the financial architects of the new Yankee Stadium," he added.
The criticism highlights tensions felt nationwide as governments increasingly support stadiums for profitable pro sports teams with multimillion dollar payrolls.
Rep. Laura Watson, D-Calif., said her hometown of Los Angeles has gone without a professional football team for decades because city officials are unwilling to pay for a new stadium.
Given the current financial crisis gripping the U.S. economy, she said it made no sense for taxpayers to pay for construction of buildings for the benefit of sports owner tycoons.
"In this country we have allowed the upper class to destroy the middle class," Ms. Watson charged.
NoLandGrab: While Yankees and City officials may be standing by the project, it's not surprising that they wouldn't want to testify in front of a Congressional subcommittee, since if they did so under oath, their "standing by the project" would likely result in perjury charges.
And shame on Crain's for such naked boosterism of the Yankees, and projects like Bruce Ratner's Atlantic Yards. They may call themselves the most trusted name in New York business, but preaching socialism for big corporations and sports teams and capitalism for taxpayers and small businesses is intellectually, and morally, bankrupt.
Posted by eric at 4:29 PM
September 17, 2008
Events, Dear Boy
Gumby Fresh
The Atlantic Yards blogosphere's resident debt-finance expert owns up to the fact that even experts make mistakes.
It's interesting that no matter how infrequently I post, it's still possible for me to drop a decent-sized clanger with pretty decent regularity. I refer, of course, to the post below, where I confidently predicted that Barclays had lost interest in the idea of building up a US brokerage business, and that financing conditions for the Atlantic Yards arena were still benign.
So, that was about 1.5 clangers. Barclays, of course, has decided to double down its bet on a presence in the US capital markets by tearing a few strips off the Lehman Brothers corpse, although how the Lehman* purchase helps it build up a retail business in the US escapes me. It's clear that John Varley and Bob Diamond have decided to fling the money of the good depositors in the banks' UK operations at empire-building in New York.
...The .5 clanger is that financing conditions have headed south again. Now right now, investors love them bonds, and the "Barclays Center" (that dare not speak its name) would probably be financed using bonds. But the bonds that they love are mostly low-risk stuff, and highly-leveraged construction financings for speculative team moves don't count.
NoLandGrab: One interesting news item that popped up over the weekend was the explanation that Barclays backed out of a full takeover of Lehman because the U.S. government wouldn't cover the losses — like their naming-rights partner Bruce Ratner, they apparently know it's better to risk the taxpayers' money than their own.
Posted by eric at 6:46 PM
Blogs Note Yankee Stadium Report, Taxpayer Rip-Off
Runnin' Scared [Village Voice blog]
In addition to citing Atlantic Yards Report and yours truly, Runnin' Scared offers this tidbit by way of the Windy City:
From Chicago, B12 Solipsism comments, "The swindle works so well because there is always a second-string city somewhere who can be used as leverage (like when the Seattle Sonics got moved to BFE Oklahoma ). If city governments stood strong, the owners of the teams would end up financing the stadiums... Mayor Bloomberg (and Rudy 9-11 before him) and the Yankees made all sorts of grandiose claims that the stadium would be a boon to the economy, and of course, it isn't, and won't be much different than the previous stadium, other than making more money for the owners."
Posted by eric at 6:38 PM
At Congressional hearing tomorrow, Brodsky will be the sole New Yorker
Atlantic Yards Report
Dennis Kucinich (D-OH), Chairman of the Subcommittee on Domestic Policy of the Oversight and Government Reform Committee, has released the witness list for the hearing tomorrow called “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” and the only New Yorker is Assemblyman Richard Brodsky, whose committee yesterday released a scathing report on the new Yankee Stadium.
The president of the New York City Economic Development Corporation, Seth Pinsky, was scheduled to testify, but withdrew. Discussions with New York City officials about their appearance before the subcommittee are ongoing, according to Kucinich's office. Representatives from the New York Yankees will testify at hearing on October 7.
NoLandGrab: With the Brodsky report tossing around terms like "may have violated legal requirements" and "manipulated and evaded State law requirements," it's just possible that City attorneys advised Pinsky that it might not be such a good idea for him to testify under oath. Time will tell if the Kucinich committee decides to compel that testimony with a subpoena.
Posted by eric at 5:40 PM
Yankee Stadium & Atlantic Yards Follies Update
Curbed
Two of the city's big three stadium and arena projects are in the news again this week (sorry Citifield, you're getting a pass, except for the Shea Stadium foul pole being up for sale). The Yankee Stadium woes and Atlantic Yards woes are different, yet similar.
Posted by eric at 12:35 PM
In Brodsky’s report slamming Yankee Stadium deal, major questions implied about Atlantic Yards arena plan
Atlantic Yards Report
Watergate gave us "it's not the crime, it's the cover-up," but in the case of New York City's manipulation of assessed land values to help the Yankees stick taxpayers with a large bill for their new stadium, it appears to be that it is the crime, and the cover-up.
AYR's Norman Oder has the goods on the damning report issued this week by Assemblyman Richard Brodsky, and what it may mean for Bruce Ratner, who's trying to pull the same scam for his planned Nets arena.
Westchester Assemblyman Richard Brodsky yesterday released a report, The House That You Built (PDF), slamming the city on multiple grounds for its management of the Yankee Stadium deal, suggesting the willingness to grant tax-exempt bonds was based on an empty threat--a vague report, backed up without direct evidence, that the Yankees would leave the media capital of New York City for a stadium elsewhere.
Brodsky’s charges drew a fierce rebuttal from the city, which not coincidentally, was followed by an announcement that Seth Pinsky, president of the New York City Economic Development Corporation and the only witness at a contentious July 2 Assembly hearing called by Brodsky’s Committee on Corporations, Commissions and Authorities, had withdrawn from a planned appearance at a Congressional hearing tomorrow on the Yankees deal.
No other city official will take his place. "We have informed the congressman [Dennis Kucinich] that it will not work for us," Pinsky said, according to the New York Sun. "But we remain happy to speak to him about this subject." (Doesn’t Congress have subpoena power?) Nor will the Yankees testify.
AY implications
The absence of any city representative suggests that Kucinich’s committee will have trouble publicly exploring the parallels between the Yankees deal and that planned for the Atlantic Yards arena. While Brodsky’s report doesn’t mention Atlantic Yards, it raises significant questions about the arena deal, notably whether taxpayers are paying for construction and whether the city is willing to manipulate the arena tax assessment to meet requirements for tax-exempt bonds.
NoLandGrab: We have a feeling that Mr. Pinsky's unwillingness to be inconvenienced by an Acela trip to the nation's capital isn't going to bring Congressman Kucinich's investigation to a halt.
And we do find it interesting that Pinsky and the City feel the hearing won't work for them, since we're pretty damned sure that the ripping off of taxpayers doesn't work for us.
Posted by eric at 8:54 AM
Yankees’ Deal May Have Violated Law, Report Says
The NY Times
By Charles V. Bagli
New York City and the Yankees may have violated federal tax regulations and state laws in using $943 million in tax-exempt bonds to build the baseball team’s new stadium, according to a report issued on Tuesday by Assemblyman Richard L. Brodsky.
Saying the taxpayers are footing the bill for the $1.3 billion Yankee Stadium in the Bronx and are getting little in return other than higher ticket prices and the loss of parkland, Mr. Brodsky, a frequent critic of the deal, said that the report stems from a review of thousands of pages of previously unreleased documents.
...
Mr. Brodsky and other critics have argued that the city violated federal tax regulations by manipulating the assessed value of the land beneath the stadium so that the team’s annual payment in lieu of taxes would effectively equal the annual payments to bondholders, or debt service, of $56.7 million beginning in 2010.Mr. Brodsky’s 34-page report previews testimony he plans to give on Thursday at a Congressional subcommittee hearing sponsored by Representative Dennis J. Kucinich of Ohio that is looking into public financing for sports complexes. The Yankees plan to testify next month, while the Bloomberg administration is negotiating a date.
...
The Bloomberg administration successfully lobbied the Internal Revenue Service to approve the use of the tax-exempt bonds for the stadium, which did not initially qualify. But the I.R.S. later issued a proposal that would tighten the rules governing such bonds so it would be nearly impossible for this kind of financing to be used again by a profitable sports franchise.The Yankees are awaiting a ruling on whether they can issue a second bond offering of about $250 million.
“We do things for professional sports we wouldn’t do for any other business,” Mr. Brodsky said. “When it comes to professional sports, we become socialists; for everyone else, we’re capitalists.”
NoLandGrab: Atlantic Yards developer Bruce Ratner is seeking favorable treatment by the same loophole to finance a new Brooklyn arena for his New Jersey Nets basketball team. How the IRS rules on the second bond offering for the Yankees might affect Ratner's request for a handout.
Associated Press, via amNY, Pol: Taxpayers cheated in Yankees Stadium deal
[Brodsky] said the concerns about subsidies for private businesses without direct benefit to the public could also apply to proposals to help the New York Mets build a new stadium and for a Nets basketball arena in Brooklyn.
Brodsky's criticisms, based on city, IRS and Yankees documents, include:
- The city manipulated the assessed value of the stadium to meet requirements for an IRS tax exemption. That included using comparable land values in Manhattan rather than the Bronx to come up with the value for the new property.
NoLandGrab: Norman Oder of Atlantic Yards Report has explained how Ratner will likely seek to manipulate the assessed property value to maximize the potential for tax-exempt bond financing [link].
The Yankees plan to increase ticket prices, but won't offer more moderately priced tickets to New Yorkers whose taxes will help pay for the stadium.
City officials didn't disclose their purchase of a luxury box and extra game tickets and apparently there is no city policy on their use.
The $366 million in additional funding sought by the Yankees to complete the stadium would be for a large video screen, not structural costs.
The NY Sun, City Declines To Participate In Hearing on Stadium Financing
The Sun is reporting that amidst all of the scrutiny and turmoil, City officials have decided that they won't be going to D.C. for a turn in the hot seat:
The Bloomberg administration is scrapping plans to send one of its top economic officials to testify before a congressional panel that is investigating how sports stadiums and arenas receive public financing.
The president of the Economic Development Corp., Seth Pinsky, confirmed yesterday that he would not be testifying at a congressional hearing in Washington tomorrow called by Rep. Dennis Kucinich of Ohio.
Mr. Pinsky said no other representative from the city will be attending in his place.
"We have informed the congressman that it will not work for us," Mr. Pinsky said. "But we remain happy to speak to him about this subject."
MetroNY, City, Yanks no-shows in Congress
News about City officials ducking Congress focuses on the land-valuation discrepancy as documented in the Brodsky report.
The NY Times, For Stadium Seating, City Officials Demand Luxe
And if all the above hasn't pissed you off enough, here's an aside that will make your head spin:
Rank has its privileges everywhere else — so why not here?
That was the thinking, to hear city officials tell it, that drove them to demand free luxury suites and first dibs on the best available seats at the stadiums being built for the Yankees and the Mets.
...
Mr. Brodsky said that the perks were negotiated in secret and that the city had yet to explain, despite repeated inquiries, why they were necessary and how they will be paid for.
Posted by lumi at 6:34 AM
September 16, 2008
Brodsky: city manipulated assessed value for Yankee Stadium (and a lot more)
Atlantic Yards Report
A not-so-understated press release issued [Monday] by Assemblyman Richard Brodsky about the Yankee Stadium deal indicates
1) an interim report from Brodsky's Assembly committee is coming [Tuesday];
2) Brodsky will be testifying Thursday in the Congressional hearing, which will look into not just the Yankee Stadium deal but also that contemplated for the planned Atlantic Yards arena; and
3) the city, according to the report, manipulated the assessed value of the stadium to meet the need for an IRS tax exemption.
That latter tactic, already the subject of columns by Juan Gonzalez of the Daily News, has potential parallels in the case of Atlantic Yards. Why? Only a high assessed value--likely much higher than that faced by Madison Square Garden--would be necessary to ensure that the PILOTs (payments in lieu of taxes) are sufficient to repay the tax-exempt bonds planned. (A lower assessed value means lower foregone taxes; the bond payments can't be higher than the foregone taxes.)
Update: The AP has responses from city officials and the Yankees.
[full press release after the jump]
“THE HOUSE THAT YOU BUILT”: BRODSKY RELEASES REPORT ON PUBLIC SUBSIDIES FOR NEW YANKEE STADIUM
Interim Report “The House That You Built” Reveals Massive Subsidies, Inflated Tax Assessment, Lack of Job Creation, Questionable Actions by NYCIDA, Luxury Suite Acquisition, Violation of IRS Requirements, Excessive Ticket Prices And Other Issues
What: Press conference to release the Brodsky Report “The House That You Built”
When: Tuesday, September 16, 2008 at 12:00 p.m.
Where: Corner of 164th Street and Jerome Avenue (directly behind the new Yankee Stadium), Bronx, New York
Assemblyman Richard Brodsky (D-Greenburgh), Chairman of the Assembly Committee on Corporations, Commissions and Authorities, will release tomorrow, Tuesday, September 16, 2008 at a press conference being held on the corner of 164th Street and Jerome Avenue (directly behind the new Yankee Stadium) in the Bronx, THE HOUSE THAT YOU BUILT: An Interim Report Into Public Financial Assistance for The New Yankee Stadium.
The 30-page document is based on a five-month investigation into the decision by the New York City Industrial Development Agency and others to provide hundreds of millions of public dollars for the construction of the new Stadium. The findings of this investigation are detailed in the Report and include:
$550 - $850 million dollars in taxpayer investment resulted in the creation of only 15 new permanent jobs
The public, not the Yankees, is paying the costs of constructing the new stadium
A luxury suite was secretly acquired by NYCIDA and the Mayor’s Office with the proceeds from stadium bonds
The City manipulated the assessed value of the Stadium to meet the need for an IRS tax exemption
Sworn commitments to the IRS, the National Park Service, and state officials were not kept
NYCIDA may have violated existing law in its creation of massive amounts of public debt, and its failure to assure public benefits from the massive taxpayer investment
The City refused to protect the public from excessive ticket price increases by the Yankees
Independent investigations of the actions of DOF, NYCIDA, and other public and private parties must be undertaken immediately
The Report is based on a review of thousands of pages of documents, sworn testimony by City officials, and meetings with City officials. It uncovers in depth the actions and decisions that led to the Yankees receipt of cash contributions from the City and State of about $350 million, and additional subsidies of between $200 and $500 million in interest savings on IRS approved tax-exempt bonds, for a total taxpayer investment of between $550 and $850 million and how in exchange the Stadium project will create 15 new permanent jobs, and little in private investment. The Report will be presented to the United States Congress in testimony to be given by Chairman Brodsky this Thursday in Washington.
Posted by lumi at 5:20 AM
September 15, 2008
More details emerge on Yankees lobbying efforts re tax-free bonds
Atlantic Yards Report
Norman Oder wonders if Forest City Ratner's fingerprints may be on the Charles Rangel letter uncovered today by the Daily News.
Yes, the Atlantic Yards arena is part of this controversy. The article concludes:
In 2006, Akin Gump - a bipartisan firm that for years has donated thousands to both Democrats and Republicans - reported that the Yankees hired the firm to lobby the U.S. Department of Interior for "federal approval required to complete stadium relocation."That job ended Jan. 1, 2007. Levine said the Yankees hired the law firm again three months ago - this time to represent the team in a congressional probe on the use of public funds for sports arenas. Hearings are set for this week.
Levine said the firm had nothing to do with the Rangel letter and insisted the letter was meant to serve the interests of the Yankees and other projects, such as the Mets' new stadium and developer Bruce Ratner's proposed Nets' arena in Brooklyn.
Mets officials said they had nothing to do with the letter.
A spokesman for Ratner did not return calls.
So one of the lingering questions is whether Forest City Ratner had anything to do with the letter.
Posted by eric at 9:55 AM
Rep. Charles Rangel lobbied IRS for tax breaks on behalf of Yankees
NY Daily News
by Greg B. Smith
Sure, unemployment is at its highest level in five years, the global financial system is falling apart, millions are without power along the Gulf Coast, and that knock at your door is probably someone serving you with a foreclosure notice. But don't worry — your elected officials are hard at work making sure that you and me and our fellow taxpayers are picking up a big chunk of the tab for billionaire team owners.
This must-read article shows just how deeply entwined city and state officials and sports and development interests really are — and how the system is rigged for the benefit of the wealthy and powerful.
The city and the Yankees secretly crafted a letter Rep. Charles Rangel used to lobby the IRS for tax changes that would save the team $66 million, the Daily News has learned.
They did this at the same time Yankees owner George Steinbrenner and the team's law firm, Akin Gump Strauss Hauer & Feld, raised almost $25,000 for Rangel, records show.
The law firm's political action committee also donated an additional $30,000 to the Democratic Congressional Campaign Committee in this election cycle. Rangel is chairman of the DCCC's board of directors and a key fund-raiser for House Democrats. Yankees President Randy Levine is senior counsel at Akin Gump.
The Rangel letter was just one weapon in the Yankees' ongoing battle to get more tax-exempt financing for the new stadium rising in the Bronx. Last year, the team got $942 million in tax-free bonds through a city agency, but the team wants $350 million more.
If the new bonds go through, the Yankees would lower their borrowing costs by $66 million on top of the $181 million they're already set to save from the first round of tax-free bonds, the Independent Budget Office estimates.
...Levine said the firm had nothing to do with the Rangel letter and insisted the letter was meant to serve the interests of the Yankees and other projects, such as the Mets' new stadium and developer Bruce Ratner's proposed Nets' arena in Brooklyn.
Mets officials said they had nothing to do with the letter.
A spokesman for Ratner did not return calls.
Posted by eric at 9:29 AM
September 14, 2008
Flashback January 2004: where's the team store in the "privately financed" arena?
Atlantic Yards Report
Along with the extreme hype, two interesting aspects emerge in a second look at the cover of the 1/22/04 New York Times Sports section.First, the caption at left declares that the arena would be "privately financed," though that phrase didn't appear in the overview article. While no direct public subsidy had been announced--a 2/18/05 Memorandum of Understanding set out $200 million in subsidies, $100 million each from the city and the state--the Times could have been more skeptical.
After all, the 12/11/03 article announcing the Atlantic Yards plan stated:
Mr. Ratner said that the project "will be almost exclusively privately financed," although taxes derived from elements of the project will be diverted to help pay for it. (Emphasis added)
Posted by amy at 3:17 PM
September 13, 2008
As busy week approaches, Yankees' deal gets more scrutiny; will AY arena be included?
Atlantic Yards Report
Next week is going to be very interesting. On Wednesday will be the State Senate's eminent domain public hearing and the oral argument in the appeal of a judge's dismissal of the lawsuit challenging the Atlantic Yards environmental impact statement. On Thursday, a Congressional subcommittee will look into whether city officials "gamed" valuations of Yankee Stadium to ensure that the assessment was enough to fit with bond payments used for PILOTs (payment in lieu of taxes).And in a column yesterday headlined Yanks land deal ain't fair ball, Daily News columnist Juan Gonzalez revealed that Assemblyman Richard Brodsky, who on July 2 held a hearing on the Yankees deal, will next week release an "interim report" on the Yankees probe.
Surely Brodsky will do so before the Congressional hearing called by Rep. Dennis Kucinich (D-OH).
The PILOTs problem
The Yankees deal is understandably the focus, given that, as Gonzalez wrote, in January 2007, the city assessed land under the new Yankee Stadium at ten times the market value of its neighbors--an assessment justified, city officials said, by comparing it to other stadiums around the country.
The PILOTs can't exceed the value of foregone property taxes, hence the need for a high valuation. The same situation applies to the Atlantic Yards arena.
Posted by amy at 10:07 AM
Ratner Says He Can Do Taxable Bond, So Why Not?
Develop Don't Destroy Brooklyn asks more questions in the wake of Tuesday's New York Times article and the desired $800 million tax-exempt arena bond:
There is a very enlightening comment from Ratner spokesman Joe DePlasco:...that financing plan for the arena, known as Barclays Center, is dependent on a favorable ruling by the Treasury Department in the coming weeks that would allow Mr. Ratner to use tax-exempt bonds and a final victory over court challenges. If he is barred from using tax-exempt bonds, his costs will increase substantially for what would already be the most expensive arena in the world.
...
Joseph DePlasco, a spokesman for Bruce Ratner, said his company had drawn up documents for a tax-exempt bond offering that would enable them to move quickly after the Treasury Department issued its ruling. But, he said, Forest City and Goldman Sachs were also confident that they could obtain taxable financing, if needed. (Emphasis added)We've asked this before, and we'll ask again: If Forest City Ratner admits it can build its arena with taxable bonds and can obtain taxable bonds, then why, exactly, are they pursing the triple-tax free bond? The answer is, of course, that the developer will take advantage of every government tax break or handout even as they admit they don't need to. This is because their project is about making a super profit rather than the public good, despite the PR campaign that tries to tell you otherwise.
Posted by amy at 9:52 AM
September 12, 2008
Something is Rotten in (Macombs) Dam Park
Did NYC Officials Deliberately Inflate Land Value of New Yankee Stadium to Turn Public Money into Private Profit?
Democracy Now
Democracy Now co-hosts Amy Goodman and Juan Gonzalez discuss Gonzalez's column in today's Daily News about the shenanigans surrounding the City of New York's over-valuation of the land under the new Yankee Stadium.
And, of course, this is a major issue all around the country, because local governments are spending enormous sums in public subsidies and federally backed—federal tax-exempt bonds to create these huge stadium complexes. Here in New York alone, the Yankees have a stadium, a new stadium; the Mets are building a new stadium; the developer Bruce Ratner wants to build a new Nets arena. Across the river in New Jersey, the Giants and the Jets are building new stadiums. Minnesota, Washington—you go to any major city in America, they’re building new stadiums using huge amounts of public subsidies, and there are questionable practices, I think, in many of these cities as to how government officials are aiding these efforts.
article/video/audio/download MP3
NoLandGrab: Rep. Dennis Kucinich (D-OH) will chair a Congressional hearing next week probing the financing of the new Yankee Stadium and the Mets' Citifield — and Bruce Ratner's planned Barclays Center arena.
Posted by eric at 2:39 PM
Yanks land deal ain't fair ball
NY Daily News
by Juan Gonzalez
Q. How can it be that the land under the new Yankee Stadium is worth 17 times as much as the land under the old Yankee Stadium, which sits just a infield pop-up away?
A. Because the city appears to be colluding with the Yankees to hand the nation's taxpayers the bill for tax-exempt bonds!
In January 2007, the city assessed land under the new Yankee Stadium at 10 times the market value of virtually all other land in the South Bronx neighborhood.
The assessment - not including the new ballpark - worked out to a fair market value of $275 per square foot. But a Daily News analysis of city property records shows that city assessors said land on a dozen blocks around the site was worth an average of less than $25 a square foot.
...Lawmakers in Washington and Albany are investigating whether city officials inflated the new stadium's land value to make it possible for the Yankees to pay back nearly $1 billion in tax-free bonds for the project.
The Yankees deal calls for the team to begin paying back its original bonds once the new stadium opens in April through the use of something called Payments in Lieu of Taxes. IRS rules say such payments can't be higher than the official tax on the property that is being financed.
In other words, the Yankees need the highest possible assessment to be able to make their huge debt payments.
NoLandGrab: If the Yankees, or the Nets, for that matter, are permitted to issue tax-exempt bonds rather than taxable bonds, it can save them hundreds of millions of dollars in interest payments. Supporters say that most of the tax burden falls on the Federal goverment — but we're all federal taxpayers. And if the onus for funding our city's new sports venues is being spread around the nation, you can bet that we, in turn, are being handed a bill to help fund stadiums and arenas in other states, too.
Posted by eric at 1:49 PM
Down to the Wire for Ratner
Brooklyn Daily Eagle
The New York Times reported yesterday that Forest City Ratner plans to break ground in December on its long-delayed, $4 million Atlantic Yards arena-housing-office project. Skeptics, however, say the worsening economy and a host of lawsuits against the project will make it more difficult to begin. The giant real estate firm has applied for the use of tax-exempt bonds to finance its project. At the centerpiece would be the sports arena, designed for the basketball Nets and now named the Barclays Arena. Atlantic Yards is supported by high-ranking public officials, but a lively opposition movement of neighborhood residents and artists continues to be active.
NoLandGrab: The Eagle failed to mention that the Times reported that Ratner is seeking another $100 million in direct cash subsidies from the City and that Barclays Bank has an option to walk away from the naming-rights deal for the arena if the financing for the arena doesn't close by November.
Posted by lumi at 4:17 AM
September 11, 2008
Karma Burns
Gumby Fresh
The one blogger who has insight to bond financing and the like gives his personal assessment of the news from yesterday's NY Times article. Below are a few excerpts, but if you're interested, you may want to check out the entire post.
"Freshie" on the Barclays naming-rights deal:
It certainly explains why FCR and its underwriter are insisting the deal goes down in November. Because, according to the Times' Mr. Bagli, the arena's sponsor, Barclays, can walk if the arena doesn't reach financial close in November.
Barclays must be thinking they dodged a bullet on this one. Let's assume they really thought a speculative move by a basketball team was a good way to market exchange-traded funds. The advantages right now of trying to build a retail brokerage presence in the US are pretty limited.
And while Barclays hasn't had the poor run of form of its peers, but its balance sheet is still in need of a little TLC. $20 million is the amount that Barclays could earn from a single rights issue that isn't a massive cock-up, but it's still probably mutliples of the amount that it squanders on the entire New York financial publishing industry in a year.
...on the bond financing:
And then there's the financing. I reckon, leaving the litigation to one side, that FCR could get the financing done right now. Goldman Sachs closed a pretty solid, if somewhat subsidy-larded financing for the Louisville Arena the other day. The bond insurers seem to have stablised, and right now its easier to persuade bondholders of the utility of a new basketball arena in Kentucky than of the US housing system.
...on the death knell of Atlantic Yards:
No, the Atlantic Yards project won't ever get the decisive stake to the heart. There will be a dozen cuts instead, not least among them higher financing costs, discounted naming rights, restrictions on tax-exemption, Brooklyn pols refusing to chuck any more subsidies at it, and mounting losses at the Nets. At some point, FCR's stock analysts are going to start suggesting that it goes back to nickel-and-diming government agencies on a smaller scale than through gargantuan sports-related boondoggles.
Atlantic Yards Report, The picture clouds for FCR; what might the spreadsheet say?
Norman Oder responds to Gumby Fresh's assessment of how Atlantic Yards might finally bleed to death:
You have to believe that the spreadsheet folks inside Forest City Enterprises and Forest City Ratner have done the numbers, and that the developer can incur Nets losses and the carrying costs of the land as long as the upside--including tax-exempt bonds and naming rights--is available.
If that upside changes--and there's no proof that it will, just the possibility--then the numbers change and the deal changes. Then things might get even more interesting.
Posted by lumi at 5:48 AM
Atlantic Yards Groundbreaking In December
The NY Sun recapped yesterday's NY Times article with this blurb for the Real Estate Week in Review:
The developer Bruce Ratner has told state and city officials that he plans to break ground in December on his long-delayed $4 billion Atlantic Yards project in Brooklyn, which will include apartments and offices in 16 towers built around a basketball arena for the Nets, the New York Times reported. Mr. Ratner, chairman of Forest City Ratner; his bankers at Goldman Sachs, and the commissioner of the National Basketball Association, David Stern, also met last week with bond-rating agencies to discuss the proposed financing for the $950 million arena. The financing plan for the arena, to be known as Barclays Center, is dependent on winning court challenges and a favorable ruling by the Treasury Department that would allow Mr. Ratner to use tax-exempt bonds. If he is barred from using tax-exempt bonds, his costs would increase substantially for what would already be the most expensive arena in the world. Mr. Ratner has asked government officials recently for as much as $100 million in additional cash for the project, citing rising costs and problems in the bond markets.
Posted by lumi at 4:20 AM
September 10, 2008
It came from the Blogosphere... (Atlantic Yards bedside vigil edition?)
Not surprisingly, the Blogosphere is abuzz in the wake of this morning's New York Times article.
Gothamist, Ratner Vows to Break Ground on Atlantic Yards in December
Gothamist doesn't quite share Bruce Ratner's "mission accomplished" optimism.
That plucky developer Bruce Ratner is still rallying for his $4 billion plan to turn the MTA rail yards in downtown Brooklyn* into a sports arena, office and residential complex designed by Frank Gehry!
...All in all, the article is a study in contrasts, with the obstacles facing Ratner seemingly more insurmountable than ever, especially given the tanking economy. Yet the developer seems to be projecting Rumsfeldian confidence.
* The rail yard is not in downtown Brooklyn — it lies between Prospect Heights and Fort Greene; additionally, the rail yard only represents about 38% of the project footprint.
Curbed, Atlantic Yards Volcano Rumbles in Time for the Fall Season
Brownstoner, Plans to Break Ground on Yards, But What About Phase II?
Bavatuesdays, I heard the news today, oh boy…
This eulogy for Coney Island's Astroland finds a little solace in the increasingly murky future of Atlantic Yards.
Gowanus Lounge, Atlantic Yards Project Needs $100M More in Public Subsidy, Etc.
Yonkers Tribune, The Atlantic Yards Deal Is Coming Undone
The Neighborhood Retail Alliance, Net Gains Coming
Lobbyist Richard Lipsky must've read the Times article this morning while sporting his rose-colored glasses, though we do detect a softening in his tone.
But instead of sinking hundreds of millions of public dollars into a pro basketball arena to inspire "the thousands of young people that are playing ball in Brooklyn harboring the dream of playing professionally," dare we say it would make more sense to spend that money on schools, so the 99.9% of those young people who won't end up in the NBA at least have a fighting chance?
Nets Daily, Optimism Mixes with Doubt on Arena Ground-Breaking
Posted by eric at 10:31 AM
Brooklyn Arena Builder Plans to Break Ground in December After Delay
The NY Times
By Charles V. Bagli
This must-read update on Bruce Ratner's controversial Atlantic Yards arena-'n'-high-rise megaproject contains two breaking-news bombshells:
Ratner has been trying to close on the deal and has been telling the press all year long that the company plans to break ground in November because "the naming rights contract [with Barclays Bank] requires Forest City to close on the land and the financing by the end of November."
[Ratner is now telling the Times's lead real estate reporter that groundbreaking will be in December.]Bruce Ratner is asking for MORE OF YOUR MONEY TO BUILD THE ARENA.
Mr. Ratner has asked government officials recently for as much as $100 million in additional cash for the project, citing rising costs and problems in the bond markets, according to two officials who would speak only on the condition of anonymity because they were not authorized to discuss the negotiations. The city and the state have already agreed to provide $300 million in subsidies and tens of millions in tax breaks.
[More specifically, the tally is $305 million ($100 million from the state and $205 million from the city).]
NoLandGrab: For the online version of the article, the photo is captioned, "Bruce C. Ratner in Brooklyn at the Atlantic Yards, which he has hopes to transform." Technically, he is overlooking "the Vanderbilt Yards."
"Atlantic Yards" is the brand name Ratner made up for the project he hopes to build, which, as you can tell by the photo, hasn't been built.
From Develop Don't Destroy Brooklyn (DDDB), Atlantic Yards: The Deal is Coming Un-done
The group spearheading the legal fight against Ratner's landgrabbing megaproject highlights three important points from the Times article, the two listed above and the issue of whether or not the IRS will reopen the tax loophole to allow for tax-exempt bond financing.
Citing Ratner's troubles, the group calls for a time-out on demolitions so that alternative plans can be considered:
The Atlantic Yards project is hanging by a thread, yet Ratner continues to demolish a whole section of Prospect Heights and spend taxpayer dollars on project-specific infrastructure work. It's time for that to stop. It's time to move forward with a new feasible and superior vision to develop the rail yards.
DDDB thought that Joe DePlasco was "spun by his own spin for too long," when the Ratner pr flack sounded a little punch-drunk in the Times, calling Atlantic Yards "the most exciting project in the country and the most exciting arena in the world."
Atlantic Yards Report, Times: Barclays naming deal has November deadline; FCR seeks $100M in subsidies
Some analysis of the Times article from Atlantic Yards watchdog Norman Oder:
It's doubtful that [November] deadline will be met; while it doesn't mean that the Barclays Center deal is on death row, it could lead Barclays to reconsider and/or renegotiate the deal. (FCR wouldn't comment.)
The article also states that CEO Bruce Ratner "has asked government officials recently for as much as $100 million in additional cash for the project, citing rising costs and problems in the bond markets," according to anonymous sources. (Remember, Chuck Ratner of parent Forest City Enterprises told investment analysts in April that "we still need more" subsidies.)
NoLandGrab: Regular readers will remember that the Chuck Ratner quote was excavated out of a transcript and reported on by Oder.
Despite the article's fairly critical view, Oder suggests that Bagli should have been more skeptical:
The article doesn't define "break ground." While the developer obviously could hold a ribbon-cutting ceremony, it's hardly guaranteed that pending legal cases would be dismissed, or that additional appeals or legal challenges wouldn't emerge.
The article quotes Daniel Goldstein of Develop Don't Destroy Brooklyn: “There’s no way they’ll get control of the land they need, get the financing, end the litigation and break ground by December." Indeed, even in the event the two lawsuits are cleared this year, it would still take additional time to acquire properties via eminent domain.
Note that the Times's phrase "will feature" suggests that the current plan for 16 towers is a go; evidence suggests the project is seriously in flux.
Oder fills in some blanks in response to DePlasco's confidence-building quote:
The FCR spokesman Joe DePlasco offers some spin:
While it is a tough market, we have secured more than $1.5 billion in construction loans this year so far,” Mr. DePlasco said. “And this is the most exciting project in the country and the most exciting arena in the world.”*
Well, part of that total is Liberty Bonds; another part is state housing bonds. Such tax-exempt bonds are a much better deal than taxable bonds.
NoLandGrab: In other words, the "construction loans" cited by DePlasco come from government programs and were NOT secured in the actual marketplace, which presumably will take a less sanguine view of the project.
Posted by lumi at 5:40 AM
Kucinich's Subcommittee to look at stadium and AY arena deals
Atlantic Yards Report
Apparently the July 2 State Assembly hearing on financing the new Yankee Stadium was just a warm-up, since some tough questions about the deals for Yankee Stadium, the Mets' Citifield, and yes, the planned Atlantic Yards arena will be raised next week in Congress.
Rep. Dennis Kucinich (D-OH), who chairs Domestic Policy Subcommittee of the Oversight and Government Reform Committee, yesterday announced a hearing to be held September 18. It follows up on two public hearings the subcommittee held last year (3/29/07 and 10/10/07) that looked more broadly at some of the policy issues.
No witness list has been announced, but I assume someone from the New York City Industrial Development Authority, whose Seth Pinsky was on the hot seat July 2, will be among those present.
While no legislation has been proposed yet, the Subcommittee's concern may put pressure on the Internal Revenue Service (IRS) to clarify and finalize a proposed rule regarding PILOTs (payments in lieu of taxes) to finance sports facilities. That rule could stymie tax-exempt funding for the Atlantic Yards arena--or the city and state could succeed in getting the arena grandfathered in under the ruling that allowed funding for the two baseball stadiums.
The Yankees and Mets, with the assistance of New York City and State, gained "private letter rulings" (PLRs) from the IRS in October 2006 allowing an aggressive plan for tax-exempt financing. After financing for those stadiums was approved, the IRS issued a revised regulation that would eliminate what its chief counsel called a "loophole."
New York City and State would like to see the loophole extended for additional financing for the two stadiums, as well as for the Atlantic Yards arena, which officials contend should be grandfathered in under those old rules, given that it was proposed and proceeded long before October 2006. However, the project was not approved until December 2006.
Posted by lumi at 5:05 AM
September 9, 2008
“Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York"
No, that's not the name of a new book by Neil deMause and Joanna Cagan. Even better, it's the title that the U.S. House of Representatives' Domestic Policy Subcommittee, chaired by Rep. Dennis Kucinich (Dem-OH), has given to a hearing it will hold next week on efforts by the Yankees, Mets and, yes, the Nets, to fund their new playplaces at the expense of the taxpayers.
And that can't be too comforting to the Steinbrenners, the Wilpons or Bruce Ratner.
Specifically, the hearing will address whether efforts to finance new stadiums for the New York Yankees and New York Mets and a new arena for the New Jersey Nets by issuing federally tax-exempt bonds advance the public interest; whether the U.S. Department of Treasury’s rulemaking has been consistent with the Tax Reform Act of 1986; and the legal, policy, and economic implications of the existing and proposed IRS rules regulating the structure of payments of lieu of taxes (PILOTs) permitted to finance projects funded by the issuance of federally tax-exempt bonds (i.e., the PILOT rule).
The hearing will also address alleged misrepresentations made to the IRS and investors related to the assessment of the new Yankee Stadium, whether these alleged misrepresentations affect the tax-exempt status of the bonds issued to finance construction of the stadium, and whether these alleged misrepresentations are an outgrowth of the incentives provided to state and municipal stakeholders by the PILOT rule.
Read the complete Media Advisory after the jump.
For Immediate Release:
Contact: Nathan White (202) 225-5871
Media Advisory: Hearing on Financing of New York Stadiums
Washington D.C. (September 8, 2008) – The Domestic Policy Subcommittee of the Oversight and Government Reform Committee will hold a hearing, “Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York,” on Thursday, September 18, 2008, at 10:00 a.m. in 2154 Rayburn House Office Building.
This will be the third hearing held by the Domestic Policy Subcommittee examining whether the use of the federal tax code to subsidize the construction of professional sports stadiums and arenas furthers the public interest, and the first to examine alleged improprieties in the financing process.
Specifically, the hearing will address whether efforts to finance new stadiums for the New York Yankees and New York Mets and a new arena for the New Jersey Nets by issuing federally tax-exempt bonds advance the public interest; whether the U.S. Department of Treasury’s rulemaking has been consistent with the Tax Reform Act of 1986; and the legal, policy, and economic implications of the existing and proposed IRS rules regulating the structure of payments of lieu of taxes (PILOTs) permitted to finance projects funded by the issuance of federally tax-exempt bonds (i.e., the PILOT rule).
The hearing will also address alleged misrepresentations made to the IRS and investors related to the assessment of the new Yankee Stadium, whether these alleged misrepresentations affect the tax-exempt status of the bonds issued to finance construction of the stadium, and whether these alleged misrepresentations are an outgrowth of the incentives provided to state and municipal stakeholders by the PILOT rule.
Posted by eric at 6:23 PM
September 8, 2008
Payments in Lieu of Taxes: An Animated Explanation
This animated explanation of PILOTs and TIFs, both creative ways that tax revenue is diverted towards paying for government-sponsored projects, was brought to our attention by the folks at Develop Don't Destroy Brooklyn, who posed the question, "Wouldn't it be nice if you too could use your taxes to pay your mortgage or rent?!"
NoLandGrab: Bruce Ratner is hoping to use PILOTs to finance a new Frank Gehry-designed arena for his NJ Nets basketball team.
That means that, if he gets the go-ahead on PILOTs, the money that would normally be collected as property tax and flow to the State coffers, would instead be used to pay off the loan that financed the construction of the arena.
PILOTs and TIFs are a convoluted response to the taxpayer backlash against direct funding of controversial projects or simple hand-outs of subsidies.
Posted by lumi at 5:26 AM
It came from the Blogosphere...
POLITICS
Brooklynian, News flash: We have a primary Tues. 9/9
"Raulism" updates Prospect Heights netizens about tomorrow's primary election, including the skinny on Atlantic Yards:
We don't have many races in our district, but most of Prospect Heights is in the 57th AD. The one contested race we do have is for District Leader (male). This is a Democratic Party position, and it doesn't have much power, but it is our voice in the official Democratic Party decision making process.
As most people should know, most of the decisions in New York State are done behind closed doors, so this position is our choice for who to put in those hidden negotiations. Believe it or not, our incumbent, Bill Saunders, has been a strong independent voice. He is active in the African-American community in Fort Greene, and he has been a consistent, strong voice for our community and against the Ratner Atlantic Yards proposal.
FINANCE
Nets Daily, Nets Arena Bonds to Launch in November
Goldman Sachs is close to launching an $800 million bond issue for the Barclays Center, says Project Finance magazine. Quoting ”sources close to the financing”, the magazine reports Goldman is in the process of having the bonds rated, and expects financing to be in place by the end of November 2008. The new arena will be part of Atlantic Yards. The Nets say they intend to break ground on the arena in November.
Commenters, like Norman Oder, are skeptical, including "brooklyn bob" who sez:
Anonymous sources … yeah, that’s REAL reliable.
Probably the same sources that spouted a thousand previous lies for ratner.
EVENT
NY Protest Calendar, 10/18 SAT: "Stop Ratnerville" walkathon Atlantic Yards
POSTER PROJECT!
Noticing New York, “Yeah, sure. Bad for the glass.” (Inartful Clues to New York City Government?)
Since many trees along the Brooklyn waterfront are suffering from "salt-shock," Noticing New York asks an important question. The answer will sound familiar to many Atlantic Yards watchdogs:
Could the damaging effect of the art-concept salt-waterfalls have been foreseen? The Brooklyn Eagle tells us that an environmental impact assessment preceded the art project: "‘An Environmental Assessment Study was done, and it was concluded that there would be no lasting impact from the project,” said Rochelle Steiner, director of the Public Art Fund.
...
City Hall issued a June 15, 2008 press release of the Mayor’s statements about the coming art project on WINS 1010: Mayor Bloomberg Discusses the Waterfalls Project in Weekly Radio Address. The Mayor promised “the Waterfalls will have little impact on the environment.”
...
Whether you want to view them as a large scale project or a small one, the Waterfalls are temporary. They might even be viewed as just an experiment and as we see, when they failed environmentally and fell short of expectations they can be turned off early. But we have much more major projects like the Atlantic Yards megdevelopments being propelled along by similar impulses and much less competence. Though the Gehry-branded megadevelopment is being treated cavalierly by the Bloomberg administration almost as if it were just another piece of concept art (Building #1 is currently to take the shape of a stack of discarded pizza boxes), it won’t be temporary and remediation won’t be as simple as turning off a spigot.
Sullivan County CBA Blog, Concord Secures Equity Financing
Though this post is off-topic, the ability to secure financing for large projects is being compared to the region's poster-project:
Even the long-heralded Atlantic Yards mega-project in Brooklyn has been delayed.
Curbed, Columbia's Manhattanville Show, Day 2: 'Diabolical Plan'
And the award for poster-project tied up in years of litigation goes to Bruce Ratner's controversial Atlantic Yards megaproject, though West Harlem property owner Nick Sprayragen vows to take his fight against eminent domain all the way to the top:
The storage facility owner says he will fight the use of eminent domain to take his property all the way to the Supreme Court, a process that could hold up the Manhattanville expansion--not unlike the litigation that has tied up the Atlantic Yards plan in Brooklyn--for years.
Posted by lumi at 4:10 AM
September 2, 2008
City finally responds to FOIL request, but doesn't answer "how and why" extra $105 million was provided
Atlantic Yards Report
Did it really take the Mayor's office three months to release numbers that they point out have already been made public, or was that how long it took to figure out how to NOT give Norman Oder the documents he was really looking for?
I finally got a response to the Freedom of Information Law (FOIL) request that the mayor's office seemed inclined to ignore, but the answer wasn't exactly informative. So we still don't know exactly how Forest City Ratner managed to get the city to more than double its direct subsidy of $100 million for Atlantic Yards.
...
I got a response August 5 to my request for "documents, including but not limited communication between and among government agencies, developer Forest City Ratner, and lobbyists, that explain how and why the $105 million request was made and how and why the City agreed to it."
...
In its belated response to me, the city provided an itemized list of capital and infrastructure projects released by the Office and Management and Budget (OMB). That was it--no further explanation.The city stated that the additional $105 "represents capital projects to support infrastructure and other capital needs in the are, some of which are independent of, but in the area of the planned Atlantic Yards project."
As far as I can tell, most of those capital project are not independent of the Atlantic Yards project. For example, the two bridge overpasses are clearly not independent. The MTA infrastructure almost certainly isn't independent, and the "transportation infrastructure" likely is not independent. The "water main improvements" most likely are related to the size of the AY project. As for "Atlantic Ave. Corridor," that's vague.
The fact remains that the city didn't answer "how and why" the request was made, and that Chuck Ratner thinks that entire $105 million goes to the Atlantic Yards project.
Posted by lumi at 5:15 AM
August 27, 2008
As new stadiums spring up, grumbling over ticket prices (but is that the real issue?)
Atlantic Yards Report
There's been some vigorous discussion on the New York Times web site in response to yesterday's front page article, headlined New Stadiums: Prices, and Outrage Escalate, about how four new stadiums coming online in the next few years have raised ticket prices and also added revenue-raising elements like personal seat licenses--both of which are likely for the Atlantic Yards arena, which goes unmentioned in the article.
The article is sympathetic to the elite of sports fans who have season tickets, while some online commenters suggest that fans should be paying for new stadiums. Others point out that the stadiums receive public financing and tax breaks, and that "professional sports leagues are government sanctioned cartels" with competition limited. Moreover, season tickets are often a tax deduction.
And what about the Nets? As I wrote last year: "Thanks significantly to 170 new high-priced suites, the “blended average ticket price” for Nets games would go up dramatically, 73% for regular-season games and 64% for playoff games, upon the team's move." The number of suites has been reduced to 130, but you can bet the average ticket price would skyrocket.
Posted by eric at 10:39 AM
August 26, 2008
New Stadium or Old, Seats Cost a Fortune
The New York Times, New Stadiums: Prices, and Outrage, Escalate
No American market has witnessed anything like it: two baseball teams and two football teams will open three new stadiums within 17 months and 20 miles of one another, with everything set to be in place by the fall of 2010.
But even as fans of the Mets, the Yankees, the Giants and the Jets look forward to state-of-the-art stadium architecture, better sightlines, wider concourses and more bathrooms, some of them are also facing startling increases in ticket costs during a serious economic downturn.
The teams are confident market research supports the increases, but season-ticket holders say the price they are being asked to pay in the new stadiums — the Mets’ $800 million Citi Field, the $1.3 billion Yankee Stadium and the $1.6 billion (and climbing) Jets-Giants stadium — is turning them into something other than fans. Instead, interviews with two dozen fans indicated, they are starting to feel like unwitting bankers.
“You’re asking me for money and giving me nothing in return,” said Steve Kern, a construction executive from Boonton Township, N.J., who owns two Jets season tickets. “I won’t be sharing in the revenues or get any perks.”
NoLandGrab: At least Mr. Kern will get to see a Jets game or two, should he decide to keep his season tickets. Millions of taxpayers will have nothing to show for the massive public investment in these projects.
One has to wonder, too, with all these new stadiums coming online, and a head-to-toe makeover of Madison Square Garden soon getting underway, what demand will remain for seats and suites in the Barclays Center?
amNY, Shea Stadium seats selling like hotcakes
Not the right to sit in the seats in the new Citi Field, but the actual physical seats from the soon-to-torn-down Shea Stadium, 6,000 of which sold in the first two hours of online sales yesterday morning.
The Mets struck a deal to sell the pairs of seats, complete with an armrest in between, priced at the hefty sum of $869 in honor of the team's champion years of 1986 and 1969.
The club will split the proceeds from the sale, which is expected to gross more than $14 million, with the city.
As of Monday morning, all of the orange-colored field level seats were sold out, but seats in the loge, mezzanine and upper deck remained.
Other bits of Shea lore, such as clubhouse lockers, are expected to go on sale shortly, as are pieces of Yankee Stadium, which is also closing this year, but final details have yet to be worked out.
NoLandGrab: And why exactly is the City of New York splitting the proceeds with the Mets, when the stadium is ostensibly publicly owned? Too bad we taxpayers don't get to negotiate our tax rates with local government, which appears to be an exceptionally easy mark.
Posted by eric at 2:16 PM
August 25, 2008
Is Kucinich looking at the issue of naming rights?
Atlantic Yards Report
From a New York Times Magazine Q&A yesterday with Rep. Dennis Kucinich:
I see you are scheduled to speak at the convention on Tuesday, at the Pepsi Center, which sounds like the name of a soda plant. Why is it called that?
My guess is that Pepsi probably bought the naming rights. Naming rights are another thing my subcommittee — the Domestic Policy Subcommittee — is looking into.
We know that the subcommittee has been looking into the tax-exempt bond deals for Yankee Stadium and other sports facilities, as well as the rules behind tax-exempt bonds. But the naming rights inquiry is news to me.
NoLandGrab: If Bruce Ratner's new basketball arena in Prospect Heights is technically publicly owned, how come he gets to keep all the money made from selling the naming rights?
Posted by lumi at 5:09 AM
August 23, 2008
Gov. appoints head of Empire State Development
Crain's
Erik Engquist
Marisa Lago was introduced at a midtown press conference as president and CEO of the Empire State Development Corp. Upstate and downstate ESDC presidents will report to her, unlike in the Spitzer administration, when the agency was bifurcated with two chairmen reporting to the governor. Mr. Paterson had frowned on that arrangement, saying it diluted authority at the agency and led to confusion about who was in charge.Ms. Lago, the former head of development for the city of Boston and a veteran of two mayoral administrations here, has spent the last seven years in international finance as global head of compliance for Citi Markets & Banking. She will be based in New York City and work under unpaid ESDC Chairman Robert Wilmers, who described his role today as “largely strategic” rather than operational. Mr. Wilmers, who was appointed by Mr. Paterson in June, runs Buffalo, N.Y.-based M&T Bank.
...
Mr. Wilmers said that when he accepted his post, “my first thought was to find out how much we spend on economic development.” More than two months later, he admitted, “I still don’t know the answer.”The agency has also been trying to hold businesses accountable for the job creation they promise in exchange for receiving grants and tax breaks from ESDC. Spitzer administration officials complained that the rationale behind the agency’s handouts was often questionable and follow-up was virtually nonexistent.
Develop Don't Destroy comments:
Remember that Forest City Ratner promised 10,000 office jobs when it announced its project in 2003. Today, if the thing ever gets built, it is likely to only produce about 375 office jobs.Since the Atlantic Yards project is stalled, lacking in finance and has numerous contracts remaining to be signed prior to the project moving forward, now is the time when the ESDC can examine—really for the first time—its handouts to Forest City Ratner. There is no need to wait for follow-up.
Posted by amy at 8:57 AM
August 22, 2008
The lesson of Field of Schemes: political reform needed
Atlantic Yards Report
This is the eighth and final part of a multi-part interview (conducted May 28) with Neil deMause, the Brooklyn-based co-author of the book Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, and writer of the companion web site. He testified at a 3/29/07 Congressional hearing that questioned taxpayer financing of stadiums, convention centers, and hotels.
Q. What’s the lesson of the book? Do you have general reform advice--what should cities, states, or the federal government do?
A. It’s easy if you’re the city or the state or the federal government: you stop giving money… It’s within federal government’s power to stop tax-exempt bonds from being used for stadiums right now. You just pass a law telling the IRS don’t do that anymore. The federal government could shut down subsidies for sports stadiums and for other ridiculous deals, luring companies from one state to another.
There’s this thing I mentioned in the book. [Rep.] David Minge’s proposal, why don’t you just pass an excise tax on corporate subsidies, so if Ratner gets, say, a billion in subsidies for this project, then he has to pay federal taxes on this project, that would suddenly make it a lot less lucrative. Congress could do that in a second. They are not.
Cities could say No, it’s not worth it to us, that it would be nice to have a basketball team in Brooklyn, but not that nice. All this is within the power--it’s not that hard to do. The problem is, what do we as private citizens do when the government is not making decisions based on the public interest but making decisions based on the private interest.
Posted by lumi at 4:13 AM
August 21, 2008
Mayor, rich friends need to conserve money, too!
amNY, Letter to the Editor
Hey, it's only one person's opinion, but Tanya O'Langan from Manhattan has a point:
How can Mayor Bloomberg say we have a budget problem when he only pays cops $25k? Maybe our only budget problem is that we have a mayor who gives billions of our tax dollars to his fellow billionaires in corporate welfare?
If 'times are tough' and 'we must all bite the bullet,' then perhaps he should get our money back from the well connected crooks like Steinbrenner and the Mets!
NoLandGrab: And while we're belt tightening, throw in fat-cat Bruce Ratner.
Posted by lumi at 4:32 AM
August 8, 2008
Yet again, sports economist Zimbalist stumbles in court
Atlantic Yards Repot
The sports economist who penned the oft-cited economic study that comes to the dubious conclusion that a new Nets arena in Brooklyn would be a net benifit to taxpayers screwed up on the witness stand, again:
It’s been a tough seven months for sports economist and professional witness Andrew Zimbalist, who has been beaten up in court three times, not to mention the court of opinion. I recently chronicled a case involving the Seattle SuperSonics, during which Zimbalist’s credibility was shredded during cross-examination, an antitrust case involving NASCAR in which a judge cast doubt upon Zimbalist's report, and Zimbalist’s dubious and defensive appearance on the Brian Lehrer Show.
In the past two weeks, Zimbalist’s credibility further suffered during a federal antitrust trip involving a challenge to the ATP (Association of Tennis Professionals), the men's professional tennis players' association, by organizers of the tour in Hamburg, Germany, upset that their tournament had been demoted from the top tier and changing its schedule.
(All coverage is from SportsBusiness Journal, reposted in this tennis blog.)
According to SportsBusiness Journal, Zimbalist’s testimony “caused an uproar,” leading the defense to request a mistrial and the judge to dismiss the jury early, because he brought notes to the stand, in contravention of court procedures.
In fact, at one point, Zimbalist corrected the lawyer questioning him, asking if the right question had been asked. “Well, I have seen it all,” federal judge Gregory Sleet said.
Posted by lumi at 4:16 AM
Kucinich looks into questionable ticket deals for the Yankees and Mets stadiums
Atlantic Yards Report
Norman Oder reports that Representative Dennis Kucinich "has asked the Internal Revenue Service and Treasury Department to hold off from approving any deal allowing PILOTs for a Nets arena until his investigations of tax-exempt financing are concluded."
Kucinich's investigation now includes perks for NYC government officials in the Yankees and Mets Stadium deals.
Posted by lumi at 3:46 AM
Atlantic Yards IS Too Costly
The folks at Develop Don't Destroy Brooklyn (www.dddb.net) agree with Governor Paterson, who recently stated in an interview on WCBS, "if [Atlantic Yards] starts to become too costly, a lot of these projects that we were for, we might have to change our mind."
However, after a quick tally, the group argues "that we are there with Atlantic Yards and have been for quite a while":
Though the NY Post's $2 billion in government back financing is debatable, the developer claimed three years ago that the public investment in the project would be $1.1 billion. Either figure is too costly considering neither the city or state have shown that there would be a meaningful financial return for the taxpayers—especially seeing as how Ratner has provided the public and government with no confidence whatsoever that the project can be built.
Posted by lumi at 3:36 AM
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 Ho