Wednesday, February 27, 2008

Yassky come lately on AY costs, which still need a thorough accounting

Term-limited Brooklyn City Council member David Yassky, running for the citywide position of Comptroller, has decided to target subsidies for Atlantic Yards, part of a tougher line he's shown lately regarding the project.

Among the tactics he recommends in an article in this week's Gotham Gazette is ending corporate tax loopholes:
Of course, the single biggest example of corporate welfare is the proposed Atlantic Yards development. The Bloomberg administration has agreed to give the project's developer at least $100 million in direct subsidies, plus another $400 million to $500 million in tax breaks. In the current financial climate, this handout is impossible to justify.

While some significant increases in subsidies--including a doubling of the city's contribution and the "Atlantic Yards carve-out" for 421-a benefits--have surfaced in the past year, there was a longer list worthy of concern before that.

And Yassky did not raise the issue of AY subsidies in his comments during the Atlantic Yards approval process. In his 8/23/06 letter to the Empire State Development Corporation, he expressed "grave concerns" and requested "substantial changes," but those regarded the size of the buildings and plans for traffic and transit.

He concluded, in his mend-it-don't-end-it posture:
Again, I do believe that development of an arena and housing at the Atlantic Yards site would have genuine benefits for Brooklyn. The current GPP [General Project Plan], however, imposes an unacceptable cost to achieve those benefits.

When Yassky ran for Congress that summer, he tried to steer $3 million in job-training funds to AY Community Benefits Agreement signatory BUILD. He took a distinctly moderate position, refraining from bringing up issues like corporate welfare, while rival Chris Owens needled him for not asking tough questions.

$500 million, $3 billion?

Would the total in tax breaks be $500 million, as Yassky says, and the total in government benefit be $3 billion, as Develop Don't Destroy Brooklyn suggests (right)?

Well, it depends how you do the math. Yassky, I believe, is adding direct subsidies and the 421-a tax break. DDDB's chart suggests that the bonds for the arena--to be repaid by payments in lieu of taxes--represent a complete subsidy, but the Independent Budget Office (IBO) does not agree, because it assumed that the railyard portion of the land would've remained tax-exempt anyhow.

And tax-free bonds valued at $1.4 billion do not represent savings of $1.4 billion, but rather the spread--perhaps 15%--between taxable and tax-free bonds.

New analysis needed

Still, if DDDB's numbers don't fully stand up, neither do anyone else's. The IBO, in its September 2005 report, did not attempt to assess the full fiscal impact of the Atlantic Yards project, just the arena. The New York City Economic Development Corporation and the Empire State Development Corporation, in their analyses, focused on costs rather than benefits.

So there's still a significant need for a government-sponsored, fully-vetted effort to analyze Atlantic Yards costs and benefits. Maybe Yassky, or even fellow Comptroller candidate Jim Brennan--who's pushed to get Atlantic Yards financial information but hasn't made AY a rhetorical centerpiece of his candidacy--can put the issue on the agenda.

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