Friday, June 27, 2008

City says Yankees' PILOTs wouldn't exceed property taxes, but where's the backing data?

Wasn't there a chance the PILOTs (payments in lieu of taxes) used to pay off tax-exempt bonds for the Yankees and Mets stadiums would exceed the foregone real estate taxes and thus run afoul of federal rules? The city's Independent Budget Office certainly thought the annual Yankees PILOT might exceed those taxes.

And I thought that the same cap might pose a problem even if the city and state officials manage to get the feds to allow tax-exempt bonds for the planned Atlantic Yards arena under the lenient "loophole" provided to the Mets and Yankees.

Then again, you have to think that city and state officials would make sure the numbers work out. In fact, as a 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department from the New York City Industrial Development Authority (NYC IDA) and the Empire State Development Corporation shows, the estimated tax for the Yankees would be $62.5 million, while the PILOTs would be only $56.7 million. That's room to spare.

I speculated there would be much less room to spare regarding Atlantic Yards, but we can assume that numbers can be massaged.

Source of estimates

Then again, where exactly did the numbers for the Yankees and Mets come from? As the footnote says, Moody's Investors Service, a company that offers credit rating and risk analysis. The numbers are projections, rather than reports from the city tax assessor. I asked NYC IDA for more information and a look at the relevant report pages, but I didn't hear back.

The calculations behind those projections deserve a closer look. Neither the federal agencies, nor Assemblyman Richard Brodsky's Committee on Corporations, Authorities & Commissions, which will hold a hearing on tax-exempt bonds, should let the numbers stand without some backing data.

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