Saturday, September 13, 2008

As busy week approaches, Yankees' deal gets more scrutiny; will AY arena be included?

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.

Will they get to AY?

The Atlantic Yards case may be even more of a challenge for the city. First, if the arena bond deal is going to be finished in November (even if the bonds aren't sold yet), the city must have prepared a preliminary assessment.

But the city would have to compare the Brooklyn arena not just to new arenas elsewhere but also to Madison Square Garden.

As I've written, Forest City Ratner expects a $800 million tax-exempt bond issue, which, by my estimation, would save the developer $165 million. Based on the example of the Yankee Stadium bonds, an $800 million bond issue would require $48 million in annual payments.

However, foregone property taxes for Madison Square Garden, which the Independent Budget Office considers more valuable property than the expected arena in Brooklyn, are only $12 million a year.

Maybe Kucinich and Brodsky can shed some light on this.

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