Tuesday, October 28, 2008

Jobs, housing, and (not) hoops: the city's justification for arena bonds

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.

From the document

IRS Regulations
Opponents:
New regulations are attempt to prohibit use of tax-exempt debt for future projects like Yankee Stadium
Facts:
Proposed regulations made technical changes to how some payments backing tax-exempt bonds could be structured in the future, doing so in a way that City felt disadvantaged New York versus other states
Final regulations amended proposal to let projects in the pipeline avoid changes, helping, most importantly, Brooklyn’s Atlantic Yards ($4 BN project that will create thousands of jobs and 2,000+ affordable housing units)
Nobody with appropriate authority (including IRS) has ever said similar tax-exempt bonds cannot be used for economic development or even stadia in the future
.
(Emphasis in original)

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