Saturday, November 22, 2008

On CityTalk: "How much welfare do you think the Steinbrenners should get?"

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.

Host Doug Muzzio, a Baruch College political scientist, was joined by two forceful guests. Bettina Damiani, Project Director, Good Jobs New York (GJNY), declared, "If somebody could write a book on how to make an opaque democratic process and screw over poor people, this would've been it."

Baruch professor Neil Sullivan, author of The Diamond in the Bronx: Yankee Stadium and the Politics of New York (2001, updated 2008), said the fundamental question was "how much welfare do you think the Steinbrenners [Yankee owners] should get?

(Note that the video for me was fuzzy, but I downloaded the audio.)

Opening up

Muzzio brought up the recent spate of critical news coverage.

DM: OK, the last week, stories all over the place, Jim Dwyer in the Times, For Yankees, Mayors Play Ball at City's Expense; Mike Lupica, The city's real tax burdens, Juan Gonzalez, Yanks caught stealin' from taxpayers again. Why the upsurge in interest? Why the news stories?

(Note that the headlines of the print articles, read by Muzzio, are not necessarily the same as those online).

The press enters, belatedly

BD: I think for two reasons. One is, we're watching our financial systems totally recreate themselves as they're melting down, so it's a little bit on the front of people's brains, about financial systems. Secondly, a little bit of a pessimist in me thinks that it's OK to write about these things, because this project is so far along nobody's going to get mad at the media for it.

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.

(The Mets have gotten much less scrutiny regarding their new stadium, but, as Damiani pointed out, at least "they didn't try and gobble up Flushing Meadow Park.")

Fixed, or too complicated?

Muzzio raised the question about whether the press had rolled over.

DM: So you, in a sense, create a web of the permanent government, the movers and the shakers and the fixers. So you're telling me that the papers stayed away from it when it was hot because of their interest and now they're in it because it's a done deal.

BD: I wish I had the answer for that. Because, I mean, we could've fixed it early on, when there was really an opportunity to put some democratic process to this. The reality is, early on, the only people that really, really put their nose to grindstone on this was Pat Arden at Metro and Neil deMause, who's the author of Field of Schemes. It was a heavy lift, and I think part of it was because it's a very complicated project.

We should keep in mind that there's a difference between editorial pages, which are influenced by the publisher's interests--the prime example is the recent editorializing against term limits--and news coverage.

Then again, there's been ample evidence from groups like Good Jobs New York that the press could've relied on, so I suspect that the government investigations have given columnists the ammunition they feel they need.

Always a political building

Sullivan provided some history of Yankee Stadium.

NS: It's a political building, it always was. It was built by Jake Ruppert, who was a Tammany Hall Congressman... So Ruppert would've known... the Terminal Market was going to open up and he'd have a fan base... but he paid for the whole thing with his own money, which to me is exactly the way these things should be done. Let me just interject: everything we're talking about here... boils down to a very simple proposition, which is how much welfare do you think the Steinbrenners should get? That's what it all comes down to.
(Emphasis added)

The first phase is, possibly, honest graft. The second political phase is in the seventies, when Mayor [John] Lindsay, bargaining against himself, decides that the socialist model of stadiums, which began in the 1950s in Milwaukee, the cities, counties, states, would actually construct the stadium, finance it, and then rent it to the private entertainment business. That model took over.

The city was going into bankruptcy, the South Bronx was going into a free fall, and Lindsay persisted, that this stadium's going to be done. It was supposed to--they pulled $25 million out of the air because that's what it cost to build Shea Stadium--the stadium wound up costing... $120-$140 million, at the very time the city was imploding.

Muzzio cited "reverberations and echoes here" with the current situation.

The era of partnership

Now, Sullivan said, things are much more complicated. He didn't even deal with the question of whether PILOTs (payments in lieu of taxes) to pay for construction represent a free sports facility--Brodsky says yes, the Yankees say no, and the same arguments apply to the AY arena--but instead pointed to the consequences of municipal ownership.

NS: You're now in this current phase, we're getting out of the socialist phase, which at least had simplicity going for it, and now we're into the era of the partnership and when I first heard about this deal, the Yankees said, 'We're going to pick up the lion's share, we'll need a bit of stuff, the infrastructure... $800 million we're coming up with.' Well, that's an improvement.

Well, trying to get through this agreement, and I am not the sharpest knife in the drawer... I'm reading it, reading it, and reading it. In some ways, there's a benefit to taking a step back instead of plunging into the morass of details, you take a step back: OK, here's this private entertainment business, they gotta come up with $800 million of what was supposed to be $1.2 billion but they don't own the stadium. the city owns the stadium. And one of the points I've been hammering about for years, it does the cities no good to own these things. Because if you don't have a ball club in the stadium, you own the world's largest flowerpot. There's nothing you can do with this so-called asset. It's an albatross around the community's neck. So you want to get rid of the stadium, you should auction them off. You should get out of this business entirely, especially in this city. New York has never played the stadium game well. And it certainly hasn't played it well in this instance.

Why the fig leaf 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.

And what happens when the arena is obsolete? Surely that would happen before the 30-year bonds were paid off; after all deMause has observed that team owners try to get money for renovations as soon as possible.

The owners of Yankee Stadium, home of the country's richest team, do not need naming rights to pay for construction. The case of the Atlantic Yards arena is even more stark, given that developer Forest City Ratner gets to sell naming rights for a publicly-owned arena.

A brief history of machinations

Muzzio asked Damiani for "a brief history of what can only be described as the machinations behind this." He cited GJNY's July 2007 report, Insider Baseball: How Current and Former Public Officials Pitched a Community Shutout for the New York Yankees, and February 2006 report, Loot, Loot, Loot for the Home Team.

BD: This was sort of a perfect storm. You had the former Deputy Mayor, under Giuliani, who happens to be Randy Levine, who worked for baseball, then worked for City Hall, and then miraculously went back to the Yankees.... So there was this revolving door that was greased so well for a project like this, because you had the insiders going back and forth. Then you have... unfortunately, the Bronx doesn't have the best representation, we're going to leave it at that. Their local elected officials, I don't know where they were, but somehow it managed that 22 acres of parkland, some of the heaviest used parks in that area of the Bronx... were taken, as a state of emergency, through the city and state legislature, in nine days at the end of the legislative session.

She continued, her tone verging on incredulousness.

If somebody could write a book on how to make an opaque democratic process and screw over poor people, this would've been it. Because it was done perfectly. It was really quite ingenious. All of this was done at the end of the legislative session. People didn't have an opportunity--they didn't even know it was happening. There was no public hearing--22 acres of parkland in New York City! As we all know, this is a city; we do things by feet, much less by acres.... It was given not over for a hospital or a school or a road, but for a baseball stadium to move across the street.
(Emphasis added)

What about the CBA?

Sullivan joined the bandwagon of people criticizing Community Benefits Agreement (CBAs) for New York projects.

NS: That all went through, as I understand it, through this Community Benefit Agreement, that this was what spread the wealth around. The Community Benefit Agreement, as I understand it, is simply the modern expression for honest graft. Y'know, you guys stay quiet, we'll give you X amount of jobs, you'll get these contracts... The women, the minorities, various categories... So we'll scatter this around. But it's the same fundamental exchange that the city went through back at the [of Tammany Hall's George Washington] Plunkitt.

Lost parkland

Muzzio also was incredulous.

DM: But the community lost all this parkland--the parkland they're replacing it with is on the top of garages, it's not contiguous, it's not available yet.

BD: This is the issue. When you see Community Benefits Agreement, I can do little air quotes, because nobody from the community was involved in this process and nobody signed it. What irks me beyond belief, besides that they call it a Community Benefit Agreement, there's a process in which you're taking money out of the city treasury, essentially, this pot of money, and the Yankees are going to say we're going to privately give tons of money to community groups in the Bronx.

So people that head up this Community Benefit fund are the ones that decide how services are provided in the Bronx? It doesn't make any sense. It's totally counterintuitive to the democratic process. So, the issue of the CBA really kind of makes the hair go back up on my neck, because it's really was what helped seal it through. Everyone was going: It's OK, there'll be a CBA.... which has not been replicated in New York City anywhere like how it's been done out west.

Damiani gave definitive testimony 5/26/05 before the City Council pointing out how the Atlantic Yards CBA--which, I'd point out, looks better than the Yankee Stadium CBA--differs significantly from more legitimate CBAs. That was never covered in the press.

Public costs

DM: Let's talk a little about the magnitude of money. The IBO [Independent Budget Office] in an August 7 letter, they argued you would lose tax revenue over 40 years of $28.3 million... and would save the Yankees $189.9 million.... Then you've got the overt cash subsidies where there's not only an opportunity cost, but they're handing them cash to build garages. Excuse me--explain this to me.

(Keep in mind that, not only would tax-exempt bonds save the Atlantic Yards developer a large sum--I estimated $165 million--there would be $305 million in direct subsidies.)

BD: I wish I could... The reality is... the reason why it's been so difficult to write and advocate around this project is because it is so complicated. They just throw figures and numbers out. The reality is this project is being built with public money, despite what the mayor says... because tax-free bonds, so they're getting cheap and free tax-free financing, it's mostly a federal subsidy... but also we've gotta pay for new parks. We have to pay to tear down Yankee Stadium... Right now, when we're talking about an incredible deficit on the city and state level, we have to keep a very close eye on making sure that the South Bronx doesn't get shorthanded on the way these parks are rebuilt.

Who sacrifices?

Muzzio quoted Lupica, who pointed out that the city has canceled a class of new police recruits. Sullivan was sarcastic.

NS: Everybody's got to sacrifice because we're in tough times, but I'll repeat that you're sacrificing in this instance so you can transfer money up to the Steinbrenner family... They're the primary beneficiaries.... When I read Randy Levine's testimony, before the House committee... He talked about how there had never been transparency like this... And I thought, he's kidding, right? Well, y'know, in a way he's not. This is a fleecing of the taxpayer that's hiding in plain sight. It's all right there. But it's so complex that you would have to dig into this.
(Emphasis added)

Which means there's a job for journalists.

It's for the kids, right?

Sullivan went on to criticize the popular rhetoric--exemplified in the Atlantic Yards context by New Jersey Nets CEO Brett Yormark and lobbyist Richard Lipsky--that a new sports facility is about the children.

NS: You can write this down now. When the stadium opens, there'll be kids from the local schools who'll come out, and Bud Selig will appear, having done his own stadium scam in Milwaukee, and he'll be talking, 'Oh isn't it wonderful, the children, it's all about them, blah blah blah.' They go back to these godforesaken science labs in the Bronx. Their grandparents are going to go to hospitals and need all kinds of help. The most basic services are ignored so we can transfer money up to this family that owns one of the most lucrative private entertainment businesses in the world.

"The people are supine!"

The host started thinking aloud.

DM: Isn't this a small pieceof what we're witnessing nationally... to bail out the corporations, banks and insurance agencies? I don't want to sound like a populist yet... or I do.

NS: It's part of the explanation for how, historically, sports owners in New York City get away with this. There really is no kind of populist tradition in New York City

DM: The people are supine! You've been yelling in the wilderness for how long?

BD: Over three years.

I don't know if the people are supine, given general resistance to subsidies for sports teams. It's more that the infrastructure for analysis and resistance--the press and civic groups--is pretty thin. These stories are tough to do. And perhaps some traditional civic watchdogs have learned to pick their fights. The resistance that's grown up in response to Atlantic Yards is notable.

NS: My biggest surprise writing the book... in the 70s, I'm looking for all kinds of backroom stuff. Every single newspaper in town... told the entire story from start to finish. We are going into bankruptcy. The South Bronx is going into a free fall. And Lindsay has frozen capital budgets, except for Yankee Stadium....

The explosion of articles in the Daily News in particular now may well have to do--maybe some editor said, 'Dial it back for a period of time.' But at the end of the day, it's easy to blame Randy Levine and blame all these other people, but it's the people of New York who have put up with this.


DM: And their elected representatives.

Remember what Brodsky said at the Kucinich hearing: "[T]here is nothing like professional sports to make public people nutty."

They paid in San Francisco

Sullivan pointed out that the New York model isn't the only one.

NS: San Francisco, which is always trotted out as the most harebrained liberal place in America, four times, twice in San Francisco and twice in San Jose, they voted down a new public stadium for the Giants. They forced the San Francisco Giants to build PacBell Park... with private money... The Giants were fine.

What next?

Muzzio asked what's next. Damiani said the Yankees would have to request more tax-exempt bonds at a hearing before the New York City Industrial Development Agency, and GJNY will announced that hearing. She also said that the city needs more teeth in its Conflicts of Interest Board.

Nobody mentioned Atlantic Yards.

Final words

Muzzio asked his guests for some final observations.

NS: A candidate for mayor should give a serious, thoughtful look at auctioning off the stadium. See if that makes sense, give it to a private party and get out of this business.

BD: Make the Yankees pay their taxes like everyone else.

They'd make the same arguments, I presume, regarding the Atlantic Yards arena.

1 comment:

  1. One can't help feeling that much of the mainstream media would rather cover the broken promises after the fact, than inform their readers beforehand with thoughtful analysis.

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