Saturday, December 13, 2008

Bloomberg: "Letting any group have a special deal is not what democracy is about"

On yesterday's Live from City Hall with Mayor Mike and John Gambling radio show, Mayor Mike Bloomberg said some very curious things about sweetheart deals, tax-exempt financing, and the Metropolitan Transportation Authority's capital budget.

Special deals

At about 25:45, he flatly declared:
Letting any group have a special deal is not what democracy is about. It breeds contempt for our laws.

Pop Quiz: That was said in relationship to...
A) The zoning override that allows Forest City Ratner to build Atlantic Yards at the size it desires
B) The City Council's vote, at his behest, to overturn and extend term limits
C) The ongoing sales by Indian reservations of tax-free cigarettes

Answer: C

Financing sports facilities

At 22:50, Gambling brought up a controversial issue with a big fat pitch:
Speaking of things that are expensive, I'm reading that our baseball stadiums are getting more and more expensive, and they've looked for more money…

Bloomberg responded breezily, if inaccurately:
The issue here is the federal government has a plan where, and the city has an agency that helps decide who gets it, there are tax-exempt bonds, they typically are free of state, city, and federal taxes. And since they are, you can sell the bonds at lower rates. So something like the Yankees or the Mets organization would like to use these bonds, 'cause the interest costs to them would be lower…

Why does the federal government have a program? It stimulates construction jobs and economic activity. They might not do these things, build stadiums or in this case some infrastructure around it, if it costs them more. The economics might not work.

So everybody says, look, we'll get less income from taxing the interest that the bondholders would pay, but in return there's more construction, more jobs, and that's good for society. It's not city money other than we would would forego… a very small amount of revenue on the interest on those bonds. So would the state, so would the federal government. But our development bank is set up to do this, and you do it for big projects, and the federal governments [sic] approve these projects, and we'll go on with them.

(Emphasis added)

Though Bloomberg was speaking casually, the federal government does not forego a "small amount of revenue" but rather bears the brunt of the tax exemption. As Rep. Dennis Kucinich (D-OH) has put it, "the practice of providing taxpayer subsidies to the building of sports stadiums is a transfer of wealth from the many taxpayers to the few wealthy owners."

“My plea is that you put some common sense restrictions on that,” Assemblyman Richard Brodsky testified in October before Kucinich's subcommittee. “There’s no value to the economy of the United States when the state of New York buys off a corporation to move from Pennsylvania.”

He also said, "We again conclude that there is no commensurate public value, that these are giveaways not investments, and that the Federal Government should cease its subsidies of any project where the public subsidy is not met with a public benefit of at least equal value."

The MTA

At about 16:30, Bloomberg brought up the MTA:
For example, the express buses. We have to hold the fares on the express buses.Let me step back. The MTA has an enormous deficit--a billion-plus dollar, maybe even bigger, who knows. And they have zero dollars for capital, zero. This is an enormous agency, needs technology, needs new equipment, and they don’t have any money.

Now, forget about the fact that there has been, in the past, proposed a plan that would've gotten $384 million from the federal government and to some extent would've fixed the problem, at least it would've fixed the capital side, not the operating side. Right now, the city, which has four votes out of 16... on the MTA board, we have to go and find a ways to work with the MTA, with the state. And Dick Ravitch has come up with some ideas. And I've talked to the Speaker of the Assembly--Shelley Silver understands we have a problem here, and try to go forward, not look back.


Which means everyone forgets that the Vanderbilt Yard was appraised at $214.5 million, including the construction of a new railyard, and, after Forest City Ratner bid $50 million and rival Extell bid $150 million, the MTA board decided to negotiate exclusively with FCR, which [corrected] upped its bid by $50 million to $100 million.

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