Skip to main content

Smoking gun: emails show how Yankee Stadium valuation was "jacked up"

Daily News columnist Juan Gonzalez continues to look into the astounding inflation (from $26.8 million to $204 million) in valuation of the land under Yankee Stadium, apparently aimed to qualify for the amount of foregone taxes needed to pay off construction bonds via PILOTs (payments in lieu of taxes).

(Yes, Atlantic Yards watchers are waiting to see if something similar happens with the land under the planned $950 million arena.)

In a column yesterday headlined E-mails reveal how city went to bat for Yankee to inflate value of stadium land, Gonzalez describes how it took only hours for the Department of Finance's chief tax assessor to do an about-face and "jack up" the valuation.

Smoking gun

Gonzalez writes:
"This is the smoking gun," said Assemblyman Richard Brodsky, who has spearheaded a state probe into the stadium deal. "The professionals did their job. The political appointees then ordered them to change the assessment - and they did."

And Gonzalez points out that the emails contradict testimony from DOF Commissioner Martha Stark in October before the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee chaired by Rep. Dennis Kucinich (D-OH).'

Here's one from Michael Kalt, an aide to former Deputy Mayor Dan Doctoroff: "I don't want to get into this much further on e-mail, but we have to take into consideration that the AV [assessed value] is only so high because we're choosing a methodology to support the tax-exempt financing."

It's not over

Gonzalez observes that the city has refused to release to state and federal investigators hundreds more relevant e-mails. His conclusion:
That's why it's time for some prosecutor to step in, subpoena every document and figure out if the Bloomberg administration manipulated land assessments for the Yankees.


Potential impact

In the Village Voice, Neil deMause explains:
This wasn't just a matter of sloppy paperwork: If the IRS figure had been any lower, the Yanks' convoluted plan for getting tax-free bonds (involving setting property tax levels high enough that the team's private bond payments could be recast as public "payments in lieu of property taxes," or PILOTS) would have fallen apart; if the state figure were any higher, it would have been illegal to eliminate Macombs Dam Park without providing more new parkland to replace it.


More on the switch

The city's assessor, deMause reports, wrote a memo titled "Estimated Market Value for Proposed Yankee Stadium," that cited land values in the Bronx "growing by leaps and bounds," reaching $32.50 a square foot.

Twelve days later, a new paragraph cited comparables in Harlem, where "land sales north of 100 Street in Manhattan range from $200 to $323 per square foot."

deMause writes:
The "major revitalization" of Harlem over the past five years "has also spread across the river to the South Bronx," Kellman's memo now asserted, without explanation of why it concluded that Manhattan sale prices were considered a better means of valuing Bronx land than Bronx sale prices.

Beyond that, there's no mention in the Daily News, the Voice, or the memos of the astonishing inclusion of a vacant lot in Alphabet City as another comparable.

While deMause acknowledges that all the evidence is circumstantial, some is pretty juicy:
This past July, mayoral press aide Andrew Brent e-mailed a proposed statement to others in City Hall that concluded that the $204 million appraisal had been "made at the urging of EDC to satisfy the underwriters of the tax-exempt bonds that were to be used to finance the stadiums." Finance Department press officer Owen Stone e-mailed back, "I think you should skip that last sentence" about satisfying the underwriters, and suggested a more neutral replacement.

What next?

If the city cooked the books, the IRS could conduct an audit--and strip the bonds of their tax-exempt status. (Is there political juice for that?)

deMause adds:
And if nothing else, this should make for some fireworks when the IDA considers the Yanks' request for $259 million in new tax-exempt bonds -- now slated for a public hearing on January 15 at 10 am at 110 William Street.

That public hearing also involved $82.3 million in tax-free financing for the New York Mets. It was announced the other day via an ad on page 55 of the New York Post--and noticed by subsidy watchdogs Good Jobs New York.

Comments

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…

Former ESDC CEO Lago returns to NYC to head City Planning Commission

Carl Weisbrod, Mayor Bill de Blasio's City Planning Commission Chairman and Director of the Department of City Planning, is resigning,

And he's being replaced by Marisa Lago, currently a federal official, but who Atlantic Yards-ologists remember as the short-term Empire State Development Corporation CEO who, in an impolitic but candid 2009 statement, acknowledged that the project would take "decades."

Still, Lago not long after that played the good soldier at a May 2009 Senate oversight hearing, justifying changes in the project but claiming the public benefits remained the same.

By returning to City Planning, Lago will join former ESDC General Counsel Anita Laremont, who after retiring from the state (and taking a pension) got the job with the city.

Back at planning

Lago, a lawyer, in 1983 began work as an aide to City Planning Chairman Herb Sturz, and later served as the General Counsel to the president of the NYC Economic Development Corporation, Weisbrod himself.