Saturday, March 07, 2009

At another Assembly hearing on the Yankees, PILOTs, taxes, ticket prices, and animosity

To the New York Times, the main event at a public hearing on Yankee Stadium yesterday was not the documents submitted (or withheld) but the continued animosity between team president Randy Levine and Assemblyman Richard Brodsky, chair of the Corporations, a Westchester Democrat. (Newsday also focused on the clash.)

To Bloomberg News, the lead was Levine's (predictable) opposition to a proposed state law that would require that 7 percent of tickets sold to a sporting event be "affordable" a long as the facilities had received state or local benefits.

But to Atlantic Yards watchers, the hearing, which attracted a far sparser crowd to 250 Broadway than another held in January, was intriguing because of unresolved questions regarding the tax assessment of the Yankee Stadium property and whether PILOTs (payments in lieu of taxes)--the strategy to pay off construction bonds--are a subsidy.

Tax assessment

Brodsky, who has said at a Congressional hearing he thinks the city used irregular procedures in assessing the site--and there is, indeed, evidence--pressed Levine about the assessment but didn't get too far.

Was Levine aware of concerns that the level of PILOTs would be insufficient to pay bondholders if the initial assessed value of the land had become official policy?

Levine reminded Brodsky that they sat together last October at the hearing called by Rep. Dennis Kucinich, and that New York City Commissioner of Finance Martha Stark had testified that the process was done appropriately. "What the Yankees did was provide construction information, which is a component of how they do the assessment," Levine said.

Brodsky re-asked the question.

"I’m not aware of any effort" by the Yankees to do anything that was other than appropriate and routine, Levine responded.

Brodsky asked again.

Levine said the Yankees understood that assessment had to support a PILOT, that information was submitted, and that Department of Finance had to make a decision on the on the merits.

"I wasn’t involved in that decision," Levine said. "[Stark's] testified. You should ask her. That’s what happened. She was the decision-maker… who’s already answered all your questions."

Was there a subsidy?

Assemblyman Brian Kavanagh argued for the ticket-pricing bill, noting that "certainly there’s very substantial public benefit going to this project."

Levine responded, "I don’t believe there’s any subsidy in the construction of the stadium."

"I didn’t call it a subsidy," Kavanagh responded. "There does seem to be a public benefit in the form of tax benefits. That’s not really disputable. You’d prefer [tax-exempt financing] to taxable financing. Is that fair?"

"Yes," replied Levine.

Are PILOTs a full subsidy?

Brodsky contends that the public is paying for the stadium because the tax-exempt bonds are paid off by PILOTs. The Independent Budget Office (IBO), however, considers only the break on interest rates the subsidy.

"I’m going to read language from the IRS letter," Brodsky said to Levine, referring to a letter in which city officials wrote, "The city has determined to use its property taxes to finance the construction and operation of the stadium."

"Is that accurate," he asked.

"I don’t know, I’m not a bond lawyer," Levine demurred. "I’ve testified, over and over, in my opinion, the New York Yankees are paying every cent of construction of the new Yankee Stadium." He noted that the Yankees do not pay property taxes and no new stadium would have been built without the opportunity to use PILOTs.

Only the Yankees have responsibility to pay for the bonds, he noted, adding that even the IBO believes there is no city subsidy.

"You don’t think PILOTs are property taxes," Brodsky asked.

"I’m not a tax lawyer," Levine responded. "I’m answering the question the way I want to answer it."

Brodsky pointed to a transcript from the previous hearing, where city official Seth Pinsky agreed that city property taxes were at issue--whereupon Levine's counsel pointed to another page of the transcript where Pinsky pointed out there was no net loss in property taxes.

Brodsky reminded Levine that, when Pinsky was asked if the city was using its property taxes to finance the stadium, he responded, "Absolutely."

"Mr. Pinsky can speak better for the city than I am," Levine responded.

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