Tuesday, May 19, 2009

Looking back at that IRS letter: did ESDC stretch the truth about the project timetable?

(This is one in an irregular series of articles about issues that a State Senate committee might address when it holds a hearing on Atlantic Yards.)

So, if Empire State Development Corporation (ESDC) CEO Marisa Lago thinks Atlantic Yards would take "decades," as she said in April, when did she and other ESDC officials come to that unsurprising conclusion?

Because the ESDC said something very different last year to the Internal Revenue Service (IRS) when it was lobbying to get an exemption for Atlantic Yards as the IRS planned to tighten rules regarding tax-exempt bonds.

Longstanding doubts

Keep in mind that project supporters like Assemblyman Roger Green and Partnership for NYC's Kathryn Wylde in 2005 and 2006 projected decades-long delays. Then the project was approved in December 2006 with an announced ten-year timeframe. In May 2007, Rob Lane of the Regional Plan Association suggested AY could take many, many years.

In September 2007, long before the IRS letter, the ESDC signed a State Funding Agreement that imposes penalties only six years after the exercise of eminent domain for arena delays and 12 years for delays in Phase 1, with no deadline for Phase 2. The implication was that a ten-year time frame was unlikely.

Lago was named to the ESDC last August.

May 2008 IRS letter

As I wrote last June, in a May 5, 2008 letter to the IRS and U.S. Treasury Department, the New York City Industrial Development Authority and the ESDC cited the discredited and chimerical decade-long timetable in arguing that the PILOTs (payments in lieu of taxes) plan for arena financing should stand.

Part of the argument was that Atlantic Yards had already proceeded significantly. But no construction had begun--no construction has begun, a year later--and a realistic timetable would have acknowledged the project was much farther away from its completion date.

Official claim

The letter stated:
In order to illustrate the substantial progress that has been made with the Project prior to the issuance of the Proposed Regulations, we have provided the chronology of events set forth below. The Project commenced in 2003; the Arena is anticipated to be completed in 2010, and the balance of the Project is expected to be built over the next decade.

The claim that the arena would be completed in 2010 was doubtful then, and the developer's current estimate of 2011 is equally dubious.

The claim that "the balance of the project" would be "built over the next decade" was and remains extremely unlikely, given the loose deadlines already established, not to mention the continually shifting projections from the developer.
Did the ESDC ever believe it?

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