Was the valuation of the new Yankee Stadium "gamed" so that the foregone taxes exceeded the expected bond payments, thus allowing a PILOT (payment in lieu of taxes) financing deal?
That's the subtext of the inquiry launched yesterday by the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee, which in March 2007 and October 2007 held hearings regarding tax-exempt financing for sports facilities.
And should the subcommittee, chaired by Rep. Dennis Kucinich (D-OH), find the procedures sketchy, that could cast doubt on similar financing plans for Atlantic Yards arena and the new Mets stadium.
In yesterday's letter, Kucinich was not questioning the use of fixed PILOTs, which would be forbidden under proposed federal regulations, just whether the city and others are cooking the numbers to make a deal with fixed PILOTs work. (Here's coverage from Reuters.)
Drilling down
The subcommittee is investigating the accuracy of representations made to federal agencies and bond investors about the property value of the land and buildings in the stadium construction project.
Kucinich yesterday sent letters to the New York Yankees, the New York City Department of Finance, New York City Economic Development Corporation, Internal Revenue Service, and National Park Service, asking for "all documents relating to any assessment, appraisal, or any other valuation, estimated or final, of the new Yankee Stadium and the land on which the stadium is being built, including the methodologies by which these valuations were calculated."
Fishy numbers?
As I wrote June 27, the city's Independent Budget Office (IBO) certainly thought the annual Yankees PILOT might exceed the foregone taxes and thus render the deal questionable. However, according to a 5/8/08 letter to the IRS and Treasury Department from city and state agencies, the estimated tax for the Yankees would be $62.5 million, while the PILOTs would be only $56.7 million.
But where did those numbers come from? The source for that estimate is not a city agency but a report from Moody's Investors Service, a company that offers credit rating and risk analysis.
No estimate for the Atlantic Yards arena PILOTs was given. However the IBO estimate of $11 million in foregone property taxes for Madison Square Garden would be far less than the estimated $48 million annual payment for $800 million in tax-exempt bonds for the arena. Develop Don't Destroy Brooklyn has raised this point with the IRS and Treasury Department.
At stake for developer Forest City Ratner is a savings of perhaps $165 million compared with taxable bonds. Federal taxpayers bear most of the burden; hence, the backing of the plan by the city and state.
Several levels of concern
Kucinich may personally oppose tax-exempt financing, but eliminating it is politically unlikely. Still, both Congress and federal agencies can on several levels make things difficult for backers of tax-exempt bonds for sports facilities.
First, Kucinich has questioned whether the PILOT deals for the Yankees and Mets should have gone through. In June, he published a letter questioning whether the IRS’s approval of the teams’ financing arrangements was permissible, let alone compelled, as the IRS Chief Counsel had testified.
He asked for clarification of testimony on the issue before the Treasury Department finalizes new rules that would permit a version of such financing.
New rules opposed by city and state
Second, even though Kucinich has questioned the proposed rules, they would remove what the IRS Chief Counsel called a "loophole" and make it impossible to issued fixed PILOTs, but rather make sure they fluctuate, as do regular property taxes.
The city and state are lobbying to make sure that additional bonds for the Yankees and Mets stadiums, as well as bonds for the Atlantic Yards arena, are grandfathered in under the more lenient standard, which allowed fixed PILOTs. As Neil deMause explained on Field of Schemes, bond buyers look askance at PILOT payments pegged to floating annual property assessments, since they "really really don't like uncertainty in their bond payments."
Holding the city and state to the PILOTs deal
Third, as noted above, Kucinich in the letters issued yesterday did not question the concept of fixed PILOTs, just whether the numbers behind them are fishy.
At the Assembly hearing
There are several reasons to question the numbers, including the IBO report and discussion at a State Assembly hearing July 2. At the hearing, Assemblyman Richard Brodsky grilled Seth Pinsky, head of the New York City Industrial Development Authority, about the assessment for the new Yankee Stadium.
Pinsky said he didn’t know the methodology, but said the IRS had given its blessing.
“I believe the IRS accepted the numbers given without examination,” Brodsky responded.
Pinsky said that the bond buyers and rating agencies and associated law firms had vouched for the numbers.
“We’re going to take a much harder look at that,” Brodsky said.
It looks like Congress will be part of that "much harder look."
Showing posts with label Richard Brodsky. Show all posts
Showing posts with label Richard Brodsky. Show all posts
Saturday, July 26, 2008
Thursday, July 03, 2008
At Assembly hearing, Brodsky questions Yankees’ deal; more AY subsidies hinted
[Note: I was unable to attend this hearing, but instead relied on an audiotape that captured most of the session.]
At a joint hearing yesterday of several state Assembly committees regarding tax-exempt bond financing for the New York Yankees, New York City Economic Development Corporation President Seth Pinsky faced forceful scrutiny from Westchester Assemblyman Richard Brodsky, a vocal foe of “Soviet-style bureaucracies,” his term for the unelected city and state authorities and agencies that have steered such deals.
Though Brodsky said he still hadn’t made up his mind about the legitimacy of the Yankees’ request for additional tax-exempt bonds—under what the Internal Revenue Service describes as a “loophole”--he did offer this statement at the end of the three-hour hearing: “I dislike public benefits for private parties when the public at large is being starved in so many ways.” And if that’s a description of sports facility finance, he added, “so be it.”
Brodsky chairs the Assembly Standing Committee on Corporations, Authorities and Commissions, which held the hearing with three other committees.
(Photo by Steve Soblick)
More AY subsidies
The Atlantic Yards arena and the New York Mets stadium both were discussed only glancingly, but yes, there were hints of the additional subsidy request Forest City Ratner is expected to make.
Pinsky, who also heads the New York City Industrial Development Authority (NYC IDA), was asked by Assemblyman Brian Kavanagh, “Is it your understanding, from [FCR executive Andy] Zlotnick and others, for the purpose of financing Atlantic Yards, Forest City Ratner will be requesting additional assistance than what’s already been announced?”
The Memorandum of Understanding signed in 2005, Pinksy responded, “assumed tax-exempt financing, provided through the state.” (So did the General Project Plan approved in 2006.) “In terms of additional assistance, we all know that we’re operating in a difficult economic and financial environment. The Nets—Forest City Ratner has made clear to us that that’s having impacts on their project. They have not made specific requests for additional financial assistance.”
After the hearing, he told reporters, “I believe that this project is going to happen. It’s a very important project for Brooklyn.”
Was AY approval premature?
Brooklyn Assemblyman Jim Brennan, who chairs the Assembly Committee on Cities, noted that the tax-exempt financing for the Yankees was approved in 2006, then was immediately followed by an Internal Revenue Service statement that the rules would be modified.
Pinsky confirmed that that occurred in October 2006.
Brennan raised a question about the December 2006 approval of Atlantic Yards by the Public Authorities Control Board (PACB), two weeks after approval by the Empire State Development Corporation (ESDC). The PACB evaluated the soundness of the state’s $100 million subsidy for Atlantic Yards
“So when the PACB approved the Nets project,” Brennan noted, the revised regulation had already been proposed by IRS and was then effectively implemented, because nobody could get any financing when it was on the table. So the PACB’s approval, he said, making the point again, occurred after a regulation was on the table that would effectively shut out tax-exempt financing for the arena
Yes, said Pinsky, as long as Brennan’s dates were correct.
Brennan implicitly suggested that that the PACB had acted without considering the full viability of the project.
Construction workers pack house
The hearing, at 250 Broadway in Lower Manhattan, was packed with construction workers who came on at least four buses more than 45 minutes before the 10 am start time, thus crowding out some others who didn’t expect a full house. The hearing room holds fewer than 150 people.
(Photo by Michael D.D. White)
Brodsky and Pinsky jousted repeatedly over whether the latter’s answers were responsive, with the Assemblyman—a generation older but a fellow Harvard Law School graduate—scornfully suggesting that Pinsky’s answers deserved a failing grade. Pinsky at one point declared that his agency had “spent over 100 man-hours over the past week or two weeks trying to answer your requests.” He was the only witness at the hearing.
Would Yankees leave the Bronx?
A key question at the hearing was the legitimacy of the threat by the Yankees to leave the South Bronx. Neil deMause has the blow-by-blow in his Village Voice report in which Pinsky admitted he doesn’t recall who at the IDA was told the Yankees would leave and that city officials trusted the Yankees’ claim they could not, or would not, fund the stadium using taxable debt. (More from deMause on his Field of Schemes site.)
Unmentioned was whether the Yankees—the Bronx Bombers—could move and not suffer diminished franchise value.
Pinsky offered three other possible outcomes: the Yankees would not have built a stadium at all; they would have would have built a stadium “substantially less” than achieved, “which would’ve created fewer job, fewer benefits;” or they would’ve requested additional subsidies from the city and state.
The tax-exempt bonds, Pinsky said, were worth $20 million a year over 30 years to the Yankees. Brennan questioned whether, given billions of dollars in revenue, the difference was "so essential that they will walk away from the city of New York.”
While Pinksy suggested that, under an alternate scenario, the additional direct subsidy from the city and state might have been $100 million, he didn’t quantify the reduction in revenues and jobs that would result from a smaller, less fancy stadium.
Indeed, Brodsky noted that, because the stadium would produce relatively few jobs, NYC IDA officials had to get a mayoral waiver to move the project along. (He said there’d be 140 permanent jobs; the Yankees now say 1000. Pinsky said figures in Juan Gonzalez's New York Daily News column yesterday were premature.)
What about ticket prices?
Kavanagh, who has proposed a bill to cap ticket prices at the stadium, wanted an explanation of why building the most expensive stadium in the history of baseball, even if it means the most expensive tickets, is a positive thing. (Here's more coverage in Metro, amNY/Newsday, and the New York Sun.)
Pinksy ticked off five reasons:
--“We’re getting off our hands an obsolete stadium.”
--“There will be 30 acres of new parkland, six more than exist today. (He pointed out that the Assembly had approved the alienation of parkland, but left out the major delays, which Assemblyman Ruben Diaz noted.)
--A new Metro-North station.
--“3000 new parking spaces, which will “take cars off the streets.” (Not sure how much that helps.)
--"The Yankees are making a $1 billion-plus investment “in an area that hasn’t seen that kind of investment.” (He left out that the Yankees have a strong incentive to stay in the Bronx.)
Kavanagh suggested that the Yankees are spending more than necessary to build the stadium. Pinsky suggested that the ticket prices are set by the market—leaving out the possibility that additional bells and whistles might help sell luxury boxes.
Pinsky suggested that elected officials wouldn’t try to regulate the cost of products made by IBM, were it gaining state assistance. (It was an example of how the seemingly “public” nature of local sports teams both generates support and expectations.)
Kavanagh tried to tease out a contradiction, pointing out that Pinsky had testified that the more the resulting economic activity, the more justification for the subsidy. So why, he asked, wouldn’t it be better to have higher ticket prices?
Pinsky responded that it was a question of balance.
Kavanagh asked if the affordability of tickets was a factor in the IDA’s determination.
Pinsky said "the affordability of tickets [to fans] is something we hope for,” but it was not a condition. He noted that “the public is not subsidizing the stadium.”
“I did not say subsidizing; it’s providing financial assistance,” Kavanagh replied.
(The "blended average ticket price" for the Nets also would skyrocket; the team has so far put only luxury suites on sale for the yet-unbuilt arena.)
How much do Yankees want?
The Yankees, who have benefited from $943 million in tax-exempt bonds, with savings of nearly $200 million, would like to issue perhaps $350 million more, and the city and state are asking the IRS and the Treasury Department, which have proposed tightening federal regulations, to grandfather in the request.
Brodsky asked Pinsky how much the Yankees have requested.
Pinsky said the team “asked for a placeholder” and that the NYC IDA won’t review the draft application until the “IRS says this is a possibility, which they have not done.”
Brodsky asked why the draft document forwarded to his committee contained redactions.
Pinsky said, “We believe it is competitive information.”
Brodsky pointed out that Yankees executive Lonn Trost had already told Forbes--actually an AP story—that “cost overruns included $150 million in enhancements such as the giant video screen, $138 million in food and beverage costs not included in the original estimate and $50 million from delays due to a lawsuit by community groups that sought to halt construction of the stadium.”
Pinsky said that the Yankees “don’t want to alert the potential bidders what they have in their budget for these items.”
Brodsky said he’d accept a lesser level of detail. Pinsky said he’d look into it.
“Since it’s in the public domain, I don’t see any reason not to provide it,” Brodsky said.
(Does this mean that Forest City Ratner will ask for more tax-exempt bonds because of delays posed by lawsuits?)
The Zimbalist defense
Long Island Assemblyman Charles Lavine pointed out that some economists say the “cheap seats are fewer and much farther” away than in old stadiums.
Pinsky said that he hadn’t seen such studies, but “some of the leading sports economists, who looked at this,” said that the city and state investment was “considerably lower” than in other cities. (I think he was pointing to Andrew Zimbalist. Then again, TV and other revenues in New York are higher.)
Lavine asked how many projects NYC IDA rejects each year.
Pinsky said he’d have to check.
Would assessed value exceed PILOTs?
The financing plan for the sports facilities is based on PILOTs (payments in lieu of taxes), which must be keyed to the foregone property taxes on tax-exempt land. Bonds can only be sold if the payments are fixed; the proposed IRS rule aims to ensure that the PILOTs are keyed to actual property taxes, which fluctuate. However, the bond market requires the predictability of fixed payments; hence the city/state lobbying to get the Nets arena, and the additional bonds for the new stadium, grandfathered in.
But how could the value of the land exceed the significant ($57.6 million) annual PILOT for the Yankees?
Who applied to the IRS in 2006 for a private letter ruling endorsing the PILOTs plan, asked Brodsky.
The IDA, said Pinsky.
“The city asserted an assessed value at $1.229 billion,” Brodsky noted. “Did that figure include capitalized interest?”
Pinsky said he wasn’t aware of the details, but the numbers were determined in connection with the city Department of Finance’s normal assessment.
In determining such assessments, Brodsky asked, is it common practice to include capitalized interest and soft costs (architecture, legal, etc.)?
Pinsky said he didn’t know the methodology, but the IRS had given its blessing.
“I believe the IRS accepted the numbers given without examination,” Brodsky responded.
Pinsky said that the bond buyers and rating agencies and associated law firms had vouched for the numbers.
“We’re going to take a much harder look at that,” Brodsky said.
The role of elected officials
In representing the city’s position to the IRS, “what elected officials have been involved in determining whether your position is correct?” Brodsky asked Pinsky.
Pinsky drily said he assumed Brodsky was referring to his “Soviet-style” quote.
“I’ll get to the Soviet reference in good time,” Brodsky responded.
Pinsky said there were hearings and reviews at all levels of government, and the IDA board is made up of elected officials or their designees.
“Who’d you have in civil procedure?” Brodsky asked, making a law school reference.
“Martha Minow,” Pinsky replied.
“You’d have gotten an F,” Brodsky continued, playing Professor Kingsley on the fly.
Which elected officials were involved in the decision to advise the IRS, Brodsky continued.
Pinsky said that his agency had coordinated with the mayor’s office, with the Empire State Development Corporation, “which reports to the governor.”
“ESDC does not report to the governor,” Brodsky said. (Well, it is controlled by the governor.)
Pinksy ultimately acknowledged that the mayor’s office, the ESDC, and the state’s Washington (lobbying) office, had been involved.
Brodsky suggested that the city’s executive is making policy to the exclusion of legislators.
“Notwithstanding you’re having done better in civil procedure than me,” Pinsky riposted, “I don’t understand that asking for an option” to get the bonds was out of order.
“If there’s something below an F, you’re going to get it for that,” snapped Brodsky. He suggested that issues like public authority reform, the Jets stadium, and congestion pricing were driven by unaccountable executives.
Pinsky was conciliatory, saying that he believes Brodsky is “coming from a position of genuine conviction,” but that asking the IRS for relief from a regulation “simply gives the mayor an option” which would then have to go through a public hearing and get approval by the IDA board. Moreover, the diversion of PILOT revenue would require a City Council vote.
(Does that mean there’d be a vote for AY PILOTs?)
No more help for Yankees?
If the IRS doesn’t change its regulations, would the city help the Yankees through additional capital contributions or other subsidies?
“I would be surprised if that were to occur,” Pinsky said.
If the IRS says no and the Yankees open their wallets, that might answer the question of whether tax-exempt bonds were essential.
Replacing real estate taxes
Brennan asked if the city could authorize increasingly more tax-exempt debt, given that the cost is mainly to federal taxpayers.
“The PILOT is serving as debt service for a private investment,” Pinsky said, quickly correcting his phrasing to “for a project that’s backed by a private entity.” The reason why tax-exempt bonds backed by PILOTs “make sense” here and perhaps in similar places is that the city never received real estate taxes from the original stadium.
The same argument is made regarding the Atlantic Yards arena, some of which would be on land that is currently taxed. The no-property-tax status was supposed to raise the value of the land, however.
Summing up
Brodsky, as the hearing wound down, referred to the Yankees’ threat to leave the city. “The extent to which that threat is valid is at the heart of the legal position the city and IDA have taken,” he said. “If it was just a negotiation, the city folded to a certain kind of political pressure. I don’t know what it is yet, because we don’t have the documents.”
Moreover, he continued, decisions were made solely by the mayor and his surrogates. “The analyses of the benefits and costs remain obscure, partially because you guys have not produced the documents that would clarify them. The requests for additional bonding is similarly obscure,” he said. “The mayor’s and IDA’s failure to consider the issues raised by Mr. Kavanagh strikes me as a fundamental breakdown in the public policy analysis.”
He added that the Yankees will seek electricity discounts, even as other public projects, notably the mass transit system, need capital. So that raises “fundamental political concerns” regarding whether public processes need to change. The single strongest argument, Brodsky said, “is the one you haven’t made, or hardly made: the federal government takes more money from us than they give back.”
“Everybody who rides a subway train needs to know the priorities for capital investment,” Brodsky said. “Everyone who needs a new school…”
“May I respond?” Pinsky asked.
“Knock yourself out,” Brodsky responded.
Pinsky forcefully stated that the city had not folded to political pressure, that the administration had taken politically unpopular stands. He repeated that no other business was willing to invest as much in the South Bronx. He pointed out that the Assembly had recently bailed out a state racetrack and suggested it was no less elitist than Yankee Stadium.
He criticized Brodsky’s use of the term “Soviet-style,” pointing to public hearings and opinions from counsel and bond insurers. “This has nothing to do with the MTA. We can help the Yankees and we can help the MTA.…The best way to help the MTA is to make sure the economy and the city grows.” And, he pointed out, Brodsky and his colleagues killed congestion pricing. As Pinsky pointed proudly to the city’s record, the crowd for the first time erupted in applause.
Brodsky proclaimed “a great personal admiration” for Bloomberg but said he remained at odds regarding the “Soviet-style bureaucracies… those are the state authorities,” such as ESDC and MTA, inaccessible, controlled largely by executives. “The mayor is the major obstacle to reforming public authorities, because he killed the bill in the last week of the session.”
“We voted to demap parkland,” Brodsky said of the Assembly’s Yankee Stadium vote. “I don’t think the Legislature ever took a position on funding a facility, or facilities, of the kind I just described.... And in the end, although you’re smart and an effective advocate, no one elected you. And the fight we’re in is to turn these type of decisions back to people who are elected.”
Not too late?
Bettina Damiani of Good Jobs New York, which has witheringly scrutinized the Yankees deal, told me afterward that there were two reasons the hearing was important: "First, this was the only time there was any real discussion about job figures and the (lack of) accountability measures to ensure jobs were created. (The gist here is that there is no written guarantee that any a specific number of jobs were to be created, NONE). Bronx elected officials need to be asked why this hearing wasn’t held three years ago."
She added: "Second, the Yankee project should be the canary in the coal mine for local elected officials with proposed projects in their community. Unless local elected officials start to educate themselves on the impacts on major economic development projects, there won’t be any way for the community or the city to hold private interests accountable."
Still, as far as I can tell, the hearing didn't answer the question Good Jobs New York posed regarding apparently contradictory city postures on tax-exempt bonds.
At a joint hearing yesterday of several state Assembly committees regarding tax-exempt bond financing for the New York Yankees, New York City Economic Development Corporation President Seth Pinsky faced forceful scrutiny from Westchester Assemblyman Richard Brodsky, a vocal foe of “Soviet-style bureaucracies,” his term for the unelected city and state authorities and agencies that have steered such deals.
Though Brodsky said he still hadn’t made up his mind about the legitimacy of the Yankees’ request for additional tax-exempt bonds—under what the Internal Revenue Service describes as a “loophole”--he did offer this statement at the end of the three-hour hearing: “I dislike public benefits for private parties when the public at large is being starved in so many ways.” And if that’s a description of sports facility finance, he added, “so be it.”Brodsky chairs the Assembly Standing Committee on Corporations, Authorities and Commissions, which held the hearing with three other committees.
(Photo by Steve Soblick)
More AY subsidies
The Atlantic Yards arena and the New York Mets stadium both were discussed only glancingly, but yes, there were hints of the additional subsidy request Forest City Ratner is expected to make.
Pinsky, who also heads the New York City Industrial Development Authority (NYC IDA), was asked by Assemblyman Brian Kavanagh, “Is it your understanding, from [FCR executive Andy] Zlotnick and others, for the purpose of financing Atlantic Yards, Forest City Ratner will be requesting additional assistance than what’s already been announced?”
The Memorandum of Understanding signed in 2005, Pinksy responded, “assumed tax-exempt financing, provided through the state.” (So did the General Project Plan approved in 2006.) “In terms of additional assistance, we all know that we’re operating in a difficult economic and financial environment. The Nets—Forest City Ratner has made clear to us that that’s having impacts on their project. They have not made specific requests for additional financial assistance.”
After the hearing, he told reporters, “I believe that this project is going to happen. It’s a very important project for Brooklyn.”
Was AY approval premature?
Brooklyn Assemblyman Jim Brennan, who chairs the Assembly Committee on Cities, noted that the tax-exempt financing for the Yankees was approved in 2006, then was immediately followed by an Internal Revenue Service statement that the rules would be modified.
Pinsky confirmed that that occurred in October 2006.
Brennan raised a question about the December 2006 approval of Atlantic Yards by the Public Authorities Control Board (PACB), two weeks after approval by the Empire State Development Corporation (ESDC). The PACB evaluated the soundness of the state’s $100 million subsidy for Atlantic Yards
“So when the PACB approved the Nets project,” Brennan noted, the revised regulation had already been proposed by IRS and was then effectively implemented, because nobody could get any financing when it was on the table. So the PACB’s approval, he said, making the point again, occurred after a regulation was on the table that would effectively shut out tax-exempt financing for the arena
Yes, said Pinsky, as long as Brennan’s dates were correct.
Brennan implicitly suggested that that the PACB had acted without considering the full viability of the project.
Construction workers pack house
The hearing, at 250 Broadway in Lower Manhattan, was packed with construction workers who came on at least four buses more than 45 minutes before the 10 am start time, thus crowding out some others who didn’t expect a full house. The hearing room holds fewer than 150 people.(Photo by Michael D.D. White)
Brodsky and Pinsky jousted repeatedly over whether the latter’s answers were responsive, with the Assemblyman—a generation older but a fellow Harvard Law School graduate—scornfully suggesting that Pinsky’s answers deserved a failing grade. Pinsky at one point declared that his agency had “spent over 100 man-hours over the past week or two weeks trying to answer your requests.” He was the only witness at the hearing.
Would Yankees leave the Bronx?
A key question at the hearing was the legitimacy of the threat by the Yankees to leave the South Bronx. Neil deMause has the blow-by-blow in his Village Voice report in which Pinsky admitted he doesn’t recall who at the IDA was told the Yankees would leave and that city officials trusted the Yankees’ claim they could not, or would not, fund the stadium using taxable debt. (More from deMause on his Field of Schemes site.)
Unmentioned was whether the Yankees—the Bronx Bombers—could move and not suffer diminished franchise value.
Pinsky offered three other possible outcomes: the Yankees would not have built a stadium at all; they would have would have built a stadium “substantially less” than achieved, “which would’ve created fewer job, fewer benefits;” or they would’ve requested additional subsidies from the city and state.
The tax-exempt bonds, Pinsky said, were worth $20 million a year over 30 years to the Yankees. Brennan questioned whether, given billions of dollars in revenue, the difference was "so essential that they will walk away from the city of New York.”
While Pinksy suggested that, under an alternate scenario, the additional direct subsidy from the city and state might have been $100 million, he didn’t quantify the reduction in revenues and jobs that would result from a smaller, less fancy stadium.
Indeed, Brodsky noted that, because the stadium would produce relatively few jobs, NYC IDA officials had to get a mayoral waiver to move the project along. (He said there’d be 140 permanent jobs; the Yankees now say 1000. Pinsky said figures in Juan Gonzalez's New York Daily News column yesterday were premature.)
What about ticket prices?
Kavanagh, who has proposed a bill to cap ticket prices at the stadium, wanted an explanation of why building the most expensive stadium in the history of baseball, even if it means the most expensive tickets, is a positive thing. (Here's more coverage in Metro, amNY/Newsday, and the New York Sun.)
Pinksy ticked off five reasons:
--“We’re getting off our hands an obsolete stadium.”
--“There will be 30 acres of new parkland, six more than exist today. (He pointed out that the Assembly had approved the alienation of parkland, but left out the major delays, which Assemblyman Ruben Diaz noted.)
--A new Metro-North station.
--“3000 new parking spaces, which will “take cars off the streets.” (Not sure how much that helps.)
--"The Yankees are making a $1 billion-plus investment “in an area that hasn’t seen that kind of investment.” (He left out that the Yankees have a strong incentive to stay in the Bronx.)
Kavanagh suggested that the Yankees are spending more than necessary to build the stadium. Pinsky suggested that the ticket prices are set by the market—leaving out the possibility that additional bells and whistles might help sell luxury boxes.
Pinsky suggested that elected officials wouldn’t try to regulate the cost of products made by IBM, were it gaining state assistance. (It was an example of how the seemingly “public” nature of local sports teams both generates support and expectations.)
Kavanagh tried to tease out a contradiction, pointing out that Pinsky had testified that the more the resulting economic activity, the more justification for the subsidy. So why, he asked, wouldn’t it be better to have higher ticket prices?
Pinsky responded that it was a question of balance.
Kavanagh asked if the affordability of tickets was a factor in the IDA’s determination.
Pinsky said "the affordability of tickets [to fans] is something we hope for,” but it was not a condition. He noted that “the public is not subsidizing the stadium.”
“I did not say subsidizing; it’s providing financial assistance,” Kavanagh replied.
(The "blended average ticket price" for the Nets also would skyrocket; the team has so far put only luxury suites on sale for the yet-unbuilt arena.)
How much do Yankees want?
The Yankees, who have benefited from $943 million in tax-exempt bonds, with savings of nearly $200 million, would like to issue perhaps $350 million more, and the city and state are asking the IRS and the Treasury Department, which have proposed tightening federal regulations, to grandfather in the request.
Brodsky asked Pinsky how much the Yankees have requested.
Pinsky said the team “asked for a placeholder” and that the NYC IDA won’t review the draft application until the “IRS says this is a possibility, which they have not done.”
Brodsky asked why the draft document forwarded to his committee contained redactions.
Pinsky said, “We believe it is competitive information.”
Brodsky pointed out that Yankees executive Lonn Trost had already told Forbes--actually an AP story—that “cost overruns included $150 million in enhancements such as the giant video screen, $138 million in food and beverage costs not included in the original estimate and $50 million from delays due to a lawsuit by community groups that sought to halt construction of the stadium.”
Pinsky said that the Yankees “don’t want to alert the potential bidders what they have in their budget for these items.”
Brodsky said he’d accept a lesser level of detail. Pinsky said he’d look into it.
“Since it’s in the public domain, I don’t see any reason not to provide it,” Brodsky said.
(Does this mean that Forest City Ratner will ask for more tax-exempt bonds because of delays posed by lawsuits?)
The Zimbalist defense
Long Island Assemblyman Charles Lavine pointed out that some economists say the “cheap seats are fewer and much farther” away than in old stadiums.
Pinsky said that he hadn’t seen such studies, but “some of the leading sports economists, who looked at this,” said that the city and state investment was “considerably lower” than in other cities. (I think he was pointing to Andrew Zimbalist. Then again, TV and other revenues in New York are higher.)
Lavine asked how many projects NYC IDA rejects each year.
Pinsky said he’d have to check.
Would assessed value exceed PILOTs?
The financing plan for the sports facilities is based on PILOTs (payments in lieu of taxes), which must be keyed to the foregone property taxes on tax-exempt land. Bonds can only be sold if the payments are fixed; the proposed IRS rule aims to ensure that the PILOTs are keyed to actual property taxes, which fluctuate. However, the bond market requires the predictability of fixed payments; hence the city/state lobbying to get the Nets arena, and the additional bonds for the new stadium, grandfathered in.
But how could the value of the land exceed the significant ($57.6 million) annual PILOT for the Yankees?
Who applied to the IRS in 2006 for a private letter ruling endorsing the PILOTs plan, asked Brodsky.
The IDA, said Pinsky.
“The city asserted an assessed value at $1.229 billion,” Brodsky noted. “Did that figure include capitalized interest?”
Pinsky said he wasn’t aware of the details, but the numbers were determined in connection with the city Department of Finance’s normal assessment.
In determining such assessments, Brodsky asked, is it common practice to include capitalized interest and soft costs (architecture, legal, etc.)?
Pinsky said he didn’t know the methodology, but the IRS had given its blessing.
“I believe the IRS accepted the numbers given without examination,” Brodsky responded.
Pinsky said that the bond buyers and rating agencies and associated law firms had vouched for the numbers.
“We’re going to take a much harder look at that,” Brodsky said.
The role of elected officials
In representing the city’s position to the IRS, “what elected officials have been involved in determining whether your position is correct?” Brodsky asked Pinsky.
Pinsky drily said he assumed Brodsky was referring to his “Soviet-style” quote.
“I’ll get to the Soviet reference in good time,” Brodsky responded.
Pinsky said there were hearings and reviews at all levels of government, and the IDA board is made up of elected officials or their designees.
“Who’d you have in civil procedure?” Brodsky asked, making a law school reference.
“Martha Minow,” Pinsky replied.
“You’d have gotten an F,” Brodsky continued, playing Professor Kingsley on the fly.
Which elected officials were involved in the decision to advise the IRS, Brodsky continued.
Pinsky said that his agency had coordinated with the mayor’s office, with the Empire State Development Corporation, “which reports to the governor.”
“ESDC does not report to the governor,” Brodsky said. (Well, it is controlled by the governor.)
Pinksy ultimately acknowledged that the mayor’s office, the ESDC, and the state’s Washington (lobbying) office, had been involved.
Brodsky suggested that the city’s executive is making policy to the exclusion of legislators.
“Notwithstanding you’re having done better in civil procedure than me,” Pinsky riposted, “I don’t understand that asking for an option” to get the bonds was out of order.
“If there’s something below an F, you’re going to get it for that,” snapped Brodsky. He suggested that issues like public authority reform, the Jets stadium, and congestion pricing were driven by unaccountable executives.
Pinsky was conciliatory, saying that he believes Brodsky is “coming from a position of genuine conviction,” but that asking the IRS for relief from a regulation “simply gives the mayor an option” which would then have to go through a public hearing and get approval by the IDA board. Moreover, the diversion of PILOT revenue would require a City Council vote.
(Does that mean there’d be a vote for AY PILOTs?)
No more help for Yankees?
If the IRS doesn’t change its regulations, would the city help the Yankees through additional capital contributions or other subsidies?
“I would be surprised if that were to occur,” Pinsky said.
If the IRS says no and the Yankees open their wallets, that might answer the question of whether tax-exempt bonds were essential.
Replacing real estate taxes
Brennan asked if the city could authorize increasingly more tax-exempt debt, given that the cost is mainly to federal taxpayers.
“The PILOT is serving as debt service for a private investment,” Pinsky said, quickly correcting his phrasing to “for a project that’s backed by a private entity.” The reason why tax-exempt bonds backed by PILOTs “make sense” here and perhaps in similar places is that the city never received real estate taxes from the original stadium.
The same argument is made regarding the Atlantic Yards arena, some of which would be on land that is currently taxed. The no-property-tax status was supposed to raise the value of the land, however.
Summing up
Brodsky, as the hearing wound down, referred to the Yankees’ threat to leave the city. “The extent to which that threat is valid is at the heart of the legal position the city and IDA have taken,” he said. “If it was just a negotiation, the city folded to a certain kind of political pressure. I don’t know what it is yet, because we don’t have the documents.”
Moreover, he continued, decisions were made solely by the mayor and his surrogates. “The analyses of the benefits and costs remain obscure, partially because you guys have not produced the documents that would clarify them. The requests for additional bonding is similarly obscure,” he said. “The mayor’s and IDA’s failure to consider the issues raised by Mr. Kavanagh strikes me as a fundamental breakdown in the public policy analysis.”
He added that the Yankees will seek electricity discounts, even as other public projects, notably the mass transit system, need capital. So that raises “fundamental political concerns” regarding whether public processes need to change. The single strongest argument, Brodsky said, “is the one you haven’t made, or hardly made: the federal government takes more money from us than they give back.”
“Everybody who rides a subway train needs to know the priorities for capital investment,” Brodsky said. “Everyone who needs a new school…”
“May I respond?” Pinsky asked.
“Knock yourself out,” Brodsky responded.
Pinsky forcefully stated that the city had not folded to political pressure, that the administration had taken politically unpopular stands. He repeated that no other business was willing to invest as much in the South Bronx. He pointed out that the Assembly had recently bailed out a state racetrack and suggested it was no less elitist than Yankee Stadium.
He criticized Brodsky’s use of the term “Soviet-style,” pointing to public hearings and opinions from counsel and bond insurers. “This has nothing to do with the MTA. We can help the Yankees and we can help the MTA.…The best way to help the MTA is to make sure the economy and the city grows.” And, he pointed out, Brodsky and his colleagues killed congestion pricing. As Pinsky pointed proudly to the city’s record, the crowd for the first time erupted in applause.
Brodsky proclaimed “a great personal admiration” for Bloomberg but said he remained at odds regarding the “Soviet-style bureaucracies… those are the state authorities,” such as ESDC and MTA, inaccessible, controlled largely by executives. “The mayor is the major obstacle to reforming public authorities, because he killed the bill in the last week of the session.”
“We voted to demap parkland,” Brodsky said of the Assembly’s Yankee Stadium vote. “I don’t think the Legislature ever took a position on funding a facility, or facilities, of the kind I just described.... And in the end, although you’re smart and an effective advocate, no one elected you. And the fight we’re in is to turn these type of decisions back to people who are elected.”
Not too late?
Bettina Damiani of Good Jobs New York, which has witheringly scrutinized the Yankees deal, told me afterward that there were two reasons the hearing was important: "First, this was the only time there was any real discussion about job figures and the (lack of) accountability measures to ensure jobs were created. (The gist here is that there is no written guarantee that any a specific number of jobs were to be created, NONE). Bronx elected officials need to be asked why this hearing wasn’t held three years ago."
She added: "Second, the Yankee project should be the canary in the coal mine for local elected officials with proposed projects in their community. Unless local elected officials start to educate themselves on the impacts on major economic development projects, there won’t be any way for the community or the city to hold private interests accountable."
Still, as far as I can tell, the hearing didn't answer the question Good Jobs New York posed regarding apparently contradictory city postures on tax-exempt bonds.
Tuesday, July 01, 2008
Some questions for the Assembly hearing tomorrow on Yankees' tax-exempt financing (and what about the Nets?)
On Wednesday morning, the Assembly Standing Committee on Corporations, Authorities and Commissions, chaired by Assemblyman Richard Brodsky, along with three other committees, will hold a joint hearing in Manhattan in order to look into "the request for increased public financing for construction of a new Yankee Stadium in New York City."
While a focus on the Yankees is understandable, an exclusive focus is curious, given that less than three weeks ago Brodsky issued a press release stating that the hearing would examine the New York City Industrial Development Authority's "practices and procedures for issuance of public debt with respect to sports facilities for the Yankees, Mets and Nets."
I asked Brodsky's office about the narrowing of focus; when I get a response I'll publish it.
Even if the hearing does not specifically address Forest City Ratner's expected request for $800 million in tax-exempt financing (though DDDB assumes it would), any scrutiny of the city agency's effort to get a "loophole" grandfathered in for the Yankees seemingly would apply equally to sports facilities sought by the Mets and the Nets.
Questions about tax estimates
There are numerous questions (here, here, and here) worth asking about the city/state letter to federal regulators regarding Atlantic Yards. But let's stick to the Yankees for now.
The city's Independent Budget Office thought the annual Yankees PILOT (payment in lieu of taxes) might exceed the foregone property taxes, which would run afoul even of the "loophole" allowing tax-exempt financing.
Yet the numbers, according to a letter from the city and state, work out. The estimated property taxes are attributed to the research firm Moody's, not any city agency. Let's hope those at the committee hearing ask a little more about how those estimates were generated; after all, I never got a response from the New York City Industrial Development Authority when I asked.
Neil deMause reported 4/10/06 on Field of Schemes:
Asked what happens if the assessed value ultimately comes in below the city's projections, city Economic Development Corporation chief Andrew Alper replied, "I'm not sure what would happen to the debt," which is hardly reassuring.
...Mostly, though, it was a day for confusion, as councilmembers with only the dimmest grasp of economics tried to figure out how the Yankees' payments could be both "tax money" and a private contribution. As the IBO's Lowenstein explained it: "Part of what makes this so difficult to get your mind around is that these guys aren't paying property taxes now, but we're structuring something to look like a property tax so that it meets the Internal Revenue Service code test that allows them to do the tax-exempt financing."
Questions about a contradiction
To pursue the tax-exempt bond deals, PILOTs must be considered the equivalent of taxes, but the city hasn't always gotten its story straight. The July 2007 Good Jobs New York report Insider Baseball (PDF) points to a contradiction that those at the committee hearing should address:
City lawyers submitted a request to the IRS for a special ruling allowing payments-in-lieu-of taxes (or “PILOTs”) to be considered the legal equivalent of taxes for the purpose of servicing the bond debt and providing the Yankees with tax-free bonds. This argument contradicted statements made by the New York City Corporation Counsel as well as the City’s Budget Director in testimony before the City Council in spring, 2005 when they outlined financing for the massive development proposed for Manhattan’s Far West Side.
Let's go to the footnotes. The architects of the special ruling, the law firm Nixon Peabody, crowed in an 8/24/06 press release:
The deals ensure that future generations of New Yorkers will be able to cheer their favorite teams in new stadiums without increasing taxes, thanks to a first of its kind financing structure conceived of and developed by Nixon Peabody.
The structure allowed both stadiums to be financed primarily on a tax-exempt basis through the issuance of bonds supported solely by negotiated payments (in lieu of taxes) to be made by affiliates of the teams. To develop this innovative structure, the firm prepared and successfully obtained two separate private letter rulings from the Internal Revenue Service on behalf of the New York City Industrial Development Agency (NYCIDA). As a result, the Yankees and the Mets have on a combined basis saved in excess of $200 million in financing costs.
Those numbers would be higher if the teams successfully get more tax-exempt financing. I've suggested that Forest City Ratner might save $165 million on the Atlantic Yards arena.
Some questionable statements
By contrast, Good Jobs New York points to excerpts of statements made more than a year earlier by Corporation Counsel Michael Cardozo and Budget Director Mark Page before the City Council Finance Committee in Spring, 2005 regarding PILOTs.
Michael Cardozo, Corporation Counsel (4/25/05):
The sponsors' apparent basis for Intro. 584 is the argument that no revenue of the City may be expended without appropriation. This is generally true to the extent that such monies are "revenues of the City," paid into the general fund.
However, as I have explained, contractual rights to receive PILOTs in the future, directed by the Mayor pursuant to economic development agreements, are not "revenues of the city." They are instead contract rights that can be transferred or otherwise disposed of by the Mayor……
The right to receive PILOT payments are contract rights, not revenue, and they are therefore not subject to payment into the general fund and subsequent appropriation.
Mark Page, Director of the OMB (3/22/05):
However, the concept that this money is the equivalent of tax money in terms of the treatment of the revenue and the role of the Council is something that I am advised is not true, at least in the way contemplated by this local legislation and that's I guess not a great surprise to me in terms of how money paid under these contracts has been used in the past.
Here's more from Field of Schemes
While a focus on the Yankees is understandable, an exclusive focus is curious, given that less than three weeks ago Brodsky issued a press release stating that the hearing would examine the New York City Industrial Development Authority's "practices and procedures for issuance of public debt with respect to sports facilities for the Yankees, Mets and Nets."
I asked Brodsky's office about the narrowing of focus; when I get a response I'll publish it.
Even if the hearing does not specifically address Forest City Ratner's expected request for $800 million in tax-exempt financing (though DDDB assumes it would), any scrutiny of the city agency's effort to get a "loophole" grandfathered in for the Yankees seemingly would apply equally to sports facilities sought by the Mets and the Nets.
Questions about tax estimates
There are numerous questions (here, here, and here) worth asking about the city/state letter to federal regulators regarding Atlantic Yards. But let's stick to the Yankees for now.
The city's Independent Budget Office thought the annual Yankees PILOT (payment in lieu of taxes) might exceed the foregone property taxes, which would run afoul even of the "loophole" allowing tax-exempt financing.
Yet the numbers, according to a letter from the city and state, work out. The estimated property taxes are attributed to the research firm Moody's, not any city agency. Let's hope those at the committee hearing ask a little more about how those estimates were generated; after all, I never got a response from the New York City Industrial Development Authority when I asked.
Neil deMause reported 4/10/06 on Field of Schemes:
Asked what happens if the assessed value ultimately comes in below the city's projections, city Economic Development Corporation chief Andrew Alper replied, "I'm not sure what would happen to the debt," which is hardly reassuring.
...Mostly, though, it was a day for confusion, as councilmembers with only the dimmest grasp of economics tried to figure out how the Yankees' payments could be both "tax money" and a private contribution. As the IBO's Lowenstein explained it: "Part of what makes this so difficult to get your mind around is that these guys aren't paying property taxes now, but we're structuring something to look like a property tax so that it meets the Internal Revenue Service code test that allows them to do the tax-exempt financing."
Questions about a contradiction
To pursue the tax-exempt bond deals, PILOTs must be considered the equivalent of taxes, but the city hasn't always gotten its story straight. The July 2007 Good Jobs New York report Insider Baseball (PDF) points to a contradiction that those at the committee hearing should address:
City lawyers submitted a request to the IRS for a special ruling allowing payments-in-lieu-of taxes (or “PILOTs”) to be considered the legal equivalent of taxes for the purpose of servicing the bond debt and providing the Yankees with tax-free bonds. This argument contradicted statements made by the New York City Corporation Counsel as well as the City’s Budget Director in testimony before the City Council in spring, 2005 when they outlined financing for the massive development proposed for Manhattan’s Far West Side.
Let's go to the footnotes. The architects of the special ruling, the law firm Nixon Peabody, crowed in an 8/24/06 press release:
The deals ensure that future generations of New Yorkers will be able to cheer their favorite teams in new stadiums without increasing taxes, thanks to a first of its kind financing structure conceived of and developed by Nixon Peabody.
The structure allowed both stadiums to be financed primarily on a tax-exempt basis through the issuance of bonds supported solely by negotiated payments (in lieu of taxes) to be made by affiliates of the teams. To develop this innovative structure, the firm prepared and successfully obtained two separate private letter rulings from the Internal Revenue Service on behalf of the New York City Industrial Development Agency (NYCIDA). As a result, the Yankees and the Mets have on a combined basis saved in excess of $200 million in financing costs.
Those numbers would be higher if the teams successfully get more tax-exempt financing. I've suggested that Forest City Ratner might save $165 million on the Atlantic Yards arena.
Some questionable statements
By contrast, Good Jobs New York points to excerpts of statements made more than a year earlier by Corporation Counsel Michael Cardozo and Budget Director Mark Page before the City Council Finance Committee in Spring, 2005 regarding PILOTs.
Michael Cardozo, Corporation Counsel (4/25/05):
The sponsors' apparent basis for Intro. 584 is the argument that no revenue of the City may be expended without appropriation. This is generally true to the extent that such monies are "revenues of the City," paid into the general fund.
However, as I have explained, contractual rights to receive PILOTs in the future, directed by the Mayor pursuant to economic development agreements, are not "revenues of the city." They are instead contract rights that can be transferred or otherwise disposed of by the Mayor……
The right to receive PILOT payments are contract rights, not revenue, and they are therefore not subject to payment into the general fund and subsequent appropriation.
Mark Page, Director of the OMB (3/22/05):
However, the concept that this money is the equivalent of tax money in terms of the treatment of the revenue and the role of the Council is something that I am advised is not true, at least in the way contemplated by this local legislation and that's I guess not a great surprise to me in terms of how money paid under these contracts has been used in the past.
Here's more from Field of Schemes
Friday, June 27, 2008
City says Yankees' PILOTs wouldn't exceed property taxes, but where's the backing data?
Wasn't there a chance the PILOTs (payments in lieu of taxes) used to pay off tax-exempt bonds for the Yankees and Mets stadiums would exceed the foregone real estate taxes and thus run afoul of federal rules? The city's Independent Budget Office certainly thought the annual Yankees PILOT might exceed those taxes.
And I thought that the same cap might pose a problem even if the city and state officials manage to get the feds to allow tax-exempt bonds for the planned Atlantic Yards arena under the lenient "loophole" provided to the Mets and Yankees.
Then again, you have to think that city and state officials would make sure the numbers work out. In fact, as a 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department from the New York City Industrial Development Authority (NYC IDA) and the Empire State Development Corporation shows, the estimated tax for the Yankees would be $62.5 million, while the PILOTs would be only $56.7 million. That's room to spare.
I speculated there would be much less room to spare regarding Atlantic Yards, but we can assume that numbers can be massaged.
Source of estimates
Then again, where exactly did the numbers for the Yankees an
d Mets come from? As the footnote says, Moody's Investors Service, a company that offers credit rating and risk analysis. The numbers are projections, rather than reports from the city tax assessor. I asked NYC IDA for more information and a look at the relevant report pages, but I didn't hear back.
The calculations behind those projections deserve a closer look. Neither the federal agencies, nor Assemblyman Richard Brodsky's Committee on Corporations, Authorities & Commissions, which will hold a hearing on tax-exempt bonds, should let the numbers stand without some backing data.
And I thought that the same cap might pose a problem even if the city and state officials manage to get the feds to allow tax-exempt bonds for the planned Atlantic Yards arena under the lenient "loophole" provided to the Mets and Yankees.
Then again, you have to think that city and state officials would make sure the numbers work out. In fact, as a 5/8/08 letter to the Internal Revenue Service and U.S. Treasury Department from the New York City Industrial Development Authority (NYC IDA) and the Empire State Development Corporation shows, the estimated tax for the Yankees would be $62.5 million, while the PILOTs would be only $56.7 million. That's room to spare.
I speculated there would be much less room to spare regarding Atlantic Yards, but we can assume that numbers can be massaged.
Source of estimates
Then again, where exactly did the numbers for the Yankees an
d Mets come from? As the footnote says, Moody's Investors Service, a company that offers credit rating and risk analysis. The numbers are projections, rather than reports from the city tax assessor. I asked NYC IDA for more information and a look at the relevant report pages, but I didn't hear back.The calculations behind those projections deserve a closer look. Neither the federal agencies, nor Assemblyman Richard Brodsky's Committee on Corporations, Authorities & Commissions, which will hold a hearing on tax-exempt bonds, should let the numbers stand without some backing data.
Thursday, June 26, 2008
Bloomberg's desire to control board members is part of why public authorities reform bill died
Yes, the bill to reform public authorities in the state was derailed by last-minute objections raised by Mayor Mike Bloomberg, drawing a furious reaction from Assemblyman Richard Brodsky, the sponsor.
In a letter to Bloomberg Monday, Brodsky wrote:
We have been working on ways to reform public authorities for five years. The investigations we’ve conducted, often with other Committees of jurisdiction, include the activities of the MTA, the Power Authority, the Javits Operating and Construction Corporations, ESDC, the Long Island Power Authority, the Thruway Authority, the Capital Resources Corporation, The New York City IDA, the Port Authority, and many, many others. What we’ve concluded is that public authorities are making critical decisions about the daily lives of New Yorkers, and are often wildly out of control, sources of unrestrained debt, hosts to repeated incidents of malfeasance and corruption, secretive and unaccountable, and in the end as close to Soviet-style bureaucracies as anything we have in government.
We can recite the painful specifics at enormous length. At the MTA, we’ve seen the criminality of the 2 Broadway deal, the secret cash assets, the controversies about EZ-Pass and real estate deals, and others. We’ve seen massive subsidies provided for sports facilities, favoritism at the Erie Canal, intervention by powerful former public officials at the Port Authority and MTA, repeated failures to consummate development deals on the West Side of Manhattan, hundreds of millions wasted at the Javits Convention Center, the list goes on and on.
Our work has been assisted by the private sector, most notably by the Millstein Commission, and we have produced a sweeping reform bill that will fundamentally change these authorities, and return them to the control of democratic institutions. Last year the Governor and Assembly agreed on legislation which we passed, while the Senate passed a very similar bill. All this was known to the City. Now, at the last minute the City has produced a list of demands which would destroy the progress we’ve made on reaching a consensus, make the system worse than it is today, and leave the problems we’ve identified completely unchanged.
(Emphasis added)
Previous reports
Here are links to previous reports on public authorities reform: Public Authority Rreform: Reining in New York's Secret Government (2/04), by the New York State Comptroller; PUBLIC AUTHORITIES IN NEW YORK STATE: Accelerating Momentum to Achieve Reform (2/05), by the New York State Comptroller; Public Authority Governance in New York State: Members of Boards of Directors (8/04), by the New York State Comptroller; and Public Authorities in New York State (4/06), by the Citizens Budget Commission.
Fiduciary duty
As I wrote last week, notably, the bill would require a fiduciary duty of authority board members--a duty of care arguably lacking in the Empire State Development Corporation's (ESDC) treatment of the Atlantic Yards project.
Bloomberg opposed such a rule; while he doesn't have appointments to the ESDC, he does appoint members of the Metropolitan Transportation Authority and other boards.
Brodsky wrote:
First, you seek law that undercuts the fiduciary duty to the authority that permits a board member to “act in a manner consistent with the policies of the elected or appointed official” who appointed them. The laws creating public authorities sets forth a statutory mission, transportation for the MTA, economic development for ESDC, etc... . There is no basis for leaving control of those missions in the hands of local or state officials who have conflicting, if important, other goals and concerns. This would leave organizations like the MTA as mayoral or gubernatorial agencies without even the protection of legislative control of their budgets.
In a letter to Bloomberg Monday, Brodsky wrote:
We have been working on ways to reform public authorities for five years. The investigations we’ve conducted, often with other Committees of jurisdiction, include the activities of the MTA, the Power Authority, the Javits Operating and Construction Corporations, ESDC, the Long Island Power Authority, the Thruway Authority, the Capital Resources Corporation, The New York City IDA, the Port Authority, and many, many others. What we’ve concluded is that public authorities are making critical decisions about the daily lives of New Yorkers, and are often wildly out of control, sources of unrestrained debt, hosts to repeated incidents of malfeasance and corruption, secretive and unaccountable, and in the end as close to Soviet-style bureaucracies as anything we have in government.
We can recite the painful specifics at enormous length. At the MTA, we’ve seen the criminality of the 2 Broadway deal, the secret cash assets, the controversies about EZ-Pass and real estate deals, and others. We’ve seen massive subsidies provided for sports facilities, favoritism at the Erie Canal, intervention by powerful former public officials at the Port Authority and MTA, repeated failures to consummate development deals on the West Side of Manhattan, hundreds of millions wasted at the Javits Convention Center, the list goes on and on.
Our work has been assisted by the private sector, most notably by the Millstein Commission, and we have produced a sweeping reform bill that will fundamentally change these authorities, and return them to the control of democratic institutions. Last year the Governor and Assembly agreed on legislation which we passed, while the Senate passed a very similar bill. All this was known to the City. Now, at the last minute the City has produced a list of demands which would destroy the progress we’ve made on reaching a consensus, make the system worse than it is today, and leave the problems we’ve identified completely unchanged.
(Emphasis added)
Previous reports
Here are links to previous reports on public authorities reform: Public Authority Rreform: Reining in New York's Secret Government (2/04), by the New York State Comptroller; PUBLIC AUTHORITIES IN NEW YORK STATE: Accelerating Momentum to Achieve Reform (2/05), by the New York State Comptroller; Public Authority Governance in New York State: Members of Boards of Directors (8/04), by the New York State Comptroller; and Public Authorities in New York State (4/06), by the Citizens Budget Commission.
Fiduciary duty
As I wrote last week, notably, the bill would require a fiduciary duty of authority board members--a duty of care arguably lacking in the Empire State Development Corporation's (ESDC) treatment of the Atlantic Yards project.
Bloomberg opposed such a rule; while he doesn't have appointments to the ESDC, he does appoint members of the Metropolitan Transportation Authority and other boards.
Brodsky wrote:
First, you seek law that undercuts the fiduciary duty to the authority that permits a board member to “act in a manner consistent with the policies of the elected or appointed official” who appointed them. The laws creating public authorities sets forth a statutory mission, transportation for the MTA, economic development for ESDC, etc... . There is no basis for leaving control of those missions in the hands of local or state officials who have conflicting, if important, other goals and concerns. This would leave organizations like the MTA as mayoral or gubernatorial agencies without even the protection of legislative control of their budgets.
Wednesday, June 18, 2008
Board members of ESDC, other authorities, would finally become fiduciaries if reform bill passes
Somewhat buried in a New York Times Empire Zone column on Monday, headlined Stance on Same-Sex Marriage Brings Surprises for Paterson, was an item, under the sub-headline "Seeking Oversight for Agencies," indicating the potential passage of “the first meaningful oversight of the Metropolitan Transportation Authority, the New York State Thruway Authority, the Empire State Development Corporation [ESDC] and a multitude of other state and local authorities.”
Notably, it would require a fiduciary duty of authority board members--a duty of care arguably lacking in the ESDC's treatment of the Atlantic Yards project.
Such proposed reforms have been under discussion for years, and the current proposal draws on both Assembly and Senate bills and the report of a special commission convened by then-Gov. George Pataki. As the Times reported:
The broad outlines of the proposal would overhaul an existing budget office for authorities and transform it into an entity with teeth, as well as give the state comptroller broader power to reject contracts. Board members of authorities would also be considered fiduciaries under the plan, with responsibilities that would make them legally responsible to uphold the interests of state taxpayers and potentially subject to legal recourse if they did not.
Negotiations among the Assembly, Senate, and Governor’s office are ongoing, with the goal of reaching a resolution before the legislative session ends next Monday, Emma Furman, Deputy Chief of Staff for Assemblyman Richard Brodsky, told me. “We are working hard to try to get it done.” Brodsky is sponsor of Assembly Bill A9296A.
Bill details
According to a memorandum in support of the bill, it would not only establish and fund the Independent Office of Public Authority Accountability, it would require study of additional potential reforms, mandate referral of suspected wrong-doing to entities qualified to conduct investigations, require the State Comptroller to review and approve certain public authority contracts, prohibit state public authorities from forming subsidiaries without legislative approval, except under defined circumstances, and require all state authorities to include contract participation by minority-and women-owned businesses.
The fiduciary duty & AY
The plan to establish a statutory fiduciary duty owed by public authority board members to the authorities they serve and to require such members to acknowledge their fiduciary duties upon taking office, while too late, most likely, for the Atlantic Yards project, suggests that future iterations of the ESDC might not approve a project so cavalierly.
Did ESDC board members, in their brief 12/8/06 approval of the project bother to check:
What a fiduciary duty means
The bill would amend the Public Authorities Law to “establish a statutory fiduciary duty on the part of authority board members to perform their functions in good faith and with the degree of independence, diligence, care and skill which ordinarily prudent persons would exercise under similar circumstances, and in all ways consistent with their fiduciary duties of loyalty and due care to the organization and obedience to the authority's corporate purposes
Corporate governance expert Ira Millstein, who chaired Pataki’s Commission on Public Authority Reform, testified before a joint Assembly/Senate hearing 3/7/07. “You need to have directors of these authorities which understand that they have a job to do,” Millstein said, according to a transcript of the hearing. “[W]e've talked to a lot of these directors in the past, and most of them did not, and still don't understand that they have a job. “
“This is a real job," he continued. "Now how do you tell people that they have a real job? Well, you tell them that they have a fiduciary duty. This is a common, well-known expression which everybody in the world understands. You have a fiduciary duty to do the job that you've been appointed to do. And that means you have the duty of loyalty, you have the duty of care, you have a duty to carry out the mission, and it's a duty. It's not something that you have because you think it's a good thing to do. There is a requirement that you do that.”
He noted that corporate directors have fiduciary duties enforced by stockholder derivative suits, while public authorities have gotten into trouble only when “something blatantly went wrong” and the issue was covered by the press.
The penalty is shame
Brooklyn Assemblyman Hakeem Jeffries, a member of the committee, asked what kind of penalties authority board members might face, given that authorities are not corporations. Millstein suggested that civil penalities were not necessary, given that the monetary penalties corporate directors might pay are nearly always covered insurance and thus not a deterrent.
The real deterrent, he suggested, was shame: “Nobody likes to read about themselves in the newspapers of having been on a board that went to sleep. “
And that’s why the press should have paid more attention to the ESDC’s approval of Atlantic Yards.
Implications for AY eminent domain case?
Regarding the ESDC’s performance, the plaintiffs in the Atlantic Yards eminent domain case have argued, in appeal papers before the U.S. Supreme Court,
that the case differs from one in Washington, DC, involving the City Council, a legislative body:
As the court observed, legislators enjoy both statutory and common lawprivileges and immunities from disclosing their subjective motives and intentions in considering and/or acting on legislation.
Here there is no such privilege or immunity and thus no reason for hesitancy. Ratner’s and Pataki’s decision to condemn respondents’ properties was rubber-stamped by the ESDC, an unelected, quasi-governmental corporation. Indeed, the ESDC is so removed from state government that the Eleventh Amendment does not protect it from suit.
That may not be the same as lacking a fiduciary duty, but strikes me as a parallel issue. The suit argues that the ESDC has not been very accountable. So does the pending reform legislation.
Notably, it would require a fiduciary duty of authority board members--a duty of care arguably lacking in the ESDC's treatment of the Atlantic Yards project.
Such proposed reforms have been under discussion for years, and the current proposal draws on both Assembly and Senate bills and the report of a special commission convened by then-Gov. George Pataki. As the Times reported:
The broad outlines of the proposal would overhaul an existing budget office for authorities and transform it into an entity with teeth, as well as give the state comptroller broader power to reject contracts. Board members of authorities would also be considered fiduciaries under the plan, with responsibilities that would make them legally responsible to uphold the interests of state taxpayers and potentially subject to legal recourse if they did not.
Negotiations among the Assembly, Senate, and Governor’s office are ongoing, with the goal of reaching a resolution before the legislative session ends next Monday, Emma Furman, Deputy Chief of Staff for Assemblyman Richard Brodsky, told me. “We are working hard to try to get it done.” Brodsky is sponsor of Assembly Bill A9296A.
Bill details
According to a memorandum in support of the bill, it would not only establish and fund the Independent Office of Public Authority Accountability, it would require study of additional potential reforms, mandate referral of suspected wrong-doing to entities qualified to conduct investigations, require the State Comptroller to review and approve certain public authority contracts, prohibit state public authorities from forming subsidiaries without legislative approval, except under defined circumstances, and require all state authorities to include contract participation by minority-and women-owned businesses.
The fiduciary duty & AY
The plan to establish a statutory fiduciary duty owed by public authority board members to the authorities they serve and to require such members to acknowledge their fiduciary duties upon taking office, while too late, most likely, for the Atlantic Yards project, suggests that future iterations of the ESDC might not approve a project so cavalierly.
Did ESDC board members, in their brief 12/8/06 approval of the project bother to check:
- if the arena financing plan was legitimate or a took advantage of a "loophole"?
- if there would be enough affordable housing financing to get the project done anywhere close to the “anticipated” ten-year timetable?
- if that ten-year timetable would be enforced in future ESDC contracts or whether the agency would give the developer 12+ years to build Phase 1 and no deadline for Phase 2?
What a fiduciary duty means
The bill would amend the Public Authorities Law to “establish a statutory fiduciary duty on the part of authority board members to perform their functions in good faith and with the degree of independence, diligence, care and skill which ordinarily prudent persons would exercise under similar circumstances, and in all ways consistent with their fiduciary duties of loyalty and due care to the organization and obedience to the authority's corporate purposes
Corporate governance expert Ira Millstein, who chaired Pataki’s Commission on Public Authority Reform, testified before a joint Assembly/Senate hearing 3/7/07. “You need to have directors of these authorities which understand that they have a job to do,” Millstein said, according to a transcript of the hearing. “[W]e've talked to a lot of these directors in the past, and most of them did not, and still don't understand that they have a job. “
“This is a real job," he continued. "Now how do you tell people that they have a real job? Well, you tell them that they have a fiduciary duty. This is a common, well-known expression which everybody in the world understands. You have a fiduciary duty to do the job that you've been appointed to do. And that means you have the duty of loyalty, you have the duty of care, you have a duty to carry out the mission, and it's a duty. It's not something that you have because you think it's a good thing to do. There is a requirement that you do that.”
He noted that corporate directors have fiduciary duties enforced by stockholder derivative suits, while public authorities have gotten into trouble only when “something blatantly went wrong” and the issue was covered by the press.
The penalty is shame
Brooklyn Assemblyman Hakeem Jeffries, a member of the committee, asked what kind of penalties authority board members might face, given that authorities are not corporations. Millstein suggested that civil penalities were not necessary, given that the monetary penalties corporate directors might pay are nearly always covered insurance and thus not a deterrent.
The real deterrent, he suggested, was shame: “Nobody likes to read about themselves in the newspapers of having been on a board that went to sleep. “
And that’s why the press should have paid more attention to the ESDC’s approval of Atlantic Yards.
Implications for AY eminent domain case?
Regarding the ESDC’s performance, the plaintiffs in the Atlantic Yards eminent domain case have argued, in appeal papers before the U.S. Supreme Court,
that the case differs from one in Washington, DC, involving the City Council, a legislative body:
As the court observed, legislators enjoy both statutory and common lawprivileges and immunities from disclosing their subjective motives and intentions in considering and/or acting on legislation.
Here there is no such privilege or immunity and thus no reason for hesitancy. Ratner’s and Pataki’s decision to condemn respondents’ properties was rubber-stamped by the ESDC, an unelected, quasi-governmental corporation. Indeed, the ESDC is so removed from state government that the Eleventh Amendment does not protect it from suit.
That may not be the same as lacking a fiduciary duty, but strikes me as a parallel issue. The suit argues that the ESDC has not been very accountable. So does the pending reform legislation.
Tuesday, May 27, 2008
At West Side hearing, Brodsky questions subsidies, muses about eminent domain for MSG
Presumably, the Metropolitan Transportation Authority’s (MTA) confirmation Thursday of a second developer, the Related Companies, for the Hudson Yards project, after original bidder Tishman Speyer pulled out, somewhat undermined the rationale for the Assembly Corporations, Authorities and Commissions Committee, chaired by Westchester Assemblyman Richard Brodsky, to assess the status of various projects on Manhattan’s West Side.So it’s understandable that the hearing held Friday attracted modest press coverage. To Reuters, the story was Brodsky’s provocative but somewhat theoretical suggestion that the city consider using eminent domain to condemn Madison Square Garden to effectuate a version of the Moynihan Station project. To the New York Observer, the story was MTA chief Lee Sander’s suggestion that the agency might add bus rapid transit or light rail to the West Side district, on top of the 7 line subway extension. WNYC radio reported a related story about how the Moynihan project, if it adds capacity for Amtrak, could draw additional federal funds.
For those concerned with Atlantic Yards, however, the story was Brodsky’s ongoing and unresolved effort to assess the proper level of public investment and subsidies in such projects, and the incomplete responses from government officials.
“We want to create the incentives to get the private sector do things they wouldn’t otherwise do,” explained Deputy Mayor for Economic Development Robert Lieber. “We want to use the resources of the public sector sparingly to create incentives for the private sector.” It was, he said, a question of risk and value.
That question deserves a close look in the context of Atlantic Yards. When calculating the value of direct and indirect government support, to what extent, for example, did city and state officials assess the value of naming rights for the arena (and other buildings) in the Atlantic Yards project? The value of luxury boxes? While not traditional subsidies, the opportunity for such special revenue sources was made possible only by the government’s backing of Forest City Ratner’s plan.
An AY hearing?
While Brodsky (right) mentioned Atlantic Yards in passing more than once, and suggested that the state’s willingness to pursue eminent domain for AY means it shouldn’t be philosophically opposed to using it for Moynihan Station, he wouldn’t commit to holding a hearing on Atlantic Yards.“We’re going to proceed with a whole host of inquiries on these kinds of projects,” he said, in an interview after the hearing, indicating that, at the least, written questions would be sent. “Atlantic Yards is in that mix. Whether or not I hold a hearing is secondary as to whether I get the information.”
Brooklyn Assemblyman Hakeem Jeffries, whose district includes Atlantic Yards, is pushing for such a hearing and there are numerous questions--some noted below--that are pending. Indeed, the advantage of a hearing, as shown on Friday, is that in-person exchanges enliven and clarify contentious topics. (Assembyman Jim Brennan and Assemblywoman Joan Millman, whose districts border that of Jeffries, also support a hearing, according to Jeffries.)
Brodsky, who has served since 1982 and has a history of investigating authorities, made an abortive run for Attorney General in 2006 and has been rumored to be interested in succeeding Sheldon Silver as Assembly Speaker.
(Photo from NY Observer.)
Calculating incentives
Notwithstanding the news from Thursday, Brodsky opened the 3.5-hour hearing, held at 250 Broadway near City Hall, by saying that the West Side projects are at best delayed and to a certain extent more costly and more uncertain than ever. He expressed what he called his own bias, that the “single most important economic development and social investment is mass transit.” (Those who challenged Brodsky’s campaign against congestion pricing might allege some cognitive dissonance.)
He blamed a governance structure that scants the role of elected officials. “Bad governance has yielded unsatisfactory results,” he said. Also, as he’s expressed before, he said subsidies distort any view of such projects, since we can no longer tell what the market can produce. “Public investment should be made when it’s essential and necessary, not when it is merely a way to enrich developers,” he said, adding that he wasn’t casting aspersions on any specific project.
The city’s Lieber described “three broad buckets” in which the city could provide support and incentives to developers: direct subsidies, changes in zoning or land use, and financing and tax incentives. He described how the Hudson Yards UTEP (Uniform Tax Exemption Policy) has been amended to offer developers incentives to build office space in the western segment of the Hudson Yards zone; the discounts are 40% on payments in lieu of taxes (PILOTs) for the first 5 million square feet of development.
“It provides greater incentive to build farther from the core,” Lieber said, which sounds plausible. Then again, critics have suggested that the extension of the subway is an incentive in itself. “It seems particularly hard to justify committing to a policy of property tax cuts several years in advance of market conditions, and inconsistent with committing billions of dollars of public infrastructure investment,” testified James Parrott of the Fiscal Policy Institute in 2006 at a hearing before the New York City Industrial Development Agency.
“The development of Hudson Yards is going to take place over a series of economic cycles,” Lieber said, noting that it would take “decades to complete” 24 million square feet.
Atlantic Yards would be an arena encompassing 850,000 square feet and 6.5-7 million square feet of mostly housing, plus office and retail space. While the project, as approved by the Empire State Development Corporation (ESDC) in December 2006, was “anticipated” to take a decade, a State Funding Agreement signed in September 2007 gives the developer up to six years after the close of litigation and the exercise of eminent domain to build the arena, and 12 years to build the four or five towers of Phase 1, with no timetable to build the rest of the project.
No government official has been challenged to justify that timetable, though presumably the issue would be aired in a hearing.
Assessing the incentives
“How do we know if the public investment is insufficient, adequate, or excessive?” Brodsky asked.
“We’re trying to create incentives to encourage development” on the western part of the site, Lieber responded.
“I’m asking for a general rule,” Brodsky continued.
Lieber suggested it was a determination elected officials like Brodsky could make.
“Why is [the discount] zero to 40%?” Brodsky asked. “Why not 40 to 80%?”
Lieber acknowledged that the number could be debated.
Brodsky pressed for the method to determine the discount.
Lieber said the challenge was to determine the “appropriate level” of risk and return to the private sector. He said the city engaged the real estate firm Cushman & Wakefield to assess the viability of the project.
How can you defend the 40% figure, Brodsky asked.
Lieber acknowledged that he wasn’t part of that decision-making four years ago, but would search for the analysis and provide it to Brodsky. While he couldn’t immediately explain the total value of the discount, later--after receiving communication via BlackBerry--he estimated the discount at $200 million.
Excess discount?
There are other places for subsidies to emerge. For example, the Hudson Yards Infrastructure Corporation, which finances development to be carried out by Hudson Yards Development Corporation and other public entities, has bought development rights from the MTA and will sell them to developers.
“At market rates?” asked Brodsky.
“Yes,” replied Lieber.
“No way,” uttered Anna Hayes Levin, a lawyer and member of Manhattan Community Board 4, in the audience.
She was similarly skeptical about the state’s plans to sell 5.4 million square feet of development rights for the Moynihan Station project, telling Reuters that the ESDC had priced the rights at half the market value.
Adding infrastructure to the list
Brodsky tried to drill down to the public costs and subsidies. Was it just sales tax exemptions and real estate PILOTs, he asked Lieber.
An aide whispered in Lieber’s ear. “Just to be clear, there are additional costs,” the deputy mayor told Brodsky, citing sewer, water, and utility upgrades. “We have $225 million in the city capital budget for infrastructure.”
That raises questions about the appropriate spending for infrastructure. For Atlantic Yards, a project less than one-third the size of Hudson Yards--and with an overall price tag of one-fifth or less--the city has committed $105 million for infrastructure and the state has committed $100 million. (The city has committed another $100 million for property acquisition.)Then again, an arena may require more infrastructure, but it would be worth hearing some explanations from governmental officials.
Lieber later added that, on the West Side, there would be subsidies for affordable housing that “would inure to all residential projects.”
He allowed they were “subject to volume cap,” the limit on total bonds issues that has already affected numerous projects, including Atlantic Yards, and has caused Brooklyn developer John Catsimatidis to revise a Myrtle Avenue development from mixed-income to all-luxury units, the Brooklyn Paper reported this week.
Hidden costs
Though it didn’t come up, there may be additional, unmentioned costs in the Hudson Yards project. Former MTA Chairman Richard Ravitch, recently appointed by Gov. David Paterson to head a commission on the MTA’s five-year capital plan and operating budget, has expressed skepticism about such costs.
Similarly, there are indications that the public contribution for Atlantic Yards could go up. Both the city and state, according to the Atlantic Yards Memorandum of Understanding signed in 2005, agreed to “consider making additional contributions for extraordinary infrastructure costs relating to the mixed-use development on the Project Site (excluding the Arena Building Site)."
Given that Forest City Ratner once claimed it was paying $163 million in "extraordinary infrastructure costs incurred by the developer to build on the MTA parcels," including a new platform and public open space, but no longer makes that claim, it’s reasonable to conclude that the developer will seek reimbursement.
Who’s in charge?
Gary Dellaverson, the MTA’s chief financial officer, said that, under the agreement between the MTA and Related for the Hudson Yards project, if the 7 line subway extension isn’t available by 2014, there’d be a 50% rent holiday, some $32.5 million a year.
Brodsky: How did the HYIC get the legal right to control PILOTs?
Lieber said the decisionmaking involved both the city and city agencies.
Brodsky: “What is the mayor’s legal authority to assign revenues in a PILOT?”
“He’s the mayor,” Lieber replied, serving Brodsky a fat pitch.
“Here we come to the heart of the problem,” Brodsky responded, with indignation. “If I wasn’t under control I’d make a reference to dictators.”
“I’m certain he doesn’t do this without legal authority,” Lieber replied, not without some exasperation.
It was another opportunity, however, for Brodsky to suggest that properly balanced oversight was missing.
Looking at Moynihan
When it came to the Moynihan Station project, which could involve a new rail station in the Farley Post Office, the relocation of Madison Square Garden, and new office towers and retail over the current Penn Station/MSG site, Brodsky had the same basic questions. “How do I know how the public investment should be made versus private--what’s the rule?” he asked.
You make what’s “necessary to maintain the infrastructure, to maintain the stature of the city” replied Avi Schick, acting president of the ESDC. “This is not a subsidy for economic development. It is maintaining and enhancing transportation.”
Brodsky asked the “value of 5.4 million in FAR.” (He was referring to Floor Area Ratio but meant, simply, development rights.)
It’s not a simple answer, Schick said, saying that the working number is $125/square foot--the figure Levin later disputed.
Brodsky again asked about the appropriate relationship between public and private investment.
“We take into account the nature of the project,” Schick replied gnomically.
Brodsky acknowledged he was facing a formidable rhetorical foe. “I’m going to get you, Mr. Schick, but it’s going to take a bit longer,” he said playfully.
(At the close of the hearing, he offered public thanks to Schick for service to the state, suggesting that this might have been Schick’s last public hearing. Schick is leaving in September, so that suggests that, at the least, Brodsky’s not planning to hold an Atlantic Yards hearing by September.)
Who’s paying?
Brodsky brought up the apparent effort by Madison Square Garden to get government to advance the cost of building an arena.
“To my understanding, it’s not for the Garden, it’s for the [Moynihan Station] project,” Schick said.
Has the Garden asked for such support, Brodsky asked.
No, replied Schick.
Brodsky amended his question: Has the joint venture--involving Related Companies and Vornado Realty Trust--asked for such funding.
Yes, replied Schick.
Lieber added the entire financing plan was under discussion.
Eminent domain for MSG?
Then, as if out of left field, Brodsky brought up the eminent domain issue. “What are the arguments for condemning Madison Square Garden” to hasten the project, he asked. (At this point, the Dolan family’s Cablevision, which owns MSG, is planning to finance an arena upgrade in place, rather than move to the post office.)
It would be “a full-employment act for lawyers,” Schick replied skeptically.
“You’re doing it for Atlantic Yards,” Brodsky countered. “You have no philosophical opposition to eminent domain.”
“Within a 22-acre [AY] site, there is a limited use,” Schick said.
“Why pick on a homeowner, when you can pick on the Dolans?” Brodsky asked, to general laughter from the audience, who know the Dolans have been criticized for their stewardship of the hapless Knicks basketball team and their effort to continue a real estate tax exemption for the Garden. “What are the virtues of considering the use of eminent domain to break the logjam on this project?”
“I think if one is talking about breaking the logjam, and bringing certainty and clarity and speed to the project,” Schick responded, “there are very few virtues.”
Brodsky: Has ESDC considered use of eminent domain.
Schick: No.
Lieber backed Schick up, saying that there’s been no discussion of the issue, to his knowledge.
Brodsky again asked if eminent domain could achieve the project more quickly and effectively.
Lieber said he didn’t know the answer to the question.
It’s an opinion, Brodsky said.
“My own view, philosophically," Lieber mused, "is that the role--what would you do, if you condemned the Garden, the Dolans out of the Garden, for what purpose--?”
“The same purpose you’re doing in Brooklyn,” Brodsky interrupted, with a touch of exasperation.
“Where would they go?” Lieber continued.
“Same thing in Brooklyn,” Brodsky cut in.
“We would be looking at wanting to maintain their presence in New York City,” Lieber said.
“I want their presence in New York City too,” Brodsky said. “I think they’ve been great corporate citizens. I think they deserve a fair shake. I don’t think it’s necessarily a thing we ought to do. But I certainly think it ought to be considered. Would you gentlemen get back to us with your considered views on the wisdom of using eminent domain to advance this project?”
“As a legal analysis?” Schick asked.
‘No,” Brodsky replied. “The wisdom to whether it would advance the public interest.”
“With all respect,” Schick said, “the touchstone, the starting point for any condemnation--while I’ve never practiced law in this area, I believe, is the neighborhood condition study, is there blight? There are a number of preconditions. So I’m not sure that, in a vacuum, what Avi Schick or Robert Lieber on a random Tuesday think... is the right way to go with it. It’s a much more detailed and focal process, which is, what are the preconditions, as a legal matter, what would the analysis be, and what could be done?”
[Lawyer M. Robert Goldstein, who represents condemnees, writes, “While property may only be condemned for a 'public use' or 'public purpose,' the terms being synonymous, the definition of those terms, has become so broad that almost anything a condemnor wishes to do for the health safety and welfare of the public fits under this umbrella.”]
Brodsky shook off Schick's lawyerly analysis: “You won’t get to doing the studies until you decide you want to do the studies. My question is: Is it an attractive enough tool to go through the exercise of deciding whether it should be used in this project?... Will you get back to us with your policy conclusions?”
“My current thinking is that, given what the process needs is certainty and clarity, and what it suffers form is delay,” Schick said, “eminent domain would certainly inject a lack of clarity and... significant and substantial delay. So my current position is that, since it would just further some of the issues that came with the project and it would not solve any of those, it would not seem at first blush to make sense. But if the thinking changes I will certainly get in touch.”
“Mr. Lieber?” Brodsky said.
“I would say, as a policy matter, sitting here in front of you today, we’ve not considered it,” Lieber said. “It’s the first time it’s been asked.”
Speed and clarity?
“In terms of speed and clarity, I disagree with Mr. Schick,” Brodsky said. “You get control the day you write the check. You litigate the price. You can move forward. That’s a difference of opinion, but I understand your answer.”
Given that the Atlantic Yards eminent domain case, filed in October 2006, remains unresolved, and that the deep-pocketed Dolans spent nearly $19 million on lobbyists to fight the West Side Stadium, Brodsky was perhaps a tad optimistic.
Did Schick’s statement constitute an acknowledgement that the need to use eminent domain injected "a lack of clarity and significant and substantial delay” into the Atlantic Yards project? That's a question worth asking at a hearing concerning Atlantic Yards.
Afterward, I asked Brodsky if using eminent domain for MSG was a new idea or if had it come up before.
"It came up today," he responded.
"The rationale would be blight?" I asked.
"Don't get to be a lawyer on me," he responded. "The issue there is, whether or not, rather than concede to a"--he paused and shifted gears, apparently unwilling to put Cablevision on the spot--"this is a theoretical answer to your question. Eminent domain exists when an individual, by stubbornness or greed, is trying to hold up a project that is in the overwhelming public interest. I believe in eminent domain, and I asked today, without making a recommendation, whether that analysis should be applied to the Garden.”
Calculating the price tag
In closing, Brodsky attempted to tally the price tags for all the projects on the West Side, including Moynihan Station, Hudson Yards, and expansion of the Javits Convention Center. “We haven’t talked about downtown [projects],” he said. “We haven’t talked about Atlantic Yards.”
Does the public sector have the money to do all this? Brodsky asked. “If I had to choose, which ones should be done first?”
“You have to carefully assess costs and benefits,” Lieber said.
Brodsky pressed on. “What should I do first, with $10 billion?” he asked.
“I think you use it to seed multiple projects like we’re doing,” Lieber said.
Brodsky asked about the first $2 billion. Lieber said that’s where the city was with Hudson Yards.
Lieber further pointed out that, to some extent, Brodsky’s question of priorities is moot. “In many of [the projects], the city’s contribution and funding has already been made.”
That’s the case with Atlantic Yards--except that there might be additional contributions for “extraordinary infrastructure” costs as well as support for affordable housing. After all, CEO Chuck Ratner of parent Forest City Enterprises told investment analysts in April that "We still need more" subsidies.
Priming the pump
Earlier, Brodsky had asked about the general rationale for subsidies.
“From an economic development perspective, we think the city is going to benefit in the tens of billions,” Lieber said. “We think we can spend a couple of hundred million to do that.”
Brodsky said that, because he lumped the cost of the $3.5 billion #7 line extension into the costs for West Side development, he calculated some $4 billion in public support.
Lieber said that there’d be “significantly in excess of $20 billion” in private investment on the West Side.
The numbers for Atlantic Yards are more modest. It would be a $4 billion-plus project, with more than half of the funding for the project depending on government resources, both direct aid and a limited pool of tax-exempt financing.
Summing up
In closing the hearing, Brodsky said the general question of whether we’re subsidizing projects at an appropriate level still remains. Still, he said he appreciated the government officials’ willingness to answer questions at a public forum, calling it an important part of the governmental process.
“I hope we can move forward on these [West Side] projects,” he said. “I fear we’re in more trouble than we’re letting on.” (He noted that it was news to him that the hearing brought out the city’s commitment to spend up to $3.5 billion on the #7 line, given that he'd previously criticized the city for committing to only $2.1 billion.) He said he was recessing rather than closing the hearing, given that he hoped Port Authority representatives would testify as well.
Does the legislature have any power, he was asked after the hearing. While it may not have direct oversight of such project, he said, in the long run the legislature has the power to pass laws restricting certain actions.
Again he criticized governance mechanisms to manage projects that bypass democracy. "What we've structured is a set of governance mechanisms that eliminate democratic institutions," he said. "And the net result is that anonymous people.... this is a set of Soviet-style bureaucracies that are acting without any public accountability, even when they’re right. They would much rather discuss whether they're right or wrong.... The reason we're in this problem with these projects is that the governance is secretive and out of touch, and we don't have enough money."
Doesn't Brodsky favor a new authority, however, to oversee the Hudson Yards project?
"A foolish consistency is the hobgoblin of little minds," riposted Brodsky, never at a loss for words. "The answer is, right now, I'm wrestling with a series of emergencies and the fact of the matter is that the Hudson Yards deal does not represent a thought-out economic development strategy or priority for what the city and the region need. In defense of that, we're scrambling for ways of gaining some control. It's not necessarily intellectually consistent."
"Having said that," he continued, "what today's hearing was about was bringing out into public view the realities of decisions, like on Moynihan, like, for example, the Garden is now seeking public monies." (He said he'd seen documents that have not been made public.)
"The Dolans have every right to seek public support," he said. "The public ought to deal with it intelligently. That's what this is about. This is about returning these things to the control of public agencies."
Agencies, perhaps, but not--as per his comments--public authorities.
Wednesday, May 21, 2008
Brodsky on West Side deal: subsidy info needed
From yesterday's New York Times, in an article headlined New Developer Signs $1 Billion Deal to Transform West Side Railyards:
“Until we get a handle on the level of subsidies involved, there’s no way to determine whether this is a good deal or a bad deal,” said Assemblyman Richard L. Brodsky, a Democrat from Westchester who is holding a hearing on West Side development on Friday.
Last week, I reported on similar comments. "Developers have learned the fight is about the subsidies," Brodsky said. "That distorting element is so powerful we don't know how much to give, what is proper." That, he said, makes it hard to assess "what exactly is the public good."
The same questions could be raised about the Atlantic Yards deal, where, for example, the amount of scarce housing bonds needed was not made public until after the project was approved.
“Until we get a handle on the level of subsidies involved, there’s no way to determine whether this is a good deal or a bad deal,” said Assemblyman Richard L. Brodsky, a Democrat from Westchester who is holding a hearing on West Side development on Friday.
Last week, I reported on similar comments. "Developers have learned the fight is about the subsidies," Brodsky said. "That distorting element is so powerful we don't know how much to give, what is proper." That, he said, makes it hard to assess "what exactly is the public good."
The same questions could be raised about the Atlantic Yards deal, where, for example, the amount of scarce housing bonds needed was not made public until after the project was approved.
Thursday, May 15, 2008
Brodsky calls for "time out" on West Side projects; hearing next Friday
A powerful Assemblyman is calling for a "time out" on a major development, but it's not Atlantic Yards, focus of a recent "time out" rally. And that Assemblyman, Richard Brodsky, while calling for a timetable and cost-benefit analysis for megaprojects in the state, said that the focus of an Assembly committee's first hearing next week will be limited to projects on Manhattan's West Side.
The New York Times, in an article Wednesday headlined City Revisits Old Bidders After Railyards Deal Fails, reported:
Assemblyman Richard L. Brodsky and other critics, however, say that the authority should wait for the economy to improve, while working with a master plan to coordinate all the activity on the West Side. “These deals are breaking down because the governance system for authorities doesn’t work and because the public subsidies are out of control,” said Mr. Brodsky, a Democrat from Westchester. “We need a time out before this disaster repeats itself everywhere else.”
Discussion at MAS
The issue of what to do with the West Side--and, by extension, other megaprojects--came up at a panel discussion on the fate of Moynihan Station held Tuesday at the Municipal Art Society (MAS).
"The era of the grand Power Point presentation and numbers that appear to show the impossible is possible--I think that era is over," said moderator Charles Bagli, who covers real estate and development for the New York Times.
He was talking about the West Side, but the comments could be applied to Forest City Ratner's May 2005 Power Point presentation to the New York City Council and to the developer's overblown claim of 10,000 office jobs.
Bagli also essentially reprised his comment on the 3/27/08 Leonard Lopate Show, "I think both the city and the state are going to have to sort of open up a M*A*S*H tent and start doing triage."
In this case, he pointed to not only Moynihan Station, but the fate of the Javits Convention Center, the extension of the #7 subway, and "whatever's going to happen at the [West Side] railyards."
Competition and the role of developers
Kathryn Wylde, president and CEO of the Partnership for New York City, pointed out that, beyond projects competing on the West Side, Lower Manhattan needs significant support, there's a $17 billion Metropolitan Transportation Authority deficit, and a "five borough strategy" needs to be pursued.
Daniel Biederman, president, 34th Street Partnership, suggested that only developers had the savvy and incentive to get projects like Moynihan Station moving, given that elected officials have a time horizon that spans four years at best. MAS President Kent Barwick disagreed. Much of the city's infrastructure, he said, has been built during economic downturns. "We have fallen into this trap, that we are going to get something for nothing."
"They're skillful developers," Barwick allowed of Steven Roth of Vornado Realty Trust and Stephen M. Ross of the Related Companies, the two developers Biederman hailed, "but their time span and focus of attention cannot be 75 or 100 or 150 years. Infrastructure has to be built without a return."
Brodsky on authorities & "distorting" subsidies
Brodsky, who has long criticized unelected authorities like the Empire State Development Corporation, pointed again to a problem in the city and state, that projects are "controlled by authorities, run by hired guns who are accountable to nobody."
"Developers have learned the fight is about the subsidies," he said. "That distorting element is so powerful we don't know how much to give, what is proper." That, he said, makes it hard to assess "what exactly is the public good."
Though generally a critic of authorities, Brodsky has proposed that a new state authority buy the railyards from the MTA, develop a master plan, and seek multiple developers for individual parcels.
The Newark option
Bagli asked Brodsky about the fate of the city's convention center. "It's going to end up in Newark, that's my guess," Brodsky said, allowing that the Sunnyside Yards in Queens remains an "attractive option."
"I'm not convinced we can't get 85% of the benefit" of a convention center in Newark, he added. It was an interesting acknowledgement of the continued importance of seeing New York as a metropolitan region.
Hearing on May 23
Brodsky last month announced a bill that would require the Empire State Development Corporation (ESDC) to report within 45 days on the status of several megaprojects, including Atlantic Yards and said the Committee on Corporations, Authorities and Commissions, which he chairs, would hold a public hearing on the issue.
On Tuesday he said that the first hearing, on May 23, would cover only projects on Manhattan's West Side. It will be held at 10 a.m. at 250 Broadway, the location for many such hearings. A hearing notice should be posted shortly.
"I'm getting my arms around what I can get my arms around," he told me, suggesting that inclusion of projects like Willets Point and Atlantic Yards would make the hearing too unwieldy.
Will there be a follow-up hearing on other projects? He said he wasn't sure.
The New York Times, in an article Wednesday headlined City Revisits Old Bidders After Railyards Deal Fails, reported:
Assemblyman Richard L. Brodsky and other critics, however, say that the authority should wait for the economy to improve, while working with a master plan to coordinate all the activity on the West Side. “These deals are breaking down because the governance system for authorities doesn’t work and because the public subsidies are out of control,” said Mr. Brodsky, a Democrat from Westchester. “We need a time out before this disaster repeats itself everywhere else.”
Discussion at MAS
The issue of what to do with the West Side--and, by extension, other megaprojects--came up at a panel discussion on the fate of Moynihan Station held Tuesday at the Municipal Art Society (MAS).
"The era of the grand Power Point presentation and numbers that appear to show the impossible is possible--I think that era is over," said moderator Charles Bagli, who covers real estate and development for the New York Times.
He was talking about the West Side, but the comments could be applied to Forest City Ratner's May 2005 Power Point presentation to the New York City Council and to the developer's overblown claim of 10,000 office jobs.Bagli also essentially reprised his comment on the 3/27/08 Leonard Lopate Show, "I think both the city and the state are going to have to sort of open up a M*A*S*H tent and start doing triage."
In this case, he pointed to not only Moynihan Station, but the fate of the Javits Convention Center, the extension of the #7 subway, and "whatever's going to happen at the [West Side] railyards."
Competition and the role of developers
Kathryn Wylde, president and CEO of the Partnership for New York City, pointed out that, beyond projects competing on the West Side, Lower Manhattan needs significant support, there's a $17 billion Metropolitan Transportation Authority deficit, and a "five borough strategy" needs to be pursued.
Daniel Biederman, president, 34th Street Partnership, suggested that only developers had the savvy and incentive to get projects like Moynihan Station moving, given that elected officials have a time horizon that spans four years at best. MAS President Kent Barwick disagreed. Much of the city's infrastructure, he said, has been built during economic downturns. "We have fallen into this trap, that we are going to get something for nothing."
"They're skillful developers," Barwick allowed of Steven Roth of Vornado Realty Trust and Stephen M. Ross of the Related Companies, the two developers Biederman hailed, "but their time span and focus of attention cannot be 75 or 100 or 150 years. Infrastructure has to be built without a return."
Brodsky on authorities & "distorting" subsidies
Brodsky, who has long criticized unelected authorities like the Empire State Development Corporation, pointed again to a problem in the city and state, that projects are "controlled by authorities, run by hired guns who are accountable to nobody."
"Developers have learned the fight is about the subsidies," he said. "That distorting element is so powerful we don't know how much to give, what is proper." That, he said, makes it hard to assess "what exactly is the public good."
Though generally a critic of authorities, Brodsky has proposed that a new state authority buy the railyards from the MTA, develop a master plan, and seek multiple developers for individual parcels.
The Newark option
Bagli asked Brodsky about the fate of the city's convention center. "It's going to end up in Newark, that's my guess," Brodsky said, allowing that the Sunnyside Yards in Queens remains an "attractive option."
"I'm not convinced we can't get 85% of the benefit" of a convention center in Newark, he added. It was an interesting acknowledgement of the continued importance of seeing New York as a metropolitan region.
Hearing on May 23
Brodsky last month announced a bill that would require the Empire State Development Corporation (ESDC) to report within 45 days on the status of several megaprojects, including Atlantic Yards and said the Committee on Corporations, Authorities and Commissions, which he chairs, would hold a public hearing on the issue.
On Tuesday he said that the first hearing, on May 23, would cover only projects on Manhattan's West Side. It will be held at 10 a.m. at 250 Broadway, the location for many such hearings. A hearing notice should be posted shortly.
"I'm getting my arms around what I can get my arms around," he told me, suggesting that inclusion of projects like Willets Point and Atlantic Yards would make the hearing too unwieldy.
Will there be a follow-up hearing on other projects? He said he wasn't sure.
Saturday, May 10, 2008
Hudson Yards plan snagged by lowered revenues; new plan might involve multiple developers
When it comes to megadevelopments, it may be better for developers to lock in the deal, then declare (and even negotiate) a flexible timetable, as with Atlantic Yards.
The negotiations over the Hudson Yards project are a notable counterexample. In an article yesteday headlined Deal to Build at Railyards on West Side Collapses, the New York Times reported:
Six weeks after the Metropolitan Transportation Authority selected Tishman Speyer Properties to build a vast complex of office towers, apartment buildings and parks over the railyards on the West Side of Manhattan, the deal has fallen apart.
Gary Dellaverson, the authority’s chief financial officer, said the negotiations foundered Thursday afternoon after Tishman Speyer insisted on changing the terms of the $1 billion development, which both parties had agreed to on March 26.
The change would have substantially slowed the flow of millions of dollars in annual rent and fees to the authority and introduced a note of uncertainty about the pace of construction at the 26-acre site, which straddles 11th Avenue between 30th and 33rd Streets, he said.
Since Atlantic Yards is delayed, with the expected flow of new city, state, and MTA revenues thus delayed, there's a not dissimilar situation in Brooklyn. However, there are limits to the parallel; the revenues in Brooklyn would be from new taxes, not rent and fees.
Reopen negotiations?
The Times reported:
Mr. Dellaverson said he had agreed to a request from Tishman Speyer, which controls Rockefeller Center and has projects in India, China and Brazil, for a meeting on Monday, which seemed to leave open at least a faint possibility that the deal could be put back together. But he also said that the authority was considering whether to reopen negotiations with one or more of the four other developers who had bid nearly $1 billion each for the development rights.
But if the authority reopened negotiations with another bidder, it would almost certainly mean that it would get less money for the rights to the property, real estate executives said.
That at least recognizes that other bidders began from the same starting place; with Atlantic Yards, Forest City Ratner was the frontrunner, having been anointed by city and state officials 18 months before an RFP was issued.
Financing uncertain
The Times noted:
But critics of the deal said that it should never have been made, especially since the financing for a key element for West Side development, the extension of the No. 7 subway line, had not been resolved. At the same time, plans for the expansion of the nearby Javits Convention Center had collapsed. And given the sour real estate market, critics said the developer was getting an inexpensive development option.
The same might be said of Atlantic Yards, given that financing for affordable housing was and remains in doubt.
Note that Tishman Speyer also gave up designs by architect Helmut Jahn, another example of how flexible such projects can be. Also note how Bruce Ratner has been lowering our architectural expectations.
Mayor pushes project
The discussion continues. In an article today headlined West Side Railyards Project Gets New Push From Mayor, the Times reported that Mayor Mike Bloomberg would try to push the parties together to get the project done, and that the city would commit funds to help finish the No. 7 subway.
A new authority
The article ended with an intriguing tidbit:
In a related development, Assemblyman Richard L. Brodsky proposed that a new state authority be created to buy the railyards from the transportation authority for $1 billion and take charge of development in the area. It would come up with a master plan and find builders for individual parcels over time.
While the creation of new authorities can bring problems, if there's little oversight, the idea of a master plan, with multiple developers for multiple parcels, sounds like a way to get moving while avoiding the snags inherent in a one-developer deal.
It sounds, in fact, like proposals for the UNITY plan for the MTA's Vanderbilt Yard and like what City Comptroller Bill Thompson suggested might be the future of Atlantic Yards.
The negotiations over the Hudson Yards project are a notable counterexample. In an article yesteday headlined Deal to Build at Railyards on West Side Collapses, the New York Times reported:
Six weeks after the Metropolitan Transportation Authority selected Tishman Speyer Properties to build a vast complex of office towers, apartment buildings and parks over the railyards on the West Side of Manhattan, the deal has fallen apart.
Gary Dellaverson, the authority’s chief financial officer, said the negotiations foundered Thursday afternoon after Tishman Speyer insisted on changing the terms of the $1 billion development, which both parties had agreed to on March 26.
The change would have substantially slowed the flow of millions of dollars in annual rent and fees to the authority and introduced a note of uncertainty about the pace of construction at the 26-acre site, which straddles 11th Avenue between 30th and 33rd Streets, he said.
Since Atlantic Yards is delayed, with the expected flow of new city, state, and MTA revenues thus delayed, there's a not dissimilar situation in Brooklyn. However, there are limits to the parallel; the revenues in Brooklyn would be from new taxes, not rent and fees.
Reopen negotiations?
The Times reported:
Mr. Dellaverson said he had agreed to a request from Tishman Speyer, which controls Rockefeller Center and has projects in India, China and Brazil, for a meeting on Monday, which seemed to leave open at least a faint possibility that the deal could be put back together. But he also said that the authority was considering whether to reopen negotiations with one or more of the four other developers who had bid nearly $1 billion each for the development rights.
But if the authority reopened negotiations with another bidder, it would almost certainly mean that it would get less money for the rights to the property, real estate executives said.
That at least recognizes that other bidders began from the same starting place; with Atlantic Yards, Forest City Ratner was the frontrunner, having been anointed by city and state officials 18 months before an RFP was issued.
Financing uncertain
The Times noted:
But critics of the deal said that it should never have been made, especially since the financing for a key element for West Side development, the extension of the No. 7 subway line, had not been resolved. At the same time, plans for the expansion of the nearby Javits Convention Center had collapsed. And given the sour real estate market, critics said the developer was getting an inexpensive development option.
The same might be said of Atlantic Yards, given that financing for affordable housing was and remains in doubt.
Note that Tishman Speyer also gave up designs by architect Helmut Jahn, another example of how flexible such projects can be. Also note how Bruce Ratner has been lowering our architectural expectations.
Mayor pushes project
The discussion continues. In an article today headlined West Side Railyards Project Gets New Push From Mayor, the Times reported that Mayor Mike Bloomberg would try to push the parties together to get the project done, and that the city would commit funds to help finish the No. 7 subway.
A new authority
The article ended with an intriguing tidbit:
In a related development, Assemblyman Richard L. Brodsky proposed that a new state authority be created to buy the railyards from the transportation authority for $1 billion and take charge of development in the area. It would come up with a master plan and find builders for individual parcels over time.
While the creation of new authorities can bring problems, if there's little oversight, the idea of a master plan, with multiple developers for multiple parcels, sounds like a way to get moving while avoiding the snags inherent in a one-developer deal.
It sounds, in fact, like proposals for the UNITY plan for the MTA's Vanderbilt Yard and like what City Comptroller Bill Thompson suggested might be the future of Atlantic Yards.
Thursday, April 24, 2008
Brodsky seeks AY timetable, cost-benefit analysis in report on megaprojects
What might be the impact of the law (details from the New York Observer) proposed by Assemblyman Richard Brodsky that would require the Empire State Development Corporation (ESDC) to report within 45 days on the status of several megaprojects, including Atlantic Yards.
If passed, the law would require not merely a status report, but also would require a cost-benefit analysis that has so far not been conducted. It would require the ESDC to detail the full spectrum of public "incentives, benefits, subsidies, and revenues," the projected economic impact on the city, state, and metropolitan area, "and a comparison of expected benefits with anticipated costs."
That could be a watershed. The ESDC has produced a lengthy Final Environmental Impact Statement (see the last pages of the Socioeconomics chapter), as well as a General Project Plan, both of which estimate new revenues, but provide
If passed, the law would require not merely a status report, but also would require a cost-benefit analysis that has so far not been conducted. It would require the ESDC to detail the full spectrum of public "incentives, benefits, subsidies, and revenues," the projected economic impact on the city, state, and metropolitan area, "and a comparison of expected benefits with anticipated costs."
That could be a watershed. The ESDC has produced a lengthy Final Environmental Impact Statement (see the last pages of the Socioeconomics chapter), as well as a General Project Plan, both of which estimate new revenues, but provide