Skip to main content

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


Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

This graphic, posted in November 2017, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

How many people are expected?

Atlantic Yards/Pacific Park has a projected 6,430 apartments housing 2.1 persons per unit (as per Chapter 4 of the 2006 Final Environmental Impact Statement), which would mean 13,503 new residents, with 1,890 among them in low-income affordable rentals, and 2,835 in moderate- and middle-income affordable rentals.

That leaves 8,778 people in market-rate rentals and condos, though let's call it 8,358 after subtracting 420 who may live in 200 promised below-market condos. So that's 5,145 in below-market units, though many of them won't be so cheap.


Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Atlantic Yards/Pacific Park in 2017: no new towers, unfilled affordable units, Islanders prepare to leave, project timetable fuzzy

My 2018 preview.

It was another wait-and-see year for Atlantic Yards/Pacific Park, with one big twist--the beginning of a slow goodbye for the New York Islanders--but continued delays for towers, a lost (mostly) 421-a subsidy for condos, and new skepticism about unfilled not-so-affordable housing units.

So ongoing questions linger regarding the project's pace, affordability, and even future ownership.

In my 2017 preview, I predicted--not exactly going out on a limb--that two and likely three more towers would open, though it would be unclear how fast they'd lease up and sell.

Indeed, we've learned that the middle-income below-market units at 461 Dean (which opened in 2016) and 535 Carlton have leased very slowly, while it's too soon to assess progress for commensurate units at 38 Sixth. (At 535 Carlton and 38 Sixth, middle-income units make up half the "100% affordable" buildings.) Meanwhile, many apartments are up for rent at the 550 Vanderbilt condo buildin…