Both developer Forest City Ratner and the Empire State Development Corporation, in public statements, have treated December 31 as the final deadline to have bonds issued for the Atlantic Yards arena, which is why we should see a flurry of activity in the coming weeks.
That's based on Internal Revenue Service (IRS) rules issued in October 2008 regarding a PILOTs (payments in lieu of taxes) plan previously allowed for stadiums (Yankees, Mets).
It disallowed such a plan for projects going forward but grandfathered in projects “certain projects substantially in progress,” including the Atlantic Yards arena and those aforementioned stadiums, whose builders sought additional bonds.
But is that deadline firm? I couldn't get an answer from the IRS. Perhaps the deadline is firm, but the Atlantic Yards saga is always full of twists.
Looking at the document
The relevant document is IRS Bulletin: 2008-47, Treatment of Payments in Lieu of Taxes Under Section 141, excerpted below.
That seems pretty firm, but I asked the IRS if legal challenges persist, can that deadline be extended? (While I assume that no one has yet tested that deadline in an administrative proceeding, I suspect that IRS has some general rules about whether similar deadlines can be extended because of litigation or other circumstances.)
IRS spokesman Kevin McKeon replied: "We're unable to comment due to our Disclosure Rules."
That's based on Internal Revenue Service (IRS) rules issued in October 2008 regarding a PILOTs (payments in lieu of taxes) plan previously allowed for stadiums (Yankees, Mets).
It disallowed such a plan for projects going forward but grandfathered in projects “certain projects substantially in progress,” including the Atlantic Yards arena and those aforementioned stadiums, whose builders sought additional bonds.
But is that deadline firm? I couldn't get an answer from the IRS. Perhaps the deadline is firm, but the Atlantic Yards saga is always full of twists.
Looking at the document
The relevant document is IRS Bulletin: 2008-47, Treatment of Payments in Lieu of Taxes Under Section 141, excerpted below.
(3) Transitional rule for certain projects substantially in progress. Paragraph (k)(1) of this section does not apply to bonds issued for projects for which all of the following requirements are met:As noted in the bold text, the transitional rule requires that bonds for the project be issued on or before December 31.
(i) A governmental person (as defined in §1.141-1) took official action evidencing its preliminary approval of the project before October 19, 2006, and the plan of finance for the project in place at that time contemplated financing the project with tax-exempt bonds to be paid or secured by PILOTs.
(ii) Before October 19, 2006, significant expenditures were paid or incurred with respect to the project or a contract was entered into to pay or incur significant expenditures with respect to the project.
(iii) The bonds for the project (excluding refunding bonds) are issued on or before December 31, 2009.
That seems pretty firm, but I asked the IRS if legal challenges persist, can that deadline be extended? (While I assume that no one has yet tested that deadline in an administrative proceeding, I suspect that IRS has some general rules about whether similar deadlines can be extended because of litigation or other circumstances.)
IRS spokesman Kevin McKeon replied: "We're unable to comment due to our Disclosure Rules."
Comments
Post a Comment