Brutally weird holiday news from NYT: Stadium Boom Deepens Municipal Woes (no mention of AY or other NYC projects)
From today's New York Times, an article headlined Stadium Boom Deepens Municipal Woes:
There's no mention of New York City in the article.
Well, the sports facility financing schemes in New York are different and, to their architects, much superior: the amount of direct subsidy is much smaller, for land and/or infrastructure rather than construction, while the cost of construction is magically shifted to PILOTs (payments in lieu of taxes), given that the land is (and, in most but not all cases, was) tax-exempt. And the Internal Revenue Service has now banned such plans, after grandfathering in the one for the arena.
Of course the tax exemption for the Metropolitan Transportation Authority's Vanderbilt Yard was supposed to increase the price of the property when sold, but there was only one other bidder, given Forest City Ratner's head start. As the New York City Independent Budget Office (IBO) observed, "It is clear that the MTA’s ability to maximize its return from property sales has been constrained."
And the PILOTs in the case of the AY arena would rely significantly on the naming rights that the state simply gave away.
And Forest City Ratner has been good at getting the city, state, and MTA to modify agreements in its favor. Meanwhile, the IBO's analysis that the arena would be a net loss for the city has not been refuted, despite the Times's willingness to quote a deceptive response from the New York City Economic Development Corporation ( an agency that has failed to release a promised cost-benefit analysis).
CINCINNATI — Years after a wave of construction brought publicly financed stadiums costing billions of dollars to cities across the country, taxpayers are once again being asked to reach into their pockets.And in New York?
From New Jersey to Ohio to Arizona, the stadiums were sold as a key to redevelopment and as the only way to retain sports franchises. But the deals that were used to persuade taxpayers to finance their construction have in many cases backfired, the result of overly optimistic revenue assumptions and the recession.
Nowhere is the problem more acute than in Cincinnati. In 1996, voters in Hamilton County approved an increase of half of one percent in the sales tax that promised to build and maintain stadiums for the Bengals and the Reds, pay Cincinnati’s public schools and give homeowners an annual property tax rebate. The stadiums were supposed to spur development of the city’s dilapidated riverfront.
But sales tax receipts have fallen so fast in the last year that the county is now scrambling to bridge a $14 million deficit in its sales tax fund. The public schools, which deferred taking their share for years, want their money.
The teams have not volunteered to rewrite their leases. So in the coming weeks, the county plans to cut basic services, lower its legal bills and drain a bond reserve fund with no plan for paying it back.
“Anyone looking at this objectively knows it’s a train wreck,” said Dusty Rhodes, the county auditor. “I told them they were making a big mistake, but they didn’t want to hear me.”
Cincinnati is hardly alone. In Indianapolis, the Capital Improvement Board spent 2009 trying to find $32 million to run the Lucas Oil Stadium and convention center. In Milwaukee, a drop in sales tax receipts may delay by several years the date for paying off the bonds issued to build Miller Park, the home of the Brewers.
Columbus, Ohio, is considering using public money to keep the Blue Jackets in town. Glendale, Ariz., has fought to hold the Phoenix Coyotes to their long-term lease. In New Jersey, a ticket surcharge may be added to help resolve a tenant-landlord dispute between the Devils and Newark.
There's no mention of New York City in the article.
Well, the sports facility financing schemes in New York are different and, to their architects, much superior: the amount of direct subsidy is much smaller, for land and/or infrastructure rather than construction, while the cost of construction is magically shifted to PILOTs (payments in lieu of taxes), given that the land is (and, in most but not all cases, was) tax-exempt. And the Internal Revenue Service has now banned such plans, after grandfathering in the one for the arena.
Of course the tax exemption for the Metropolitan Transportation Authority's Vanderbilt Yard was supposed to increase the price of the property when sold, but there was only one other bidder, given Forest City Ratner's head start. As the New York City Independent Budget Office (IBO) observed, "It is clear that the MTA’s ability to maximize its return from property sales has been constrained."
And the PILOTs in the case of the AY arena would rely significantly on the naming rights that the state simply gave away.
And Forest City Ratner has been good at getting the city, state, and MTA to modify agreements in its favor. Meanwhile, the IBO's analysis that the arena would be a net loss for the city has not been refuted, despite the Times's willingness to quote a deceptive response from the New York City Economic Development Corporation ( an agency that has failed to release a promised cost-benefit analysis).
I read that article and wondered if it would appear here on the report, glad it has.
ReplyDeleteIt is interesting given current events that there was no mention or reference given to Atlantic Yards or even the new Yankee and Mets stadiums.
My take was maybe this is as close as reporters at the Times can get to sounding the alarm on the likely failures of the Atlantic Yards project. Given the Grey Lady's ties to Ratner, I figured this was the only way to report concerns and stay covered.
Well, the results are more obviously egregious elsewhere, and the Times thinks of itself as a national newspaper. However, given the enormous controversies over Yankee Stadium and the planned AY arena, some mention of NY would have been in order.
ReplyDelete