Tuesday, April 18, 2006

"Council plays ball" in the Daily News, 4/18/6

Council plays ball

City set to hear pitches for two new stadiums


The owners of the Yankees and Mets are heading for a big showdown with the City Council next week.
The stakes are humongous financing deals the city and the teams have put together to build new stadiums.

And - hold on to your hats - the combined cost of the Siamese deals is nearly $2 billion. To be exact, it's $1.169 billion for the Yankees and $798 million for the Mets.

Holy cow, who will pay?

For a change, you'll be surprised it won't be entirely the taxpayers - as was the case when the city built Shea Stadium in the early 1960s, at a reported cost of $25.5 million, or rebuilt Yankee Stadium in the early 1970s.

This time around, the two teams will pay the lion's share of the financing deals - $1.562 billion, or 79.4%. The city and state taxpayers will pay for $405 million, or 20.6%.

But what about overruns?

The Yankee Stadium reconstruction was supposed to cost $25 million and ended up costing taxpayers $100 million.

This time both teams are legally committed to paying for overruns. That might explain why the construction estimates are so high - $733 million for the new Yankee Stadium and $574.4 million for the Mets' new stadium. The financing deals include other costs borne by the teams.

So what will taxpayers have to pay for?

The financing packages the Council is expected to approve April 26 call for the city and state to pay for infrastructure improvements around each stadium.

The city is to spend $91.4 million for infrastructure work around the Mets' stadium and $164.7 million for Yankee Stadium. The state will spend $74.7million for each stadium.

So, what's in it for the Mets and Yankees?

To build a house, most people, unless they're Tony Soprano, borrow money - they take out a mortgage. It costs money to borrow money. And that's how the city is giving the Yankees and Mets a sweet deal.

A city entity called the Industrial Development Agency will help the teams finance their construction by selling bonds to private investors - $632 million for the Mets and $930 million for the Yankees.

Most of the IDA bonds will be tax free - $528 million of the Mets' bonds and $866 million of the Yankees' bonds. That tax-free feature will save each of the teams "tens of millions of dollars" in borrowing costs, city officials testified.

But won't the Yankees and Mets have to pay the bonds back with interest costs?

Yes, of course. But they won't pay any city property taxes, though the teams will assume maintenance and future capital costs).

Instead of taxes, the teams will pay off the IDA bonds through what is known as payments in lieu of taxes, or PILOTS. By law, the Council has to approve PILOTS.

Council estimates are that the Yankees' PILOTS could be as high as $62.5 million a year for 35 to 40 years, the Mets' as high as $50.4 million a year.

Originally published on April 18, 2006


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