"IBO cries foul" MetroNY 04/21/06

IBO cries foul
New report critical of Mets plan

by patrick arden / metro new york

APR 21, 2006

MANHATTAN — At the behest of angry Queens City Council members, the Independent Budget Office yesterday released an analysis of the city’s financing scheme for a new Mets stadium.

The IBO weighed the costs of government subsidies and tax exemptions, as well as the team’s use of $528 million in tax-exempt bonds, before concluding the Mets will save $298 million over 40 years on its $632 million stadium. But the city’s cost will be $177 million, and the state will be down another $89 million.

The city puts the economic benefit of the Mets’ stadium at $48 million over 40 years. But that ignores lost parking revenue, which the IBO estimates at $80 million. “Simply including that item,” the IBO states, “would switch the fiscal impact from a net positive to a net negative.”

PILOT problems

The IBO has already issued a separate report on the plan for a new Yankee Stadium, which calls for $866 million in tax-exempt bonds. It concluded the financing schemes for both stadiums depend on “an aggressive interpretation” of the law. The city has asked the IRS to rule on the plans’ legality.

In 1986 Congress tried to curb the use of tax-exempt bonds for stadiums by requiring that 90 percent of the debt must be paid off with funds that would normally go to the city. The city claims the Mets and Yankees will pay off their bonds with payments in lieu of property taxes, or PILOTs, though neither team currently pays property taxes. IBO deputy director George Sweeting has noted the Yankees are actually repaying this debt with stadium revenue rather than money that would go to “general public revenues.”

The Yankees would need $66 million a year to pay off its bonds, the IBO said, but the team’s property taxes would equal just $39 million. The Mets will shell out $40 million annually to service its bonds, but IBO put the team’s 2010 tax bill at only $27.6 million.

The city has claimed that hundred of millions will be saved on maintenance costs when the teams move into new stadiums. But since the city will no longer be collecting rent, the IBO pegs the city’s savings over a 40-year period at just $15 million for the Yankees stadium and $31 million for the Mets ballpark.

Victory uncertain

“The Mets are getting a sweetheart deal,” said City Councilman Hiram Monserrate, who represents the area around Shea and has pushed for a community partnership agreement. “Without a promise to give anything back to the community, it’s clear the costs and benefits of this deal do not weigh in the favor of our residents.”

“If the IRS determines the PILOTs aren’t legitimate,” Queens Councilman Tony Avella added, “then the financing plans for both stadiums are in jeopardy.”