Tuesday, April 11, 2006

Questions remain about Yankees bonds

Neil deMaus of Field of Schemes was able to attend the bond hearings yesterday. Click the title above to read what he learned, but this is what caught our eye:

"The process by which the teams would pay back the stadium bonds - paying off bondholders under the guise of "payments in lieu of property taxes," or PILOTs - is, testified city Independent Budget Office director Ronnie Lowenstein, "a very, very aggressive interpretation of the IRS code." The two main unresolved questions, according to Lowenstein: Will the IRS approve the financing scheme at all, and if it does, will the PILOT payments - which, remember, can't be more than what the stadium would pay in property tax, if it were taxed - be enough to pay off the Yanks' proposed $866 million in tax-exempt bonds? The IBO estimated it wouldn't, projecting a shortfall of about $29 million a year; the city said it would, but only by projecting that the new stadium's market value would be $1.025 billion - 40% more than its entire construction cost - while valuing the land it sits on at $204 million - even though the city finance department values the land under the current Yankee Stadium at a mere $7 million. 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."


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