"Bonds are approved to finance ballpark" MetroNY 07/12/06

Bonds are approved to finance ballpark

by patrick arden / metro new york

JUL 12, 2006

THE BRONX — Three months ago, the city’s financing scheme for the proposed new Yankee Stadium was called “very, very aggressive” by the Independent Budget Office. Yesterday, that plan apparently became even more aggressive, as the city’s Industrial Development Agency authorized $920 million in tax-exempt bonds to fund the new ballpark, up from $866 million.

While yesterday’s OK had been expected, the deal still hinges on the approval of the Internal Revenue Service. Under federal law, tax-exempt bonds can only be used to build sports facilities if those bonds are repaid with “payments in lieu of taxes,” or PILOTS. Currently the team pays no taxes.

In April the IBO noted the Yankees would need to pay “about $66 million” annually to repay the $866 million in tax-exempt bonds, while the team’s estimated property tax bill — if it paid property taxes — would only equal $37 million. “They’re trying to make it look like they’re financing this with general public revenues, although in this case [the funds to pay off the debt are] coming from the stadium,” IBO deputy director George Sweeting told the City Council finance committee.

IDA spokesperson Janel Patterson said the increase in tax-exempt bonds was expected. “We knew those numbers were evolving as market conditions changed and the team worked out its construction requirements,” she explained.

The number of permanent jobs created by the stadium was also lowered to 615. Previous projections were closer to 1,000. “The new number excludes concessions,” Patterson said. “The larger number might take into consideration what we call indirect jobs.”

Tax-exempt bonds

• While yesterday’s OK had been expected, the deal still hinges on the approval of the Internal Revenue Service. Under federal law, tax-exempt bonds can only be used to build sports facilities if those bonds are repaid with “payments in lieu of taxes,” or PILOTS. Currently the Yankees pay no taxes.