Thursday, February 28, 2008

"Corporate Welfare Lives, Especially for Baseball" NY Times 2/27/8

Corporate Welfare Lives, Especially for Baseball

Published: February 27, 2008

More than four years ago, Mayor Michael R. Bloomberg claimed victory over one of the city’s longest-running three-card-monte operations: big companies demanding, and getting, tax breaks to remain in New York when they really weren’t going anywhere.

“We’ve essentially ended corporate welfare as we know it, by no longer paying companies — who wouldn’t have left anyway — to stay in our great city,” Mr. Bloomberg said.

This week, details are emerging about $20 million in tax breaks that the city is ready to provide for Major League Baseball to put a new television network in an office tower that would be built in East Harlem — a deal that officials say makes good economic sense for the city, but which critics see as another episode of binge subsidies to fabulously profitable professional sports operations.

For decades, pretty much every New York mayor has made a pronouncement almost exactly like the one Mr. Bloomberg made in October 2003. There would be no corporate handouts in their governments, only hard-headed business deals in which enough jobs would be saved or created to outweigh the cost of the subsidy.

Since Mr. Bloomberg declared victory over corporate welfare, Goldman Sachs has been given $650 million in city and state subsidies to build a headquarters in Battery Park City. JP Morgan Chase got about $240 million to build in Lower Manhattan after threatening to move to Stamford, Conn., although the mayor of Stamford said he had never heard from Chase about it. These funds were needed, state and city officials said, to help rebuild the streets left desolate by the attacks of Sept. 11.

Big as those handouts were, they have been dwarfed by public subsidies that have nothing to do with Lower Manhattan. For the city’s two baseball teams, the Bloomberg administration has agreed to build new highways, train stations, garages and parkland so the teams can have new ballparks.

All told, the city and state have agreed to provide about $1.3 billion to the Yankees and Mets, whose new stadiums will have fewer seats and more expensive tickets. Corporate welfare has been transformed into monopoly welfare.

Major League Baseball plans to put a new television network in an office building that would go up near Park Avenue and 125th Street. Although the precise amounts of the tax breaks are still being calculated, city officials expect to provide $15 million to the developer, Vornado Realty Trust, and $5 million to Major League Baseball. And city documents show that baseball would be able to use some of the $5 million to pay for equipment and furnishings for its headquarters, at Park Avenue near 46th Street in Midtown Manhattan.

Where baseball spends the subsidy does not matter to the city, said Seth W. Pinsky, the president of the city’s Economic Development Corporation. The city wants 125th Street to become a different kind of business hub, and the new tower would be the first major office building in Harlem in 30 years. Construction costs are no less in Harlem than they are in Midtown, Mr. Pinsky said, but the developers cannot charge as much rent.

“The rents barely cover the cost of development, or barely don’t,” Mr. Pinsky said. “We don’t see that we’re losing the value of these benefits — absent them, the project wouldn’t happen, so we wouldn’t have them anyway.”

Bettina Damiani, director of Good Jobs New York, a private watchdog group that tracks how the city uses incentives, says the city lost its grip with the building of the baseball stadiums.

“Our wounds are still open from the Yankee Stadium deal,” Ms. Damiani said. “The love affair with professional sports doesn’t make sense. Hands down, we don’t think these two projects should be publicly subsidized.”

Mr. Pinsky said that in the scheme of things, the city is offering a small amount of money to get a 21-story building on a piece of land that has been vacant for years, even though it is just steps from the 125th Street Metro-North station, where trains depart for the entire region.

The 350 to 500 jobs in the television network, which is a new enterprise, are expected to pay an average of $98,000 annually, according to city officials.

Ms. Damiani argues that the city needs “more transparency and accountability” in how it provides its handouts, noting that the city did not disclose its cost-benefit analysis of the Yankee Stadium parking garages until the day it began borrowing money for them.

Mr. Pinsky said, “We don’t give a lot of subsidies, but it’s very important to receive a positive return.”

Ms. Damiani said it’s corporate welfare, “with a new dress, and a different shade of lipstick.”


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