"Field of Schemes: Congress Probes How New Sports Stadiums Turn Public Money into Private Profit" Democracy Now 7/30/8

A congressional committee is investigating whether New York City and the New York Yankees wildly inflated the value of the site for the team’s new stadium to float nearly $1 billion in tax-free bonds. Click the title above to listen to the discussion. [includes rush transcript]

"Rep. Kucinich probes Yankee Stadium debt data" Yahoo News 7/25/8

Rep. Kucinich probes Yankee Stadium debt data
By Joan Gralla
Fri Jul 25, 6:36 PM ET

NEW YORK (Reuters) - A Congressman said on Friday he was probing aspects of the tax-free bonds sold to pay for the New York Yankees baseball team's new stadium in the Bronx, including whether land and buildings were accurately valued.

Dennis Kucinich, the Democratic Chairman of the House Committee on Oversight and Government Reform, said in a statement that he "has broadened the Subcommittee's investigation of tax-exempt public financing of professional sports stadiums to include specific document requests relating to the valuation of the new Yankee Stadium."

The Yankees, which have won 26 World Series titles and are one of the world's richest professional sports teams, want a city agency to sell $350 million of extra bonds to help finance their new home.

But the Internal Revenue Service must approve the new debt. It stiffened its rules after $941 million of stadium bonds were sold for the Yankees in 2006.

The Yankees repay the bonds that were sold by making so-called payments in lieu of taxes. If the land and buildings are overvalued, the city agency can sell more debt because the payments in lieu of taxes can be higher.

After years of feuding with New York City and threatening to move out of the Bronx, the Yankees decided to stay put. Their new stadium, which will replace the 1923 building made famous by Babe Ruth, will open in 2009.

While the Yankees say 80 percent of the new tickets will cost less than $100, the high cost of seats near the infield and the stadium's "lavish" design has prompted outrage from state lawmakers and civic advocates. Critics also note that the building has deprived Bronx residents of public park space for longer than expected.

New York state Assemblyman Richard Brodsky on July 2 held a hearing to probe the debt sales and demanded reforms.

Kucinich's subcommittee, which held its first hearing in March 2007, has focused on how pro sports teams repay stadium bonds.

"The subcommittee is investigating the accuracy of representations made to federal agencies and bond investors about the property value of the land and buildings in the stadium construction project," the Congressman said.

The bond issue has gained new currency because the New Jersey Nets basketball team, who plan to move to a new stadium in Brooklyn, New York, also want the IRS to let a city agency sell more than $800 million of tax-free bonds for them. The new arena for the Nets would anchor a big development now struggling in a cooling real estate market.

The New York Mets baseball club, currently replacing Shea Stadium in Queens with a new ballpark, also want more tax-free bonds. In 2006, $548 million of debt was sold for the team, which has won two World Series.

One technical but crucial aspect of Kucinich's probe concerns whether the payments in lieu of taxes that the teams use to repay the bonds qualify as a generally-applicable tax, which would meet the requirement for public funding.

But if these payments are ruled a special charge, these stadiums could only be financed with taxable bonds whose much higher interest rates likely would bar any future deals.

Kucinich said he had written the Yankees, the city's finance and economic development departments as well as the Internal Revenue Service and the National Park Service, seeking more information and documents by August 6.

A Yankees spokeswoman said a committee hearing into the matter had been postponed and declined further comment.

The hearing was set for July 30, and now likely will be held in September, sources familiar with the matter said.

"Congress probing whether city wildly inflated value of land for new stadium" Daily News 7/27/8

Congress probing whether city wildly inflated value of land for new stadium
Sunday, July 27th 2008, 10:03 PM

The new Yankee stadium under construction. The city faces a probe for giving two wildly differing estimates of the value of the land underneath it.

A Congressional committee has launched a probe into whether the city and Yankees wildly inflated the value of the site for the team's new stadium to float nearly $1 billion in tax-free bonds.

Rep. Dennis Kucinich (D-Ohio) last week demanded "specific documents and reports" that could show the city claimed the land beneath the new Yankee stadium was worth nearly seven times its true value.

The massive switcheroo allowed the city to sell $941 million in bonds for the stadium, which must by law be linked to a site's actual value.

That means taxpayers are getting rooked because bondholders avoid paying tax on the interest they earn - and it could jeopardize the financing of the whole project.

Kucinich, who heads the House Committee on Oversight and Government Reform, is zeroing in on dramatically different estimates the city offered for the stadium land - one of $275 per square foot and another of just $45. A hearing is set for September.

"There's no way vacant land in the Bronx is worth $275 a square foot," said a veteran city assessor, who asked not to be identified.

The issue is especially touchy because the Yankees have sought up to an additional $366 million in tax-exempt bonds as costs for the project have soared.

The conflicting figures were first put forward in April 2006, as the city prepared to approve building a new stadium, documents obtained by the Daily News showed.

City Finance Department officials said a large swath of Bronx parkland earmarked for the site of the new ballpark had a market value of $204 million. That comes out to a whopping $275 a square foot.

That preliminary assessment, given to the City Council, was crucial to the Yankees and their bond underwriters.

It established the amount of money under IRS regulations the team could use to pay in PILOTs - payments in lieu of taxes - to repay the debt.

The more the land was worth, the more bonds the city could float for the Bombers.

Less than a month later, in an application the city was required to submit to the National Park Service before it could convert the parkland for stadium use, the Parks Department gave a different estimate.

It said an independent appraisal concluded the land was worth just $45 per square foot.

Why such wildly different values for the same property?

"Our assessors jacked up the numbers and the comparables for the Council to justify the stadium bonds," said a Finance Department official familiar with the project.

Earlier this month, Assemblyman Richard Brodsky (D-Westchester), who heads an assembly committee reviewing the Yankee stadium project, requested copies of all records connected to the Finance Department's 2006 estimate.

"There are some obvious inconsistencies," Brodsky said.

In the 2006 report, former Assistant Finance Commissioner Dara Ottley-Brown said assessors used sales of seven small vacant parcels in Manhattan as comparables to estimate the value of the new stadium's land.

Most of those parcels were in Harlem, one was on the lower East Side and another was in Manhattan Valley, near Columbia University.

"Why use only Manhattan land for comparables when the stadium is in the South Bronx?" said the veteran city assessor.

The independent appraisal around the same time reached the $45-per-square-foot figure for the same parkland.

That appraisal, which the city commissioned from PATJO Appraisal Services, relied only on sales of big vacant parcels in the Bronx as comparables.

The watchdog group, New York City Park Advocates, obtained a copy of the PATJO appraisal under a Freedom of Information Law request and supplied it to The News.

Current sale prices for vacant land in the Bronx, according to Robert Von Ancken, the managing executive of Grubb & Ellis, a major real estate firm, are "between $100 and $125 per square foot."

Finance Department spokesman Sam Miller defended the city's valuation of the stadium land.

That estimate, Miller said, reflected an expected increase in market value of the new stadium site from a new Metro-North station and other infrastructure improvements slated for that area of the Bronx.

If so, that should mean the value of all land around the new stadium also increased.

A review of the Finance Department's latest assessments of an entire block across River Ave. from the new stadium shows an average market value of $36 per square foot for land.

Even more amazing, the city's 2008 assessment of the 10.7 acres of land under the existing stadium - the legendary House That Ruth Built - shows a market value of just $7 million! That's $15 per square foot, if you do the math.

The city would have you believe that when you cross the street to the new stadium site, land values suddenly skyrocket to $275 per square foot.

If that's not inflation, what is?

jgonzalez@nydailynews.com

"City swings suite deal with Yanks while fans strike out" 7/28/8

City swings suite deal with Yanks while fans strike out

BY ADAM LISBERG
DAILY NEWS CITY HALL BUREAU CHIEF
Monday, July 28th 2008, 9:34 PM

Fans will have to pay through the nose for good seats at the new Yankee stadium next year - but city officials will get a luxury suite for free at every game.

The free "Landlord's Suite" must have eight seats plus standing room for four and offer the same "accommodations, services and amenities" as the other suites in the new $1.3 billion stadium, according to the Yankees' lease with the city agency financing it.

The city also gets the right to purchase up to 180 tickets at every home game "for the best seats available" at face value - even for playoffs and the World Series.

"The more you dig, the more strange stuff you find," said Assemblyman Richard Brodsky (D-Westchester), who is probing how the Yankees and the city Industrial Development Agency issued $943 million in tax-exempt bonds for the project.

"I'm not so sure why the city or the IDA deserves a luxury suite," Brodsky said. "I'm not so sure that we want to develop these complicated deals to give someone access to a luxury suite."

The Yankees are seeking another $366 million in tax-free financing for the stadium, but Daily News columnist Juan Gonzalez reported yesterday that Congress is probing whether the value of the stadium land was wildly inflated to justify the tax-exempt bonds.

"I don't think we should be spending money to build skyboxes for City Hall or anyone else," said Bettina Damiani of Good Jobs New York. "The Yankees should be building their own skyboxes."

The Landlord's Suite is supposed to be built with taxable bonds, so American taxpayers will not subsidize its construction.
The new stadium has 47 luxury suites in all, according to published reports, and renting one for a year costs anywhere from $600,000 to $850,000.

The Yankees project they will rake in $253.2 million at the stadium next year. The team says 50% of tickets will cost $45 or less, but seats near home plate will cost as much as $2,500 next year, while some seats behind the dugout will shoot to $850 from $250.

Asked about the city's free suite yesterday, Mayor Bloomberg mistakenly said there would be no such deal at the new Yankee stadium or at Citi Field, the Mets' new home in Queens.

Mayoral spokesman Stu Loeser later acknowledged that the mayor was wrong, but said the city had not decided what to do with the suite.

alisberg@nydailynews.com

"New York assemblyman queries Yankees on stadium subsidy" Daily News July 28

New York assemblyman queries Yankees on stadium subsidy

THE ASSOCIATED PRESS
Monday, July 28th 2008, 4:22 PM
ALBANY, N.Y. - New York Assemblyman Richard Brodsky wants the Yankees to explain why the proposed value for land under Yankee Stadium appears inflated in an Internal Revenue Service tax estimate.

He also wants to know if the city agencies considering the team's request for public funds will get a luxury suite in the new stadium.

The Westchester Democrat raised the questions in a letter to Yankees' President Randy Levine released Monday. Brodsky has questioned the Yankees' request to subsidize the new stadium using $336 million in public funds issued by the city's Industrial Development Agency.

Brodsky also questions the Yankees about 2009 ticket prices and if there will be access for poorer fans.

A spokeswoman for Levine declined comment. A spokeswoman for the IDA said she hasn't seen Brodsky's letter and had no immediate comment.

"This goes to the heart of whether it is a public project or a private project," Brodsky said in an interview. He said his review of documents concerning the project differ from public comments about the deal that would use public support to help the Yankees build their new stadium in the Bronx.

IDA funds, which can include temporary tax breaks and incentives, are most commonly used to attract employers to an area served by the IDA and who promises to increase the number of jobs. Brodsky is chairman of the state Assembly's Corporations, Authorities and Commissions committee, which has jurisdiction to review proposals involving IDAs.

Brodsky seeks answers to several questions about:

A New York City appraisal, obtained by Brodsky, that shows the land under the new Yankee Stadium is valued at $21 million, while city officials once told the IRS the land was worth $204 million.

The apparent purchase of a luxury suite" at the stadium by officials for the city and the city IDA

Ticket prices for 2009 and whether low-income fans will have any seats set aside at prices they could afford.

Facts backing up statements from the Yankees organization that the team would have left New York City if it didn't receive a public subsidy.

The number of jobs to be created by the short, but expensive move across the street from their current stadium.
In a July 2 letter from Levine, released Monday by Brodsky, the Yankees stated about 35 percent of tickets at the new stadium will cost $25 or less. Levine also stated that, so far, New York state firms (including a large share in the city) have received $443 million in contracts.

Levine also noted that the stadium proposal has already been reviewed by several state and city government boards, including the state Legislature where Brodsky supported it twice, and was picked apart by critics and in two losing lawsuits against the project.

The Yankees seek additional public support from the New York City IDA beyond the $941 million in tax-exempt public bonds the organization already has issued for the $1.3 billion stadium. Under current IRS regulations, the Yankees cannot ask for more public debt to be incurred for the stadium. But city officials have been lobbying Washington for a change in IRS regulations that would allow the Yankees to get the additional tax-exempt bonds they say they need.

Such a change could help other big stadium projects.

"Tax-exempt aid for new Yankee Stadium raises questions" Newsday 7/2/8

Tax-exempt aid for new Yankee Stadium raises questions
BY KEITH HERBERT AND MICHAEL FRAZIER | keith.herbert@newsday.com; michael.frazier@newsday.com
July 2, 2008


More than two years ago, New York City and its Major League Baseball teams seized upon an innovative way to use tax-exempt bonds to help fund construction of the New York Yankees' new stadium in the Bronx and the Mets' Citi Field in Queens.

For the Yankees and the New York Mets, the public financing, with its lower interest rates for borrowing money, meant at least $147 million in savings for the Yankees over 30 years and $104 million for the Mets over 40 years, according to the Independent Budget Office, an independently funded, nonpartisan watchdog agency in the city.

But now, the playing field for such financing is shifting, even as the Yankees plan to seek another $350 million in what essentially is a government-subsidized loan for construction of their $1.3-billion arena.

Questions are being raised at both the federal and state levels.

In Washington, the Internal Revenue Service is contemplating a change that could block the Yankees from getting proceeds from the extra tax-exempt bonds the team says it wants to complete the new stadium.

In addition, a congressional subcommittee is asking the U.S. Treasury Department to explain why the financing for the Yankees and Mets was allowed in the first place and whether the IRS can change its regulations to more strictly limit publicly backed financing of sports stadiums. Rep. Dennis Kucinich (D-Ohio), who chairs a subcommittee of the House Oversight and Government Reform Committee, is leading the inquiry.

Here in New York, the prospect of additional public financing for the Yankees prompted Assemb. Richard Brodsky (D-Westchester), chairman of the Assembly's Committee on Corporations, Authorities and Commissions, to set a hearing today in Manhattan.

Is there a public benefit?

Brodsky, who last week called stadium financing "socialism for the rich," will aim questions at Seth Pinsky, president of the city's Economic Development Corp., the agency that put together the financing deal for the Yankees.

"What's the public benefit?" Brodsky said when asked what the committee, which has oversight of public bond financing, hopes to focus on at the hearing.

Pinsky said the project will boost the city's economy with the construction jobs and other revenue they bring.

"This is an amazing investment by the city," Pinsky said, referring to the new stadium in the Bronx. "The two major league stadiums being built today represent private investments of more than $2 billion in two underserved and deserving neighborhoods," Pinsky said.

Use of the public financing route stems from the fact that the Yankees don't own the land upon which the stadium is being built. The city does. Because the team doesn't pay any real estate taxes, the stadium deal hinged on compensation using payment-in-lieu-of-taxes, commonly called PILOT.

PILOT payments, however, usually are linked to real estate taxes, hotel taxes or sales taxes. In the Yankees' case, the PILOT is earmarked as a repayment of money for stadium construction borrowed by the city's Industrial Development Agency.

Without the tax-free government bonds to raise cash, the Yankees would have to shop for money via private financing and thus face higher borrowing costs.

City officials and the Yankees confirmed that they have been lobbying Treasury Department officials in Washington to persuade regulators not to make the change, and thereby continue allowing the PILOT funding mechanism.

Yankees president Randy Levine said the financing structure should remain unchanged.

"Our original transaction always contemplated completion bonds," Levine said last week. "We believe it's not fair to change course midstream of a transaction."

Controversial funding mechanism

The bond document signed in 2006 by the Yankees and the city provides that additional borrowing can be sought for the stadium's completion.

For the IRS, the funding mechanism has been a thorny question since 2006. Shortly after the agency approved the use of the PILOT method to pay for both New York stadiums, tax regulators proposed new restrictions on the use of PILOTs.

The proposed change in the IRS regulation, under consideration by U.S. Department of Treasury and IRS officials in Washington, also seems to be dousing the hopes of other sports-stadium developments, including the $950-million, 18,000-seat basketball arena for the Nets that had been planned as the jewel of Atlantic Yards, a residential and commercial development in downtown Brooklyn.

Andrew DeSouza, a spokesman for the Treasury Department, said the proposed change would affect bonds sold after Feb. 16, 2007.

"They haven't been finalized yet," DeSouza said of the proposed IRS changes. "I'm not saying that they'll change. But it's an important issue and we're going to continue working on it."

How budget breaks down

The new Yankee Stadium, rising next to the 85-year-old stadium in the Bronx, originally carried an $830-million price tag. Driving the cost to $1.3-billion are changes made to the original plans: upgrades to concession stands, a larger, high-definition scoreboard in centerfield and nicer luxury boxes.

About $942 million in tax-exempt bonds and $25 million in taxable bond financing are part of the Yankee Stadium deal.

The city also has contributed parkland for the new stadium, and the Metropolitan Transportation Authority plans to build a Metro-North station and expanded subway platform. The state is contributing the cost of parking-garage construction. A total of $300 million is estimated to be the public contribution to the project.

The Yankees organization has assured city officials that the new stadium will be completed regardless of any IRS changes.

Similarly, for the $632-million Mets stadium, a large portion of the cost - $528 million - also would come from tax-exempt bonds.

Jay Horwitz, a spokesman for the Mets, said he had no comment when asked if the Mets had plans to seek additional tax-exempt borrowing to complete Citi Field.

The Yankees' tax problem

TAX REFORM ACT

1986: This federal legislation removed stadiums from the list of private business projects that could be financed with tax-exempt industrial development bonds. In limited cases, however, the law allows tax-exempt government bond financing for stadiums as long as local governments subsidize construction using "generally applicable taxes," such as a sales tax, real estate tax or hotel tax. The rules were designed to ensure that the federal subsidy of tax-exempt-bond financing was targeted at low-cost financing for critical public infrastructure projects.

DEALS FOR NEW YANKEES & METS STADIUMS

2006: Both the New York Yankees and New York Mets win financing deals for new stadiums in which New York City's Economic Development Corp. issues tax-exempt bonds to raise $830 million for a new Yankee Stadium and $547 million for a new Mets stadium, Citi Field. The tax-exempt government bond financing allowed the city's Industrial Development Agency to borrow money at a cheaper interest rate, saving the teams millions. To get around the 1986 IRS regulations, the deal crafted by the city and the teams utilized a PILOT mechanism - that is, payment in lieu of taxes. For the teams, the payments are equivalent to the loan payments the city must make to retire the debt incurred to build the stadium.

YANKEES NEED MORE

STADIUM CASH

February 2008: Planned upgrades to the scoreboard, concession stands and luxury suites spark the Yankees to seek an additional $350 million in tax-exempt borrowing via the city's EDC. The problem lies in potential revision of an Internal Revenue Service regulation - a revision proposed shortly after the Yankees and Mets got IRS approval for their tax-exempt financing in 2006.

STRICTER IRS REGULATION OF PILOTS COULD NIX MORE YANKEES' BORROWING

The proposed regulation under review by the U.S. Treasury Department and IRS would impose stricter interpretation of rules governing PILOTs. The proposed regulation would require PILOTs to be closely tied to "applicable taxes" such as a real estate tax, rather than a fixed payment - in the Yankees' case, a PILOT equal to the debt service on the bonds. The change could disqualify the Yankees from benefiting from further tax-exempt government financing via PILOTs. The Yankees are trying to persuade Treasury and IRS officials to drop the proposed regulation.

- KEITH HERBERT

"Rip-Off In The Bronx" WNBC 7/10/8

Rip-Off In The Bronx
By Gabe Pressman, Senior Correspondent

POSTED: 12:12 pm EDT July 10, 2008
UPDATED: 12:51 pm EDT July 10, 2008

NEW YORK -- If the people who live near Yankee Stadium believed what they were told about new parkland being built, they were deluded. That promise was a scam in a city with a rich history of scams.

This one is particularly atrocious because it hurts a neighborhood that can ill afford to lose any recreational facilities.

The Yankees made a deal with the city back in 2006 to take 25 acres of parkland to build their new stadium. The Bloomberg administration, then Gov. George Pataki and the New York Yankees promised that not only would the parkland be replaced. More land for parks would be provided. That turns out to be a false promise.

The group known as NYC Park Advocates has put out a report showing that only 21.78 acres of park land are being replaced -- meaning that the community is actually losing about four acres. The Yankees are the richest team in baseball and the Bronx neighborhood where it’s located is one of the poorest in the country.

The city and the Yankees seem to be playing a three-card monte game with the people affected.

The people have lost much of Macombs Dam and John Mullaly parks. Hundreds of trees, many at least 80 years old, have been cut down to make way for the new stadium.

That’s hardly a good thing for a community with a high asthma rate. On top of that, replacement facilities are being built over smaller plots of land and on the roof of a parking garage.

That doesn’t sound like anyone is truly interested in giving the folks in this neighborhood anything like what they lost.

City Hall says that construction costs have risen astronomically, from the $95.5 million estimated in 2006 to the current price tag, $174 million. The Yankees are also paying about 60 percent more to build the new stadium but they are getting help from taxpayer subsidies.

It’s been estimated that it will take two years to complete the so-called replacement parks. Don’t bet on it. Nor should anyone be convinced that the new parks are really new parkland. Some of it may have been listed as mapped parkland in years past.
There’s a park near the stadium named after Joyce Kilmer. He wrote the poem that begins: ‘’I think that I shall never see a poem as lovely as a tree….’’

Now they’ve torn the trees down nearby---and done it in the name of progress. As a kid I played in Macombs Dam Park. It was an oasis for young people in the neighborhood then ---and in the decades since.

Today, the kids and the neighborhood people who use the parks for recreation seem to be ignored as the city moves ahead with its grandiose plans to help the Yankees---no matter whom it hurts.

"NYC, Yankees Redefine Crookery" Sports Central 7/2/8

NYC, Yankees Redefine Crookery
By Diane M. Grassi

Just prior to the beginning of this 2008 Major League Baseball season, this writer wrote an article titled MLB Goes To Harlem Seeking Welfare, primarily examining the deceit and misappropriation of funds, regarding the new Yankee Stadium project.

It referenced the public entitlements that MLB will be receiving from the City of New York in the form of public financing and incentives, including a direct cash payment to MLB to the tune of $5 million in order to lure the tenancy of its new baseball broadcast network offices into a new high-rise building in the historic neighborhood of Harlem.

Since that time, in March 2008, the New York City Council has approved and ratified the complete rezoning of the entirety of Harlem in order to level up to 76 neighborhood businesses and residences, to completely and forever change the skyline of this once hallowed neighborhood.

The rezoning will provide for the construction of buildings over 20 stories high and is a boon for big businesses looking to cash in on lower real estate costs, especially in light of the present mortgage crisis and with property values in flux.

That prior report also discussed the parameters and arrangements of the initial public financing of both new stadiums for the NY Yankees and the NY Mets, set to be ready for Opening Day 2009 and both beneficiaries of such funding.

But upon further inspection, in addition to now realized and disclosed cost-overruns by the NY Yankees just recently, these rather complex and in some cases unorthodox arrangements extended the Yankees by the City of NY date back to former Mayor Rudy Giuliani's administration in the mid-'90s.

And as recently as mid-June 2008, the Yankees are looking for even more handouts from NYC and New York State taxpayers between $350-400 million in funds, bringing the total and final cost of the new Yankee Stadium to nearly $2 billion, up from the its current total of $1.3 billion. And of the $2 billion, the majority would be funded either directly or indirectly by public subsidies.

But the machinations of the funding as well construction costs are now just part of the story and now includes both ongoing federal and state investigations on a multitude of issues where there is no shortage of actors in this drama.

One would think that the NY Yankees new stadium would not necessitate so many state and federal agencies and investigations, including nefarious characters involved in this script, no better suited for Broadway.

However, the new Yankee Stadium construction now includes the issues of graft within City Hall, including the former Giuliani administration, the hiring of state and federal lobbyists of both the U.S. Congress and the Internal Revenue Service, a state probe of construction fraud and violations, a Manhattan District Attorney's office racketeering investigation, an FBI probe, the Seminole Indian Tribe — with its own federal problems — and the lack of oversight by the NYC Economic Development Corporation, the NYC Buildings Department, the NYC Parks Department, as well as the NY Yankees.

In order to simplify, this part of the series discusses the involvement of the New York State legislature, as well as the IRS. The next article will delve into the more involved details concerning NYC and the NY Yankees organization and how both of their interactions and deals have led to all of their various conflict-of-interest scenarios.

What got the ire of the NY State legislature was perhaps best described by NY State Assemblyman Richard Brodsky, Chairman of the Committee on Corporations, Authorities, and Commissions. "These decisions are being made in secret, in these Soviet-style meetings and it is outrageous." Brodsky was referring to a meeting between the NY Yankees and Mayor Michael Bloomberg's administration and its Economic Development Corporation office.

It was revealed that NYC is seeking relief from the Internal Revenue Service (IRS) to receive a special waiver from a law that the IRS amended in 2006 concerning the amount of tax-exempt bonds that may be allotted for the public financing of sports stadium facilities.

The Yankees' argument is that the amendment should be waived retroactive to 2004, when the original agreement with NYC was finalized. However, over $940 million in tax-exempt bonds have already have been floated for Yankee stadium alone.

With the NY State legislature's shortfalls in its present annual budget, Brodsky, among other legislators, feel that the $60-70 million in lost NYC, as a direct result of issuing more tax-exempt bonds, could be better spent on its infrastructure in desperate need of repairs.

Similarly, the United States Congress has gotten involved, as both NYC as well as the NY Yankees have hired lobbyists to get face time with various members of Congress serving on various finance committees who may have influence over the IRS and input in its special consideration of the NY Yankees.

But certain members of Congress believe such would set a terrible precedent for sports stadium construction all over the nation and that there was good reason for reeling in the financial structuring of such ventures, especially at a time when states are considerably strapped for cash.

Among the amenities that the NY Yankees claim they need the additional financing for is a larger video scoreboard. It is curious as to why in June 2008 that the NY Yankees all of a sudden had a need to enlarge the scoreboard decided upon a few years ago in its finalized plans. Could it be that over the winter the Kansas City Royals installed a new scoreboard at Kauffman Stadium which is now the largest of its kind in North America?

If there were not so many serious issues involved in this whole matter, it certainly would be comical. But this is past the point of amusement. It is but greed, abuse of power, and thievery in the dead of night all on the backs of New York residents and that which has potential national ramifications for all of professional sports.

As we will see in the next report, you cannot make this stuff up!

"Tax-exempt aid for new Yankee Stadium raises questions" Newsday 7/2/8

Tax-exempt aid for new Yankee Stadium raises questions
BY KEITH HERBERT AND MICHAEL FRAZIER | keith.herbert@newsday.com; michael.frazier@newsday.com
July 2, 2008

More than two years ago, New York City and its Major League Baseball teams seized upon an innovative way to use tax-exempt bonds to help fund construction of the New York Yankees' new stadium in the Bronx and the Mets' Citi Field in Queens.

For the Yankees and the New York Mets, the public financing, with its lower interest rates for borrowing money, meant at least $147 million in savings for the Yankees over 30 years and $104 million for the Mets over 40 years, according to the Independent Budget Office, an independently funded, nonpartisan watchdog agency in the city.

But now, the playing field for such financing is shifting, even as the Yankees plan to seek another $350 million in what essentially is a government-subsidized loan for construction of their $1.3-billion arena.

Questions are being raised at both the federal and state levels.

In Washington, the Internal Revenue Service is contemplating a change that could block the Yankees from getting proceeds from the extra tax-exempt bonds the team says it wants to complete the new stadium.

For the IRS, the funding mechanism has been a thorny question since 2006. Shortly after the agency approved the use of the PILOT method to pay for both New York stadiums, tax regulators proposed new restrictions on the use of PILOTs.

The proposed change in the IRS regulation, under consideration by U.S. Department of Treasury and IRS officials in Washington, also seems to be dousing the hopes of other sports-stadium developments, including the $950-million, 18,000-seat basketball arena for the Nets that had been planned as the jewel of Atlantic Yards, a residential and commercial development in downtown Brooklyn.

Andrew DeSouza, a spokesman for the Treasury Department, said the proposed change would affect bonds sold after Feb. 16, 2007.

"They haven't been finalized yet," DeSouza said of the proposed IRS changes. "I'm not saying that they'll change. But it's an important issue and we're going to continue working on it."

How budget breaks down

The new Yankee Stadium, rising next to the 85-year-old stadium in the Bronx, originally carried an $830-million price tag. Driving the cost to $1.3-billion are changes made to the original plans: upgrades to concession stands, a larger, high-definition scoreboard in centerfield and nicer luxury boxes.

About $942 million in tax-exempt bonds and $25 million in taxable bond financing are part of the Yankee Stadium deal.

The city also has contributed parkland for the new stadium, and the Metropolitan Transportation Authority plans to build a Metro-North station and expanded subway platform. The state is contributing the cost of parking-garage construction. A total of $300 million is estimated to be the public contribution to the project.

The Yankees organization has assured city officials that the new stadium will be completed regardless of any IRS changes.

Similarly, for the $632-million Mets stadium, a large portion of the cost - $528 million - also would come from tax-exempt bonds.

Jay Horwitz, a spokesman for the Mets, said he had no comment when asked if the Mets had plans to seek additional tax-exempt borrowing to complete Citi Field.

The Yankees' tax problem

TAX REFORM ACT

1986: This federal legislation removed stadiums from the list of private business projects that could be financed with tax-exempt industrial development bonds. In limited cases, however, the law allows tax-exempt government bond financing for stadiums as long as local governments subsidize construction using "generally applicable taxes," such as a sales tax, real estate tax or hotel tax. The rules were designed to ensure that the federal subsidy of tax-exempt-bond financing was targeted at low-cost financing for critical public infrastructure projects.

DEALS FOR NEW YANKEES & METS STADIUMS

2006: Both the New York Yankees and New York Mets win financing deals for new stadiums in which New York City's Economic Development Corp. issues tax-exempt bonds to raise $830 million for a new Yankee Stadium and $547 million for a new Mets stadium, Citi Field. The tax-exempt government bond financing allowed the city's Industrial Development Agency to borrow money at a cheaper interest rate, saving the teams millions. To get around the 1986 IRS regulations, the deal crafted by the city and the teams utilized a PILOT mechanism - that is, payment in lieu of taxes. For the teams, the payments are equivalent to the loan payments the city must make to retire the debt incurred to build the stadium.

YANKEES NEED MORE

STADIUM CASH

February 2008: Planned upgrades to the scoreboard, concession stands and luxury suites spark the Yankees to seek an additional $350 million in tax-exempt borrowing via the city's EDC. The problem lies in potential revision of an Internal Revenue Service regulation - a revision proposed shortly after the Yankees and Mets got IRS approval for their tax-exempt financing in 2006.

STRICTER IRS REGULATION OF PILOTS COULD NIX MORE YANKEES' BORROWING

The proposed regulation under review by the U.S. Treasury Department and IRS would impose stricter interpretation of rules governing PILOTs. The proposed regulation would require PILOTs to be closely tied to "applicable taxes" such as a real estate tax, rather than a fixed payment - in the Yankees' case, a PILOT equal to the debt service on the bonds. The change could disqualify the Yankees from benefiting from further tax-exempt government financing via PILOTs. The Yankees are trying to persuade Treasury and IRS officials to drop the proposed regulation.

- KEITH HERBERT

"Hot dog clause in financing of new stadium gives taxpayers heartburn" Daily News 7/2/8

Hot dog clause in financing of new stadium gives taxpayers heartburn
Wednesday, July 2nd 2008, 12:56 AM

Call it the secret Hot Dog Giveaway.

The Yankees could be allowed to operate up to 25 vendor pushcarts outside the new stadium as part of a secret provision the team negotiated with the city and state for parking garages being built with public financing.

The "hot dog" clause - never made public until now - would kick in if the Yankees don't get 600 free year-round parking spaces.

That little goodie is just one ofseveral revelations buried in thousands of pages of documents and e-mails about the stadium project that city officials recently gave Assemblyman Richard Brodsky (D-Westchester).

Brodsky, who heads the assembly committee that oversees public authorities, demanded the documents after learning last month that the city's Industrial Development Agency was backing a Yankee request for $366 million in additional tax-exempt financing to complete the Bronx project.

The new request comes on top of the $942 million in taxexempt bonds the Yankees have received.

Brodsky has scheduled a public hearing today on the entire project. It islikely to be the toughest public review the $1.3 billion stadium has received.

"The more you see of authorities like the IDA, the more you realize they act like old-style Soviet commissars," Brodsky said. "No one has elected them, they're not accountable to anyone, and they operate in secrecy."

The assemblyman was furious when he learned that City Hall and state economic development officials have quietly urged the Internal Revenue Service to change its regulations to allow the Yankees and other city teams to pile up more tax-exempt debt simply to finance what are essentially private projects.

According to other documents IDA released to Brodsky, Mayor Bloomberg and former Gov. George Pataki greatly exaggerated the number of permanent jobs the new Yankee stadium will produce.

At the groundbreaking in August 2006, Bloomberg announced that the new stadium would "result in about 1,000 permanent jobs."

The actual job figures the Yankees submitted in their application to the IDA told a far different story.

They show the Yankees had only 104 full-time permanent employees in 2005. Included in that total were all team executives, ballplayers, office workers and maintenance personnel. Barely half were city residents.

The number of full-time permanent jobs, the Yankees projected, would increase to 140 by 2009, the year the new stadium will open. That's a gain of just 36 permanent jobs.

The big increase was expected to come in seasonal workers. The team predicted their number will jump from 440 in 2005 to 950 by the time the stadium opens - an increase of 510 part-time jobs.

In the team's newest application for more money, submitted by Yankees Vice President Lon Trost in March, the Yankees reported 879 part-timers on the payroll.

Amazingly, more than 700 of those part-timers live outside the five boroughs. So even the part-time jobs are barely benefitting city residents or the team's Bronx neighbors.

So why, we might be expected to ask, is City Hall backing hundreds of millions more in tax-exempt financing for a private business that barely employs city residents?

"At a time when we can't find enough money for the MTA and other public needs, who is making the decision to put these public resources in the hands of private parties?" Brodsky wants to know.

Well, the bureaucrats over at the IDA will finally get to explain today why they keep falling over themselves to give the richest team in American sports more public subsidies.

jgonzalez@nydailynews.com

"Corruption probe subpoenas are blanketing the Bronx" Daily News 6/30/8

More interesting is this second item:

Fort Yankee Stadium

Mayor Bloomberg apparently has adopted a bunker mentality on the new Yankee Stadium project, as serious questions arise over "equal" replacement of parkland, huge cost overruns, questionable financing and other issues.

Parks Commish Adrian Benepe is now under orders to pass any media inquiries about the project directly to Mayuh Mike's press office.

Maybe City Hall needs to build a bunker under the new stadium. ...