Wednesday, September 17, 2008

"Brodsky Slides in Front of City's Stadium Plans" The Observer 9/16/8

Brodsky Slides in Front of City's Stadium Plans
Westchester assemblyman has Dennis Kucinich on his side—but why all the fuss?

On Thursday, inside the Rayburn House Office Building in Washington, D.C., two legislators will convene a hearing on the financing of New York sports stadiums. Neither are from New York City, but the duo, Assemblyman Richard Brodsky of Westchester and U.S. Representative Dennis Kucinich of Cleveland, have begun a crusade against a complex city-crafted plan to finance new stadiums and arenas for the Yankees, Mets and Nets.

At the least, the two stand to be a biting irritant to city officials and sports executives, as City Hall seeks to fight back on one news-making charge after another. But more than an annoyance, the two bring publicity, scrutiny and attention to the issue that could conceivably influence an impending ruling at the Internal Revenue Service on the matter, threatening the development of the planned $950 million Nets basketball arena in Brooklyn and additional loans for the Yankees and the Mets.

The chairman of the Domestic Policy Subcommittee, Mr. Kucinich is holding the hearing as part of his larger focus on subsidized sports arenas and a Congressional probe on the Yankee Stadium deal. At the hearing, Mr. Brodsky expects to present a report he released Tuesday that’s highly critical of multiple aspects of the city’s financing deal for the new Yankee Stadium.

The focus of the two men—one a loud and often relentless critic of many Bloomberg administration policies; the other a mousy, twice-failed far-left presidential candidate—is on a complicated mechanism the city used to win tax-free financing for the new Mets and Yankees stadiums (and plans to use to finance the new Nets arena). The Mets and Yankees already have obtained their financing, but both teams want more to cover additional costs. The Nets have yet to gain approval for the financing, with plans to break ground on a new arena before the end of the year. The I.R.S. has criticized the mechanism as a loophole and has yet to rule on whether the teams can get any additional financing through the city’s structure.

Without the mechanism, for which the teams give fixed payments in lieu of taxes that pay off hundreds of millions of dollars in bonds, costs would rise substantially for each of the three teams, and in the case of the Nets, perhaps further upset an already troubled project.

At issue is the tax-exempt aspect of the financing. Under the Bloomberg administration’s arrangement, once the city-controlled Industrial Development Authority approves the financing plan, the teams are eligible to issue hundreds of millions in bonds that are free from city, state and federal taxes. Such savings can lower the cost to the teams by perhaps 15 or 20 percent.

But now, two and a half years after the IDA first approved the Yankees for the financing, the two lawmakers are crying foul in a loud, public way, questioning both the premise that the stadium deals are indeed a public good and the legality of the details in the financing mechanism.

For their part, Bloomberg administration officials are proud of their work and say they have nothing to hide in the deal, which uses a tax-free structure with a relatively minor amount of city and state investment to leverage a major federal subsidy for city projects. The financing allowed for billions in private investment, officials contend, making Mr. Brodsky’s crusade a frustrating one, especially as the financing mechanism for the Nets is up in the air.

“Why is he trying to create additional challenges for economic development beyond the challenges that the larger economy is already creating?” said Seth Pinsky, president of the city’s Economic Development Corporation and an architect of the financing agreement. “It’s unclear to me what Richard Brodsky’s endgame is.”

Mr. Brodsky, who was the leading state legislative voice against the mayor’s failed congestion pricing proposal, holds that the issue is no different from any of those on which he focuses, and highlights a need for reform of the state’s public authorities, his pet cause.

“The state IDA law, in my opinion, was at best manipulated,” he said. The investigation is “consistent with the abuse of the state authority structure. … These are run as Soviet-style bureaucracies with no transparency and no accountability.”

Looking at the deal—a Yankees request for an additional $350 million in tax-free financing, for instance, would have meant $3.6 million and $6.7 million in estimated subsidy from the city and state, respectively, compared with $72.6 million from the federal government—the city and state appear to come off fairly well. But Mr. Brodsky points to broader questions of legality with the deal in its entirety. In his report on the issue, he alleged that property assessments were artificially boosted to meet the financial arrangement, and that there are legal questions as to whether the city had the right to take on new public debt without other approvals, among other issues. (The city has denied any wrongdoing on assessments or other questions of legality.)

The attention of Mr. Kucinich, who declined to comment in advance of the hearing, comes as the I.R.S. in a waning Bush administration weighs the request by the city and state to allow the use of their financing structure for the Nets arena. The city and state want the agency to allow the use of the structure for projects that were already in the pipeline, and the I.R.S. is expected to issue its ruling shortly.


Post a Comment

<< Home