"Rep. Charles Rangel lobbied IRS for tax breaks on behalf of Yankees" Daily News 9/15/8

Rep. Charles Rangel lobbied IRS for tax breaks on behalf of Yankees
BY GREG B. SMITH
DAILY NEWS STAFF WRITER
Monday, September 15th 2008, 3:32 AM

The city and the Yankees secretly crafted a letter Rep. Charles Rangel used to lobby the IRS for tax changes that would save the team $66 million, the Daily News has learned.

They did this at the same time Yankees owner George Steinbrenner and the team's law firm, Akin Gump Strauss Hauer & Feld, raised almost $25,000 for Rangel, records show.

The law firm's political action committee also donated an additional $30,000 to the Democratic Congressional Campaign Committee in this election cycle. Rangel is chairman of the DCCC's board of directors and a key fund-raiser for House Democrats. Yankees President Randy Levine is senior counsel at Akin Gump.

The Rangel letter was just one weapon in the Yankees' ongoing battle to get more tax-exempt financing for the new stadium rising in the Bronx. Last year, the team got $942 million in tax-free bonds through a city agency, but the team wants $350 million more.

If the new bonds go through, the Yankees would lower their borrowing costs by $66 million on top of the $181 million they're already set to save from the first round of tax-free bonds, the Independent Budget Office estimates.

Internal e-mails and correspondence obtained by The News under the Freedom of Information Act show how the Yankees and Mayor Bloomberg's top deputies have worked hand in hand to win special tax breaks for America's richest team.

In one letter, the Yankees invited city officials to a special behind-the-scenes MLB preview of the 2007 All-Star game in San Francisco. This year's All-Star game was held at Yankee Stadium. City officials could not say which officials went or how much the trip cost taxpayers.

A key obstacle for the Yankees' financing remains the Internal Revenue Service. That's where Rangel, chairman of the powerful tax-writing House Ways and Means Committee, came in.

$350M break for Bombers

IRS regulations adopted in the mid-1980s - at the request of the late New York Sen. Daniel Moynihan - restrict the use of tax-free financing for sports arenas.

In 2006, the city got the IRS to grant an exception that allowed the Yankees to obtain $942 million in tax-exempt bonds - but the cost of the stadium began to rise, and the exception expired.

Now the Yankees say they need $350 million more in tax-free bonds, so they're pressing the IRS for another exception.

On Jan. 4, Levine e-mailed an unsigned Rangel letter to then-Deputy Mayor Dan Doctoroff along with "talking points" explaining the need to change the IRS regulations.

"Dan," the e-mail begins, "Happy New Year. Per our discussion, attached is 1) a proposed letter from Congressman Rangel to the IRS and 2) talking points. If you have any questions, please call me. Thank you. Best, Randy."

Levine says the letter and accompanying "talking points" were written by the city but "reviewed" by Yankees in-house tax lawyers before being sent to Rangel.

"The January letter was prepared by the city," Levine said. "They sent it to us to review for facts and [to see] if we agreed, which we did. We sent it back to the city saying it's up to them, do whatever they want. We had no problem with it."

Levine said he had "no knowledge of whether any of our tax lawyers made some suggestions as to form, or corrected the original draft. As to me, I made no changes."

Rangel's spokesman Emile Milne said the letter to IRS Acting Commissioner Linda Stiff was sent. The agency acknowledged its receipt.

The mayor's office said outside counsel hired by the city wrote the letter, which was "revised by city and state counsel." The office declined comment on whether the Yankees or anyone else reviewed the Rangel letter.

Ultimately, the IRS rejected the Rangel letter and requested a letter directly from the city in May, the mayor's office said.

Campaign donations spike

Rangel has received campaign contributions from the Yankees and Akin Gump for years, but in this election cycle - after he became chairman of the House Ways and Means Committee - the contributions spiked to $24,950.

Some of the donations appear to be choreographed to get around the $4,600 limit on how much an individual can give a congressional candidate. Last summer, 14 Akin Gump lawyers made $250 to $1,000 donations for a total of $12,850.

Yankees executives, Akin Gump lawyers and Akin Gump's political action committee have raised $45,000 for Rangel and his affiliated National Leadership PAC since 2000.

In 2006, Akin Gump - a bipartisan firm that for years has donated thousands to both Democrats and Republicans - reported that the Yankees hired the firm to lobby the U.S. Department of Interior for "federal approval required to complete stadium relocation."

That job ended Jan. 1, 2007. Levine said the Yankees hired the law firm again three months ago - this time to represent the team in a congressional probe on the use of public funds for sports arenas. Hearings are set for this week.

Levine said the firm had nothing to do with the Rangel letter and insisted the letter was meant to serve the interests of the Yankees and other projects, such as the Mets' new stadium and developer Bruce Ratner's proposed Nets' arena in Brooklyn.
Mets officials said they had nothing to do with the letter.

A spokesman for Ratner did not return calls.

gsmith@nydailynews.com