"Tax-exempt bonds part of baseball's growth plan" USA Today 10/28/8

Tax-exempt bonds part of baseball's growth plan

The irony is lost on no one as the issue of tax-free bonds being used to finance the building of the new facilities for baseball's Yankees and Mets and the NBA's Nets in New York City continues to be investigated by both the state of New York and the Congressional Subcommittee on Domestic Policy.

At a time when the Presidential race centers on the economy, taxes and spreading (or not) the wealth, subcommittee chairman Dennis Kucinich (D-Ohio) said the issue before his subcommittee amounts to the "transfer of wealth from the many taxpayers to a few wealthy owners."

The congressional subcommittee heard testimony in Washington last Friday from Yankee and New York City officials on the Yankees bond issue.

The Yankees have already received $942 million in tax-exempt bonds for the construction of the new Yankee Stadium. They are seeking another $366 million in such bonds.

One of the issues is weather the city properly adjusted the value of the new stadium's land from the original assessment of $26.8 million to $204 million in order for the Yankees to be eligible for that extra bond money.

There was evidence presented to the subcommittee Friday of e-mails from two aids of New York City Mayor Michael Bloomberg that indicate the mayor's office was involved in helping to navigate the change in the assessment.

New York Assemblyman Richard Brodsky, who has opposed the use of the bonds for stadium structures, has charged the city "cooked" the valuations so the Yankees could get what they wanted and that the method to do so was "illegal."

Martha Stark, the city's finance commissioner testified on Friday that the re-assessment came about because of an initial mistake. She said the original valuation was wrong because "they used vacant land rather than land that had benefited from government infrastructure improvements and investments. Remember, (the finance commissioner) had been asked to value the property, including the land as it would exist if fully completed. This (the first valuation) value did not reflect that."

Yankees president Randy Levine testified as to the benefits for the city derived from having the Yankees in New York and the money staying in the city from the construction work.

Levine continued with an argument that has long been made by the Yankees: "And as I've mentioned, without a new stadium the Yankees would have been forced to leave the Bronx."

Note, Levine did not say the team would have been forced to leave New York.

Levine did testify that, "There was no shortage of suitors." While refusing to list those suitors, Levine said New Jersey was "absolutely" on that list.

The New York Times followed that testimony up by contacting the current and former chairmen of the New Jersey Sports and Exposition Authority, an organization long rumored to have been either wooing the Yankees or being wooed by the team to move to New Jersey.

Those gentleman told the Times, in a story printed Saturday, that they "…never had conversations with any representatives of the New York Yankees about them relocating to the Meadowlands."

Perhaps all the New Jersey talk was to gain leverage for the Yankees to get what they wanted from New York City. That appears to have worked, but at what price to the taxpayers?

Congressman Elijah Cummings of Maryland said on Friday, "What we see in New York with the development of the new Mets and Yankee stadiums is a situation where the federal government was simply taken to the bank. We are essentially offering these teams interest-free loans by issuing tax-exempt federal bonds for construction of the stadiums and allowing them to pay them back in place of taxes."

Cummings noted that the IRS revised their regulations, effective Friday, to prevent future deals where tax-free bonds could be used in this manner to avoid taxes.

At a time when the economy is in the tank, such largess to owners of baseball teams, especially the Yankees with their enormous profits, does not sit well with many. The last thing such teams want now is further publicity about public funding for their places of business.

Nevertheless, there will be more to come. The congressional subcommittee is not done its investigation and Brodsky has refused to let the issue die.

The impact the publicity generated by these investigations will have on teams such as the Florida Marlins and Tampa Bay Rays in their effort to attain new stadiums areas remains to be seen.

Stay tuned.

"Yankees Say They Would Have Left Bronx if Pushed" NY Times 10/24/8

Yankees Say They Would Have Left Bronx if Pushed

By RICHARD SANDOMIR
Published: October 24, 2008
WASHINGTON — Randy Levine, the president of the Yankees, told a Congressional hearing Friday that if the city had not issued tax-exempt financing for the team’s new stadium, it would have left town.

“It’s been no secret for many years” that the team would move if it could not save tens of millions of dollars on financing with tax-free bonds, Levine told the House subcommittee on domestic policy. He added: “There was no shortage of suitors. We see ourselves as a paradigm in professional sports.”

Levine refused to be specific about the other suitors, but when asked after the hearing if New Jersey has wooed the Yankees in recent years he said, “Absolutely!”

He did not say if the interest had emanated from the New Jersey Sports and Exposition Authority, the landlord of the Meadowlands complex. But Carl Goldberg, a board member since 2002 and chairman since 2003, said by telephone, “I’ve never had conversations with any representatives of the New York Yankees about them relocating to the Meadowlands.”

George Zoffinger, the former president, confirmed the history.

Since the 1980s, the Yankees had sought a replacement for Yankee Stadium in the Bronx and Manhattan. And in 1987, New Jersey voters rejected by a 2-to-1 margin a $185 million bond proposal to build a baseball stadium, presumably for the Yankees.

That did not end speculation that George M. Steinbrenner, the Yankees’ principal owner, was looking to New Jersey at least as leverage to get what he wanted in New York.

The allure of New Jersey endured into 2006 — years after the team’s annual attendance reached three million and then four million. In June 2005, at a gala unveiling for designs of the new ballpark, Steinbrenner declared the team would stay in the Bronx. But at that time, the financing deal with the city had not been reached.

In early 2006, the city’s Economic Development Corporation recommended how to make the stadium project eligible for more than $900 million in tax-exempt financing.

In a memo to Mayor Michael R. Bloomberg, Andrew Alper, then the E.D.C. president, said the likely result of not providing the tax-free bonds “was the loss of the New York Yankees.” Alper said the Meadowlands “could easily be reconfigured to accommodate a stadium for the relocation of a major league baseball franchise” and that the Yankees’ appeal would let them relocate “within the tri-state area, the country and even internationally.”

Alper said earlier this week that he did not recall the details of the memo or whether the Yankees had made specific threats to move.

After the hearing Friday, Seth W. Pinsky, the E.D.C. president, said he was not in his position when the Yankees were approved for the bonds. “The Yankees clearly were interested in staying in the Bronx in a stadium that accommodated their needs,” Pinsky said.

Levine said he made the team’s position clear during the negotiations that led to the 2006 financing deal. He said in a telephone interview that the team would have acted on options if the Bronx talks had died. “Since the stadium in the Bronx did happen,” he said, “nothing was pursued.”

The often-testy hearing came four days after the Internal Revenue Service agreed to let the Yankees and the Mets issue more tax-exempt bonds to complete their stadium financing and for the Nets to issue them for their new arena near downtown Brooklyn.

Much of the testimony Friday focused on how the city’s Department of Finance assessed the value of the land underneath the new Yankee Stadium.

Assemblyman Richard L. Brodsky, Democrat from Westchester, said assessments of $26.8 million and $204 million, reached on consecutive days in 2006, were evidence that the city had “cooked” the valuations to help the Yankees maximize the tax-exempt financing they wanted. He testified that an “illegal” methodology was used to reach the bigger figure, which was based on far higher land sales for sites in Manhattan, while the smaller one used far lower land sales for properties in the Bronx and Staten Island.

Martha E. Stark, the city’s finance commissioner, testified that the lower figure did not reflect the land’s value with a $1 billion ballpark on it. Her agency, she said, “realized that the $26.8 million value was wrong and that they used vacant land rather than land that had benefited from government infrastructure improvement and investments.”

Dennis J. Kucinich, the chairman of the subcommittee, said the city cited attorney-client privilege in its refusal to provide documents about the changing land values.

Kucinich did not make eye contact with Levine when Levine reminded Kucinich that “the City of Cleveland, while you were mayor and on your watch, became the first American city to default on its bonds since the Great Depression.”

"At Yankees Hearing, Kucinich Schools City Officials" The Real Estate 10/24/8

Click the title to read the article with hyperlinks (includes video).

"Just call the new Yankee Stadium the House That Tax Subsidies Built" Daily News 10/22/8

Just call the new Yankee Stadium the House That Tax Subsidies Built
Wednesday, October 22nd 2008, 2:02 AM

The federal government just gave America's richest sports team another gift.

For the second time in two years, the Internal Revenue Service has approved special rules that allow the Yankees to use additional tax-free bonds to pay the skyrocketing costs of the team's new stadium.

This time around, the extra bonds could be worth as much as $366 million.

Sure, the Mets new Citi Field and developer Bruce Ratner's new Nets arena in Brooklyn could also qualify for the specially tailored exemption, but the Yankees spearheaded an intense lobbying effort in Washington for the special tax loophole.

The IRS action comes just days before Yankees President Randy Levine and top city officials are to face tough grilling before a congressional committee on the stadium's financing.

The committee, headed by U.S. Rep. Dennis Kucinich (D-Ohio), is investigating allegations of inflated land assessments and other improprieties connected to the city's sponsorship of the first tax-free bonds for the project.

Those original bonds for $942 million also required a special IRS ruling.

Kucinich told Mayor Bloomberg in a letter last week that the city's Finance Department overvalued the land and the construction costs of the new stadium by as much as $500 million. He also claimed city officials lied about that assessment to the IRS so the Yankees could qualify for the tax-free bonds.

Kucinich's investigation has backed up what this column has been reporting for more than a year - that city officials never notified the IRS of two separate appraisals they commissioned that put a dramatically lower market value on the stadium's land.

Kucinich also backed up the conclusion of a separate probe by Assemblyman Richard Brodsky (D-Westchester), who says the stadium's actual construction cost has also been inflated.

"This assessment was cooked," Brodsky said. "It was done in violation of sworn promises to the IRS. That, in and of itself, requires more investigation."

City Finance Department officials dispute the allegations. The agency, says Deputy Commissioner Sam Miller, "estimated the value of the new Yankee stadium accurately and independently by using a standard cost approach for new construction."

Department e-mails obtained by the Daily News show that back in February 2006, former Assistant Commissioner Dara Ottley-Brown opposed an assessment method for the stadium that lawyers for the Yankees and the city's Industrial Development Agency were about to report to the IRS.

Ottley-Brown finally relented and agreed to the original wording of the IRS letter, but added, "as long as we are not held to a strict interpretation" of the assessment method.

Ottley-Brown, when asked Tuesday about that 2006 assessment dispute, said, "I have no recollection of any such e-mails."
Asked what general method the Finance Department used to assess properties like the stadium, she said, "I can't recall."

jgonzalez@nydailynews.com

"Stadium appraisals under fire" Newsday 10/16/8

Stadium appraisals under fire
BY MICHAEL FRAZIER | michael.frazier@newsday.com

October 16, 2008
A congressional panel has scheduled a hearing in Washington next week to determine whether appraisals of the Bronx property on which the new Yankee Stadium is being built were manipulated by the city.

Critics claim New York City inflated the property's value more than six times its actual worth to secure Internal Revenue Service approval of the city's plan to allow the $1.3-billion stadium to be constructed with tax-exempt bonds.

The city has said the appraisals were done by two different agencies, on dates about a month apart, using different criteria.

The land appraisals will be reviewed during an Oct. 24 hearing of the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee. The subcommittee is chaired by Rep. Dennis Kucinich (D-Ohio).

The discrepancies between the appraisals are reflected in reports submitted to the IRS. One report listed the land as worth $275 per square foot, while the other had it at $45 per square foot.

The city Department of Finance made the higher appraisal in April 2006, using the supposition that the new stadium was complete. The finance department said the lower figure was estimated by the city's Parks Department in May 2006, appraising the land as if it were undeveloped.

It was unclear yesterday why the two appraisals were performed in that way.

Yankees officials originally were scheduled to testify before the subcommittee on Oct. 7, but the hearing was postponed.

Yankees president Randy Levine and Seth Pinsky, president of the city Economic Development Corp., are expected to testify. Assemb. Richard Brodsky (D-Westchester), a critic of the deal made by the city and the Yankees, also is expected to testify.

The debate over using public financing for private projects was revived after the Yankees requested an additional $336 million in tax-exempt bonds to help complete the stadium. The IRS is considering a regulation that would block the Yankees from receiving any more tax-exempt bonds.

The Yanks' crosstown rivals, the Mets, who also are building a new stadium, went the same financing route and are seeking $52 million more in tax-exempt bond financing.

The new Yankee Stadium initially was financed with about $942 million in tax-exempt bonds and $25 million in taxable bond financing. The Mets' new stadium already has been granted $528 million in tax-exempt bonds.

"Congress Questions Appraisals of Stadium" New York Times 10/16/8

Congress Questions Appraisals of Stadium

By RICHARD SANDOMIR
Published: October 16, 2008

The chairman of the Congressional subcommittee investigating the tax-exempt financing of the new Yankee Stadium said that city officials could be prosecuted if the Internal Revenue Service determined they lied about the ballpark’s property value.

Based on the $1.2 billion value of the land and the new stadium, the city’s Industrial Development Agency issued more than $900 million in tax-free bonds on the Yankees’ behalf.

Representative Dennis J. Kucinich, Democrat of Ohio and chairman of the House’s Domestic Policy subcommittee, wrote Tuesday in a letter to Mayor Michael R. Bloomberg that if the I.R.S.’s enforcement arm audited the sworn representations of I.D.A. officials, “they could be guilty of perjury if the misrepresentations were deliberately inaccurate.”

He said the agency’s claims about the value of the stadium “cannot be relied on.”

In an e-mail interview on Thursday, Kucinich said that “our factual findings could be the basis for a later agency or court finding of legal liability.”

In the letter and interview, he cautioned that the I.R.S. could roll back the tax-exempt status of some or all of the stadium bonds. He also suggested that the I.R.S. could reject the Yankees’ pending request for tax-free status on an additional $366 million in bonds to complete the financing of the stadium, which is scheduled to open in April.

“If the tax assessment was inaccurate,” Kucinich wrote in his e-mail message, “the S.E.C. and bondholders could hold the I.D.A. and other parties liable for material omissions or misstatements in the offering documents, which is a securities violation.”

Kucinich’s comments build on criticism by Assemblyman Richard L. Brodsky, a Westchester Democrat, who in a report last month accused the city of manipulating the land value.

“The city’s sworn promises to the I.R.S. were not kept,” Brodsky said Thursday. “We’ve found a written promise that the city would not artificially inflate the value to make it work economically.”

The city’s Economic Development Corporation, which manages the I.D.A., said that the disparate assessments “looked at land for different purposes and so had different assumptions.”

Kucinich will hold a fourth hearing on tax-exempt stadium financing Oct. 24 at which Seth W. Pinsky, president of the E.D.C.; Randy Levine, the Yankees’ president; and Martha E. Stark, the city’s finance commissioner, are to testify.

A central part of Kucinich’s and Brodsky’s assertions is the range of values on the stadium land. The Parks Department placed it at $21 million, and an E.D.C. consultant pegged it at $40 million. The I.D.A. subsequently assessed the land at $204 million, based on the city Department of Finance’s rate of $275 a square foot, well above comparable values in the South Bronx, but gave a $175 million figure to the I.R.S.

Kucinich wrote that it was unclear “who, if anyone” put pressure on the city’s finance department to submit the “wildly inflated” $204 million appraisal, or why it decided to use “inappropriate comparable properties” to determine that value. By e-mail, he said he had seen no evidence that the Yankees asked the city to raise its appraisal.

Owen Stone, a spokesman for Stark, said, “We look forward to going down to Washington to explain to the subcommittee how we value property.”

Brodsky said: “You can be for or against Yankee Stadium, but no one is for cooking assessments.” He has argued that the city manipulated the market value of the land so that the Yankees’ annual payments in lieu of taxes would effectively equal the annual payments on their debt.

In his letter to Bloomberg, Kucinich was critical of the city’s and the Yankees’ failure to fully comply with his requests for documents on the assessed value.

“I am disappointed,” Kucinich said in an e-mail message. “The Yankees’ and city’s refusals to provide the requested information have hindered the ability of the subcommittee to determine whether wrongdoing has occurred.”

Janel Patterson, an E.D.C. spokeswoman, said, “We have always been forthcoming with the documentation the congressman has requested and will continue to do so.” The Yankees refused to comment.

A version of this article appeared in print on October 17, 2008, on page B14 of the New York edition.

"Pols probing city on Yankee stadium aid" Daily News 10/16/8

Pols probing city on Yankee stadium aid
BY GREG B. SMITH AND JUAN GONZALEZ
DAILY NEWS STAFF WRITERS

Thursday, October 16th 2008, 1:49 AM
The city may have improperly inflated the value of the new Yankee stadium by hundreds of millions of dollars and lied about it to the IRS, investigators charged Wednesday.

Rep. Dennis Kucinich, head of a House subcommittee probing taxpayer funding of sports arenas, says the city provided a "possibly inaccurate tax assessment" to justify hundreds of millions of dollars in tax-exempt bonds.

The Ohio Democrat cited "serious questions" about city statements to the IRS. Because of those questions, Kucinich wrote, "The accuracy of the [city's] representations of the Yankee stadium project cannot be relied on."

Investigators said the city might have improperly included $500 million in construction costs in its assessment.

They also noted three different city-funded appraisals forecast the stadium's worth as anywhere between $21 million and $204 million - meaning it might have been overvalued by nearly $180 million. Only the highest appraisal was mentioned to the IRS.
Kucinich said if the city Department of Finance based its findings on inaccurate valuations of the stadium, "there would be a violation of New York State Law."

Finance spokesman Owen Stone said the stadium's assessment was accurate and that department officials "look forward to traveling to D.C. to explain to the committee how Finance values property."

Kucinich blasted city officials for refusing to hand over documents and e-mails that could show whether top city officials exerted improper influence on city assessors who determined the stadium's value.

Under the agreement with the city, the Yankees were able to obtain $942 million in tax-exempt bonds that will save them $181 million in lower borrowing costs over the next 30 years. The Yankees want $366 million more that will save another $66 million in borrowing costs.

In a letter sent to Mayor Bloomberg on Tuesday and released Wednesday, Kucinich said his investigation found the city may have lied to the IRS about the stadium's true value.

Under the deal, the city allowed the Yankees to make special payments instead of paying property taxes. Under IRS rules, those payments cannot exceed normal property taxes.

Kucinich said city officials could be guilty of perjury if an IRS audit finds the city's "sworn representations" were false. The committee will hold a hearing next Friday.

gsmith@nydailynews.com

"Washington investigates Yankee Stadium appraisals" Newsday 10/15/8

Washington investigates Yankee Stadium appraisals
BY MICHAEL FRAZIER | michael.frazier@newsday.com
8:10 PM EDT, October 15, 2008

A congressional panel has scheduled a hearing in Washington next week to determine whether appraisals of the Bronx property on which the new Yankee Stadium is being built were manipulated by the city.

Critics claim New York City inflated the property's value more than six times its actual worth to secure Internal Revenue Service approval of the city's plan to allow the $1.3-billion stadium to be constructed with tax-exempt bonds.

The city has said the appraisals were done by two different agencies, on dates about a month apart, using different criteria.

The land appraisals will be reviewed during an Oct. 24 hearing of the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee. The subcommittee is chaired by Rep. Dennis Kucinich (D- Ohio).

The discrepancies between the appraisals are reflected in reports submitted to the IRS. One report listed the land as worth $275 per square foot, while the other had it at $45 per square foot.

The city Department of Finance made the higher appraisal in April 2006, using the supposition that the new stadium was complete. The finance department said the lower figure was estimated by the city's Parks Department in May 2006, appraising the land as if it were undeveloped.

It was unclear yesterday why the two appraisals were performed in that way.

Yankees officials originally were scheduled to testify before the subcommittee on Oct. 7, but the hearing was postponed.

Yankees president Randy Levine and Seth Pinsky, president of the city Economic Development Corp., are expected to testify. Assemb. Richard Brodsky (D-Westchester), a critic of the deal made by the city and the Yankees, also is expected to testify.

The debate over using public financing for private projects was revived after the Yankees requested an additional $336 million in tax-exempt bonds to help complete the stadium. The IRS is considering a regulation that would block the Yankees from receiving any more tax-exempt bonds.

The Yanks' crosstown rivals, the Mets, who also are building a new stadium, went the same financing route and are seeking $52 million more in tax-exempt bond financing.

The new Yankee Stadium initially was financed with about $942 million in tax-exempt bonds and $25 million in taxable bond financing. The Mets' new stadium already has been granted $528 million in tax-exempt bonds.

"Kucinich Steps Up Pressure on NYC Officials" Press release from Congressman Kucinich's office 10/15/8

For Immediate Release:

Contact: Nathan White (202) 225-5871

Kucinich Steps Up Pressure on NYC Officials
Cooperation Insufficient in Subcommittee’s Investigation of Stadium Finances

Washington D.C. (October 15, 2008) – In a letter to New York City Mayor Michael Bloomberg, Congressman Dennis Kucinich (D-OH), Chairman of the Domestic Policy Subcommittee, yesterday raised serious questions about the City of New York ’s assessment of the new Yankee Stadium that was used in the issuance of federally tax-exempt bonds for the stadium’s construction. Congressman Kucinich requested that the City fully comply with previous Subcommittee requests for documents related to the assessment issue in advance of the Subcommittee’s October 24, 2008 hearing.

The Domestic Policy Subcommittee has previously held three hearings examining the use of federal tax-exempt financing for construction of professional sports stadiums and arenas and has focused on federal regulation of the use of payments in lieu of taxes (PILOTs), an innovative financing mechanism pursued by the City for its stadium projects. The October 24th hearing will examine whether City officials reported to the Internal Revenue Service and prospective bond purchasers an improperly inflated value for the stadium in an order to secure more PILOTs for the stadium construction and whether the City’s efforts to stop finalization of proposed U.S. Department of Treasury regulations that would effectively prohibit the use of PILOTs in this context serve the public interest.

Mr. Seth Pinsky , President of the New York City Economic Development Corporation and Mr. Randy Levine, President of the New York Yankees, have agreed to testify at October 24th hearing. In the letter, Congressman Kucinich requested that Ms. Martha Stark, Commissioner of the New York City Department of Finance, the City agency that conducted the stadium assessment, also testify at the hearing and that the City finally produce documents related to the assessment issue that were due on August 6, 2008. Despite repeated promises, the Yankees still have not produced many of the documents related to the assessment that were due on that same date.

Click the title above to read Congressman Kucinich's letter to Mayor Bloomberg