"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.