"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."