Wednesday, October 29, 2008

"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.


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