Since last week’s item on the New York Jets‘ stadium finance plan was, shall we say, a bit on the obscure side, here’s an attempt to answer some of the questions that have been raised by puzzled readers:
Q: I’m confused. Is using tax-exempt bonds for a privately funded stadium legal or what?
What do I look like, a bond attorney? (Don’t answer that.) The short answer is no, it’s not supposed to be – but there are plenty of loopholes, some of which are known only to bond lawyers, or are being invented by bond lawyers as we speak.
As for this particular Jets PILOTs-for-phantom-property-taxes plan, after talking to various development and bond experts (including one known as “the bond god”), I can safely say that: No one knows. The IRS, which has the ultimate say, is prohibited by confidentiality rules from commenting on specific future projects, and no one else was willing to hazard a guess beyond calling it a “creative” financing mechanism. “One can never be sure what the IRS will do,” notes Dennis Zimmerman, the Congressional Budget Office’s tax-exempt bond expert. “Political pressure is always on to give liberal interpretations, and this may have enough of a veneer to give them the cover they need to say sure, this is okay.”
Q: So the Jets are going to use naming rights and luxury box receipts to pay off their $800 million share? Can they afford that?
That’s a fine question, and one that the Jets’ current landlord, George Zoffinger, has himself raised. The New England Patriots and Washington Redskins recently financed the lion’s share of their new stadiums with such things as suite revenue, but those each cost less than half as much as the Jets’ behemoth. Until the team releases its own finance plan, that $800 million “private” contribution remains a black box, and worrisome for those who fear that the public may yet be asked to sweeten the pot.
Q: If stadium revenues really do pay for the Jets’ portion, how much does that leave for the public to pay?
The same $600 million ($300 million from the city, $300 million from the state) that has been proposed all along. Getting tax-exempt bond status, though, would effectively pass along another $90 million to federal taxpayers. (Can you imagine how Dolphins fans will feel about helping pay for the Jets’ new stadium?) And there are so many details to be worked out – remember, the finance plan looks like this – that there could easily be more subsidies hidden in the profit-sharing arrangements with the Javits Center, say, or the ground rent paid to the MTA. As with all stadium projects, but especially for one as complex as this, until there’s a lease agreement, there’s no way to exactly determine the public cost.