The governor’s Powerpoint presentation on his plans includes a diagram on page 51 showing a “development district” that would include Penn Station and several blocks around it. Cuomo’s office referred questions to the state Empire State Development corporation, which indicated that this would be both the size of the new project and the size of the PILOT diversion district, though “the exact boundaries and parcels have yet to be finalized.”
If Madison Square Garden does end up within the area carved out to pay PILOTs, notes Kaehny, that could have the effect of cementing MSG’s tax break in place — or at least limiting the amount of future taxes Dolan and his successors pay, and ensuring that the proceeds go to the governor’s redevelopment project, not to city coffers.
There are a lot of question marks here, to be sure — it’s not even certain whether Cuomo’s PILOT district will be approved by the city council, or if the expansion will ever get off the ground at all — but Kaehny isn’t wrong to worry. Though the way things are going in Albany, even getting a thin sliver of tax payments that immediately get dumped into building a new auxiliary-station-plus-upscale-mall might be preferable to just letting the tax break ride forever.
And speaking of letting the tax break ride forever, here’s what an MSG spokesperson said when asked why that was really necessary:
“We appreciate that people have their opinions about our location, but the truth is that Madison Square Garden’s tax abatement pales in comparison to the billions in public benefits received by the other New York sports venues.”
All the other kids’ parents let them get away with even more! Someday I really want to see the industrial-strength vats of chutzpah that PR professionals bulk-order to keep under their desks.
Also, a clause in Nashville’s lease with Nashville S.C. requiring the soon-to-be MLS team to play at least one game in Nashville in any 24-month period has the team’s financiers balking at loaning money for the stadium — presumably because they’re afraid MLS will up and disappear for a couple of seasons, maybe as part of a labor stoppage, who knows — so the city may just delete that clause. Seriously, lord grant me the negotiating powers of a mediocre rich man.
The U.S. Supreme Court has given a final dismissal to a case charging that the car rental tax used by Arizona to fund sports facilities was unconstitutional because the money wasn’t being used for transportation projects.
The city of Santa Clara has voted again to remove the San Francisco 49ers as manager of their stadium, after the first vote might have been illegal because it took place in closed session. Glad we worked that out!
The Hamilton County Commission approved a plan that will involve spending $30 million to relocate a concrete plant so the county can build a music venue next to the Cincinnati Bengals stadium, with the Bengals helping out by forgoing $30 million in future payments from the county, though the team will also now get free parking space on the land. The music venue is reportedly needed because the waterfront is “an area starved for attention outside of Bengals and Reds games,” which maybe is something to keep in mind the next time you hear that a sports stadium will be enough to revitalize an underused area.
In completely unrelated news, here’s an article about a Columbus bar owner who is hoping that the new Crew soccer stadium being built nearby will be a windfall for her business.
Madison Square Garden’s 10-year extension of its operating permit — designed ostensibly to give the arena time to find a new home that’s not atop Penn Station — is halfway over with no sign of the Garden departing, leaving the possibility that New York City might have to evict the New York Knicks and Rangers come 2023. What would that actually look like? I did a deepish dive for Gothamist, and came up with this:
“We cannot think of other examples of special permits for building use with expiration dates,” Department of Buildings spokesperson Andrew Rudansky tells Gothamist. “Hypothetically, if a building’s special permit expired, causing the use of that building to be contrary to zoning, the Department may take enforcement actions to compel the owners to return the building to a previous Code and zoning-complaint use.”
The typical enforcement actions available to the DOB, Rudansky explains, include imposing civil penalties or fines. In cases of more routine violations, the department maintains a Padlock Unit that, true to its name, is authorized to padlock a premises and issue criminal charges against anyone who enters. (Cue visions of the Rangers being hauled off to The Tombs in full uniform and pads.)
To be clear, everyone I spoke to was pretty firm that they don’t expect this to happen: Lots of people may want the Garden gone to make way for a new above-ground Penn Station (either modern or retro), but that doesn’t mean anyone on the city council wants to be the target of headlines about forcing the Knicks and Rangers to leave town. (Not that they would leave town, since they’re the centerpieces of a New York–based cable network; the levels of gamesmanship here go all the way down.) But the threat of being able to shutter the garden if they wanted to has to be a part of negotiations for MSG to relocate, if those ever get started. (Neither council officials nor MSG officials would so much as tell me whether talks have even taken place.)
The concern here, obviously, is that MSG will come back with, “It’s going to cost us around $2 billion to acquire land and build a new arena, and we’re going to need city help with that, plus we need to be able to take our $50 million a year tax exemption to any new site,” and that the council will feel obligated to listen to make the Garden leave quietly. Not that they would be obligated to listen — they do have the hammer here of applying padlocks — but the fear of nasty tabloid headlines could end up putting New Yorkers on the hook for billions of dollars in new arena costs, which would be an extremely bittersweet way of undoing the city’s original sin.
In what I suppose is a tax dodge but is actually kind of hilarious, the New York Rangers are going to be playing a game in New York City as the road team against the Buffalo Sabres, all because they don’t want to spoil the eternal property tax break they were accidentally gifted 35 years ago:
When the Buffalo Sabres and New York Rangers square off in the 2018 NHL Winter Classic in Queens, the Sabres will be the home team despite being headquartered 385 miles away…
Madison Square Garden, the privately owned Manhattan home of the Rangers and the NBA’s New York Knicks, would risk a lucrative property-tax exemption worth more than $40 million a year if either team plays home games in New York City outside the iconic arena…
“If one or both of said teams shall cease to play their home games in said property at any time, the tax exemption provided herein shall cease immediately and such property shall immediately be restored to the tax rolls,” New York’s Real Property Tax Law states.
You can see why the state legislature wrote the language that way back in 1982: They didn’t want to give the Knicks and Rangers a massive tax break and then have the teams leave town anyway, as they were at the time threatening to do without the subsidy. (Though the bill’s crafters also either neglected to notice or intentionally snuck in language that made the tax break extend indefinitely, something that’s now cost the city government more than $400 million.) But apparently they didn’t notice the loophole of the teams playing home games and calling them road games — it’s not like the NBA or NHL would really abet the teams’ tax dodge by designated all of their games as road games, I don’t think, but…
Anyway, all of this subterfuge, and the now $50 million annual cost of the tax break, could be avoided if the state legislature would just pass a bill to rescind it after 35 years. (Mayor Ed Koch claimed he thought he was approving just a 10-year tax break at the time.) Such a bill is annually introduced to the state assembly by Manhattan assemblymember Brian Kavanagh, and for the fifth year in a row is sitting in committee with no action. With government watchdogs like these, NHL-abetted loopholes are all MSG’s owners need to keep raking in the dough.
Certain sectors of the New York City policy world (the Municipal Art Society, the New York Times editorial board) have been calling for a while for the relocation of Madison Square Garden, so that a new, grand Penn Station could be built in its place. (The old, grand Penn Station was demolished in the 1960s to make way for the current Madison Square Garden, the fourth building to bear that name.) NYU’s Rudin Center for Transportation Policy and Managementreleased a study last week of how much it would cost to do this, and came up with … do I hear $5 billion?
This isn’t really all that surprising: A billion and a half for a new MSG sounds about right given that just renovating the old one cost a billion, and acquiring new land could easily cost half that in this market. (The Rudin report looks at the price of buying up the annex to the Farley post office building across the street Morgan post office annex a couple of blocks to the southwest, but other sites would be priced similarly, if you could even find any.) And almost $3 billion for building a new Penn Station is already the price tag established by Gov. Andrew Cuomo for his plans (which would leave MSG intact but build lots of new stuff under it).
It’s also important to consider the political context, with Cuomo’s plan to expand Penn Station with MSG in place (to be paid for by some as-yet-unidentified private developer — applications were due two weeks ago, but if any have been revealed it’s news to me) going up against the MAS and Regional Plan Association’s insistence that MSG really needs to be kicked out. Given that Rudin director Mitchell Moss has already endorsed Cuomo’s plan, and his report’s conclusion is “It’s time to move on,” it’s easy to see some political gamesmanship going on here.
Still, this whole mess is a reminder that as easy as it is to envision redesigning your city to undo past mistakes (tearing down one of the greatest public spaces ever, building a kind-of-ugly sports arena in its place), there’s something to be said for actually existing architecture, both in that it’s already paid for, and in that the city has grown up around it to accommodate it. Not to say that nothing should ever get built or torn down, but it’s important to look at the true costs of doing so, and whether the money could be better spent mitigating the effects of your last mistakes.
The New York city council is gearing up for another run at Madison Square Garden’s 32-year-old full property tax exemption, and the city’s Independent Budget Office has a new estimate of how much MSG’s owners will get from it: $54 million in 2015, based on the projected increased value of a renovated Garden. The total value of MSG’s exemption now stands at a whopping $541 million*.
While the IBO doesn’t make policy recommendations, it just presents policy options, economist George Sweeting makes it pretty clear what the agency thinks of the MSG tax break, noting that “there is broad consensus within the economics field that government subsidies for sports facilities are not an effective use of scarce public resources,” that the Garden’s is the only property-tax exemption that applies only to a single property and is open-ended (most other property tax breaks end after a number of years, but the state legislature neglected to include a sunset provision in this case), and any threat that may have existed in 1982 of the Knicks and Rangers leaving town has long since gone by the wayside.
Of course, the council already voted once before to axe the MSG tax break, in 2008, but it didn’t accomplish anything because the tax exemption is enshrined in state law, it’s impossible to get the New York state legislature to do anything, really. Unless you’re a rich guy looking for a tax break, in which case the three men in a room would be happy to serve you.
*[UPDATE: IBO confirms that $541 million is the present value of the tax exemption over the next 30 years, net of tax breaks that would be available to any company, not just MSG. So allowing the tax break to remain in place for another 30 years would cost New York City $541 million in present-value 2014 dollars.]
The permit may expire in 2023, but there’s nothing magic about that number; as we’ve seen in numerous other manufactured crises around stadium deadlines, leases are made to be extended. The city could technically order the Knicks and Rangers to vacate the premises after 10 years, says Independent Budget Office chief of staff Doug Turetsky — “theoretically, they could ask them to tear it down” — but far more likely is that the city will use this as leverage to get the Garden’s owners to start thinking about moving elsewhere whenever the shine wears off the new scoreboards.
Go read the rest! Poppa needs a new set of hit counts! Also, you might learn yourself something.
The “sky bridges” in the renovated Madison Square Garden turn out just to be a new deck of seats suspended from the ceiling. Also, pretty obtrusive to fans sitting in the back rows of what used to be the blue seats. And there’s still the low railings that will allow fans to drop beers on the heads of those in the pricey seats below them. A win-win-win!
San Francisco Mayor Ed Lee compared a new San Francisco Warriors arena to the Statue of Liberty, and the San Francisco Chronicle’s Scott Ostler has brought out the sarcasm stick.
Qatar’s plan for hosting the 2022 World Cup will cost an estimated $200 billion, including building a stadium for the final in a city that doesn’t exist yet. Also, an estimated 4,000 migrant workers will likely die building all this stuff. Maybe that Columbus guy isn’t sounding so bad by comparison.
The Garden has argued time and again that there is no money and no plan for the station trapped beneath it and that previous attempts to move the arena failed because of the intransigence of the various parties involved. Ms. Quinn insisted this was no excuse and maintained that a deal would be reached.
“This is enough time to create and implement a plan for the future of the site and the area,” Ms. Quinn said a press conference prior to the council’s vote. When asked by a reporter what would happen if a deal was not reached in the next decade, the speaker responded, “I don’t think that’s going to happen.”
Of course, just because the council voted on something doesn’t mean it can’t revote to reverse itself and grant another extension if it looks like a new arena isn’t forthcoming. (Nobody genuinely thinks New York City is going to just evict the Knicks and Rangers and force them to play in the street. Though that’d actually be kinda cool.) But if nothing else, this certainly seems to be Quinn laying down the gauntlet that she wants to make building a new arena to make way for a new above-ground Penn Station a centerpiece of mayoralty, if she gets there. Which seems like kind of a waste given that the old Garden just got $1 billion worth of renovations, not to mention that the designs submitted for a new Penn Station aren’t exactly, you know, Penn Station.
But there’s still plenty of time to work all that out — after all, ten years is a lifetime in arena years these days. In the meantime, if nothing else, Quinn probably just won herself the mayoral endorsement of the Regional Plan Association.
The New York City Planning Commission approved a 15-year operating permit extension for Madison Square Garden yesterday, rejecting MSG’s request for a permit to remain atop Penn Station in perpetuity. And to hear planning commission director Amanda Burden talk, she wants the Garden gone once its 15 years are up:
“The best possible outcome would be a relocated Madison Square Garden,” said city Planning Commission chairwoman Amanda Burden…
“What a 15-year period can do is create an opportunity for city, state, and federal government agencies to reach an agreement with Penn Station and the railroads for a comprehensive plan to relocate the arena,” she said.
“There is no more important initiative for the region.”
“This would essentially allow four people in a room to decide for themselves what is best for commuters, the future of the area and the vitality of the city— requiring only a rubber-stamp approval from planners without further public review or City Council oversight,” said Robert Yaro, the president of the Regional Plan Association and co-founder of the Alliance for a New Penn Station, in a statement.
That would be a reference to this loophole, which would allow MSG to remain in perpetuity if it works out a deal with the railroads to upgrade the underground Penn Station. Or as Mayor Bloomberg explained to Capital New York (if you’re lenient about the definition of “explained”): “Because you’re right above this mass transit location and if you needed to do something for the greater good of the city, leaving the city in the position of being able to do something down the road. Doesn’t mean they’re gonna do it. But we would be derelict in our duty, I think, to take that away.”
Clearly something weird is going on here, since Bloomberg’s office has now created an out for the Garden to stay put as long as it wants at the same time as its city planning chief is saying that the Garden needs to get out of the way, because progress. The city council still needs to vote on this, so hopefully by the time of those hearings we’ll be able to figure out who’s on what side here — perhaps most importantly, the person who’s likely to be mayor when plans for 15 years from now actually get decided.