February 06, 2004
Diagramming the end run
After speaking with several city development experts, many of whom were initially as baffled as we were as to how New York Mayor Michael Bloomberg could approve hundreds of millions of dollars in Jets stadium subsidies without putting them up for a legislative vote, we've come up with one potential scenario that could do the trick:
- The city takes a large swath of West Side land, and transfers it to a city development corporation such as the Industrial Development Agency.
- The IDA makes an offer to developers: we'll exempt the land from city property taxes, if you agree to payments in lieu of taxes (PILOTs) equal to what their property taxes would have been.
- The IDA collects the PILOTs, and uses them to pay off construction bonds related to the stadium project (which, counting the associated new subway line and convention center expansion, could amount to more than $4 billion).
The net effect - redirecting property tax money from city coffers to the stadium project - would be the same as the city's original tax increment financing (TIF) plan, with one notable exception: unlike creating a TIF district, use of a development agency would not require the approval of the state legislature. It would, however, still require a city council vote on zoning changes; it's unclear whether the council or state legislature vote would also have to vote to seize the land by eminent domain.
Interestingly, Bruce Ratner's Nets arena plan would not be able to use a similar scheme, since it would use sales and income taxes, and as Frank Mauro of the Fiscal Policy Institute notes, "the IDA can't give away the sales tax on hot dogs." Ratner's $435 million TIF request, then, seems destined for a vote of the state legislature. The Jets, meanwhile, could conceivably end up getting their West Side billions after no more than a single city council zoning vote.
