June 09, 2004
More end runs for Jets complex?
New York assembly speaker Sheldon Silver is calling for state hearings into New York Mayor Bloomberg's Hudson Yards redevelopment plan, after the discovery that Gov. George Pataki attempted to attach a "hidden" airport car-rental tax to legislation to fund a $1.4 billion expansion of the Jacob Javits Convention Center. Assembly Democrats also charged that Pataki's bill would reduce oversight of the legislation, by limiting legal challenges and reducing the state comptroller's power to audit the project. "It's bizarre beyond belief," Assemblymember Richard Brodsky, who chairs the committee on state authorities, told the New York Post. "This takes the worst of the state authority abuses we've seen and writes them into statute."
The question of legislative oversight - in plain English, whether the mayor and governor can ram through a multi-billion-dollar redevelopment plan without having to go to the state legislature and city council for approval - has been a hot topic ever since New York deputy mayor Dan Doctoroff announced his end run around the state legislature by funding a $2 billion subway line extension to Hudson Yards via a state development authority. At last Thursday's city council hearing on the $1.4 billion Jets stadium that would be part of the complex, Doctoroff coyly noted that "whether [stadium construction costs] will go through the budget or not is something that we'll determine over the next several months," leading to speculation that he could yet have more tricks up his sleeve.
But finding $300 million apiece in state and city stadium subsidies, as Doctoroff plans to do, without getting state or city legislative approval could be a tough nut to crack, according to development experts we surveyed. One common form of "backdoor borrowing," according to Fiscal Policy Institute finance guru Frank Mauro, is something called "contractual obligation debt," whereby a state authority sells bonds, then contracts with the state to pay them off, avoiding the normal appropriations process. (One example: New York's recent prison construction boom, which was green-lighted by the state even after voters had rejected a bond act.) But even that, says Mauro, would likely require approval of the contract by the legislature. City budget experts concurred that there should be no way to dip into general funds without at the very least going through the council's capital budget process. In his testimony last week, Doctoroff referred to paying off stadium bonds with "other PILOT, rental, and lease payments that the city would otherwise collect" - whether this was a reference to the Battery Park City funds that the city had previously proposed diverting to pay for the convention center expansion (earning a tongue-lashing from Speaker Silver), or something else entirely, is anybody's guess.
In any case, no one is breathing easy, given the track record on prior development deals in the region. As Bettina Damiani of Good Jobs New York told us, before rushing off to a hearing on strengthening the city's minimal reporting standards on corporate subsidy deals: "The state is not known for transparency when it spends our tax dollars."
