January 25, 2005
Whose $400M is it anyway?
Just got an e-mail from the New York Association for Better Choices that again points up the difficulty of determining how to count stadium subsidies. Outlining the "Facts and Myths" of the Jets stadium proposal, NYABC writes:
Myth
- Under the current proposal the Jets will pay property taxes
Facts
- The Jets will not pay any property taxes, rather they would make Payments In Lieu Of Taxes (PILOT), but instead of paying PILOT to the City, the Jets PILOT will be used to pay the debt service on $400 million in tax-exempt bonds that were supposed to be part of the Jets' contribution to the stadium.
- This is the equivalent of the Jets using city tax revenue to make payments on the Jets' mortgage on the stadium.
This is the scheme that I'd previously written was a dodge to use "private stadium revenues" to pay off tax-exempt bonds, on the grounds that since the stadium would be on state land, it wouldn't normally be subject to property taxes. But this is the old "but-for" question, and there's another way to look at it: While projects on public land are normally exempt from property taxes, there's nothing stopping the city from demanding payments in exchange for allowing developers to build on a site. And as NYABC goes on to note, "The Regional Plan Association has released a study that established that if the stadium site were developed for residential use, the City would collect property tax revenue with a present value of $423 million."
So depending on how you look at it, the Jets are generously offering to pay $400 million in taxes they're not required to in order to pay off the stadium bonds; or the city is forgoing $423 million in tax revenue it could be receiving in order to let the Jets get their new dome. There's an argument for either way, but if you accept the NYABC reasoning, that would mean the $600 million public subsidy for the project would be really more like $1 billion - if not even higher.
