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July 16, 2004

Jets and taxes

More tea-leaf reading on the never-ending New York Jets stadium finance saga. In today's Newsday, staff writer Graham Rayman reports that Jets president Jay Cross downplayed the significance of tax-exempt bonds, saying that (in Rayman's words) "the proposed use of PILOT payments would not reduce the revenue the city and state would get from sales tax revenue at the stadium."

Attaching PILOTs as a surcharge to existing tax payments, though, and using the proceeds to pay off a stadium would be illegal. So either Cross was being disingenuous, or he's misinformed about tax law, or Newsday misquoted him.

On a separate front, Cross told amNewYork's Michael Clancy regarding the Jets' rent payments to the Metropolitan Transportation Authority: "We are going to be paying million of dollars a year in ground rent, I'm pretty confident of that. Not tens of millions, but millions." Even assuming the most generous interpretation of Cross' estimate - a first-year rent payment of $9 million, and that payments would rise with inflation - for a 30-year lease that's still a present value of only $270 million, less than one-tenth the $3 billion estimate put forth by former MTA chief Richard Ravitch, and significantly lower even than the $600 million current MTA head Peter Kalikow has hinted at. Clearly those appraisers are going to have their work cut out for them.

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