December 17, 2004
Mayoral slush fund for Jets stadium?
The mystery of the missing $950 million may be one step closer to being solved. On Wednesday, New York deputy mayor Dan Doctoroff told the Bond Buyer that (in the Bond Buyer's words) "he believes there are sufficient PILOT payments and other fees paid to the city to back bonds to finance both a $300 million subsidy to the Jets stadium and a $350 million subsidy to the Javits [convention center] expansion."
Doctoroff has hinted at using PILOTs (payment in lieu of taxes, basically fees that developers agree to pay the city in exchange for property tax breaks) before, but the Bond Buyer article hints at where they might come from. After getting told off by state assembly speaker Sheldon Silver, Doctoroff agreed not to use PILOT funds from the city's largest collector of the fees, the Battery Park City Authority. But another quasi-public agency, the Industrial Development Agency, hands out $128 million in property-tax exemptions a year, according to the city Independent Budget Office. Of what comes back from developers, some of the money is committed to pay debt service on development bonds, and some goes for IDA administrative costs. The remaining $46 million a year is currently passed through to the city's general fund.
Since the IDA budget is controlled by the mayor's office, not the city council, what's to stop Mayor Michael Bloomberg from telling the city treasury: Sorry, we've decided that instead of giving our PILOT money to you, we're going to go build a football stadium? The answer is, well, no one seems to be sure. Finance experts at both the IBO and public-subsidy watchdog Good Jobs New York (who are hip-deep in IDA arcana) said they couldn't tell whether the IDA - which is part of a complex net of quasi-governmental agencies and sub-agencies that control much of the city's development spending - is contractually obligated to pass through to the city the PILOTs it collects, or if it can choose to go spend them all on football stadiums, or, for that matter, junkets to Aruba. It would apparently be unprecedented, anyway; neither IBO nor Good Jobs spokesfolks could remember a previous case where the IDA siphoned off PILOTs for an unrelated construction project.
Of course, as the Bond Buyer also notes, New York City deputy budget director Alan Anders testified last July that the city's stadium subsidy would come solely from "revenue streams [that] are currently not supporting the city budget." Clearly, the IDA's PILOT surplus is currently going directly into the city treasury, so spending that instead on the stadium and convention center would blow a $46 million a year hole in the budget. The IDA PILOTs may or may not be a slush fund waiting to happen, but it's going to take some awfully fast dancing by Doctoroff to grab it without his administration getting caught in a $650 million lie.
