By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
NYC 2012's no-new-taxes pledge is arrived at by using a funding scheme called tax increment financing, or TIFs, whereby increased property taxes on the newly developed land are used to pay off the costs of infrastructure improvements. "That is not city tax money," insists NYC 2012 CEO Jay Kriegel, "because that is not money that's available unless you do the plan."
Development subsidy experts aren't so sure. This is "the proverbial 'but-for' problem," says Greg LeRoy of the D.C.-based Good Jobs First; TIF subsidies are provided under the assumption that no new development would happen "but for" the TIFs, yet developers often strain the limits of that concept. In Minnesota, LeRoy notes, city officials were recently found to be handing out TIF money for projects that otherwise would still occur, just on a different block.
"TIFs are among the most problematic kinds of subsidies in America today," in part because of their speculative nature, continues LeRoy. "Right now we're in the middle of this giant real estate boom, but real estate markets are cyclical. During the crash in real estate values in the early '90s, some places got caught in the downdraft, and the increment evaporated. And you've got a situation where a liability that was supposed to be taken care of by the TIF is now eating the lunch of the general fund."
Further complicating matters are the Jets, who figure prominently in the Olympic bid package as the means of getting a West Side stadium built. Yet there are seemingly intractable timing problems here. The Jets are apparently ready to move immediately (or as soon as they can get out of their Giants Stadium lease, which runs through 2008). Building a Jets stadium in the hopes of landing the Olympics, though, is itself problematic, because no one is pretending that eight games a year of football can justify a multi-billion-dollar public investment. For that you need the Olympics, with their feel-good aura and claims of economic bonanza. But with no final decision on the host city due until 2005, any Olympic construction would be years off and contingent on the none too certain possibility of New York winning the nod of both the U.S. and International Olympic committees.
Thus far, NYC 2012 seems to be engaging in a clever dance, hoping that no one will notice that their proposal is all cart and no horse. Kriegel says that while most of the Olympic venues must wait until 2005 to go forward, Midtown West will be dealt with immediately. "With the Midtown West plan, we believe that it can proceed independently because it doesn't require Olympic revenue," he says. But Midtown West does depend on landing the Jets, and even if owner Woody Johnson agrees to front the money for a West Side stadiumconceivable, since the Washington Redskins, New England Patriots, and Carolina Panthers have all struck deals in recent years to pay venue construction costs if the public pays for land and infrastructureit can't happen without the platform, which can't happen without city and state backing, which is dependent on the promise of the Olympics. If any one piece fails to fall into place, the whole house of cards collapses, which is no doubt why Kriegel and his associates are playing this extremely close to the vest, refusing to release so much as a single budget projection to the public.
Then there's the little matter of next year's mayoral race, the winner of which will inherit this whole mess in 2002. For now, all four candidates are reflexively pro-Olympics. ("Yes, we should have the Olympics in New York City," snapped a spokesman for Alan Hevesi. "What do you mean, 'because?' ") But they are mostly cool to a West Side stadium: Hevesi "is yet to be convinced that a West Side stadium makes sense." Mark Green is "not for a West Side stadium that doesn't include serious community involvement." And Peter Vallone and especially Fernando Ferrer have each come out against the plan. No doubt all have been reading the polls, which at this early stage are likewise in favor of luring the Games (64 percent) but against the Manhattan stadium site (55 percent).
Among community groups and good-government organizations, meanwhile, there is concern but so far little action. The bellwether for anti-Olympic sentiment has been Fisher's Clinton Special District Coalition, which has kept up the drumbeat against the Midtown West plan. "I hope they understand," he says, "that we will be in the streets on this."
How much all this will cost, no one knows. NYC 2012 promises to use Olympic revenues (TV rights, corporate sponsorships) to pay for all venue construction outside of Midtown West, from a beach volleyball stadium in Williamsburg to an equestrian center on Staten Island. But the West Side costs alone could be staggering: The Olympic stadium itself is estimated to cost in the $1 billion range, plus another billion for the extension of the No. 7 train to 33rd Street and 11th Avenue, and hundreds of millions more for the concrete platform and other sundries. Even if some of the money is repaid from TIFs, Olympic construction could monopolize the city's capital budget for more than a decade, delaying construction of needed housing (the Olympic Village in Sunnysidebitterly opposed by Queens Borough President Claire Shulman, who wants to see mixed-use residential and commercial development on the sitewould be opened up to renters, but not until 2013) and possibly stalling such projects as the Second Avenue subway.