Play-by-play of Assemblymember Richard Brodsky’s hearing on the new Yankees stadium project, continued from last post:
11:29 am: Brodsky and Yankees president Randy Levine are now squabbling over which documents have and haven’t been provided when. Moments later, city development chief Seth Pinsky calls Brodsky “un-American” for not allowing city attorney Michael Cardozo to reply to questions in his stead. It’s great theater, but we’re a long way here from talking about stadiums and who’s paying for them. (A reporter seated near me just shook his head: “This is like Gossip Girl!”)
Finally, some meat: Pinsky tries to explain why the city told the IRS that the Yankees’ bond payments were public tax money (in order to qualify for tax-free bonds), yet tells the public that the stadium is entirely privately funded. The Yankees didn’t pay property taxes at their old stadium, he notes, nor did the now-extinct Macombs Dam Park, where the new stadium now stands. “Effectively,” he explains, “the city will be in exactly the same position with regard to real estate taxes both before and after this transaction” – the only difference being that “every year the Yankees are writing a giant check” to pay off the bonds, which happens to flow through city hands before landing in bondholders’ pockets.
Brodsky points out that the city wrote to the IRS that “The city has determined to use its property taxes to finance the construction and operation of the stadium.” Pinsky doesn’t see any contradiction here: “I stand with my characterization.”
Levine tries to pipe up at this point, and is shushed by Brodsky. Levine: “I forgot, you’re in total control.” Brodsky: “Mr. Levine, if I were in total control, this hearing would have started at 10:45.” Ooh, snap!
11:50: Brodsky: “Why is it necessary to vote on this Friday morning?” Pinsky: “The Yankees and the Mets told us that there was urgency to the issuance of the bonds.” Brodsky: “Do you know what the nature of the urgency was?” Pinsky: “The urgency is that this project is a project that is underway.”
Pinsky starts to accuse Brodsky of engaging in “political theater.” That draws an interruption from the chair: “I’m not going to allow this hearing to be a forum for political attacks!” Irony has officially left the building.
12:06 pm: Randy Levine is in the hot seat, with Brodsky asking him why the city should be selling bonds to build the shell of a Hard Rock Cafe and steakhouse in the new stadium. Levine, now bright crimson, insists that “everything inside [the restaurants] is being paid for by the Yankees” directly; only the core and shell are being paid for with city-issued bonds. “It’s like when you build a house, you need to build the shell for a kitchen.”
Brodsky asks for the average wage of part-time workers at the new stadium. Levine replies: “From April to October, a lot of people are employed. A lot of people work a lot of hours, subject to union agreements, at a very good wage.”
Brodsky reminds Levine that his question was about the average wage. Levine replies: “I don’t have it in front of me.”
12:22: And it goes on. Brodsky asks Levine how much money the Yankees will be raking in from their new, stratospheric ticket prices; Levine replies that the team hasn’t finished deciding how much it will charge for all its seats yet: “Once we get to April, I’d be delighted to share that,” he says – adding quickly, “as long as there’s sufficient confidentiality.”
12:33: Assemblymember Jim Brennan, appearing in the role of Good Cop, finally gets down to the real meat of the matter: The city, he notes, is being asked to sell tax-free bonds to help pay for the Yankees’ added costs – including refinancing of some of their original bonds. “You’re saying that you could not handle the construction payments to complete this without this particular form of financing?” he asks Levine. The Yankee exec responds: “I’m saying that this is what was intended from the beginning, this is what was anticipated for quite a long time, and that if there was a change at the last minute it would create serious issues.”
Brennan then presses Pinsky to admit the use of tax-exempt bonds is a subsidy to the Yankees, because the team gets to pay a lower interest rate on their construction debt. Pinsky dodges a direct answer: “It costs the city nothing, in this particular instance.” Brennan: “But the benefit to this company goes to their bottom line.” Pinsky: “Only to the extent that there is no alternative where the Yankees would be laying that out.”
This is a common Pinsky refrain, and is worth explanation. The city’s line is that since the Yankees weren’t offering to build a stadium with plain old taxable bonds, the city isn’t losing anything here – without the tax-free bonds, no stadium would be built, and the city wouldn’t get any taxes on the bond proceeds.
No one points it out, but there are two flaws in this argument. First off, those investors who are buying Yankees bonds would instead do something else with their money, and it might well involve paying taxes on the proceeds to the city – creating a new tax shelter does cost the city, albeit a lot less than it costs the federal treasury. More important, though, the new stadium already has been built, so if the IDA were to tell the Yankees to take a long walk off a short pier on its new bond request, the Yankees would be forced to use taxable financing, like it or not.
“I’ll concede that it gets confusing,” Pinsky finally admits.
1:58: At last, someone with actual information to testify about! After a short break – during which pretty much the entire press corps heads for the exits – economist George Sweeting of the Independent Budget Office hands out spreadsheets detailing his office’s latest estimates of the myriad tax breaks and “infrastructure” expenses being paid by taxpayers. Without going into details (check the IBO’s website for those), the totals come to a total public subsidy for the Yankees of $854.7 million, more than half a billion of which will come out of state and city coffers; for the Mets, the total subsidy is $371.5 million, with the state and city on the hook for about $230 million. And this, it’s worth noting, is without counting any lost future property taxes. Levine would probably turn orange at this point, but he, along with most of the rest of the onlookers, has gone home.
And tomorrow we all reconvene around the corner for the official IDA public hearing on the bonds. Tune in again, if you’re not already sick to death of this.