The taxpayer cost of the Yankees’ latest request for city bonds went up on Friday, as the city Independent Budget Office released a more detailed analysis of just how much tax revenue will be lost if the Family Steinbrenner is allowed to use tax-exempt bonds to finance an additional $350 million in construction costs. The total public price tag, according to IBO deputy director George Sweeting: $82.9 million, with $3.6 million coming from city coffers, $6.7 million from Albany, and the remaining $72.6 million from the feds. As for the Yanks, according to Sweeting, they’d pocket $61.9 million in savings. (Apparently the tax-exempt bond racket requires cutting bondholders in on a sizable piece of the action.)
Elsewhere on the stadium-bond front, city Economic Development Corporation spokesperson Janel Patterson has confirmed to the Voice which IRS regulation the city is looking to have overturned, or at least suspended in the Yanks’ case: the ruling, first formulated in late 2006 but still not officially ratified, that would (deep breath) require that payments in lieu of property taxes, aka PILOTs, be pegged to a percentage of actual assessed property taxes, rather than a fixed annual sum.
In slightly plainer English, this means that when the Yanks cross off the word “rent” on their bond payments check and pencil in “PILOTs” — necessary because federal law prohibits the use of tax-exempt bonds if it’s the private tenant making the payments — they’ll need to make sure the numbers on the check bear some relation to what their actual property taxes would be, or even the Bush IRS will look askance at the dodge.
It’s worth noting here that, contrary to what some news outlets are reporting, this new bond requirement is hardly a sign that the IRS is moving to “crack down on” the use of tax-free bonds for sports stadiums. Part of the proposed new regulations, in fact, would eliminate a pesky clause that implies that PILOTs should be considered “special charges,” not general tax money, retroactively justifying the agency’s ruling that allowed the city to sell $1.6 billion worth of bonds for the new Yanks and Mets stadiums in the first place. (Estimated cost to taxpayers, according to IBO: $359 million.)
The new restriction requiring linkage with property tax assessments, though, would force bond payments to float up and down year to year, instead of being made on a pre-set schedule. And since bondholders like their assured annual payments, this would reduce the discount from the tax-free bonds — hence the Yanks’ insistence that the IRS let them off the hook from this rule.
Meanwhile, more sturm und drang is on the horizon: After decrying Yanks bond decisions being made “in secret in these Soviet-style meetings” (prompting one e-mail correspondent to employ the subject line: “Evil Empires Learn From Each Other”), state assemblymember Richard Brodsky has promised to hold hearings on the Yanks bonds within “a couple of weeks.” On top of this, Ohio Congressman Dennis Kucinich on Friday released a strongly-worded letter to the Treasury Department questioning why the first round of Yankees bonds were approved; he’s likely to hold hearings in Washington as well. It looks like regardless of what they do on the field, the Yankees will find a way to make headlines this summer after all.