photo by Shelley Panzarella (cc)
State assemblymember Richard Brodsky was largely silent during the debates over building the Yankees’ new $1.9 billion stadium — as the Yankees and Mayor Bloomberg have been quick to point out, he even voted for the project when it came up in the legislature. But with Yankee Stadium’s days dwindling, he’s been making up for lost time.
With Brodsky in D.C. today for his star turn before Rep. Dennis Kucinich’s subcommittee investigating the Yankees’ stadium deal, it’s a good time to examine some of the questions raised by the 33-page report on the House That George Built that Brodsky let drop on Tuesday.
On the big questions, the Brodsky tome is largely a rehash of earlier investigations into the curious financing of the Yanks’ new playpen, ranging from Runnin’ Scared’s own reports to Good Jobs New York’s 2006 report “Loot, Loot, Loot for the Home Team.” (Disclosure: I get a brief shoutout in Brodsky’s report, citing my testimony before Kucinich’s subcommittee last year.) The assemblymember estimates the total taxpayer subsidy for the new stadium as “between $585 million and $826 million,” a bit lower than my most recent estimate of $833 million — but his figures don’t include forgone property and sales taxes that the Yankees will be absolved of (worth about $188 million) or the cost of building a new Metro-North station to disgorge Yankees fans ($90 million).
Brodsky overstates one public cost, improperly tallying up the team’s annual savings from tax-exempt bonds as if they were getting all the benefits right now; using the more accepted accounting practice of “present value” would reduce Brodsky’s total subsidy figure to around $550 million.
But enough with the big numbers that no one can really wrap their brains around. Does the Brodsky report shed any new light on how the Yanks hornswoggled New York elected officials and the IRS into okaying their insanely complex pay-your-taxes-and-keep-them-too deal?
Some of the more interesting questions raised:
How did the Yankees pull off telling the IRS that the former parkland under its new stadium was worth $200 million, while telling the state it was worth just $21 million?
This was perhaps the slickest trick in the Yanks’ playbook: Simultaneously meeting the requirement for a high land value for the feds (to justify the pretense that their stadium payments are really “in lieu of” property taxes) and a low land value for the state (satisfying the need for the replacement parkland being created to be at least as valuable as what’s buried beneath the new bleachers).
According to Brodsky, the city Department of Finance began by determining the value of “comparable” parcels, a common practice – except in this case, all eight “comparable” parcels were in Manhattan, some in such high-priced districts as Chelsea and the Lower East Side. The figure they came up with was $204 million, or $275 a square foot. At the same time, the department did a second appraisal that compared the Yanks land to parcels in the Bronx, and came up with $21 million, or $45 a square foot. “The existence of the [$204 million] DOF appraisal,” notes the report, “was not disclosed to Park officials.”
What’s this all mean? If the higher number was bogus — and given that Brodsky’s office found land values in the stadium’s neck of the woods typically run between $14 and $63 a square foot, that seems likely — then the Yankees can’t legitimately claim that their annual $57 million in stadium bond payments are really “in lieu of” property taxes, since their property-tax tab (if they had one — didn’t I say this was confusing?) wouldn’t be that high to begin with.
And that’s especially so if the city simultaneously overvalued the new stadium structure itself: Brodsky notes that this $1 billion-and-change figure was accepted without challenge from the Yankees themselves, even though it included tens of millions of dollars for such things as luxury-box furnishings, which aren’t usually considered in real estate valuations, plus the cost of a police substation that isn’t part of the stadium.
How many new permanent jobs is the new stadium creating, anyway?
Brodsky says 15; city Economic Development Corporation chief Seth Pinsky snapped back that the stadium is “creating thousands of union jobs.”
The Brodsky report cites the Yanks’ “core application” to the city Industrial Development Agency for the 15 jobs figure. This, explains Bettina Damiani of Good Jobs New York, is a pile of paperwork that the IDA provides before holding public hearing on a proposed construction project — only a few days before, though that’s an improvement over the bad old days when the IDA routinely released it only on the day of the hearing. One of the line items, she says, is a projection for how many new jobs will be created, though the city’s attention to detail here isn’t always the best: “We regularly go before the IDA and say, ‘You guys forgot to fill out the jobs part.'”
Damiani says she can’t find the estimate of 15 jobs created in IDA documents previously made public, but that’s no guarantee it doesn’t exist. “If he’s referring to the initial application, the Yankees didn’t list a jobs figure — at least not in the pages that IDA gave us,” she tells Runnin’ Scared. “If it’s an application for the new bonds, no one has seen it, because it’s not far enough along in the process.” Further complicating matters: When the city EDC filed another set of disclosure paperwork under Local Law 48, it reported 614 full-time equivalent jobs — more than Brodsky’s 15, but less than Pinsky’s “thousands.”
Is anything going to come of all this?
The Brodsky report concludes that the city’s shenanigans “may have violated the law,” but don’t get your hopes up for Bloomberg officials or Steinbrenner cronies doing the perp walk as a result. Likewise, it seems unlikely that the IRS would retroactively declare the Yankees bonds illegal — that’s not who the feds go after these days — though it could very well reject the additional $367 million the team is asking for, to pay for such items as a larger scoreboard video screen and “improved washrooms.”
In that case, the Yankees could be forced to swallow about $80 million in extra interest payments — or in baseball terms, two Pavanos.
Mostly, the latest revelations will continue to provide a turd in the Yanks’ “say goodbye to the House That Ruth Built” punchbowl, one that has plenty of turds already. And it will only get uglier for the Yanks next month, with team execs scheduled to be hauled before Kucinich’s committee on October 7. (Pinsky, who begged off of today’s hearing on the grounds he needed to stay home to keep the city’s economy from falling over, is reportedly still negotiating when he’ll testify.)
Given the Yanks’ recent October performance, Kucinich has to be considered the favorite.