The story so far: Back in July, U.S. Rep. Dennis Kucinich demanded documents from the Bloomberg administration and the New York Yankees explaining how exactly they managed to tell the IRS that the land under the Yanks’ new stadium was worth $200 million, while telling the state of New York it was worth $21 million. (If the IRS figure had been lower or the state figure higher, the team’s convoluted stadium tax breaks might have been illegal.) As of last week, Kucinich still hadn’t gotten an answer.
Today, starting at 10 am, that may change, as Yankees president Randy Levine, city finance commissioner Martha Stark, and Economic Development Corporation chief Seth Pinsky are all scheduled to testify in Washington before Kucinich’s Congressional subcommittee. I’ll be liveblogging the hearings below; if you want to follow along at home, check the subcommittee website for a video feed.
9:01 am: An hour to go, and Seth Pinsky’s testimony just arrived over the email transom. After much lengthy back-patting (“The benefits of this project have been validated in one of the most thorough and transparent approval processes in the history of New York City, New York State, and likely the nation”), Pinsky finally gets to the point of today’s hearing: Those wildly divergent land assessments for the parkland now buried under the Yanks’ new grandstand.
His explanation: The higher figure ($175 million) assessed the value of the land once a stadium was built on it; the lower one ($21 million) the value if low-income housing were built there. (Why low-income housing? Pinsky doesn’t specify.) “Claiming that a marked disparity between these valuations is a sign of malfeasance,” Pinsky will say, “is no more logical than drawing the same conclusion from an assertion that the canvas on which a work of art is painted would be worth less if it instead contained a portrait by an artist with far lesser talents.”
9:40 am: Another news item while we wait: Reuters reports that “the credit crunch might impede the city from selling more debt for the Yankees, who are expected to seek up to $360 million of new tax-free and taxable bonds.” You might want to take that with a grain of salt, though: The same story also claims that in 2006 the Yanks’ new stadium was projected to cost only $480 million to build – when that was actually one estimate then of the taxpayer cost of the $1 billion-plus project. Maybe they should start teaching remedial math in J-schools.
9:59 am: They moved the page with the streaming video. If you bookmarked it before, go here instead.
10:19 am: And we’re off: Kucinich, in his opening statement, alleges that the Yankees withheld documents he’d requested in July in order to stall the hearing until the Treasury Department had okayed their request for new tax-free bonds. Treasury did so on Tuesday; the Yankees, says Kucinich, delivered the paperwork on Wednesday night. Kucinich calls this “evidence that they don’t want the truth to come out.”
10:33 am: Kucinich again: The key question is whether the city “reverse-engineered” its land assessments to make the Yanks’ tax-exempt bonds legal. (Long, detailed explanation of the Yanks’ “PILOT” scheme here.) Rep. Elijah Cummings follows up by talking about how Roger Clemens is still his hero even though he did steroids.
Witnesses are up next.
10:45 am: Yanks prez (and former deputy mayor under Giuliani) Randy Levine says without a new stadium, “the Yankees would have been forced to leave the Bronx,” and says state assemblymember Richard Brodsky belongs in the “grandstanding Hall of Fame” for his critical report on the Yankees project. Note that Brodsky, who testifies later, has been placed way at the other end of the table from Levine.
11:14 am: Pinsky says it’s “both standard and appropriate” for the city to do two different assessments, based on different principles. Finance commissioner Martha Stark, who actually conducted the assessments, is up next, which is where the math (and the logic) starts getting hairy.
The first assessment, says Stark – the one to determine how much parkland would be needed to be replaced – was based on just multiplying a typical per-square-foot value for the South Bronx by the size of the property. The second one – sent to the IRS to justify the PILOT plan – took the total value of the development, stadium included, and assumed that the land value was between 15% and 25% of the total – this, Stark says, “is consistent with appraisal practices around the country.”
I don’t have any appraisers on speed-dial, but I did just call Independent Budget Office economist George Sweeting to get his response to all this. His reply: The city keeps two “baskets” of value for determining property taxes – land value and improvements value. “Thinking about it logically, the economic value of the land should show up in the land value,” he says, while any value of stuff that’s dropped on top should show up in the “improvements” line. The land under the original Yankee Stadium, Sweeting notes, is valued by the city at a mere $7 million – despite having a baseball stadium on top of it, not a housing complex.
Continued in next post…