September 10, 2009

Nets arena subsidies worth almost as much as Nets arena

The New York City Independent Budget Office has issued an update of its 2005 study of the proposed Atlantic Yards arena to bring the New Jersey Nets to Brooklyn, and as Norman Oder notes, has come up with "far more pessimistic results." The highlights:

• Counting both direct public spending and tax breaks, New York City is spending $350 million on the project, the state and Metropolitan Transportation Authority $142 million, and the federal government $194 million (via tax-exempt bonds), all in present-value dollars.

• Nets owners Forest City Ratner, meanwhile, would save $726 million thanks to public subsidies. That's almost as much as the $772 million that the arena is now projected to cost to build — though, since some of the Ratner savings have merely kept that figure from being higher, it wouldn't be quite right to say that the public is paying the full arena cost.
• The IBO estimates that the city and state would each bring in $130 million worth of new tax revenues (and the MTA $6 million) as the result of the arena — most of it, notes the report, thanks to the Nets themselves paying New York income taxes instead of New Jersey. That would mean the city would lose $40 million even just counting direct cash outlays; counting tax breaks puts the city at a $180 million loss. For the state/MTA, tax breaks would turn a $31 million gain into a $7 million loss. And the federal treasury, needless to say, would get nothing in return for its contribution.
• The IBO report doesn't include includes a pro-rated portion of the cost of below-market land provided for the project (between $50 million and $114 million, depending on how you define "market"), nor does it but doesn't attempt to estimate how much tax revenue the site could generate if something else where built there, as some other studies have tried to do.
• Projected property tax valuations for the site aren't expected to generate enough payments in lieu of taxes (PILOTs) to pay off the arena bonds, meaning they'd be illegal without the kind of fancy footwork the city is alleged to have engaged in for the Yankees.

Way, way more at Atlantic Yards Report, as always, if you're interested.