The New York Yankees and New York Mets baseball teams, which faced limits on tax-exempt financing, may sell additional municipal bonds to complete their stadiums, according to regulations issued by the Internal Revenue Service.
The $4 billion Atlantic Yards project in Brooklyn, including an arena for the New York Nets professional basketball team as well as apartments, offices and stores ruling, may also be covered by the decision covering the debt, whose interest isn't subject to federal income tax.
The IRS previously restricted tax-exempt bond sales benefiting private companies, which instead of taxes, make payments applied to the debt. The New York bond sales would be allowed because the three projects were ``substantially in progress'' by October 2006 when the rules were proposed, according to the Treasury Department, which oversees the IRS.
``It is good news that the IRS has provided transitional relief for the projects already in the pipeline,'' said Janel Patterson, a spokeswoman for the New York City Industrial Development Agency.
The Yankees sold $930 million of tax-exempt bonds and the Mets sold $547.5 million in August 2006 through the city agency. Bonds for both stadiums are backed by payments the teams make in lieu of real estate taxes, known by the acronym Pilots.
``We have had preliminary talks with the Yankees and Mets on additional bonds, though we don't have formal applications from them,'' Patterson said. Construction of both stadiums is under way and the teams expect to play in the new facilities next season.
Yankee Plans
Alice McGillion, a Yankees spokeswoman, declined to comment on the Treasury ruling or the team's plans. Mets officials weren't immediately available for comment.
Bonds for Atlantic Yards are expected to sell through the Empire State Development Corp., a state authority, Patterson said. Officials at Forest City Ratner, developer of the project, couldn't be reached for comment.
Because tax-exempt bonds usually sell at lower interest rates than those whose interest is federally taxable, the Yankees saved $200 million to $500 million, according to Assemblyman Richard Brodsky of Westchester, a critic of taxpayer subsidies for the stadiums.
Brodsky, who said he will testify at a Oct. 24 hearing of a U.S. House Oversight and Government Reform subcommittee held by Ohio Representative Dennis Kucinich, has objected to inconsistencies in the city's valuation of land to benefit private owners of sports teams.
To increase the contribution the Yankees make instead of taxes to an adequate level for the bond payments, the city valued stadium land at $250 per square foot. At the same time, property at the nearby Hunts Point produce market, ``where the city wanted to keep the valuation low'' was just $9 per square foot, Brodsky said.
(Source: Bloomberg)
