As the vote on providing an additional $370 million of bond financing for the new Yankee Stadium in New York City nears, New York State Assemblyman Richard Brodsky has introduced a bill that would limit the amount of debt state authorities could sell based on how much public benefit the bond-financed projects would provide.
The bill, A1874, would require that bonds issued by public authorities, nonprofits, and industrial development agencies could not exceed $50 million unless the projects financed produce sufficient quantifiable benefits to the community. The test he proposes would have prevented the financing of the new Yankee Stadium that was the subject of a heated and at times belligerent hearing convened by Brodsky in Manhattan yesterday.
At the hearing he questioned New York City Industrial Development Authority chairman Seth Pinsky and New York Yankees president Randy Levine about the request for additional bonds.
Under the proposal, plans to sell more than $50 million for a project would require the project produce benefits to its community in terms of employee wages and capital investment in the community that are 20 times the benefit to the business enterprise. The business' benefits to be measured would include savings generated using tax-exempt financing. The bill would also require that the cost of creation of permanent new jobs would be less than $50,000 per job.
The way the bill is written, it would apply to all bond issuance by public authorities, but a Brodsky staff member said the bill was intended to apply to economic development projects and could be changed to reflect that.
Also yesterday, the New York City Independent Budget Office released estimates of the costs of subsidies from the Yankee Stadium project over 40 years. The IBO estimated city net direct and indirect costs from the project will be $362.4 million and state costs at $165.8 million. Those costs are primarily from city and state-funded infrastructure projects related to the stadium, which includes replacement parks, a commuter rail station, and certain costs associated with parking facilities.
The use of tax-exempt bonds would save the Yankees $277.2 million in borrowing costs and their total benefits would be $786.8 million, according to the IBO. The New York City IDA estimates the incremental benefits to the city will be $438.3 million, over 40 years.
The Yankee organization has stated that its $1.5 billion stadium will create 57 permanent jobs, far short of what Brodsky's bill would require of future projects.
The additional Yankee Stadium bonds will increase the annual PILOT payment that Yankee Stadium LLC will make to the city to between $60 million and $75 million from an estimated $56 million.
Brian McMahon, president of the New York State Economic Development Council, a nonprofit that lobbies on behalf of economic development professionals, said his organization would oppose Brodsky's bill.
"Limiting the role of IDAs to smaller projects would limit the growth opportunities for New York communities," McMahon said. "A community should have the ability and the tools to control its economic development future.'"