The New York City Industrial Development Agency and New York City may have broken state and federal laws in putting together a $942.5 million deal to finance the new Yankee Stadium currently under construction in the Bronx, Assemblyman Richard Brodsky, said yesterday in a report.
New York City Economic Development Corp. president and IDA chairman Seth Pinsky called the report "willfully misinformed."
Brodsky, a Westchester Democrat, stopped short of actually calling the actions of the city and IDA criminal but painted a picture of the city and IDA manipulating property value assessments to permit the use of tax-exempt bonds backed by payments in lieu of taxes under Internal Revenue Service regulations.
"The report clearly lays out a set of actions which are inconsistent with commitments made by the city to the IRS," Brodsky said. Asked whether or not those actions were illegal, Brodsky, who is the chairman of the Assembly committee on authorities and corporations, said, "I'll let you draw your own conclusions."
Pinsky said that explanations were given to Brodsky explaining the different methodologies used for the assessments that took into account timing and improvements made to the land.
"You would think that he would at least reference the fact that there were explanations given for these differences, rather than continuing to make accusations through innuendo," Pinsky said.
When the city sought a private-letter ruling from the IRS permitting the use of PILOT bonds for the stadium, it said the PILOT payments would resemble regular property tax payments.
According to the report, city agencies undertook or contracted out three separate appraisals of parkland on which the Major League Baseball stadium is being built.
The city Finance Department appraised the park using eight "comparable" parcels in Manhattan rather than in the Bronx, thus inflating property value, the report said. The department also calculated the parcel as though it were 17 acres when it was actually 14.5 acres. This assessment valued the property at $204 million and was the one used, along with an assessment of the finished stadium based on construction costs, to calculate PILOT payment, the report said.
The parkland that was being used for the stadium had to be replaced under state law with parkland of equal or greater value. When the city hired an outside appraiser to value the property for the purposes of calculating how much parkland would have to be replaced, it came up with a $21 million assessment based on land values in the Bronx, the report said. If the city had used the higher assessment, it would have had to replace much more parkland.
The report said that the city had a third appraisal done that valued the land at $40 million, but withheld this information from the IRS as well as federal and state park officials.
Pinsky said that the department of finance informed them and the city that it stood behind its assessment.
The bonds were sold in 2006 as serial and term bonds with maturities out to 2047. The Yankees franchise is seeking an additional $366.9 million of bonds to complete the stadium.
Rep. Dennis Kucinich, D-Ohio, chairman of domestic policy subcommittee of the oversight and government reform committee, holds a hearing tomorrow on the use of PILOT bonds by the Yankees, New York Mets, and the New York Nets.