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New York City’s first professional football stadium probably won’t cost New York City taxpayers financially — Mayor Eric Adams said during this fall’s virtual victory tour after announcing the deal. repeatedly insisted.
Ultimately, the truth is more complicated and much more costly for New Yorkers.
In a new analysis, the city’s Independent Budget Office says the actual cost to taxpayers of Queens’ new football stadium will be at least $516 million spread over the 49-year lease of New York City Football Club. concluded. .
Government subsidies for sports stadiums have long been a third rail issue in New York City. Economists who study the use of public funds for sports teams generally argue that public costs outweigh public benefits. Yet political leaders continue to pony up because they don’t want to alienate sports fans.
Last year, following a record public grant deal for a new stadium at Buffalo Bills Stadium (including $850 million in direct construction grants), Mayor Adams announced the deal with New York City Football Club as another animal. characterized as The soccer team will pay for his $780 million construction cost of the 25,000-seat stadium with no city or tax-exempt funds.
However, there was a caveat.
Because the city chose to lease land in the Willets Point neighborhood to a developer rather than sell it, there are no property taxes.
The Independent Budget Office’s calculations were based on how much the city would receive in property taxes if it sold the land to the stadium’s developer. That figure — $1.7 billion — makes him worth around $516 million today, taking into account inflation and the uncertainty of the value of the dollar 49 years from now.
“The claim that the city doesn’t subsidize the stadium doesn’t really hold up,” said George Sweeting, executive director of the Budget Office.
A typical workaround for economic development deals on urban land is to impose payments instead of taxes, or PILOT for short. In this case, the developer would pay her PILOT on the land where subsidized housing is being built by the stadium, but at just $1 a year in rent, city officials said. The developer will also pay for both the planned hotel rent and her PILOT.
However, the land under the stadium does not require a PILOT payment. Rents only accrue, and officials say rents start at about $500,000 a year and rise to $4 million by the end of the 49-year lease.
“4 million [dollars] At 49 years, that seems like a pretty low rent,” said Nathan Jensen, a professor of political science at the University of Texas at Austin who focuses on state and local economic development.
Mr. Adams attempted to convey a different message. This means that the deal was unusual in that it spared no expense to taxpayers.
“The stadium we are building will create a significant number of jobs, but it will be 100% privately funded,” the mayor told WCBS 880. The mayor and his team repeated this message over and over again that mid-November: “We haven’t spent a dime of taxpayer dollars.”
Critics of the subsidy deal have focused on the enormous wealth of the football team and the New York Yankees owned by Sheikh Mansour bin Zayed Al Nahyan, deputy prime minister of the United Arab Emirates and brother of the country’s president. The Bloomberg Billionaires Index recently estimated the Al Nahyan family’s net worth to be at least $300 billion.
The stadium’s other developers, affiliates and joint ventures of Sterling Equities, are not without sufficient resources either. According to Forbes magazine, the founder and chairman of Related Companies, Stephen M. Ross, has a net worth of nearly $12 billion. Sterling Equities was co-founded by Fred Wilpon and Saul Katz, and in 2020 he, along with Jeff Wilpon, sold the Mets to his hedge fund manager Steven A. Cohen for his $2.4 billion.
The affiliate and Sterling Equities will sublease the stadium to the football team, a team spokesperson said, though the terms of that economic deal remain unclear.
“What you’re really doing is redistributing income from the general taxpayer to the very wealthy,” says Denise Coates, an economics professor at the University of Maryland in Baltimore County who specializes in sports economics. That’s it.
Not only will team owners not have to pay property taxes or taxes in lieu of taxes, the city will invest an estimated $200 million to $300 million in infrastructure improvements across the Willets Point project, which was formerly home to Willets Point. I am putting in dollars. The city’s largest collection of body repair and salvage shops before the city evicts them.
The Adams administration argues this is worth the investment.
“This analysis shows that while polluted and declining sites divided among multiple property owners generate $6 billion in economic activity and property tax revenues for projects that generate 14,000 construction jobs, some It’s based on the fabricated premise that it can be set aside for the mystical theoretical uses of , and 2,500 affordable homes,” said mayoral spokesman Charles Lutvak. I’m here.
“Let’s be clear, that scenario is utterly implausible and Mayor Adams’ vision for Willets Point, which includes one of the most financially responsible stadium deals in recent history, is the largest of the year. It brings in $4 million in rent while delivering substantial returns, providing the city with critical infrastructure and resources for the entire Willets Point community.”
The plan has supporters.
James Patchett, former president of the Economic Development Corporation and now working in real estate, said Willets Point land was polluted after decades of being home to a body shop. without it, the development options there would have been limited. Some form of government subsidy.
“The idea of a real revenue-generating and tax-paying use being built on this location, apart from the casino, is not realistic,” Patchett said. “Stadium deals not financed with tax-exempt bonds are also unusual, but I think this certainly supports the deal.”
A football team spokesman said the stadium “will bring record affordable housing, billions of dollars in economic activity, public schools and thousands of jobs to Queens.”
The city and state helped the Mets and Yankees build their current stadium on city land. This also includes the use of tax exempt bonds. In 2009, the Independent Budget Office calculated the cumulative value of city and state subsidies for both stadiums at $762.3 million.
The Bills secured about $1 billion in construction grants from the state and Erie County for the stadium project, but New York and other major cities like Oakland and Los Angeles have pushed back against wealthy sports teams in recent years.
“There seems to be a regular occurrence of short-term, temporary problems where people realize that this is not a very good use of tax money,” says Professor Coates.
In 2005, the Jets’ attempt to build a stadium on public land on Manhattan’s West Side with the backing of New York City Mayor Michael R. Bloomberg met with fierce opposition from the Knicks and Rangers owner James Dolan. rice field. Albany lawmakers ultimately rejected the proposal.
Dolan, who also owns Madison Square Garden, has his own subsidy in the form of a city property tax exemption passed through the state in 1982. Politicians have tried for years to overturn the exemption.
“It’s a 100% 49-year subsidy. So it’s an Amazon HQ 2-level subsidy,” Professor Jensen said, referring to the multi-city race to host Amazon’s second headquarters, and the large amount of government subsidies. It included an offer of gold. “Many communities weren’t offering jobs that big for thousands of jobs.”
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