City on Yanks Bond Details: Reply Hazy, Ask Again Later
As promised, state assemblymember Richard Brodsky held a hearing this morning into the Yankees' latest request for $350 million (or so - see below) in city-backed tax-exempt bonds to help pay for extra doodads for their new stadium. The surprise: On the hot seat for the entire three-hour hearing was a single witness, Economic Development Corporation president Seth Pinsky, who at times struggled to come up with detailed responses to the questions posed by an increasingly impatient Brodsky.
Pinsky did explain one mystery right away: The reason no one can agree whether the additional Yankees bonds would total $350 million or $400 million or what is that the team hasn't submitted a formal request to the city, and won't until the Internal Revenue gives its blessing to the deal. "The Yankees have submitted a partially completed draft application to the [Industrial Development Agency] to put their project into the IDA queue," said Pinsky, and city lawyers have begun drawing up the paperwork, but nothing will go forward unless the IRS rescinds proposed rules that would have the effect of making the bonds more expensive. (Pinsky insisted no bond buyers would touch them at any price, effectively making them unusable for sports projects.) Likewise, a new set of bonds for the Mets (estimated by Pinsky at "tens of millions" of dollars) and promised financing for the Nets' Atlantic Yards project are on hold until the IRS comes to a decision.
Even the rough guesstimates in the Yanks' preliminary application, though, were not revealed at today's hearing - Pinsky's office had redacted them in the documents supplied to Brodsky. (At this point, visible steam all but shot out of the assemblymember's ears.) Pinsky insisted that letting on what the Yanks plan to spend their newfound money on could hurt their bargaining position with suppliers - leading Brodsky to snort that if the team wanted to keep the details a secret, CEO Lonn Trost shouldn't have gone bragging about them to reporters.
Other hard figures notably absent include the number of full-time jobs the Yankees have promised to create (numbers thrown around this morning ranged from 16 to 1,000), and what ticket prices will look like at the new stadium - Pinsky confirmed that aside from checking to see that average prices would be high enough to generate significant sales taxes (yet low enough that the Yanks couldn't afford to pay for the stadium on their own), the city didn't concern itself with how much it will cost to get through the turnstiles of the new city-financed venue.
(In a written statement handed out by a Yankees p.r. representative at the hearing, team president Randy Levine said that "we expect approximately" 35% of tickets at the new stadium will go for $25 or less, half will be $45 or less, and a mere one-fifth will break triple digits.)
Most of the hearing, though, was spent pressing Pinsky on why exactly the city needed to help finance the Yankees project in the first place. (Though the EDC chief rightly noted that the bulk of the tax-exempt bond costs would hit the federal government, the overall construction project is estimated to cost about $596 million in local subsidies, $419 million of that from the city.) Brodsky noted that in a "deviation letter" issued by the IDA to explain why the Yanks were being let out of the city's Uniform Tax Exemption Policy, the agency claimed that without public aid, the team would leave town:
Brodsky: Who in the IDA was told by the Yankees they would leave?
Pinsky: I don't recall.
Brodsky: Was anybody in the IDA told that?
Pinsky: I don't recall.
Brodsky: Who's Andrew Alper?
Pinsky: He was the chairman of the IDA at the time.
Brodsky: And in this letter, he says that without the project [it] would likely result in the New York Yankees relocating the team to a stadium outside the city. Who said that to who?
Pinsky: I think what the Yankees made clear was that, and maybe you can ask the Yankees this question too, was that the Yankees could not continue to play in an obsolete baseball stadium, that the city could not afford to renovate the existing stadium, and that the Yankees would not accept the dislocation that would have occurred with a renovation, so the only option for keeping them in the Bronx was a new stadium.
Brodsky: And how did you determine that the Yankees could not or would not fund that stadium themselves?
Pinsky: I believe that the Yankees told us that that was the case.
A bit later, though, under questioning from assemblymember Jim Brennan, Pinsky indicated somewhat different consequences had the city not supplied the Yanks with public bonds:
"I think what I would say is that without that benefit, one of three things would have happened: Either no project would have happened at all - perhaps that would mean the Yankees would leave New York... The second possibility is that we would have gotten a substantially different stadium that resulted in substantially fewer returns to the city and state. And the third possibility is that we would have gotten the same stadium, but instead of getting a federal subsidy... the Yankees would have turned to the city and state."
And still later, in response to a question from assemblymember Charles Lavine as to whether the government helps drive up ticket prices when it "underwrites lavish new stadiums that have expensive field boxes and skyboxes and infinitely more amenities than the old stadiums have," Pinsky replied:
"I honestly don't view it that way, because I don't think there's any circumstance under which the Yankees or the Mets would be playing five years from now in a stadium other than like the one that you're describing."
Brodsky hinted at future hearings, perhaps bringing in Yankees officials to provide some of the answers that Pinsky couldn't. Hint to the assembly: Don't let them bring their video projector.