IBO Report: Atlantic Yards to Cost City Big, Rain Cash on Ratner
This just hasn't been a good week for Bruce Ratner, the Nets owner who'd rather be the Nets' landlord. First, he unveils a new vision of his much-derided Atlantic Yards arena plan — now with more metal mesh! — and gets slammed by Times architecture critic Nicolai Ouroussoff for creating an "oddly clunky composition." Then this morning the Independent Budget Office issued its revised projections for the arena's fiscal impact on city coffers, concluding that any new tax revenues wouldn't be enough to pay for the city's costs.
The upshot, for those of you who are allergic to spreadsheets: The city is giving the arena $170 million in cash subsidies, plus another $180 million in tax breaks and other goodies. In return, it can expect to bring in about $130 million in new revenues over time — most of it thanks to the Nets themselves paying New York income taxes — resulting in either a $40 million loss or a $220 million loss for the city, depending on how you count. Ratner, meanwhile — who would be getting state and federal subsidies as well — is looking at a $726 million savings, or nearly as much as the whole arena is projected to cost in the first place...
The reason behind the IBO's increased pessimism, explains IBO chief of staff Doug Turetsky: "The fundamental change is that the city's contribution has gone up" — more than doubling when Mayor Bloomberg introduced his 2007 budget. "Plus, the cost of building the project has increased, so the value of some of the tax exemptions, such as for mortgage recording taxes, has also gone up." A new version of the economic model underlying the calculations may have also rejiggered the final tallies, says Turetsky, such as by revising the earlier assumption that 60% of Brooklyn Nets fans would otherwise be spending their dollars in New Jersey.
Adding insult to injury, the IBO notes in a sidebar that "we project that PILOTs [payments in lieu of property taxes] generated by the arena would still fall short of the payments needed to finance the arena's debt service" &mdash with the shortfall amounting to as much as $15 million. Since tax-exempt bonds are a key part of the Ratner arena plan — they're the whole reason the developer is rushing to get shovels in the ground by December — this raises the specter of the kind of funny land value numbers the city was accused of using for the Yankees. Could more Brodsky hearings be around the corner?