Ratner Feasts on Public Subsidies

fat-cat-03-2008.jpgReal estate attorney Michael D. D. White has some rage to spare when it comes to how public dollars are used to build private arenas and stadiums, especially in the case of Atlantic Yards. In a HuffPo piece White pillories the practice of making developers like Bruce Ratner even richer on the public dime and further allowing them to realize enormous gains via eminent domain. Part of the op-ed examines the extraordinarily murky finances that are making AY possible:

The centerpiece of Ratner’s arena finance dance is a complicated device best referred to as an “R-TIFC-PILOT” agreement (pronounced “Artifice-PILOT”- or “Return Total Intercepted For Costs-Payment In Lieu Of Taxes”) which simultaneously spares Ratner’s companies from all real estate taxes on the arena while providing him with $692.70 million in municipal bond proceeds toward its cost. The bonds are paid entirely with intercepted tax payments that would otherwise have been going to the public treasury. Other intercepted taxes can defray Ratner’s cost of operating the arena, increasing his bottom line. Because the bonds are exempt from federal, state and local income tax an additional estimated subsidy of $129 million goes to the project. Including a $11.7 million exemption from sales tax, donations of public land (and excluding a number of other subsidies that could also be included) it adds up to an arena replacement cost paid for by the public of $905.72 million. From publicly available figures it can be discerned only that Ratner is paying for another $71 million with private money. But beyond this, the public is donating to Ratner the right to name the arena and the neighboring portion of Brooklyn, rights being sold for $20 million a year for 20 years, ($400 million). Just on the arena alone Ratner will clear at least $116.29 million in present value on day one.

Most disturbing is the notion that support from public officeholders probably means we’re going to continue to see developers dance on the numbers for years to come—only trouble is, those of us who are paying for it have to watch the pas de deux from the sidelines.
More Money for the Very Rich: An Unsporting Pursuit? [Huffington Post]

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  • It should be noted that the figure of Ratner clearing (bilking) the NY taxpayers for $116 million on day 1 doesn’t factor in the additional value of the Nets created by us building them a stadium. Even though they suck, that figure is likely to be in the hundreds of millions of dollars.

    Yeah I know, jobs. But the question most people ask when paying for something is not just what we’ll get, but how much money it’s going to cost.

    We didn’t get screwed. We screwed ourselves. It’s our fault for letting this happen.

  • excuse me but we had no say in any of it. the politicos did.

  • When PH questioned Ratner, we were all called NIMBYs. You people turned your back to us.

  • yet you all rahrah bloomberg who has the power here and trash markowitz who is the cheerleader. So they let powerless boro-prez take all the scorn – as you keep praising the real powers.

  • Excellent illustration, Mr. B.

    That cat looks like some good eatin’.

  • seriously the Rat got over like a fat cat.

  • That cat is the most frightening thing I have seen this week!

  • Dude! Ratner, tired. Cat, CRAZY! More articles about fat cats please. I mean, real CATS. That thing just blew my mind!

  • 1) The subsidy is reasonable considering how much time and money will be spent constructing the decking over the train yard

    2) Tax abatements for residential construction are desirable because so much of the city revenue comes from income taxes. Making this project feasible brings tax revenue to the city as the several thousand future residents of this development will ALL be paying income taxes.

    In the end – it’s projects like this that will keep NYC financially stable.

  • Interesting that the author of the article is criticising the use of municipal bonds when his whole career was spent issuing that animal for a state agency whose whole purpose is to do these type of financings.

  • If one and two are true, why won’t he disclose the financials of the project. Why did he sell the naming rights and keept he money for himself?

    If you love him so much include an extra grand or two when you pay your taxes and earmark it for Ratner.

  • That cat is photo-shopped I hope

  • Another slow day Brownstoner?

  • Another slow day Brownstoner?

  • Another slow day Brownstoner?

  • Polemicist —

    Did you even read the post? The linked article? This has nothing to do with covering over the railyard. This is about subsidies to the arena, which is not being built on top of the railyard.

  • Sorry folks but this is not slow day news. Ratner is stealing money from NYC taxpayers with Bloomberg and other politician’s blessings. The reason this isn’t getting a lot of posts is because when confronted with truths like this, there’s nothing any of the pro Ratner jack-asses can say.

  • On this 5th Anniversary, remember also, aside from the current suffering, that the total cost of the O.I.L. is estimated to possibly hit 3 trillion USD. Considering this, does anyone realize how mortgaged our lives are…and who has walked off with the money?

    I’m sorry to say, but the shower of money Ratner has tried grease his way into seems but a drop in the bucket compared to the Great Train Robbery (Great Train Wreck)…of course, it just adds to our burden and especially for NYC and NYS residents.

    I wonder what our future will be like…

    And yes, Polemicist, you continue to come up with nonsensical arguments. What? We should give a billion dollars and probably much more to Ratner so he can offshore it while we can get some lousy service sector jobs from huge retailers who put more small, local ones out business? And will we really get lots of income taxes on imaginary new residents who flock to NYC and all have decent jobs with decent salaries?

    If the proposed AY housing even gets built, it will add to the oncoming apartment glut. We may end up seeing just ongoing NYC residents moving into any additional units, not scores of thousands of new-to-NYC residents materializing out of thin air…certainly not with the kind of dough either to live at AY or the level of income that would impact tax rolls.

    How many buildings are coming on line or already built that are sitting with unclaimed units at the present moment? Who’s going to buy at the prices the developers can recoup on? And even rental: who will pay the kind of rent needed so the owner can recoup costs, maintain the building, pay any staff, etc?

    On top of this, sadly many of the new buildings coming on line didn’t work in real high efficiency very much—most of it seems to be smoke and mirrors with a vague attempt at greening (mostly the greened up websites and brochures, but not material, palpable, low-impact measures to make the new buildings more sustainable…just business as usual with the same cruddy NYC style of housing being slapped up). They will cost fortunes to heat and cool. POOR planning…the cheapest path of least resistance taken.

    Again, the country/government has been so drained of resources that we are mortgaged up the ying-yang. Do I hear “under water”, “upside down”? So what if Ratner gets away with a billion or two? In a way, it will be hard to even discern who took what when the dust settles (plus, there’s so much real-time cover-up happening at all levels anyway, who’ll ever know what happened or have the resources to research it, publish it…and not get bumped off in the process?)

    We are probably entering a long twilight. Who even knows how bad it will get. Meanwhile, you’ve got Polemicist who thinks that by people moving more and more into cities, somehow we will save the planet and spark the economy, that each city resident somehow exists without massive amounts of resources, eating trucked in food, sending out all kinds of waste. Sure, it’s more compact but we know the failures of hi-rises in “park like settings”. All those great ideas from the first decades of the 20th Century led to less-than-desirable living in many cases. The footprint of NYC is enormous spreading out over the planet like a blanket. Our lifestyles in the suburbs or in the cities in the country are energy and resource intensive.

    So, if you live in exurban maybe you’ll use more energy for transportation (if you really *need* to drive that much) but you might be able to building a dwelling/community with sustainable materials, grow food (even fiber) for local consumption, rely on water beneath your feet or off your roof (not from many miles away). Communities can be designed and retrofitted to be more compact, greener, sustainable…even in NYC, but it is harder here. The currently devastated small towns in the US may end up being the loci of future safety.

    Look it…people have flocked, and continue to flock to cities all over the world and the results for the cities, the people and the emptied countryside are devastating.

    Nihilist Future Fantasy Novel begins?

  • Making this project feasible brings tax revenue to the city as the several thousand future residents of this development will ALL be paying income taxes.

    Har har.

    So all of the future residents of this complex are moving to NYC from outside the city? I didn’t realize that’s all we needed to do to stabilize the economy.

    Wow. Let’s build more luxury condos and we’ll be the richest city in the world!