Real 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 comeâ€”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]