Archive for the ‘Tax-Exempt Bonds’ Category

New Yorkers Kept in Dark About Outcomes of Recovery Zone Facility Bond Program

March 31, 2011

Cover photo by Scott Lenger. Used with permission.

UPDATE April 7
After the release of our report, and as reported in Crain’s Insider last week, we have confirmed that New York City Economic Development Corporation officials agreed with one of our recommendations regarding transparency and are considering ways to update the agency’s website to better inform New Yorkers on the status of proposed projects.

A city entity charged with allocating $122 million in Recovery Zone Facility Bonds regularly announced preliminary approvals and held public hearings on projects but left New Yorkers in the dark when deals fell through according to new report released today by Good Jobs New York. The report: Kept in the Dark: Poor Reporting on New York City’s Recovery Zone Bond Deals exposes a confusing and un-transparent process that prevents New Yorkers from holding companies accountable for job creation. The report is available at

“Despite historical changes in subsidy disclosure at all levels of government as part of the Recovery Act, the Recovery Zone Facility Bond Program fell dramatically short,” said Bettina Damiani director of Good Jobs New York and an author of the report.  “GJNY spent countless hours breaking down the byzantine approval process to determine which projects received these special bonds when basic details should be at every New Yorker’s fingertips.”


Bondholders of Yankee Stadium Garage Bonds Get Extra Innings

March 25, 2011

The April 1 deadline for the Bronx Parking Development Corporation to get its act together is no prank. Thanks to a glut of parking space at the new – subsidized to the hilt – Yankee Stadium, the parking garages, also subsidized to the hilt, have gone so unused the owners are struggling to pay its bondholders. It was widely reported that the $237 million in private activity bonds to finance the garage were going to default at the end of next week. However, today Juan Gonzalez at the Daily News reports that directors at the firm agreed to dip into its debt reserves (again) to pay the bondholders as well changes to its operations, like getting approval for expenses from an appointee chosen by the bondholders.
We can’t say New Yorkers didn’t see this coming.


Runaround on Job Numbers for Stimulus-Financed City Point Project

September 18, 2009

Is the New York City Economic Development Corporation (EDC) cooking up different sets of job numbers for the City Point project depending on its audience?

Conflicting figures in hearings, meetings, official documents, and the press over the past week are cause for some raised eyebrows at the very least.

City Point is a large mixed-use project planned for Downtown Brooklyn that was just approved for $20 million in tax-free financing in the form of Recovery Zone Facility Bonds (RZFBs), a new program created by the federal stimulus bill (ARRA). The bonds are intended to finance the project’s first phase, consisting of 184,000 square feet of retail space.

Brooklyn activists testified against the deal at a September 10 public hearing on grounds that EDC is failing to leverage the subsidies to ensure jobs will pay a living wage, provide benefits, and go to local residents. Activists also want to see 10 percent of space in the new facility set aside and made affordable for small businesses that were displaced to make way for City Point.

But it’s hard to stay focused on issues of job quality when you have to spend time sorting through the different claims on job numbers.

Here’s a breakdown:

Those who testified on the project did so based on a formal cost/benefit analysis posted on EDC’s website shortly before the hearing. In these documents, EDC projected that City Point will create 68 new permanent jobs and 108 construction jobs during the first phase of construction. (This round of bonds is only intended to finance the first phase, not the entire development.)

Less than a week later, on September 15, EDC staff told New York City Capital Resource Corporation (CRC) board members who were to vote on the allocation that the project would generate 208 permanent jobs and 328 construction jobs. (CRC is part of EDC.) According to EDC, these higher numbers incorporate jobs projected for a later phase of the project that has nothing to do with the current bond allocation, but which they believe will be indirectly catalyzed by completion of the first phase.

A majority of CRC board members voted to approve the financing.

EDC also touted the bigger numbers to the media, though a typo in their September 15 press release on the project explains why Amanda Fung reported in Crain’s New York Business that City Point would create 108 (rather than 208) permanent jobs, and 328 construction jobs.

These inconsistencies look especially bad in light of passionate participation at the three and a half hour hearing on September 10. Turnout was impressive. There was real debate. It was democracy in action.

But the EDC’s handling of these numbers undermines that process.

It’s misleading for EDC to promote figures that were not included in its official analysis, and that the public wasn’t given. Shouldn’t board members vote on the project based on the same numbers furnished to the public?

Brooklyn Activists Fight Use of Stimulus Bonds for Gentrification Plan

September 8, 2009

Thanks to the federal stimulus bill, a new tax-exempt bond has hit the market: “Recovery Zone Facility Bonds” (RZFBs). And while that phrase might make your eyes glaze over, keep reading, because initial indicators of how these bonds might be allocated in New York City are cause for heightened alert.

RZFBs are one of several new bond programs created under the American Recovery and Reinvestment Act (ARRA). As the name suggests, they must be used for projects within designated “recovery zones,” the boundaries of which are determined by the bond issuer (in New York State this means Industrial Development Agencies) based on indicators of “economic distress.”

RZFBs are a type of private activity bond that make commercial and industrial projects easier to finance because the bondholder does not have to pay federal, state, or local taxes on interest generated by the deal, and is thus willing to accept a lower interest rate.

It’s difficult to evaluate the RZFB program so far because states across the country—including New York—are still grappling with how to take advantage of it. New York City is the exception. The Bloomberg Administration has started things off with a bang by selecting a controversial project in downtown Brooklyn called “City Point” to receive financing through these new bonds. If the deal goes down, City Point developer Albee LLC would receive $20 million in tax-free financing for a shopping mall that will likely be anchored by a big box store such as Target.

This isn’t the first round of public money sought by this project—subsidies were approved in 2007, but then fell through due to difficulty in securing financing after the economic meltdown. Now, Albee LLC is looking to the stimulus bill for help.

Advocacy groups on the ground, led by Families United for Racial and Economic Equality (FUREE), are experiencing déja-vu. Having resisted the 2007 deal, they will oppose this round of subsidies on many of the same grounds at a public hearing scheduled for September 10. But they will have plenty to beef about without reminding the city that the site was home to the old Albee Square Mall, which was demolished in 2007 to make way for City Point. That demolition displaced scores of longtime local business that catered mostly to Brooklyn’s black community. Those stores were at odds with the city’s vision of a newly gentrified downtown, which favors chains like H&M and Bed Bath and Beyond. None of the displaced businesses were given the option to return once the new facility is built, and no requirements for local hiring or living-wage jobs were tied to the 2007 deal, despite fervent protest.

This history lesson should be the backdrop to the bigger question of whether retail development should ever receive public financing. Asking whether more Targets and Wal-Marts are really what so-called distressed communities really need is not a radical question at this point. It is well established that such economic development strategies amount to a subsidization of poverty, since retail jobs are among the lowest-paid. As an alternative, FUREE is pushing for an affordable grocery store in downtown Brooklyn, which is lacking in healthy food options.

Good Jobs New York is keeping an eye on the City Point project, as more communities across the country recognize the dangers of subsidies for retail development, and are organizing to avoid them. There may be a bright spot to this story in the Bronx: The Kingsbridge Armory Redevelopment plan—also slated to receive public subsidies—is emerging as a model of how development in New York City might be done. Due to effective community organizing, Bronx Borough President Ruben Diaz recently announced his commitment to signing a Community Benefits Agreement with the developer that includes a living wage, local hiring and community space among a long list of points. So stay tuned!

Note: This item is crossposted on the Good Jobs First’s STAR Coalition blog. (more…)

New York Baseball Teams’ Win Is Taxpayers’ Loss

January 23, 2009

Last Friday, just one day after a heavily attended public hearing, the New York City Industrial Development Agency (IDA) approved hundreds of millions of dollars in additional tax-free bonds for new stadiums for the New York Yankees and New York Mets. Adding in the subsidies approved in 2005, this brings the total public cost of the new Yankee Stadium well above $1 billion and the Mets’ new Citifield Stadium to over $600 million.

The IDA’s approval came despite increased media attention and new opposition to the city’s deal with the Yankees. Over the past several months, the Yankees’ plea for more public assistance has been met with increasing opposition, extending well beyond those of us who have long been demanding more transparency to the public giveaways for the new Yankee Stadium project.

After receiving wide support from New York City’s daily newspapers in 2005, criticism of the project has grown among major media sources. While The New York Times had been mostly silent on the public finances of the stadium subsidies, last week its editorial board called on the city to renegotiate the Yankees deal before providing the team with more financing. And reporters who have long been critical of the project, like Juan Gonzalez of the Daily News, joined Neil deMause and Patrick Arden to continue to question the additional subsidies. Gonzalez even had extra fodder when project documents revealed that the Yankees wanted more money for improved video boards, suite upgrades and “fancy johns.”

Two New York politicians who initially voted in favor of the Yankees project also stand out: State Assembly Member Richard Brodsky, whose recent sparrings with city officials and the Yankees’ Randy Levine has garnered wide attention, and New York City Comptroller William C. Thompson, Jr. Last year, Assembly Member Brodsky joined U.S. Representative Dennis Kucinich, chair of the Domestic policy Subcommittee, in investigating the financing scheme that allowed the city to provide the Yankees with $942 million in tax-free bonds in 2006. And more recently, Comptroller Thompson, a member of the IDA’s Board of Directors, spoke out against additional subsidies for the Yankees. In deviating from standard IDA practice, where the Board unanimously approves most proposals before it, Comptroller Thompson voted against additional financing for the Yankees.

While it was refreshing to see IDA board members debate at last Friday’s meeting, it’s disconcerting to those of us concerned with transparency and accountability that the projects moved forward. One of the many reasons is that Representatives for the Yankees and Mets each made presentations during the hearing, though by the IDA’s own rules comments in favor or opposition to projects are limited to public hearings.

Despite increasing opposition to public financing for the new Yankee Stadium, the city has continued to let the Yankees play by their own rules.

Opposition Grows on Proposal to Cut Bond Transparency

December 9, 2008

In November we blogged about an IRS proposal that would lessen the public approval and transparency requirements states and localities must follow when they issue tax-exempt bonds for private economic development and housing projects. These bonds have been used for a variety of purposes involving affordable housing, nonprofit organizations (including hospitals),  and (in some cases) commercial firms, Wal-Mart warehouses, and private prisons. [This paragraph was updated on 1/23/09].

The following local and national groups joined Good Jobs First and Good Jobs New York in submitting comments against the proposal, either individually or jointly:

Center for Tax and Budget Accountability (Chicago, IL)

Citizens for Tax Justice (Washington, DC)

Coalition for the Homeless (New York, NY)

Community Service Society (New York, NY)

Develop Don’t Destroy Brooklyn (Brooklyn, NY)

Families United for Racial and Economic Equality (Brooklyn, NY)

The Fiscal Policy Institute (Albany, NY and New York, NY)

International Brotherhood of Teamsters (Washington, DC)

Law Office of Weinberg, Roger & Rosenfeld, on behalf of its Building and Construction Trades Clients (Alameda, CA)

Living Wage Coalition of Sonoma County (Santa Rosa, CA)

Metro Justice (Rochester, NY)

New Jersey Policy Perspective (Trenton, NJ)

New York Industrial Retention Network (New York, NY)

New York Jobs with Justice (New York, NY)

New Yorkers for Parks (New York, NY)

NYC Park Advocates (New York, NY)

Pratt Center for Community Development (Brooklyn, NY)

Service Employees International Union (Washington, DC)

Service Employees International Union, Local 32 BJ (New York, New York)

UNITE HERE (San Francisco, CA)

United Food and Commercial Workers Union, Local 1500 (New York, New York)

U.S. Public Interest Research Group (Boston, MA)

Willet, Daniel (Silver Spring, MD)

Working Families Party (NY)

Those listed above specifically challenged the following aspects of the IRS proposal, in addition to others:

1) Decreasing from two weeks to one the amount of time the public has to research an announced project and prepare testimony in support or opposition.

2) Allowing localities to proceed with no hearing at all if there are no “timely requests” to participate.

3) Limiting the information now made publicly available prior to a hearing by allowing for more general project descriptions.

[Updated on 1/21/09] A public hearing is scheduled for January 26 at 10 AM at the IRS. Anyone wishing to testify must submit an outline of topics to be discussed by December 29, 2008. Please contact us for more information.

The Grey Lady Wakes up to the New Yankee and Mets Stadiums

November 6, 2008


Yesterday, The New York Times ran a lengthy article about the mounting public costs of New York City’s two rising baseball stadiums. Good Jobs New York has been meticulously tracking these subsidies for over three years.

The article documents the increase in tax breaks for the Yankees and Mets new homes from the $281 million announced in 2005 to $458 million today. The article also takes Mayor Bloomberg to task for his flip-flopping comments on subsidies for stadiums.

While reporters at other New York daily papers, Patrick Arden at Metro and Juan Gonzalez at the Daily News specifically, have devoted space and research to the ever expanding subsidies and seizing of 22 acres of park space for Yankee Stadium, this is The New York Times‘ baseball stadium subsidy coming out party, so to speak.

While the city stands by the project claiming $40 million in new revenues over 40 years, the article is chock full of counter arguments from economists claiming that sport arenas don’t drive economic development.

Most interesting of the experts cited is Andrew Zimbalist. Zimbalist is an economist from Smith College who has written positively about New York City’s stadium projects but throws a bit of a curve ball in The Times piece. He rebuffs a claim that the Hard Rock Café and N.Y.Y. Steak restaurants at the new Yankee Stadium will bring much more business to the area saying, “it’s hard to imagine” they would provide many benefits during the off season, because it “would require a tremendous renaissance in that part of the Bronx.”  

All New Yorkers, not just economists, should pay attention to this evolving project since the Yankees and Mets are expected to apply for additional public financing (GJNY will forward details of the public hearing when it is announced) just as news of tax increases on the middle class and cuts in critical services are being proposed.

“Gaming the Tax Code” Hearing Yields No Winners

October 28, 2008

It didn’t break through the coverage of the presidential election or the meltdown of our financial system, but corporate welfare was center stage at the Capitol last Friday.

In his fourth Congressional hearing into the economic benefits – or lack thereof – of taxpayer-subsidized stadiums, Rep. Dennis Kucinich (D-Ohio) summoned to Washington the masterminds of America’s most expensive stadium: the Yankees’ new palace going up in the South Bronx. There was Randy Levine, President of the Yankees; Seth Pinksy, President of the New York City Economic Development Corporation; Martha Stark, Commissioner of the New York City Department of Finance defending the project. Also testifying was Assembly Member Richard Brodsky who as Chairman of the state’s Assembly Committee on Corporations, Commissions and Authorities is conducting an investigation into the use of public financing for the project.

If attendees (yours truly sat in)  and web watchers (see and www.atlanticyardsreport for the play by play) expected the hearing to clarify how the Yankees project  – considered by many the murkiest deal in recent New York history – got a bundle of bond financing, they came away disappointed. (more…)

Legislative Umpires Call Yankees Out

September 19, 2008

The controversy around the public financing of the new Yankee Stadium heated up this week as a New York State legislator and a member of Congress put the squeeze on the team and New York City officials who helped finance the $1.3 billion stadium.

Testifying before the House Subcommittee on Domestic Policy, New York Assemblyman Richard Brodsky revealed that his summer-long investigation into the public financing of the new stadium shows that the city’s job creation figures and property tax assessments might not be up to par.  And Rep. Dennis Kucinich, chairman of the Subcommittee who has held two previous hearings on the use of tax-exempt bond financing for stadiums said:

“In the case of the new Yankee Stadium, not only have we found waste and abuse of public dollars subsidizing a project that is for the exclusive benefit of a private entity, the Yankees, but also we have discovered serious questions about the accuracy of certain representations made by the City of New York to the federal government.”


A New Controversy at the New Yankee Stadium

July 29, 2008

If you’ve been watching the antics around the development of the new Yankee Stadium, it shouldn’t be a surprise that another controversy has taken place.

The issue being raised in recent days by Rep. Kucinich (D-Ohio) and New York Assembly Member Richard Brodsky is that city officials may have lent a helping hand to the Yankees by boosting the value of the land for the new Yankee Stadium for property tax purposes.

It appears that city assessors jacked up the value of the land under the new stadium so that the Yankees would receive nearly a billion dollars in tax free bonds. Making the land more valuable allowed more borrowing.

Juan Gonzalez of the Daily News reported yesterday that the city may have estimated the value of the stadium seven times over. He reports that one estimate stands at $275 a square foot, far from what is land is valued in the South Bronx.

Rep. Kucinich isn’t holding back and has requested documents related to assessments from the Internal Revenue Service, National Park Service (the city needed the NPS’s OK since the new stadium is being built on a park upgraded with federal funds), New York City Department of Finance, New York City Economic Development Agency (that via its Industrial Development Agency allocated $942 million in tax-free bonds) and Randy Levine, President of the New York Yankees. Kucinich’s committee expects to hold a hearing in September.

It’s worth pointing out that neither Kucinich, the Congress Member from Ohio nor Brodsky represent New York City. One can only guess why elected representatives from New York City are sitting this one out. Brodsky represents a portion of suburbs north of the city and is chair of the Committee on Corporations, Authorities and Commissions.

Media alert: I’m scheduled to appear on tomorrow’s (Wednesday’s) edition of Democracy Now! (check out your stations listings or podcast info) hosted by Juan Gonzalez about the Yankee project with others to include guests Rep. Kucinich and stadium subsidy guru Neil deMause.