Friday, December 17, 2004

N.Y.C. Eyes $650M of PILOT Bonds - Debt Would Fund Jets, Javits Subsidies (but no source identified

Subj: N.Y.C. Eyes $650M of PILOT Bonds for Jets, Javits (but no source identified)
Date: 12/17/2004 5:31:49 AM Eastern Standard Time
Sent from the Internet (Details)

N.Y.C. Eyes $650M of PILOT Bonds
Debt Would Fund Jets, Javits Subsidies

Posted 12/16/04
By Michael McDonald

New York City Mayor Michael Bloomberg's administration is considering
selling $650 million of bonds backed with payments in lieu of taxes, or
PILOTs, and other fees in order to finance a $350 subsidy for the Jacob
Javits Convention Center and a $300 million subsidy for the proposed Jets

The bonds would come on top of $4 billion of bonds and notes the
administration has proposed for other infrastructure projects such as the
extension of the No. 7 subway line in the neighborhood around the Javits
center and proposed stadium. These bonds and notes would also be secured
with PILOTs and other fees, though only from developers in the Hudson Yards

Deputy mayor Dan Doctoroff said on Wednesday evening after he testified at
a City Council hearing about the Hudson Yards Infrastructure Corp. that he
believes there are sufficient PILOT payments and other fees paid to the
city to back bonds to finance both a $300 million subsidy to the Jets
stadium and a $350 million subsidy to the Javits expansion.

"It's not just PILOT payments," he said. "It's other fee streams that we
could capture."

According to city budget documents, New York City had more than 5,000
property tax exemption agreements in place last year through public
agencies such as the Industrial Development Agency. In lieu of property
taxes, developers and others have agreed to make annual PILOT payments that
were estimated to total $209.2 million in fiscal 2004, which ended June 30.

The IDA accounted for $46.6 million of PILOT payments in fiscal 2004,
according to the estimates, while the state-run Battery Park City Authority
accounted for $131.5 million.

The Bloomberg administration originally proposed using money from the
Battery Park City Authority to back bonds for the $350 million Javits
subsidy. Earlier this month the state Legislature and Gov. George Pataki
reached an agreement on legislation permitting the convention center
expansion that includes language preventing the city from using "any funds"
from the Battery Park City Authority.

Doctoroff said the city would not attempt to use the Battery Park City
PILOTs for the Jets stadium.

The Bloomberg and Pataki administrations have been working in concert on
redevelopment plans for Manhattan's far West Side, including building
platforms over the Hudson Yards to accommodate a football stadium and other

The two sides signed memorandums of understanding in March, along with the
New York Jets, whereby the city agreed to provide $350 million of the
financing for the $1.4 billion Javits expansion, with the state proving the
rest. The city and state also agreed to subsidize $600 million of the
proposed $1.4 billion Jets stadium, with the football providing the other
$800 million.

The state and city said it would sell $400 million of tax-exempt bonds to
raise half of the Jets contribution.

It was later revealed that the city would sell raise all of the $600
million of the Jets stadium subsidy if the state Legislature prevented the
Pataki administration from selling $300 million of state appropriation bonds.

Doctoroff said the city would not sell PILOT- and other fee-backed bonds
for the state.

"We won't do $600 million unless there is compensation from the state in
another form," he said. "So we don't ever see our exposure being $950

The City Council on Wednesday evening criticized the Bloomberg
administration's plan to use the Hudson Yards Infrastructure Corp. to sell
$4 billion of bonds and notes. It said the financing could be done more
cheaply through the city's general obligation bond program.

State Assemblyman Richard Gottfried also criticized the administration's
reluctance to reveal the sources of funding for the stadium subsidy.
Gottfried said that New York City"s deputy budget director Alan Anders
testified to the City Planning Commission last July that the Bloomberg
administration was "looking at several revenue streams to back" bonds to
raise the $300 million subsidy it agreed to make in March for the proposed
$1.4 billion Jets stadium.

Anders said "those revenue streams are currently not supporting the city
budget and estimated the amount needed to be $20 million to $30 million,"
to back the $300 million bond issue, according to a letter Gottfried
submitted to the administration seeking more detail.

Gottfried distributed a copy of the letter from July on Wednesday at the
City Council hearings. "At a time when the mayor is asking the council to
cut important services and projects, OMB [the Office of Management and
Budget] says there are several revenue streams that could support that
magnitude of expenditure that are coming to the city but are not currently
being used to support the city," Gottfried testified at the council hearing.

The OMB referred questions about the PILOT payments to the city's finance
department. A spokeswoman for the finance department said that it estimates
"what [the public agencies] should pay in PILOTs]" and referred questions
about where the money goes from there back to OMB and to the public
agencies. The IDA did not respond to questions about the PILOT agreements.

Subj: Re: [CB9M Chair's Blog] N.Y.C. Eyes $650M of PILOT Bonds - Debt Would Fund ...
Date: 12/17/2004 7:16:10 PM Eastern Standard Time
From: Cbleelaw
To: Reysmont


Just how many places have had those PILOTs committed to them, in one shot fixes to solve other income problems.

In addition, it does appear that this is a huge tax stream which is becoming a tax flow from one busienss to another, not paid as taxes, but then not put into the general budget either but reserved for still other business subsidies.

We are already in the position that a very large percentage of all large businesses pay no Federal income tax at all.

Are we now going to vouch for a mechanism whereby their should have been tax money is now to be diverted into a daisy chain of goodies passed out by politicians from one business to another wihtout stopping at schools, firehouses, hospitals and the like. Sheesh!

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