http://www.manhattan-institute.org/html/_nydn-steer_clear.htm

Daily News

Steer clear of stadium madness
November 23, 1998

By Sol Stern

Connecticut has already plunged into sports stadium madness with Gov. John Rowland's decision to build a $350 million football arena for the New England Patriots in Hartford. Can New York City be far behind?

Apparently not, since, as the Daily News reported last week, the city's Economic Development Corp. has quietly agreed to give the Yankees $3 million to study building a new stadium on the West Side or in the Bronx.

The Giuliani administration's pursuit of a new Yankee Stadium is understandable. It is a maxim of New York politics that no mayor can afford to be remembered as someone who stood by helplessly while the Big Apple's oldest and most beloved sports franchise abandoned the city.

Even so, the mayor's determination to use some $500 million of taxpayer money to build a glittering new field of dreams for the Yankees is a terrible idea. It is a dismaying retreat from his pledge to lower taxes and reduce government intrusion into the economy. It is the exact reverse of the fiscal policies Mayor Giuliani needs to follow to help the city achieve real economic growth.

The administration tries to justify its venture into state capitalism as an economic boon for the city. But there are dozens of reputable economic studies that argue sports stadiums cannot reasonably be justified by expectations of increased economic activity. The consensus runs almost across the board from economists on the right to those on the left.

Despite all this evidence, elected officials sometimes succeed in convincing the public that sports stadiums are worthwhile investments — just look at all the applause for Gov. Rowland in Connecticut.

It's true that new businesses do sprout up around relocated stadiums. No doubt, a new stadium on the West Side would attract new souvlaki stands and souvenir shops, new bars and restaurants, possibly even a new hotel. Some of the revenue these new businesses would generate might come out of the pockets of out-of-towners who might not otherwise have spent money in the city.

But as recent studies of Baltimore and Cleveland show, a substantial amount of the revenues would represent merely a shift of entertainment spending from one part of the city to another.

Take Baltimore's Oriole Park at Camden Yards. When Giuliani paid this new stadium a highly publicized visit last spring, he not only gushed about its beauty and comfort but repeated the claim that everyone benefited from the public expenditure on it.

Parts of the "Camden Yards miracle" are certainly true. Immediately following its construction, average attendance at Orioles games increased to 45,000, from 28,000.

However, several recent definitive studies have demolished the myth that building the stadium led to overall economic betterment for the city and state.

Johns Hopkins University economists Bruce Hamilton and Peter Kahn stated: "Public expenditures on [Camden Yards] cannot be justified on the grounds of local economic development."

They went on to say: "We estimate that baseball at Camden Yards generates approximately $3 million in annual economic benefits to the Maryland economy at an annual cost to the taxpayers of Maryland of approximately $14 million."

Though economic activity increased considerably in the spruced-up waterfront area near Camden Yards, much of this represents a relocation of businesses from other parts of the city. And while it is true that Orioles fans spend a lot more money in and around the new stadium, this, too, is money shifted from other Baltimore entertainment venues.

Baltimore was an economically troubled city before the building of its new stadium. It still is.

Giuliani is entitled to try to move the mountain a little to keep his beloved Yankees in the city. What he ought not do in the process is undermine his own political legacy and further impair the city's economic prospects.

©1998 New York Daily News

About Sol Stern: articles, bio, and photo

Here is another good article on the matter:

http://gothamgazette.com/article/finance/20041209/8/1208

A New Stadium Authority Will Add to City Budget Woes
by Glenn Pasanen
December, 2004


Mayor Michael Bloomberg faces a $3 billion deficit for the next fiscal year and Governor George Pataki a $6 billion deficit. Both men are also faced with the problem of how to fund the additional $5.6 billion a yearthat a state court panel in the Campaign for Fiscal Equity case says must go to city schools. In spite of Mayor Bloombergs claim that the city should not share the new expense with the state, a common assumption is that the city will need to take on a substantial share, at least 25 percent of the new funds.

But the mayor and governor seem publicly oblivious to their budget problems, at least in their current rush to judgment on a Jets stadium in Manhattan.

New information about the financing and governance of the stadium project raises serious questions about its costs to the city and the wisdom of the city' role in creating yet another unaccountable public authority. A November report from the governor's own economic czar (in pdf format) on the project reveals how the deal-making among the Jets, the mayor and the governor will generate actual and potential costs to the city beyond the city's initial $300 million capital commitment. And a new report from the Regional Plan Association (in pdf format) shows how the city could reap much higher tax revenues from a residential and commercial development at the stadium site.

The project report comes from the mega-public authority which controls the stadium deal, the Empire State Development Corporation (ESDC) ‚ parent already to over 90 smaller authorities and run by the governor's economic czar, Charles Gargano. The report spells out in mind-numbing detail the project's financing plan and the enormously convoluted financial and governance structures that will build and control it.

The stadium deal will not just cost the $300 million promised to build the stadium platform and roof. There is also the money promised to pay the interest on the debt, which could double the cost. And then there are tax breaks given the Jets on their construction bonds and their property taxes, as well as exemptions in sales taxes. No estimate of these costs is included in the Empire State Development Corporation's report.

The city's $300 million capital promise, it turns out, is tied up with the state's own $300 million promise in a joint bonding understanding that would have the city pick up the debt service cost of the state's share should the state legislature not fund the state's share. (The state would purportedly compensate any city cost with some negotiated substitute funding.) The city share of debt service would be paid for by an unidentified revenue source.

The city will also lose two major streets to the project, and all the stores on those streets, West 30th and West 33rd Streets, between 11th and 12th Avenues, to provide the entrances to the stadium. A pedestrian bridge over the West Side highway on 33rd Street will link the project to the Hudson River Park (controlled by another public authority jointly run by city and state). And a three-block section of the High Line would be eliminated.

The Anatomy of a Public Authority

The stadium project depends on the creation of a new public authority, called a local development corporation, which will be jointly controlled by the city and state. The local development corporation's main job will be to issue bonds to finance the stadium. This will be done outside the control of the City Council, which normally has to approve the issuing of bonds for capital improvements in the city. The local development corporation will issue $600 million of tax-exempt "Public Sector Bonds" to pay for the platform and roof. This debt, like a mortgage, will be paid off over 25 or more years by future city and state revenues. The corporation will also issue tax-exempt Jet Bonds to help the Jets pay for the stadium itself. The Jets will build the stadium, but will be exempt from city property taxes. Any payment-in-lieu-of taxes (PILOT) they might negotiate with the city would be used to help the Jets pay off the Jet Bonds. In other words, the city will now be part of a deal that issues tax-exempt bonds for the Jets share of the construction costs.

What may be most troublesome about this arrangement is not simply its unaccountability but its presumption of joint control by state and city. In state law, cities are always creatures of the state, and in politics, cities are generally at the mercy of the state. This will not, on the record, be an equal partnership.

Moreover, such an unequal partnership can further blur solutions to and accountability for much bigger problems, such as the city's deficit and the $5.6 billion education-aid problem. Both problems will require complex negotiations between state and city. The existence of a new joint public authority in which huge city/state trade-offs can be negotiated outside the normal budget processes is not a healthy prospect.

The airspace that the new authority would lease back and forth has a value ‚ ignored by the Empire State Development Corporation ‚ that should be factored into any decision about land use on the West Side. The new report (In pdf format) from the Regional Plan Association shows that over a 30 year period the city would gain $510 million from rents, development fees and property taxes from a mixed-residential-commercial development over the rail yards rather than a stadium.

The stadium deal is moving quickly and the mayor and governor are intent to break ground in the spring of 2005. A hearing will take place on December 16 on the Empire State Development Corporation's project report. Thereafter, creation of the Local Development Corporation and state funding streams would seem to require state legislative approval. Assembly Speaker Sheldon Silver then becomes, potentially, the significant city counterweight to the mayor and governor's dealing. But in a world of secretive negotiations among various private and public interests involved in the stadium deal there is no telling what will happen.

Glenn Pasanen, former associate director of City Project, teaches political science at Lehman College of the City University.

From what I have read here, and elsewhere (as well as using some common sense) Bloomberg and his croonies (potentially including Pataki in this group) are running a big scam on New Yorkers with their relentless quest to built a West Side stadium.

http://stopcablevision.com/index.html