Dec
17

A stadium scandal and a scoreboard heads south

By

I have two stadium-related stories to cover today. One is about the increasingly obvious signs of shady dealings concerning the land under the new Yankee Stadium, and another is about two pieces of the old stadium heading to Tampa.

  • In the Daily News yesterday, columnist Juan Gonzalez reported on yet another series of e-mails between city officials that may have some legal ramifications. The e-mails detail how the Bloomberg aides, according to Gonzalez, “secretly pressured city tax assessors to inflate the value of land under the new Yankee Stadium so the team could qualify for nearly $1 billion in tax-free bonds.” That’s what politicians call a bombshell. It’s tough to say what this means for the city or the Yankees. Assemblyman Richard Brodsky continues to investigate the issue, and at some point, he may subpoena all of the city’s e-mails concerning the land deal. Perhaps, in the end, he or the IRS can levy finds against the city or the Yankees. No matter the outcome, this is bad government.
  • In rosier news, two scoreboards from Yankee Stadium are being shipped off to Legends Field. The scoreboards in question are new LED displays the Yanks purchased two years ago for $1 million. The team sold them to Hillsborough County for $250,000 each, and they’ll adorn the left and right field grandstands in Tampa. As long as they show the words to “Enter Sandman” during Spring Training, I’ll be happy.
Categories : Yankee Stadium
  • Cam

    Ben, what’s the worst outcome for the Yanks in this? Is it just fines and penalties or is there anything more serious?

    • http://www.riveraveblues.com Ben K.

      I can’t quite figure it out and don’t have the time until after my last final tomorrow to delve into Richard Brodsky’s stance. The worst I can think of is a back-audit and some money owed to the proper tax-collecting agency.

      But if someone with more knowledge of the minutiae of the laws can correct that, I’d appreciate it.

  • TONY

    Ben, I know the news is slow but I really don’t care. Worst case – the yanks made a deal with the city & they inflated the values to make it work – So what.

    Every buisness that has built a building in the city have received incentives also – they just don’t make the news. Are we supposed to be surprised that their was deal making behind the scenes – Wow.

    If it helped the yanks build this great sadium – then kudos to them

    It it help the yanks keep a high payroll & bring great players to play in the greatest city in the world – all the better

    Tony

    • http://www.riveraveblues.com Ben K.

      So you cared enough to comment, but you don’t otherwise care? Ok. Anyway, I care. That’s why I wrote this post. We probably should care that may have been illegal goings-on to devalue land in the South Bronx. There’s a huge difference between legal business incentives and illegal activities.

      Are you going to complain when Bloomberg and Patterson start taxing everything you do? Because if so, you should care about this too.

      • TONY

        don’t be so naive- do you think everything is always done without a little bit of bending of the rules? The Yanks should get the same deals any other entity gets & no I do not see playing a appraised value is a big deal.

        If your that inflexible then nothing would ever get done – in the real world these things happen.

        Tony

        • UWS

          So you’re saying that just because these things happen, we should take them as the norm and not bat an eyelash? That’s some great thinking!

          Maybe I’m naive too, but I would like to see everyone play by the rules, and certainly not condone it when the rules “get bent” as you put it.

          • TONY

            yes in a perfect world that would be the case. I am not passing judgment on saying how things should be – I am commenting on how things actually are. So yes if companies abc&d get this break it would be unfair that yankees do not.

            And in terms of bending the rules – their is a thing called a gray area – it not always black & white.

            I am not condoning that anyone including the yanks break the law but I will applaud them to exploit the system to the limit. We can debate where that limit is – but to me inflating a value is misiscule in the grand scheme of things.

            Tony

            • http://www.riveraveblues.com Ben K.

              I’m still waiting for you to answer my question.

              Are you going to complain when Patterson starts taxing the hell out of everything to cover the state’s gigantic budget gap?

              • TONY

                Ben, I do not think that is valid argument. The state of NY does not have a billion dollar deficit because company A (the yanks) received a tax break – The reason yoo (the city/state) give a company a tax break is because you want to give the company incentive to build in NYC. By giving these breaks they gave the yanks incentive to build the stadium. Which if I am not mistaken they are paying for? So with this incentive the city/state where able to have company A (the yanks) invest 1 billion on a construction project. Sounds like a sound judgment to me.

                Now if the city/state where actually paying for the stadium – then I would be in total agreement against the building of the stadium. But why would I be against them in building the infrastructure around the stadium?

                Tony

        • Charlie

          journalism is supposed to hold these people accountable. we rip cashman when he makes a stupid deal, and it’s infinitely more important to call attention to the fact that Hal, the new executive of our team, has collaborated with elected government officials to skirt the law and evade paying taxes that should be going to schools and roads. it may or may not be true that nothing gets done without bending the rules. i lean towards thinking it’s not true. however, in light of the current economic crisis and wall street scandals, how can you say that it’s not worth noting that the yankees are illegaly getting out of paying taxes on this stadium.

          • TONY

            Because I dont think they did anything wrong – very time I read an article about this subject – I always have the same thought – what “exactly” was done wrong. That they inflated a value? They had come to an agreement with the city on what subsidy they where going to do – the value was just a means to get to that subsidy. Trust me if it wasnt the inflated (and there is real debate on whether it was inflated) value then they would have found another loophole. And to me if you a smart enough to find a loophole then you should be able to do it.

            Now if a story comes out that yankee offials bribed an official at a city dept – then I think we have a real scandal – to me an inflated value does not rise to that level. This story is only coming to light because the yanks are high profile. If it was abc enterprise – this story would never make it to any paper or blog.

            Tony

            • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

              $9 vs. $275 is not just “inflation”, it’s scandalous inflation.

              • http://www.riveraveblues.com Ben K.

                Come on! I routinely run into land that’s valued at 3000 percent more than the same land 1000 feet away.

                • TONY

                  It all depends what is on the land. If you have an office building or a stadium then the value will be higher than say a 10 unit apartment building. So yes a skyscraper or a stadium will be worth 3000x more than a 10 unit apartment building

                  Tony

                • UWS

                  As others in this thread have already pointed out, it depends on whether the land was valued before or after the stadium was actually built on it.

                • http://www.riveraveblues.com Ben K.

                  Totally wrong.

                  Sure, a skyscraper may have more value than a 10-unit apartment building, but the land underneath the skyscraper won’t be 3000 times more valuable than the land underneath the apartment building if they’re in the same neighborhood.

                • The Honorable Congressman Mondesi

                  I’m really hesitant to get into this conversation and don’t feel like discussing experience/credentials here… But, saying this as someone with a modicum of insight into the real estate world: No, this is not like some company “receiving incentives.” And “inflating value” is not a “miniscule issue”… it’s… well it’s inflating value, which is a pretty f’ng huge issue in a real estate deal (an issue whose import is compounded by the size of this deal). This Stadium stuff is not “how things actually are.” I also hesitate to get into the name-calling around here, but Tony brought up this word – Tony, you’re the one who sounds naive. Of course shady stuff goes on, yadda yadda. That doesn’t mean it’s ok for a very large corporation and a municipality, in concert, to intentionally defraud the taxpayers out of large, meaningful sums of money. What’s going on here is not normal. This isn’t a groundbreaking concept.

                • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

                  Precisely. These land valuations are supposed to be done strictly on the basis of inherent geographic value, not on what will be built on the land. There is no possible way that any land in the South Bronx is intrinsically worth $275 per square foot when all the land surrounding it for miles in every direction is worth less that $10 per square foot.

                  Conversely, to use your skyscraper vs. 10-unit apartment building, the skyscrapers downtown may sit on land worth, say, $100 per square foot, if somebody buys that 10 unit apartment building and tears it down, that land will be valued at $100 per square foot, you’d better believe it.

                  Land valuations are geographic. Discrepancies like that are definitely unethical, probably criminal.

                • TONY

                  The Honorable Congressman Mondesi – maybe I am the one who is naive. I never said I know everything – I am giving my humble opinion. But I beleive in my premise that the yanks made a deal with the city & we are debating the “process” of how the deal was done. I do not beleive that the yanks bribed anyone – but I do feel that the city wanted this to get done & made sure that it did.

                  To me the yanks are putting up 1 billion & I think it is fair for the city/state to pay for infrastructure.

                  But hey – I am obviously on my own island on this one.

                  Tony

                • Chris

                  “Land valuations are geographic. Discrepancies like that are definitely unethical, probably criminal.”

                  That’s not necessarily true. There are a lot of factors besides simply geographic location that can affect the valuation of the land. For example, how many tax parcels are there in the land, how is the land zoned, are there utilities servicing the land, etc. There is considerable site work that was done beyond the actual stadium which could affect the value of the land (for example, having a metro north station within walking distance will increase the value of that land).

                • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

                  That’s true. But none of those factors (facilities, utilities, tax parcels, etc.) justify a difference between $9 and $275. That’s ludicrous.

                  A small difference, sure… a few dollars a square foot. Not $266 dollars difference, though.

                • Chris

                  Actually, the zoning of the land could make a huge difference. Also, whether the land is subdivided or not could also make a big difference. You’re right that the other items probably won’t make too big a difference.

                • Ed

                  I don’t know enough about evaluations to know how feasible a difference in evaluations under normal circumstances, but you can very easily pull off huge differences in value between two properties in the same neighborhood.

                  Residential vs Commercial zoning laws will change the value.

                  A large, flat area such as what you’d build a stadium on would have higher value than land on an incline.

                  Groundwater and/or soil contamination would greatly devalue land. Land down gradient from a contaminated site would be substantially less valuable than land up gradient.

                  Environmental regulations can drastically alter land values. The closer you are to a body of water, the more limited you are in what you can build on a property, which lowers property value.

                  The previous uses of land would drastically alter the valuation of it. Previously undeveloped land is highly valuable. Prior industrial use greatly devalues land.

                  While a 3,000x difference in value certainly sounds way out of line, I would expect land within a major city that’s suitable for building a stadium to be scare and worth a lot more money than the land around it. Short story is you can’t take two valuations and reasonably compare them without knowing a LOT about the property.

                • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

                  Again… both of these two plots of land are virtually the same size, they’re practically across the street from one another, neither of them has any environmental hazards or problems, they’re both well served by public transportation and utilities, they have no special tax restrictions or subdivisions or prior use, etc. etc. etc.

                  All of you raise several valid reasons why plots of land can be valued differently. But not enough to justify a difference between $9 and $275.

                  As somebody who lived in the neighborhood and works in the neighborhood and knows these areas intimately, if the Bronx Terminal Market land was valued at $9 a square foot and the Yankee Stadium land was valued at, say, $15 a square foot, it would be intriguing but possible.

                  It’s simply impossible for there to be any sum of any valid reasons that would cause the parcel of land between 161st Street and 164th Street, Jerome Ave and River Ave to be worth $266 dollars per square foot more than the parcel of land in the Bronx Terminal Market project less than a handful of blocks away. Impossible.

                • Ed

                  I’m not disagreeing with you that a $266 dollar difference is too much. I’m just saying large differences are possible.

                  But let’s look at the full picture here – both estimates are laughably bad. The stadium land is valued way too high, and the Terminal Market land is valued way too low. About $50 per square foot is a reasonable ballpark number for the land valuations, which puts one property valuation at less than 1/5th the proper value, and the other at around 5.5x the proper value.

            • sam

              Potentially there were a lot of things that may have been done wrong, potentially violating the law (I am not a lawyer).

              It is possible that the valuation itself was in violation of state law, which may have allowed them to file for the tax exempt status that they were not entitled to (State and Federal tax law). There is the questions if politcal officials incorrectly influenced a process in which they shouldn’t have. There is also the question of the luxury box given to the city in exchange for various concessions. There are potential legal ramifications if in fact these things occurred — the Yankees may have unjustly enriched themselves at taxpayers expense.

              Obviously there are a lot of areas that should be investigated because there is a lot of taxpayer dollars at stake in this case. Also there is a neighborhood that has been altered in order to build the stadium — just because you don’t live there doesn’t mean that the people that do should be unjustly affected. Those are probably some of the many reasons for the investigation.

              If something was done illegally people should be held accountable… whether its the Yankees or the Bloomberg administration.

  • Chris

    The root of all of these assessment issues is whether the land is valued based on it’s state prior to construction (i.e. unimproved park land) or after building a $1.3B stadium on it. I have no idea which is the correct value to use, but simply because the mayors office told the assessor to use the larger value does not mean anything improper or illegal was necessarily done. If the assessor used the wrong bench mark for the assessment, then the mayor’s office should tell him to correct it.

    • http://www.riveraveblues.com Ben K.

      Yes. The caveat should be “potentially illegal.” It’s unclear if what they did was actually against the law.

  • http://www.spartacus.schoolnet.co.uk/CRsmithT1.jpg tommiesmithjohncarlos a/k/a Ridiculous Upside

    I was at a forum last week and heard Brodsky speak on the issue himself. He stated that the Bronx Terminal Market project, where the city (and some private developers) are building a nice new shopping complex, the land was valued at $9 per square foot.

    For the Yankee Stadium project, just a few blocks away, the land was valued at $275 per square foot.

    That’s ludicrous.

    Also, for the sum of about $1B (billion, not million) in total tax abatements and savings, the Yankees internal memos to the city (most of which were never made public) only officially promised to create 15 new, permanent jobs in the stadium project.

    • Charlie

      all that money could go a long way. I don’t even live in New York and i’d rather see the schools in the bronx pay their teachers more and buy new books for the kids than see the yankees sign teixeira. i’m ashamed of the yankees and i never wanted a new stadium to begin with.

      • http://www.riveraveblues.com Ben K.

        Signing Teixeira and paying for the land under the new stadium are two issues that are completely unrelated to each other.

        • Mike Pop

          I enjoyed this post

          • The Honorable Congressman Mondesi

            Mazel Tov.

    • Ed

      $9 per square foot for commercially zoned property sounds incredibly cheap. Unbelievably cheap. A typical 50×100 residential lot would only be worth $45,000 at that rate.

      For reference, if you buy a house on a 50×100 lot in North Jersey, the land will typically be appraised at around $200,000, give or take depending on the town. That’s $40 per square foot. Commercially zoned lots free of environmental issues tend to be more expensive than similar lots with residential zoning. I don’t know land values in NY, but I would think land prices would be higher in NYC than in NJ.

      For $9 per square foot, that property has to either be horrendously contaminated, or they’re getting a pretty sweet deal on property taxes. I’m voting on the latter.

  • Jay CT

    Ben- Not trying to sound rude, but I think there are quite a few grammar mistakes in that post, many more then I have seen in the past. Just wanted to point it out in case you wanted to fix it.

    • http://www.riveraveblues.com Ben K.

      Yeah, God. That was sloppy. I should really proofread posts I write at 3 a.m. after studying CivPro all night. Thanks for the note. I think I caught them all.

      • Jay CT

        Lol, yeah you did. And once you get a law degree from NYU, one of the best in the country, and can charge over 1,000 an hour, you can pay numerous people to edit your blog postings, regardless of the hour. I just didn’t want to look like a dick with bringing it up.

  • Ryan S.

    Edited by RAB: Saying something is “completely off topic” doesn’t mean it’s OK to post it. Please review the commenting guidelines.

  • A.D.

    I’d guess more will come down on the aids & the city then would come down on the Yanks, since aids pressured the assessors, not the Yanks… but we will see

  • Manimal

    Don’t mean to be picky but its Steinbrenner Field now, formally known as Legends field.

    http://en.wikipedia.org/wiki/Legends_Field

  • Brad

    Not to defend Tony completely…..I do believe it is your duty to question what leadership does in your name….To a certain degree he has a point. States, cities, and municipalities often offer companies very lucrative incentives in locate or keep their business in a given city. While I’m sure most of these incentives are legal in every sense of the word you could always argue that the money might have been better spent somewhere else like teachers salaries, police and fire etc. The issue the Yankee’s and other sports franchises run into is the very negative perception people have of publicly financed stadium deals. I’m sure the good people of Tennessee didn’t see the nearly $580 million dollars the state gave Volkswagon to build a new plant there.

    Sports franchises should have the same access to incentives that other business do. They keep jobs at home, create short term increase in local employment, add certainly add to the local economy. IN NO WAY do I condone inappropriate and potentially illegal activities as a means to achieve some sort of corporate parity but I understand what Tony was trying to say.

    • TONY

      Whats wrong with defending Tony????????

  • Brad

    Nothing….nothing at all.

    • TONY

      hey only playing we all know that Ben is big kahunna

      Tony

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  • http://www.riveraveblues.com Ben K.

    RAB thinks it’s completely off topic and shouldn’t be posted here.