RSJ Posted March 9, 2005 Share Posted March 9, 2005 the other issue, of course, with the LDC is that while it offers bankruptcy protections (and let's face it, the taxpayers of new york city are the best guarantors on the planet, so that's not an issue - our relatively stable rating, even in times of financial crisis, is as big a testament to that as any) it was set up to enable the PILOTs (that's the point you didn't want to discuss, but the Jets couldn't do this by themselves, because they wouldn't be able to use tax exempt bonds, or own the stadium) and, perhaps more importantly, to sidestep city council authority - if the monies went from the city to the jets directly, it would all need couincil approval. Two things here: 1) The bankrupcy thing is a good protection whether the city is great guarentors or not it is a smart move to protect the city and its taxpayers. 2) The Jets may not be able to do this by themselves but neither could the city. The stadium and all the revenue it will generate is the focal point of this whole project. The city is hurting right now and could use to create new revenue streams. This project will do that. Though it may take some time to materialize it will be a great revenue stream for years to come. Link to comment Share on other sites More sharing options...
RSJ Posted March 9, 2005 Share Posted March 9, 2005 you have to admit, there are as many levels in which the deal is shady,if not more, as there are in which it makes sense. I really do not think it is that shady. I do think it is very, very complicated and based on some optimistic thinking. I think the media again is very biased and twisting things around to confuse people. Link to comment Share on other sites More sharing options...
isired Posted March 9, 2005 Share Posted March 9, 2005 so do you disagree with the appraisers that say that mixed development would be more valuable? it would certainly would be less risky, and it would realize more immediate return, along with more tax revenue... i get your points, but i kind of disagree on one - that the city could not do this alone - maybe not, but 'this' doesn't have to be a stadium, and it could be with another party, not alone... i think it's over-subsidized - i think the jets would still do the deal, even if they had to dip into their own project-based (i.e. stadium) reveue, eventually, to pay for it - that's the way most manhattan development projects were PILOTed, like battery park, where the PILOTs covered the time before the project realized revenue - then it converted to traditional taxes and traditional debt repayment (i.e., 'from the developers pocket'). maybe they wouldn't, but i don't think we need to offer them that option. especially if we're only going to collect after it's paid off, and at that time, under the agreement, the jets are under no obligation to stay. also, the stability of the PILOT cuts both ways - if the stadium and surrounding area truly is a 365 day booming area, taxes would surely eclipse the PILOT payments (whatever they might be within the confines of paying off $600MM of debt - or whatever the jets bonds are - in 30 years). Link to comment Share on other sites More sharing options...
RSJ Posted March 9, 2005 Share Posted March 9, 2005 so do you disagree with the appraisers that say that mixed development would be more valuable? it would certainly would be less risky, and it would realize more immediate return, along with more tax revenue... i get your points, but i kind of disagree on one - that the city could not do this alone - maybe not, but 'this' doesn't have to be a stadium, and it could be with another party, not alone... i think it's over-subsidized - i think the jets would still do the deal, even if they had to dip into their own project-based (i.e. stadium) reveue, eventually, to pay for it - that's the way most manhattan development projects were PILOTed, like battery park, where the PILOTs covered the time before the project realized revenue - then it converted to traditional taxes and traditional debt repayment (i.e., 'from the developers pocket'). maybe they wouldn't, but i don't think we need to offer them that option. especially if we're only going to collect after it's paid off, and at that time, under the agreement, the jets are under no obligation to stay. also, the stability of the PILOT cuts both ways - if the stadium and surrounding area truly is a 365 day booming area, taxes would surely eclipse the PILOT payments (whatever they might be within the confines of paying off $600MM of debt - or whatever the jets bonds are - in 30 years). I don't disagree that you can build a better mixed bag of real estate in that spot and it would be more valuable from a real estate perspective. But not from a city income perspective. Look at just the players salaries that will be subject to city income tax. Same goes for the bands that will perform there. I'm pretty sure this would outweigh a little more property tax from higher valued buildings from a mixed bag scenerio. The city could do this with another party. But let me flip it and ask you this. If the Jets are getting such a sweatheart deal why haven't the Giants, Yankees or Mets jumped on it? You are 100% correct that the pilot cuts both ways. But the guarentee is that the building will never be worth what it costs to build it and could be worth far far less and not be drawing any venues 5 years from now. Not likely, but could happen. Also if it is booming and business is great that means the city is collecting a ton of revenue from all the other revenue streams included in this project plus the fixed revenue from the pilot. This is not being set up like other projects because it is different than all the others. There is also economic problems that exist in the city that did not exist back then. The prospect of the city growing commercially is not good at all. This is why the city needs to be on its heels on this project. Lastly this project is based on a cost theory called activity based cost. Where there is what's called a cost floor and activity does nothing but shrink the cost basis. But lack of actuivity does not crush the project. Link to comment Share on other sites More sharing options...
isired Posted March 9, 2005 Share Posted March 9, 2005 I don't disagree that you can build a better mixed bag of real estate in that spot and it would be more valuable from a real estate perspective. But not from a city income perspective. Look at just the players salaries that will be subject to city income tax. Same goes for the bands that will perform there. I'm pretty sure this would outweigh a little more property tax from higher valued buildings from a mixed bag scenerio. i can't imagine that 8 days worth of income tax on player salaries, as large as they are, could offset that - employees of my ad agency that travel a lot break out their income on days they don't work in new york, i can't imagine these guys wouldn't. The city could do this with another party. But let me flip it and ask you this. If the Jets are getting such a sweatheart deal why haven't the Giants, Yankees or Mets jumped on it? i can only speculate, but i don't think the deal works with a non-football team b/c there aren't enough open weeks in desireable time periods to host the 14-30 javits events they need. as for the giants, i would guess woody, as a key republican party findraiser, might have an edge; also might be that the giants are sold on jersey... You are 100% correct that the pilot cuts both ways. But the guarentee is that the building will never be worth what it costs to build it and could be worth far far less and not be drawing any venues 5 years from now. Not likely, but could happen. Also if it is booming and business is great that means the city is collecting a ton of revenue from all the other revenue streams included in this project plus the fixed revenue from the pilot. stripping out all tax earnings on the project for 30 years seems like a steep price to pay to hedge something that is unlikely - the risk/reward ratio seems way off. the entire rezoned area is subject to the PILOT, due to the associated costs of a stadium. so i don't see the ancillary income that would be greater in contrast to development without the stadium. This is not being set up like other projects because it is different than all the others. There is also economic problems that exist in the city that did not exist back then. The prospect of the city growing commercially is not good at all. This is why the city needs to be on its heels on this project. if that's true, then it makes all the more sense to invest more heavily in residential development, an area where the prospect of growth exceeds all expectations and projections. Lastly this project is based on a cost theory called activity based cost. Where there is what's called a cost floor and activity does nothing but shrink the cost basis. But lack of actuivity does not crush the project.in ABC, from what i know of it, activity is what crushes profitability, not lack of it - because those activities consume resources, usually 'overhead', that are not accounted for in traditional cost accounting. i fail to see how that applies in this broad sense - ABC analysis requires knowledge of overhead costs and direct costs tied to a product or service, in order to calculate the 'true' cost, and this determine profitability. Link to comment Share on other sites More sharing options...
bitonti Posted March 9, 2005 Share Posted March 9, 2005 bergen you aren't thinking big picture the billions and billions of federal dollars that this city would gain from winning an olympic bid would make the PILOT fund look like a rain puddle even if there is no olympics think about the tax revenues that the stadium would earn for the city in terms of purely tourism driven sales tax with: -JETS -spot on Super Bowl rotation -NCAA final 4 -concerts -conventions and who knows what else? if the whole waterfront thing takes off that's more income for the city in property taxes - parking lots and bars will do extra business on certain days of the year bloomberg knows that you need to spend money to make money...also nothing good comes for free - in this case the stadium could be a cash cow for the city of NY - Link to comment Share on other sites More sharing options...
RSJ Posted March 9, 2005 Share Posted March 9, 2005 i can't imagine that 8 days worth of income tax on player salaries, as large as they are, could offset that - employees of my ad agency that travel a lot break out their income on days they don't work in new york, i can't imagine these guys wouldn't. You would need to further explain why your employees break out there income on days they do not work in the city. There are certain acceptable reasons. It is not only players salaries that will be taxed though. It is entire events as well as money generated surrounding those events. i can only speculate, but i don't think the deal works with a non-football team b/c there aren't enough open weeks in desireable time periods to host the 14-30 javits events they need. as for the giants, i would guess woody, as a key republican party findraiser, might have an edge; also might be that the giants are sold on jersey... I'm not sure that is true one way or another. stripping out all tax earnings on the project for 30 years seems like a steep price to pay to hedge something that is unlikely - the risk/reward ratio seems way off. the entire rezoned area is subject to the PILOT, due to the associated costs of a stadium. so i don't see the ancillary income that would be greater in contrast to development without the stadium. I didn't see that the whole area is subject to a PILOT. I thought that is was just the stadium. Again, commercial real estate is far less stable than any other type of real estate. if that's true, then it makes all the more sense to invest more heavily in residential development, an area where the prospect of growth exceeds all expectations and projections. I would agree that it makes more sense to try to build a residential building in the city than a commercial one at this point. But this is an entertainment complex that will hopefully attract corporations that otherwise might not do business in the city. in ABC, from what i know of it, activity is what crushes profitability, not lack of it - because those activities consume resources, usually 'overhead', that are not accounted for in traditional cost accounting. i fail to see how that applies in this broad sense - ABC analysis requires knowledge of overhead costs and direct costs tied to a product or service, in order to calculate the 'true' cost, and this determine profitability. In all cost theories "Overhead" is a fixed cost. Your overhead costs are the same whether you produce 500 units or 5000. Variable costs are tied to production. You are right that in order to determine profit you need all these figures in order to compute true cost. Activities do consume resources which are considered variable but you are increasing profits. And with a lack of activity you do not consume resourses but you still have the same fixed overhead costs. Anyway, this is a complicated issue and I'm pretty much done. I will say one thing that I honestly believe. I honestly believe this is a good deal for the city and the Jets. Also in none of these newspaper articles have I seen them quote a renowned economist or accountants analysis of this project. All I see is a lot of politicing. It would be nice and very possible with all the figures to breakdown the whole deal from a numbers standpoint which is were I think our seperation in beliefs is at and many others. Link to comment Share on other sites More sharing options...
isired Posted March 9, 2005 Share Posted March 9, 2005 bergen you aren't thinking big picture the billions and billions of federal dollars that this city would gain from winning an olympic bid would make the PILOT fund look like a rain puddle even if there is no olympics think about the tax revenues that the stadium would earn for the city in terms of purely tourism driven sales tax with: -JETS -spot on Super Bowl rotation -NCAA final 4 -concerts -conventions and who knows what else? if the whole waterfront thing takes off that's more income for the city in property taxes - parking lots and bars will do extra business on certain days of the year bloomberg knows that you need to spend money to make money...also nothing good comes for free - in this case the stadium could be a cash cow for the city of NY - the olympics could make this work, for sure, but i just see the US getting the olympics in this climate as a longshot. i have seen NOTHING that says any area within the project will pay taxes, i have seen articles that say the whole rezoned area will pay PILOTs to the LDC to pay off the debt. would you agree, and you, too, rsherry, that if no taxes are be generated under the current scheme, the project is a loser with the potential for real fiscal disaster without the olympics? Link to comment Share on other sites More sharing options...
RSJ Posted March 10, 2005 Share Posted March 10, 2005 i have seen NOTHING that says any area within the project will pay taxes, i have seen articles that say the whole rezoned area will pay PILOTs to the LDC to pay off the debt. would you agree, and you, too, rsherry, that if no taxes are be generated under the current scheme, the project is a loser with the potential for real fiscal disaster without the olympics? In the "Original Project Plan" you provided it say the following. Economic Impact ESDC has performed an independent economic impact analysis of the Project. (Separate analysis Link to comment Share on other sites More sharing options...
isired Posted March 10, 2005 Share Posted March 10, 2005 In the "Original Project Plan" you provided it say the following. Link to comment Share on other sites More sharing options...
RSJ Posted March 10, 2005 Share Posted March 10, 2005 Link to comment Share on other sites More sharing options...
isired Posted March 10, 2005 Share Posted March 10, 2005 I'm not nieve to the fact that this couldn't be done by other parties. But I'm a little curious as to why Stienbrenner never jumped on this. He is also a big time republican donator and a chronie of Woody, Trump, and Bloomberg. I know you brought up the point that Baseball would take up the stadium for 82 days a year and that may be a good reason. But wouldn't it be better to guarentee someone in the stadium for more dates during the year? one of bloomberg's first acts as mayor was to kill yankees/mets stadium deals signed off by guiliani in his last months in office, i wonder if that's either telling, or a factor itself? don't get me wrong, it was absolutely the right thing to do at the time, absent emotion/chronyism/etc... The major problem I see with developing the rail yards without a stadium is that NYC's economic future will not be in commercial office space. the stadium plan calls for more commercial space than any development ever in the history of nyc - more than twice that of lower downtown - 28 million square feet (see quote below). mixed development w/o the stadium, because it isn't dependant on the larger tax rev. generated by biz, actually would have less commercial (office) space. Unprecedented Strategies to Float NYC2012's Office District Though sold as only a rezoning, the "Hudson Yards" is actually a rigorous development plan. The city would be painted into a develop-or-default corner: build 1 million square feet of office space each year, for several decades, or default on the multi-billion dollar Olympic bond. The taxes from the West Side buildings would be taken to pay for a record-breaking $12 billion bid plan, at the very time that the IOC is asking for less costly proposals. Link to comment Share on other sites More sharing options...
Kentucky Jet Posted March 10, 2005 Author Share Posted March 10, 2005 Woody buys the KNICKS& Rangers if he would then sell MSG and have the teams play in the new WEST SIDE stadium with the addition of a roof. That would be a win-win situation. MSG could be sold for additio0nal revenue and WOODY would have a monopoly of sorts. It can happen! Link to comment Share on other sites More sharing options...
dickkotite Posted March 10, 2005 Share Posted March 10, 2005 this is what happens when people make absurd amounts of money. billionaire pissing contests....ill tell you what, when the smoke clears woody johnson will turn out to be even scumier than the dolans. he sucks. i hate him Link to comment Share on other sites More sharing options...
isired Posted March 10, 2005 Share Posted March 10, 2005 Woody buys the KNICKS& Rangers if he would then sell MSG and have the teams play in the new WEST SIDE stadium with the addition of a roof. That would be a win-win situation. MSG could be sold for additio0nal revenue and WOODY would have a monopoly of sorts. It can happen! i don't think that works, b/c they need to have 14-30 3/4 day blocks open for convention/tradeshow usage... Link to comment Share on other sites More sharing options...
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