New Stadium Question Mark- NY Times article

In East Rutherford, N.J., New Football Stadium, but at Whose Cost?
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LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy KEN BELSON
Published: October 10, 2009
What is the new $1.6 billion Giants and Jets stadium worth? That is the question tax assessors in East Rutherford, N.J., will be asking in the coming weeks.


This is no academic exercise, but is central to the debate over the use of public dollars to help privately owned sports franchises and, closer to home, aid New Jersey?s efforts to keep the teams playing in the state for another generation.

The stadium, which is scheduled to open next year, is in East Rutherford. and the borough naturally wants to collect taxes that any private business in its borders would have to pay. But the stadium sits on land owned by the New Jersey Sports and Exhibition Authority, a tax-exempt organization created by the state in 1971 to run the sporta arenas in the Meadowlands and elsewhere in New Jersey.

For years, the authority has collected rent from the teams to use its publicly owned stadium, and payments of $1.3 million a year in lieu of taxes. In turn, the authority has made payments to East Rutherford in lieu of taxes that cover the football stadium as well as the Izod Center and the Meadowlands Racetrack.

This year, the authority will pay the borough $5.97 million, which is equal to 21 percent of what the borough would have collected if the land were privately owned. The first annual payments of $466,000 started in 1977, the year after the sports complex opened, and have been renegotiated every decade or so.

Now, however, the Jets and the Giants are building their own stadium, team offices and practice facilities, most of them in East Rutherford. Because the buildings are privately owned, James Cassella, the mayor of East Rutherford, said the borough deserves more than what it has been receiving, a point he plans to make in negotiations with the authority.

?If the poor guy trying to run a dry cleaner and struggling to make ends meet pays taxes, should it be any different for a couple of millionaire owners?? Cassella said. ?I?m just looking for our fair share.?

Negotiations are unlikely to begin until November, when the next governor is chosen. Cassella would like to deal directly with the Jets and the Giants. But that is unlikely because the authority, to keep the teams from moving, agreed in 2006 to let the teams continue making the payments of $5 million in rent and $1.3 million in lieu of taxes. That deal is separate from the authority?s agreement with East Rutherford.

That deal was brokered by Richard J. Codey, the president of the State Senate, who was then acting governor. The agreement broke a logjam among critics on the authority?s board who thought the teams were getting a sweetheart deal.

But critics remain unrepentant. George Zoffinger, then the authority?s chief executive, who opposed the deal, said that the authority might ultimately need to ask lawmakers in Trenton to help make its payment to East Rutherford.

?It?s a travesty that no one is focused on them building a $1.5 billion stadium and that they don?t pay any more in taxes,? he said. ?At the end of the day, the authority is going to have to go back to the state for subsidies.?

Zoffinger said that while the teams liked to claim that they built their stadium with private funds, New Jersey taxpayers are on the hook for about $400 million in road improvements, a new rail link from Secaucus and more than $100 million to retire the debt on the old stadium after it is torn down.

Cassella added that under the terms of the authority?s agreement with the teams, the Jets and the Giants can keep any money from stadium naming rights, parking and other revenue that is sometimes shared with local governments that subsidize sports complexes.

John Samerjan, a spokesman for the authority, declined to comment about talks with East Rutherford. But he said the authority has had an open dialogue with and made payments to the borough for more than three decades. ?The authority?s position would be that we?ve been a very fair partner for 33 years and it would be our goal to keep it that way,? Samerjan said.

Trying to figure out what the authority should pay is complicated because it is difficult to find a comparable property.

But Cassella points to its agreement with Xanadu, a privately owned shopping and entertainment center on the authority?s property. After its scheduled opening next year, Xanadu will pay the borough $1.8 million for each of the first two years before payments rise to nearly $10 million after the fifth year.

Then there are the businesses not on authority land. The Federal Reserve Bank pays the most property tax to East Rutherford, $2,677,642.51 in 2008. Two real estate developments paid more than $1 million each last year.

The Mets and the Yankees also make payments in lieu of taxes in New York City, the payments roughly equal to the debt payments the teams have to pay on their bonds. The owners of Madison Square Garden have been exempted from paying property taxes since 1982, costing New York City hundreds of millions of dollars.