In a move that will save the owners of the Yankees, Mets and Nets tens of millions of dollars, the IRS has given its O.K. to the use of tax-free bonds to finance the construction of the teams' new facilities, according to a state spokesman. The tax-free financing comes mostly at expense to federal taxpayers—though city and state revenues are affected as well—in taxes that are not paid on bond earnings.
The city and state have long been awaiting an IRS ruling on the matter, as the agency has said the governments had found a "loophole" in existing rules, which generally bar tax-free financing for privately-financed sports facilities. The two governments have pushed their approach as a way to generate economic development through a technique that generally costs the city and state marginal amounts.
The ruling is undoubtedly good news for the troubled Atlantic Yards project, which would have seen its costs of financing a planned Nets arena rise by perhaps more than $100 million, based on the amount tax-free bonds traditionally save over normal bonds. The Nets had planned to seek around $800 million in tax-free bonds, while the Yankees wanted an additional $300 million or so apiece. read more »
