Congress, NY Times Take a Swing at $943m Tax-Exempt Financing for Yankees' New Stadium

The Subcommittee on Domestic Policy of the House Committee on Oversight and Government Reform holds a hearing this morning on Gaming the Tax Code: Public Subsidies, Private Profits, and Big League Sports in New York:

This hearing will examine whether the use of the federal tax code to subsidize the construction of professional sports stadiums and arenas furthers the public interest. This is the third hearing held by the Subcommittee on this subject and the first hearing to examine alleged improprieties in the financing process of the new Yankee Stadium.

Here are the witnesses scheduled to testify and links to their testimony:

• Dennis Kucinich (Chairman, Subcommittee on Domestic Policy)
• Stephen Larson (Associate Chief Counsel, Financial Institutions and Products, IRS)
• Richard L. Brodsky (Assemblyman, 92nd Assembly District, New York)
• Clayton Gillette (Professor, NYU Law School)
• Brad R. Humphreys (Professor, University of Alberta, Department of Economics)

New York Times:  Yankees’ Deal May Have Violated Law, Report Says, by Charles V. Bagli:

New York City and the Yankees may have violated federal tax regulations and state laws in using $943 million in tax-exempt bonds to build the baseball team's new stadium. ...

Mr. Brodsky and other critics have argued that the city violated federal tax regulations by manipulating the assessed value of the land beneath the stadium so that the team's annual payment in lieu of taxes would effectively equal the annual payments to bondholders, or debt service, of $56.7 million beginning in 2010. ...

The Bloomberg administration successfully lobbied the Internal Revenue Service to approve the use of the tax-exempt bonds for the stadium, which did not initially qualify. But the IRS later issued a proposal that would tighten the rules governing such bonds so it would be nearly impossible for this kind of financing to be used again by a profitable sports franchise.

See also Associated Press.