Stadium Status: Federal Subsidy for Private Development

Stadium Status: Federal Subsidy for Private Development

This stadium no longer exists. flickr user wallyg

Stadium Status from Internets Celebrities on Vimeo.

The Internets Celebrities, a duo of New York based hip-hop bloggers turned documentarians Dallas Penn and Rafi Kam, recently released their longest, most in-depth video to date: Stadium Status. The title refers to a Kanye West lyric, but as they explain, Stadium Status is the unique position that professional sports teams find themselves in: feeding at the trough of taxpayer dollars whenever they want to build a stadium.

Stadium-centered revitalization has become quite popular among urban boosters in recent decades, as cities try to figure out how to attract people back to somewhat abandoned downtowns. Time and time again, the public is told that these things pay for themselves, by bringing new jobs and foot traffic to the neighborhood. Never mind that both the jobs and the foot traffic are seasonal, and otherwise irregular, which economists like to point out. This doesn’t stop planners, city officials, developers, and voters from being fooled.

New York City, as Stadium Status shows, was fooled three times over in one year. Starting in Queens, our hosts Dallas and Rafi take a look at Shea Stadium’s replacement, Citi Field, which uses the old Shea Stadium’s footprint as a parking lot. Then, they go uptown to The Bronx to see The House that Ruth Built reduced to rubble directly across the street from a shinier version of the same, only this time with a Hard Rock Cafe built into the ground level, and prohibitively expensive tickets. About half of each stadium’s cost was covered by taxpayer subsidies. In the case of the new Yankee stadium, the taxpayer bill was about $1 billion. And yet, in interviews with fans in and around the stadiums, no one seems upset. Everyone, after all, likes a new ballpark.

The main event of the video is Dallas and Rafi’s examination of the controversial Atlantic Yards project in Downtown Brooklyn. The project, which will receive twice the amount of subsidy that the Yankees received, is a basketball arena for the New Jersey Nets, and 16 high-rise residential buildings. As Dallas and Rafi point out, the only thing worse than the Nets was the use of eminent domain to remove so-called “blight” from the neighborhood, clearing out a few hundred residents to make room for the project’s massive footprint.

Despite all the destruction, the development got most of its political support because of Ratner’s promise of 2,250 units of affordable housing, which that particular area or Brooklyn lacks. But, even that is dependent on a great deal of public subsidy, and some critics fear Ratner won’t deliver. Even if he does, the Internets Celebrities point out, he only has to deliver a fraction of those units in the first decade of development.

In my mind, the most bizarrely postmodern aspect of the development — Bed-Stuy-bred rapper Jay-Z’s involvement — is also the most telling of the true motives of the project. Jay-Z owns a small chunk of the New Jersey Nets, and hopes to bring them back to Brooklyn. His friendship with LeBron James fuels the rumor that, perhaps, LeBron will move on to the Nets when they move to Brooklyn, making them a halfway-decent team, and bringing much-needed revitalization to Downtown Brooklyn.

But the issue here is that Downtown Brooklyn all the way up at Dean Street is not in need of revitalization. Atlantic Avenue, and the old train yards act as an unfortunately ugly divider between Fort Greene and Prospect Heights, two of Brooklyn’s most picturesque neighborhoods — made up of nothing but brownstones, tree-lined streets, and tin-ceilinged restaurants. Nearby Fulton Street in Fort Greene was the center of Brooklyn’s early 90’s “black bohemia,” and both neighborhoods are excellent examples of affluent, integrated neighborhoods in New York City — an unfortunately rare sight.

Jay-Z, on last year’s hit single “Empire State of Mind”, raps about how used to live nearby, at 560 State Street, but he doesn’t mention that it’s right around the corner from the Atlantic Yards site he was involved with at the time of recording. He claims it was his “stash spot”, but New York Magazine reports that it was more of an “enclave for black artists at the time.” Since then, most artists have been priced out of the area. And now that Jay-Z lives in a massive Tribeca loft with Beyonce, he eschews the street hustler image that made him famous for that of a business mogul, lunching with the mayor and fellow Atlantic Yards investors at Gracie Mansion. Jay-Z, like the developers he works for, will definitely claim that he cares about Brooklyn’s future, but he probably cares more about the money that he stands to make. But I digress.

Getting back to the economic side of things, it is the seasonal and unskilled nature of the work offered at stadiums — tearing tickets, food service, security — that make any claims to public benefit incredibly dubious. The NBA season, at 82 games long (not including post-season, which shouldn’t really be a consideration for the Nets in their current state anyway), only offers 41 nights of guaranteed employment to anyone working at the stadium, per year. Sure, the Globetrotters will make an appearance to trounce the Generals, maybe the circus will pass through, but these events are few and far between. In this sense, Ratner and Jay-Z’s claim to be bringing jobs to Brooklyn makes even less sense than the Yankees and Mets’ argument.

But despite all the obvious reasons why this sort of large-scale, disruptive development is not actually in the public interest, stadium developers continue to receive massive subsidies, even from the federal government. Neil deMause, author of the book Field of Schemes, is featured prominently in Stadium Status. He points out that technically speaking, due to the federal subsidies developers of new Yankee stadium received, Red Sox fans helped pay for the ballpark. The mechanism is somewhat roundabout; the city issues the teams tax-exempt city-issued bonds, a transaction that was made illegal in 1986, because it robs the Federal Treasury of tax dollars for private development. But, because the city has the teams pay back the loans in the form of PILOTs — Payments In Lieu Of property Taxes — they claim that they are collecting tax revenue, even if the federal government is not. According to Neil deMause, this mechanism amounted to about $60 million in (mostly) federal subsidy for the Yankees alone. Aside from the fact that this is questionably legal, it’s troubling that the federal government is unwittingly lining the pockets of developers who claim to work in the public interest, but don’t.

Back in October of 2008, right after Lehman Brothers tanked, and the realities of the banking crisis were becoming clearer, federal tax officials approved the use of tax-exempt bonds to Ratner’s development group, for the Atlantic Yards project. With that decision, millions of dollars of future tax revenue disappeared from our nation’s coffers, and Downtown Brooklyn will get 16 new skyscrapers and a few hundred jobs selling peanuts for 41 nights a year. What a trade.

Tags: new york cityculturewashington, d.c.built environment

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