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City officials say the tax break won’t move with MSG, and Garden owner Jack Dolan says MSG won’t move without it.
“Our assumption is that taxes will be paid,” Deputy Mayor Dan Doctoroff told the New York Daily News.
The property tax break is worth more than $11 million a year, and the city has no intention of continuing it if MSG makes the move, city officials told the paper. Dolan has already rankled Mayor Michael Bloomberg with his successful effort to kill plans for a Manhattan football stadium.
A nonbinding agreement between Dolan and developers Related Cos. and Vornado Realty Trust would move the arena over the Farley building, which is being renovated into a $930 million transit hub. The current location over Penn Station would be converted to a business and residential complex.
The tax break was defended by Related Chairman Stephen Ross, who told the paper that building high-rises at the Garden’s current location would generate new taxes and replace lost revenues.
“The Madison Square Garden tax issue is a small component of an overall tax package,” Ross spokesman Howard Rubenstein told the Daily News. The entire project would give the city $75 million in new property taxes, Ross said.
But even without the tax break, Dolan and the other MSG owners would get about $756 million for the rights to develop the current site, according to a report by a Wachovia Securities analyst cited by the paper.
New York state officials are largely staying out of the property tax fray.
“It is the city’s decision as to how to deal with any Madison Square Garden tax exemption,” an Empire State Development spokeswoman told the Daily News.
The Garden has had the tax exemption since 1982 when its former owner threatened to move basketball’s Knicks and hockey’s Rangers out of New York City. Now, opponents of the tax break are spoiling for a fight over it.
City Councilwoman Helen Sears reportedly reintroduced a resolution calling for the state legislature to end the exemption. But other observers think that in the end the city will support continuing it, given the importance of the project.