IRS Gives Pass To NYC Teams

A recent Internal Revenue Service ruling will change the way sports facilities can be financed in the future, but left room to allow New York’s Nets, Yankees and Mets to use tax-exempt bonds to pay for the teams’ new buildings.

Specifically, the tax rule won’t apply to “certain projects substantially in progress,” that had been approved and made “significant expenditures” by October 2006.

Under the ruling, the Yankees and Mets will be able to tap tax-exempt bonds worth hundreds of millions, according to the New York Times.

Developer Bruce Ratner’s $4 billion Atlantic Yards project, which includes the Frank Gehry-designed basketball arena for the Nets, also apparently meets the requirements.

“The tax-exempt financing was always part of the plan for the development of the arena and the regulation released today acknowledges that,” Ratner spokesman Joe DePlasco told the Times. “The regulation will help us move forward with a project that is critical to the ongoing economic vitality of Brooklyn and the city.”

Ratner is reportedly seeking up to $800 million in tax-free financing for the arena.

Still, before Ratner can move forward with the project, the developer has to face the latest lawsuit against Atlantic Yards, and opponents who say it fails to meet the tax rule’s criteria.

“Ratner does not qualify for the tax-exempt bond he wants under the IRS ruling’s requirements,” Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein said in a statement.

“There was no official government action on the Atlantic Yards arena prior to October 19, 2006, as required by the ruling.

The project’s approval was in December, 2006. There were also no ‘significant expenditures’ on the arena prior to the October date as required by the ruling.”