Resolution asks Albany to end Madison Square Garden’s property tax exemption. On January 30, 2008, the City Council passed a resolution calling upon the State legislature to revoke Section 429 of the State’s Real Property Law, which allows Madison Square Garden to receive a full property tax exemption.
The exemption dates back to 1982 and allows the Mayor to negotiate with the Garden to ensure the Knicks and Rangers continue to use the facility because “the presence of professional major league sports teams greatly contributes to the general and economic welfare” of the local community. The exemption was intended to keep sports teams in the City by easing the economic burden associated with running a professional sports facility. According to the Independent Budget Office, the tax break will save Cablevision, which owns the Garden and both sports teams, $11 million during fiscal year 2008.
The resolution seeks to end the exemption partly because other privately owned sports teams in other major cities do not receive a similar benefit. The resolution also notes that it is no longer a distinct possibility that both the Knicks and Rangers will leave the City. Lastly, the proposal cites an IBO study that shows the Garden is currently financially sound as it hosts over 500 events annually, which generate rent, concession and cable broadcast advertising revenue.
At the public hearing on January 7, 2008 before the Council’s Finance Committee, Thomas Hazinski, of sports-entertainment consulting firm HVS, testified on behalf of the Garden and argued that it receives less economic support from the City than the Nets and Mets, which he claimed will receive assistance valued at $340 million and $440 million respectively. Hazinski also urged the Council to delay voting on the resolution until the Garden can evaluate the costs of moving to the James A. Farley Post Office Complex per the Empire State Development Corporation’s Moynihan Station proposal. 4 CityLand 154 (Nov. 15, 2007).
Finance Committee Chair David Weprin, who described the exemption as “welfare for the rich,” called the committee’s attention to a recent public statement from Mayor Ed Koch which claimed that the exemption was originally intended to last only 10 years. Pointing to the Knicks’ net worth—valued at over $592 million, the highest in the NBA—and the City’s robust economy, Council Member Helen Sears argued that the exemption is no longer needed as neither the professional sports teams nor the City are struggling to stay economically competitive.
Council Member David Yassky, however, opposed the resolution, arguing that revoking the exemption would set a negative precedent and cast a shadow on similar commitments between the City and private entities. Council Member Letitia James agreed, pointing to similar negotiated agreements between the City and AIG, Chase, Bear Stearns, Morgan Stanley and other for-profit corporations. Lastly, Council Member Miguel Martinez also opposed the resolution, claiming that the Garden’s exemption produced no loss to the City, unlike the City’s recent deals with the Yankees and Mets.
Nevertheless, the Finance Committee eventually passed the measure, bringing it before the full Council, which voted to approve it by a vote of 40 to 3.
Council: Res. No. 90-A (Jan. 30, 2008); Public Hearing Res. No. 90-A (Jan. 7, 2008). CITYADMIN