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Tax break saves MSG chairman Dolan $48.5M this fiscal year

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It seems unlikely that the Knicks and Rangers would leave NYC, especially after MSG's expensive renovation, so the tax break doesn't make sense anymore.Andrew Burton/Getty Images

It seems unlikely that the Knicks and Rangers would leave NYC, especially after MSG’s expensive renovation, so the tax break doesn’t make sense anymore.

Nothing in life is certain except death and taxes … unless you’re James Dolan.

The Knicks may be one of the sorriest NBA franchises in the league, but Dolan, the chairman of Madison Square Garden, can take comfort in the special property tax exemption that saves him from paying the city nearly $ 50 million on the luxurious and recently renovated home of the Knicks and Rangers.

For the 2016 fiscal year, according to the New York City Independent Budget Office, the Garden will generate an estimated $ 48.5 million that the city would have been entitled to collect if no Garden tax exemption existed.

“This tax exemption is unfortunately another example of government policies and practices that give preferential treatment to large corporations rather than focus on what’s in the best interests of the public,” says noted attorney and Knicks fan Norman Siegel.

The tax break has been enshrined in law since 1982, when mayor Ed Koch approved it to keep the Garden’s owners from acting on a threatened move to New Jersey. But despite local and state politicians pushing to have the tax break removed, any legislation ultimately has stalled in Albany, keeping alive the 34-year (and counting) streak.

Two years ago, the New York City Council passed a resolution asking Gov. Cuomo to sign legislation to repeal MSG’s real property tax exemption, but Cuomo has gone on the record saying he is not in favor of removing the tax relief. In a recent sign that MSG is trying to bolster its efforts on the issue, one of Cuomo’s trusted advisers, Joseph Percoco, left his post as Cuomo’s executive deputy secretary in December to work for MSG.

“They’ve paid more lobbyists than taxes,” says David Weprin, the Democratic State Assemblyman who represents District 24 in Queens, when asked how the Garden has been able to continue enjoying tax relief.

NYC PAPERS OUT. Social media use restricted to low res file max 184 x 128 pixels and 72 dpiHoward Simmons/New York Daily News

James Dolan’s Madison Square Garden will generate an estimated $ 48.5 million that the city would have been entitled to collect if no Garden tax exemption was in place.

“The city could use that revenue − to help with education, hire more police officers, more firefighters.”

Weprin says that for the seven years he has been a State Assemblyman, he has sponsored a bill to eliminate the Garden’s property tax exemption, only to see MSG’s lobbyists and political allies run interference in Albany. But Weprin is sponsoring Bill No. A03421, which will be part of an upcoming agenda for the State Assembly’s Committee on Real Property Taxation.

“No exemption is granted in perpetuity. The purpose of this bill is to eliminate the (Garden) exemption, but to ensure that fans are not penalized by the owners of the facility, in the form of passing onto them any charges or other costs as a proxy for the taxes the owners must pay,” reads the bill.

Sandy Galef, the chair of the Committee on Real Property Taxation and an Assemblywoman representing the 95th Assembly District in Westchester, says it is “unimaginable” that a corporation could enjoy such tax relief for so long.

“I’ve never seen anybody have a total exemption forever. I’ve seen deals where, in older parts of cities where they are trying to revitalize a downtown area, there are exemptions. But gradually those exemptions disappear,” says Galef. “It seems to me that (New York City) could develop a plan with Madison Square Garden to start having it pay some tax over time.” Should the committee vote to pass the bill, it would have to next make its way through the state Ways and Means Committee, and ultimately Gov. Cuomo (or any future governor) would have to sign off on the bill.

According to the city’s Independent Budget Office, the argument raised by legislators as far back as the Koch Administration was that there was a threat the Knicks and Rangers would flee the city to play elsewhere. But that argument seems archaic at best now, especially after MSG went through its $ 1 billion renovation three years ago. Forbes calculated the Knicks’ market value alone at $ 3 billion in 2016. Not exactly a financially disadvantaged team, despite the Carmelo and Co. trainwreck.

Carmelo Anthony and the KnicksNathaniel S. Butler/NBAE/Getty Images

Carmelo Anthony and the Knicks

“Madison Square Garden is a vital driver of the city’s economy, supporting thousands of jobs, and hosting 400 annual events that attract 4 million people to the heart of New York City,” says a Garden spokesman. “In addition, MSG is the only venue in the city that has used its own money, more than $ 1 billion, to transform to a state-of-the-art facility for the 21st century, helping to ensure it attracts even more premiere events to New York. The Yankees, Nets and Mets all receive significant public subsidies, including property tax exemptions.”

Not exactly.

Yankee Stadium and Citi Field are all located on city-owned land, while the Garden is on private property. Barclays Center is on state property. The Yankees, for example, pay a PILOT, or Payment In Lieu Of Taxes, which is in effect paying rent. Both stadiums and Barclays Center had tax-exempt financing, but according to the Independent Budget Office, the IRS has since issued a ruling that prevents such relief.

Meanwhile, Weprin is hoping to create what he feels is necessary change with regard to MSG’s property tax status.

“You have two of the most valuable franchises, and yet MSG continues to get a tax break,” says Weprin. “I find it hard to justify the argument that this is money they need.” 

Tags:
new york knicks ,
new york rangers ,
nba ,
nfl ,
madison square garden ,
taxes and spending ,
james dolan ,
new york city council ,
andrew cuomo ,
barclays center

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