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State Pols Square Off Over Madison Square Garden's Property Tax Exemption

By Alan Neuhauser | April 17, 2013 8:42am | Updated on April 17, 2013 11:08am

MIDTOWN — Three state lawmakers are going toe-to-toe with Albany's two most powerful politicians over a bill the trio introduced in the Assembly and Senate last week that would strip Madison Square Garden of its decades-long, multi-million-dollar property tax exemption. 

The bills, formally announced by Assemblymen David Weprin and Brian Kavanagh and state Sen. James Sanders on Tuesday afternoon, would repeal a 1982 measure that, at the time, supporters said they believed would give the Garden a 10-year reprieve from property taxes in exchange for a decade-long guarantee that the Knicks and Rangers would remain in Midtown.

Instead, the exemption never expired.

Written to remain in place "so long as both the Knicks and Rangers play their home games at the Garden," according to Independent Budget Office testimony, the measure has since deprived the city of up to $16 million a year — or as much as $350 million over the past 31 years, Weprin, Kavanagh and Sanders allege.

"The time has come," Weprin said. "The city needs the revenue. The property tax exemption should no longer exist.

"In 1982, there was a question whether the Knicks and Rangers were going to leave the city," he added. "Since then, they've become much more valuable franchises, and Madison Square Garden is a very profitable, for-profit, multi-billion-dollar enterprise. It just seems inappropriate that Madison Square Garden should be the only for-profit entity that has this type of property tax abatement indefinitely."

The City Council passed a resolution in 2008 urging the governor and state Legislature to repeal the tax exemption, and former Mayor Ed Koch, who signed the initial agreement into law, said he had believed the exemption would last no longer than 10 years.

"'It was not only my intent. I went to bed at night believing it was a 10-year abatement. There's no question,'' he reportedly told the New York Times in 2002.

Nevertheless, Gov. Andrew Cuomo and Assembly Speaker Sheldon Silver reportedly declared Tuesday that they oppose eliminating the exemption.

“I haven’t heard any argument that’s convincing for eliminating that,” Cuomo told the New York Daily News, which added that Silver called the idea "troubling."

Cuomo has received more than $300,000 in campaign contributions from Madison Square Garden Company executive chairman James Dolan and Cablevision, which bought Madison Square Garden in 1994 before turning it into a separate entity. Dolan, in addition to running the Garden, is president and CEO of Cablevision, which also gave at least $5,100 to Silver.

In a statement, the Madison Square Garden Company argued that it "is the only venue in the city that has used its own money, nearly $1 billion, to build a brand new arena inside an existing building."

"All other teams, including the Yankees, Nets and Mets, have received, and continue to receive, significant public subsidies, including property tax exemptions, that are estimated to total more than $2.3 billion,” the statement read.

Those purported costs could not be independently verified.

Moreover, Weprin told DNAinfo.com New York that while Yankee Stadium and Citi Field, located on city land, do not directly pay property taxes, they nevertheless make payments-in-lieu-of-taxes, commonly known as PILOT payments.

"There is no other for-profit entity in the city or the state that has this kind of tax exemption," Weprin said. "The city needs this revenue to provide for teachers, police officers firefighters, firehouses."

Kavanagh agreed, saying the bill was right at the time but had lost its relevance.

"We're not questioning the wisdom of that bill in 1982, but it is certainly now the case that the middle of Manhattan is one off the best places in the world for this type of activity," he said. "These are some of the wealthiest teams in the country, and there's just no reason for this tax break."

Their bill comes as the Madison Square Garden Company seeks to renew a special-use permit that would allow it to operate as a large-scale arena in perpetuity, and as Dolan's Cablevision navigates an ongoing dispute with the Communications Workers of America regarding the alleged illegal firing of 22 Brooklyn cable workers who unionized.

Weprin insisted that the timing of the tax-exemption bill had nothing to do with those issues, but instead stems from the City Council's summer budget season.

"This is the time in the city when the budget is being discussed," he said.

The Assembly bill had collected close to 10 sponsors a few short hours after Weprin and Sanders' joint announcement Tuesday, Weprin's office said. It was expected to attract dozens more by Friday, an official said.