Friday, June 03, 2005

D-Day, the third of June

It's now after midnight. Today is D-Day in the state of New York. Decision Day. Governor Pataki is calling a final vote by the Public Authorities Control Board on the proposed Manhattan West Side Stadium. In short, he, NYC Mayor Mike Bloomberg, former NYC Mayor Rudy Guiliani and others (though according to polls, not a majority of NYC residents) want to use taxpayer dollars to finance part of the stadium's construction costs. Originally, it was proposed that NYC and New York State put up $300 million each, but there have been unexpected cost increases, like having to buy the land for more than anticipated. Also, the new plan is that Gotham and Albany finance their share via government bonds (as if they haven't issued enough debt already?). Paying off those bonds will add another $400 billion, so actually the city and state's total "cost" will be over $1 billion.

I've previously blogged on why the stadium is bad economics, and why the deal between the Jets and the city government is dirty dealing:

What Would Bastiat Say?
(Why government cannot create economic growth by spending tax money)

An unfair bidding war?
(Even the New York Times notes how the Jets' alliance with the city government gives it an unfair advantage)

Another win for big government
(The NY MTA unanimously accepted the Jets' proposal, since it was government-backed, i.e taxpayer-backed)

My friend Chris Masse recently sent me a link talking about a recent letter from 106 economists who oppose the stadium. The article notes that among them is Dr. Vernon Smith of GMU, the 2002 Nobel laureate in economics. But also included are Doug Bandow, the syndicated columnist and senior fellow at Cato, and Dr. Don Boudreaux of GMU (the same who blogs at Cafe Hayek).

Sadly, such good economists and thinkers are often ignored. What we need is a political ally, and New Yorkers might finally have one in a major politican. One of New York State's top three elected officials has seen the light! This is almost too good to be true:

Bruno's 'Private' Plan for Stadium
June 2, 2005 -- Days before the crucial vote on the proposed West Side stadium, Senate Majority Leader Joseph Bruno yesterday raised a new issue about the project: He'd like to see private investors cover the state's and city's costs.

"There are private-sector investors who believe that the entire project can be funded with private-investor money," said Bruno, who holds one of the three votes that can kill the project. "If it's a good business deal, it's a good business deal for the private sector."

Bruno said he has spoken to a number of potential investors, although he refused to name them.

"They're qualified, bona-fide people who have, like, a billion available for this kind of investment," he said. "I have had recent conversations with people on exactly this."

With Gov. Pataki seeking a final vote tomorrow by the Public Authorities Control Board at its 2 p.m. meeting, Bruno said he is not ready to support the plan for a new stadium for the Jets and the 2012 Summer Olympics.

The board is comprised of Pataki, Bruno and Assembly Speaker Sheldon Silver.

Bruno worried that what was originally pitched as $300 million contributions each from the state and city might actually be closer to $1.4 billion when various tax abatements and other enhancements are factored in.
That's what I've said all along: let the private sector build it. If the stadium proposal is really so profitable, if it would bring in so much revenue after the tremendous costs, private investors would have been all over the idea years ago. I hope there really are investors, but if Bruno is blowing smoke or bluffing, at least he appears poised to vote against the stadium proposal. Will Pataki and Silver override him? Stay tuned.

What amazes me more than anything is that Bruno, a politician, is actually worried about the cost being higher than projected.


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