Thursday, June 30, 2005

Pilots Take Off

The Times and the Sun are reporting that the Mayor has agreed to subject the special revenue source, know as Pilots (Payments in Lieu of Taxes), to City Council oversight. The revenue fund, largely unknown to all but the most wonkish, came into awareness when the mayor was planning to use around $300 million in Pilot funds to finance the decking for the proposed Jets stadium.

Pilots and Bronx Terminal Market Thievery

Pilots are paid instead of direct tax allocations on property that is owned by the city. As Robin Shulman points out in the Times, Pilots:

are typically used to encourage corporations or institutions to build large-scale projects on city-owned land.
If this sounds familiar, it should, since Pilots are also slated to be paid by the Related Companies on the Gateway Project at the Bronx Terminal Market. The City Council hearing on Monday only touched the surface of this blatant theft of city property. On the Gateway deal not only do the Pilots phase in slowly but Related only pays $250,000 a year for the first five years and lease payments cap out at $500,000 a year or 2% of the total leased space.

What does this mean? Well, there will be around 1,000,000 sq. ft. of leasable space at full build out. At an average predicted rental of $40 per sq. ft. this mean Related will be paying the City, at most, $800,000 a year on revenue of $40 million a year.

If you do all of the math here you’ll find that the city would be better off paying Buntzman $40 million to leave and keeping the existing merchants who are paying around $3 million in rent annually. In 13 or 14 years the city does no worse with the “ghetto-dwelling” merchants than it does on the glamorous upscale mall. Does this make any sense?