New Gridiron Has Hidden Costs

In the Jets’ first-ever television ad for the team’s planned stadium, to be built atop the West Side rail yards, the narrator says in a dreamy tone: “Neglected industrial areas around the rail pit will be transformed into new waterfront parkland.”

It sounded good: Who could be against turning derelict rail yards into parks?

Indeed, as the Jets refined their pitch after that first ad in early June, they began to talk more and more about the pedestrian-friendly aspects of the project: parks to the north and south, a tunnel affording passage to the nearby Jacob K. Javits Convention Center, and a wide, landscaped platform over Route 9A connecting the stadium to the water. Every image of the stadium on the Jets’ Web site shows this idealized version of the stadium, seamlessly integrated with its surroundings by means of this landscaped web of connective tissue.

There’s only one problem with this rendition: None of it is budgeted to happen. The parks, tunnel and platform do not appear in the General Project Plan that the Jets, the city and the state just certified and sent out for public review.

And if those amenities are to be built, the public will most likely have to shoulder the majority of the costs, which would push the project’s subsidy from $600 million, where it currently stands, to at least $700 million, according to documents from the Javits Center obtained via the Freedom of Information Act and made available to The Observer by a third party who opposes the stadium project.

The documents show:

· The park proposed for the north side of the stadium-in addition to the ground beneath it, where the pedestrian tunnel is slotted to be built-are both owned by the Javits Center. One might assume, especially given the degree of importance that the Jets and Mayor Michael Bloomberg have assigned to these amenities, that the tunnel and the park would be part of the stadium’s budget. The General Project Plan, however, doesn’t make any provision for either, which means that the choice (or the responsibility) to do them falls by default to the Javits Center. Of course, the city and the state jointly pay the Javits Center’s construction bills, so that constitutes a subsidy regardless of whether the accountants write the line item into the Javits Center’s or the stadium’s budget. Internal documents from the Javits Center Operating Corporation peg the tunnel’s cost at $30 million; estimates for the narrow park were not available.

· The Jets have pledged to shoulder half the costs of a new ferry terminal at 39th Street, to serve the team’s New Jersey fan base. That leaves the city and state to cover the other half. While this is not a subsidy, strictly speaking-the ferry terminal is off the footprint of the stadium development and therefore considered a separate project-the need for the new ferry terminal is created as a direct result of the Jets’ plan to forego building a parking facility for the stadium. The idea is to encourage the use of public transportation to and from the stadium-but for Jersey fans, that means building additional infrastructure.

Not that the Jets are walking away from all their commitments to incorporate neighborhood-friendly design into the stadium project. The General Project Plan describes a two-level “game porch,” to be constructed on the bed of 33rd Street north of the stadium, just south of the site of the proposed northern park. The first floor will contain a museum and meeting rooms; as The Observer reported in March, interest has already been generated in establishing a Science of Sport museum on the site. The second floor leads to the stadium’s main northern entrance. The porch continues over Route 9A, along the width of the stadium and beyond, to form a pedestrian bridge that is perhaps one quarter the width of the hypothetical platform slotted to run down the stadium’s western edge. The cost of the porch-this time borne by the Jets-will push construction costs for the stadium from the originally planned $800 million to at least $875 million.

· The Jets still haven’t worked out how much they will give in annual lease payments to the M.T.A., which owns the rail yards. In recent weeks, M.T.A. chairman Peter Kalikow has been saying publicly that the rail yards could fetch anywhere from $400 million to $1 billion on the open market. If the city and the state force the M.T.A. into accepting a below-market lease from the Jets, it could drastically hurt the bottom line of the already cash-strapped agency. And since taxpayers pay a good chunk of the M.T.A.’s bills, a forced fire sale of the agency’s property seems like robbing Peter to pay Paul. How much this could cost taxpayers is impossible to calculate without first publicly bidding the air rights out, but the Jets have given no indication that they will be paying anything near what Mr. Kalikow has said is a fair market price. And all this as Mayor Bloomberg takes the agency to task for being fiscally reckless-while at the same time arguing that it should sell its most valuable real-estate asset at a steep discount to billionaire Jets owner Woody Johnson.

· The Jets plan to float at least $400 million in bonds to finance the stadium’s construction. However, according to the General Project Plan, those bonds are tax-exempt, meaning that the city won’t be able to collect income tax on the interest that people or institutions collect from the bonds. Independent economic experts say the lost tax revenue could easily total $50 million over the course of a 30-year bond.

· As the stadium will be located on state-owned land, the Jets will pay no real-estate taxes. Rather, according to the General Project Plan, they will be making so-called real-estate payments in lieu of taxes (PILOT’s) to the city, which will then funnel the money back to the Jets to cover their debt service on their bonds. In other words, the Jets will be taking money out of one pocket and putting it back in another-and the public gets no cut. Of course, the Jets will be generating sales, income and other taxes out of the stadium and related convention-center activities, but so would any other development project that would rise on that spot. The difference is that another development project might also be paying real-estate PILOT’s to the city without the expectation of then getting that money funneled back. Again, without bidding that property out on the open market, the opportunity cost isn’t calculable.