Two years after the IRS proposed tightening rules governing the use of tax-exempt bonds, officials have finally issued a ruling that comes as a huge relief to developer and Nets' owner Bruce Ratner, who has been counting on raising up to $800 million in tax-exempt bonds to pay for a new Brooklyn arena. Though the IRS ruling limits the way tax-exempt bonds can be used in the future, the regulation doesn't apply to "certain projects substantially in progress." That includes not just the Nets arena, but also the new Yankees and Mets stadiums, which are being built with more than $1 billion in tax-exempt bonds and will now take advantage of the ruling to issue more bonds, according to the Times.
Of course, the Times also points out the obvious: These New York teams may be hard-pressed to find investors who will buy the bonds, given the current Wall Street turbulence. Not so incidentally, the ruling comes four days before Yankees president Randy Levine and city officials are expected to testify at a Congressional hearing investigating the tax-exempt financing of the new $1.3 billion Yankee Stadium. Representative Dennis Kucinich, who is holding the hearing Friday, has threatened to prosecute officials if they lied about the value of the land the new stadium occupies.
State Assemblyman Richard Brodsky, a Westchester Democrat, slammed the IRS decision, telling the Times and the AP, "This is the same kind of socialism for the rich, and capitalism for the rest of us that’s gotten us into the current economic mess...The rules don't apply if you've got enough juice." The groundbreaking for the arena will still be delayed at least six months by a lawsuit challenging the project's use of eminent domain to evict residents. And Daniel Goldstein, spokesman for Develop Don’t Destroy Brooklyn, insists the ruling does not let Ratner use the tax-exempt bonds, because the Atlantic Yards project was not "substantially in progress" before October 19, 2006, the cut-off date for the IRS tax-exempt loophole.