Lawmakers in Albany could — if they wanted to — cause a major headache for Madison Square Garden.
The arena owned by the Dolan family hasn’t been subject to any city property taxes since 1982, when the state Legislature passed an exemption – now worth an estimated $43 million a year – that remains on the books despite long-standing efforts to repeal it. Estimates from the city’s Independent Budget Office show MSG has saved roughly $875 million, adjusted for inflation, since the exemption began — quite the coup for a for-profit venture.
This year, an MSG-backed PAC has spent more than $400,000 on digital ads and mailers supporting a slate of 10 Democratic State Senate candidates – including six with a primary on Tuesday – through a super PAC known as the Coalition to Restore New York. It comes at a time when Albany has particular sway over “The World’s Most Famous Arena” – since lawmakers could repeal the tax break at any time and because MSG could be significantly impacted by the ongoing Penn Station redevelopment project overseen by the state.
So Gothamist posed a question to the candidates: Do they support the MSG tax break? Or would they like to see it repealed?
Their answers varied, with five of the 10 candidates responding to Gothamist’s inquiries. Of those, only one – Assemblymember Nathalia Fernandez, who is running for State Senate in a district stretching from the Bronx into Westchester County – said she supported repealing the tax exemption.
“The 34th State Senate District, which she is running to represent, is known for high property taxes,” said Emma Hernando, Fernandez’s campaign spokesperson. “She believes it's only fair that corporations pay their fair share of property taxes as well and would be interested to explore a new tax exemption plan that requires corporations to do so."
Sheri Toiv, a spokesperson for Brooklyn Sen. Simcha Felder, said the exemption has been on the books for 40 years and the senator “has never been presented with a compelling argument against it.”
Bronx candidate Miguelina Camilo, running in a primary against incumbent Sen. Gustavo Rivera, noted a bill to repeal the exemption has been “stagnant for years.”
“I don’t think a repeal can happen without considering all the consequences," she said, noting she will not be swayed by outside contributions and “will be in the office to serve the people that elect me – no one else.”
The remaining two candidates who responded – Brooklyn Sen. Kevin Parker and Angel Vasquez, who is challenging incumbent Sen. Robert Jackson in upper Manhattan – didn’t take a position on MSG’s tax break.
Andrew Holt, a spokesperson for Parker, said via email that the senator supports anything that “will create better and more quality affordable housing in my district.” But when pressed on whether that means the senator supports or opposes the tax exemption, he didn’t respond.
Of the remaining five candidates, representatives for State Sen. Joseph Addabbo of Queens and candidate Iwen Chu declined to weigh in. The campaigns of Sens. Peter Harckham of Westchester County, Michelle Hinchey of the Hudson Valley, and Anna Kaplan of Long Island did not respond to multiple inquiries.
The Coalition to Restore New York has been active since last year’s New York City elections, when it spent more than $3 million on the city’s elections, including the mayor’s race. Earlier this year, the PAC backed a slate of Assembly candidates in the June 28th primary. Four went on to win their primaries, another lost, while the sixth candidate did not face a primary challenge.
Last year, the PAC asked candidates to fill out a questionnaire but didn’t endorse any candidates, though the questions focused heavily on crime and quality-of-life issues that helped propel Eric Adams to the mayor’s office. The PAC then put the candidates’ answers on its website. (Following his mayoral win, Eric Adams was reportedly seen at a private election night party with James Dolan, owner of MSG.)
There was no such questionnaire this year. When asked about the PAC’s rationale for selecting its preferred candidates – and whether support for the MSG tax break was a part of the equation – MSG pointed to a single section on the “candidates” section of the PAC’s website.
“For the 2022 NYS Elections, the Coalition to Restore New York™ has identified candidates who are committed to improving the lives of hardworking New Yorkers and keeping their constituents safe,” the website reads.
The tax exemption dates back to the administration of late Mayor Ed Koch and marks an effort to keep the New York Knicks and New York Rangers from fleeing to the suburbs or New Jersey – much like the New York Giants had done six years earlier and the New York Jets would do two years later.
The exemption is written into Section 429 of the state’s Real Property Tax Law, and it’s carefully crafted to apply only to MSG.
In exchange, Gulf+Western — then-owner of MSG, the Knicks, and the Rangers — pledged to commit to playing home games at the arena for at least 10 years and as long as the tax break remains in effect.
It has occasionally led to strange situations over the years. In 2018, when the Rangers played in the NHL’s Winter Classic game at Citi Field in Queens, the Buffalo Sabres were designated the home team despite having to travel 385 miles for the game.
Push to end exemption
There have been numerous efforts to repeal the tax break since the early 2000s, but none have gained serious traction.
There are two bills in Albany that would repeal the MSG exemption, though they have never moved beyond the committee stage. The main bill, sponsored by Sen. Brian Kavanagh of Manhattan, died without getting a vote in the Local Government Committee earlier this year.
“The conditions and fears that may have made this exemption necessary in 1982 have long subsided, and no exemption is granted in perpetuity,” the bill memo reads. “It is long past time to end one of our state's most blatant examples of corporate welfare.”
In 2004, with the city still coming back from the economic hardships of the September 11th attacks, the Council held hearings on the tax exemption, even though it’s set in state law. Ultimately, the Council passed a resolution calling on the state to repeal it, declaring that it’s “only fair that a large, profitable institution such as MSG contribute its fair share.”
Twenty-two councilmembers signed on to the resolution, including five who are now sitting state senators: James Sanders, Robert Jackson, John Liu, Joseph Addabbo and Leroy Comrie. Comrie currently sits on the Public Authorities Control Board, which holds significant sway over the Penn Station redevelopment plan.
Jackson faces a challenge from Vasquez, the candidate backed by the MSG-funded PAC. Addabbo, whose campaign declined to comment for this story, is also backed by the PAC.
Jackson is among the five senators listed as a sponsor or co-sponsor of one of the state bills to repeal the tax break; Addabbo is not.