The Fine Print Of The Giants Deal
The Fine Print - From The Star-Ledger - Friday, April 15, 2005
Acting Gov. Richard Codey says the deal for a new Giants Stadium is better for taxpayers than any deal for an NFL facility during the past decade. While the Giants will bear the $750 million cost of building the stadium, and will pay the state $6.3 million a year to lease the land, the agreement has sweeteners that make it very friendly to the team.
No rent or property tax hikes for 25 years: Rent increases tied to inflation are common in major land deals, but the Giants' rent remains stable for 25 years. Also: The New Jersey Sports and Exposition Authority, which runs the Meadowlands Sports Complex, makes an annual payment in lieu of taxes to the borough of East Rutherford for the sports complex property. While that payment may rise, the Giants' contribution to it remains stable for 15 years.
No responsibility for infrastructure: The state will spend $30 million to bring utilities to the site of the new stadium and cover all costs to maintain those utilities for 98 years.
Ownership and depreciation: The Giants' owners — not the team and not the state — will own the new structure. That gives them the right to depreciate a portion of its value each year for the next 30 years. The result is a huge income tax write-off.
The banks get paid before the state: The technical term is subordination. It works like this: The Giants get to pay off their construction loans each year before they make their lease payments to the state. If the team's owners have a bad year and don't have enough money to pay both their bankers and the state, they get to pay the banks first, with no penalty due the state.
No equity requirement: Landowners usually require developers to put up a certain amount of cash. This is supposed to increase the developer's risk and incentive to finish the project as soon as possible. This deal allows the Giants to finance the entire project and avoid paying any portion with cash.
Parking money: The sports authority pays to maintain the parking areas. The Giants get to keep all the parking revenues.
Acting Gov. Richard Codey says the deal for a new Giants Stadium is better for taxpayers than any deal for an NFL facility during the past decade. While the Giants will bear the $750 million cost of building the stadium, and will pay the state $6.3 million a year to lease the land, the agreement has sweeteners that make it very friendly to the team.
No rent or property tax hikes for 25 years: Rent increases tied to inflation are common in major land deals, but the Giants' rent remains stable for 25 years. Also: The New Jersey Sports and Exposition Authority, which runs the Meadowlands Sports Complex, makes an annual payment in lieu of taxes to the borough of East Rutherford for the sports complex property. While that payment may rise, the Giants' contribution to it remains stable for 15 years.
No responsibility for infrastructure: The state will spend $30 million to bring utilities to the site of the new stadium and cover all costs to maintain those utilities for 98 years.
Ownership and depreciation: The Giants' owners — not the team and not the state — will own the new structure. That gives them the right to depreciate a portion of its value each year for the next 30 years. The result is a huge income tax write-off.
The banks get paid before the state: The technical term is subordination. It works like this: The Giants get to pay off their construction loans each year before they make their lease payments to the state. If the team's owners have a bad year and don't have enough money to pay both their bankers and the state, they get to pay the banks first, with no penalty due the state.
No equity requirement: Landowners usually require developers to put up a certain amount of cash. This is supposed to increase the developer's risk and incentive to finish the project as soon as possible. This deal allows the Giants to finance the entire project and avoid paying any portion with cash.
Parking money: The sports authority pays to maintain the parking areas. The Giants get to keep all the parking revenues.
Posted by Enlighten-NewJersey @ 6:50 PM
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