Giants’ Fight to Avoid Property Tax Spurs New Jersey Town Rating Downgrade
NY Giants Practice Center
Patrick McDermott/Getty Images
Members of the New York Giants take part in practice at New Meadowlands Sports Complex on Aug. 8, 2011 in East Rutherford, New Jersey.
Members of the New York Giants take part in practice at New Meadowlands Sports Complex on Aug. 8, 2011 in East Rutherford, New Jersey. Photographer: Patrick McDermott/Getty Images
The New York Giants’ dispute with hometown East Rutherford, New Jersey, over whether the National Football League team should pay property taxes on its training center led Moody’s Investors Service to downgrade the credit rating of the borough of about 8,900.
The ratings firm downgraded $16 million in general obligation debt from the borough one level to A2 from A1, saying the lawsuit between the town, the team and the state entity that owns the land beneath the stadium has worsened financial operations.
A2 is Moody’s sixth-highest investment grade, and the shift may result in increased borrowing costs for the town because investors may see it as less able to repay debts.
“The negative outlook reflects ongoing litigation related to the Timex Performance Center’s tax status and the impact on the budget of non-payment of a material amount of property taxes for two years,” Moody’s said in a Jan. 13 ratings report, noting that the facility is the borough’s second-largest taxpayer by assessed value.
Giants spokesman Pat Hanlon declined to comment in an e- mail, citing the lawsuit. Mayor James Cassella said the training center constitutes private development that should be taxed.
“It’s an office building,” he said in a telephone interview. “Why should someone who owns an office building, built by a private company, not pay taxes?”
Old Stadium Payments
Tax payments on the training center are covered by an arrangement that dates back to the New Jersey Sports & Exposition Authority’s construction of Giants Stadium in the 1970s, according to John Samerjan, a spokesman for NJSEA. The authority, which still owns the property, pays about $6 million annually to East Rutherford in place of property taxes for the Meadowlands complex, which also includes a horse-racing track and the Izod Center.
“We believe the statute is clear,” Samerjan said in a telephone interview. “The new stadium replaced the old stadium. The Giants had a practice facility here and offices here. Now they have a practice facility and offices. Nothing has changed.”
The town in September 2010 sent the Giants a $745,000 bill for taxes on the practice complex, which is built near the new $1.6 billion MetLife Stadium, shared by the Giants and New York Jets. The facility includes three grass football fields and an artificial turf field, a field indoors, a 7,500-square-foot weight room and a football-shaped locker room.
Borrowed for Stadium
The Giants, owned by the Mara and Tisch families, and Jets, owned by Woody Johnson, each borrowed $650 million to help finance construction of the shared, 82,500-seat stadium. They also sold personal seat-licenses, one-time fees that give fans the right to buy season tickets.
New Jersey’s average residential property tax bill rose 4.1 percent to $7,576 in 2010 from $7,281 the previous year, according to the state Department of Community Affairs.
East Rutherford, 13 miles (21 kilometers) west of Manhattan, had a median household income of $50,163 compared with the U.S. median of $41,994 in 2000, according to figures posted on the U.S. Census website.
The Giants beat the defending Super Bowl champion Packers 37-20 at Green Bay last weekend to advance to the conference championship game. New York is scheduled to play at the San Francisco 49ers on Jan 22.
The stadium is scheduled to host the NFL’s title game in 2014, the first time the Super Bowl will be held outdoors in a cold-weather city. Cassella said he’s a Giants season-ticket holder, who paid $10,000 for the right to buy tickets when the stadium opened. He just wants the court to order the team to pay its fair share.
“That’s the game that I hope they lose,” Cassella said. “I want them to win on the field, but I’m certainly not rooting for them to beat us in court.”
To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net.
To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net.
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