James Cassella says he wants the New York Giants to win their National Football League conference championship game against the San Francisco 49ers and then lose a fight against paying property taxes on their training center.
The mayor of East Rutherford, New Jersey, said he’s a season-ticket holder rooting for the team to reach and win the Super Bowl title game. He also wants the club to pay $1.5 million in taxes on the Timex Performance Center in his borough, saying the team owes more than it’s paying under a deal that dates back to the 1970s.
“Originally, their offices were in Giants Stadium and that building was owned by the state of New Jersey,” Cassella said on Bloomberg Television’s “InBusiness with Margaret Brennan”. “This was a building that was constructed with private money, owned by the New York Giants.”
The Moody’s Investor Service ratings firm last week downgraded $16 million in general obligation debt from the borough one level to A2 from A1, saying the dispute between the town, the team and the state entity that owns the land beneath the stadium has worsened financial operations.
“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.
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.
East Rutherford Bond
An East Rutherford general-obligation bond maturing in November 2022 traded on Jan. 6 at an average yield of 3.91 percent, according to data compiled by Bloomberg. That’s 89 basis points higher than when it was traded on Aug. 26. A basis point is 0.01 percentage point.
Even if the taxes aren’t paid, East Rutherford probably won’t be in trouble, said Richard Larkin, director of credit analysis at Herbert J. Sims & Co. in Iselin, New Jersey.
“I don’t get the feeling there’s such a concentration on this taxpayer that this town is going to founder if they don’t get the money,” Larkin said in an interview.
Giants spokesman Pat Hanlon declined to comment on the case in an e-mail, citing pending litigation.
Tax payments on the training center are covered by an arrangement that dates back to the New Jersey Sports & Exposition Authority’s construction of the original 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 yesterday. “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 first $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.
The Giants, owned by the Mara and Tisch families, and the Jets, owned by Woody Johnson, each borrowed $650 million to help finance construction of the 82,500-seat stadium. They also sold personal-seat licenses, one-time fees that give fans the right to buy season tickets. The teams also borrowed money from the NFL.
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.
Cassella said he paid $10,000 for a seat license in the stadium and he’s still a big fan of the Giants, who beat the defending Super Bowl-champion Green Bay Packers 37-20 in Wisconsin last weekend to advance to the conference championship game against the 49ers in San Francisco on Jan 22.
The stadium is also 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 considered taxing the stadium itself, which is owned by a joint venture between the Giants and Jets, and is waiting to see how the litigation proceeds before trying to collect a bill he guesses may be about $12 million a year.
“We’ll see how we make out in this particular court action that’s going on right now,” he said. “But we also believe the stadium should be taxed because it was built with private money.”