Saturday, December 20, 2008

Legal Notice! A Hearing May or May not Be held! (It Depends, Call Us!)

*(Correction appended at the end: The most recent shift in the statutorily required period for notice was back to ten from thirty days.)

Hey, everybody, listen up: A legal notice has appeared that a hearing may or may not be held come January 15, 2009 on the highly controversial proposed issuance of additional tax-exempt bonds to give more money to the Yankees and the Mets for their new stadiums. It may be (if a hearing is held on January 15th) that the bonds would be in the respective amounts of $370.9 million for the Bronx stadium and $82.28 million for the Queens stadium (or $453.18 million combined, which is not to mention an additional $60 million in refunding bonds).

Pretty Convoluted; A Notice that Notice Might Be Given, If you Call In

Specifically, the legal notice that appeared in the New York Post on December 16, 2008 says that if you happen to remember to call a certain telephone number “on or about noon on the Friday preceding the hearing,” that someone (who is not answering that telephone number presently) will give you notice whether or not a hearing will be held. Humm, the “noon on the Friday preceding the hearing”: If the hearing is Thursday the fifteenth we think we are then supposed to figure that means the Friday we are supposed to keep in mind on which to make our phone call would be Friday, January 9, 2009 (less than six days before the possible start of the hearing). We are scheduled to be busy at noon that day, before and after noon as well. What do we suppose the specification to call “on or about noon” means? What if we do not call within an hour of that time? Two hours? Of course, you only know to make this phone call (if you can remember to) if you were lucky enough to spot the telephone instructions in the notice that appeared, or if someone like us is telling you about it. We, ourselves, got the information via Good Jobs New York.

So where are we? We have a notice that 1.) notice will be given if 2.) a phone call is made (at the right time) to request that notice. If you don’t call, no notice.

A (Promised?) Cost Benefit Analysis Application: A Good Thing, But Worse Waiting For

In addition, apparently around the time that the New York City Industrial Development Agency which might be holding, the hearing decides whether it will be holding the hearing, it will (presumably if it is going to have a hearing) also make “project applications and a cost benefit analyses” available. (You think the city agency can’t provide those now? Is it possible the agency is still bogged down in trying to decide whether it is possible to represent that there is a net cost benefit? Don’t bet on it.)

We Scrutinize to Note Disservice

Does it sound like we are scrutinizing the particulars of this notice to death? Yes, we are. Does it sound like we are perhaps going to tell you that the notice to give notice upon request might not be legally valid? Yes, very likely it is invalid. But there is another reason to scrutinize the notice. Yes, the notice may not be legally valid, but even it were valid, the reason that it walks so close to the line and that it makes its validity readily disputable is that it reflects an underlying lack of respect for the public. This notice doesn’t serve the public: It is a disservice to the public.*

* (What else in the world would you expect to do on such short notice? Announce a seminar? Buy tickets to a popular theater show? Would you expect to get an assured seat or a good price on round trip airline tickets? People need to make plans for their lives in advance. In fact, if you were coordinating with national experts on preparing appropriate hearing testimony for the issuance of $341.28 million in bonds pursuant to complicated tax regulations and a special loophole, arranging workable plane flights might be the least of your worries.)

What the Statute Says About the Notice of Hearing Called For

The notice is being given to comply with Section 859-a of the General Municipal Law. Since January 2008 that law has provided that additional notice be given to the public of these hearings. Subsection 3 of 859-a says:

3. The agency must give at least thirty days published notice of said public hearing and shall, at the same time, provide notice of such hearing to the chief executive officer of each affected tax jurisdiction within which the project is located. The notice of hearing must state the time and place of the hearing, contain a general, functional description of the project, describe the prospective location of the project, identify the initial owner, operator or manager of the project and generally describe the financial assistance contemplated by the agency with respect to the project, and provide an opportunity for the public to review the project application, which shall include an analysis of the costs and benefits of the proposed project.
Twenty-Five Days Less Than the Statute Says (30-5=25)

“The agency must give at least thirty days published notice of said public hearing”? Until just recently, the law required “ten days published notice.” It seems the legislature wanted the longer thirty-day period of notice. Does an offer to inform inquiring public whether or not there will be a hearing less than six days (including a weekend) before the hearing starts, comply with the directive to give at least thirty days notice of the hearing? Probably not. Among other things, it is less notice than was probably given under the old ten-day statute!

And Where Are The Dawdling Applications and Cost Benefit Analyses the Legislature Wanted?

The statute also requires “an opportunity for the public to review the project application, which shall include an analysis of the costs and benefits of the proposed project.” This application and cost benefit analysis requirement is also new. Sounds like something that might be of special and current importance to the legislature. The law doesn’t precisely specify how far in advance of the hearing the opportunity must be provided, but don’t you think that the legislature envisioned that hearings would not be set up and noticed until applications were received? Since that would mean that applications would be in hand more than thirty days in advance of the hearing do you think the legislature would envision that the in-hand applications might be withheld from the public during the thirty days, not to be released until just before the hearing? Did the legislature envision that the public would have to deal with a review of the application and the cost benefit analysis it is supposed to contain on a rushed basis right before the hearing? Not likely. - -

- - Forcing the public to deal on a rushed basis with something that is purposely held up and sprung at the last minute is just a scam strategy to debilitate public response and its ability to appropriately raise issues. Remember the way that Bloomberg held back his scheme to extend term limits so he could pursue a third term? In early summer he knew he planned to go after the term limit extension (well before the fiscal crisis), but then he waited to push it through the City Council in a last minute October rush! There really can’t be argument then that this hearing indeed sounds like the way that Bloomberg and his execs prefer to do business. And we know that the gift of cheap bucks for the wealthy stadium owners is something that Bloomberg wants. But, do you think that the legislature wanted rush-through hearings with no substantive public evaluation of the applications and the public benefit analysis?

Cost Benefit of Stadiums: A Hot Button Issue

When it comes to stadiums, cost benefit analysis is a hot button issue because the experts say that there is no net cost benefit to publicly financing stadiums. There is therefore plenty of reason for the city bond-issuing agency to want to engineer the most limited public response they can possibly manage. (See: (See: Monday, July 14, 2008, FCR consultant Zimbalist (in 2003): "no rationale" for federal subsidy of projects like AY arena).)

Bloomberg Likes to Simply Disregard the Costs

Bloomberg has also been trying to misrepresent so as to minimize the true costs to the city of issuing the tax-exempt R-TIFC-PILOT bonds to finance the stadiums. “R-TIFC-PILOT” or “Return Total Intercepted For Costs-PILOT” agreement involves a PILOT (“Payment In Lieu Of Taxes”) agreement that is unlike a typical PILOT agreement, which provides for specified payments to be made into city coffers just like taxes. R-TIFC-PILOTs (the nomenclature we offer in contradistinction is pronounced “Artifice-PILOT”) provide that the payments that would have been paid like taxes will instead be intercepted and used as a gift to relieve a developer/stadium owner of responsibility for costs that would normally be the owner’s. In other words, the public picks up the private tab. Bloomberg likes to disregard this public expense. For some of what we have written on the mayor’s unwillingness to properly acknowledge the substantial cost of the stadiums see: Who Gets Clipped? Bloomberg Radio Clip on Stadium Financing (Wednesday, December 17, 2008) and Stadium Finance: Mayor, Professing to Know Numbers, Should Know He Can’t Have It Both Ways (Unless He’s Keeping Two Sets of Books) (Monday, December 15, 2008).

Returning to a point we made earlier, what about the whereabout of those project applications with the cost benefit analyses? Wouldn’t you think that the city agency would now have in hand what they plan to give to the public? Would the city have run anything in the newspapers if the applications and cost benefit analyses were an just a yet-to-be-received unknown? Highly doubtful! If the applications and cost benefit analyses are already in city agency hands, why doesn’t the city want to make the applications and cost benefits available to the public now?

The Possible Hearings? How Possible They Won’t Be?

Is there a real likelihood that when people call “on or about noon on the Friday preceding the hearing” that they will find that the hearings are not going to be held? If you think the likelihood is small, we would advise you not to be so sure. As pointed out, the cost benefit analysis is inherently difficult for the city to defend. But there is another reason the city may want to pull these hearings. City officials engaged in some very strange monkeying with the real estate tax assessment numbers that are supposed to support the Yankee Stadium bonds and provide them with the foundation for their tax-exemption. This apparently happened at a very high level within the Bloomberg administration so things are especially awkward. (See: Wednesday, October 1, 2008, Safety in the Numbers You Pull out of a Hat.)

Tax-Exempt Bonds Become Taxable: Call for Prosecutorial Investigation

There is now serious question about whether the Yankee Stadium bonds should be declared taxable. (See: November 8, 2008, Does Questionable Assertion of Attorney-client Privilege Point to Yankee Stadium Bond Taxability?) This may lead to substantial civil liability on the part of the city. We are talking hundreds of millions of dollars. Just recently a criminal investigation has also been called for. See the Daily News article of a few days ago: E-mails reveal how city went to bat for Yankee to inflate value of stadium land, Tuesday, December 16th 2008. (See also further analysis of this article in: Thursday, December 18, 2008 Smoking gun: emails show how Yankee Stadium valuation was "jacked up".)

The article concludes:

There are still hundreds of e-mails connected to the stadium assessment the city refuses to release.

That's why it's time for some prosecutor to step in, subpoena every document and figure out if the Bloomberg administration manipulated land assessments for the Yankees.
Heating Up; Lawyering Up?

That Daily News article was published on the very same day that the notice of possible notice appeared, but after that notice had already been sent in to the Post for publication. (By the way, we note that the issuance of these bonds is of state-wide concern but, consistent with keeping things on the Q.T., the notice-notice was in the NYC Post rather than edition of the New York Times that receives state-wide circulation.) The Daily News article asks whether city officials violated “state law, which requires uniform valuation methods for all properties?” There is also the question of whether there was perjury before Rep. Dennis Kucinich’s Congressional subcommittee investigating the matter.

As things heat up, do you think the city will still be desirous of holding the hearing when the sixth day before the January 15th arrives? Given the mention of criminal proceedings, we wonder, and maybe you do too, whether the city officials who were involved in this affair have started to think about hiring private personal counsel to represent them in any prosecutorial proceedings such as those called for by the Daily News article.

Lawyer’s Footnote: Fixing a Defective Hearing Notice

(Final Footnote: What would be the cure for the defective hearing non-notice? Let’s speak to it. As a former government lawyer with a lot of experience with hearings and their proper notice, I would never proceed by cancelling the defective hearing or electing not to hold it. That would only compound the defect. Members of the public who wanted to and were either prepared or mobilizing to testify couldn’t do so and would thereby be unfairly thwarted. There is no way to ensure that notification of a cancellation is provided to precisely the same group of people who happened to get the original notification so there is no way of effectively cancelling. The tricky little phone-in device would be unfair to rely on and could be pointed to as an intended discouragement of future public participation. Even though you can’t effectively cancel the defective hearing, and even though it should be held, it remains defective. That means that, in addition to holding the defective hearing, a second hearing should be held that isn’t defective and which can qualify under the statute’s requirement for proper notice. If bonds are ever issued, bond counsel will have to approve the final relied-upon notice in connection with its opinion that such issuance is valid.)

A copy of the December 16, 2008 notice that notice will be given if a phone call request is made appears below (Click on image to enlarge or click on preceding link to get pdf version posted by Good Jobs New York):

*(CORRECTION: Apparently the required period of statutory notice is now ten days. Historically it was ten days. Then it was changed to thirty days. The statutory thirty day requirement recently rolled back to the original ten day requirement though there is an ongoing effort to reinstate thirty days. With the roll back, the technical specification that the public was to be provided with cost benefit information needed to make its comment worthwhile also rolled back and is part of what should be reinstated when the law is again brought up-to-date. The IDA’s notice played around with craftily purporting to fulfill both all these requirements while actually complying none of them.)

No comments: