BILL NUMBER: S3122

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to repeal section 429 of the real property tax law relating to
real property used for professional major league sports

 
PURPOSE OF BILL:

This bill repeals Section 429 of the real property tax law, "real prop-
erty used for professional major league sports," to require that the
owners of Madison Square Garden pay real property taxes. Under the law-
written to encompass only the Garden-the exemption is contingent upon
the continued use of the venue by both a professional major league hock-
ey team and basketball team for all of their home games.

At its inception in 1982, the exemption cost the state around $5 million
annually. In 2014-the last year before the Garden's $1 billion renova-
tion-the cost to the state was $17.3 million. Just two years later in
2016, the cost to the state was assessed to be $48.5 million.

              

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill states the Legislative intent behind the repeal.

Section 2 of the bill repeals Section 429 of the real property tax law.

Section 3 sets forth the effective date.

 
JUSTIFICATION:

Madison Square Garden has been a New York institution for nearly 150
years. Across three centuries, the four venues that have held this name
have showcased the very best of sports and entertainment to the people
of this state, and to millions of visitors and viewers from around the
world.

However, for the last forty years, New Yorkers have not only been
supporting the privately-owned MSG at the Box Office, they've been
subsidizing The Garden's near $50 million annual property tax bill, as
well.

This tax exemption was given to the arena in 1982 after former owners
Gulf & Western Industries had threatened to move the Knicks and Rangers
to New Jersey-as the New Jersey Nets, Devils, and New York Giants had
recently done. Gulf & Western lobbied NYC Mayor Ed Koch for a full prop-
erty tax exemption which he recommended to the state legislature. At
that time, the exemption cost the state around $5 million annually;
money that was used by Gulf & Western to build the stadium's first luxu-
ry skyboxes. Mayor Koch told the NY Times in 2002 that he believed the
exemption would sunset after ten years, but no such provision existed in
the law.

In the thirty-eight years since the legislature granted this exemption,
the state of New York has lost over $550 million in revenue, according
to the NYC Independent Budget Office (IBO).  Further, if current proper-
ty value trends continue, MSG's total tax break could clear $1 billion
by 2030. Meanwhile, the Knicks' market value in 2020 is now $4.6
billion, nearly seven times its 2011 value; while the Rangers' value has
more tripled over the same period to $1.65 billion, according to Forbes.

In his 2014 testimony regarding this proposed repeal, IBO Deputy Direc-
tor George Sweeting noted that "the Garden is now, by all accounts, a
highly profitable enterprise," due to its "cable television network,
more intensive use of the facility to generate advertising revenue, and
construction of new luxury boxes and club seating areas with higher
ticket prices." Deputy Director Sweeting stated that " 
The Garden's
exemption is the only significant property tax exemption in state law
that benefits a single private for-profit firm in the city."

The conditions and fears that may have made this exemption necessary in
1982 have long subsided, and no exemption is granted in perpetuity. It
is long past time to end one of our state's most blatant examples of
corporate welfare.

 
LEGISLATIVE HISTORY:

2020: 52897/A4206 - REFERRED TO LOCAL GOVERNMENT:/referred to real prop-
erty taxation
2019: S2897/A4206 - REFERRED TO LOCAL GOVERNMENT:/referred to real prop-
erty taxation
2018: S8128/A5500 - REFERRED TO LOCAL GOVERNMENT:/ referred to real
property taxation
2017: A5500 - referred to real property taxation
2016: A3421 - referred to real property taxation
2015: A3421 - referred to real property taxation

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.