As the Bloomberg administration scrambles to get its development projects in the ground amid a slowing economy and a waning political term, two major planned initiatives the city has championed face a formidable hurdle: the Internal Revenue Service.
I.R.S. Could Crimp Bloomberg's Big Plans
For the financing plan for the Atlantic Yards housing and sports arena complex in Brooklyn, and for one being considered for the planned middle-income-housing mega-complex at Hunter’s Point South in Queens, the city would need a favorable ruling from the I.R.S. or face substantially higher costs for both projects. Negative rulings from the federal agency could result in tens of millions of dollars in added costs, putting up new obstacles to major developments that have already seen ambitions scaled back.
For both projects, the city wants to use tax-exempt financing, a method that lowers costs substantially—perhaps more than 15 percent—with the bulk of the savings coming out of federal tax revenues.
And, at least in the case of Atlantic Yards, the I.R.S. is rather wary, as it has called the financing method a “loophole” that it has ordered closed.