Crain’s Extra: The march of zombies

The march of zombies

Let’s turn the wayback machine to the spring of 1982. The No. 1 song on Casey Kasem’s American Top 40 was Joan Jett’s “I Love Rock ’n Roll,” although coming up fast was Olivia Newton-John’s “Make a Move on Me.”

The New York Knicks and Rangers were thinking of making a move too. Specifically, they considered relocating to New Jersey, where a new arena had been built in the Meadowlands. City leaders took the teams’ threat seriously because the New York football Giants had left Yankee Stadium in 1972 for the charms of East Rutherford, New Jersey. In return for a promise to keep the Knicks and Rangers in town, Mayor Ed Koch agreed to give the owner of Madison Square Garden a 10-year reprieve on property taxes.

Somehow, by the time the state Legislature signed off, the agreement turned into a permanent exemption so long as the Knicks and Rangers played in the Garden. The deal has saved MSG $916 million in the past 40 years, the city says, including $42 million last year.

New York gives out lots of tax breaks to businesses, although none are quite like MSG’s.

As a Crain’s investigation reveals, the city is swarming with recipients of zombie tax breaks and other incentives that elected officials and their appointees have awarded to a select number of New York companies and industries in the name of promoting economic development. These zombies last for eternity, or something close to it.

All told, the city and state dish out $10 billion worth of subsidies to business every year. What is the public getting in return for this considerable outlay? “The truth is we don’t know,” said Andrew Rein, president of the Citizens Budget Commission.

Pressure is building to kill the MSG zombie. The state Senate’s budget proposal repeals it, though the Assembly proposal doesn’t. Ultimately it will be Gov. Kathy Hochul’s call as budget negotiations head down the stretch.

We conclude our trip in the wayback machine by turning the dial to late May 1982. Weeks after the Garden made its infamous tax deal, its leverage dropped. That’s because a failing hockey team in Denver moved into the arena at the Meadowlands and became the New Jersey Devils. Had the city held out just a little longer, it could have spared us one particularly grotesque zombie.

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