Garden's $11 Million Tax Perk Is Targeted

Madison Square Garden could lose an $11-million-a-year property tax exemption that has been in place for more than 25 years if City Council members succeed in convincing the state Legislature to remove the tax perk.

"It's very unusual that you have a profitable institution like Madison Square Garden that's been profitable for quite a few years to have an exemption," Council Member David Weprin of Queens, who is sponsoring a resolution in opposition to the Garden's tax benefits that is being considered today, said yesterday.

Mayor Bloomberg has argued against the Garden's tax breaks for several years. Madison Square Garden's parent company, Cablevision, spent millions to defeat the mayor's bid for a new Jets stadium on the far West Side of Manhattan.

A spokesman for Madison Square Garden, Barry Watkins, released a statement in response to the council hearing, calling the arena "an engine of economic activity providing jobs to New Yorkers," and adding that MSG would discuss the issue "at the appropriate time."

The city government's push comes at an unprecedented low point for the Garden's public image. The Garden's chairman, James Dolan, and the president and coach of the Knicks, Isiah Thomas, paid out an $11.5 million settlement last month after losing a sexual harassment lawsuit filed by a former MSG executive, Anucha Browne Sanders. The trial uncovered a host of damaging allegations about the Knicks, including that its point guard, Stephon Marbury, had lured an intern into his car for sex, and that Mr. Thomas had verbally abused Ms. Browne Sanders and made sexual advances toward her.

To make matters worse, the Knicks have not won a playoff game since 2001, falling from championship contenders to national laughing stock under the stewardship of Messrs. Dolan and Thomas. The team currently holds an 8–24 record despite owning one of the league's highest payrolls. Chants of "Fire Isiah" frequently break out at Knicks home games, and Mr. Dolan is a constant target of sportswriters' ire.

Council Member Lew Fidler of Brooklyn said the resolution calling for an end of the tax break has new momentum.

"If the Knicks were on the way to a championship, the environment might be different, and it's no question that it would be more difficult to sell politically," he said yesterday. "But that's really not the issue. The Garden pressured the city into a giveaway in perpetuity, and that was wrong."

Any changes to Madison Square Garden's tax status would have to pass the state Legislature and the Assembly speaker, Sheldon Silver. Mr. Silver sided with Cablevision in vetoing the Jets stadium and would be able to block attempts to end the tax exemption. His daughter worked as a temporary employee at the Garden in 2003, according to reports by the New York Post, and Mr. Silver's former chief of staff, Patricia Lynch, is paid by Madison Square Garden as a lobbyist.

A spokesman for Mr. Silver declined to comment yesterday.

The tax exemption is also significant in the state's negotiations to redevelop the area around Penn Station. Two private developers, Vornado Realty Trust and the Related Companies, have proposed to move the arena one block west, rebuild Penn Station, and transform the existing Garden site into an office complex. Cablevision has indicated that plans to move Madison Square Garden would not go forward unless it was able to take the property tax exemption to a new site.

Mr. Weprin, who also supported the West Side stadium plan, said yesterday that he had waited until now to review the Garden's tax exemption in part because he did not want it to appear as retaliation for Cablevision's opposition.

He added that the city and state's projected budget shortfalls give the issue higher priority than in more prosperous years.

"It was my understanding that the tax exemption was put forward as a way to keep the Knicks and Rangers from leaving the Garden," Council Member Vincent Gentile, another sponsor of the resolution, said yesterday.

"That's no longer the case. We should therefore reassess what we're doing giving away $11 million a year in property taxes," he said.