Opinion: City Council Should Make Free-Riding MSG Pay Fair Share


Op-Ed originally posted in Streetsblog
by Rachael Fauss, Senior Policy Advisor

As the City Council nears final consideration of Madison Square Garden’s application for its permit renewal, the East Wing of City Hall can and should ask for much more from MSG.

Since 1982, state law has exempted Madison Square Garden from paying close to a billion dollars in city property taxes, according to the NYC Independent Budget Office. In return the people of New York City have gotten little public benefit.

Let’s not forget that MSG also receives an enormous benefit by virtue of its location on top of Penn Station — the busiest train station in the country. MSG and its CEO James Dolan are reaping the benefits of a huge amount of public investment in Penn Station, and stand to benefit even more as upgrades are made. 

To ensure that the public gets as much back from MSG as possible, we have asked the City Council to do three things:

  1. Require MSG to give up its taxiway and any property needed to build new Penn Station entrances at Eighth Avenue at 31st and 33rd streets at no cost, given the $1 billion in tax breaks MSG has received.
  2. Extend MSG’s permit for only three years, as recommended by Manhattan Community Board 5, to encourage MSG to be a help, not a hindrance, to improvements at Penn Station.
  3. Pass a resolution supporting the paired state bills A846 (Weprin)/S1632-A (Kavanagh), which would repeal the MSG tax abatement. 

Let’s discuss each of those in depth:

Require MSG to give up property
The compatibility report produced by Amtrak, MTA and NJ Transit clearly shows that, as it is now, Madison Square Garden makes it impossible for renovations to take place at Penn Station. 

We have asked the Council to ensure that MSG gives those railroad agencies the taxiway and any property needed to build out new entrances at W. 31st and W. 33rd streets at no cost, given the $1 billion in tax breaks MSG has received with the public getting little to nothing in return.

Extend MSG’s permit for only three years
We support CB5’s recommendation calling for MSG’s permit to be extended only three years, rather than 10. We understand that the City Planning Commission’s report would create a mechanism to require MSG to come back with proposed property improvements to facilitate Penn Station improvements, when the project reaches a threshold of 30-percent design development. Given the complexity of the redesign, this may take years and be subject to different interpretations over when this threshold is met.

A three-year extension is a cleaner and more effective mechanism than the 30-percent design threshold for reevaluating whether MSG is truly facilitating improvements at Penn Station. The shorter time frame should be used in addition to requiring the immediate cooperation of MSG regarding the taxiway and W. 31st and W. 33rd street entrances.

Support ending MSG’s tax abatement
MSG’s owner also owns the New York Knicks, which are worth $5.8 billion, and the Rangers, valued at $2 billion. There is zero public policy, fiscal, or economic reason for New York City to subsidize a billionaire owner of Madison Square Garden, while depriving city schools and other basic services of millions a year in revenue, and creating an unfair burden on other businesses and taxpayers to pay for essential services. 

Roughly 21 percent of city revenue goes to the public schools (see Chart 7, Table 9 of the NYC Comptroller’s Comments on the FY23 Adopted Budget). This means that Madison Square Garden’s tax break has starved public schools of $185 million in operating support, and continues to cost city schools $9 million every year. 

We urge the Council to pass a resolution supporting the aforementioned state legislation that would repeal the MSG tax abatement.