By Ron Leir
HARRISON – The New York Red Bulls major league soccer team has been dealt a deadly shutout by a civilian referee.
A year from the day the team went to court to challenge the host town’s demand that it pay real estate taxes on its stadium, Judge Christine Nugent, sitting in State Tax Court in Newark, ruled not only can the Red Bull Arena be taxed but also the land the Arena occupies.
Now the Red Bulls go from being a “free rider” to, potentially, the biggest taxpayer in Harrison.
The judge had previously concluded – in a separate ruling made last year – that the land was tax-exempt but on Friday, Jan. 6, in issuing her final decision, she reversed herself.
Ironically, in its legal arguments filed with the court, Harrison appeared to concede that the 12-acre parcel where the stadium sits should be tax-exempt because title to the land is held by the Harrison Redevelopment Agency, itself a tax-exempt public entity.
“It’s a grand slam for Harrison,” said Town Tax Assessor Al Cifelli.
Harrison says it’s entitled to $1,290,225 in taxes on the stadium for 2010, based on a partial assessment (it opened in March 2010) of about $22.1 million and an additional $1,867,477 (based on an assessment of $30 million) for 2011.
For the land, the town says it’s owed $215,863 in taxes for 2010 (based on an assessment of about $3.7 million) and an additional $227,413 for 2011.
Additionally, the town is awaiting payment of a $150,000-a –year rental fee for 2010 and 2011.
Thomas Denitzio, of the Woodbridge law firm Greenbaum, Rowe, Smith, & Davis who handled the case for the Red Bulls, couldn’t be reached for comment Friday. If the Red Bulls decide to challenge the court ruling, it will have to request a hearing from the state Appellate Court.
Kearny attorney Norman J. Doyle Jr., a tax specialist, was retained as special counsel by Harrison to present its case.
Cifelli, who attended Friday’s court session, said that it took Judge Nugent nearly two hours to read her decision into the record. A copy of the transcript wasn’t readily available.
In its complaint – filed against the Town of Harrison, the Harrison Redevelopment Agency and the Hudson County Improvement Authority – the Red Bulls asserted that the stadium is, in legal parlance, a “Property” and “Project” of the government entities that borrowed nearly $40 million to acquire the land, sub-leased the land to the team, and promoted the Red Bulls’ presence as a boost to the local economy, public recreation and tourism.
As a “public purpose” endorsed by those public entities, the stadium should be deemed tax-exempt, as provided by the state Redevelopment Law and state Improvement Authority Law, the Red Bulls reasoned.
Harrison, in its brief, countered that the stadium, notwithstanding certain “contractual and police” controls the Harrison Redevelopment Agency exercise over the Arena and despite any “intangible and unquantifiable benefits” the town may derive from it, the stadium – as a private, profit-making enterprise – “does not serve a public purpose” and, therefore, under a strict interpretation of state law, it shouldn’t qualify for tax-exempt status.
The court sided with Harrison.
Interpreting the court’s ruling, Doyle said that Judge Nugent agreed with the town that the stadium is taxable because it is a profit-making venture and that the land is also taxable even though it is owned by a public entity (the Redevelopment Agency) which exercised eminent domain to acquire the 12 acres and paid to clean it up, “once the stadium was built, the agency had no further role to play,” and, therefore, no longer had a “public purpose.”
The legal test of taxable vs. tax-exempt in cases of this type, Doyle said, is “where does the money go – admission tickets, concession revenues – to a public agency or to the person (or corporation) running the stadium. That’s the key.”
Doyle characterized the previous concessions by Harrison, the Harrison Redevelopment Agency and the HCIA that the land should be considered tax-exempt “collectively our error” and credited the judge with finding a legal basis for remedying that misinterpretation.
Harrison Mayor Ray McDonough said he was “pleased with the decision. We were always confident the ruling would go in Harrison’s favor. Now we’re just hoping the Red Bulls step up to the plate and meet their financial obligations to the town.”