New City budget adds beef for capital projects.

Under Mayor Rudolph Giuliani's new $35 billion budget proposal for the fiscal year that begins July 1, 1999, monies will be allocated for school and stadium construction, museum expansions and rail projects.

The Mayor also plans to continue the cooperative and condominium abatement program, reduce the commercial rent tax and set up a Tax Reform Task Force to use $100 million to reduce other taxes.

As per the Mayor's plan to fund Yankee Stadium construction last year, the commercial rent and occupancy tax will continue to be reduced, but not as fast as proposed when the Mayor first took office.

According to Curt Ritter, a mayoral spokesperson, the collected tax money would go towards funding new "stadia," i.e. the new Mets ballpark, a Yankee redevelopment in The Bronx and/or a West Side joint for the Yanks or even the Jets.

The money would flow through a Sports Facilities Development Corp.

"This [Mayor] has cut the tax, and he's going to cut it totally in half, and it may be the best accomplishment of the decade," said Steve Spinola, president of the Real Estate Board of New York (REBNY), who is supportive of the use of these funds to wards those projects.

Under the current plan, the Commercial Rent Tax would be reduced from its current 3.9 percent to 3.4 percent on December 1, 1999, and then to 3 percent on June l, 2001.

The tax only affects those companies paying over $100,000 in rent that are located below 96th Street. The other areas of the city are now exempt from the tax.

In general, Spinola said the budget appears to be a "rational proposal" that concentrates on education and schools. He also supports the increase in the police force. "This is different than a few years back when we were paying for the police [through Safe Streets Safe City's dedicated real estate taxes] and were asking, 'Where are they?'"

Spinola is also supportive of the extension of the abatement of cooperative and condominium taxes, "so the people who live on top of each other don't pay more than the people who live next to each other."

The Mayor has budgeted $166 million for fiscal year 2000 for an extension of the current abatement program. The budget provides $173 million in 2001; $180 million in 2002 and $187 million in 2003.

Martin Karp, chairman of the Action Committee for Reasonable Real Estate Taxes, said "We're pleased to see the Mayor continues to support co-op and condo tax reform and we look forward to working with him and the City Council and the State legislature for the necessary action to continue the program."

The City Council has also been working on a proposal to continue to reduce the amount of taxes paid by apartment owners relative to home dwellers.

When the Coliseum sale closes, the Mayor has budgeted $345 million towards a Budget Stabilization Account - but critics say he should use it to reduce some of the city's debt and use it to balance budgets.

He is proposing many capital projects, as well as partial support for projects proposed by hospitals, cultural institutions and other non-profits.

But those in the real estate industry should expect to hear from the institutions, as those on the receiving end will be required to raise additional funds on their own, similar to challenge grants that corporations and foundations often use when providing monies to charities.

In FY 00, these organizations will be required to raise 25 percent of their funds on their own, and the following year, 50 percent.

Among the major cultural construction projects the city is supporting is Jazz @ Lincoln Center, the 1,000-seat theater to be included at the Related Coliseum Center, which will get $18 million.

Major contributions are proposed to be made to cultural facility expansions, including: $65 million to the Museum of Modern Art's $650 million expansion and renovation; $25 million towards the Metropolitan Museum of Art's $250 million expansion and renovation; $11 million for a new wing of the Museum of Jewish Heritage; and $45 million towards the new planetarium and Natural Sciences Complex at the Museum of Natural History.

Capital projects being funded include a New Queens Hospital Center for $148 million; $90 million towards the New Kings County Hospital; $98 million towards the Hudson River Park project; $94 million for the Willis Avenue Bridge Reconstruction: $50 million for the Brooklyn Sportsplex and Minor League Baseball Park; $29 million for the Minor League Baseball Park in Staten Island; and $22 million for renovations to City Hall Park.

The Mayor also proposed using funds due under the Tobacco settlement for capital needs, including many school projects.

Another plan will fund a train to the plane, but logistically, the Mayor is looking at an extension of the N train to LaGuardia, said Ritter, acknowledging it needs "more analysis."

"He is willing to put up city money, which is a good thing," said Building Congress President Richard T. Anderson. "The city has not put up money for public transportation for a long time. That was a big commitment." Anderson believes the Mayor has not committed to any one train to the plane project. "He's waiting for the results of a study," he said.

Meanwhile, John Dyson will be heading up a new Tax Reform Task Force that will be exploring ways to give $100 million back to the taxpayers through different scenarios.

In his response, City Council Speaker Peter Vallone complained about budget cuts made to the library and university system, and the Administration for Children's Services.

Vallone is proposing the construction of 20,000 units of middle income housing over the next five years, using the property taxes to be paid once the World Trade Center is privatized. The Council Members want to create a Housing Trust Fund to be used for that purpose, and to eliminate some of the closing costs for first-time home-buyers.

But he also applauded the Mayor's reductions in the commercial rent tax, the co-op condo property tax, and the sales tax exemption on clothing, which the Mayor proposed should be eliminated on all clothing and footwear costing under $110 on December 1, 1999, and to extend it to costlier items in the future.

"We will continue to work closely with the administration to end onerous and redundant taxes that no longer make sense in a healthy economy," Vallone said.