Further, the decision endangers the appropriate relationship between municipalities and private enterprise; it also allows municipalities' tax-free financing to enter into competition with tax-paying businesses," he said.

Mr. Rohatyn should use his considerable influence and abilities to roll back some of the onerous restrictions on tax-free municipal financing imposed by the 1986 tax reform act.

Also, Senator Daniel Patrick Moynihan, the New York Democrat, has sponsored a bill to end tax-free financing for stadiums.

But a bill that would have enabled the authority to offer tax-free financing to developers building affordable family housing failed to win approval by the State Legislature last week.

It could take advantage of the tax-free financing and the forgiveness of Federal taxes that public power authorities enjoy.

In June 2000, Justice Clarence Thomas, writing for himself and three other justices, expressed second thoughts about denying tax-free financing to institutions based on how religious they were.

In addition, he is expected to seek tax-free financing for the housing, probably through the state's 80-20 program, which requires developers to set aside 20 percent of the apartments for low- and moderate-income tenants.

Congress voted in 2002 to allow up to $8 billion in Liberty Bonds to provide tax-free financing to help New York City rebuild after the Sept. 11 terrorist attack.

Its negotiations with city officials for special tax-free financing known as Liberty Bonds are also at a standstill.

Without such tax-free financing, the cost of most takeovers would be prohibitively high.