It’s official: A development consortium made up of the owners of the New York Islanders, Sterling Equities (owners of the Mets), Madison Square Garden (owner of the Knicks and Rangers), and Oak View Group (builders of Seattle’s renovated KeyArena) won permission to build a new hockey arena and mixed-use development in a parking lot adjacent to the state-owned Belmont Park racetrack. And while Islanders owner Jon Ledecky declined to say how much the arena would cost, he did promise, “We’re not looking for government funds.”
We have heard that before, though, and it doesn’t always work out so well — remember that a Yankees exec promised that that team’s new stadium would be built with “no public subsidies,” and then it wound up getting more than a billion dollars worth. And while there’s no sign that the Islanders deal will turn out to be the biggest sports handout in history like that one did, there are several places where it could end up tapping significant public dollars.
For starters, the Islanders group will be leasing the Belmont Park land from the state, so as I noted yesterday, one big question is whether they’ll pay full market value. And the answer appears to be not by a long shot:
On finances: New York Arena Partners – group includes #isles, Sterling and Oak View – will finance the entire project – $1 billion total. They'll get a 49 yr lease and will pay $40 mil in rent.
— Randi Marshall (@randimarshall) December 20, 2017
No. Total, from what I can tell. Am double checking.
— Randi Marshall (@randimarshall) December 20, 2017
Marshall, who is a member of Newsday’s editorial board, hasn’t circled back to confirm this yet (UPDATE: Norman Oder tweets that the state has confirmed to him that it’s just $40 million total), but assuming she’s correct, $40 million over 49 years is an absolutely pathetic payment for 43 acres of land. That’s maybe $10-15 million in present value — here’s a tenth-of-an-acre vacant lot in nearby Floral Park that’s going for $729,000, which would imply that the Belmont Park property should be worth around $313 million, or more than 20 times what the Islanders are paying for it. (If you use this exceptionally hideous lot as a comparable instead, it’s only worth six times what the Islanders are paying, but that’s still not good.)
(UPDATE #2: Oder has updated his Bridge article to note that the state says $40 million is “the upfront value over the term of the lease for the build out” — he sent me this quote from a state spokesperson, it’s not in the article verbatim. So if it’s lease payments worth $40 million in present value, that’d amount to a taxpayer-subsidized discount of between $44 million and $273 million, depending on which nearby Zillow listing you go by.)
Marshall also notes that since the land will continue to be owned by the state, it won’t pay property taxes, but will instead pay payments in lieu of property taxes, aka PILOTs, and whether those will be as much as regular taxpayers would pay is “to be determined.”
And if $300 million in lease breaks isn’t worrisome enough, there’s also the matter of getting fans to the new arena, which is currently served only by a part-time rail spur off the Long Island Rail Road, something the state has promised to upgrade to full-time service at taxpayer expense. How much taxpayer expense? As Aaron Gordon reports for the Village Voice, even the state doesn’t know:
Despite the LIRR committing to “developing a plan to expand LIRR service to Belmont Park Station for events year-round,” according to the press release, a spokesperson for the MTA, which runs the LIRR, said the agency doesn’t have any accompanying cost estimates. Which is to say, the MTA has promised to provide a service for which they don’t know the actual cost.
So there are a lot of unknowns here, to say the least — and that’s if the Islanders even go ahead with the arena, which they’re sure acting like they will, but it’s an awfully expensive endeavor even with partners who have an incentive to pound the owners of the Barclays Center into dust by outmaneuvering them for concerts. (The Barclays group also operates the newly renovated Nassau Coliseum, which could be odd arena out for bookings if the Belmont arena happens.) Though the Barclays owners, for their part, seem less concerned about facing new competition than eager to get the Islanders away from taking up space at the Brooklyn arena and into their other venue on a temporary basis:
Barclays Center “awaiting a response from the Islanders to our proposal to bring NHL games back home to the Coliseum on an interim basis. We understand the required approvals from all parties involved to make that happen, and are prepared to facilitate any necessary enhancements.
— Jim Baumbach (@jimbaumbach) December 20, 2017
There are many, many shoes left to drop here. Let’s hope against hope that when it all shakes out, this looks more like the Seattle arena deal than the Yankees one, but I’m not holding my breath.
And, almost forgot: renderings! Renderings that look like they were done with a cheap tray of watercolors and no lessons in perspective (I especially like the building that bends in the middle, like the top part is toppling over), but given that “blurry” seems to be the name of the game with this project, it’s probably appropriate: