Well, that was confusing. After conflicting reports last week that New York Gov. Andrew Cuomo was set to announce the construction of a commuter rail station for a new New York Islanders arena which was going to either cost $300 million and mostly be paid for by the public, or cost $100 million and mostly be paid for by the arena developers, the answer turned out to be … neither! Instead, Cuomo canceled his own event, and substituted an emailed press release.
The press release, at least, spelled out the finances at last:
Constructing the new full-time station on the LIRR’s Main Line and upgrading the existing spur is estimated to cost $105 million. The arena developers will cover $97 million – 92 percent of the total cost – and the State will invest $8 million.
Nice and clear! Except that the governor’s statement came with an accompanying economic impact statement by the state-run Empire State Development corporation, and that contained a different set of numbers:
The total investment in the LIRR Improvements is anticipated to be $104 million, of which $30 million is to be funded by [New York Arena Partners, the Islanders owners’ development group] and $74 million is to be funded by the State of New York.
At this point, what the actual hell, man?
State officials were tied up all afternoon with a board meeting to approve the arena plan’s final environmental impact statement — an event that drew nearly three hours of public testimony, despite only having been announced late on Friday afternoon — but thankfully, someone at Newsday finally tracked down the explanation:
To build the LIRR station, state officials said the developers will initially contribute $30 million and the state will cover the remaining $75 million. The developers will then pay back the state $67 million of that figure over time, officials said. Details of that arrangement are not yet available.
Let’s ignore for the moment the missing comma that makes it appear that state officials are building a train station with their words. In terms of who’s paying for what, the upshot appears to be that the deal for the train station — which will benefit pretty much only the privately run arena, as there’s already another existing train station just a quarter-mile away — will include an $8 million grant and a $67 million loan. And that’s a “no-interest, multidecade” loan, according to the New York Post, meaning the present value of the repayment will only be worth … well, it depends on what “multidecade” means, but if it’s a 30-year loan with evenly spaced payments, for example, the Islanders owner stand to save about $33 million from the state loan deal.
(And that’s assuming, of course, that the repayment is in actual cash, not in, say, future tax revenues that anyone would normally pay, a dodge that’s been tried in other cities before.)
That $41 million gift would then need to be added to: the land discount Cuomo has given the Islanders owners (tough to calculate because comparable giant plots of land are so hard to come by, but $74-300 million is the best guesstimate so far); any tax breaks the arena will be getting (as it’ll be on leased public land, it won’t pay property taxes, but rather payments in lieu of taxes, amounting to a $10,000 per event fee for the arena with a minimum of $1 million per year, plus payments equivalent to regular taxes for the accompanying hotel and retail project that don’t kick in for 20 and 15 years, respectively, which I have no idea how much all that adds up to); any cost overruns the state may be on the hook for (your guess is as good as mine, since nothing was specified about who’d pay these); plus the “cost of additional services that may be required to support new economic activity in the local area (e.g. police, fire, water, sewer infrastructure),” which the state study specifially noted it didn’t even try to calculate.
That is a big pile of dunno, but it’s certainly worth asking questions about. Whether those questions will be asked is another story — state senators Leroy Comrie and Anna Kaplan, the two main previous critics of the arena deal, were both quoted in Cuomo’s press release as applauding the new train station plan — but they’re the kind of thing that somebody with better data and more processing power than me should be crunching the numbers on. Also, speaking of data, did anyone try to figure whether it would be more cost-effective to just run shuttle buses from the existing Bellerose Long Island Railroad station, instead of building a whole new one a quarter-mile away that will still require shuttle buses to the arena? And who’s going to pay to run those shuttle buses, anyway?
I’m starting to see why Gov. Cuomo decided not to subject himself to a press conference. More news hopefully later today, once I hear back from all the sources who didn’t return my calls yesterday afternoon. In the meantime, let’s all just enjoy the fresh vaportecture the governor’s office dropped on us, complete with a woman walking her child dangerously close to the edge of the tracks and what looks like an ad for what would have to be Billy Joel’s 73rd birthday tour, or maybe a show by Belly Jolie, the Angelina Jolie-Tanya Donnelly supergroup:
UPDATE: I’ve now talked to some state officials for this Gothamist article, and can answer a few of the above questions, and confirm that others have no answer as of yet:
- The 30-year no-interest loan is confirmed by ESD officials, though they deny that it should be considered a no-interest loan, saying it’s just the state fronting $67 million and then the developers paying the state $67 million over 30 years with no interest, which is obviously a different thing entirely. So my $41 million subsidy estimate above stands, though state officials would clearly complain that they don’t consider it a subsidy.
- The land lease is now for $50 million, not $40 million, and would go partly to cover some of the state’s LIRR station costs ($30 million) and partly for other unspecified infrastructure ($20 million). ESD argues that this means the state would come out ahead, which only works if 1) $30 million is more than $41 million and 2) you’re okay with the fair-market value of the land being $0.
- Speaking of which, that appraisal that ESD was supposed to do by now? They’re checking to see if it’s still happening.
- Also unknown, according to ESD: whether anyone looked at running shuttle buses from the existing Bellerose station as an alternative to building a whole new one 1300 feet away.
- The developer will pay for the shuttle buses, hooray!
- Nobody knows yet who’ll pay for cost overruns, boo!
- The state doesn’t know how much the PILOT tax breaks will be worth, but also doesn’t agree that they’re tax breaks!
I think that’s it. I’ll try to calculate the total subsidy value of this at some point, but right now all the known unknowns are making my head a splode. Hand it to Cuomo for this: He learned from Atlantic Yards that the best way to stop people from talking about your spendthrift ways is to make the money trail too confusing to sum up in a single number.