New York state okays Islanders arena lease, still won’t say how much subsidies are worth

The New York Islanders arena plan received its final(ish) signoff yesterday, from the obscure state Franchise Oversight Board, which approved the team’s lease with the state. It also revealed how much the project will be paying in payments in lieu of taxes (PILOTs) as part of its tax break deal with the state:

It also includes a payment in lieu of taxes agreement under which New York Arena Partners would pay $40 million to various municipalities. The PILOT would last throughout ESD’s lease for the arena, and for 20 years for a proposed hotel and 15 years for retail stores at the arena. An estimated $154 million would go to the Elmont and Sewanhaka school districts over almost 50 years, and the state would make at least $1 million per year from rent payments based on attendance.

That is a lot of numbers that don’t actually make sense together, so let’s explain them one at a time:

  • That $40 million PILOT payment appears not to be a PILOT payment at all, but rather the team’s lease payment for the state land it would be using, which we’ve covered previously. (And is also now supposedly up to $50 million.)
  • The actual PILOT payment from the arena will be that “at least $1 million per year” figure, which is certainly way below what an arena would normally pay in property taxes, though no one has revealed how much of a tax break it is.
  • Likewise, the PILOTs for the hotel and stores are actually tax breaks, not special payments to the state, since if the state insisted on the developers buying the land instead of leasing it, it would be subject to normal property taxes.

The upshot, then, is that the state is still giving the Islanders and their developer partners a sweet land deal, plus cash toward a new commuter rail station, plus tax breaks. There are so many moving parts to the financing plan, and so little transparency, that it’s pretty much impossible to put a number on the total public cost, but it’s certainly close to $100 million, and could be much higher.

As far as the approval process goes, I believe the state comptroller still needs to sign off on the deal, but that’s usually a formality. Then will come the inevitable lawsuits; whether the Islanders can meet their aggressive goal of breaking ground in September and opening the place in fall of 2021 will likely depend on whether opponents are able to get court injunctions, or if everyone will be left to calculate the public cost after the horse has escaped.

NY state spokesperson on last-minute Isles land appraisal: Ha ha, we had it for months but you didn’t ask right, joke’s on you

So this escalated quickly: Yesterday, I noted that Jack Sterne, the Empire State Development spokesperson assigned to the New York Islanders arena project, had told me that an assessment of the value of New York state land being leased to the developers for $50 million would be forthcoming before the ESD board’s vote — and indeed it was, a whole three and a half hours before. And the released documents only included the executive summaries of the assessments, which contained no details of how the land values had been arrived at, making it impossible to determine why their conclusions ($35.9 million to $41 million) were so much lower than those arrived at by looking at comparable nearby land values ($114 million to $340 million).

I immediately emailed Sterne to ask if he could provide more details. He wrote back:

Hey Neil — yes I believe the summaries are in the board materials.

If you’re looking for additional docs you are always welcome to FOIL — https://esd.ny.gov/freedom-information-law-foil

A FOIL — Freedom of Information Law request, in New York state terms — typically takes at least a couple of months to get a response to, and some state agencies have been known to drag it out for a year or more. So this wasn’t entirely helpful with a vote just two hours and change away at this point, and I noted that here in a comment. (Then the board unanimously voted to approve the plan, though the arena still has a couple more hoops to jump through before it’s finalized.)

Norman Oder, who’s been covering the Belmont arena shenanigans at Gotham Gazette, then picked my comment up in a tweet:

Jack Sterne then responded on his personal Twitter account:

And:

Sterne almost has a point: Oder, or I, or anyone else, could have filed a FOIL request months ago to get the full appraisals. (According to the dates on the executive summaries, they were submitted to ESD on December 3, 2018 and July 3, 2019.) If, that is, we had known they existed. But when I had asked Sterne previously for the documents, I got answers that in retrospect seem designed to throw researchers off the trail.

On July 8, I asked Sterne via email: “When I spoke to one of your predecessors early last year, they said that ESD would conduct an appraisal of the arena project land before the final presentation to the ESD board. Is that still happening before the final vote at the end of the month?”

Sterne answered several of my other questions in a subsequent email, but ignored this one. On July 22, I tried again: “Is ESD still conducting an appraisal of the value of state land being leased for the project, and if so is there a target date for releasing that appraisal?”

Sterne’s response:

The appraisals will be completed by the time the General Project Plan is approved by the ESD Board.

Now, this isn’t technically lying: The appraisals had already been completed, in one case for months, meaning they would indeed be completed by the time of the ESD board’s approval vote! It is at best, however, deceptive, since an honest answer would have been “No, we’re not still conducting an appraisal, we already have two in hand!”

It’s also pretty exceptional behavior from a press flack, whose job is usually to try to spin or stonewall reporters or sometimes call them up and yell at them when they don’t like what was written. (Sterne has done that, too, but I’m used to that.) All this, combined with the abbreviated last-minute release of the appraisal documents, is certainly enough to fuel suspicions that there’s something in those full appraisals that ESD — or Gov. Andrew Cuomo, who controls ESD — really doesn’t want anyone to see until all the t’s are crossed in the deal. We’ll find out once they process my FOIL request, I guess — hopefully before the new arena opens for its first game.

 

 

NY state board to give final signoff to Islanders arena plan today, still has no idea how much state’s land is worth (UPDATED)

New York’s state-run Empire State Development corporation board is holding its final approval vote on an Islanders arena development plan at Belmont Park today at 3 pm, which reminds me of something:

An ESD spokesperson contacted the Voice after publication to say that in according with its guidelines and state law, the agency will conduct an appraisal of the Islanders arena project land before the project is presented to the ESD board of directors following the conclusion of the environmental review in 2019.

An ESD spokesperson confirmed to me two weeks ago that the appraisal “will be completed by the time the General Project Plan is approved by the ESD Board.” So, they have four hours left — hope the ESD board members can read complicated land value assessments really fast!

The appraisal is important because the Islanders owners are only paying $50 million for 43 acres of state land for the project, a figure that could be as much as a $300 million discount on the land’s actual value. Or it could not! Land appraisals are hard, which is why it’s important to hire trained professionals to conduct them, well before you have to decide on whether a sale of public land is a fair deal or a complete giveaway!

(It’s maybe worth noting that the state most recently has been saying that the $50 million is really the developers’ private contribution toward a new train station for the project, which would make the actual land sale price be $0. If “actual” has any meaning here anymore.)

I emailed my ESD contact again this morning to ask to see the appraisal, but haven’t heard back. It’s altogether possible the report will appear just in time for the hearing — but that certainly won’t give any time for anyone on the board to read the report before voting, let alone members of the public.

If so, it would be only the latest in a long line of, shall we say, not enthusiastically democratic steps taken by the state in its rush to approve the Islanders plan after a year and a half of mostly behind-closed-doors talks: The initial ESD board meeting last month was held on a Monday afternoon after public notice only went out late Friday; and the Public Authorities Control Board, which is supposed to vet actions by public authorities like ESD, went ahead and gave its approval to the plan last week, despite all the final details not being in yet. Whether the final Islanders deal turns out to be a massive public money pit or not too bad, it looks like we won’t know for sure until after the deal has been decided — the phrase “no way to run a railroad” comes to mind.

UPDATE: The ESD board meeting materials have been posted, and they include two separate appraisals — one dated December 3, 2018, the other July 3, 2019 — that estimate the public land value at between $35.9 million and $41 million. The first provides no information about its methodology at all; the second says it bases its figure on the future income that the site could produce, but says nothing about how it calculated that projected income. Lots of questions here, obviously, which will almost certainly take more than (checks clock) three hours and 10 minutes to answer.

Friday roundup: Lotsa new vaportecture renderings, lotsa new crazy expensive bridges

I’m traveling this week and next, so there will likely be some weird scheduling changes for posts, such as this Friday roundup appearing close to noon Eastern time. (I think. I’m not entirely sure what time it is here or anywhere, just that it’s hot, which doesn’t narrow it down much because it’s hot everywhere.) The news watch never stops, though, so here’s a somewhat abridged week of highlights:

  • New Los Angeles Clippers arena renderings! This vaportecture is honestly all starting to look more or less alike to me, though what appears to be a transparent roof on an arena is novel — the article refers to “indoor/outdoor ‘sky gardens,'” though, so maybe this is those, whatever those are. (Gardens open to the sky? Wouldn’t that be … “gardens”?) Anyway, constantly releasing renderings is a great way to show people that you absolutely are going to be able to build an arena, despite any lawsuits trying to block it, because everyone knows cartoons always come true.
  • And on the other side of the pond, Everton has released its own stadium renderings, with more lens flare and balloons and promises that 1.4 million more people will visit Liverpool just by Everton moving into a new stadium. (The balloons are probably the least fanciful of these predictions.)
  • Norman Oder has a long analysis of the New York Islanders Belmont Park arena plan laying out all the remaining questions about the project, from the value of land and tax breaks to how exactly the state expects a Belmont arena to host sports and concerts without cannibalizing shows from the nearby Nassau Coliseum. (Not that it should matter to the state if the Coliseum loses business, but if shows are just relocated, they’re not new economic activity. For that matter, if Long Islanders just go to more shows and fewer restaurants, say, that’s also not new economic activity. So very many questions.)
  • Dodger Stadium is getting a $100 million facelift this offseason, including a new centerfield plaza, new elevators and bridges for fan circulation, and a statue of Sandy Koufax. A hundred million dollars seems like a lot for that, but it’s Magic Johnson‘s stadium and his money, so whatever floats his boat.
  • And finally, the cost of the Atlanta Falcons‘ pedestrian bridge has now surpassed $33 million. up $6 million from the last accounting. On second thought, maybe $100 million for some bridges and a statue isn’t that crazy at all.

NY Gov. Cuomo: Yeah I’m giving the Islanders owners $75m for a train station, but they’ll repay some of it eventually, so shut yer yaps

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.

Friday roundup: Raleigh MLS project funding, Islanders’ train station costs, Flames arena talks are all ???

Happy Friday! If you’ve been wondering if Scott McCaughey’s excellent new album of songs written while in a hospital room recovering from a stroke can drown out the sound of poorly timed jackhammering by the gas company right outside your window, I’m here to report: Not nearly well enough!

Typing really loud so you can hear me over the din:

  • Raleigh residents are concerned that a development project centered on a new soccer stadium could price them out of living in the city. Also, there isn’t actually enough Wake County tax money available to pay for the project’s proposed $390 million public cost. And Raleigh doesn’t have an MLS team, or the promise of one. Other than that, this is going swimmingly.
  • Newsday has contradicted Long Island Business News’s report that New York state will pay “most” of the cost of a new $300 million train station for an Islanders arena at Belmont Park, saying that the actual cost is only $100 million and developers will pay most of it. Unnamed source fight!
  • Calgary city councillor Jeff Davison, who is spearheading behind-closed-doors talks with the Flames owners over a new arena, says, “We do not have a deal today, and when we will have one and if we will have one is totally up in the air. But what we can tell the public today is that discussions are productive but they’re not complete. We can’t give an exact date as to when we’ll be back with any information [but] I’m confident if we do bring a plan back, that the public will support it.” Pretty sure that translates as “Still talking, ask again later.”
  • Noah Pransky has been on a writing tear about the Tampa Bay Rays mess this week, including a review of an article he wrote in July 2009 predicting much of what has since come to pass and an analysis of how hotel-tax money that Tampa officials say can’t be spent for things like policing or libraries really can, because they could be used to free up general-fund money that’s currently spent on tourism-related expenses. “Where’s the study on best uses for that new money?” writes Pransky at Florida Politics. “How about just a best-use conversation, held out in the sunshine?” Crazy talk!
  • Speaking of tax money that could be spent on other things, Cuyahoga County is considering a 1% hotel tax hike to free up $4.6 million a year to spend on its convention center and sports venues, which in present value comes to about $70 million. (The Cleveland Plain Dealer article on this is entirely about how the bed tax hike would affect the hotel industry, because of course it is.)
  • “Could an NFL Stadium [for the Buffalo Bills] be Built on an Abandoned Coke Plant Property?” asks Erie News Now, boldly toying with Betteridge’s Law.
  • Worcester will break ground next Thursday on its new heavily subsidized Triple-A Red Sox stadium set to open at the beginning of the 2021 season, which, uh, isn’t a lot of time. They’d better hope that the climate crisis means a less stormy winter construction season in New England, which, uh, isn’t likely.

Report: Andrew Cuomo to announce $300m train station for Islanders, “most” paid for with public money

Normally I wouldn’t bother posting on the 4th of July because there are going to be like two of you reading this and you’re both in Canada, but but but:

Gov. Andrew Cuomo is scheduled to be on Long Island Monday to announce plans to build a new train station to serve the proposed new arena at Belmont Park, sources told LIBN…

It is unclear whether New York Arena Partners, the developers of the $1.18 billion arena, hotel and retail project, will contribute to the cost of the new station, however most of the cost, which could approach $300 million, will be paid for with public funds.

The possibility of a new train station, of course, is nothing new: Back in February, local elected officials made clear that they had no intention of approving an Islanders arena unless it came with a full-time train station, which — thanks in part to some problematic geometry with how the existing Long Island Railroad tracks are laid out — transit officials had estimated could cost as much as $300 million. Yesterday’s Long Island Business News report, though, is the first to indicate not only that Cuomo is set to go ahead with this cockamamie plan, but that “most” of the price tag will be footed by New York state taxpayers.

LIBN also included a map showing how far from the new arena the new train station would have to be:

That little trapezoid is the train station. The giant oval is Belmont Park racetrack. The area below the giant oval, mostly cut off at the bottom of the image, is where the arena would be built.

That’s a distance of about half a mile, which will require hockey fans to board shuttle buses that will inch their way around the west end of the racetrack on that single service road to drop fans at the arena. (What looks like an existing train station at the southwest corner of the racetrack, by the way, is indeed an existing train station, but one that can only be used for service to and from the west thanks to that troublesome geometry mentioned earlier.) So New York state could be looking at spending nearly $300 million just so people going to Islanders games and concerts can take shuttle buses a slightly shorter distance than if you ran it from the existing stations to the east and west.

We’ll find out more on Monday, presumably — I’ve reached out to the state agencies responsible, but July 4th, remember? — and it’s always possible that LIBN’s report (based entirely on “sources”) got something wrong. But right now it looks like Cuomo could be set to ease local opposition to a privately funded (except for $74 million to $300 million in land discounts) arena project by throwing as much as $300 million at a train station a bus ride away from the arena, which, you know what, let’s just wait till Monday before issuing any epithets.

Friday roundup: Another Islanders arena delay, Wisconsin to wrap up Brewers stadium spending but not really, Italy wins (?) 2026 Olympics

My endorsement of Hmm Daily last month was so successful that this week the site announced it’s shutting down. I am now officially afraid to tell you people to give money to any other particular site, lest I bestow the kiss of death on them as well, but you should give money to someone you like, because journalism is in bad shape, with dire effects on, among other things, the public’s ability to hold elected officials accountable.

Speaking of which, here’s this week’s news about elected officials doing unaccountable things, and the rich dudes who want to keep it that way:

UPDATE: Just realized I forgot to link to my Deadspin article yesterday on Stuart Sternberg’s Tampontreal Ex-Rays threat, Richard Nixon, Kinder eggs, and bird evolution. And now I have done so, so go read it!

Friday roundup: Sacramento soccer subsidies, Fire could return to Chicago, and a giant mirrored basketball

Did I actually write a couple of days ago that this was looking like a slow news week? The stadium news gods clearly heard me, and when they make it rain news, they make it pour:

New York studying whether to build Islanders an impossible train station that could cost $300m

Hey, remember how the New York Islanders owners said that their new Belmont Park arena would require a full-time commuter rail station, and it turned out that would be somewhere between cost-prohibitive and physically impossible, and then lots of local elected officials said they wouldn’t approve the arena without a 24/7 train station? Surprise, surprise, New York state is now “expanding its environmental review to study the possibility of adding a full-time Long Island Rail Road station,” according to “sources” cited by Newsday. The paper continues:

No decision has been made about the new station’s location on the Main Line, sources said.

It is also unknown how much a new station would cost or how it would be financed.

That is a mighty large detail, considering that one (now former) MTA board member said a couple of months ago that building a full-time train station could cost as much as $300 million.

Of course, studying something isn’t the same as building something, so it’s entirely possible this is Gov. Andrew Cuomo’s way of establishing a price tag (and degree of possibility) for such an undertaking, so that he can then say to local pols, “Look, this wouldn’t work, can’t I just give you some extra youth sports funding or something and make your objections go away?” The environmental review is supposed to be done by the end of June, so that doesn’t give the state a lot of time to explore its options; but then, this is a governor who reworked an entire multi-billion-dollar transit project that had been in the works for years on the advice of a few academic-honcho friends, so maybe he knows some good non-Euclidean mathematicians who can help out.

[UPDATE/CLARIFICATION: The Newsday article indicates that the new station under study would go on the main LIRR line, presumably between the Bellerose and Queens Village stops, not on the spur that leads directly to Belmont Park. But that would leave fans at least a half-mile walk from the new station to the new arena, which isn’t much less than the walk would be from the existing Queens Village station — and it would still be extremely expensive and involve difficult geometry (the Cross Island Parkway would get in the way, among other things). My money is still on this being a proof of bad concept, but we’ll see in a couple of months, maybe.]