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.