On Tuesday when I threw up my hands at figuring out whether $2 million was a fair price for Queensboro F.C. to pay for a five-year licensing agreement to stick a 7,500-seat soccer stadium on York College land, I had hopes that my hands wouldn’t stay that way forever. And now, thanks to a consult from a property valuation expert, I think we have a way to at least make a start at a guesstimate:
If a sports team were looking to lease a regular plot of land at market value, one would expect that at the very least, the property owner would want them to cover the parcel’s annual property tax bill. Since York College is part of the City University of New York, its land is tax-exempt — as is all public and nonprofit college-owned land in New York, including the frigging Chrysler Building. But it still gets assessed by the city to see what taxes it would pay if it had to, which for the soccer stadium land can be found here and here.
The total assessed value of the land is $14,257,620. If taxed at the regular rate, it would owe $1,524,709 a year in property taxes. Over five years, that comes to $7,623,549.
Queensboro F.C., though, isn’t going to be using the stadium all of the time. If we knock off 51% of the price on the logic that York College will have use of the space 51% of the time — not that it will likely use all of that, but let’s just go with it — then we have an expected market value of at least $3.8 million. That’s nearly double what CUNY is actually getting.
And that “at least” is very much a lowball figure, for two important reasons. First off, it’s likely that a private landlord would want to do more than just cover their property taxes if renting out land. And second, city property assessments are notoriously low, especially in cases where the land isn’t generating any tax money anyway, so it doesn’t much matter what value the city puts on it. (Cf. the whole New York Yankees stadium mishegoss.) So really the best we can say is the soccer team owner’s land discount is somewhere between $1.8 million and … a lot more than that.
The best way to determine market value, obviously, is to put land on the market — but CUNY hasn’t done that, issuing a request for proposals only for “development, design, construction and licensed operation and management of an athletic facility and soccer stadium.” So until then, we have to go with our best guess, which right now is that Queensboro F.C. owner and Chinese investment impersario Jonathan Krane is getting a sweetheart deal worth at least several million dollars compared to what he would have to pay for stadium land elsewhere, if he could even find it at all. As always, public officials really should be hiring experts to do their stadium negotiations for them, because when left to their own devices in this area, they kinda suck.
I have no doubt that QFC is only proposing “this” because they feel it is a great deal for them and covers their stadium needs for the short term at less than market rate.
The fly in this particular ointment from a valuation perspective is that CUNY is NOT paying property tax on the land anyway. This is supposed to be a public support for educational endeavours, but as you’ve pointed out (and Northwestern U knows only too well… as it now owns a significant portion of Evanston’s commercial real estate), it is not supposed to be a method of taking ordinary commercial properties off the municipal tax rolls.
Regardless, QFC shouldn’t have to pay “enough” to cover a property tax bill that their potential landlord doesn’t actually pay.
I agree it is a discount and there are certainly larger issues to discuss when it comes to educational institutions essentially profferring their tax benefits to private businesses – something many jurisdictions either discourage or ban outright.
Rather than question the benefits of an educational institution engaging in private (and at least notionally, for profit) business, I prefer to think about this from the perspective of a private land owner who has to pay the $1.5m in annual taxes on his similarly sized parcel of land in roughly the same area, yet cannot work out a deal with the football club as he would need not only market rent but the $1.5m to cover the tax payments as well.
Whatever happened to the free markets we are alleged to value above all else?
They don’t seem to apply where some entities are concerned.
How do Monterey Bay FC and Queensboro FC obtain federal SBA PPP loans of $277,722 and $66,600 (respectively)? Given that neither has seen a soccer ball hit the pitch, much less has a pitch.
Because they have employees? Queensboro has front office and coaching staff already working in addition to an operational youth team/academy. They have social media, merchandising, and promotional staff that are in full drive building a fan base. They don’t just hire everyone on the day of their first game.
How much data is available on a short term land lease deal? If it was a longer term deal that was functioning basically like a purchase than you could compare it to other land sales in the area. The way I see it is, a USL team in NY is a very speculative venture so they are trying it out before committing to a permanent stadium so it makes sense for Queensboro FC to build something temporary. York College (who I never heard of despite the fact I grew up in NY) has some land that they aren’t using right now. Maybe its part of some growth plan for the future but they aren’t actually using it at the moment. So they get some cash and have a facility that they can use for campus events so its a somewhat cool amenity. At the end they get the land back so they can use if for whatever. All they are losing is the opportunity cost for 5 years, which might by zero