Yesterday’s official NYC F.C. stadium announcement turned out to feature, as I wrote for Hell Gate, “Mayor Eric Adams, a panoply of elected officials, soccer bigwigs, and everything but an actual dog and pony.” And none of them said word one about the three big unknowns about the project: How much would the city be putting in via infrastructure costs and property tax breaks; how much wouldd the team pay in rent for city land; and exactly how much affordable housing would be built, for whom, and is it what the city initially promised for the site?
After the cameras were off, deputy mayor Maria Torres-Springer told reporters that infrastructure for a project of this size would cost the city “typically in the $200 to 300 million range,” but that specifics were still being worked out. She also said that the team’s rent would start at $500,000 and rise to $4 million a year — in the year 2076, assuming Willets Point isn’t underwater then. Because those payments are so backloaded, their present value doesn’t come to much: less than $30 million in present value.
So, the city would be putting up $200-300 million to make the land development-ready, and get paid $30 million total for its use for a stadium — that’s already not great. But there’s also the question of those property tax breaks, which Torres-Springer didn’t answer questions about at the press conference, but a spokesperson for Mayor Adams did in a subsequent email to Hell Gate. This person said that charging zero dollars in property taxes isn’t really a cost to the city, because city land isn’t normally subject to property taxes; and then noted that the city will get revenues from NYC F.C., via those rent payments.
There are a couple of problems with this argument. First off, it’s not at all unheard of for private developers on public land to pay money toward city services — that’s what payments in lieu of taxes, or PILOTs, are for. And, in fact, it’s not even unheard of for private buildings on public land to be subject to taxation: NYC F.C.’s rivals, Red Bull New York, were ruled by a judge to owe taxes on their stadium on public land in New Jersey since it was for a private purpose, though they later renegotiated a side deal with the city of Harrison to make their payments another way.
Second, if the rent payments are meant to be in lieu of taxes, not only is that $30 million total value over 50 years a piddly amount (technical budgeting jargon there) compared to the taxes being forgone, but that would mean the city is getting nothing for use of its land. So we’re back to: Mayor Adams wants to take a large swath of city-owned land, do maybe $300 million worth of work to improve it, give it to a pro soccer team owned by oil billionaires who wouldn’t have to pay taxes on it, and collect only $30 million total in rent in exchange. There are still some unknowns here — the exact value of the land, the exact value of the tax breaks — but there’s no math by which this anything but blows for city taxpayers.
(Torres-Springer also cited numbers for the projected impact of the project: “$6 billion in economic impact over 30 years and close to 16,000 jobs.” The mayor’s office did not provide sources for these numbers beyond saying these were the city’s projections, and also did indicate whether they were provided inside a clear plastic binder.)
The mayor’s office also released a couple of renderings of what the new stadium would look like, or rather probably won’t look like, as they were helpfully stamped “CONCEPT ONLY”:
Pictured are: a generic-looking soccer stadium with the even more generic-sounding name “Stadium Name,” a passing subway train with the wrong number of doors, a fruit stand in the middle of a crosswalk, and a man on a bike about to run over a man with a cane. Not pictured: how the crap that generic-looking stadium, which doesn’t even feature a full roof, could possibly cost $780 million. This might be a good time for a real press conference, the kind where city officials answer questions on camera, because man, are there a lot of them left to ask.
Is there a way to quantify the value of the affordable housing they are building? I assume the $780 million isn’t just for the stadium. It’s for the whole deal – stadium plus affordable housing plus other buildings.
St. Louis just opened their MLS Stadium last night. There estimated cost is 458 million. I would guess that 780 million is just the stadium.
On the other hand, LAFC’s stadium (2018) was reported at around $350m cost. The new Columbus stadium (2021) was in the same ballpark (NPI) ~ $315m if I recall correctly. The latter is in a heavier snow region than Queens, too, so the roof would have to be significantly stronger/more robust.
How much of the stadium project cost was committed to demolition (more ramps to nowhere) and site prep?
It’s just hard to imagine that the Stl group paid 50% more than Columbus did to build a stadium about the same size just one year later.
From the construction cost index (https://www.mortenson.com/cost-index) provided by Mortensen, the builders of St. Louis stadium. It looks like about a 30% increase in construction fees from 2018 to present. its about 20% just since 2021, note the large jump from 21q1 to 21q3.
A 30% add to LA stadium brings them into the 450 million range, Columbus’ number would grow to about 380 million. St. Louis price doesn’t seem too far out.
I can’t find a breakdown anywhere, but would assume 458 million probably includes the training center as well.
I’m sure the people who built the facility that cost an extra 40-50% worked very hard to justify that cost. That doesn’t make it defensible, however.
If we had an arm’s length entity that said the same thing, I might be inclined to believe it. When it’s the people who pocketed some (or all) of the extra money, I’m not inclined to believe it at all.
More than a decade ago I was chatting with a friend (engineer) who does assessments for a nearby city. He said the city had asked him to take on a research project… basically to figure out the cost to the city of eliminating several contract services categories (in construction mainly) and replace that work with in house teams.
I had said to him before that that it looked like there was an extra 30% being built into every project I was (then) working on, and I wondered where it went (not to me, that’s for sure).
He smiled and said he had done the math on having his home city create it’s own construction staff & crews, buy all new equipment, rapidly depreciate that new equipment and he still couldn’t get the bill higher than 75-80% of what the city was then being charged.
What the winning bidders were doing was building in their usual 17-22% profit margin as a ‘cost’, then increasing their bid on top of that to make a windfall profit.
And anytime you have a construction manager who is paid a percentage of the total cost of the project to manage it, you automatically incentivize him or her to drive the costs up (I wish I had a dollar for every time I’ve heard some contractor say that he submitted his bid and the CM told him it wasn’t high enough).
I feel like we are back in the same boat. Sure things got harder to do and more expensive during Covid. Yes, supply chains are still disrupted. However, they aren’t as bad as they were when Columbus built a stadium for their local billionaire.
What is driving these alleged 30% annual increases is less inflation/material costs and more profiteering, in my opinion.
They claim $780 million is the construction cost for the stadium. I agree that sounds beyond bonkers, but it’s what they say.
They haven’t revealed a price tag on the housing, which would be built by Related and the Mets, so far as I’ve been able to tell. The list of things they haven’t provided information on is as long as my arm.
Don’t belittle my franchise business plan–Crosswalk FruitStands. Territories (crosswalks) available.
I mean, the foot traffic would be tremendous.