Sunday, February 27, 2011

Zimbalist issues guiding principles for successful arena in Edmonton; guarantees of revenues and ancillary development absent in Brooklyn

In an Edmonton Journal article headlined Case for new arena no 'slam dunk': Leading analyst says such plans can work - if conditions are right, sports economist Andrew Zimbalist, who claims he turns down 70 percent of consulting gigs offered, offers a mixed opinion on a new downtown arena:
Success, he says, comes down to a few guiding principles.

These include: thoughtful planning and design; a solid financial model that places most (roughly 80 per cent) of the financial burden on the private-sector partner; upfront, iron-clad guarantees from the developer to protect local taxpayers from projected future revenue shortfalls or project cost overruns; and a binding upfront commitment by the team owner and his developer-partners to proceed with ancillary projects, such as hotels or condos.
What was missing in Brooklyn

Funny, but Zimbalist didn't say that in the "study" he conducted for Forest City Ratner. (He was hired before the project was unveiled in December 2003.)

Protection from future revenue shortfalls? No, Zimbalist provided the best-case scenario, which assumed a full buildout of the original configuration, and at the announced ten-year timetable.

The timetable is long gone, as is the configuration, and a full buildout is questionable, given that it's not required by the Development Agreement.

Binding commitment to proceed with ancillary projects? The Development Agreement allows a much smaller project. Office space (jobs and tax revenue) was swapped for condos.

Here's a prescient criticism, from the 5/4/04 Daily News:
"This document is a self-serving document," said Councilwoman Letitia James (D-Fort Greene). "This document is a ruse. We should line our wastebaskets with it."
And that's not even getting into other contradictions and willfully naive statements.

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