Tuesday, October 07, 2014

The Islanders deal means more revenue for Barclays Center; will ESD require "additional rent and other terms"?

Remember the passage to the right?

According to the 2/18/05 Memorandum of Understanding that Atlantic Yards developer Forest City Ratner signed with New York City and New York State, there was to be a sweet lease for the arena for one team, via a local development corporation (LDC), but more for the public parties if a second team arrived:
Rent under the LDC-FCRC Lease will be $1, provided that in the event FCRC wishes to bring another professional sports team to the Arena, FCRC and the Public Parties will negotiate and agree to additional rent and other terms before the Public Parties consent to use and occupancy of the Arena by the second team.
That LDC allows for a fig leaf of public ownership, allowing for the issuance of tax-exempt bonds, and that $1 lease is connected to a complex financial deal in which PILOTs (payments in lieu of taxes) are used to pay for arena construction.

More for the public from Islanders?

It was plausible for the public parties to ask for more, because it implies that the arena would gain additional revenue from another team, eased by the significant public contribution--direct subsidies, tax breaks, giveaway of naming rights, override of zoning, inside deal on railyard development rights--that allowed arena construction.

Now that the New York Islanders are coming to the Barclays Center in the fall of 2015, will there be "additional rent" and other terms, subject to approval by Empire State Development (ESD), the state authority that oversees/shepherds the Atlantic Yards/Pacific Park project?

I queried ESD multiple times:
1) Must ESD agree to use and occupancy of Arena by second team?
2) will there be additional rent? how much? was this requirement in the lease?
I never got an answer, which suggests they either already agreed, or plan to agree, without asking for more. After all, the Memorandum of Understanding contained a key loophole: it was nonbinding.

Nor has my perusal of seemingly relevant documents answered the question (though it's possible I missed one).

What next?

Still, the arrival of the Islanders seems to offer some leverage for the state, an opportunity--not yet exercised--to claim a share of the increased area revenues.

Maybe this will be a question for the Atlantic Yards Community Development Corporation, once it gets started in December, though that CDC is an advisory body, not a new governance entity.

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