What's missing from the Times's summary of public assistance for arenas (Belmont, Coliseum, Barclays)
Hunt for New York City F.C.’s Stadium Site Is Back Where It Began: the Bronx, the New York Times published an online-only sidebar headlined So Many Seats, So Many Tax Breaks.
Belmont Park ArenaWhile the arena likely will take advantage of tax-exempt financing--though, since it's not firm, it's not implausible to omit--it's not expected to get free land or cash. But that's it will get significant government assistance, which lowers the developers' costs.
Location: Elmont, N.Y.
Year It Will Open: Projected 2021
The arena, planned as the new home for the New York Islanders, is part of a proposed $1 billion complex, to be built by Sterling Equities and Oak View group and their partners. It would be located eight miles from Nassau Coliseum.
As I wrote for CityLab, the price of the land seems very low, and the open-ended promise of Long Island Rail Road improvements implies significant spending.
The Nassau Coliseum
From the Times:
Nassau ColiseumThat omits the $6 million Gov. Andrew Cuomo pledged last month to upgrade the Coliseum for National Hockey League games. While the renovation did not receive government aid, that figure omits the $90 million in low-interest EB-5 funding from immigrant investors offering loans in exchange for green cards--not a direct subsidy, but access to a scarce public asset.
Location: Uniondale, N.Y.
Year Opened: 1972
Nassau Coliseum is owned by Nassau County. The recent $180 million renovation was privately funded. The current operator, BSE Global, pays the county 8 percent of gross revenues, or $4 million annually, whichever is greater under the terms of their operating agreement. While the Islanders await a new arena in Belmont, opening possibly in 2021, the team will split its home games between Barclays Center and the Nassau Coliseum. The Long Island Nets, an affiliate of the Brooklyn Nets basketball team, also call Nassau Coliseum home.
Also, the arena doesn't have 15,000 seats. According to the NYCB Live (its new awkward name) web site, "The 416,000-square-foot arena will feature capacities of 14,500 for concerts, 13,500 for basketball and 13,000 for hockey."
The Barclays Center
From the Times:
Year Opened: 2012
Barclays Center, home of the Brooklyn Nets and to about half the Islanders games, was built for a cost of $1 billion. The project received $260.3 million in state and city funding, in addition to property tax exemptions totaling $266.6 million from 2004 to 2018.
Some of the statistics are fuzzy, and not simple to pin down.
The Barclays Center does say it offers up to 19,000 seats for concerts, which involves seats on the event floor, but few concerts fill that space; the more commonly stated arena capacity is 17,732 for basketball.
Did the arena cost $1 billion? Well, maybe the "project," including associated infrastructure like the new $72 million subway entrance, cost close to $1 billion. In October 2012, an executive at developer Forest City Ratner cited a $934 million cost, which "covers the cost of this building, the transit connection, the site work, etc."
It has been home to all the Islanders games over the past three seasons, but next year will be splitting the season as home rink with the Nassau Coliseum, for at least three years, until the projected 2021 opening of the new Belmont arena.
Did the project receive $260.3 million in state and city funding? That's not simple either. The state committed $100 million in project-related infrastructure. The city initially committed $100 million that could be used for infrastructure or land purchases; it was used for land purchases.
Then the city committed another $105 million; "because a portion of the additional $105 million in city capital contributions cited by the Mayor would likely have occurred in the absence of the project, IBO [Independent Budget Office] counts about half of this addition—$50 million—as part of the city’s capital contribution for the project," according to a 2009 report.
That would add up to $250 million. Then again, the developer, Forest City Ratner, itself claimed the project had received $305 million. A city spokesman claimed the city total was $171.5 million, which would make the total $271.5 million:
The funds allocated today are part of the City’s previous $105 million commitment to infrastructure. The total City commitment is actually less than $205 million.What about the property tax exemptions? I'm not sure how the $266.6 million in property tax exemptions was calculated; for example, the arena's PILOTs (payments in lieu of taxes) added up to about $196.5 million between 2012 and 2018. Over time, the property tax exemption increases and the total increases.
ACTUALLY GIVEN/FUNDING NOW: $131 million for land + $8 million for City work + $32.5 million for infrastructure (in today’s ESDC board item) = $171.5 million total.
The IBO in 2009 assessed the value of the city property tax exemption at $146 million in present value, a figure that deserves recalculation.
The Times omits two other benefits for the arena builder/operator. One is the below-market cost of the railyard development rights. Extell offered $150 million in cash; Forest City offered $50 million, and then was allowed to renegotiate: it upped its bid to $100 million. The IBO then estimated the benefit as $50 million, though others would point out that an appraisal valued the development rights at $214 million.
(All that is made further confusing by the fact that the cost of infrastructure, which was supposed to be offset by the development rights, has increased significantly.)
And then there's the value, unmentioned, of tax-exempt financing, which is mainly a cost to federal taxpayers. The IBO estimated the value of that financing as about $200 million, part of what was calculated as an overall $726 million in savings on the arena. However, that was overstated by at least $50 million, given that a smaller amount of tax-exempt bonds were sold.
In 2016, researchers at the Brookings Institution estimated $161 million in revenue loss based on that financing. But that was before the bonds were refinanced in 2016: Bloomberg estimated an additional $90 million in savings over time for the arena operator, at this point Mikhail Prokhorov's BSE Global.
Bottom line: while the Times estimates some $526.9 million in subsidies and tax exemptions, the total is likely significantly higher. (At the same time, the project developer has lost a lot of money and the arena profit is far less than projected.)
Nor does the total government aid include the $577 million in EB-5 funds--again, not a direct subsidy, but an example of a scarce public resource.