Controversial Nassau Hub plan outside Coliseum: does "reasonably cooperate" clause let BSE Global steer the process?

We know that the Islanders' 25-year lease at the Barclays Center in Brooklyn was not "ironclad" as claimed, and we know that there are question marks--notably regarding the cost of Long Island Rail Road service and the fairness of the RFP (request for proposals) process--regarding the planned arena at Belmont Park in Nassau County.

Now, as development proceeds in "The Hub"--the land surrounding the Nassau Coliseum, the largest undeveloped site in Nassau County and long the site for failed dreams--more questions arise, at least according to the New York Post and one rival developer, regarding the fairness of the process.

The Post cited the role of developer Scott Rechler, who Gov. Andrew Cuomo appointed to the MTA and Port Authority boards and who since 2009--if you count associated family members and companies--has contributed nearly at least $548,982 to Cuomo campaigns since 2009.

More on that below, but do note that other coverage has been less critical and Cuomo's spokesman called it bogus.

Also here is my full response which was cut for some reason that I’m sure was completely valid. pic.twitter.com/mtDE2siU34

— Rich Azzopardi (@RichAzzopardi) October 21, 2018

Indeed, it's hard to imagine a direct role for Cuomo, though surely his shadow is long. In other words, the charges are hard to support. But I wouldn't completely dismiss claims of favoritism either. At essence, as far as I can tell, is whether Nassau County officials would be willing to push on some ambiguous language in the land lease.

Making progress, with state help

According to a 10/16/18 article in Newsday, Nassau Hub developers: 'One more chance to get it right':

The first phase of a $1.5 billion development to transform 72 acres of asphalt around NYCB Live's Nassau Coliseum into a residential and commercial district could begin by the end of next year, as project developers expanded their vision by adding two new hotels.
For the first time, project developers Brett Yormark, chief executive of Brooklyn-based BSE Global, and Scott Rechler, chairman and CEO of Uniondale-based RXR Realty, laid out a time frame to secure legislative approval, state funding and community backing for development of the Nassau Hub.

This is a project requiring approval by the Republican-dominated Nassau County Legislature on an amended lease agreement, involving revenue sharing. The project has the backing of County Executive Laura Curran, a Democrat. Approval from the Town of Hempstead is also needed.

The article notes that the plan relies on state funding "for three critical elements," including:

• $85 million once pledged for parking garages (but which could be reallocated)
• $50 million for a Center for Bioelectronic Medicine, of which $30 million will be instead used by Northwell Health to upgrade existing facilities, leaving $20 million "to lure an anchor life sciences firm"
• $20 million for three pedestrian bridges leading to adjacent RXR Plaza, Hofstra University and Nassau Community College
• plus a possible $10 million to $20 million for bus rapid transit connecting to two Long Island Rail Road stations

Newsday editorial writer Randi Marshall reported that "total funds could reach $145 million... $85 million for parking, $20 million to lure a life sciences company, and an additional $40 million for bus rapid-transit and for as many as three pedestrian bridges."

Helping the Coliseum

These would not only help with the real-estate project, but also could significantly help the Coliseum, which is operated by BSE Global, which is making its first foray beyond venue development and operations into more general real estate. From a 9/4/18 Newsday article:

BSE and RXR officials said they will include in the venture another company with expertise in attracting and operating retail and entertainment destinations.
"Ultimately, the vision of what's going to be built there is going to incorporate the Coliseum. The Coliseum is the integral part of what gives energy to the project," said RXR chief executive Scott Rechler. "The success of the Coliseum site is key to the vibrancy of the area and frankly all of Nassau County."

Note that Gov. Cuomo, via Empire State Development, not only pushed the Islanders to return part-time to the Coliseum during the three years (estimated) in which the Belmont arena is under construction, but offered $6 million in state funds to upgrade the older venue.

Giving up the past

The article states:

A 2013 lease agreement signed by former County Executive Edward Mangano and the project's former developer, Bruce Ratner, would have paid the county a minimum of 8 percent of the gross revenue from the entertainment facilities surrounding the Coliseum, or $400,000 per year — whichever is greater. Rechler said that agreement did not contemplate a more thorough development of the Hub and that new terms will be negotiated.
"This will create significant amount of tax dollars and have an economic development effect, not just for the site but the broader community," Rechler said.
The lease amendment will recognize BSE Global's right to support or reject development around the arena. BSE Global, formerly known as Brooklyn Sports & Entertainment, holds a 49-year lease to the property.

First, this is just a reminder that everything is negotiable. (As I wrote in Newsday in May 2015, Nassau must be wary about plans for Coliseum, "Ratner revised the Brooklyn deal several times. Expect more in Nassau.")

Also, when the article notes that county lawmakers "must approve the amended lease," it leaves
things a little fuzzy. Previously, Newsday's Marshall wrote 8/23/18:

BSE’s parent, Onexim Sports & Entertainment, controls 85 percent of Nassau Events Center, which holds the Coliseum lease. A clause in that lease says the county has to “reasonably cooperate” with Nassau Events Center on any development.

The more recent article notes that Nassau County received 17 proposals in response to a Request for Expressions of Interest, including one from BSE and RXR, but former Ratner partner Blumenfeld Development Group--which previously had pursued a lease--called this a "a thinly constructed veil to provide favored party status to a specific developer."

Looking back at coverage, from Long Island Business News and Newsday

In a 5/17/18 article, County to seek other ideas for Coliseum property, LIBN reported that County Executive Curran notified Blumenfeld that it was ending a lease for 11 acres of Coliseum property, which was a proposal Blumenfeld could present as part of an out-of-court settlement with Forest City.

Then BSE Global ended a potential potential joint venture with Blumenfeld for the larger project. On 8/10/18, in LIBN's BDG jumps back into Coliseum development sweepstakes, Blumenfeld said it would update its plan for the overall 61 acres. The article noted that the "original July 20 deadline for responses was later extended to August 3 and has now been pushed ahead to August 17." Any developer chosen by the county would have to work with BSE.

One 8/28/18, LIBN reported RXR partners with BSE on Coliseum redevelopment, calling the new joint venture partner the favorite. A letter from BSE "asserts that BSE’s Coliseum lease with the county allows it to 'submit a collectively developed master plan' for redeveloping the site, which would supersede the current RFEI process and preempt any additional request-for-proposals competition."

A Nassau County spokesman would not comment on the pre-emption issue. The article noted that  the RXR team includes former Forest City Ratner executives Joanne Minieri and Rebecca D'Eloia, both of whom were previously involved in the Coliseum project.

In a 9/5/18 article, Newsday reported that legislative leaders from both parties "reacted cautiously" to the proposal. But in a 9/8/18 article, Newsday reported on Blumenfeld's criticism:

“What is deeply troubling, and should be to every lawmaker and taxpayer, is that this decision was made with no transparency, no genuine review, and through a process that defies rational explanation by an administration that has quickly abandoned the principles upon which it ran for office," said Ed Blumenfeld, founder of BDG, which is based in Syosset. 

“While the lawyers and the courts may very well have to determine whether this unprecedented unilateral transfer of development rights to a major donor of the current administration without employing a fair open competitive process is somehow lawful, it is now apparent to even the most casual observer that at the very minimum it is utterly devoid of ethics, fairness and integrity," Blumenfeld said.

So, "somehow lawful" but not ethical? Then again, Nassau officials say Blumenfeld previously signed an agreement promising not to sue. And Newsday noted that, while Rechler is a major campaign donor, Blumenfeld is no slouch either.

In an editorial 9/16/18, Newsday called it A promising plan for the Hub, suggesting the project would provide housing, jobs, retail, and more and, "by involving BSE, it only requires amending the existing lease, rather than starting from scratch."

That day, Newsday reported Stars aligning for Nassau Hub development?, citing both optimism and skepticism, given that critics noted the relatively small amount of housing (500 units), no anchor tenant for the arena, and no direct link yet to public transportation. Town of Hempstead Councilman Bruce Blakeman also noted competition from the new Belmont arena: "I don’t believe there are enough entertainment dollars to support two arenas so close together."

Writing 9/19/18, Newsday columnist Joye Brown detailed the history of abortive projects and added some skepticism:

All of which brings us to the present, when what’s left of Mitchel Field, with its proposed “experiential retail,” could find itself in competition with a slew of destinations that have sprouted up across Long Island over the past few years.

Lease changes

Newsday reported 10/1/18 that County Executive Curran "has proposed a development plan agreement and revisions to the Coliseum lease" to the legislature. Not only would the lease give RXR and BSE exclusive rights to the site, it also would axe "the requirement that the Brooklyn Nets play an NBA preseason game at the Coliseum."

Also, BSE's parent would get full control of the lease, taking the 15 percent share that Forest City Ratner/Forest City New York apparently retained. (Would they even want it?)

The least also would require "that developers propose an agreement to provide benefits for surrounding neighborhoods," which sounds like a Community Benefits Agreement, but--as always--the devil's in the details.

On 10/1/18, LIBN reported County moves to advance Coliseum plan, saying the county legislature would have to approve amendments proposed by Curran to change the lease agreement with BSE to clarify the size of the redevelopment site and to include $85 million in state funds for parking.

A 10/16/18 LIBN article, RXR, BSE present preliminary plans for Coliseum site, cited the new proposal by the team:

In an emailed statement, BDG principal Ed Blumenfeld called the selection of RXR “a thinly constructed veil to provide favored-party status” to a specific developer.
...One of the reasons that Yormark said BSE chose to partner with RXR was because of its existing ownership of properties nearby.

In the Post

Then came the 10/20/18 New York Post article, headlined ‘Pure pay-to-play’ after Cuomo donor lands $1B Coliseum contract. Beyond the publicly stated Blumenfeld quotes, it started with a blind quote:

One of Gov. Cuomo’s biggest donors has landed a $1 billion-plus contract to develop the land surrounding Nassau Coliseum — infuriating other bidders whose proposals were solicited, then discarded, by government officials.
“It’s pure pay-to-play,” said one of the developers frozen out of the mega deal who told The Post he wants a federal investigation.
The developer, along with 16 others, submitted proposals this summer at the behest of Nassau County, which was looking to finally transform the sprawling property around the newly renovated stadium, which is now mostly a parking lot.

But the county didn’t follow through with the proposals, but rather went with RXR and BSE.

Republican Richard Nicolello, who's presiding officer of the County Legislature said "it could have been done differently," called it "secretive," and agreed--but didn't assert--that Cuomo might have steered it. That's not definitive. Note also the Cuomo disavowel.

The Post noted that not only did the county twice extend the deadline to reply, a spokesman wouldn't say who requested the extension. And only 14 days after the RXR-BSE plan was announced, the county was in favor of it.

The question, then, is whether the lease requires the county to work with BSE's choice:

But the respondents aren’t buying that explanation — because if true, why would the county have bothered asking for proposals at all?
“I’m bitter that the county made us waste our time and our resources on a process they claimed they controlled and then claimed they didn’t control,” one told The Post.

So that turns on how exactly the county claimed it controlled the process, and whether an obligation for the county and BSE to “reasonably cooperate with one another” requires the county to agree to BSE's choice. The county's explanation?

When asked why the county asked for “expressions of interest” only to allow the tenant to choose the developer, a spokesman said, “It is well-known that BSE Global had a contractual right to propose development at the site, and had not yet done so. The County wanted to expedite the development process and spur new interest in development.”

Maybe there's more to that. Because pushing other developers to spend considerable energies making proposals that ultimately would be ignored is not a great way to do business. Stay tuned.