Skip to main content

Featured Post

Atlantic Yards/Pacific Park graphic: what's built/what's coming + project FAQ (pinned post)

Gaslighting the Belmont story: the arena developers are said to pay for nearly all the railroad station's cost

Crain's New York Business published, on 8/20/19, an op-ed from Nassau County executive Laura Curran, headlined Belmont shows a big project can succeed in the suburbs. From the article:
The state expects one-third of arena attendees to use the LIRR, taking thousands of cars off our roads and greatly reducing congestion. Just as important, the station will be a true public-private partnership: The arena developers will provide $30 million upfront and pay the state another $67 million over time, for a total private contribution of $97 million of the $105 million total cost.
(Emphases added)

Similarly, from an 8/21/19 Newsday article headlined LIRR Elmont station to be served by Hempstead branch trains at all times
What is the cost of the station, and who is paying for it?
The station is estimated to cost $105 million. Private developer New York Arena Partners — a partnership of the owners of the Islanders, New York Mets and the arena development company, Oak View Group — will initially contribute $30 million and the state will cover the remaining $75 million. The developers will then pay back the state $67 million over time, officials said.
The latter is not inaccurate, but not fully informative, since it doesn't calculate the benefit to the developer of paying that $67 million slowly, over 30 years, rather than upfront. The total cost of $105 million is not close to being repaid.

More informative examples

Consider the Newsday coverage 7/13/19:
The developer, New York Arena Partners, gets to put a 19,000-seat arena, upscale retail shops, restaurants and a 250-room hotel on state-owned land — without paying any rent — and interest-free, 30-year state financing to pay for nearly all of a $105 million new Long Island Rail Road station in Elmont, near the new arena.
That's not quite true, either. If it's interest-free, then someone is paying the implied cost of financing.

What's the benefit? As I wrote in my 7/24/19 op-ed for Gotham Gazette:
Neil deMause, writing in Gothamist, estimated that the financing offered a $33 million public bonus to the developers. 
To me, it recalled the 2009 deal in which Forest City Ratner, which had bid $100 million for the right to build over the Metropolitan Transportation Authority’s Vanderbilt Yard in Brooklyn, negotiated relaxed terms: permission to put $20 million down (for the parcel necessary for the Barclays Center), then pay, over 21 years, the equivalent of $80 million in 2009 dollars: approximately $173 million, at an implied 6.5% interest rate.
In other words, the Belmont developers shouldn't be writing $67 million in cumulative checks, but rather much more, to approximate the present value of $67 million. Even at today's low interest rates, it's a lot more. (And that's not even considering the likelihood of cost overruns.)

You could imagine an alternate scenario, in which the planned project was less welcomed. Then the Nassau County executive and Long Island's dominant newspaper would have lots of ammunition to argue for transparency and honesty.