The New York Islanders owners' plans for a new billion-dollar-plus arena complex alongside Belmont Park in Nassau County took a major lurch forward on Monday, as Governor Andrew Cuomo announced his intent to build the Long Island Rail Road station that local elected officials had been demanding as a condition of approving the project. But while the governor initially announced that private developers would cover almost the entire cost, the actual financing plan is far more convoluted: The state will front a large chunk of the $105 million construction bill, then get repaid without interest over 30 years—a mechanism that could end up leaving taxpayers on the hook for upwards of $40 million of the new station's cost.
The day's confusion began when Cuomo's visit to Long Island to make the announcement, previously reported by both Long Island Business News and Newsday, was replaced by a brief press release that promised a "transformational" project complete with a brand-new train station on the LIRR's Main Line a half mile from Belmont Park, plus upgrades to the existing part-time rail spur that leads directly to the racetrack. Of the $105 million cost of the upgrades, Islanders owners Jon Ledecky and Scott Malkin and their developer partners would cover $97 million—92 percent—of the cost.
However, Cuomo's statement was accompanied by an economic impact statement from the state-run Empire State Development corporation. And that document, it turned out, included a different set of numbers: "The total investment in the LIRR Improvements is anticipated to be $104 million, of which $30 million is to be funded by [New York Arena Partners, the Islanders-connected developer group] and $74 million is to be funded by the State of New York."
That would leave the lion's share of the costs of transit upgrades landing on taxpayers. So which is it?
The explanation, it turns out, is that both sets of numbers are true, in their own way. The state of New York would indeed front $74 million toward the new train station, according to ESD, but the developers would then repay $67 million of that figure in annual payments over 30 years. Since the Islanders developers won't pay interest, this effectively amounts to a loan that would end up costing taxpayers about $33 million in present value, on top of the $8 million that would be outright covered by a state grant.
By ESD's calculations, the state would still come out ahead, because it would also receive a $50 million lease payment from the developers that would be split between paying for the train station ($30 million) and other infrastructure ($20 million). But if the land lease is counted as a transit contribution, then it can't also be a payment for using the state's land — something that previous estimates indicated could already be anywhere from $74 million to $300 million less than the land is actually worth.
Meanwhile, several questions remain about the Islanders project, some of which could affect the public's price tag:
- If the LIRR station comes in over budget—something that's been known to happen with transit projects in New York—who pays the overruns?
- The ESD confirmed that the developer will pay to operate shuttle buses between the new train station and the arena. But how many people can the shuttles carry, anyway? This was a stated concern of many of the locals who filled three hours of public-mic time at Monday afternoon's ESD board meeting, despite the meeting only having been announced late Friday afternoon — 5:10 pm on Friday, according to arena opponents, 4:39 pm, according to ESD, during a holiday long weekend.
- Did the state do any research into whether it would be more cost-effective to run shuttle buses from an existing LIRR station—the Bellerose stop is just a quarter-mile to the east of the planned Elmont station, albeit abutting a residential neighborhood rather than a parking lot—instead of building a whole new one from scratch?
- How much of a discount are the developers being given on the cost of their lease on the arena land, exactly? After earlier questions about the land value, ESD indicated that it would conduct an appraisal before granting final approval to the project; ESD was not able to immediately provide any information on whether this is still forthcoming.
- How much will state tax breaks for the project be worth? Since the Islanders developers will be leasing public land, the arena project won't pay regular property taxes; instead, they'll pay "payments in lieu of taxes," much like the Hudson Yards developers are doing in Manhattan. And as with Hudson Yards, the Belmont Park arena will be paying less than a fully private project would: The arena itself will pay a fee of $10,000 per event (with a minimum of $1 million per year), while the accompanying hotel and retail space will receive get-out-of-taxes-free cards that last 20 and 15 years, respectively, before resuming normal tax payments.
In any event, the LIRR station announcement counts as a victory for the squeaky wheels such as state senators Leroy Comrie and Anna Kaplan, who successfully held out for a train station — otherwise the arena plan would be dead in the water — even as it also counts as a victory for Cuomo and the arena developers. (The New York Post notes that the governor has received at least $270,000 in campaign contributions from Malkin's family and partners Sterling Equities.) Unless Comrie does an about face and opposes the plan in his role on the Public Authorities Control Board, there's little now to stop the arena from becoming a reality. The Belmont Park Community Coalition is still considering an Article 78 appeal of the final environmental impact statement approved by ESD on Monday, but that can't proceed until ESD gives its final signoff to the project at the end of July.
The LIRR station news was greeted with cheers by Islanders fans—"the more trains, the better," longtime Islanders fan and Wantagh resident Annemarie Hadden Briskie told Gothamist on hearing the news—who had feared that the new arena would be tough to get to, especially from points farther out on Long Island. As for local residents in neighboring Elmont and Floral Park, plenty are still clearly terrified of traffic and development impacts from an arena: Floral Park Mayor Dominic Longobardi kicked off the public testimony on Monday by warning of "major security issues for our community, with an estimated annual additional cost of $2.3 million"; other speakers worried about everything from the arena depleting the local water supply to insufficiently high hedges to protect local children from the horrors of tailgating.
None of that is likely to matter now, though, unless local elected officials decide to shift the line in the sand they drew last winter at "give us a new train station and we're good." Comrie, who was earlier this year appointed to the Public Authorities Control Board whose three members each have veto power over state development deals, did not immediately respond to queries about whether Cuomo's announcement resolved all of his concerns.
As for Kaplan, whose district actually includes the proposed arena site, spokesperson Sean Collins told Gothamist that while additional issues may yet emerge, she is "absolutely thrilled" that the full-time train station has come to pass. "Largely that addresses the big issues," said Collins, "and she looks forward to this proceeding—with continued community input—to finally be built and opened."
ADDENDUM: ESD spokesperson Jack Sterne asked that Gothamist add the following statement: "Through this public-private partnership, the developer will repay New York State for 92% of the cost of a new LIRR station in Elmont that will provide 24/7 service to an area that has long-needed it, alleviating congestion and cutting commutes for thousands of New Yorkers. This ESD financing package provides a unique solution that applies private funding to create a permanent, public, MTA station, showing the creativity necessary to revitalize the system.”