Monday, August 1, 2011

Not With a Bang, But a Whimper....

Tonight, we can officially project that the new arena referendum has failed, raising serious questions about the future of the New York Islanders hockey team and, more importantly, Nassau County as a whole.  Overwhelming support from hockey fans and trade unions ran into a buzzsaw of misinformation and anti-tax fervor that was simply too much to overcome.

In hindsight, this was quite possibly doomed from the start given the bungling by Ed Mangano's office, assisted by a rocky roll-out and the lack of high-level support on the Islanders side.  The passion on the fan and activist side has helped, but it just wasn't enough, despite pathetic turnout figures.

The sad fact is that Ed Mangano may just not be an effective enough leader for Nassau County, as he bungled this from the beginning.  It still amazes me that Mangano thought he could get this referendum through without providing any studies and details to the electorate beforehand.  The numbers and studies helped back up the Yes side with facts, but their timing never let Ed shake the perception that he rushed this referendum, was unprepared, and the numbers were similarly rushed.  A united front from the beginning would have done wonders to clamp down on the misinformation, and a shocking unwillingness to throw the opposition a bone on a reasonable proposal such as a lockbox for revenue from the Coliseum site assisted in the negative perception.

In addition, the Islanders utilized an army of committed and valiant employees who deserve every credit in the world....but Charles Wang needed to make his last stand with the best troops available, such as a first-class PR firm and someone experienced in working the street-fight of a political campaign, especially a single-issue referendum election.  Pushing the non-Islanders angle and tugging the heartstrings from the beginning could have helped.

The fact is very simple: getting this referendum date on August 1 was a boon for the Yes side, and those in charge of seeing the vision through have blown what could and perhaps should have been a landslide.

One thing is for sure, before anything else: the failure of this referendum is not our failure, it is that of the powers that be, who simply allowed themselves to get out-maneuvered by anti-tax/anti-spending zealots, a disgustingly opportunistic Democratic Party chairman, and a morally bankrupt developer lobbyist who somehow managed to get himself presented as a dispassionate and concerned citizen.  In hindsight, for the reasons Joe Conte outlined on Saturday, we might have never had a chance.

What does this mean for the Islanders and their future in Nassau County?  The picture is clouded.

What does this mean for Nassau Coliseum?  It will continue to be a shameful reminder of the complete and utter failure of anyone on Long Island to get anything done.

What does this mean for Nassau County?  The NIMBYs win again, and Long Island sinks a little further into the ocean, but they're all on their decks preening about what a beautiful place it is.

What will become of me?  Well....that's an interesting question.  This has been a fight lasting 7 years, since I first wrote a paper analyzing the Lighthouse Project for a class while a student at Boston University, and we now find ourselves back at square one.  The fight continues, but my business and personal obligations will force me to be more of a background player than a man in the center.

Ultimately, the realities of being an urban entrepreneur in a suburban home have finally caught up to me, and I need to move.  I will begin my apartment hunt next week, and I will be a full-time resident of Manhattan before the puck drops on a new season of Islanders hockey, which at this point may just be a countdown to execution.  I will contribute what I can, but my time as a dedicated hockey/politics/land use blogger is no more.

I am grateful for everyone I have met on this journey, many of whom I am proud to call my friends, and it is because of you that I have never for a second regretted starting this blog.

I hope this experience has taught you many valuable lessons, but I hope that this has not caused you to believe that political activism and deep participation in the democratic process are fool's errands.  Maybe, like Icarus, we flew too high to the sun and plunged into the sea....but we were brought here by a common purpose: the sincere desire to make our home a better place.

As Teddy Roosevelt, the only Long Islander to serve as President of the United States, so eloquently stated:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. 
Today, we know defeat, but the fight continues for all of us, no matter how we have chosen to fight it.  We have all stepped into the arena, and that is something to be commended.

Weep with me for the future of Long Island tonight, but never lose the optimism and sense of wonder that leads all of us to reach for something bigger than ourselves.

Until we blog again....farewell.

Some Historical Perspective on Sports Facility Referenda (and Plan Z??)

In the last hours before the polls open, I thought would try to bring some historical perspective to bear on sports facility referenda in the America and perhaps speculate as to a way forward if things don't go well tomorrow.

First, a personal note. Islanders fans are mostly immune to the abuse our team receives in the media. However, I have found the lead up to the referendum particularly harrowing. It’s one thing to bear derision and dismissal – usually based on ignorance – of the team we root for when it is in the context of day-to-day sports coverage. It’s quite another when that derision and dismissal is used as part of an argument as to why our team doesn’t deserve an arena and may be better off moving out of town. Yes, I realize that the business side of sports can’t be ignored, but fandom should not have to include constant uncertainty about whether your team will continue to exist or play within driving distance. That’s asking too much. And what’s particularly galling is local sports journalists like George Vecsey and Larry Brooks being perfectly blasé about an event that will rip the hearts out of thousands of their readers. George and Larry, keep in mind that were it not for the passion of us fans regarding grown men and women engaged in sport, you would be out of a job. Don’t worry – Islander fans have very long memories and we are taking names.

Fans have been subjected to this process for years. Referenda regarding sports facilities are quite common – there have been close to 50 of them over the past 25 years or so – and there has been a surprising amount of scholarship regarding what influences the outcome. Here are some of the key conclusions of the research, nicely summarized in this article:

  • Passage rate: While the overwhelming majority of the public are opposed in principle to the notion of subsidizing arenas and stadiums, the research has shown that they are approved close to 60% of the time.
  • Turnout: Turnout for sports facility referenda are very high -- over 40% -- even when presidential and congressional elections are excluded (it is unclear how turnout is for referenda that do not take place on Election Day).
  • Factors impacting passage: The most important factor influencing the success of sports facility referenda is the existence (or absence) of opposition to the referenda by elected officials. Other important factors include the existence or absence of support by elected officials and the percentage of the public subsidy for the project. Factors such as campaign spending and support or opposition by civic or business groups have minimal impact.
  • If at first don’t succeed… On several occasions, referenda that were rejected were subsequently re-proposed and were successful.

Turning to tomorrow’s referendum, it appears that, whatever the result, the most significant development in the referendum campaign was the decision by the Nassau County Democrats to actively oppose it. Early on it was unclear whether they would oppose and if so whether they would be vocal about it. But over the past couple of weeks, Nassau County Democratic Chairman Jay Jacobs has become the face of the opposition and the party has run ads and organized phone banks opposed to the referendum. While Jacobs is not an elected official and is largely unknown to Nassau voters, his criticisms have been echoed to various extents by Democratic legislators. Accordingly, Democratic opposition should significantly lower the chances of the referendum passing. On the other side of the margin, County Executive Ed Mangano’s vigorous advocacy of the referendum is sure to help the “Yes” side. Say what you will about Mangano, he is fairly popular and well liked. However, there are very few elected officials aside from Mangano who have advocated on behalf of the referendum (e.g., where has Kate Murray been?). Finally, the fact that the public subsidy amounts to only around 40% of the total cost of the project – assuming Wang’s minimum required payments under the lease only – should also suggest a strong chance that the referenda passes (in contrast, the average size of the public subsidy in sports referenda is 70%) . However, it does not seem that Mangano effectively communicated this fact to the public as much of the press coverage suggests that the county is bearing all of the costs.

What does this mean if No wins tomorrow? The history of sports facility referenda shows that rejection should not be the death knell of a proposed project. And forgive me in advance for indulging in sheer speculation, but if the parties are willing, why can’t the proposed arena plan be revised and a second referendum be proposed to the voters later this year?

If this is feasible, the research provides a couple of takeaways for Plan B (or C…):

  • Lay groundwork for more support and less opposition from elected officials. Obviously easier said than done, but did Mangano make efforts to secure support from other elected officials with respect to current referendum?
  • Restructure the deal to improve the “optics.” The reason why many do not see the proposed plan as involving only a 40% subsidy is that the county is funding the construction in the first instance. Is there a way to structure the deal so that the economics are identical (60% Wang/40% County) but that Wang finances his share up front so that the County would be borrowing less?

Let’s hope that it doesn’t come to this. But I am having trouble coming to grips with the notion that a bad result tomorrow means the end of the New York Islanders on Long Island.

Sunday, July 31, 2011

Tomorrow is the Big Day

It's been a long journey - 7 years for some of us, at least 2 years for others.

I could give a big rah-rah about how the future of Nassau County is truly at stake tomorrow, and how we need to step up....

But honestly, you already know that, and there's nothing more I can say.

If you want the moving rah-rah, please check out the formal endorsement from last Sunday, where I lay out all the reasons I'm voting yes and why I hope Nassau County agrees tomorrow.

Other than that, you all know what you need to do.

Talk to your neighbors.

Get the facts out there.

And just get out there and vote.

It's overtime, Game 7....nothing else to do, as Jake Taylor so famously said in "Major League," but "win the whole fuckin' thing!"

Let's leave it all on the ice tomorrow and fight for what we believe in....If we can't stand up for our team, community, and future, then we deserve none of those things.

This has been a fun and interesting ride, and thank you from the bottom of my heart for allowing me to take it with you.  I hope every community is so fortunate to have engaged and active citizens who want to peacefully advocate their cause.

I'll see some of you at the rally tomorrow, and in order to not "tempt the wrath from high atop the thing," I will have 2 posts in the can tomorrow depending on outcome.

Dave might have something later about the historical performance of sports referenda, but for now, I'm out.

You know what you need to do - now go do it.


Saturday, July 30, 2011

Why I Believe the Referendum Could Fail, by Joe Conte

Blogger's Note, by Nick: When Joe approached me with this post, I was skeptical, but on the whole I think we all need to hear what he is saying.  This is not a slam dunk on Monday, and these are the most likely reasons if it were to fail.  

This post is not meant to be an abandon ship, but an exhortation to not take anything for granted and spend these last 2 days motivating anyone we can find to come out and vote.  We can stop this, but it's a much taller order than some people may realize.

Also, the standard disclaimer: The views expressed in this post are Joe's, and do not necessarily reflect the beliefs of myself or Dave (for example, I have a friend in the Nassau DA's office, who is a member of the CSEA and says the vast majority of his office plans to vote yes).  However, Joe's perspective and realism are important so we don't get complacent and understand the true nature of what we've involved ourselves with.

Without further ado, here's Joe:

I wish it didn't come to this, and I hope I'm proven spectacularly wrong on Monday, but if I read my tea leaves right, I feel obligated to write this post.  The reasons I lay out below are varied and complex, as any political issue often is.  If this does go down, you can't point the finger at just one person.  Mistakes have been made across the board by everyone with a vested interest in seeing this referendum passed.  Now onto those reasons why.

1.  Mangano is not an effective leader.

His defense of this bond has been mediocre at best.  He's not articulate (I know we joke about the areener thing, but his inability to even pronounce the word is symbolic of his handling of the whole situation).  His decision to alienate NIFA by not going to them first created another veto point and more elite level opposition (and I prescribe to theory of elite level of policy making). His resistance to creating a lockbox for the bond revenue is a huge liability with the Democrats.  It further stoked their level of skepticism and allowed them to question his true motivation behind issuing the bond.  They see it as an attempt to hold the line on property taxes for the 2013 election.  And really, who's to say they are wrong?  Lumping the bond revenue into the general fund does a tremendous disservice to our cause.

2.  The Islanders do not know how to run a political campaign.

And really, who's expecting them to; they are a hockey organization not a political outfit. But if they were smart, they would have hired outside counsel that they unfortunately did not do.  This left the campaign in the hands of the ignorant or even worse, the incompetent.  Case in point: I'm in their database, so every year I am called to see if I want season tickets, yet I have not received one phone call encouraging me to vote on Monday.  The key to winning elections is indentifying your base and getting them out to the polls.  The Islanders have failed in both regards. Their advertisements are also boring and I believe, ineffective.  They are handing literature out a train stations, which is not an effective strategy.  When you can't identify your opposition, you don't run a blanket campaign because that could lead to No voters remembering to vote Monday.  Precision is key in an election like this.  They also have no "get out the vote" campaign or if they do it's obviously poor because I haven't heard about it.

3.  The fiscal conservatives/tea parties/Republican base have abandoned Mangano.

Or more accurately, they feel he betrayed them after they got him elected to office.  Mangano rode the populist conservative wave to the executive office two years ago, and; by proposing this bond he has forsaken their fiscally conservative principals.  That is why Jay Jacobs is running around as if this was the worst deal since we signed DP for 15 years, he's playing to this base for votes come November.  Plain and simple Jacobs is making a political play.  He's not ideologically opposed to this bond, he's a self interested political leader who sees his time as chairman slipping away if he does not win back the legislature this November.  The conservatives will be out to vote No on Monday.

4.  The August 1st election date/referendum rush job.

These two issues created a cloud of doubt in people's minds.  At town hall meetings citizens wanted details, which of course were not available.  This led them to question why we were moving forward with this so fast.  And this is not an unreasonable reaction from an overtaxed, underemployed electorate.  Not to mention the political calculation of the August 1st date was so overtly obvious.  People tend to expect politicians will act in their own best interests, but they don't want their noses rubbed in it.  They could have easily mitigated this by holding the election on primary day when turnout is extremely low to begin with.  The plan then would not have looked so devious and they still could have controlled turnout.

5.  The union movement is not that strong.

The times of the powerful private sector union movement are over.  Counting on the trade unions to deliver the votes is a risky strategy.  If, and only if, every union member their immediately family vote will they have enough of an impact to swing this vote to the yes.

6.  The town of Hempstead Republican machine is not fully behind this.

I had assumed this for a while now as these are the same people who make up the fiscal conservative movement in the county.  Not to mention, Mangano is not their guy.  It was supposed to be Kate's turn to run but she did not want to lose to Suozzi so Mangano became the placeholder.  But Suozzi took re-election for granted and we all know what happened next.  The TOH machine has no allegiance to Mangano.  And this weekend I heard the proof I needed to confirm my suspicions. First, TOH workers are only half-heartedly being told to vote yes.  Then, I heard that a die-hard TOH Republican employee I know is against the bond.  Once again, not a good sign, as success is contingent on Kate getting behind this and putting the machine to work.  Now neither is happening.  And remember, if the workers are forced to vote but they are not supportive, that's more detrimental then them not voting at all.

7.  The public sector employee unions will vote against the referendum.

With CSEA facing massive layoffs this year, the last thing they want to see is government borrowing and spending for something other then jobs for their union members.  It is in their self-interest to see this go down, elect the Democrats to head the legislature this fall and then lobby them to restore their job cuts.  This is probably the most rational reason people will vote against the project, and I can't say I blame them.

After saying all that, I am not without hope.  There is still an election to be had, votes to be counted and time for Islander fans to come through.  That's the biggest wild card in all of this.  Will the "greatest fans in the world" show they are and turn up when it matters most?  I hope I didn't ruin anyone's weekend with this post, but only if we are honest with ourselves can we know the enormity of the task at hand at Monday.  So make sure you tell everyone friend, relative, acquaintance, random person you run into on the street and think would vote Yes to vote on Monday.  As long as the polls are still open, we have a chance.

And finally, what to watch for Monday night: the returns in Hempstead.  If the yes vote gets over 40% in Hempstead I think the bond will pass.  If not, let's start praying there actually is a plan B.


Jacobs to Nassau: Drop Dead

Hi everyone, let's leave the robots aside and move on to more important things.

Contest is Off

Our Rock the Referendum contest needs to be cancelled because of some persistent complaints that it violates New York State election law.  I maintain it doesn't, but rather than risk very serious repercussions (or a BS lawsuit, perhaps), we've decided to shut it down.  I am at least as upset, if not more, than anyone else, but this should not distract from our very real need to get people out there to the polls.

We're in the home stretch, and the persistent smear-mongering and misinformation campaign led by the 2 Stooges, Jay Jacobs and Desmond Ryan, has helped put us in a precarious spot.  Please remember, every vote counts.

Radio Appearance

I was a guest with Chris Muldoon on 90.3 FM Thursday evening, and you can listen here if you didn't have a chance to that night.  We talk for almost an hour about many issues related to the referendum.  Really enjoyed it and Chris, and I hope you enjoy our chat.

Fun With Facebook

Today's episode of Fun With Facebook: "Shockingly Out Of Touch," with 2 very special guest stars....

I RSVP'ed to Ed Mangano's Facebook invitation to Vote Yes on Monday, and I saw something that legitimately shocked me....a message to "VOTE NO1" - from none other than Town of Hempstead Councilwoman Dorothy Goosby.

That's right, the woman who stood idly by while Kate Murray hemmed, hawed, and stalled for 6 years before murdering the Lighthouse, who is as responsible as anyone that we're now in the position of this referendum, now wants you to vote no.  How about we tell her how we feel?

Then, just when I thought it couldn't get any more shocking, it did.  The Association for a Better Long Island, better described as the Association for a Better Association for a Better Long Island, truly shocked me.  This organization has been the biggest source of vitriol and misinformation not named Jay Jacobs in this campaign, and their comment is truly a sight to behold.

That's right, the group already whining to NIFA and anyone else who will listen now accuses the Yes side of planning to intimidate voters on Monday.  It would be funny if it wasn't so sad and shocking.

I'd say hold these people accountable, and we should, but the best way to do that is at the ballot box.

Jay Jacobs Continues to Dig the Hole

Jay Jacobs, he of the embarrassing performance on Mike Francesa, sent out another letter on Thursday night to registered Democrats in Nassau County.  Here is a link to the unedited letter that B.D. Gallof was helpful enough to post on TweetDeck, and I've decided to perform a line by line rebuttal.

We now join the Nassau County and New York State Democratic Party chairman, already in progress....

By Jay JacobsNassau County Democratic Chairman

Wow, are we living in Backwards Land?  Vote No and the thing we want to happen happens?

We all want a new Coliseum. We all want to keep the Islanders. We all want to see more jobs and ensure that Nassau County grows and prospers. Charles Wang’s latest Coliseum plan – shifting the cost, debt and guarantees to Nassau taxpayers is just, in simple terms, a bad deal. 
There have been a host of studies, statistics and numbers thrown about, revised and then re-revised. The bottom line is simple: If the deal is as good as Charles Wang and County Executive Ed Mangano are telling us in their sales pitch, then why isn’t Charles Wang borrowing the money himself?
I see what Mr. Jacobs did here - he's deliberately trying to perform some misdirection because the "host of studies, statistics, and numbers," including Martin Cantor's report, which analyzed 3 scenarios and claimed the County would make money even under the most conservative scenario, don't say what Mr. Jacobs wants to hear.  In fact, Mr. Cantor's report says that every dollar spent on the areener project will generate $1.46 in economic activity for Nassau County!  

Which one, then?  Is it the Camoin Associates report?  The Comptroller's Report? The non-partisan OLBR? Oh wait, they all say it's a good deal (albeit with some suggested changes that I support)

Therefore, Mr. Jacobs has now decided to turn this around on former ally Charles Wang (only when the Democrats were in power) and ask why he doesn't build a building he doesn't own with no collateral by himself.  Nice sleight of hand...Nassau County owns this building, and he is now asking for the tenant to bail out the landlord's decades of mismanagement and political gridlock that have led us to this place.  

But oh wait, Jacobs doubles down.....

And that’s the simple answer to the whole problem. Nassau County should sell the Coliseum property to Charles Wang. The County should retain the remainder of the 77-acre site for future development. Until the development is finalized and approved, the Coliseum would have use of the land for parking. A part of any development deal would require the expenditure of $135 million to build the 6800 space multi-story parking lot, freeing up the remaining land. 
With Wang as the owner of the site, he is then free to build the Coliseum he wants. He would own the asset and could sell it if he chooses – with or without the team. So, how would he pay for it? The way everyone else who buys a home or a business does. He would put down 25% of the total price and go to a bank for the rest – preferably Long Island-based banks.
Wow, what a sweetheart deal for Nassau County, especially the person who will get over $100 million to build a parking garage.  The arena that has been neglected for 40 years will be sold.  Therefore, Charles Wang has to pay for the cost of purchasing the building, the cost of demolishing the building, and the cost of a new building, all while Nassau County gets to keep the surrounding land to do whatever it sees fit.

This might actually sound reasonable on the surface, but again, Mr. Wang is a TENANT.  His solution to Nassau County abdicating its responsibilities as a landlord is a further abdication that puts the man who might benefit least from it in the position of paying for all of it.

(Remember, the revenue sharing deal says the County gets 11.5%, but, for all you New York Post and Daily News editorial writers, that's 11.5% of total revenue, regardless of the profit Wang does or does not make).

Assuming the construction costs of $350 million, the costs of borrowing and some payment to the County for the value of the land (as a requirement of the purchase the existing building would be demolished so it should have no value in the transaction), the total package would be $400 million. Wang would have to come up with $100 million in cash.

Mr. Jacobs can do math.  Bravo.

Without a billionaire’s money, Wang could fund it himself, put together an investment group or combine those ideas with the use of PSLs for ticket-holders similar to what the Jets and the Giants did to help construct their stadium. Now, PSLs are unpopular because no ticket holder wants to pay them. I’m a Giants season ticket holder and I didn’t like it either. I also recognize that the NHL is not the NFL. That doesn’t mean that you can’t have a PSL program. It means you can’t charge anywhere near what the Jets or the Giants charged for their season ticket holder seats.
As an example: where the low-end PSL for Giants seats was $5000, if the Islanders charged $5000 a seat for their BEST seats and just $1500 for their least desirable seats, they could bring in between $25 and $50 million for the 17,500 seats and 51 luxury boxes. The PSLs could be paid in installments over 3 years and PSL holders could be offered discounts on non-Islander events held at the new Coliseum. Paid over 3 years, with 41 games, an Islander ticket-holder would pay about $12 more per seat per game for just 3 years – and they would have the PSL asset to sell once they give up their seats – hopefully at a profit depending upon the team’s performance.

I can't believe I'm reading this.  I'm not even going to go into his factual inaccuracies about the pricing structure of these PSLs; I'll instead go right into how nonsensical these numbers are:

First, Mr. Jacobs is failing basic economics here.  He proposes something that will cost $12 more per game to pay part of construction as a viable alternative to $13.80 a year per household (at worst) to pay for the whole thing!  

PSLs are, as Mike Francesa put it, the biggest scourge on the landscape of 21st Century Sports.  Not only that, they only work in situations like football teams or the Toronto Maple Leafs, where there are waiting lists years-long to get season tickets.  In other words, this scam only works when demand exceeds supply.  Mr. Jacobs now assumes that the Islanders' current season ticket base of between 8-10,000 will magically rise up and purchase PSLs for all 17,500 planned seats in the new arena?

If you actually believe that, just remember this:  The Jets had trouble selling all their PSLs during the end-stages of construction at the New Meadowlands Stadium.....And those PSLs did NOT pay for construction, no matter how desperately Mr. Jacobs wants you to believe they did.

While Islander ticket-holders will howl about paying anything, my question to them is: if you won’t chip in to help pay for your seat at a new Coliseum, why should Nassau taxpayers who don’t even sit in the seat do so?

I'm a taxpayer in Nassau County who lives in a home that was taxed over $15,000 last season.  I buy tickets to Islanders games and would gladly pay what I needed for this arena if the $13.80 number (or even $58) comes true.  That isn't enough, Mr. Jacobs?  I'm "howling" that you want me to pay a disproportionate share for something all the people of Nassau County will own and all the people of Nassau County are free to enjoy equally?

I'm sure the governor's office would love to know that his state party chairman is accusing us of not wanting to do our part.

And my question to Charles Wang is: If your projections are on target and you are so confident of the revenue, why don’t you back the investment with your money and get private banks to lend you the rest?

Mr. Wang will not and does not own the building, yet Mr. Jacobs believes it's reasonable to ask him to pay the freight.  Under the revenue-sharing and lease deal, Mr. Wang is responsible for every dime of cost overrun over $350 million and will pay 61.5% of total costs as a worst-case scenario, and he's still the bad guy?

It's funny, as a quick aside....the Newsday endorsement from yesterday made a fascinating point.  Critics have called this a boondoggle that will soak Nassau taxpayers and at the same time called it a bonanza that will make Charles Wang hundreds of millions of dollars.  Since the deal is based on revenue sharing, it can't possibly be both.  But hey, why let facts get in the way of partisanship, ideology, and a good story?

Under this plan, the Nassau taxpayer is off the hook, we don’t get encumbered by another $400 million in debt AND we keep the remainder of the 77-acre site open and available for future development around a brand new Coliseum. There are “many ways to skin a cat.” Let’s find the right one and VOTE NO on this Referendum

Mr. Jacobs and his cronies in the Democratic Party ran and hid once Tom Suozzi lost the election to Ed Mangano.  They stood idly by while Kate Murray was allowed to murder the vision of the Lighthouse Project, they have offered NO alternative, but they now believe they have the moral high ground by screaming NO and proposing these ridiculous "solutions" that won't benefit anyone.

Mr. Jacobs, you and your party have had 2 years to propose something for the Coliseum.  You have not.

You had a viable private proposal that you allowed to die, and you are now claiming it was "too big."

You have no ideas, no vision, and nothing except partisanship.  Until you have something to add to the conversation, you deserve to be ignored.

Bottom Line

I'll be honest, I'm getting very nervous about the outcome on Monday, but all we can control is the turnout.  Let's get out there and vote, and spend the weekend educating our friends, neighbors, strangers, and enemies on why this is the right way forward for Nassau County.

This is our time.

2 days out.

Leave it on the ice and bring back a win!


Thursday, July 28, 2011

How to Argue with an Arena Skeptic - Updated

(Blogger's Note (From Nick): If you haven't, please enter Rock The Referendum and spend the weekend motivating people to come out and vote on Monday!)

In advance of the upcoming vote, I thought I would update and repackage my “How to Argue with an Arena Skeptic” three-part series because, would you believe, there still are some skeptics out there, my efforts notwithstanding. So here it goes.
1. The Referendum Will Not Result in a $58 Annual Tax on Residents.
Too often arena supporters accept the notion that the arena deal would mean an additional tax of $58 per household and instead argue why that's not a lot of money or that the consequences of the team leaving are worse. Aside from not being particularly effective, the assumption is simply not true. In fact, (as others have noted) the tax impact of the referendum will most likely be much, much less than $58.
The $58 number is based what the total estimated annual debt service of $26 million/year by the county would mean for the average taxpayer. However, this number assumes that the county will borrow and spend $400 million and not receive a penny in return. Sort of like assessing the cost of buying a house (or making any other investment) and focusing only on the fact that you're giving money to some guy and ignoring the fact that some guy is giving you something (namely, a house) in exchange. While the house may or may not be a worth what you're paying, to ignore the value of the house completely is absurd - but this is exactly what the $58/year number does.
So, what will the county receive in exchange for the $26 million/year in debt service?
  • Even if the Isles stink and the arena does poorly, Wang is obligated to pay the county $14 million annually once the building is built. Thus, the county's annual debt service obligation is actually $12 million annually, or approximately $24/year per household. The Office of Legislative Budget Review added another estimated $4.9 million in estimated tax revenue, to lower the burden to $6.7 million annually or $13.80 per household in Year 1 of the new arena.
  • Under the Wang lease, the $14 million payment is a minimum. If 11.5% of arena revenues exceed $14 million, Wang is obligated to pay the county that amount instead. Based on this arrangement, the county estimates that Wang's annual payment will actually be $18.9 million in the first year of the arena’s operations. As I explain here, this estimate is based on the Islanders having attendance levels and ticket prices at around the NHL average and playing no playoff games. Islander fans know that a team featuring Tavares, Okposo, Grabner, Strome, et al. in a new arena (deep breaths) might regularly sell out and advance into the playoffs, but that might not convince an arena skeptic (although you can certainly try!). In any case, $18.9 million in annual payments lowers the county's payment to approximately $7 million. This translates to approximately $14 per household in Year 1 of the new arena.
  • In addition to the revenues under the lease with Wang, the county will also receive tax revenues from both arena sales (tickets, food, parking, etc.) and economic activity generated by the arena (area restaurants, spending by team employees). This number is somewhat difficult to estimate and depends on various assumptions, but the county estimates $9.2 million in tax revenue, allowing the county to realize a $2.2 million profit, or a per household tax savings of $4.4 in Year 1 of the new arena.
  • The county and taxpayers’ burden are almost certain to get smaller each year the arena operates because while the debt service is fixed, revenues will grow due to inflation. This is the basis for Camoin’s conclusion that the arena deal will result in a net profit $27/year per household.
In sum, while the actual cost to taxpayers is unknown, once the arena and ballpark are complete, it will definitely be far less than $58 per year and should allow the county to turn a profit.
2. What Will the Islanders Leaving Town Cost Taxpayers?
One of the main argument arena supporters make is that a “No” vote means that the Islanders will leave the County and the Coliseum will be closed, which will result in a tax increase as a due to lost revenue associated with the Islanders and the Coliseum. Unfortunately, this is one area where supporters often engage in unrealistic bluster regarding the impact of a "No" note. Yes - a shuttered Coliseum would devastate the economy in the immediate area and the eyesore of a decaying Coliseum or an empty Hub would serve as a painful reminder regarding the county's decline. However, while it is difficult to precisely assess the "net" economic hit the county would take, it is unlikely to cause the homeowners' tax bills to increase more than $58/year, the number that the arena plan is said to cost the County.
But, as noted above, the $58/year "Coliseum tax" is a myth. Because the actual cost of the arena plan is far less -- and may even may result in a small decrease in taxes -- it's silly to use the $58/year number as a benchmark.
So what will a "No" vote cost the average homeowner? According to the county’s economic consultant, Camoin Associates, the county will lose at least $7.8 million per year in tax revenue, which translates to $16/year per household. As noted above, this number is difficult to calculate because it seeks to answer a hypothetical question – what would happen to all of the Islanders and Coliseum related economic activity were the team to leave? Would families go to a movie theater in the county? Or watch the Nets in Brooklyn? Or stay home and watch pay per view? Would Katy Perry find another venue in the county to perform in or decide to forgo the county on her next tour? The $7.8 million is based on economic modeling done by Camoin Associates to predict what would happen if the team left and the Coliseum closed, so by nature the number is open to question. However, thus far I haven’t seen any criticism of Camoin’s methodologies or alternative analysis that yields a different result.
While arena supporters might think that $17/year seems like a small amount, to the anti-tax crowd leading the charge against the arena plan, any tax increase is toxic.
The skeptics’ response is “well, what’s the big deal if the Coliseum closed and the team left? Who’s to say that the property won’t be redeveloped for other uses? Wouldn’t real estate developers be chomping at the bit to redevelop this property?” That may be the case, but isn’t that sheer speculation? We don’t know what sorts of plans potential developers might propose, how much revenue they might bring in and whether they will be able to get all of the necessary approvals (including any zoning variance from the Town of Hempstead). Why would reject a plan that is on the table with a willing tenant and permanently chase away the tenant all in the hope of a completely hypothetical Plan B? It’s interesting how arena opponents criticize Mangano’s projections as speculative yet seem to think development will magically materialize in the place of the Coliseum, forgetting the nightmare the Lighthouse Project process was.
But more importantly, what will take the place of the Coliseum? Another shopping mall? Another set of office buildings? The Islanders is a unique institution that creates economic activity within the county by drawing visitors from the region in a way that malls and office parks cannot.
And of course, to an Islanders fan, the cost of replacing the Islanders with a Target, Dave and Busters and an Olive Garden is way, way more than $16 per year. But if you are an arena skeptic, I assume that doesn’t count for much.
The number 1 argument of arena skeptics I find online is “Wang should pay for the arena himself.” Or more accurately “WANG SHOULD PAY FOR THE ARENA HIMSELF!!@!!”
We all know the sorry history here – Wang DID try to fund the arena himself as part of the Lighthouse Project but was stymied by the Town of Hempstead. And many arena plan supporters cite this to skeptics. But skeptics probably don’t care about the back story. We also know that arenas and stadiums rarely get built this days without substantial government help. But, again, that’s not going to convince a skeptic.
The strongest response is as follows: Wang is paying for somewhere between 60% and over 100% of arena costs himself under the lease with the county. Under the lease, Wang is obligated to pay a minimum of $14 million per year for 30 years, or a total of $420 million. The arena costs will initially be funded with $350 million of the $400 million bond issue. Total principal and interest on the $350 million is (using the numbers issued by the legislative budget office) $682.5 million. Thus, assuming Wang only pays the minimum payment under the lease, he will be funding 61.5% of the total cost of the arena ($420 million of $682.5 million). However, if 11.5% percent of arena revenues exceed $14 million, Wang is obligated to pay that amount instead. As discussed here, the county's economic expert, Camoin Associates, using fairly reasonable assumptions, estimates that the the 11.5% revenue share provision will kick in, requiring an $18.9 million payment during the first year of arena operation, to increase each year by 3% to reflect inflation. If these estimates are correct, Wang’s annual payments will total $770.4 million -- actually exceeding the cost of the arena to the county. In fact, even the revenue share amount is $17 million in Year 1, the arena will turn out to be fully funded by Wang. And this doesn’t even take into account Wang’s obligation to fund cost overruns – which would increase Wang’s contribution to the arena cost.
4. Don’t Be Stupid. Use Basic Math. Don’t Slavishly Follow Ideology or Political Leaders. And Robots?? Are You #@^#! Kidding Me?!?
Unfortunately, there may not be enough room on the Internets to respond to every inanity but forth by the Vote No crowd. A sampling will have to suffice:
· We want purty pictures! Seriously, the LI Press complained that there are no architectural renderings of the new arena. As if somehow the shape or coloring of the arena is relevant to what will be voted on on Monday. As if voters somehow have the constitutional right to pass on the how publicly financed building look. As if the Islanders should spend hundred of thousands of dollars to satisfy voters who need to “see” what they are voting on.
· Wang is running away with 88.5% of revenues! This has suddenly become a Vote No talking point – that the county only gets 11.5% of the revenues while Wang gets 88.5%, which translates to hundreds of millions according to the Camoin estimates. The problem is that Wang doesn’t actually get to keep 88.5% of revenues unless he doesn’t want to pay his players and other employees and any other expenses he has. Revenues does not equal profits.
· I don’t believe in publicly funded sports facilities. The word “believe” should be reserved for God, religion and perhaps the team you root for. Applying it to public policy leads to the kind of nightmare currently unfolding in Washington – blindly refusing to accept reality because of political ideology. While it is reasonable to generally be against publicly funded sports facilities, it shouldn’t relieve you of actually looking at the current situation the county is in, the details of the revenue sharing arrangement and what might happen if the Islanders leave.
· Ahhh!! ROBOTS!!! Yesterday, an elderly woman called News 12 to complain that the estimates of new jobs that an arena will bring were exaggerated because the new jobs will be automated. I don’t quite know how to answer that, but it gives me an idea as to who Garth should go after for that top 4 defenseman:

He is a very, very low cap hit.