Wednesday, March 11, 2009

Lighthouse Stimulus Follies

In today's Newsday, we saw two more shots fired in an increasingly loud war of words between the Lighthouse and Nassau County (on one side) and the Town of Hempstead (on the other side).

Lighthouse Seeks $700 Million in Stimulus

The first piece reveals that Charles Wang, Scott Rechler, and the Lighthouse Development Group have scheduled a meeting with Sen. Charles Schumer about President Obama's economic stimulus initiative. They plan to seek $700 million in federal stimulus money for infrastructure improvements throughout the site.

First of all, let's realize this $700 million figure is a gross over-estimation of what the Lighthouse is likely to receive. However, when you have a President and Congress that are motivated to make large federal investments in local infrastructure, it would be folly not to ask for every dime you could possibly get. Moody's Economy has already proven in a study (available here) that infrastructure spending has a multiplier effect in which every $1 spent generates $1.59 in economic activity. In addition, The Tax Foundation has figures (including these from Fiscal 2005) that show New York pays significantly more in taxes to the federal government than it receives back. To interpret the chart, every $1 New York gives in taxes to the United States government results in $0.80 of federal spending in New York State. It is about time to receive our fair share of money, and since this project is clearly beneficial to Long Island and as close to "shovel-ready" as you can get.

As I've said before, transportation is a crucial component to making the Lighthouse work. I supported the decision to divorce a transportation plan from the original Lighthouse plan because it would create the illusion that the Lighthouse could not happen without THAT option. However, transportation is key to fulfilling the promises of the Lighthouse. Tom Suozzi said it himself in that Newsday piece cited above:

"I think the long-term success of the Lighthouse project is going to require that people can get from the Mineola train station to the Nassau Coliseum without taking the car. We need to start showing we can do that today, and not wait the six or seven months necessary for a light rail project to be implemented." - Tom Suozzi

The County Executive could not be more correct about that. The Lighthouse has already committed to spending $55 million in transportation improvements for the site, and as I mentioned here, the easements for Light Rail were incorporated into the Lighthouse site.

It is fair to say the Lighthouse Project will be a catalyst, and a federal investment in the area would generate more economic activity and moe benefits for the federal government than a standard bridge project or a highway widening initiative. If the money is available, they would be irresponsible not to seek it.

Town of Hempstead Seeks Stimulus for...Coliseum Renovation?

The second piece details a plan put forward by Kate Murray and the Town of Hempstead regarding the Lighthouse site. The Hempstead Supervisor has called on Tom Suozzi and Nassau County to seek federal stimulus funds to begin Coliseum renovations this year. Murray and Councilwoman Dorothy Goosby (whose district includes the proposed Lighthouse development) said in a letter to Suozzi that it would put thousands of people to work and could begin far more quickly because a renovation is not subject to the same stringent environmental review under SEQR.

Putting people to work is a worthwhile goal, and I cannot criticize anybody for that. However, the article failed to address a few important issues. As sports economist Andrew Zimbalist (and I) pointed out, arenas do not stimulate the economy, they are usually recipients of taxpayer welfare. These buildings do not generate money for the people who finance the project, only the teams that play inside of them. Think about it - if stadiums and arenas made money, why isn't every facility in this country privately financed? In addition, many of the proposed benefits will not come unless the entire Lighthouse Project is approved.

First, Nassau County's taxpayers currently lose roughly $1.5 million a year on the Coliseum site. Even if stimulus funds were used to renovate Nassau Coliseum, the County would return to losing money on the site if the rest of the Lighthouse is not approved.

Second of all, federal stimulus money will not be available in the abundance it is now if we are talking about a renovation of an existing facility instead of a 150-acre, $3.75 billion (new figure released) project. A lesser-scale project will result in lesser-scale investment.

Third of all, let us never forget that Nassau County approved the entire Lighthouse Project in 2006. Decoupling the Coliseum would require further approvals that I don't think would be forthcoming, and the Town of Hempstead does not have any jurisdiction over that process. The Supervisor's offers have rung hollow for me because they are not her offers to make.

Finally, as we've said here before, simply renovating the Coliseum without an assurance on the rest of the project minimizes the benefits. The Town of Hempstead is attempting to propose a project that will put thousands of people to work right now. While that is admirable, having the Coliseum constructed reduces the urgency of the rest of the project. This means the affordable housing, convention center, sports complex, 5-star hotel, condos, et al. will not be constructed and will therefore not attract investment in and tax revenue for the Town of Hempstead. The project is slated to provide up to $70 million in yearly tax revenue while putting 60,000 people to work in construction and creating 20,000 permanent jobs. The Coliseum on its own does not provide these benefits.

As I have said time and again, Nassau County does not have any money to maintain, renovate, or replace Nassau Coliseum, and this is especially true now, when money should be used to help those in need. The Lighthouse Project exists in order to solve these very issues, using the Coliseum as a loss leader and transforming 150 acres of Central Nassau into a vibrant community that will hopefully be tied together by a new regional transportation model. Compromises made 40 years ago helped to create the problems the Lighthouse Project is attempting to solve, and another compromise will not make things right.

Tom Suozzi repeated his assertion that the Coliseum without the rest of the Lighthouse Project, which he and his legislature approved in 2006, is not feasible and does not provide the optimal benefit for Nassau County and its residents. To me, this seems like an attempt by the Hempstead Supervisor to play politics without addressing the very real issues the Lighthouse attempts to solve. This is about more than hockey and an arena, and it is very disappointing that the Supervisor seems to constantly reduce it to only hockey and an arena, with $3 billion of other things thrown in.

Assurance and the Election

The piece also includes something we are hearing more and more from the Lighthouse group and Charles Wang in particular: they need to have certainty on the project by the start of next hockey season (October 2009) or they will begin to seek other alternatives. According to sources I've contacted that are close to the negotiation, "certainty" means that the Town of Hempstead needs to approve the zoning variance by that date.

As I said during my interview on Hockey Night on Long Island this past Saturday, there are two schools of thought: politicians will want to show progress before election day, or politicians will not want to do anything until after election day. This is a clear warning shot across the bow, since both Tom Suozzi and Kate Murray are up for re-election this year. The Lighthouse is hoping their project can avoid being politicized, but with the two major principles up for re-election, and growing whispers Kate Murray may seek her party's nomination to run against Tom Suozzi for County Executive, I wonder if it would be possible to avoid politics intruding.

Bottom Line

How did we get to this place, where both sides seem to be talking at each other? Some people claim Charles Wang's growing impatience as a catalyst for the rhetoric, especially since we have now heard increasing chatter about the Lighthouse from Gary Bettman (NHL Commissioner) and leading lights in the mainstream hockey world. Other people, myself included, believe Kate Murray could defuse much of this anxiety by attending relevant Lighthouse meetings and making a public comment about the project benefits. Is the fact that Kate Murray has continually pushed the story about the Coliseum renovation as a stand-alone, despite repeated debunking of its financial viability, a sign of more needed negotiations, or is it a betrayal of her true thoughts on the project? How will the elections this year affect the project?

And, as I asked before, what is the media's role in this? In my opinion, recent pieces like these need to go deeper and provide readers with clarity. Judging from comments I've seen on different forums, it seems these back-and-forth pieces of rote reporting are only serving to plant seeds of doubt and a lack of clarity among the people.

This also, yet again, underscores the need for people to get informed on the project. Please make every effort to attend the March 26 information session with your friends and neighbors to learn more about the project and have your questions answered.

I still believe the Lighthouse, Long Island's very own stimulus plan, will go through. In many ways, it may have to - our hockey team, numerous political careers, and our Island itself hang in the balance.

I welcome your thoughts on these pieces in the comments section. As always, don't forget to sign the petition and pass it on. I welcome your feedback at


  1. Tom Suozzi said some great things in that article- it is great to see.

    As far as Murray goes, I am not seeing where federal stimulus money for NVMC would be in leiu of federal stimulus money for the entire project. Maybe Im missing it, but I do not see where there is a conflict there. Applying for monies to help with NVMC can (and should) be part of the entire lighthouse project process.

  2. She desperately wants two things at the same time: to stop the full development but look like she's in favor of progress. So she keeps making this stupid offer of "letting" the Coliseum overhaul go forward, even though a) she's the only person in position of power who still thinks that it works as a stand alone b) she thinks Wang is dumb enough to accept that even though it destroys leverage on future project and c) her "permission" isn't needed to redo the Coliseum. She's going to keep responding to those who say she hasn't said anything on it by repeating, again, that "I told Mr. Wang he could redo the Coliseum blah blah blah....." It is really just amazing her utter lack of true leadership. Is the Nassau County Republican party able to produce any particularly strong candidates today for much of anything? Is Kate Murray really the best they could do?

  3. the project could work as a stand alone project with tax payer support, i.e. pittsburgh, detroit,buffalo,.......... not economic hotbeds, the municipality makes more of a percentage of the tax revenues, that's how most stadiums are built, see Yankee Stadium.

  4. Anon - that's the whole point, the taxpayers do not have the money to support the project. Ms. Murray made an offer she had no authority to make because she knew it would be rejected.

  5. And anonymous people were very angry on how much tax payer money went into the stadium and this was before the economic down turn

  6. Exactly - the point of economic stimulus is to pay for things that would actually stimulate the economy. Aside from the approval process that would have to go forward with Nassau County (remember, we don't have construction renderings or architectural plans yet because THE FINAL SCOPE HAS NOT BEEN SETTLED), an arena is not a wise investment for the federal government. It would spend the money and lose it for all American taxpayers in lieu of Nassau taxpayers losing the money.

    This is an elected official politicizing an issue, plain and simple. She can make it look like she's not against jobs by proposing something she knows that Wang and Suozzi will reject outright.

  7. I added a post on CB's site earlier this afternoon that Fed Stim money should be sought for the infrastructure improvements required of the plan so as to fully liberate Nassau and TOH residents from any financial liability ... that is fair enough .. and Nassau can also use the money to pay to renovate "Their" building and give Wang a favorable lease deal .... while he uses his own money to develop the rest of the site .... all for the benefit of Long Islanders ... especially those close to the site.

    I also made other posts earlier on other threads ... it only makes sense for Long Island residents to recoup some of their tax money paid out in Federal taxes by having it return to LI in the form of stimulous funds for infrastructure improvments tied to the LHP that will also bring lots of jobs ... especially in getting light rail to the site.

  8. Hey, if they gave us money to renovate the Coliseum (tied to approval of the rest of the project), then that's great. I think, based on what I've seen, that the government is looking to stimulate the economy and recoup its investment, so we're much, much more likely to get money for infrastructure than we would be for an arena.

    I thought you made some excellent points, though.