Hey everyone. Quick hit here - this was an email the Nassau County Democrats sent around called "The Coliseum Tax."
I will save analysis for now - expect that later.
Here's the email:
After a year and a half of woeful mismanagement by the Mangano administration, it comes as no surprise to discover that Ed and his fellow Republicans are lying to us again.
Mangano has told us over and over that borrowing $400 million to revamp Nassau Coliseum won't cost the taxpayers a dime -- and now, of course, the head of the nonpartisan Office of Legislative Budget Review has come forward to call him on his lies.
The coliseum bond would add at least $58 to our tax bills every year for the next 30 years. Mangano says this cost would be offset by sales tax revenue from the new stadium, but that's a risky assumption because, as Field of Schemes author Neil deMause explains,"1) you could just end up cannibalizing existing sales tax receipts and 2) there's always the danger that if the economy slumps, sales tax receipts will go down, and then you end up having to dip into the general fund to make the bond payments."
It's not safe to make policy decisions based on wishful thinking. Nassau County needs leaders with their feet on the ground.
Analysis: Coliseum loan would raise taxes
Robert Brodsky and Randi Marshall
June 14, 2011
Nassau County taxpayers could pay an estimated $58 per household in additional property taxes annually if voters approve an Aug. 1 bond referendum to construct a new hockey arena and minor-league baseball field, according to a legislative budget analysis.
County officials argue that a revenue-sharing agreement with the Islanders, set to be unveiled later this month, will not only offset the cost of the borrowing, but could ultimately result in lower property taxes for residents. But the borrowing would start before the arena is built and a revenue stream starts flowing. That leaves taxpayers ultimately on the hook, experts said.
Nassau County Executive Edward Mangano has said the funds generated from the new facilities "will produce revenue that exceeds the financing."
Legis. David Denenberg (D-Merrick) sees it differently. "It's a tax increase," he said. "This creates a separate tax line without any corresponding tax decreases."
Mangano has proposed borrowing up to $400 million to finance the construction of the hockey arena and ballpark. The debt would be amortized over 30 years, coinciding with a new 30-year lease signed by the Islanders.
Cost of the loan
Using taxable bonds, as county officials have proposed, the total cost of the borrowing could reach $878 million, according to Steve Antonio, who heads the independent Office of Legislative Budget Review.
Antonio calculates that interest payments alone, assuming an interest rate of 6.5 percent, would be nearly $478 million. The annual debt service would amount to $29.3 million, adding $58.39 to the average household property tax bill, Antonio found.
Those figures, however, do not include any offsets the county anticipates eventually receiving through the revenue-sharing deal with the Islanders and the minor-league baseball team. Mangano spokeswoman Katie Grilli-Robles said: "The revenue-sharing agreement will be unveiled later this month when contract negotiations are complete."
Even if the projected revenue comes in, Denenberg noted, it won't directly lower the $58 in new taxes. Instead, any revenue from the agreements with the Islanders and the ballpark operator would go into the county's general fund.
"It won't offset this tax specifically," Denenberg added.
Legis. Wayne Wink (D-Roslyn) added that since there wouldn't be any revenue "day one," for a while, it may be unclear whether the income will be sufficient to pay for the debt service. "There are so many unanswered questions," Wink said. "It just seems to me this could result in a backdoor tax increase."
Mangano did not respond immediately to a call for comment about Denenberg's and Wink's remarks.
Grilli-Robles said the revenue-sharing dollars will go into a special fund to pay off the debt service. Property-tax bills then would be adjusted annually based on the amount of revenue and taxes brought in from Coliseum events. If the revenue eventually exceeds the tax levy, the difference will be put into a tax stabilization fund to offset property taxes, she said.
Negotiating a better deal
Under the existing agreement, SMG, the Philadelphia-based firm that has managed the Coliseum since 1979, pays the county rent and a portion of the parking and concession proceeds, Antonio wrote in a May 19 memo. SMG deducts the cost of any maintenance it performs from the county payments.
The Islanders also pay the county a portion of concession revenue and Nassau receives $1.50 through an entertainment surcharge tax on each ticket sold, as well as sales tax on ticket and concession sales, the Office of Legislative Budget Review said.
The arrangement has brought Nassau an average annual profit of $1.4 million from 2007 to 2009, the memo said.
But Nassau officials expect a more advantageous arrangement with the new development, including a portion of all ticket sales, parking, concessions and naming rights, Grilli-Robles said.
Under the new agreement, the Islanders would manage the Coliseum -- the county is not negotiating with SMG -- and the team would collect revenue from other private operators who want to use the facility, such as concert promoters.
Even if voters approve the borrowing, the deal must be approved by the County Legislature and the Nassau Interim Finance Authority, a state monitoring board that controls the county's finances.