By Eden Laikin
Nassau County Executive Edward Mangano has chosen Bruce Ratner and his Nassau Events Center to renovate the Nassau Coliseum, and its surrounding property, into a sports-destination center that is expected to become a thriving economic engine for the County.
No taxpayer money will be used in the multi-million dollar, 100% privately financed development deal, Mangano said. But taxpayers will gain millions of dollars in generous revenue sharing beginning in the pre-construction phase and lasting for the duration of the 34-year lease.
In announcing the selected developer today, Mangano said the revenue would start generating, during the approval phase of the project as Nassau Events Center (NEC) assumes responsibility for the aged buildings significant maintenance and utility costs and starts to pay the County rent for the property.
Nassau County, meanwhile, maintains development rights on the rest of the unused property around the arena.
Ratner’s proposal also includes the Islanders hockey team playing 6 home games at the new facility.
“Today marks a historic public-private partnership in Nassau County history as I announce the construction of a 100% privately financed Coliseum that will share revenue with the County at zero expense to the taxpayer,” Mangano said. “The foundation of today’s success is credited to two industry giants, The Madison Square Garden Company (MSG) and Nassau Events Center, LLC an affiliate of Forest City Enterprises, Inc. who competed in a challenging process resulting in the submission of two excellent proposals.”
“Both had the financial and managerial capacity and expertise to successfully execute a meaningful development of the Coliseum and construction of the adjacent Plaza bringing new and exciting economic rejuvenation to the HUB,” he went on to say. ”In that regard … I truly wish we could engage both proposers.”
Mangano said he and the HUB re-development selection committee chose a proposer who provided the best opportunity for Nassau County residents; “one that will create jobs and opportunities, one that generates the greatest revenue for the County and completely relieves the County of costly capital expenditures.”
The NEC lease, signed today, will be sent to the Nassau County Legislature which is the next step in the approval process for re-development of the 43-year old Nassau Veterans Memorial Coliseum and Plaza. Mangano said he had earlier spoken to NIFA Chairman Ron Stack, who supported the idea of an expedited approval process.
NEC will invest a minimum of $229 Million in renovating the Coliseum and the Plaza. During the initial 34 year lease term, Nassau County will receive 8% of gross revenue, 12.75% of parking fees with a minimum guaranteed payment of $4 Million a year – escalating by 10% every five years, resulting in a minimum lease term payment of $195 Million to the County. With options exercised, the minimum lease payment grows to $334 Million. Similarly, the Plaza area, now concrete, will be transformed and will generate the greater of $400,000 a year in rent or 8% of the gross revenue. In addition, Nassau County maintains rights for future development on the site.
Mangano said that although the decision was not easy, there were points that the Committee emphasized when recommending NEC:
1. NEC has agreed to accept all costs and responsibility for operating, insuring, maintaining and providing utilities for the Coliseum beginning on August 1, 2015, which is when the current lease expires. This was viewed as providing a direct financial benefit to the County by eliminating millions of dollars in annual expenses for utilities, parking lot repairs and capital expenditures. Utilities alone cost Nassau over $2,000,000 last year. This will relieve the County from shouldering these expenses during the period when the developer will be seeking approvals, designing the various improvements, constructing and operating the Coliseum and Plaza area.
2. The NEC proposal includes the payment of rent during the preconstruction approvals period and the actual construction period, commencing on August 1, 2015. It is estimated that this will yield a positive cash flow to the County in the first two years of over $2,000,000 while shedding millions in expenses.
3. The minimum annual rent paid by NEC upon completion of construction for both the Coliseum and Plaza Improvements is $4,400,000, or $1,400,000 per year more than MSG’s proposal. In addition, the minimum rent under the NEC proposal escalates at the rate of 10% every five years, versus the MSG proposal of escalation of 5% every five years. Rent under the NEC proposal is calculated based on 8% gross revenues yielded by both the Coliseum and Plaza Improvements plus 12.75% of parking revenue. This was viewed as more beneficial to the County than the MSG proposal which is based solely on $1.50 per ticket sold. Under each proposal, there is a credit against minimum annual rent equal to the amount of the ticket tax paid to the County.
- According to the County’s financial adviser, Public Financial Management, Inc. (“PFM”), the total minimum rent payable over the initial 34 years of the lease is $112,109,840 for MSG, versus $194,522,894 for NEC. This was regarded by the Committee as providing a significant factor for selection of NEC over MSG.
“In conclusion, the Committee viewed NEC’s willingness to accept, at Islanders/SMG lease expiration, immediate financial and managerial responsibility for the Coliseum at its sole expense, to pay rent to the County before and during construction, and to pay a measurably higher annual minimum rent with higher escalations as primary characteristics that contributed to distinguishing NEC’s commitment and confidence from the proposal submitted by MSG,” Mangano said.
Tomorrow at 11:30am, Mangano will join with NEC to announce “exciting programming and further comment on this historic public-private partnership.”
Ratner’s proposal, Mangano said, would keep Nassau County’s economic engine (the HUB) going without disruption.
And he urged everyone to “get behind the Long Island YES.”