UNIONDALE, N.Y. – Residents who pay some of the highest property taxes in America are being asked to approve a plan to borrow US$400 million to construct a new hockey arena and minor league ballpark.
The midsummer referendum in New York’s Nassau County, which is already struggling to close a $100 million-plus 2011 budget deficit, is billed by supporters as a last-ditch effort to keep the NHL’s New York Islanders from relocating when the team’s lease expires in 2015.
Islanders owner Charles Wang, who made his fortune as the founder of Long Island software giant Computer Associates, says he is not issuing any ultimatums but would have to explore other options—including selling or moving to a new city—if voters reject Monday’s referendum.
“We are at a crossroads at the coliseum site,” Wang told business leaders this week. He said he bought the team 11 years ago and has lost about $240 million playing in a 39-year-old dilapidated arena where the average attendance of 11,059 was the lowest in the 30-team league last season. The building’s capacity for hockey is just over 16,000.
He contends uncertainty over the team’s future makes it difficult to attract quality free agent players and claims that NHL players and officials voted the coliseum ice the worst in the league last season. The Islanders finished with 30 wins, the second-fewest in the NHL.
“Nassau County needs a swift kick in the butt,” said Wang. “We need to grow by saving the jobs we have. We have seen too many businesses that have left here.”
Wang tried to privately develop the property about eight years ago, envisioning an expansive complex of office buildings, apartments and retail stores. That proposal, called the Lighthouse Project, failed because of community opposition.
Now, he is backing a publicly financed plan. County officials envision a new hockey arena, a minor-league baseball park, as well as a possible track and field facility. Decisions about developing the rest of the site, one of the most valuable remaining parcels in the densely populated suburb, will be made later, county officials say.
Nassau residents last year paid an average property tax bill of $11,500, nearly the highest in the country. The county portion of that tab is 16.4 per cent. The rest goes to finance schools, although the county has no say over school district spending, which is decided in each local municipality.
Those tax bills are sure to be on the minds of voters Monday.
Tony Puccio, a Garden City resident, said he supports a new coliseum and doesn’t want the Islanders to leave, but plans to vote no.
“I think that it’s too much on the taxpayers to have to bear the burden of the bond and the payment of the interest on the bond,” he said. “I just think that if it’s such a good deal that the owner of the Islanders should spend his own money for it, with maybe some help from the county.”
Edward O’Connor, of Stewart Manor, said he would probably vote yes.
“I’m betwixt and between,” O’Connor said. “I’m concerned with the taxes, but on the other hand if they can get a new coliseum and it would bring in more than just the hockey games, it would probably be good for the county.”
The proposal has won support from a wide spectrum of business groups, tourism officials and union leaders, who argue it will spur economic growth and create construction jobs in a weak economy.
County Executive Edward Mangano, a Republican, staunchly opposes property tax increases but insists the project would generate income to overcome any initial taxpayer investment. He says a management company created by Wang would be required to pay 11.5 per cent of revenues generated from all events, including hockey games, with a guaranteed annual minimum of $14 million. He also said the county would reap sales tax revenue.
The Islanders currently pay the management company that operates the coliseum $2 million to $3 million annually, according to a spokesman for the county comptroller.
Mangano says the average cost to taxpayers would be as little as $14 per year, though a state fiscal watchdog said the increase could be more than four times that amount.
“All transactions have risks,” Mangano said. He argues that allowing the Islanders to pack up and shuttering the coliseum would be more costly to taxpayers.
Mangano has also been criticized for scheduling the vote for a Monday in August, rather than allow the question to be placed on the November ballot. He said the August vote was necessary because time is needed to prepare for construction so that a new facility is built by before the Islanders’ lease expires in 2015. The cost to run the referendum is estimated to be $2 million, which Wang says he will pay, but only if voters approve the project.
The Islanders are financing a high-profile ad campaign encouraging a yes vote. A television commercial features actor Kevin Connolly of HBO’s “Entourage,” model Carol Alt, former Islanders star Bobby Nystrom and former NFL quarterback and broadcaster Boomer Esiason, all urging voters to approve the referendum. James Dolan, who owns Madison Square Garden, the rival New York Rangers and Cablevision, also appears in the ad favouring the project.
Even if voters approve the proposal, there are still major hurdles. The county legislature must sign off on the borrowing, as does a state fiscal watchdog, which earlier this year declared a fiscal emergency in Nassau, citing a soaring county budget deficit.
The six-member Nassau Interim Finance Authority is not taking a formal position on the coliseum deal until after the vote, but members said earlier this month that borrowing $400 million would actually cost the county $800 million over 30 years when interest payments are included. It estimated county residents would face a nearly 4 per cent property tax increase, or about $58 a year, over 30 years to fund the project.
“We will be watching closely to see if the residents of Nassau County, the highest-taxed county in the nation, have an appetite for a property tax increase,” authority member Leonard Steinman said at a meeting earlier this month.