Tuesday, February 3, 2009

"Hidden Public Costs"

Many opponents of the Lighthouse Project may deride it as a "land grab" by wealthy interests, but, in reality, nothing could be further from the truth.

First of all, never forget that the entire project was approved by Nassau County after a competitive bidding process. The current push is for the Town of Hempstead to re-zone the land (after appropriate environmental studies) for higher-density use in order to build the project as approved.

More importantly, many people are concerned that the taxpayers will end up footing the bill for a large portion of the project. This is understandable, since residents of Long Island pay some of the most onerous taxes in the United States, and all large public investments seem to be matched with tax hikes. This is not the case here; the Lighthouse Project is not asking for public financing for a large portion of the project.

That is not to say there won't be a public spending component. The taxpayer cost will largely come from a $76 million state grant to improve plumbing and sewage on the Coliseum site that was approved 12 years ago. When you consider the overall scope of the project, you will see that the Lighthouse may actually be the best deal regarding a sports facility that a government has ever had. Noted sports economist Andrew Zimbalist, who has repeatedly blasted municipal governments for investing public money in stadiums and arenas, pointed out in a New York Times column that municipal governments, on average, pay 75% of the costs for sports facilities (NOTE: Prof. Zimbalist respectfully declined my requests for an on-the-record assessment of the Lighthouse due to a full schedule, though he did allow that he believed it was an interesting concept). Since the Lighthouse Project itself is a $3 billion development, the public share turns out to be:

(76 million)/(3 billion) = 2.53%

That is not a typo. The total public share of Lighthouse Project costs is 2.53%.

Some sources within the Town of Hempstead have raised concerns over "hidden public costs." By their logic, since the Lighthouse Project will inject thousands of residents and workers into an area that is currently an asphalt jungle, there will have to be additional public costs (police, fire, garbage collection, sewers, etc.). This might have some merit, but there are other important factors to consider:
  • The land around the Coliseum will eventually be developed, so those costs are not unique to the Lighthouse.
  • While the Lighthouse is working with the Town of Hempstead to increase sewage treatment capacity, the Town would have needed this extra capacity even without the Lighthouse.
  • The Lighthouse is projected to bring $70 million in additional tax revenue to the Town of Hempstead. The net proceeds will still benefit the Town regardless of any costs that must be incurred.
  • On top of the tax revenue, the Lighthouse group will make yearly lease payments on the site that could certainly be used to defray some of these necessary expenditures.
Let's also remember one additional component. The Lighthouse Project is the kind of "shovel-ready" development that will attract federal infrastructure dollars from President Obama. A recent study by the American Society of Civil Engineers (available here) rates America's infrastructure as a "D" and estimates that an investment of $2.2 TRILLION is needed to modernize. That money will be spent somewhere, and it could only help the area's current and future traffic issues if some of it is spent around the Nassau hub. Before you consider that an additional public cost, remember that infrastructure is an investment. Dollars spent on infrastructure create a multiplier effect that results in a much larger complementary increase in GDP.

Any way you slice it, the Lighthouse Project has provided a visionary idea that minimizes public costs and maximizes public benefit. Let's hope local politicians see this sooner rather than later.

Please share your thoughts in the comments. As always, don't forget to sign the petition and pass it on. I welcome your feedback at lettherebelighthouse@gmail.com


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