Thursday, October 1, 2009

Drawing a Line in the Sand

Earlier this afternoon, County Executive Tom Suozzi (pictured, flanked by Legislators Diane Yatauro and Wayne Wink, and Lighthouse principals Charles Wang and Scott Rechler), announced the signing of a 99-year ground lease on the 77-acre County-owned Coliseum property with the Lighthouse Development Group. The announcement was filled with a lot of drama, a firm line in the sand, and even a little news.

Other people can mention direct quotes, and I don't want to re-do their work. I'll just share some key themes and take-aways.

Lease Terms

The Town of Hempstead, which, as you remember, made some requests of the County and the developer, did not get all it wanted, but there were pieces in there that satisfied many of the Town's wishes. The terms are as follows:
  • 99-year ground lease between the Lighthouse Development Group and Nassau County. This covers the 77 acres of County-owned land on which the Coliseum sits, not the other 73 acres of Rexcorp-owned land that Scott Rechler added to the project.
  • The Lighthouse commits $50 million to improve area infrastructure
  • The Lighthouse will pay Nassau County $1.5 million per year as part of the ground lease
  • The Lighthouse will assume maintenance costs on Nassau Coliseum, on which the County currently loses $1.5 million a year. Before sales and income tax, this comes out to a net positive of $3 million for Nassau County taxpayers.
  • The Lighthouse commits to a Project Labor Agreement with local labor unions that will pay a prevailing wage
  • The Islanders commit to remain in a renovated Nassau Coliseum through 2030, 5 years later than the original plan.
The Town of Hempstead is not a third-party beneficiary of the lease. Marilyn Gottlieb, Deputy County Executive who has overseen this process for Mr. Suozzi, told me that the County, as policy, does not do this for anybody.

The "Out Clause"

County Executive Suozzi said that he would submit the lease to the County Legislature immediately, and this could become an issue should environmental review continue to drag on. As previously reproted, the Islanders are able to void the lease and leave the area if it is not approved by the legislature within 120 days - let's hope it doesn't come to that.

Vision for "New Suburbia"

The County Executive touted the Lighthouse Project as his centerpiece for "new suburbia," which he unveiled last week as part of the 90/10 solution. The solution calls for 90% of Nassau County to stay exactly as it is, with the other 10% re-imagined in ways that address very real problems such as property taxes, traffic, pockets of poverty, and the flight of young people. The Lighthouse would be a great first step in realizing that vision.

Empire Zone

In a surprise development, especially since Gov David Paterson refused to make the commitment in August, Tom Suozzi announced that the proposed Lighthouse site has been designated an Empire Zone by the State. This makes the Lighthouse developers eligible for tax credits at the State level, while ensuring that the local tax obligations are met in full. This is not unheard of; the State routinely designates sites of large developments (or large skyscrapers in the city) Empire Zones because they encourage organizations to do business within the state.

The County Executive also mentioned that the Lighthouse is eligible for tax credits through the Nassau County Industrial Development Agency, a group that routinely provides incentives for companies to do business in Nassau County.

These announcements fly in the face of the Town of Hempstead's prior request that the Lighthouse not seek any tax abatements, a suggestion that left both Suozzi and Gottlieb incredulous. Gottlieb told me it would be foolish for the Lighthouse to not seek to participate in a program that is open to everyone. Suozzi raised his voice and practically screamed his disbelief that, given the real problems we face, the opportunity presented by the Lighthouse, and the time and money spent getting us to this point, that anyone would take offense to the government giving tax breaks.

Hard Line on Negotiations

The rhetoric against the Town of Hempstead was as sharp as it has ever been. Suozzi, Wang, and Rechler all criticized the Town, specifically Kate Murray, for refusing to come to the table at any point during the process to describe what she would like to be done at the Coliseum site. Mr. Rechler told me after the press conference that this is unique among all the projects in his career, in that the Town did not show an interest in coming to the table at any point throughout the negotiations.

Neither the developers nor the County Executive showed a willingness to negotiate, saying it would slow down the process. I do not claim to be an expert, but many people I have asked disputed the idea that a new environmental review would need to be conducted if the project changes in size. Despite the harsh language, Mr. Wang repeatedly shared his desire to make it work on Long Island, sharing his desire to keep the Islanders in their rightful home for many successful years to come. Mr. Wang said, at the end of the day, it came down to a single question: "Yes or no?"

I pressed a few of the parties on this after the formal part of the press conference was over - "If the Town of Hempstead returns with a reasonable offer, would you refuse to negotiate?" All parties denied to make the commitment, even though it is currently a hypothetical. I hope, at the end of the day, all sides will come together and put Long Island first.

Next Steps

Obviously, the ultimate goal is for re-zoning approval, but (as the chart states) other things must be done as well, and they all depend on the Town of Hempstead.

The Nassau County Planning Commission must approve the sub-divisions of the property, but they by law cannot do so until the SEQR process is over and the Town of Hempstead adopts the Final Generic Environmental Impact Statement (FGEIS). The next scheduled meeting of the Planning Commission is October 15, but they indicated a willingness to schedule a meeting in the meantime if it meant moving the process along in a more timely fashion.

In the same vein, the Legislature cannot vote on the lease until the Planning Commission acts, and they will likely not be able to vote until after re-zoning has been approved.

One thing is clear: at this point, it all comes down to the Town of Hempstead.

Bottom Line

This move, especially given the timing, is clearly meant to put pressure on the Town of Hempstead, as the Town is now the only government body standing between us and ground-breaking for the Lighthouse Project.

I have said before, and I will say it again: both sides will need to give on this in order for the vision to become reality. The Town cannot act like it does not have a duty to negotiate and meet with the developers, but in the same vein the developers cannot play a hard line. It is necessary now, because, as I've said, you don't negotiate against yourself, and it is up to the Town to make the next move. However, at the end of the day, this is Charles Wang's legacy, and both he and Scott Rechler are both smart and successful businessmen. They would all, I'm sure, rather have 80% of something than 100% of nothing.

I think Patrick, The Sign Man (who is now a fixture at these meetings), summed it up perfectly, since the next move is now on the Town of Hempstead:

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  1. Today was the beginning of the end with Suozzi keeping his political promise and respecting Wang's deadline. He did not call Kate Murray or get anyone together to negotiate.

    He failed as bad as TOH.

    Take it or leave it. They made it very clear what they wanted in the lease, a few slight changes like Wang's 2025 Islander lease changed to 2030 but basically no to everything else.

    Wang himself said in Newsday, if Murray called tomorrow with approval and wanted changes the answer would be no and talked about how unwelcomed he has been made to feel.

    I don't think it's posturing on his part at all and Rechler is not in this for the hockey team.

    Only surprise was Smg lease may still turn into a Nassau lease out if a buyout is not made in seven years.

    Cue the TOH response which will be we do not set deadlines on Wang winning cups and a relaunch of only do the Coliseum.

    Today was the worst moment of all through the entire process and that's saying a lot. Scary part is how many uninformed media will read today's announcement and think the project has been approved.

    Suozzi covered himeself politically and respected Wang's deadline, did as little as possible when he was needed most to bring both sides together and did not look out for Wang-Rechler-LH or the Islanders.

  2. The more I read the more I believe that this is a negotiating stance by Mr. Wang, designed to get TOH off of their collective duffs.

    Of course he is not going to negotiate with himself. It is long since time that TOH comes to the table and tells Mr. Wang what they really want. If it is reasonable I truly believe that Mr. Wang will accept it. Maybe this is wishful thinking on my part. If the TOH intends to never let this go through in any form, then I am wrong and it does not matter. But if they want to make this happen and still save face, this is the way to go.

    Either way, the end is coming soon, in the next few weeks.

  3. I agree with you, mw147. This stuff is calculated goal-oriented posteuring.

    And NYIsles1/IslesTigers, youre right that many of the uninformed will think that this means everything is greenlighted. But as that is happening, many of the more informed yet far more paranoid will declare that this means that all hope is lost. Both stances are, of course, wrong.

  4. "They would all, I'm sure, rather have 80% of something than 100% of nothing."

    Not if Chuck has already got an offer he shouldn't refuse from somewhere else.

    And I bet he does.

    Wang has the TOH (and Islander fans) over a barrel here.

    He is sitting on the greatest development plan Nassau County (and Long Island) has seen in 60 years.
    A plan that, after this fiasco, NO ONE will ever consider for a moment for the next 60 years.
    He's waited for an answer for over 5 years.
    He's sunk 10's of millions of dollars in the project and in the Isles while awaiting some direction.

    (heard that before from me?)

    It's take it or leave it Kate.
    Kiss Me Kate or Kiss Me Goodbye.

    Yes Nick, the line has been drawn.

    Will Kate snort it?

    Cuz two weeks from now and no movement by the TOH? (if not sooner).
    A stunning announcement by Wang may well make the last two weeks of Kate's re-election campaign very interesting.

  5. I just saw one of the Board members of the TOH quoted as saying this land is worth alot more then $1 which the lease states is the cost to obtain the land--Of course it is, but the last decade or two of fiscal mismanagement has caused the county, state and TOH unable to bring any funds to this important project--It rests on the developers which is unusual as usually the govt brings $$ and new road contruction, etc to the table--They bring only one thing--The Land..So the govts down the line dont have to lay out cash yet they stall since they are greedy and want more??(TOH) A developement privately funded doesnt come around alot so this is truly pathetic--Having the TOH come back long ago and say they want this and this adjusted in the plan and heres why would be the normal way of doing business--They obviously dont want this to go through--Politics as usual

  6. Nick,

    Whatever happens, you should be commended for your work on this. You have provided us with some valuable information, not available anywhere else. Thanks for keeping us informed. If the LHG is smart and this project is put through, you should be given a position in PR or something.

  7. Anon - Quick correction, I think the comment you're referring to comes from Legis. Peter Schmitt, the minority leader in the Nassau Legislature, and not a Town Board member. It seems to me that this is the best deal the County can get, when you add in a net benefit of $3 million, $50 million for infrastructure, and over $3 billion of private investment. Sometimes, people seem to talk like we're trying to tear down a nature preserve, when the current piece of land is an ugly slab of asphalt that has been neglected for 40 years.

    I'm not necessarily sure that TOH doesn't want this to go through, but there's surely a lot of blame to go around at this point. I'm just hoping for a happy ending.

    Derek - thanks, just trying to keep people informed as best I can. Not seeking anything other than this thing getting approved in return.

  8. Derek - "thanks, just trying to keep people informed as best I can. Not seeking anything other than this thing getting approved in return."

    Amen, brother.

    TOH will approve this. Might take until November, but they WILL approve it.

    -Big Van Vader

  9. I have always felt that this would get done but after the last few days I am getting more concerned. It seems that both sides are drawing lines in the sand and there seems to be no real negotiating going on and the "deadline" is tomorrow. The fact that both sides are only talking through the press and to their respective choirs at this late of a date is not promising. I really hope I am wrong but this is not looking good.


  10. If this were a litigation, they would need a mediator to attempt to bring the two sides together. In this scenario, I don't see any independent 3rd party out there whom both sides would trust to work out a deal. The only way I see out of this impasse is for the Town Board to be voted out of power and I don;t see that happening. It would be nice if someone with political clout on more than a local level could make this a bigger issue than it is and put the fear of G-d into those Nassau repubs. A Bill O'Reilly or Sean Hannity I just can't see it happening. Until then, we make our views known at the train stations and street fairs until the election.

  11. Finally, some good news:

  12. Murray wants to meet with the developers. Do you believe this, Nick? She is a walking contradiction. Typical politician. Does a 180 and will now "discuss" the project with the developers? And what does she want to "amend"? After Wang and Rechler said they wouldn't change the plans at all? Sure, an old negotiation ploy to be sure, but c'monnnn.
    Kate will meet with Wang next week.

    God help us, I hope for all our sakes that they come out of it having reached an accord of some sort.

    This has dragged on long enough.

    Just a little while longer now......

    -Big Van Vader