Forest City Ratner's Nassau Events Center to renovate Coliseum
Nassau County Executive Edward Mangano has chosen Forest City Ratner's Nassau Events Center to renovate the Nassau Coliseum, in a deal that could transform the 77-acre property in the heart of the county and provide Nassau with several million dollars a year in new revenues.
The 49-year agreement brings to a close a nearly two-decade chapter during which county officials debated the future of the aging arena, but failed to come up with a plan to restore it.
"This will create a real destination," Mangano said Thursday at a news conference in Mineola. "It's a major economic center for our county that has been underutilized. We look forward to building something very exciting that will attract people from beyond our borders."
Bruce Ratner, executive chairman of Forest City Ratner, pledged in a statement to deliver a "world-class Coliseum and a thriving sports, entertainment and retail center" that Long Islanders would use for generations to come.
"It is time for Nassau County to have an iconic and celebrated venue that will have something for everyone to enjoy and which will redefine the customer experience," Ratner said.
The Madison Square Garden Co., the other finalist for the project, said in a statement that it hopes Long Island gets "the world-class destination it deserves." The company said that "while we are disappointed with the county's decision, we are not at all surprised given the history of this project." MSG declined to elaborate on the statement.
Ratner's $229-million proposal calls for a renovated 13,000-seat arena, a 2,000-seat indoor theater, an outdoor amphitheater, restaurants, an ice-skating rink and retail space. The Islanders would play a combination of six regular or preseason games at the renovated Coliseum.
Ratner is working with Syosset-based developer Ed Blumenfeld; Guggenheim Partners, a financial services firm; entertainment company Live Nation; Roc Nation, the holding company of entertainer Jay Z; and Legends, the food and beverage company owned in part by the New York Yankees.
MSG's $250 million proposal called for a renovated 14,500-seat arena and an entertainment complex with restaurants, bowling, billiards and an Islanders-themed sports bar.
MSG was partnering with Baltimore-based development firm Cordish Cos. and Uniondale-based RXR Realty, headed by Scott Rechler.
Mangano said there were major differences in the financial impact of the Ratner and MSG proposals.
According to bid documents of Nassau Events Center, the company will pay Nassau 8 percent of all annual revenue generated by the Coliseum each year, including tickets and concessions, and 12.75 percent of parking.
The company guarantees Nassau a minimum of $4.4 million in the first year and $334 million over 49 years.
The lease is for 34 years with an option for 15 more if both parties agree to an extension. If there is no extension, Ratner will pay Nassau a total of nearly $195 million over 34 years.
Increased sales tax revenues could come on top of that, although county officials had no precise estimates. Ratner also will pay the county 8 percent of the gross revenue from new entertainment facilities surrounding the arena or a minimum of $400,000 a year -- whichever is greater.
MSG in its bid documents agreed to pay Nassau $1.50 per ticket from events at the Coliseum, but nothing from an entertainment complex it would have built adjacent to the arena. MSG's proposal would have guaranteed the county $3 million in the first year and a total of $178 million over 49 years.
The minimum annual payment by Ratner will escalate by 10 percent every five years; MSG's payments would have increased by 5 percent every five years, the bid documents show.
Last year, Nassau received $2.1 million in rent and concession revenue from the Coliseum, according to data from the Nassau comptroller's office. But those savings were offset by the county's annual cost to maintain the building, including $2 million for utilities, Mangano said.
Ratner would take over all capital expenditures and maintenance of the arena.
County officials said MSG would have to sell 1.7 million tickets initially to match the revenues in Ratner's bid. In 2010, the most recent year available, 856,349 people attended events at the Coliseum, including 41 home Islanders games, according to the comptroller. Ratner's plan allows the county to develop any remaining areas of the 77-acre Coliseum property,while MSG reserved the right to develop the property itself.
Ratner agreed to make payments in lieu of property taxes to Nassau, while MSG did not.
Also, Ratner will pay $50,000 per month to the county beginning in August 2015 if construction hasn't begun. Once construction starts, the company will pay Nassau $100,000 per month, generating a total of more than $2 million during the construction process, Mangano said. MSG's proposal did not include such payments.
Mangano's choice of Ratner comes 10 months after he conducted a study for the county to determine the best use for the arena after the departure of the Islanders. The NHL team, the Coliseum's anchor tenant, is moving to Ratner's Barclays Center in Brooklyn for the 2015-2016 season.
Ratner's analysis that a smaller Coliseum could be economically viable led Mangano to seek proposals in March.
Mangano's decision also comes as he and the county legislature struggle with budget deficits and heavy borrowing to pay settlements of property tax grievances. The county remains under a state control board, the Nassau Interim Finance Authority, and the contract with Ratner ultimately will require approval by the legislature and NIFA. Mangano said all revenues from the project will go to help pay down Nassau's $1.2 billion in debt from property tax refunds.
Ratner, MSG, Blumenfeld, and Bernard Shereck of Bayville initially bid on the Coliseum redevelopment. Last month, Mangano chose Ratner and MSG as finalists, and requested negotiated contracts detailing their final offers.
The county has been trying to find a way to redevelop the 41-year-old Coliseum since the 1990s. The efforts heated up after Islanders owner Charles Wang and Rechler proposed the $3.8 billion mixed-use Lighthouse Project on the site.
The plan failed because the Town of Hempstead did not approve the necessary zoning. In 2010, the town produced an alternative zone permitting a less-dense development, but Wang balked.
In 2011, the county held a public referendum on borrowing $400 million to build a new arena, but voters defeated the measure decisively.
The Dolan family owns a controlling interest in MSG and Cablevision, which owns Newsday.
What Forest City will pay
Forest City Ratner's Nassau Events Center will pay Nassau County:
Minimum of 8 percent of all revenue from the Coliseum and 12.75 percent of all parking revenue -- or a guaranteed annual payment of $4.4 million -- beginning in 2015. The guaranteed payment will escalate by 10 percent every five years.
At least 8 percent of the gross revenue from new entertainment facilities surrounding the arena or a minimum of $400,000 a year, whichever is greater.
$50,000 per month to the county beginning in August 2015 if construction hasn't begun. Once construction starts, it will pay Nassau $100,000 per month.
Cost of all utilities and maintenance at Coliseum.
Phased-in payments in lieu of taxes from new restaurants and entertainment options surrounding the Coliseum
$1 million if the NHL or New York Rangers prevent the Islanders from playing at the Coliseum. Ratner says the team will play a combination of six regular or preseason games there.
PLUS: Nassau can develop remaining areas of the 77-acre Coliseum property.
Source: Nassau County