Mangano Selects Forest City Ratner Companies For Nassau Coliseum
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.
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. (NEC) who competed in a challenging process resulting in the submission of two excellent proposals. In fact, it was the unanimous sentiment of the RFP committee that in most regards both MSG and NEC had submitted compelling 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. In that regard, I want to thank Hank Ratner and his staff as well as Bruce Ratner and his staff for their commitment to Nassau County. I truly wish we could engage both proposers. Just before today’s announcement I spoke with both Bruce Ratner and Hank Ratner and thanked them personally for their great proposals and professionalism throughout the process. Today, I announce the 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.
I am pleased to announce that Nassau Events Center, LLC is the successful proposer to transform the 43-year old Nassau Veterans Memorial Coliseum and Plaza into an attractive, first class destination for family fun, sports and entertainment. This is also the unanimous recommendation of the County’s RFP Committee. Accordingly, I will soon send the NEC lease to the Nassau County Legislature which is the next step in the approval process.
NEC will invest a minimum of $229 Million in renovating the Coliseum and the Plaza to create a first class destination. 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.
Although the decision was not easy, there were points that the Committee emphasized when recommending NEC and, in an effort to continue an open and transparent process, I would like to share them with you all today. They are:
- 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.
- 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.
- 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.
- Under the NEC proposal, the County retains control over any future development of the Coliseum site.
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
Tomorrow I will join with NEC to announce exciting programming and further comment on this historic public-private partnership.