Analysis: Town plan comes up short on revenue

It's pretty much a truism among developers: There's no money in building a new hockey arena, convention center, or lots and lots of parking. The profits come from building housing, office space, restaurants and stores.

But a Newsday analysis shows that Hempstead Town's new plan for the land surrounding Nassau Coliseum could cut the potential for moneymaking development by nearly 75 percent, compared with the much larger Lighthouse Project.

Although the town has said its proposal, announced last week, reduces the size and density of the project by half, Newsday's study found that a far more significant cut is likely when only the potential for new residential, retail and commercial development is considered.

Hempstead's housing component alone, because of the limited number of units, could result in 80 percent fewer square feet of residential space, compared to the Lighthouse.

Restrictive, or flexible?

While some experts say a scaled-down development could still be viable, the Newsday analysis highlights the difficulties any developer would face in trying to make money under the town's new proposal.

The Hempstead plan, by limiting the amount of development so significantly, also would make it far more difficult to renovate the Coliseum - a key component for Islanders owner and Lighthouse developer Charles Wang, who has threatened to move the team.

"The analysis . . . shows us there's no way development that would be consistent with this zone can fund the public improvements - including the Coliseum and infrastructure improvements," said Michael White, executive director of the Long Island Regional Planning Council.

Town officials, however, say their plan gives the developer the leeway to determine what's feasible economically.

"We tried to make it flexible so we could hand off pretty much a blank slate to a large degree," said Hempstead Supervisor Kate Murray.

Wang did not return calls for comment, and his Lighthouse Project partner Scott Rechler declined to comment for this story.

Analysis of town's figures

Newsday's study examined details of the Hempstead proposal in the context of the Lighthouse plan as found in the project's Draft Generic Environmental Impact Statement.

Newsday found that a developer could be left with 1.35 million square feet for revenue-making development under the Hempstead plan, compared to 4.92 million square feet under the Lighthouse proposal.

That would be a 73 percent difference.

The analysis started with the total square footage allowed by the Hempstead plan: 5.4 million square feet. Then it removed parking, which generates little revenue; existing structures including the Long Island Marriott; and a renovated Coliseum to determine how much buildable space would remain.

Town officials, while not disputing Newsday's figures, argued that more profitable scenarios are possible.

Revenue potential at issue

They said under their plan a developer could expand the Marriott and add more development to the site. They added that there would be much more room for moneymaking development if a renovated Coliseum were smaller than the 1.2 million square feet the Lighthouse plan recommended. The arena is currently just over 400,000 square feet, and town officials noted that the New Jersey Devils' new Prudential Center in Newark is 858,000 square feet.

"The Coliseum could be bigger and would likely be bigger - but it wouldn't necessarily be the size that Mr. Wang had proposed," said David Stohlman, who heads engineering consultant Frederick P. Clarke, which produced the town's plan. "But it should be of whatever size and quality is going to keep the [New York] Islanders where they play now."

But even a smaller arena wouldn't mean more housing could be built, the analysis shows. Hempstead would cap the residential component at 500 units. At an average of 1,500 square feet per housing unit envisioned in the Lighthouse plan, the Hempstead plan would produce a total of 750,000 square feet of housing - 80 percent less than the Lighthouse's 3.5 million square feet, Newsday found.

Eric Alexander, head of Vision Long Island, a smart-growth group, had hoped Hempstead would propose a minimum of 1,500 residential units. "There's a market for it and it could be built," he said.

Murray has said more housing would exacerbate traffic and water issues in the area.

Worthwhile to a developer?

Experts said that as long as the developer has to pay for a renovated Coliseum, the numbers likely won't work. A source with knowledge of the project puts the developer costs, including the Coliseum, parking, infrastructure and open space, at more than $1 billion.

Without the Coliseum factor, the discussion of economic viability would be very different, said Desmond Ryan of the Association for a Better Long Island. "Public policy as it relates to land use should never revolve around a hockey team; it clouds the issue," he said.

If the Coliseum were not funded by the developer, the economic viability would improve dramatically, said business and civic leader Richard Bivone, first vice president of the Council of East Meadow Community Organizations. The Coliseum renovation has been estimated to cost at least $320 million. If Wang doesn't cover it, Nassau County likely would have to foot the bill, with significant borrowing, according to development experts.

"I guarantee you there are people out there ready to jump on this project," Bivone said. "This can definitely be done."

Matthew Whalen, a vice president with AvalonBay Communities in Melville, said he's "keeping an eye" on the Coliseum land.

"Anything is economically viable on Long Island . . . " he said. "It's just a matter of what the financial basis is and what the underlying cost is."

Comparing the two visions

A Newsday analysis studied the revenue-producing potential of two proposals for 91 acres of surrounding Nassau Coliseum.

HEMPSTEAD TOWN

Start with buildable space: 5.4 million sq. ft.

SUBTRACT ELEMENTS that produce little or no revenue for developer:

Parking: 2.3 million sq. ft.

Renovated Coliseum: 1.2 million sq. ft.

Long Island Marriott: 466,000 sq. ft.

Other existing meeting/convention space: 82,000 sq. ft.

TOTAL SPACE REMAINING for new revenue-producing development: 1,352,000 sq. ft., including:

With 1,500-square-foot average residential unit: 750,000 sq. ft. housing; 602,000 sq. ft. commercial/office/retail

With 1,000-square-foot average residential unit: 500,000 sq. ft. housing; 852,000 sq. ft. commercial/office/retail

LIGHTHOUSE PROJECT

Start with buildable space: 10.6 million sq. ft.*

SUBTRACT ELEMENTS that produce little or no revenue for developer:

Parking: 3.9 million sq. ft.

Renovated Coliseum: 1.2 million sq. ft.

Long Island Marriott: 466,000 sq. ft.

Other existing meeting/convention space: 82,000 sq. ft.

TOTAL SPACE REMAINING for new revenue-producing development: 4.9 million sq. ft.*, including:

Housing: 3.5 million sq. ft.

Retail: 500,000 sq. ft.

Office: 468,000 sq. ft.*

New Hotel: 308,456 sq. ft.

New Convention Space: 118,000 sq. ft.

Note: Some numbers are rounded.

* Includes all Lighthouse development on the north side of Hempstead Turnpike, including parking and the Coliseum. The Hempstead plan addresses only the 91 acres of land north of the Turnpike.

Source: Draft Generic Environmental Impact Statement, Hempstead Mitchel Field Zoning Study