Aug. 2 (Bloomberg) -- The New York Islanders, whose games draw the fewest spectators in the National Hockey League, failed to persuade voters to issue $400 million in general-obligation debt to boost attendance with a new arena.
The proposal to replace the 39-year-old Nassau Veterans Memorial Coliseum in Uniondale, Long Island, was defeated 57 percent to 43 percent, the Nassau County Board of Elections said. William Biamonte, the board’s Democratic commissioner, said turnout was “low” at about 17 percent of 900,000 registered voters.
Nassau County Executive Edward Mangano said he isn’t giving up. He’ll hold a news conference today to solicit proposals to redevelop the Coliseum site.
“Tonight is not an ending -- it is a beginning,” Mangano, a Republican whose appeal for less spending and lower taxes garnered Tea Party support, said yesterday. “We will find a new path, a path that solves the problems and blockades to redeveloping this property.”
Had the referendum passed, the bonds would have required approval of the Nassau Interim Finance Authority, a state supervisory panel that’s run the county’s finances since January, and a two-thirds vote by the county Legislature. The Republican-led county panel is still free to take up the bond issue.
Mangano, 49, who has fired 128 workers and frozen wages as he copes with a budget deficit, championed the arena project even as the finance authority said it was “deeply concerned” by the proposal. County Comptroller George Maragos said on July 29 that Nassau may end 2011 with at least a $42 million deficit, a gap he said may grow to $140 million.
“NIFA is hopeful that one result of the failure of the referendum is that the leadership of the county will now devote all of its energies and efforts into balancing the county budget,” the board of directors said in an e-mailed statement today. NIFA puts next year’s budget gap at $225 million.
According to NIFA, interest payments on debt for a new arena over 30 years would have pushed the total cost to $800 million, which would be paid through a property-tax increase of 3.5 percent to 4 percent.
Arenaco Spe LLC, a company formed by Charles Wang, who bought the Islanders in 2000 for about $190 million, and the proposed area tenant would have paid no rent until construction was complete, NIFA said. That may have taken five years and required more borrowing, it said.
Voter backing of the bonds “would have added to the problems of the county,” said Howard Cure, director of municipal research for Evercore Wealth Management LLC in New York, which has $2.9 billion in assets. “There’s the potential for it to cost the county money if the revenues generated weren’t sufficient to help defray costs.”
An October 2026 tax-exempt Nassau County general-obligation bond traded July 27 at an average yield of 4.2 percent, down from about 5 percent in February, according to Municipal Securities Rulemaking Board data compiled by Bloomberg.
Mike Colecchia, a 47-year-old printer from Farmingdale, said he voted against the plan because taxes shouldn’t help fund an arena when the county is struggling to provide basic services like repairing the road in front of his house.
“It’s a nice project at the wrong time,” Colecchia said in an interview yesterday at a polling place in Bethpage. He said he felt compelled to oppose the arena even though it would have benefited friends and family members in construction who called it a jobs-generator.
Diane Yatauro, the leader of the county Legislature’s Democratic minority, said it wasn’t a “shock” that residents didn’t approve a property-tax increase for themselves. Nassau’s median property tax of $8,206 is the second-highest among U.S. counties, according to the Tax Foundation in Washington, behind only Hunterdon County, New Jersey.
“I urge Mr. Mangano to do what he should have done in the first place, give us a privately funded development plan with clear details as to how it protects taxpayers while stimulating economic growth,” Yatauro said in an e-mailed statement.
Diane Pearl, a 71-year-old office administrator from Bethpage, said she voted no because she worried about cost overruns.
“I’m in favor of the project, it would be great,” Pearl said in an interview outside her polling place. “But at a time when everyone’s struggling economically?”
Move for Growth
Wang said he was “heartbroken” by the outcome. He said he was disappointed that voters didn’t see the proposal as “a move in the right direction for growth.”
“We’re not going to make any comments on any specific next steps,” said Wang, who had threatened to move the team if it didn’t get a new arena. “We’re committed to the Nassau Coliseum until the year 2015, and, like we said, we will honor our lease.”
The Islanders won four Stanley Cup championships from 1980-83 and made the playoffs in 15 of their first 18 seasons after joining the National Hockey League in 1972. While their championship total is tied for the sixth-highest in NHL history, the franchise hasn’t won a playoff series since 1993.
The team has ranked last in the league in attendance for three of the past four seasons. It averaged a league-low 11,059 fans for its 41 home games at the Coliseum last season, when it finished with the fourth-worst record in the NHL.
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