atlantic yards economic impact analysis 9/17/09

8/14/2019 Atlantic Yards Economic Impact Analysis 9/17/09

1/6

Memorandum

To: SteveMatlinFrom: Kathr Kazanas, ecileFuSubject: AtlanticYardsEconomic mpactAnall sis-Modified GPPDate: September7 2009Cc: DarrenBloch

The following tablespresenta summarvof therevised esultsof an economicand iscalimpactanalysis ased n the modifiedGeneral rojectPlan1009.This setof resultssupersedeshosecontainedn the memodatedSeptember . 1009. ncluded n thecurrentanalysiss updatednformation n arena evenueshatwasnot ncludedn theearlieranall 'sis.

I. Project DescriptionThe Project,o be developed y ForestCity RatnerCompanies nd ts affiliate "FCRC") iscomprised f the construction f an 18.000-seatrena or theNew Jersel'Netsbasketballteamand or otherevents. n mprovedLIRR trainyardandsubwal,mprovements ndaresidentialmixed-use evelopment. able providesPlandetail.Table : Atlantic ardsModif ied PPPlan Residentialixed-Use)

Uses Modif iedGPPPlandent ialMixed-Use)Residential 6.400.000sf 6.430 nitsHotel '180ooms)* 165000 ^5>lRetail 247,000 sfCommercial 336,000 sfArena 18,000 eats) 850,000qsfParkinqspaces) 3,670PublicOoenSoace 8 acres*Theimpactof he hotelcomponent f he projects not ncludedn he analysis. owever,he spaceallocationwas shifted o commercial se.Soaceallocations re as shown n he ElS.Of he otal esidential nits n eitherplan,4,500willbe rental nits, 0%of whichwillbe ow,moderate nd middle ncomehousing. he restof theresidential nitswillbe market ate ental nd condominiums.


2/6

Privilegedand Confidential

II . Summary of ImpactsConstruction ImpactsTable2 presentsheestimated ne-time onstruction conomic nd iscal mpacts f theoverallProjectat full build-out.Theorerall Project onstructioneriod s assumedo be2007-2019, uring 'hich construction il l proceedn tu'ophases.Table : One-Time onstructionmpact: conomic ndFiscal enefits t FullBuild-Out

Modif iedGPPPlanNYC NY SEmployment

Direct . A tr .E 16,427Indirect lnduced 8 706Total 22.223 25 133Personal ncome bil l ions 0095rTotal direct,ndirect nd nduced) 1.04 1.40Tax Revenues mil l ions 009$ 210.0 171 0

*Dollarvaluesare expressed s net present alue n 2009$usinga3o/o ealdiscount at eover he 13-yearconstructioneriod. Price ndexused s derived rom he results f REMIprojections.)Constructionmployments he otalnumber f constructionob yearsby ullbuild-out, 007-2019.A ob year sthe otalnumber f workerswho are ull-t ime, art-t ime r contract orkersworking n on eyearon the project.)NY Semployment ndpersonalncome re nclusive f NYC.The New York City ax revenue otal rom construction ctivity s inclusive f the MTA portionof tax revenues.At ful l build-outn 2019. onstructionpendingundertheevisedGPPPlannil l generateemplol'mentmpacts f anestimated 6,427direct ob 1'ears nd otai ot'25.1 i direct.indirect, nd nduced onstruction-relatedobs n Neu'York State. heNe* York State otalincludes22,223construction-relatedobs and secondary'obs in New York City. Estimatedemploymenteflects he otalover heentire13-year eriodof construction. or NYS, this sapproximately n annuala\ eraqe f 1,264 onstructionobs.Totalpersonalncomeearned 1 direct. ndirect, nd nduced onstruction-relatedageeamerss estimatedo be S .04billion in New York City and$1.4billion in New York State(inclusive f New York Citl). Tax revenue ollected y New York City asa resultofconstruction-relatedctivityandemplol'ments estimatedo be $210,0million and$ 7l .0million for Nerl York State.


3/6

Privilegedand Confidential

Permanent ImpactsPermanent conomic nd iscal mpacts iill result rom heoperations f thearena ndmixed-usedevelopment nd he netneri'employment enerated1 suchactivity.Table 3reportsaverage nnualnetnew emplormentovera 30-1'sa1eriod.

Table : Permanentconomic ndFiscalmpact f TotalProject t FullBuild-OutModif iedGPPPlan NYC NY SEmployment direct , ndirectand nduced) q 16 n 5 498Personal ncome bi l l ron0095) 77 10.0Tax Revenues mil l ion 009$) 6247 1 7389

'Dollarvaluesare expressed s ne tpresent alue n 2009$usinga30k realdiscount at eover he 3O-yearperiod. Price ndexused s derived rom he results f REMIprojections.)Permanent mployments he annualaverage ver he 30-year eriod.NY Semployment nd personalncomeare nclusive f NYC.The NYC ax revenueotal s nclusive f he MTA oortion f tax revenues.

Under he modifiedGPPPlan,an annual verage f 5,498 otal obs (direct. ndrrect ndinduced)will be created y Projectactivity n New York State.Of this otal.5.150ne tnenjobs will be ocated n New York Citl'.The otalpersonalncomeof arena ndmixed-use evelopment\.age arners nder hemodif iedGPPPlan s esrimatedo be $7,7bil l ion or NervYork City residentsnd$10.0billion in Nerv York State inclusive f New York City).Tax revenues ollected 1'NeriYork City as a resultof Projectpermanent ctivity and employmentareestimatedo be5624.7million and$738.9million by New York State.

Table 4 summarizeshe overallprojectbenefitsand costs.Estimatedotal fiscal benefit oNYC from projectconstruction ndpermanent rena perationss over$834.6million overthe 30-year eriod.Total lscalbenefits o NYS areestimatedo be over$909.5million.Overall iscalbenefitso NYC andNYS areapproximately 1.7billion over 30 \'ears. iscalbenefits ncludepersonal ncome ax, corporate nd businessncome ar, sales ax,propertytax. andmiscellaneousther axes.


4/6

NYC NYS TotalTotalFiscalBenefits s834.6 S?-v 5 $1,t44 1TotalFiscal osts** ?eo o 17 .8 5657FiscalBenef i to CostRat io z. t1 5.17 3.08

PrivilegedandConf-rdentialTable 4 OverallProjectFiscal Benefitsand Costs*

'Dol lar a r iesa.e - . r i r l io-sxgrs5r*6 s netpresent alue n 2l l9S using n approx a:e1y % discountateover30 years--NYC iscal osts nciudevlTF cit ions 'sa:s 1ax xemptionsEstimatedotalNYC fiscal ost s 5389.9mil l ion. 1'$ lstal iscai rrsts over$175,8mil l ion.Overall ubliccost s approximarcly'$565.7il l ion 'fhis includes ubliccontributionso infrastructureedevelopntent,alesax e\cmptirrns.mortgageecordingaxexemptions. ebtservice n infrastructureonds, ndpers.,r:-,incomeaxes oregone ninterestncom.-'earnedy holders f taxable ndtax-exemptonds sed o llnanc.-heproject. lso ncludctl rc-YC HDC housing ubsidiesor altordaL' lc.rusingsecondmortgage f approxrntarc' lri lr l .Tmil l ionatlo/o ixed nterestate br a 3O-yearerm).Note:This amor.rntctlects nlr thc subsi,1lbr 1.677 ffordab leentalunitsat $72,000 erunit.The overall iscalbenefit o cost atio s a measure f returnon thecommitment f publicinvestment ndother ax revenueso the AtlanticYardsproject.The fiscalb'cn.'tltt) coslrat io orNYC is 2.74,orareturn f about 2.14 f f iscal enef i t brererr Sl . ( i0o1-\ \ .C arrevenuesupport ingheproject . he at io orNYS s 5.15, r $5.15 br r-rcr)S1.00 f staterevenues ommitted o theproject.Or erali. he otal iscaibenellt10cost atioshowing hereturn o thepubliccontribution stimatedn th is anallsis s approximately to l.

I I I . Summarl.of Assumptions nd MethodologyThe economicand iscal mpactof theAtlantic Yardsproject .ras stimated sing he REMImodel Regional conomicModels. nc.)of theNeu'York City region.The REMI model swidely regarded soneof themoresophisticatedegional conomic nddemographicmodels sed br economicmpact nalysis.t is a dynamicmodel hat brecastsrojectimpacts n a regional conomr.Themodel akes nto accountheadiLtstmentsha ta regionaleconomymakesover ime n responseo theproject.Suchdynamicntodels reconsideredmore ealistic ver nput-outputmodelssuchasRIMS II and mplan.u hichprovideestimates f impact or a shortperiod approximately year)with no adjustmentsn the ocaleconomy. hese it-ferencesakea comparison f estimatedmpact esults sing hedifferentmodelsdiff rcult.REMI tax revenue stimateseporled ere eflecta broadsetof state nd ocal ax collectionsincludingpersonalncome ax,corporate ndbusinessncome ax, salesax.property ax ,andmiscellaneousther axes.


5/6

Privilesedand Confidential

Construction Impacts:The estimated ardandsoft costsof constructionor the arena, renaparking,urban oom,residential omponentsincluding round loor retailandcommunin acilit-v pace),infrastructureincluding he LIRR platformand ransit onnections).ommercial fficespace, ndsoftcostswereprovidedb1 FCRC n the -\tlantic ardsSources ndUses June17,2009).TheestimatedotalProject ost s $4.898 illion (including$416.7million in landacquisition).Construction conomicand iscal mpactswereestimated verthe 13-yearperiodof construcion 2007 2019 (full bui d out).Arenu Operationsand Mixed-Use Development mpacts:Theanall'sis ses rojected stimates f taxable icket,concessions,ndnovelties ales t hearena.FCRCprovided nformationon currentNetsplayers'salaries, asketballadministration ndNets staff salaries, nd arenaworkers'payroll.The following assumptionsareused n estimating mpacts rom Nets andarenaoperations:

o Thea\erage nnual alaryor anNBA player s approximatell '56.0il l ion.based ninformation btained rom theNBA by FCRC.The analysis ssumeshat 3OoztrfNetsplayers ive in New York Citl'and pay bothCity andState ersonalncome ax.TheotherT}Yoliveoutside f New York Citl- andpay Nen York State ersonalincome ax onlv.. 25oh f visit ing eamplal 'ers' alariess eamedn New York City andpa1'onl1'Neu'York State ersonalncome ax.All spendingrom ncomeeamed n \eu York Citl,by visiting teamplayershappens utsideof the City and State.o Both economicand iscal benefits rom arenaoperations rebasedon total ticketrevenues. aleofnoveltiesandconcessions,ponsorship,ndadvertising. ales ax

. revenues re basedon both basketball nd non-basketbal l vent axable tems.o Taxableconsumptionexpenditures re assumedo be 40Yo f disposablencome.Sales ax rate s 8.375% both Stateand City SalesTax is 4o/o ndan additional0.375% ollectedor theMTA).o Direct obs for mixed-use evelopment ereestimated t full bui ld-outusing hefo l owingassumptions


6/6

PrivilegedandConfidential

Table5: SpaceAllocat ions y Useat Ful l Bui ld-OutRevisedGPPPlan GS F # Units OccuPancY Direct obsOffice 250ssf/iob). sot,ooo 0.90 1,804Retall 30 0ssfliob) 247.000 823Parkinq spaces) J,O/U YZ

Residential20 units/iob) 6.363,000 6,430 JZ Z7,96'1,000 3,04U'The Hotelallocationncludedn he estimation f directoO i used n he commercial paceallocationo Directcommercial tfice obs n'ereadjusted 1 7:% to accountor Neri York Citlresidency nd o take nto accounthatnot all ncrr officespacewill bc occupied 1'new businessesoming rom outof state.. irect obs n al l othercategoriesf directemployment ereconsidered 00%New York Citl resident'. This analysis oesnot ncludeanveconomic r fiscalbenefitgeneratedy netnewhouseholdshat are elated o this proiect

atlantic yards economic impact analysis 9/17/09

Documents