It Makes No $ense

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It was disappointing, but not surprising to learn about New York State Assemblymember David Weprin coming out in support of Governor Andrew Cuomo’s proposed $4 billion dollar Queens convention center to be built at Acqueduct Race Track.

Success of the proposed $4 billion mega convention center to be built in South Ozone Park by Genting Americas is dependent upon uninterrupted subway service between midtown Manhattan and the convention center along with unspecified other government favors and subsidies.  The devil is in the details.  Those are still being negotiated between Cuomo’s office, the Empire State Development Corporation and Genting Americas behind closed doors. There is no forecasted date when they will be released to the state legislature, state comptroller, city council, city comptroller or taxpayers for public scrutiny.

The anticipated final potential cost will never be known until completion. Costs will be refined by award of construction contracts followed by change orders to contracts during the course of construction.  If there are significant cost overruns during construction, will Genting Americas commit in advance not to ask for government assistance to cover these unanticipated costs?

Can anyone identify a successful convention center of this proposed size operating in America today which requires a significant number of attendees to travel one hour or more by public transportation from their hotel to the convention site?  Chicago, Boston, Philadelphia, Washington D.C. and other cities around the nation have also  invested hundreds of millions of dollars in their own respective convention centers.  In most cases, their hotels are located far closer to convention centers yet are operating far below 100 percent occupancy. The new McCormick Place Convention Center in Chicago, which is currently the largest in America, has an occupancy rate of only 60 percent.

NYC has previously committed investing $2.4 billion in transportation improvements by extending the No. 7 subway from Times Square to the Javits Convention Center on the west side in midtown Manhattan making it more accessible. NYC is also investing $463 million on current renovations.  Hotel owners are charging customers a $1.50 per room tax to help support this investment.  The tax will not expire for another 34 years.  NYC has plans for even more capital improvements to the Javits Convention Center.  Weprin voted for previous municipal budgets as past Chairperson of the NYC Council Finance Committee from 2002 – 2009 and state budgets from 2010 to today which contributed funding.  Does Weprin agree with those who just want to walk away from these investments and just tear down the Javits Convention Center? Does Weprin support using taxpayers dollars to help pay for a third proposed convention center as part of the Willets Point redevelopment project?

Now Albany is talking about spending an unknown amount of money to subsidize a new larger convention center in Queens.  This new facility appears to be designed to replace Manhattan’s Javits Convention Center.  At a minimum, it would steal many potential customers from one facility to another. There is also a proposal for a third convention center to be built as part of the Willets Point development project.  Should government be subsidizing rival convention centers?  Is this the best use of scarce taxpayers dollars? Even worse, some are making the case after all these investments to close down the Javits Convention Center.

In many instances, projects such as Queens Convention Center have been heavily subsidized by taxpayers, commonly known as corporate welfare.  Between direct government funding, low interest below market rate loans, tax credits and long term tax exemptions — the bill to taxpayers in the end is greater than the so-called public benefits.  There is also a potential relationship between Pay for Play campaign contributions from developers to elected officials looking for favorable legislation such as exclusive rights to casino gambling in the entire city, a state constitutional amendment to legalize gambling, private property condemnation under eminent domain, building permits along with direct and hidden subsidies for transportation and other infrastructure improvements.

Will Weprin, just like he did with the proposed Jets Manhattan Westside Stadium  last decade, accept campaign contributions from the project sponsor — Genting America, their executives, lobbyists and construction unions who might benefit from the project thus creating a clear conflict of interest? Weprin’s campaign election finance fillings later this year will make interesting reading.

The short term gains of construction jobs could be offset by unfulfilled commitments by Genting America for creation of significant numbers of good paying permanent new jobs and tax revenues after project completion.  In the past, similar projects have frequently not met either new jobs or increased government tax revenue expectations.

This project is a winning bet for Genting Americas and a losing one for taxpayers. It does represent a potential windfall in campaign contributions for career politicians like Weprin and others who will benefit from the political quid pro quo.