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February 19, 2010

What if AY is delayed or smaller? Plausible scenario (25-year buildout, 25% smaller) means projected tax revenues would decline nearly 50%

Atlantic Yards Report

The Empire State Development Corporation's projected tax revenues (see memo, below) for Atlantic Yards could be cut nearly in half under the plausible conditions--neither of which would incur a penalty--of a 25-year buildout and a project cut 25% in size.

Reasons for doubt

Yesterday, I suggested several reasons to doubt the ESDC's calculations of new tax revenue, which rely on a ten-year buildout of the project. After all, even a supporter such as then-ESDC CEO Marisa Lago said the project would take "decades." The Development Agreement allows 25 years, plus extensions.

Also, the projections rely on a full buildout of the project, nearly 8 million square feet, opening after ten years and continuing for the 30 years. But the Development Agreement allows for a much smaller project, less than 5.2 million square feet.

Though no alternative calculations or assumptions were provided, a helpful reader prepared a spreadsheet to suggest such alternatives. (The ESDC's assumption of a 3% real discount rate is maintained.)

What if, rather than take a decade to build, the full project took 15 years? That would mean only 90% of projected revenue after 40 years. A 25-year buildout would mean 72% of revenue.


Posted by eric at February 19, 2010 10:41 AM