BLOG VIEW: One of my all-time favorite buffoons is Andrew Cuomo, who formerly served disastrously as secretary of the U.S. Department of Housing and Urban Development (HUD) and New York state attorney general. For the past year, Cuomo has been the governor of New York – and, quite frankly, he hasn't done anything that warrants significant criticism. Ah, but the man is back to his old shenanigans, and you will not believe what he's up to now!
In his 2012 State of the State address delivered on Jan. 4, Cuomo offered a unique idea to invigorate the local economy: tear down the Javits Center – New York City's top spot for conventions, trade shows, consumer shows and special events – and build a new convention center next to Aqueduct Racetrack. The site of the Javits Center would then be used for a residential development that Cuomo dubs a ’21st century neighborhood.’ But even by Cuomo's dim standards, this plan is a mess on multiple levels.
The basic problem is location. For those who do not know New York City, the Javits Center is conveniently located in a primarily commercial section of Manhattan. It is not far from the city's major hotels and attractions, and it is easily accessible for the vehicular traffic that moves equipment, machinery and props for the center's many events.
Aqueduct Racetrack, on the other hand, is in the Jamaica section of Queens, which is primarily a residential area. The one major commercial development there is John F. Kennedy International Airport, but no one leaves the airport just to visit the surrounding neighborhood. And outside of a few cheesy airport hotels, Jamaica has no place for long-term visitors to stay.
The racetrack has been losing money for years as public interest in horse racing declines, and last October, a casino opened at the venue with the hope of bringing in a new wave of gambling money. In Cuomo's mind, however, the best way to further increase this location's appeal is to bring in conventions and trade shows. After all, don't bored convention attendees always sneak out of business meetings to drop their expense account funds on the slot machines and the horses?
Besides location, there are other hiccups. The Javits Center, which opened in 1986, is no one's idea of an antiquated structure. In fact, it has never had any history of problems in attracting major trade shows and events. This week, the National Retail Federation is hosting its 101st convention at the Javits Center – it would seem that the space can easily attract big-money events.
The proposed center at Aqueduct Racetrack, however, is envisioned as a 3.8 million square-foot colossus that would become the nation's largest convention site. That's all very impressive, except for one problem: The convention industry has been waning for some years, thanks to a sour economy and high-tech alternatives, including virtual trade shows. For locations that used to depend heavily on convention revenue for their good fortune – most notably, Las Vegas – these have not been the best of times. And despite what Kevin Costner was told in the film ‘Field of Dreams,’ people will not necessarily come just because you build it.
But is there 3.8 million square feet of freely available space next to Aqueduct Racetrack for the center? Or will the state need to go through expensive, courtroom-bound eminent domain fights to get the extra land? Well, Cuomo never quite got that far into explaining that necessary detail.
Nor was he specific about the residential development planned once the Javits Center was razed. He claims that it will be modeled after New York's Battery Park City – a high-price planned community where condominium apartments sell in the millions. Considering that New York is in desperately short supply of affordable rental housing, the last thing that the city needs is more seven-digit housing prices.
Cuomo insists that this strategy will be a ‘public-private partnership’ that would generate ‘tens of thousands of jobs.’ However, he has yet to spell out how much the ‘public’ half of the partnership has to pay – the ‘private’ half is being pegged at $4 billion for the convention center and $2 billion for the new residential community. Nor has he stated just what kind of jobs will be created by all of this commotion, though I suspect the new hires will not be able to buy the million-dollar condos at the ’21st century neighborhood’ they are building.
But, then again, can we really expect anything more from Cuomo? Lest we forget, this is the same HUD leader that Dick Bove, a highly respected analyst with Rochdale Securities, dubbed the ‘father of the subprime crisis.’ In a March 2010 interview with CNBC, Bove recalled Cuomo's distinctive contributions to the real estate industry.
‘One of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today and why the government is spending hundreds of millions of dollars in supporting them, is because of the edicts pushed through by Mr. Cuomo,’ Bove said. ‘It's also thought by many that the hundreds of thousands of people who are losing their homes are [doing so], to a great degree, because of the actions taken by Mr. Cuomo at HUD.’
Hey, if Cuomo could do that for the residential real estate market, just imagine what he can do for commercial real estate!
– Phil Hall, editor, MortgageOrb
(Please address all comments regarding this opinion column to hallp@zackin.com.)
