On September 4, Governor Eliot Spitzer called on the Legislature to extend the 52-year-old franchise under which the New York Racing Association operates three thoroughbred race tracks – Saratoga, Belmont and Aqueduct. The Governor also recommended that the State separately select an experienced gaming company to operate 4,500 "video lottery terminals," or VLT's – essentially video slot machines – at Aqueduct. Revenues from this new gambling operation would be used to finance improvements at all three tracks, to enrich purses, to subsidize NYRA's money-losing operations and to provide assistance to New York's thoroughbred breeders. Governor Spitzer stated that his proposed approach would "ensure that we have the best possible operator for both the racing and the gaming franchise."

Given the dramatic progress that NYRA has made in recent years in cleaning up the corruption and mismanagement that had long plagued its operations, the Governor might well be right that extending its franchise is the best available option – at least from the perspective of the state’s racing industry. New York State will also benefit from increased franchise fees, and from the tax it levies on pari-mutuel wagering and VLT gambling.

But if we step back and ask not what’s best for the racing industry, but what’s best for New York’s economy, it’s not at all clear that the Governor’s proposal represents the best possible outcome to the long-running debate over the future of the three tracks. For New York City in particular, the real question is not whether NYRA should continue to run Aqueduct. It’s whether Aqueduct should continue to be used for racing at all – or whether there might instead be much more productive uses for the land the track now occupies.

A declining business

Racing has been a declining business at Aqueduct for a long time. Between 1990 and 2006, the number of racing days dropped from 162 to 129. During the same period, total attendance fell by 77 percent; and after adjusting for inflation, Aqueduct’s “handle” – the total amount wagered on-track during the year – fell by 79 percent. In 2006, average daily attendance at Aqueduct was just 2,867.

For the past few years, the State's proposed remedy for Aqueduct’s continuing decline has been to expand its gambling business through the addition of 4,500 video slot machines. The recent experience of Empire City – a gambling hall with 5,500 VLT's that opened at Yonkers Raceway in 2006 – suggests that this strategy might in fact succeed in bringing a few thousand more people to Aqueduct each day, and creating a few hundred additional jobs.

The rise of the "airport city"

But as the Legislature considers whether to approve the Governor’s recommendation, it seems reasonable to ask whether a declining racetrack and a few thousand slot machines are the best we can do with 192 acres of publicly-owned land located next to one of the nation’s busiest airports. The question seems particularly apt when we consider how other cities in the U.S and elsewhere are using their airports – and the land around their airports – as focal points for a new wave of development.

Since the 1990’s, a growing number of cities around the world have begun to view both existing and new airports not just as transportation facilities but as nodes in an expanding network of global commerce. Local and national governments, airport authorities and private investors are betting that they can create development districts adjoining major airports, and that companies and people engaged in global commerce – because they value easy access to the worldwide air transportation network – will find these districts attractive places to work, live and do business.

Amsterdam’s Schiphol Airport began to develop an airport city nearly 20 years ago, before the concept even had a name. The Schiphol Group, which runs the airport, has its own development arm, Schiphol Real Estate. The company built the World Trade Center – Schiphol, a 700,000 square-foot on-airport office complex; is developing another cluster of office buildings (with Microsoft as its first tenant); and has also developed two office parks near the airport.

Amsterdam's World Trade Center – Schiphol. The first phase of the project was completed in 1996 and the second in 2003.

Frankfurt has developed several new office buildings immediately adjacent to its passenger terminals, and in March started construction on Airrail – a 1.5 million square-foot complex that includes 1 million square feet of office space, two hotels, and 63,000 square feet of stores and restaurants, all located above the railroad station that serves the airport. Frankfurt also has ambitious plans for development of several additional sites nearby.

Frankfurt's Airrail Center, described as a "horizontal high-rise"

In Hong Kong, a development called Sky City is rising next to Chek Lap Kok airport. On an even grander scale, China has plans for development of Beijing Capital Airport City – a massive mixed-use development that when completed is expected to have 400,000 residents. Thirty-three miles south of Seoul, a multinational team of developers has begun work on a similar complex that will be nearly as large, called New Songdo City. Dubai has also begun developing its own version, Dubai World Central.

In the U.S., several major cities and airport authorities – including Dallas-Fort Worth and Denver – are focusing on opportunities for large-scale commercial development on or near the airport. Portland is also planning a major new development adjacent to its airport. Even Detroit has begun to get into the act; Wayne County is exploring the feasibility of airport-related development around Detroit Metro Airport and along I-94.

What can New York do?

Of course, many of the places that are pursuing the vision of an “airport city” have something that New York plainly lacks – a large supply of available land around a major airport. But if advocates of this concept are right – if easy access to airports that offer high levels of worldwide connectivity is an increasingly important source of competitive advantage – then that is all the more reason for New York to be especially concerned about the fate of every piece of potentially developable land on, adjacent to or near Kennedy Airport.

The Bloomberg administration has already sought to realize some of the potential for airport-related development, through its rezoning of the area around the Jamaica AirTrain station and its efforts to promote commercial office development in this area. The City should certainly continue to focus on Jamaica – but in the long run, the Aqueduct site might offer even greater potential.

With a total of 192 acres, its own A-train station, and the potential for easy access to the airport, the Aqueduct site could easily support millions of square feet of low- to medium-density development (office buildings, distribution facilities, hotels, a conference center, etc.) and still have plenty of room left for community uses – open space, recreational facilities and other public uses.

Map of Aqueduct in relation to JFK Airport and subway stations

So what should New York do? Here's a suggestion: Extend NYRA's franchise at all three tracks for a year. Then convene a working group with representatives from the State, the City, the Port Authority, the Queens borough president's office and the local community to look carefully at all of the options for the future of Aqueduct, and come back with recommendations on what makes most sense in the long run for the State, the City and the community.

(The Port Authority has a critical role in this discussion because, in addition to be responsible for ongoing operations and future development at JFK, it already owns part of the Aqueduct site. In 1992, at the behest of then-Governor Cuomo, the PA paid NYRA $40 million for a 23-acre portion of the property; the Racing Association then passed the money through to the State. As part of that deal, the Port Authority also gained a right of first refusal on any sale of the remainder of the property, and a voice in determining what uses would be permitted in any future development of the site. In 2005 the PA bought some additional acreage for $5 million.)

Ending Aqueduct’s 113-year history as a race track need not be a blow to NYRA or to New York's thoroughbred racing industry. Belmont – a larger and better facility – is just a few miles away, and is active only 92 days a year. Consolidating NYRA's fall, winter and spring meets at one superior location seems, from an outsider’s perspective, to make eminent good sense. Part of the deal could be to provide funding that would allow NYRA to finance the improvements that would be needed at Belmont to support an expanded season.

In the end, it may turn out that a combination of part-time horse-racing and full-time video slots (or, as the Shinnecocks of Long Island recently proposed, a race track and a tribal casino) is the best use of the Aqueduct property. But here at Appleseed, we’d be willing to bet otherwise.