Letter to Mike Yevoli
March 12, 2013
Chief Executive Officer
Albany Industrial Development Agency
21 Lodge Street
Albany, New York 12207
Dear Mr. Yevoli:
I have many concerns about the proposed 733 Broadway Project. I would like my concerns to be part of the public discussion by the IDA board members at both the Finance Committee meeting and the next general meeting. My concerns are listed below. Thanks.
Common Council Member - First Ward
35 Clare Avenue
Albany, NY 12202
He are some of my thoughts:
1) Obviously, a 40 year PILOT agreement is much too long and may lead to other potential project applicants seeking a similar tax abatement (even if they are not a HUD financed project).
2) $23 million in total tax abatement over 40 years, on a building projected to cost, in toto, $13 million, in a city with a declining tax base, is unfathomable.
3) $23 million tax abatement for ONE full-time position at $37,000 per year, and ONE part-time position at $20,000 per year is not job creation.
4) The project is for RENTAL units, in a city that has a major problem with a lack of owner-occupied dwellings. True urban economic revitalization occurs with increasing home ownership, not adding to the rental registry.
5) RED FLAGS galore pop up in my mind when reading the application concerning the problems faced in getting financing for the project:
a. The owners of 733 Broadway LLC obviously do not have the CAPITAL necessary to undertake this proposed project. If they did, they would have been able to get commercial financing for the project and not have to depend on a very stringent HUD mortgage. If commercial lenders feel the project is too risky to invest in, then the IDA should also have those same concerns.
b. The applicants state that their study shows a $5 million per year economic benefit from the occupants of the building. Let's see: a whopping $57,000 in annual salaries for the 1.5 employees, and the rest of the $4,943,000 in economic benefit will be from the money spent in Albany (hopefully) at all of the surrounding businesses (bars). The application even mentions part of this benefit will be the taxes paid by the tenants - however, those taxes won't be property taxes having a direct impact on the city, county, and school district revenues, but income taxes that go to the state and federal governments, and sales taxes that the city only receives a percentage of from the county share. I would like to see more specifics as to where the $5 million figure comes from. Does it only count people who were not City residents before moving into the apartments? If not, then the economic benefit from current city residents just moving from one apartment, or owner-occupied homes to these new apartments should not be counted as they already, presumably, spend their money in the city. One could even argue, if the applicants are correct in assuming retirees will make up some of the 70 tenants, that a few of these retirees might be leaving property taxpaying abodes to move into a newly constructed apartment building, thus having an adverse affect on city property taxes.
c. If, as the applicant states, they can't get the HUD 40 year mortgage without the concurrent 40 year tax abatement, are they not then asking the city taxpayers to be, in reality, the guarantors of the HUD mortgage (loan)? I would argue that is exactly what this proposed 40 year tax abatement is, a city property taxpayer-backed federal loan for a private entity's own economic gain.
d. If the commercial lenders refused to invest in this project, and HUD has placed such stringent financial requirements on the mortgage - the 40 year tax abatement - what happens if/when the project fails to meet its financial obligations (as the private lenders seem to fear will happen)? Who is responsible for making the mortgage payments?
6) How does one justify approving a $13 million building paying only $25,000 per year in real property taxes, when many homeowners in Albany are paying upwards of $8,000 per year on a house assessed at only a fraction of the assessed value of 733 Broadway?
7) How do we justify, as stated above, $23 million in tax abatement for more rental units, when the city needs more owner-occupied housing?
8) How does this project fit into the 2030 Plan that stresses increasing the number of owner-occupied homes in Albany? Yes, the Plan does call for more downtown residents, as it should, but where does home ownership show up in this proposal that states in its application it is following the 2030 recommendations?
In general, I think the applicant does not have the necessary capital or financial wherewithal to undertake such a massive project and that approving this proposal as presented puts the City, County and School District in a precarious financial position that our dwindling tax base will have to bear for the benefit of the three listed owners of 733 Broadway. The risk is not worth the limited, and unspecified, benefits as projected by the applicant.