Albany IDA approves $32M in tax breaks
Published on 9/18/2014 by the Times Union written by Jordan Carleo-Evangelist
The redevelopment of Park South will be buoyed by two property tax breaks totaling more than $30 million.
The Albany Industrial Development Agency gave its final approval to both deals Thursday -— the largest of the two an estimated $26.5 million tax break over 22 years to Park South Partners, an offshoot of Tri City Rentals building 268 new market-rate apartments on Morris Street and Dana Avenue.
The vote was 4-2, with board members Dominick Calsolaro and Lee Eck opposing it as boosters hailed what they called a pivotal moment in the overdue revitalization of the neighborhood.
Calsolaro said the tax break is just too rich in the latter years of the pact.
"It's a lot for Albany taxpayers to have to bear," Calsolaro said. "I understand it's a transformational project. ... I think it's a precedent we're setting here."
Eck, who represents organized labor on the board, did not explain his opposition and declined to comment afterward.
Board member Robert Schofield recused himself from the Park South votes because, he said, his law firm, Whiteman, Osterman & Hanna, has relationships with some of the entities involved.
The apartment development, which includes more than 20,000 square feet of retail space, is a core piece of the 2006 Park South Urban Renewal Plan, the city's playbook for revitalizing nine dilapidated blocks between Albany Medical Center's growing New Scotland Avenue campus and Washington Park.
Albany Med, which gradually acquired the land to be redeveloped between New Scotland Avenue and Robin Street, is behind the $110 million plan, which also includes a six-story, 816-car parking garage and five-story medical office building on Myrtle Avenue.
"This is a big day for us here," said Sarah Reginelli, director of economic development for Capitalize Albany Corp., the city's local development arm.
Mayor Kathy Sheehan acknowledged the concerns about the size of the tax break but said the potential gain to local businesses of 268 new households and to surrounding property values justifies the risk.
"When you look at the size and scope and location of this project and the amount of infrastructure that is being done, this is a project that got a very, very hard look," Sheehan said. "Ultimately, the numbers came out where they came out because that was the bare minimum needed to get this project done. ... We could talk about what the revenue could be, but quite frankly this project wouldn't be getting done if we weren't providing the incentives we're providing."
Even with the tax break, Park South Partners will pay an estimated $11.1 million in lieu of taxes — or $6.7 million more than the IDA said would be owed on the property if the development did not happen at all.
Board member C. Anthony Owens said the project also heads off the possibility that Albany Med could develop tax-exempt uses for the property.
Park South Partners had sought more guarantees to ensure its payments in lieu of taxes — which it calls a risky proposition given the number of new apartments being built — wouldn't rise in the future. Among them: a waiver of a provision that would require it to pay more in later years if the project exceeds expectations. But the IDA refused to budge further.
The IDA separately approved, by a 6-1 vote, a property tax break for Albany Med's Myrtle Avenue office building estimated to be worth between $978,000 and $3.7 million, depending on the tenants it recruits. That agreement will last for 12 years. Eck cast the lone opposing vote.
The projects also received some $2.4 million in mortgage and sales tax breaks — pushing the value of total package above $32 million.
The city Capital Resource Corp., a sibling of the IDA, granted Albany Med access to up to $57 million in low-interest bond financing for the office building and parking garage.
The financing deals could yield up to $570,000 in fees that the city could use for future economic development, on top of nearly $526,000 in fees associated with the apartment project.
"I realize you can't make everybody happy," Sheehan said of the concerns, "and this is something people will always question and look at. And I'm willing to be held accountable for this project moving forward."