A deal has been reached which will permit the sale of Avalon on the Sound at 255 Huguenot Street. Under the deal , Avalon Bay Communities, the owner of the property, will pay the City of New Rochelle about $9mm, spread over several years, with $3mm coming in 2010. The City is expected to use the funds to offset future tax increases.
The transaction will be discussed at tomorrow’s City Council meeting.
Developing…
UPDATE
The announcement yesterday is being billed as an early payment to the City of the existing 30-year agreement between Avalon and the Industrial Development Agency. If ratified by City Council, Avalon would be free to sell the building and transfer the 30-year tax abatement to the new owner. While the City is in dire need of revenue this is the same old song with a new political twist. Whether you talk about the notorious 10, 15 or 30-year tax abatements you are talking about a quick money grab with total disregard for the future. You may ask what money grabs if they are paying little or no taxes. There are building and other permit fees which total million$ of dollar$ to grab up front with disregard for the decades that follow with little or no property tax revenue and $0 school tax revenue while increasing the school district’s burden with an influx of students. It has been known for months that Avalon has a buyer in the wings so if this agreement is ratified by council Avalon could finalize the sale and transfer the balance of the original 30-year abatement.
It has been reported that Avalon will pay the City $9 million http://news12.com/articleDetail.jsp?articleId=243097&position=4&news_type=news&rand=22735700 by 2014. It would be $3 million in 2010 and $1.5 million for four years after. Avalon’s taxes would be over $3 million per year at 100% taxation so in reality Avalon will be giving back the tax dollars already saved, have the ability to sell at a hefty profit and transfer their onerous tax abatement to the new owners for the 20 plus years remaining. Once again New Rochelle’s future is sold for a quick money grab. I say once again because there is a long history of this dating back to the day of the tax-cap which was a quick money grab, coincidentally $9 million a year on average over the lifespan, then there was Home Depot/Costco (10-year tax abatement), New Roc City (15-year now extended to 20 plus years tax abatement IF Kohls & Target ever come) and finally Avalon (30-year tax abatement).
The problem I have is this; if I concede (and I don’t) that Avalon was taking a great risk then the 30-year tax abatement was appropriate. What justifies the transfer of the abatement to a new owner who is taking no risk? The only answer is that the City must have been asleep at the wheel when the contract was signed and again there is a history of this. Home Depot filed and won a tax certiorari long before their abatement expired. Why? Because the City wasn’t sharp enough to include a stipulation that barred Home Depot from filing for certiorari during the abatement period. Now history repeats itself in that the City was not sharp enough to include a stipulation that if the land which Avalon sits on and is owned by the IDA is purchased before the end of the 30-year abatement period the abatement is not transferrable. Granted, if I were responsible for these agreements the lapses would be understandable. But considering all of the professionals with $100,000 plus salaries and all the lawyers, teachers, business persons and Ivy League graduate’s on council, one must wonder how this could happen?
In closing I will explore the new political twist; if ratified the City will receive $3 million in 2010 which will go directly into the fund balance. This is very important in that the 2011 budget will be adopted in 2010 as required by the City Charter. 2011 is a re-election year which means that the City Council will have an extra $3 million in its coffers to lower the property tax increase. By 2010 standards, $3 million represents a 6.7% property tax adjustment. If the City Manager presents a proposed 10% increase the City Council can reduce that to 3.3% with $3 million from the fund balance. This would be touted by the incumbents in their re-election bid. Using fund balance to reduce the tax levy has become the norm but flies in the face of Finance Commissioner Ratner’s opinion that one-time revenue infusions be used for one time capitol expenses as opposed to artificially reducing the tax levy.
While the $9 million is very attractive and would be welcome in these tough economic times this deal is truly a Trojan Horse as the negative effects will be felt for decades. All we are doing is robbing Peter to pay Paul and mortgaging our children and grandchildren’s future.
Anthony Galletta
Where is the money going to go?
Does this mean now the City of New Rochelle will give back the raises that they took away from the firefighters by threatening layoffs and using strong arm tactics? Are they going to re-hire the people from DPW laid off? Oh I forgot there is a hiring freeze, but they hired a new city clerk. Or is the council going to spend the money putting up more “bike route” signs to nowhere? Or spending thousands on putting lights on the all the “Welcome to New Rochelle” signs when they claim to have no money?
avalon 1
I don’t think it does us a hell of a lot of good to revisit the past. This is beginning to turn out like the Washington republican and democratic debates on the entire Obama program. It really doesn’;t matter at all at this point who you support. It doesn’;t even matter at this point how inexperienced and unskillful the Idoni administration was in cutting the original deal and later, the same can be said for subsequent Bramson Administation deals.
What matters is (1) did they administration learn anything, (2) how serious are all citizens in this town in terms of wanting this place to succeed and come out ahead. This is not a zero sum game, it stood to reason that the city was a second coming of an urban shell when these things happened and, yes, I think we all can agree that (1) something had to be done and (2) likely it was not done as well as it could have been. Remember, it was literally dealers choice at the time of first expansion — the venture capitalist had all of the cards — experience, money and skill and we simply had a need. So, yes, Anthony your figures are impressive and likely correct, but again, I can only hope — as I have pointed out previously on many blogs — that the Bramson administration went to school on subsequent new ventures and will do a much better job in the future. I would begin with the best real estate counsel I could find.
John in his usual gentle way, goes more towards reconcilation I think. He has seen the potential of a positive and patient effort bearing fruit in Echo Bay. Most of us who research know that Marc Jerome and the Veterans Group are onto something beneficial. I have read subsequent comments and I would advise throwing Forest City out. They likely will not stay in any event and losing the entry to the development is not a win for them but a grudging acceptance that they are overextended and have no capital base to continue. They also will likely be burned by the Annabi situation in Yonkers. My hope is that Noam and his people will accept both this fact and the community strength and spirit behind the Armory and make this work.
Look this damn place needs to heal as much as Washington DC. It seems that “no good deed go unpunished.” I was wrong on the Armory intially; not for the reasons I opposed it, but for a more important reason, the community wanted it. I was and am very aware of the abandonment of the City in terms of maintaining a gift, but who did anything about that before it became an issue around Forest City. We accepted Haunted Houses and Habitat Storage as usage. I made a mistake when I was a little too glib about Louis writing a letter to Avalon requesting a cash contribution citing the good deal they got from the city. Again, my business head was right, but my sense of how a decent community spirt and citizen could help change what could have simply remained a positive selling point to a new buyer. Louis deserves high praise for his courage and love of the city. I don’t suppose that Avalon or, for that matter, Forest City would give anything away. Business is business and as Jim Wallis says, we live in a society where values are hard to find and maybe, just maybe some good will come of all this.
the only thing besides elected politicians taking action for the greater good is action at the ballot box. The lure of power and the lure of being able to be critical in the electronic and print media are just too overwhelming for people to resist.
Lets try to be a community of citizens who want the best for the community and work more positively for the greater good than for the satisfaction of ego or selfish positions. Maybe the current admiinistrtion has learned little or nothing about new business development. check in a yaar or so what is taking place in downtown and what steps the city is taking to make things better and positive for the tax base. Leadrs need to express opinion and create plans and policies and not simply rule by rhetoric. I think this is where many of us can agree is Obama’s weak point. Let’s not let it continue in New Rochelle at any level.
warren gross
The Future is NOW!
Warren this is not about revisiting the past this is about the past repeating itself. The deal that was struck this week was not a gift as stated by City Manager Chuck Strome. This was money the city was owed at the end of the 30-year agreement. I applaud Councilman Trangucci for all his efforts he above all takes positions on what he believes are best for his district and city with minimal or no political considerations. I am sick and tired of people saying half a loaf is better than no loaf at all or look at the glass as half full as opposed to half empty. No matter what the city does they can never affect the glass by half (50%) because they only control 17% of the glass. Yes I am referring to New Rochelle taxes. The city which controls 17% of our tax bill makes decisions that negatively impact the school district which comprises 67% of our tax bill. This deal was struck to permit the sale of Avalon 1 with the balance of the tax abatements being transferred to the new owner. My latest post; http://www.newrochelletalk.com/node/1511 was not promoted to the front page but for the record Avalon 1’s abatement places a $3.8 MILLION tax burden on New Rochelle tax payers at current valuation. Add an additional $ 820,000 taxpayer burden for the 41 students enrolled from Avalon 1 which means that the taxpayers of New Rochelle will have to subsidize $4.6 MILLION tax abatement to mega-wealthy real estate speculators. The school district will be cheated out of over $2.4 million this year plus annual increases moving forward for the balance of the abatement period so this is not about the past but about New Rochelle’s future. How could the administration have learned anything if they are extending the status quo?
Yes we need to heal and move forward but if mistakes are not realized they will be duplicated as happened here. You state you were wrong on the Armory because” the community wanted it”; do think the community wants this tax abatement extended?
Anthony Galletta
Is the Negotiation Process Weak or Corrupt ?
Good insight Anthony. The Mayor has described the abatements as a vehicle to promote development and send the message to the developer that the city understands the risk being taken. So, you ask the right question, what risk is a new owner taking that would need such support considering the project is already “out of the ground” and viable? It seems as if the city has a track record of negotiating from a weak position and winds up with the short end of the stick. I’ll admit I’m not a lawyer, but having said that I ask, if the city couldn’t modify the PILOT/abatement to benefit the city in a more realistic fashion, then why bother going through the charade of council discussions? What if the parties involved were left with the distinct impression that the city would gum up the plans at every juncture if there wasn’t a big windfall for the city? Given the amounts of money involved, another 1 million per year until the abatement matures would be a good starting place. They still get a discount and the city makes some money. It’s just hard to believe this was the best that could be done. Everyone makes money except the city considering the revenues can’t cover the cost incurred by the city for infrastructure/schools and emergency services. You would be better off converting the whole place to section 8 and let the state do the subsidizing instead of the city.
You mention the political twist. Does anyone know who the principals are and what/ if any campaign money (soft or hard) has been donated? Just wondering.
Good work Anthony, thanks!