IDA Set to Sneak Through “Payment Acceleration” Deal This Afternoon, Leaving $35 Million Avalon Windfall Untouched

The IDA will be meeting tonight at 5:30 PM at the City Hall Annex on Beaufort Place, over by the Fire Department headquarters.

The principal item of business will be the IDA’s ratification of the Avalon deal which was worked up by the City Council. The official line will likely be that the IDA’s approval is pro forma and required, and that the meeting is a formality.

The Avalon “payment acceleration” deal is tied to the sale of Avalon One to Hartz Mountain for $100 million. Howard Ratner, the City’s Finance Commissioner, told council members several weeks ago that the value of the tax benefits given to Avalon Bay account for 35% of the purchase price. IDA approval might be a formality but it is a $35 million formality with significant long-term implications for the City of New Rochelle.

The Avalon deal is, by far, the most lucrative property tax deal ever given in New Rochelle. The rationale at the time was to incentivize Avalon as a pioneer for all downtown development. True or not, the new owner who will acquire the Avalon property has never before invested a dime here and is not a pioneer in anything in New Rochelle.

Past statements by City officials suggest that the response to this point will be that this “portability” was part of the original land disposition agreement entered into by the city, and that agreement cannot be renegotiated or changed. Not mentioned is all the ways the agreement has been changed already, including this latest deal for the city to receive $9 million accelerated payments.

If the payments can be accelerated, why can’t the tax abatement part of the dealbe renegotiated or changed. If IDA approval is required doesn’t that represent an opportunity for the IDA to withhold approval until changes are made? For example, how about increasing the amount of the PILOT? How about seeking to extract some of that $35 million in extra-profit on the deal? How come the City and the IDA are always the ones giving and the developers always the ones taking?

Keep in mind that Avalon is not doing the City any favor by “accelerating” payments due in the future. Any bank will lend against that sort of future cash flow. It is not “free” money just money that the City is already owed. What the City should want is a piece of the $35 million windfall in EXTRA profit that Avalon is getting due solely to the tax benefits given to them by the City.

Parents looking at massive budget cuts and the teachers union faced with a headcount reduction of 80-90 people for next year might want to consider that there was a major change in state law which requires that all taxing jurisdictions receive their proportional share of PILOT payments. Under the original deal, the city retains all the money and the school district gets virtually nothing. Under current law, if that Avalon deal were made today, the school district would get between $400,000 and $500,000. How many programs and positions could be saved with that money? How much of the projected 3.8% school tax increase could be reduced?

Pro forma?

There is nothing pro forma in the interests of the tax payers of New Rochelle being cast aside under the guise of having a “positive relationship” with developers. For years, these developers have played hardball, coming back to the City and the IDA over and over again for more concessions, more modifications and more deals and changes. Now the IDA is in a position to push back and instead is going to roll over again, putting the interests of the developers ahead of taxpayers and public employees.

Unfortunately, New Rochelle residents rarely show up for IDA meetings. The public is not welcome. The IDA makes it very difficult for the uninitiated to even find the meetings. At this particular meeting there IS a a Public Hearing in connection with Avalon-on-the Sound (Phase I) at the very start of the meeting so if you do want to speak up be on time.

If the IDA were doing such a bang up job it might be one thing but the dead carcasses of their approved but failed projects are laying all over New Rochelle. The project they have approved — Trump, LeCount, Echo Bay — are among the biggest real estate failures in Westchester County. Others like Avalon 1 and 2 have generated high actual costs with only theoretical revenue to show for it. Along the way, according to the NYS Comptroller’s office, the IDA in New Rochelle has managed to achieve the second lowest number of jobs created per million in tax incentives of all municipal IDAs in the State of New York.

If you are interested to attend the meeting click here for details.