Avalon School Tax Subsidy Tops $11 MILLION, City and Board of Ed Can’t Agree on Per-Pupil Developers Costs

Sooooo much has happened since my 9/24/2012 post. A Journal News article chronicled the woeful reality of Industrial Development Agency (IDA) failures. The New Rochelle Board of Education (NRBOE) FINALLY recognized publicly the horrendous burden that the failed development of the Idoni and Bramson administrations has placed on education funding and the number of Avalon students enrolled in the New Rochelle School District swelled from 137 to 146. And now comes news that the City and Board of Education are telling two different stories when it comes to the per-pupil cost being charged to tax abated developers. The City of New Rochelle says they agreed with the Board of Education to use a figure of $13,500 per pupil for 2011/12 and $17,500 for 2012/13. The Board of Education says there is no agreed upon figure at all.

The Journal News article, “Tax Watch The High Cost of Development” depicts the role of IDA agencies, and although well intentioned, how these agencies have failed to produce jobs through tax-abated development.

The New Rochelle IDA is among the worst of the worst. New York State rates IDA’s by the “cost per job gained”. The Westchester County average is $1,517 taxpayer dollars per job gained; the Lower Hudson Valley average is $4,100 taxpayer dollars per job gained; the City of Mount Vernon average is $16,600 taxpayer dollars per job gained while the City of New Rochelle average is $30,500 taxpayer dollars per job gained. The NR IDA is the second worst in New York State, according to a 2010 State Comptroller’s Report on IDA’s.

An additional negative impact of IDA tax-abated projects is the collateral damage of decimating school district tax revenue. While the City of New Rochelle receives a Payment In Lieu of Taxes (PILOT) the City School District receives $0 from the Avalon Project. The loss of school district taxes through IDA abatements is compounded by the actual cost of educating students from these tax-abated projects. In the case of New Rochelle it is a lose, lose situation. The Idoni administration originally doled out 30-year tax abatements to the Avalon project. In reality, the abatement time period far exceeds 30-years, as each building is abated on an individual basis. The 30-year tax abatement on Avalon 1 started ticking with the issuance of their building permit while Avalon 2’s 30-year tax abatement didn’t begin ticking until many years later with the issuance of their building permit. The actual consequence is that the taxpayers of New Rochelle will have to subsidize the Avalon project for nearly 40-years.

At 100% valuation, the Avalon project would pay over $12 million in total taxes of which, about $8 million would go to the school district. Since my 9/4/2012 post, the total number of students registered in the New Rochelle School district from the Avalon project increased by 9 students for a grand total of 146 students. When you divide the total school district budget by the number of pupils, the average per-pupil cost is $21,155.93. Multiply that number by 146 and the cost of educating 146 Avalon students is over $3 million dollars. The total impact of the $8 million school tax abatement plus the $3 million actual cost to educate 146 students from the Avalon project represents a total of $11 million, which New Rochelle property owners must absorb through increased school district taxes.

The 146 students represent a 151% increase over the 58 students originally projected by the Final Environmental Impact Statement (FEIS). This is the study that the City Council used to grant Avalon unprecedented 30-year tax abatements. Indifferent and ignoring the burden to its taxpayers, the Bramson administration failed to renegotiate this outrageous abatement when it had an opportunity to do so by allowing Hartz Mountain to purchase Avalon 1 with the remaining tax abatement intact. Once again the City Council ignored the grave financial consequences to the school district and New Rochelle taxpayers in favor of its financial self-interest, allowing the sale of Avalon 1 for a quick-fix-money-grab of $9 million to increase the City’s coffers. Even with the $9 million bonanza, New Rochelle faces a projected $29 million shortfall over the next three years.

The NRBOE recently had an epiphany and discussed this situation at a public meeting. Thanks to Bob Cox for posting both the video and an un-official transcript of the meeting.

Board President Petrone states, “Stop doing this to the school district”… and “we need our children’s education funded” in reference to the City’s tax abatement policies. In fairness, the NRBOE must bear some responsibility, as they remained silent when these tax abatements were permitted. They never publicly opposed the tax abatements nor did they challenge the obscenely low projection of 58 students from 1,000 apartments.

Moving forward, new legislation allows some recouping of taxes to school districts, but the city and school district are miles apart on the per-pupil cost. While referencing a meeting between the city and school district that attempted to reach a per-pupil cost to charge future developers, Superintendent Organisciak stated, “They [the city] didn’t invite us to the dance because they wanted to, they invited us because they had to.” The City proposed $13,500 per-pupil and the NRBOE countered with $17,500 in the discussion. Trustee Hastie states $21,000 is the bare minimum and he is correct! The schools most impacted by transit-oriented development are Trinity, Jefferson and IEY. They are the most overcrowded schools in the district and cannot absorb any more students. At this rate, in the near future the NRBOE will have to construct multi-million dollar expansions to accommodate the rising student population, which will add substantially to the per-pupil cost. I will conclude this segment with statements from Trustees Lacher and Polow. Lacher noted, “We now have to learn from the experience we have…. make sure we ask all the questions… the school district is 2/3 of the tax bill… we have the most skin in the game!” Polow stated, “We must be very vigilant and very vocal!”

Recently, I sent multiple FOIL requests to the City and the NRBOE to ascertain if they had come to an agreement on the per-pupil cost to be charged to developers in light of the pending Echo Bay/Forest City development plan. The City Clerk’s response was, “Our Finance Commissioner confirms that the amount was $13,500 for 2011/12 and $17,500 for 2012/13”, which is in stark contrast to the NRBOE clerk’s response of, “I am informed by the office of the Superintendent of Schools that there is no agreed upon sum.” This is typical of the two entities that comprise 83% of New Rochelle’s tax bill. They have not made significant strides to consolidate services, purchase in volume nor share personnel to accomplish like tasks. Typically, the NRBOE salaries are 10-15% greater than the City for a similar position with similar requirements.

The NRBOE has openly repudiated Mayor Bramson’s repeated claims of $2 and $7 million dollars in net benefit from development. This is a major change from the power brokers in New Rochelle. A group of North End Democrats controls every major board, committee and ad-hoc group. The recent City Budget Sustainability Committee was composed of 12 Democrats, 2 Republicans and 1 independent. That’s a 6 to 1 Democrat to Republican ratio while New Rochelle has a 3 to 1 Democrat to Republican registration. This is a major insult to independent voters who makeup over 20% of registered voters. This is how power is maintained, stack the deck and make the rules. One rule on the budget committee was that any budget proposal required three dissenting votes to issue a minority report. That explains why only two Republicans were appointed. The Iona expansion committee was not allowed to debate whether Iona expansion is necessary, only how Iona will expand. Proof positive, stacking the deck and making the rules is standard operating procedure for Mayor Bramson.

I have stated many times we must identify and admit our mistakes or we are doomed to repeat them. The NRBOE has taken the first step in what hopefully will be a new direction that ends the corporate welfare doled out to wealthy developers and fully funds our children’s education. I hope that the average citizen sees this as a wake-up call. Don’t let the rhetorical embellishments and grandiose phrases dupe you. During the Idoni administration it was people with disposable income. Currently Mayor Bramson has wagered his political future on the word SUSTAINABLE, sustainable budgets, sustainable communities, sustainable development and so on. We have a sustainable community via GreeNR, a sustainable budget recommendation from the city budget sustainable committee and we have sustainable development via transit-oriented development.

The only thing that the Idoni and Bramson administrations have failed to sustain is New Rochelle’s tax base. People like me are leaving do to intolerable taxes, fees and surcharges. What will happen when Avalon’s tax abatement ends? When Avalon has to pay $15 million in taxes how high will rents go? When tax abatements and restrictions expire, will Avalon fill 1,000 apartments with Section 8 tenants? What impacts will that have on the downtown business district? These are all valid questions that were never contemplated. Yes, I am talking about New Rochelle’s future and if there’s one thing the vast majority can agree on, it’s that New Rochelle’s development has been hodgepodge. No real vision, no twenty/thirty year goals, no focused direction. New-Roc City a mall turned into an entertainment center, Echo Bay waterfront development turned into a farmer’s market, a police/court facility that violated city code and doesn’t have enough parking, Costco allowed to take City parkland and colleges that are allowed to expand at will by applying political pressure to attain zoning changes through the creation of floating zones and overlays.

All I can say is don’t be deceived. Don’t allow today’s “sustainable development” to turn into yesterday’s “people with disposable income.” Both are shams or illusions! Citizens of New Rochelle Awake and be Vigilant for it is the New Rochelle Taxpayers who have the most skin in the game!