NEW ROCHELLE, NY — The City of New Rochelle has made public a report on tax-abatements for Forest City’s proposed development at Echo Bay. The report was prepared by the National Development Council, a consulting firm retained to evaluate development projects.
Per your request, the National Development Council (NDC) has reviewed the financial information regarding the proposed Echo Bay mixed-use, mixed-income redevelopment by Forest City Residential Group (the “developer”), a widely experienced and financially-strong development company. NDC is a national not-for-profit economic development company which provides development finance advisory services to many municipalities throughout the country. NDC is routinely asked to analyze financial structures of proposed redevelopments in our client communities and determine the appropriateness of direct financial assistance or
incentives such as payments in-lieu of taxes (PILOT).You requested that NDC review the submitted financial information, including the development program, capital budget, and operating budget and make a determination on the financial need and reasonableness of the PILOT agreement reached between the City of New Rochelle (the “City”) and the developer. Further, you requested NDC to provide comment on the land purchase price and public improvement costs to be funded by the developer.
The annual PILOT has reportedly been established at an initial base of $859,264 with annual escalators. Based upon NDC’s review of the submitted information and follow-up discussion with representatives of the developer, it is NDC’s assessment that the development would not be financially feasible if it were to pay taxes at full assessment and therefore, the PILOT is necessary in order for the development to be financially feasible with the existing capital structure.
Based upon the land disposition agreement (LDA), the developer will incur $8.5 million in public improvement costs and $8.0 million for the land. NDC concludes that the City is receiving maximum consideration for the land and public improvements.
If the developer had to cover any further public costs or pay a higher PILOT, the financial returns would be compromised to a point whereby and the development would likely not be completed.
About NDC
The National Development Council is the oldest national non-profit community and economic development organizations in the U.S. It was founded in 1969 with one purpose: increasing the flow of capital for investment, jobs and community development to under served urban and rural areas across the country. Since that time, NDC has worked with thousands of communities in every one of the 50 states and Puerto Rico, providing technical assistance, professional training, investment in affordable housing, small business financing and direct developer services.