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Hudson Developer asks for a tax break
Company that wants to build Greenport Commons shopping center wants to take advantage of a recently-lapsed law
by Andrew Amelinckx
Register-Star
Friday, April 11, 2008
Widewaters, the Rochester-based developer building the Greenport Commons shopping plaza, was before the Industrial Development Corporation (IDA) Thursday morning asking for a tax break.
The 500,000-plus-square-foot shopping plaza is in the beginning stages of construction next to Route 9 in Greenport.
The scene was something no one, including the developer, expected to be a part of.
"I don't want to be here," said Marco Marzocchi, general counsel for the Widewaters group, but blamed the current "economic times."
"I'm here because the of the economic situation in the country and especially in this state," he told those present. "We never thought Bear Stearns would be going for $2 a share."
Bear Stearns, the nation's fifth largest securities firm, was recently rescued by the Federal Reserve through the merger with JP Morgan Chase, after the company floundered due to the subprime mortgage crisis. The stock was increased to $10 a share a week after the merger.
Marzocchi also blamed rising construction and fuel costs for reasons Widewaters was requesting a tax exemption. "We never expected to have to be here," he said.
Until very recently the IDA wouldn't have been able to be in a position to offer tax benefits to Widewaters, or any other retail projects.
According to Theodore Guterman II, attorney for the IDA, the regulation that prohibited them from considering retail developments expired Feb. 1. He said there were legislative proposals, but as of now nothing had been done, so the IDA was free to consider retail proposals.
"We're only here because of the sunsetting of a law Feb. 1," said Kinderhook Supervisor Doug McGivney, adding he didn't believe the IDA should deal with retail developments. He and others spoke during a public comment period.
The IDA mechanism was created by Congress in the 1960s to help medium-sized manufacturing companies expand. Columbia County's IDA doesn't lend money, but issues Industrial Revenue Bonds on behalf of companies as well as providing local tax exemptions. There are three different programs through the IDA including PILOT payments, sales tax exemptions and mortgage exemptions.
Widewaters has requested PILOT payment, meaning it would agree to make payments to local taxing entities--county, town, village and school district--instead of paying property taxes. PILOTs are usually, but not always, less than the actual tax rate on the improved property.
The IDA is currently in the first phase of a four-step process with regards to Widewaters' request. The special meeting was to determine whether the agency would consider it. A resolution is required for the agency to move forward and consider the request, followed by a public hearing and then a final resolution.
Marzocchi presented the IDA with sales tax and employment numbers forecasted for Widewaters by Engineering Professor Frank Sciremammano from Rochester Institute of Technology.
According to Sciremammano's numbers the sales tax generated by Greenport Commons would be $10.8 million per year. "These are conservative numbers," Marzocchi said.
The number of jobs from the project was calculated at a full-time equivalent of 954.
"It's a total of 1,400 jobs. Some will be part-time positions. The market will dictate how many," said Marzocchi.
"These are ghost figures," said local resident Robert Pinkowski of the numbers presented by Widewaters. "You need to get more findings."
James Galvin, the executive director of the Columbia Hudson Partnership, pointed out that the numbers reflected a fully-realized project.
Attorney John Faso, the Republican nominee for governor in 2006, supports the project. He also spoke Thursday. He said it was a $70 million investment in the county and would provide $10 million in new tax revenue. He also pointed out that currently the vacant land is bringing in no tax revenue at all.
According to Faso residents of the county's southern end go to Kingston to shop, while those in the northern end go to Albany to shop.
"We can bring that home to Columbia County," he said.
Marzocchi said they were looking for a market that doesn't currently exist in Columbia County.
Bruce Bohnsack, chair of the IDA, wanted to make sure it wouldn't be merely shifting businesses from one end of the county to another.
Lori Selden, owner of Mexican Radio, a restaurant in Hudson, also questioned if Greenport Commons would merely be shifting revenue from one business in the county to another.
"Where are the people going to be coming from?" she asked.
"It's not an exclusive club. We're not going to turn down locals who want to relocate," answered Marzocchi added he had spoken to some local businesses that were looking to expand or open a second location.
McGivney welcomed the tax money, but not at the expense of the taxpayers, he said.
He went on to say that he felt giving the Widewaters project in Greenport a PILOT was unfair to Kinderhook.
"It's discriminating against Kinderhook...it benefits one region over another," McGivney said.
Greenport Town Board member Tom Fleming said he didn't believe that Greenport could support another tax exempt project.
"The middle class are stretched to the limit with taxes," he said.
He said he believed Widewaters should pay its fair share.
According to Fleming and others, Widewaters had said it would not ask for a PILOT when it was applying for a permit from the Greenport Planning Board.
Marzocchi admitted Widewaters wouldn't seek a PILOT, but he said, "these are difficult times."
Faso said that the only thing Widewaters wanted to do with the PILOT was to bring up front the tax benefits that they were already entitled to through 485B of the real property tax law. "Any commercial development is entitled to it. The tax revenue is identical to PILOT," he said.
Marzocchi added that the PILOT was to help lure businesses in with the upfront tax exemption.
Hudson Supervisor William Hughes felt giving a PILOT to Widewaters would unfairly benefit the larger retailers that would go into Greenport Commons over smaller local businesses.
Hilary Hillman of the Hudson Development Corporation and an advocate for buying local, felt that the IDA should focus on smaller local businesses that might be able to develop into regional and perhaps even national businesses.
"Maybe then they could expand into Arkansas, instead of exporting our tax revenues there," she said, making reference to the state where Wal-Mart is headquartered.
As of today the only business that is on board with the project is Wal-Mart, even though the company currently has a store just south of the Greenport Commons site.
"Wal-Mart is the only tenant solidly signed, others are in various stages," said Marzocchi. The IDA would not be providing any tax exemptions for Wal-Mart.
The IDA also wanted a guarantee that Widewaters would go beyond merely building a Super Wal-Mart and build at least two of the other large stores.
"We can guarantee that," said Marzocchi.
Marzocchi said that Wal-Mart was located on its own parcel. "They own it," he said, but added that the site work would be done by Widewaters.
Galvin said the IDA weren't interested in providing a PILOT for just a Super Wal-Mart. "The tax revenue...is a nominal increase" he said.
Marzocchi said Widewaters was lucky to have gotten Wal-Mart to sign on before the economic slump. "They killed about 125 other projects," he said.
"We have to get over the hump," Marzocchi said, adding he didn't want to think about what might happen without the PILOT.
The IDA decided it required more information before proceeding with the process and tabled the discussion until 10 a.m. April 29.
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