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Greenport
Tax break for mall is rejected
by Christine D'Agostino
Register-Star
Wednesday, April 30, 2008
The Columbia County Industrial Development Agency (IDA) denied a request from Widewaters, the developer for the Greenport Commons shopping plaza currently being constructed on Fairview Avenue in Greenport, that it be considered for various tax breaks, Tuesday.
The vote was unanimous, though IDA chairman Bruce Bohnsack says the door is open for them to return in the future with another proposal.
"For me, the determining factor was the need for the project to be unique," Bohnsack said after the meeting. "I don't think they proved that it will be unique."
The Rochester-based Widewaters Group had requested a structured property tax, also known as PILOT. Under this program, the developer would pay local taxing entities, in lieu of paying property taxes. The developer also requested it be exempt from paying sales tax on construction materials, as well as mortgage recording taxes. Widewaters was able to apply for these incentives because of the recent expiration of a law that prohibited the IDA from considering retail developments.
Tuesday's discussion was a continuation of one that began April 10. At the start of the meeting, IDA counsel Ted Guterman II made it clear that even though members of the public were allowed to speak at the previous meeting, they would not be able to do so Tuesday. If the board had voted to go forward in the process, a public hearing would have been scheduled as the next step.
Guterman added that all letters and comments the board received after the April 10 meeting were carefully reviewed by board members. According to Bohnsack, the board received 35 documents. While these letters did not speak out against the concept of Greenport Commons, they were against giving the project any sort of tax break.
James Galvin, executive director of the Columbia Hudson Partnership, said that the board had taken the extra time to review the proposal because it is breaking new ground by considering the application. They've also taken into consideration the level of concern raised by the local population.
"It is clear to us what the local concerns are," he said.
"Can we assume there will be enough there?" Galvin asked, referring to the lack of committed lessees for the site. At this point, the only retailer confirmed for the site is Wal-Mart, which plans to build a Super Center at the location. Since Wal-Mart owns its parcel and will be doing its own construction, the benefits of the PILOT would not apply to it.
"We may be the first IDA in the state to be dealing with a retail outlet," Bohnsack said.
He pointed out that in the past, the board has approved so-called "destination locations," such as Catamount Ski resort and the proposed baseball camp which would straddle Greenport and Livingston. He also recognized that attracting shoppers would benefit Columbia County.
Several times during the meeting, Bohnsack referred to Widewaters' proposal as a chicken and egg situation. The exemptions could be used to lure businesses and therefore customers, though at the time it is hard to justify giving said exemptions without any solid commitments.
Attorney John Faso, the 2006 Republican nominee for governor who also represents Widewaters said that while the prohibition on giving PILOTs to a retail project had expired, "because of the nature of the applications and what we're bringing, we felt the project would have fit with the prior law."
Widewaters was willing to make the PILOT benefit available only if the project was able to bring in the promised regional and national chains not currently in Columbia County.
"Firms signing the leases want to know that all approvals are had before they'll sign," he said. He also pointed out that they'd want to know what the final cost would be before committing.
Marco Marzocchi, general counsel for the Widewaters Group, said that the PILOT would be a "proportional benefit" that will only be extended "when we can make this project what we wanted it to be when going through the approval process."
According to Marzocchi, the requested exemption on sales tax for construction equipment and materials would allow them to better contain construction costs, which are rising "astronomically." He added that the exemption would benefit retailers as well, and serve as an incentive for them to build.
Another compromise Faso spoke of involved the length of the proposed PILOT. Widewaters had originally sought a 10-year plan, but were prepared to accept a five-year plan.
"On behalf of Widewaters, I appreciate your concerns," said Marzocchi, "and I feel the compromises address them."
A major board concern revolved around how the language of the PILOT would be written to allow it to apply only to chains not currently in Columbia County. Guterman said that doing this would be difficult.
"It's not difficult," Marzocchi said. "it would be challenging." This statement prompted the crowd of over 30 people, some of whom were standing just outside the doorway because they couldn't fit inside the room, to murmur in disbelief.
"We're trying to negotiate a document that has some complications," Marzocchi continued, "but we have people in place on both sides to solve the problem."
Faso felt a provision stating that the PILOT benefits would only flow to new national and regional chains, otherwise full taxes would apply, could be easily negotiated.
Although Marzocchi had said on April 10 that he did not want to think about what might happen without the PILOT, he was asked Tuesday how the project would proceed if the application was denied. He relied that it all depended on the leasing.
"If the leasing moves forward, we will move forward." He also admitted to the possibilities that the project would have to proceed more slowly than originally intended.
The Greenport Town Board joined the Columbia County Chamber of Commerce, as well as many local residents and businesses to oppose the tax exemptions. Town Attorney Carmi Rapport told the IDA board that the Greenport Town Board was unanimously against extending the PILOT program to Widewaters.
"When Widewaters came in for site plan review, there were repeated representations that they wouldn't seek tax breaks," he said.
"We were told they're not going to do it, and now they're doing it," he continued. "In simple language, ladies and gentlemen, we are against it." That statement prompted applause from throughout the room.
Marzocchi admitted to saying he wouldn't seek tax breaks, and has said in the past that he's done so now because of recent troubles in the economy.
"This application is not a reflection of Greenport," he said, adding that the town is one of the best he's worked with. "It has to do with the community at large. We want to keep this market on the radar for tenants who may be deciding to look elsewhere," due to the current economic situation.
IDA board member Sidney Richter said that he's spoken to many Greenport residents, and while they are not against putting the shopping center in Greenport, they are against giving Widewaters a tax break.
"I think we all remember the issues that occurred in Kinderhook and Valatie, and the result is a nice shopping center," he said, referring to the Widewaters-developed Hannaford Plaza that sits beside the traffic circle in the town of Kinderhook.
"I know the economy has turned sour, and the incentives would help you attract firms," Bohnsack said. "But it seems cumbersome to try to have the PILOT on some but not others."
"We would like nothing better than to keep people here in Columbia County, he continued, "but I'm not sure we're there yet."
Marzocchi was visibly disappointed after the meeting. "We tried to accommodate them at every turn. We will go forward, but we're not going to have an important selling point."
Faso shared in the disappointment, saying it will definitely be harder to recruit retailers, but he also said he wasn't surprised by the decision.
"These are difficult economic times," he said. "Some people are philosophically against any incentives being offered, and some feel it would be a competitive threat."
"The bottom line is, the county, town and school district are losing out on a lot of revenue," he said, then added, "100 percent of nothing is still nothing."
Galvin feels the true benefit of the PILOT would only be realized with complete buildout of the site. He said after the meeting, "In order for the board to make a decision, we need a sense that build-out would be achieved."
"They're asking us to go out on a limb we haven't been out on before, "Bohnsack said after the meeting, adding that if Widewaters can return to the IDA, with proof that the project will have some uniqueness in terms of its stores and offerings, "we can take another look."
Galvin again pointed out that right now, the only committed store is Wal-Mart, and it would not have benefited from the PILOT.
"The door is open, and hopefully we made that clear," Bohnsack said. Galvin suspects Widewaters will return to the IDA if they're able to put together some contingent leases.
Marzocchi didn't seem so sure, saying after the meeting, "I didn't hear anything from the board that would make me confident their decision would change down the road."
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