SCHOOL DISTRICT AND COUNTY LEGISLATURE MULL TAKING SMALLER SHARE OF GARVIES POINT TAX REVENUE
August 7, 2016 -- Weeks after the City of Glen Cove narrowly approved a “creative financing” plan to fund infrastructure improvements and the construction of public amenities at Garvies Point, the proposed mixed use project on Glen Cove Creek that includes a building with two 11-story towers and 1100 residential units, both the Glen Cove School Board and the Nassau County legislature heard from supporters and opponents of the proposal at their respective meetings on Monday August 1 as they considered a consent resolution that would decrease their share of the revenue generated by the property. Both bodies ultimately postponed a vote on the proposal.
Under the plan, the city is intending to borrow nearly $120 million through a method of bonding known as “tax increment financing” (TIF) which allows only tax revenue generated by the property to be used to pay off the debt.
Glen Cove City officials have said that Glen Cove taxpayers are protected from creditors should the anticipated revenues from the 52 acre former brownfield property not materialize. Because of the greater risk to investors, said Glen Cove Special Counsel for waterfront development, Michael Zarin, they would likely receive an interest rate of between 5% and 6% on the bonds (four or five times greater than the significantly lower rate on other municipal bonds), thus greatly increasing the cost of the borrowing which is anticipated to total $282,972,321 over the next 25 years.
Additionally, the developer RXR has been granted hundreds of millions of dollars in tax breaks by the City, and will instead make payments in lieu of taxes (PILOTs) through 2056 (overall reducing the revenue generated by the property by about one-third), with a large portion of those payments designated for paying the interest on the TIF bonds and the remaining amount being divided among the four jurisdictions that would have received taxes on the property - the City of Glen Cove, the Glen Cove School District, Nassau County, and the Glen Cove Library District.
The city of Glen Cove would collect a significantly higher percentage of that remainder of PILOTs and eventual tax revenue than it does for real estate taxes it currently receives on other properties in the city, and the other jurisdictions lower than they would otherwise with the school district being hardest hit. The City’s slice of the proposed PILOT and property tax pie would increase from 29% to 39%, while the School District’s would decrease from 62% to 53%, the County’s from 7.5% to 6.4%; and the library’s from 1.5% to 1.4%.
Over the course of 40 years, if projections are accurate, the school district will collect $292,506,126 in PILOT and tax payments from the property, Mr. Zarin said.
However according to the revenue schedule published by the city, approximately $250 million of that amount would not be seen until the second 20 years - from 2037 to 2056, with about $175 million of that in the final decade.
All four of the taxing jurisdictions must agree to the new formula before the plan can be adopted. On July 19, a divided City Council voted 4-3 to accept the proposal and a week later the Library Board agreed to its slightly diminished share.
At the Monday, August 1 session of the Nassau County legislature, Sea Cliff Mayor Bruce Kennedy assailed the proposal, asserting that the reduction in PILOTs going to the county, as well as a large portion of the property’s revenue going to paying debt service, would inevitably and unfairly result in taxpayers county-wide subsidizing services that would only benefit RXR or Garvies Point residents.
"To even consider this Resolution without first performing a SEQRA study of the fiscal impact to Nassau County tax payers which includes studying and analyzing all of the fiscal reports, studies, analyses, projections and economic predictions could be considered a dereliction of legislative duty," he asserted.
Additionally, Mr. Kennedy and other critics of the financing plan have said that the bond proposal violates a 2012 amendment to a land disposition agreement between RXR and the City of Glen Cove that stipulates that the developer is responsible for the cost of infrastructure improvements and public amenities.
Mr. Zarin, who was hired by the City of Glen Cove to shepherd the project through the complex approval and financing process, has challenged that assertion insisting that another clause in the agreement allows the City and RXR to explore other sources of funding.
At the Monday August 1 Glen Cove Board of Education meeting, Mr. Zarin argued that the TIF, which he described as a “creative financing mechanism” that is increasingly being used by municipalities and developers in "public-private partnerships" across the country, along with the tax breaks and PILOTs arrangement, were necessary to keep RXR from walking away and to get the project moving forward. Not approving the financing plan, he warned, would jeopardize the entire project, leaving all four of the jurisdictions without any revenue from the property.
Both he and Mayor Reginald Spinello, who also spoke at the School Board Meeting, emphasized the importance of the project generating revenue for the city.
Mr. Zarin argued that the city needs an infusion of cash now from the sale of the property (which will not happen unless the PILOT distribution proposal is approved) to enable it to pay $5 million in debt payments to the County that are now due.
Mayor Spinello, commenting on the precarious financial situation of the city in the long view, said, "we can’t run a city, we can’t run a school without new revenue."
“We need a new revenue stream to provide our residents with the services they expect and deserve," he continued, "This project will reverse the financial constraints we’ve been under for 10 years.”
Addressing the impact of the project on enrollment in the City’s schools, Mr. Zarin maintained that, despite there being 1100 residential units that could house 3000 or more occupants, they would see an increase of no more than 56 students.
“Maybe per pupil expenditure is 14 or $15,000 per year, that still gives a cushion of 40 to 50 plus students over what we believe is a reasonable, defensible number,” he said.
According to the New York State Department of Education, per pupil expenditure for the Glen Cove Public Schools in 2014-15 was $23,274.
Mr. Zarin's estimate of 56 students is significantly lower than the approximately 230 additional students that the authors of the 2012 Final Environmental Impact Statement (FEIS) concluded would be enrolling in district schools as a result of the development.
Trustee Maria Venuto expressed skepticism of the lower figures.
Mr. Zarin defended the discrepancy explaining that the City was now using a different formula that is based on “local conditions” as opposed to that used in the FEIS that used national data for determining the likely number of students coming from the development.
During the public comment period of the meeting, residents spoke on both sides of the issue.
Drew Lawrence, who had served on the Glen Cove Community Development Agency (2007-13) and Zoning Board of Appeals (2006-13), repeated points that he had made at the Glen Cove City Council meeting on July 19 - that the TIF was in violation of the agreement made between the City and the Developer in 2012 that stipulated that the developer was responsible for paying for the infrastructure improvements and public amenities.
“The developer was required to fund, maintain, and construct the amenities in question by themselves,” he said. “ The contract stipulates that the city and its agencies would not fund.”
Additionally, Mr. Lawrence said that the FEIS “is the only authoritative document projecting impacts on the city. To introduce any additional information you need to amend the FEIS.”
That statement, he continued, found that under the current proposal an additional 224 to 232 children would enter the public schools at a cost of 3.8 million per year. He pointed out that according to the revenue schedule that had been distributed, that the district would be short “at least $1 million” in revenue from 2022 to 2038 to cover those costs.
Addressing Mr. Zarin’s comment that it was primarily “empty nesters” who would be moving into the development, Glen Cove resident David Berg expressed concern that that demographic would be more inclined to vote down school budgets.
Resident Amy Peters, who is a petitioner in a lawsuit against the city that seeks to block the Garvies Point project, said that since the City’s projection for the number of students generated by the development had decreased by more than 75%, the Final Environmental Impact Study adopted in 2012 was no longer final, and had to go through the proper procedures to be amended.
“One of the reasons for the lawsuit [that had been brought by area residents],” she said, “was to ask the planning board to go back and do another environmental impact study because the project has changed so much over time.”
Zephy Christopolous, a former chief of staff for Mr. Spinello, urged the board to vote “yes” on the proposal.
“Imagine not having to sweat bullets when you’re crafting your budget and not having to sweat bullets at the amount of state aid you will get,” she said, and then offered a list of programs and capital improvements she believed the district would be able to afford with the PILOT payments, punctuating each item with the refrain, “Imagine that.”
Glenn Howard, a resident and honorary board member of the Glen Cove Chamber of Commerce said that after 20 years it was now time to get the project started. He said he believed the money going to the school district would keep taxes in check.
“You have a fiduciary responsibility to your taxpayers and your school system and your community to do the best you can to bring in the money to cover the budget and to hold down your overall tax increases,” he said
The next Board of Education meeting is scheduled for August 29 and the next regularly scheduled meeting of the county legislature is not until September 26, but both bodies are likely to hold special sessions earlier to vote on the proposal.
Story by Northwordnews.
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MAYOR BRUCE KENNEDY'S COMMENTS TO THE COUNTY LEGISLATURE IN REGARD TO TAX BREAKS FOR RXR'S GARVIES POINT PLAN
I am here today in regard to Resolution 120-2016-16 that requests public subsidies to the Garvies Point development project in Glen Cove New York. It is imperative that you vote no on this Resolution.
Despite what you just heard from Mr. Rechler and Mayor Spinello, this proposed project is not located in the Glen Cove Downtown, it is not Smart Growth, and the land in question has not been deemed fully remediated.
This Resolution is a request for Nassau County tax payers to help fund a highly controversial, super-density, residential development project proposed by RXR; a $17 billion company. There are currently two separate legal actions in Supreme Court seeking to overturn the approvals of this project and voting on this Resolution while the legal actions are still outstanding would be unwarranted and prejudicial.
To think that existing Nassau County taxpayers should pick up any portion of the County tax bill for 1,110 new luxury residential units for any period of time is outrageous. I trust you will agree that this request by the Glen Cove IDA (whosetax breaks generated fewest jobs in state in 2012, according to Comptroller DiNapoli) to saddle Nassau County taxpayers with this fiscally irresponsible and harmful plan is in violation of the public trust. To even consider this Resolution without first performing a SEQRA study of the fiscal impact to Nassau County tax payers which includes studying and analyzing all of the fiscal reports, studies, analyses, projections and economic predictions could be considered a dereliction of legislative duty. Being that the proposed Master Tax Agreement was only submitted on Friday at 7:30PM it is obvious that neither the Office of Legislative Budget Review nor the County Comptroller has had the opportunity to analyze any of the details of this proposal.
The reason the City is asking for PILOT’s and the reallocation of the County’s rightful share is because the City IDA has approved $120 million in tax increment financing for a cost that the Redeveloper is solely obligated to. It is taking money that the taxpayers are entitled to and giving it to the Redeveloper.
Blaring Frank Sinatra tunes, a box truck with diamond vision scoreboards urges residents arriving for the Glen Cove School Board meeting on August 1 to support the Garvies Point re-development project. The gentleman in the driver's seat would not reveal the identity of who had "donated" the display.