The Kingstonian PILOT: There is more at stake than just parking

Editorial

CLICK, SIGN AND SEND!  Demand that the Ulster County Industrial Development Agency (UCIDA) require the Kingstonian applicant release financial data for independent assessment and to place a value on their PILOT request prior to any scheduled public hearing:   CLICK ON THIS LINK, SIGN AND SEND TO ALL DECISION MAKERS.  Please include your name, where you live and any additional message you’d like to include. 


What the Kingston community needs to know up front

The Ulster County Industrial Development Agency (UCIDA) this week considered a $30.6 million tax subsidy to real estate developers in exchange for 277 parking spaces. In the midst of a financial crisis, the substantial loss of $30.6 million in tax receipts will have a profound effect on the community. A subsidy to the Kingstonian real estate developers for parking spaces means less money to invest in City schools, streets, public housing, and infrastructure. It increases the likelihood that already overburdened taxpayers will cover any fiscal gap with increased school and property taxes. 

What happened at the July 8th Ulster County IDA Meeting Regarding the $57.8 million Kingstonian Project?

The specific agenda item on the Ulster County IDA docket involved the question of a deviated payment in lieu of taxes (PILOT) request for the Kingstonian proposal, a $57.8 million dollar luxury apartment project in Uptown, Kingston. If granted, the Kingstonian investors pay for the value of what’s already there and not what they improve for the next 25 years. The estimated amount of the PILOT subsidy under consideration for a portion of a parking garage is roughly $30.6 million in addition to $6.8 million in tax-payer funded grants.  We have not seen a parking assessment (an estimate of how many parking spaces the project will actually need) nor do we know the true value of the PILOT request.

After the developer’s joint presentation with the Mayor of Kingston, the IDA expressed significant concerns, and sent the proposal back to the pre screening process.  The deviation and the delay will allow the developers to go back and discuss the PILOT agreement with the involved agencies (City of Kingston, Ulster County Legislature and Board of Education) to confirm their commitment before returning to the IDA board in August. If the IDA is satisfied with the progress at that point, they will schedule a public hearing.  In the meantime, without the release of vital financial information, the public is unable to assess the true value of the PILOT.  To date, neither the developers, the IDA nor the City of Kingston has agreed to release that financial information.

What’s the IDA and a deviated PILOT? How does it affect the Kingston Community?

What is the Industrial Development Agency (IDA)? What’s a deviated payment in lieu of taxes (PILOT)? And what does this mean for the average taxpayer or to the City of Kingston community especially with respect to concerns about social justice and poverty? 

The Ulster County Industrial Development Agency (UCIDA), is a public benefit corporation that was created by the New York State legislature in 1976 to aid Ulster County in promoting business development and in creating jobs. One of the tools the IDA uses to promote business and industry is the PILOT.  The Uniform Tax Exemption Policy (“UTEP”) outlines the various benefits provided by the Agency; most specifically sales and use tax exemption; mortgage recording tax exemption; real estate transfer tax; and real estate tax exemptions.

VIEW the Ulster County Planning Board discuss the Kingstonian deviated PILOT request in February.

The Kingstonian team has requested a deviated PILOT which means that it wants to ‘deviate’ from the Uniform Tax Exemption Policy (“UTEP”) which will require a public hearing.  In fairness to our community, the Kingstonian PILOT and all subsidies should have been shared during their SEQR process last year. 

There’s more at stake than just parking

In a time of financial crisis when the coronavirus pandemic has led to cuts in city services and jobs, a $30.6 million subsidy for a parking garage deserves increased scrutiny. While not all PILOTs are exploitive, they must be balanced against the potential gains an investor or industry may bring to the area. The cost of the PILOT may be offset by community gains that have not yet been realized and won’t come to fruition until after the investment. Those gains may be larger than the PILOT subsidy.  The PILOTs that cause concern are those structured to eliminate the investor’s financial risk while displacing that risk on to taxpayers. While every investor would like to eliminate risk, ordinary citizens aren’t able to shape the political landscape to their preferred financial ends. 

What do the Kingstonian real estate developers and the Mayor tell us about the potential community gains

The Mayor, the developers, and Kingston’s politically connected tell us that the PILOT will offset the costs of a 420-space parking structure so that there is “no cost to City taxpayers.”  The applicant says that the City of Kingston will have access to 277 of those parking spaces, though at an hourly/daily rate that the developer will set. 

Despite the Mayor’s reasoning, the cost of the purported 277 parking spaces amounts to a $30.6 million give away in the form of a PILOT subsidy. It’s an amount that will be unavailable to the City to lessen tax burdens, invest in infrastructure, improve our schools, and provide desperately needed services for the poor. 

For those of us who have advocated for social justice in housing, services for the poor, and children in need, the loss of tax revenue is simply devastating. While the intricacies of the IDA, real estate investment, and PILOTs are complex, what should be clear is that the proposed Kingstonian PILOT deal potentially harms the least well off in the city as well as hardworking taxpayers who struggle to pay already soaring school and property taxes.  

Moreover, the IDAs PILOT decision is being made without full transparency even though the outcome will affect the long-term financial health of the City. The developers are unwilling to publicly disclose the math behind their numbers and are going to extremes to shield them. 

In the cover letter of the Kingstonian’s PILOT application, Dan Ahouse former Chief of Staff for Representative Maurice Hinchey and director of the political consulting firm Stockade Strategies wrote:

“…you will notice that the applicant designated particular parts of the Application to be “Confidential in Accordance with Article 6”.  This designation is intended to refer to the “Applicant’s specific request that such portions of the Application be kept confidential…Particularly, the Applicant views the designated portions of the Application, which detail project cost, investment and financing source estimates, to be trade secrets, information submitted to an agency by a commercial enterprise and information which, if disclosed, would set forth materials, confidential information as to Applicant’s business methods and strategy and cause substantial injury to Applicant’s competitive position as a real estate developer in the City of Kingston and beyond.”

Without this important financial information, the public does not know what portion of the $57,885,000 project is taxable and thus cannot estimate the cost to taxpayers over 25 years.  Besides the IDA, only the political insiders have access to that information.  

The parking garage, the zoning code, and basic math

The centerpiece of the developer’s PILOT request is a parking garage for a luxury apartment project. Uptown Kingston has sought increased parking for its shops and boutiques for years. Under the Kingstonian project deal, the parking garage is the purported real benefit to the community. Yet, the number of parking spaces in the garage is finite. Given code requirements, the Kingstonian project must provide a certain number of spaces based upon the number of bedrooms per apartment, the size of its retail facilities, and the number of rooms in its boutique hotel. The remainder of the parking spaces are allotted to the City of Kingston. 

In December of last year, Kingstonian attorney Michael Moriello appeared before the Zoning Board of Appeals to discuss several items including an area variance for parking for their project.  During the meeting, Chairman Anthony Argulewicz read directly from the City of Kingston’s code that if all 143 apartments were single units, it would require 1.5 spots per apartment (or 214.5 parking spots, well exceeding the 143 total parking spots that it says it will need in its application).  

As a multi-family project, the Kingstonian will not only offer nine studio apartments (where the code requires one parking spot per studio) and sixty four 1-bedroom apartments (where the code requires 1.5 parking spaces per apartment), but also sixty 2-bedroom and ten 3-bedroom apartments (where the code requires 2 parking spaces for a 2 bedroom +).  The 32-room boutique hotel will need 1 parking spot per room. A lot is at stake in determining the precise number of parking spaces that the Kingstonian project will need as those spaces are taxable income.

Despite the lack of clarity surrounding the Kingstonian’s parking space requirements once the PILOT is approved, the developers can return to the city and request a waiver during their site plan review from the Kingston Planning Board and/or a variance from the Zoning Board of Appeals. 

The Politics of the Kingstonian Project

Last year during the Kingstonian project’s State Environmental Quality Review (SEQR) process, the public requested and the Ulster County Planning Board recommended that the applicant reveal all of its public funding sources. With the project receiving a negative declaration determination, both government agencies and the public have little time to understand the complicated PILOT processes in order to provide informed public comments.  Now, concerned government agencies and members of the public face not only a compressed time period to analyze the PILOT, but have been denied vital information to make a reasonable assessment of its value to the Kingston community.

As we’ve noted, the developers characterize their financial information as “trade secrets” and are unwilling to publicly disclose their calculations. Moreover, they have aggressively sought to shield that financial information from the public. Without this important information, the public does not know what portion of the $57,885,000 project is taxable and therefore, has no ability to calculate cost or potential benefits to taxpayers over 25 years.  Instead we are expected to rely upon assurances from our politicians.  

At the IDA meeting last Wednesday, principal developer Joe Bonura told the IDA  that the Kingstonian project was a “lynchpin” in Kingston securing the $10 million dollar Downtown Revitalization Initiative (DRI) grant funding through New York State, and suggested that if the PILOT agreement were to go away, that both the Kingstonian project and the DRI monies would disappear too.  

“I don’t like ultimatums.” said a board member. “Please don’t anyone make ultimatums. I have had guys with projects come in here saying that they had $2m invested, and if they don’t get anything then they are going to leave and my hand usually opens the door for them to leave.” 

LISTEN to the audio clip

The acrimony around the development of the Kingstonian has been intense. With investors who stand to gain lots of money, we see proponents of the development attempt to conceal relevant financial information and silence and intimidate opponents rather than persuading them in open civil dialogue. While the complexity of PILOTS, the confidentiality accorded to the developers’ financial records, and the purpose of the IDA itself are largely unknown to the public, the end result is clear. The Kingstonian PILOT process has been structured to benefit the developer, not the Kingston community.  

How much is a portion of a parking garage worth to us?  That’s the $30.6 + million dollar question. 

Food for thought.

  • If you averaged each Kingstonian luxury apartment to cost $1,800 per month x 143, that’s $3 million per year gross revenue just for apartments. Over 25 years, that’s $75 million + all the grants and tax incentives. 
  • The 14 affordable units that were included into the Kingstonian project after much outcry were not a concession. The developer added another floor to include the additional units and now will make more money.
  • In their application, the Kingstonian development team says that it anticipates minimal impact on the Kingston City School District as a similar project of theirs in Poughkeepsie has produced no school-aged residents. Is the Board of Education (BOE) willing to defer taxes for the school district because the applicant claims that there will not be youth living there?  Is education not a public good to which we all have a responsibility to pay? On this logic, those without children in the public school system should not be required to pay school taxes. Yet we pay school taxes irrespective of whether we have children who attend public school because we all benefit from an educated populace.  READ the Kingstonian PILOT application
  • In the application, it says that upon approval of the PILOT, the Kingstonian development LLC will purchase the Herzog parcel at fair market value when the Mortgage tax would be waived. Another important revenue stream will be lost to Kingston at a time of fiscal crisis.

CLICK, SIGN AND SEND!  Demand that the Ulster County Industrial Development Agency (UCIDA) require the Kingstonian applicant release financial data for independent assessment and to place a value on their PILOT request prior to any scheduled public hearing:   CLICK ON THIS LINK, SIGN AND SEND TO ALL DECISION MAKERS.  Please include your name, where you live and any additional message you’d like to include. 

7 thoughts on “The Kingstonian PILOT: There is more at stake than just parking

  1. Rebecca, you did a brilliant job of a comprehensive education on what the real deal is. Thank you. Your mention of a consultant for the developer who was a former chief of staff to Maurice certainly brought to light the notion that Maurice would likely stand for transparency. Michelle is running on good governance and transparency. Everyone in this community is friends so it is easy to skim over details and expect that everything is being done in good faith. I appreciate your community work through information sharing.

  2. Thank you for an education about a complex issue that most of us are usually too busy to take the time to understand (much less research on our own). You have performed another great public service.

    I would love to get another education about the “trade secrets” involved in this kind of building project which, on the ugly face (or facade) of it looks like the most ordinary project that anyone could have conceived, a building that could have been built anywhere but that unfortunately seems to be about to be built in Kingston’s most important historic district. Leaving aside my dislike of this project, I can’t conceivably understand how a developer seeking tax breaks should be able to hide information from the public that would help people understand the cost-to-taxpayer/benefit trade-off.

  3. This project proposes to divert sorely need funds during a time of crisis to invest in what every other major metropolitan area is moving away from. Parking, subsidized car storages is a twentieth century issue which had lost it’s relevance. We need to invest in more infrastructure that supports cities beyond cars. We don’t need space for cars in the future. We need space for people. This investment will surely loose money as it is based on old ideas and models. It’s a loser. Don’t rip apart the city for it.

  4. As late in the game as it most unfortunately would seem to be now, I still want to add my name to the long list of the Kingstonian project’s many opponents, for the reasons already deeply researched and strongly noted by Rebecca Martin and many others. This proposed structure, totally out of place and dominating our treasured Uptown Historic District, as it will, seems bereft of any but the smallest green-building practices. And this at a time when both City and County trumpet the sustainability projects being put in place here. Truly an important boat will have been missed if/when the Kingstonian becomes a reality, in place of something embodying 21st C planning, design and execution we could be proud of.

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