Avalon Bay PILOT Program Vote Tabled
With two council members absent and one recused, mayor asks for discussion on Payment in Lieu of Taxes program for developer to be postponed.
One theme of Thursday's special Bloomingdale Council meeting was trust. Trust that public officials are truthful in their intentions for a program that would allow the developer of luxury apartment complex Avalon Bay a tax abatement because it would mean a benefit for the Borough of Bloomingdale.
But while at least four residents referenced their lack of trust in politicians during their comments on the proposed Payment in Lieu of Taxes (PILOT) progam, Mayor Jonathan Dunleavy and Borough Attorney Fred Semrau said the program would be a guaranteed win for the borough.
"Unlike other municipalities where they want to give a tax advantage for a developer to come in, we didn't have to give a tax advantage for Avalon Bay to come in. We didn't have to give them a PILOT program, we could have left it as normal taxes," Councilman and Finance Committee Chairman Ray Yazdi said Thursday. "Here, we went into it saying, 'As long as it's not costing our residents a penny, this is a good deal.'"
The special meeting was held Thursday for the second reading and potential final adoption of an ordinance that would allow the PILOT program to move forward with Avalon Bay. However, with Councilwoman Jo-Ann Pituch and Councilman Mark Conklin absent from the meeting and Councilman Glenn Schiffman recused from voting on the issue, Dunleavy said three affirmative votes would have been needed to move the program forward. After five hours of discussion, Dunleavy asked that the council table the issue until more members were present.
The negotiated program would grant the borough a minimum payment of $550,000 per year, expected to grow by at least 2 percent per year, for 30 years. Avalon Bay would make quarterly payments at the same time as residents and business owners pay taxes, but would not pay normal taxation, which is split between the municipality, county and school district. Through the PILOT program, the school district would not receive money from the payments, but the municipality would recoup the bulk of the benefit, bringing in 95 percent of the money while the county receives 5 percent.
"It's a tax loophole for us to keep more money," Yazdi said.
Additionally, Avalon Bay would not receive any Kelly Act reimbursements (valued between $60,000 and $80,000) for services such as garbage pickup and snow removal and the owner of the development would not be eligible to file tax appeals for the duration of the program.
According to Yazdi, who presented figures involved in the program at Thursday's meeting, the borough would receive the guaranteed minimum payment of $550,000 in the first year of the agreement. Under normal taxation, the borough would receive $700,000 in the first year, however, only if the development was at full occupancy in its 174 units. Avalon Bay would be eligible for a land tax credit and after the county's portion is taken out, the borough would bring in about $431,395 in the first year, an increase of about $333.797 over the collection projected under normal taxation for the property, which has been assessed at about $19 million.
The calculations are based on anticipated gross revenue rising 2 percent per year, but Yazdi said rent typically increases an average of 4 percent per year. Rent at Bloomingdale's Avalon Bay will range from $1,800 to just over $2,000, including mostly one-bedroom and two-bedroom units. The demographic of renters expected includes mostly single women and single men, with married couples with one or no children making up about 12 percent of the community's residents. Some affordable housing units are also included in the project.
Some Bloomingdale residents questioned whether the rent costs at Avalon Bay, which are higher than the average rental cost in Bloomingdale, $1,300 or less per month, will turn off potential renters. But Yazdi said if the cost is too high, it could benefit other rental properties in the borough if renters seek a cheaper option in the same municipality.
Yazdi said he plans to motion that 100 percent of the money gained by the borough through the program, if approved, be used to pay down Bloomingdale's approximately $12 million debt. As an aside, Yazdi said that if the program is approved, he plans to speak with bond counsel and possibly go before a state finance board to inquire whether the borough could sell the cash stream expected from Avalon Bay to a lender who would immediately pay down the borough's debt. If not, Yazdi said the council would still use the money to pay down debt, paying as much as can be budgeted for debt relief per year.
As a result, once the debt is eliminated, Yazdi said, property taxes could stabilize instead of increasing, benefitting all taxpayers in the borough.
Avalon Bay also would see a benefit from the PILOT program. As opposed to higher percentages that may be paid under normal taxation, Avalon Bay would be expected to pay about 12.9 percent of their gross revenue if it is higher than the $550,000 minimum. In the first year, Avalon Bay is projected to receive a nearly $90,000 benefit. But Dunleavy maintained that if a benefit for the developer of Avalon Bay, a court-mandated development, means a benefit for the borough, the program would be worth it.
"They're here. I want to do what's best for the borough while they're here," he said.
Some residents disagreed that the program would be best for the borough and questioned if the public officials thought it was fair that Avalon Bay would get a benefit if they do not. The owner of Hamburg Turnpike apartment complex Waterfall Village said he pays more than 20 percent of the complex's gross revenue in taxes. He also said he dos not think it is right to not give the school district a portion of the money. Resident Ron Caputo agreed.
"I can't accept that we're going to take that off our children's backs," he said.
Yazdi repeated throughout the meeting that the board of education did not need the money, as evident, he said, by the school district's $1 million expenditure on capital improvement projects this year.
Board of Education Member Rich Dellaripa, the school board's liaison to the Bloomingdale Council, was the only representative of the board who was present at the meeting, a point several residents and Councilwoman Linda Shortman made and said they were disappointed about. Resident Mike Azzolino called it an "embarrassment" that more board members were not present.
Dellaripa said he was not asked to make a statement on behalf of the board, but noted that board members would have attended the meeting if they took issue with the program. Shortman also said she had asked Business Administrator George Hagl to attend, but he was not present.
"I don't really feel, personally, that the board of education is going to have any significant harm from this," Dellaripa said.
Planning Board Member Ed Simoni said he has not always been in favor of the Avalon Bay project, but he thinks the PILOT program is a good idea for Bloomingdale.
"I think we should welcome them in as a neighbor and a new resident," he said.
Resident Bill Graf said Thursday, for him, was "one of the proudsest moments coming here to a council meeting in a long, long time," and that he thought the program was great.
"It's the benefit to Bloomingdale that really counts," he said.
Peter Dorram, a Kampfe Lake resident, was the first resident who said he did not trust the council that the money gained from the program would be used for debt relief. He said emergencies, such as damage to Main Street that was sustained after flooding last year, happen and if the borough needs the money for other things, it will be repurposed. He also said the borough should not "bite the hand that feeds them" by taking money that would have gone to the county, which has helped with repairs in the past.
Former Councilwoman Linda Huntley said she did not feel making the Avalon Bay portion of Union Avenue a redevelopment zone was appropriate.
"I believe getting a redevelopment zone is great, but I believe it has to be done right," she said.
Huntley said she did not feel that the Avalon Bay area is "blighted," typically one of the characteristics of the zones that qualify for PILOT programs. But Semrau said the opinion that the area qualified for classification as a redevelopment zone was made by the borough planner and then endorsed by the Bloomingdale Planning Board before eventually being approved by the Bloomingdale Council.
If Shortman had indicated she would have voted in favor of the program, the PILOT ordinance could have been approved Thursday. But Shortman said she wanted more time to digest the comments of the public and speak with the board of education at their scheduled Monday night meeting. She also urged the public to question the board of education members at Monday's meeting (at 7 p.m. at the Walter T. Bergen School) about why they have not made a statement on the program and how it affects them.
"This is where your real tax dollars are spent," she said.
Correction: An earlier version of this story incorrectly stated the borough would gain $102,000 over standard taxation.