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Response To Questions

Click here to view PDF: PILOTS vs. Taxes

Eastern Property Owners' Association

c/o Mr. Walter McKenna, Director

Dear Mr. McKenna:

This is in reply to your letter, which was received at Village Hall on August 13, 2008, in which your request that I respond, as Chairman of the Mayor's Committee on St. Paul's, to a series of questions that were raised by the direction of the Eastern Property Owners' Association at a special meeting on July 29, 2008.

1. Why were the proposals to the Albanese Organization and a coalition of the Canus group and the Committee to save St. Paul's not considered?

The proposals submitted by the Albanese Organization and Canus/Committee to Save St. Paul's (CSSP) were thoroughly evaluated by the Mayor's Committee.

The Albanese Organization proposal required a Village subsidy of $19.25 million. Albanese was invited to continue in the selection process by submitting a revised proposal, for which the Village requested standardized assumptions regarding new construction, public space, and payments to the Village. The Albanese Organization, in its letter of May 22, 2007 to the Village Administrator, declined to submit revised plans.

The Canus proposal was thinly-capitalized, with no developer equity in the project to cover cost overruns and a requirement that the project receive $2.5 million in grant funding. In addition, the Canus/CSSP capital structure subjected the Village to the risk that it could lose control of the property in the event of default, as 80% of the project's financing was to be provided by a lender. Of equal importance, the project relied on Village "rent" in the amount of $962,000 per year for 14,500 square feet of community space, or $66 per square foot. This proposed rent was well above market rate, estimated at $30 per square foot, and had the net effect of a financial subsidy of $527,000 in the first year. Assuming market rate rent escalation of 3% per year, the proposed rent would remain above a market rate rent for the first 27 years of the lease.

2. Did Eskar International, Ltd. respond to the RFP and if so what was the reason for not considering their proposal?

Eskar International responded to the RFP with joint venture partner Litas Investing Co. and architect Bernard Marson. Their final proposal as submitted on January 26, 2007 was thoroughly evaluated by the Mayor's Committee, and it was determined that the proposal did not adequately meet the standards set forth in the RFP with respect to project feasibility and developer experience and track record. The developer, Eskar International, is a UK-based firm that has not completed any projects in the United States. The local investor partner, Litas Investing Co., Inc., also lacked recent experience; the proposal cited three Litas projects which were commenced in the 1970's and 1980's. No construction manager had been selected. The architect, Bernard Marson, had completed some relevant projects; however the development team as a whole lacked relevant experience and had never worked together before. Further, the management consortium, which would consist of Eskar and Litas, had no experience managing upscale residential properties.

3. If AvalonBay walks away from the project at any point prior to the completion of the project, based on the proposal, what legal option would the Village have to force them to complete the project or abandon the agreement?

The Village should obtain performance and payment bonds to insure completion of the project and payment of subcontractors and materialmen.

4. Assuming the project is completed, would it be legally possible for the property to be converted into condominiums? What approval authority does the Village of Garden City have in this process, if any?

The project cannot become a condo, because condos must have a fee (ownership) interest in the underlying land. There are a few exceptions to this which required State legislation, which, in this case, would not be granted without the consent of the Village as the fee owner.

5. While we realize that the PILOTs were negotiated by AvalonBay, so that during the PILOT period they could generate a particular yield on the project, what percentage of estimated full taxes do the PILOT amounts represent by year and what negotiations were made to increase the PILOT amounts by year, aside from the reduction of the PILOT period from 35 years to 20 years?

AvalonBay's proposed 20-year PILOT ranges from 5% to 18% of full taxes, which are estimated assuming a base of $927,000 per year escalating at 5% per year. AvalonBay originally proposed a 35-year PILOT and subsequently proposed a 25-year PILOT. [Editor's note: Mr. Lamberti included an attached spreadsheet comparing 20-year, 25-year and 35-year PILOTS and estimated full market taxes. The spreadsheet was too large to publish; however it can be found on our web site, www.gcnews.com]

The Committee's goal was to put the property on the tax rolls as early as possible to generate full taxes. As shown on Attachment A, as a result of reducing the PILOT term from 35 years to 20 years, the sum of payments over the first 35 years of the project increased from $14.5 million to $56.6 million.

6. If AvalonBay wanted to sell the building and the ground lease, could they do this? And what legal options are available to the Village to stop this from happening if it were not in the best interest of Garden City?

The lease would have to address the sale of the building and the ground lease. AvalonBay will undoubtedly want permission to do this. The Village will seek to place restrictions and safeguards on any transfer.

7. As best we can see, the project as presented to your findings does not directly speak to a key issue that needs to be understood by the public. This issue is any increase of taxes to the residents of Garden City as a result of moving forward with this project, particularly during the PILOT period.

Has the committee reviewed or analyzed the additional costs that the Village of Garden City will incur in relation to providing the following services to the AvalonBay property and its residents and if so could you please provide its findings?

A) Sanitation & Recycling

B) Police Services

C) Fire Department Services

D) Other Village Administrative services that will be needed to monitor or manage a project of this magnitude.

The Village does not anticipate any need to increase taxes as existing staffing levels and equipment would accommodate the services required under the AvalonBay proposal. There would be an increase to the Incorporated Village's disposal cost at the incinerator for rubbish and garbage collected at St. Paul's which is unknown at this time.

8. In reference to the services listed above, will there be any need to increase personnel to provide these services, be it for staffing or workload reasons or in accordance with any of the labor contracts associated with the employees that provide these services?

No.

9. With regard to the Police and Fire Department, would they be in need of or required to secure additional apparatus to support the additional residential building in the Village?

No.

10. Would AvalonBay be paying prevailing rates for Water Services provided by the Village? If not, what has been negotiated with regard to this service?

AvalonBay would be paying the standard water consumption charge.

11. What study was performed to determine the amount of students to the school district the new apartments would generate, as well as the additional costs to the district, especially during the PILOT period?

The Village did not perform an independent school impact analysis. AvalonBay performed an analysis of school impact based on current Garden City multi-family properties of comparable size (50+ units). The analysis was completed by Cameron Engineering based on information from the Garden City School District. AvalonBay also completed an analysis of their other Long Island Properties for comparison.

Using the Garden City average 0.03 students per unit, St. Paul's proposed 108 units would generate a total of 3-4 students.

 

Garden City Multi-FamilyUnitsStudents Students

Properties (50+units) per Unit

12 Hamilton Place 50 - -

111 Seventh Street 54 - -

365 Stewart Avenue 80 20.03

67 Hamilton Avenue104 40.04

22-36 Hamilton/115-129 Second104 160.15

Cherry Valley192 40.02

Wyndham East/West316 4 0.01

Total or Average900 300.03

Using AvalonBay's 5 Long Island properties average of 0.16 students per unit. St. Paul's would generate 17-18 students.

Garden City Multi-FamilyUnitsStudents Students

Properties (50+units) per Unit

Long Beach109 - -

Glen Cove256 40.02

Smithtown312 570.18

Coram450 470.10

Melville4941540.31

Total or Average: 1,6212620.16

Based on data from both Garden City and AvalonBay properties, AvalonBay estimates a total of 8 students for St. Paul's 108 units. Per pupil costs for 2007-2008 totaled $21,280 per student based on a total budget of $90.4 million for 4,250 students, indicating a total cost of $170,240 for 8 students.

12. At this point, are there any ongoing negotiations with AvalonBay or are they awaiting a decision by the Board of Trustees? If so, what points are being negotiated and will the results be reported to the public in an amended report of the Mayor's Committee?

There are no ongoing negotiations with AvalonBay.

13. Could future negotiations be held, and who could prompt such discussions?

Either party could request negotiations.

14. If the Board of Trustees voted down your committee's recommendation, what would the process be to consider the other two alternatives, demolition and mothballing, and would they be voted on immediately?

The Mayor's Committee's recommendation was that the AvalonBay Proposal should be presented to the public for "review, comment and vote." It did not recommend the form of the ballot or the voting process. This is a Board of Trustees' decision.

Thomas M. Lamberti

Chairman,

Mayor's Committee on St. Paul's

Against Tax Breaks

To the Editor:

I oppose the tax break granted to the buyers of the Garden City Hotel by the Town of Hempstead Industrial Development Agency, as it would divert from the Garden City community precious tax dollars that it deserves. I applaud both the Garden City School District and the Village of Garden City for their efforts to oppose the deal.

Before the vote to grant this tax break, I wrote to the IDA to express my concerns about this proposal. Unfortunately, my concerns were ignored. A tax break for the buyers of the Garden City Hotel is wrong and should be challenged, as is now being undertaken by the School District and Village. I fully support their efforts to stop this agreement that will only harm the residents and schools of Garden City.

Recently, there have been several efforts in Albany to reform IDA's in a number of important ways. Some proposals would include requirements for IDA board membership to include local governments, school boards, organized labor, and environmental organizations. Another proposal would require project applicants to complete a community impact report before receiving IDA assistance. These are all excellent ideas. Reforms are necessary to improve the way IDA's do business with builders and developers so that transparency is increased and the best interests of the community at large remain the top priority.

In the meantime, Garden City residents should continue to challenge the Town of Hempstead IDA's actions so that a solution can be found that will not deprive the Village of Garden City of the tax dollars it needs to maintain a high quality of life and excellent education the Garden City School District it now provides to its residents.

Thomas McKevitt

Member of Assembly

Refurbish The Rinks

To the Editor:

We are all fortunate to live in a village that invests so heavily in its children and families. Public and private schools all are top-tier. Seventh Street bustles nightly with moms and dads and kids whether or not there's a street fair because it's a fun and safe place to visit. And of course for the athletic, Village facilities are nearly all professional quality.

Witness the all-new country club-like paddle tennis courts and architecturally striking clubhouse at Community Park. St. Paul's Field's dozens of perfectly irrigated and manicured fields accommodating simultaneous soccer, baseball and lacrosse leagues. The St. Paul's gym complex. The newly razed, leveled, graded, irrigated, planted, fenced and left-to-settle Middle School fields complete with true college goal posts. The newly rebuilt and landscaped mini-golf course. The list goes on and on. The Village takes great pride and spares no expense in creating sporting jewels for its residents to enjoy.

Though one corner of one facility has been long neglected and is in need of attention: our roller hockey rinks.

Far from the most popular sport in our lacrosse- and football-focused village, roller hockey nonetheless enjoys great interest and participation with hundreds upon hundreds of wheeled feet under tutelage and the tireless efforts of Andrew Karen and the rest of GC Rec. Aside from tennis (another terrific facility), you'd be hard pressed to find another activity that boasts participants aged 5-55 but that is precisely what GC Rec Roller Hockey is: literally, an all-skate.

Am I biased? Perhaps, as both I and my two sons play year-round, but it's that participation that has afforded me the opportunity to witness first-hand the intensely devoted emerging culture and love of pucks in Garden City. It's also that year-round use of the facility that has me witnessing its demise.

Certainly there must be available funds in some portion of some budget to help refurbish the rinks. Left unchecked, the rinks have maybe five good years left. But if the Village would invest a small portion of what it has invested across the board for other sports and activities, we'd be able to watch our grandchildren lace 'em up in twenty years - and beyond.

Except for a single season, my family hasn't played football or lacrosse. We don't play paddle. One son has played inside the tennis bubble for one season of lessons. But as Village residents we all understand and accept the outlays for these world-class facilities - whether or not you use them - as part of the cost of doing business of living in a world-class village.

It's my hope we can at least begin the discussion and soon after begin work on what could be a sister bubble to the tennis facility. Contained rinks would guarantee Village-only use, eliminate recent burglaries from the hockey shed and provide comfort to wind-whipped fans. Perhaps a third rink could accommodate ice in the winter months. No need to heat anything. Roller hockey, ice hockey, free skating. The entire Village could - and would - benefit.

If we build it...you know the rest.Kevin Ryan