There is a lot of confusion around a controversial downtown project planned for the old Boscovs parking ramp that involves two lego pieces: five floors of private luxury housing project built on top of five floors of a public parking garage. This article is meant to fight through some of the intentional fog created by Mayor Kraham, the developers, and select City Council members.
First, it’s important to clarify who is involved.
The Binghamton Local Development Corporation (BLDC) is basically the City’s economic development entity, and many cities have their own LDC’s. The mayor is the chair, and the board members are mainly appointed by the mayor, so it’s an extension of whoever sits in the mayor’s office.
The BLDC actually owns the site where the Boscovs parking ramp used to be (and is the legal owner of the Boscovs building too, but that’s for another article). So the BLDC created a new “paper” corporation called the Water Street Development Corporation (WSDC) to lead this public-private partnership.
The board members of the WSDC are former Republican Mayor Rich David, City Comptroller Chuck Shager (appointed by Rich David), former Republican City Councilmember Chris Papastrat, current Republican City Councilmember Tom Scanlon, and Ron Sall, long-time downtown business owner and champion of any development downtown.
In other words, the BLDC and the WSDC are wholly controlled and led by the sitting Mayor. And if these “partnerships” that the BLDC or the WSDC engage in go bust, the city taxpayers are on the hook.
That’s the key point: don’t be fooled by all these “new” entities. They all trace back to and are controlled entirely by Mayor Kraham.
Okay. But who’s paying for what?
The City will fund the garage lego piece, WSDC will bond for (borrow) more than $4 million to build the “lego attachments” between the public garage and the private luxury housing, and the developer will fund the housing lego piece (120 units of market-rate/luxury housing and six units of “workforce housing” that will prioritize public employees, like teachers, firefighers, and police officers).
Some of the local reporting suggests that the developer is funding the entire project. Not at all.
The garage users and city taxpayers are paying for the garage. (Remember, Mayor Rich David took $7 million of pandemic recovery funds to help fund the rebuild of the public garage. Because garage’s were hit hard by COVID and needed millions in relief—people be damned.)
And a large portion of the developer’s significantly reduced tax payments are actually being redirected from the school, city, and county, to the WSDC to pay back their borrowers for the $4 million lego attachments. Here is a table of the 28-year PILOT proposal (see page 4), and you can see the first $242,484 in annual tax payments is committed to pay off WSDC’s annual bond payment. As the table shows, this developer raking in at least $2 million a year in rent revenue will only contribute $507 to the City’s general fund, and only $545 to the school district, each year for the first ten years.
Fuzzy Math from the Developer
It’s clear from comments by city officials and the developer’s representative that they are intentionally creating confusion in order to beat back criticism from well-meaning citizens and housing justice advocates.
In a Press and Sun Bulletin article this week (avoid paywall here, hopefully), the developer’s representative Jeff Smetna said that without the 28-year PILOT (which amounts to an $11.5 million tax break over 28 years) the rents would have to be $7,000.
That’s absolutely, unequivocally false.
It’s simple math.
Suppose the 120-market units are rented out at an average of $1,500 (assuming 11 months, with one month vacant). That nets $1,980,000 in rental revenue.
The 28-year PILOT provides an average annual tax break of approximately $411,000.
If the City were to deny this tax break, the rents would only have to increase to $1,950 a year to cover this “loss” in public subsidy. And that is not too far off from what 50 Front Street and other “luxury” rental developments are charging a month.
Smetna is a very smart, seasoned individual who has secured millions of tax breaks for housing developers in Broome County and elsewhere. So why did he make such a ridiculous statement to a local media outlet that rents would skyrocket to $7,000 without the tax break?
Because fear works. Because the PILOT pads the developer’s pocket. Because that’s what he’s paid to do.
It All Comes Down to the School Board
This PILOT can’t go forward without the approval from the Binghamton City Council, the Broome County Legislature, and the Binghamton City School District Board.
The GOP-led City Council already did its job rubberstamping Mayor Kraham’s request.
The GOP-led County Legislature will certainly do the same later this month.
For residents, taxpayers, housing advocates, and others who want to voice their opposition, the last resort is the Binghamton City School District Board, who meets later this month (July 18?) to discuss the request.
While I hope the above information is helpful, here are some other suggestions in advocating against this whale of a tax break:
- City officials and allies are saying this project must go forward because Boscovs will leave without the parking. But at the June 1, 2023 meeting of the WSDC (recording here), board member and City Comptroller Chuck Shager admitted that only 60 spots of the nearly 500 spots will be reserved for Boscovs shoppers. That’s a few hundred less spots than in prior years. The other four floors of parking will be available for those who purchase monthly parking permits (like tenants at downtown luxury housing). If the leadership at Boscovs is fine with only 60 spots, can’t we accommodate that with a $1 million commitment to a surface parking lot and some creative on-street parking improvements?!
- Most PILOTS, including the one for 50 Front Street, included an annual increase of the tax rate of about 1.5 to 2%. This PILOT freezes the developer’s tax bill at the same amount for 28 years. This alone should merit a NO vote, with a note to Mayor Kraham and Comptroller Chuch Shager (who is serving as point man for all negotiations) to renegotiate this PILOT.
- Construction costs inevitably increase. Remember the Joint-Sewage Treatment Plant? Mayor David, with his rubberstamping Council, increased borrowing from $110 million to more than $230 million. What if the costs of the “lego attachments,” that is the steel pillars are other work needed to place five floors of housing on five floors of parking skyrockets? Who will cover the increase? The developer, or the taxpayers? Given this ambiguity, the school board should demand a copy of any agreement the WSDC has already negotiated with the City and the developer. No body should be voting on this project until there’s a clear understanding of the nuances of the “public-private partnership.”
- If Jeff Smetna’s public statements about the project’s finances are so clearly false, then why shouldn’t the developer’s pro-forma be made public? A pro-forma is, basically, a “financial plan” for how a real estate project is developed and performs. His statement to a local media reporter significantly undermines his credibility, so it seems fair that the school board should also demand a copy of the pro-forma for this real estate development project.
This project is the epitome of the “good ol boys network” at work. It won’t die easily, but perhaps if enough decision-makers request greater transparency and information, claw through the intentional confusion, and demand a better deal for local residents and taxpayers, then maybe we can start to redefine what “true partnership” and success looks like in Binghamton—and that we deserve far more than patronizing crumbs.