PROMISES WITH NO DATA: The Mayor of Kingston Comments on the Kingstonian PILOT

Photo credit: Paul Kirby, The Daily Freeman

By Editorial Board

The Mayor of Kingston sent out a press release today, one day before the Kingston Common Council’s Finance and Audit Committee is set to review the Kingstonian PILOT request of 25 years at 100% tax exempt in exchange for an air conditioned / heated parking garage that will primarily serve luxury housing tenants and boutique hotel guests.  This is certainly not the first attempt by the Mayor to try to influence the legislative branch in their decision-making at a time when they should have autonomy.  

Below is a breakdown of the Mayor’s communication, paragraph by paragraph, that includes some of what was omitted, misleading or missing from his statement.  

“The Kingstonian project is of great importance to our City – not only will it bring desperately needed housing stock to our community, along with much-needed parking, the hotel and retail spaces will bring visitors and tax revenue. The developers have committed to paying a living wage for all new jobs created to operate the apartments, hotel and garage complex, and the public plaza will be a welcomed addition to Uptown. A PILOT for this project will have no negative tax implications, only positive!”
–  Mayor Noble

The Kingstonian luxury housing project offers apartments where the rents would be market rate (+) and unattainable to most of the Kingston community.  In the PILOT application, the Kingstonian applicant is only asked to provide a living wage for a single adult. They state that 84% of their jobs would pay $20.73 per hour, which is not nearly enough for that single person if they were raising a child in the community.   Such a worker will not earn enough to live in the Kingstonian luxury apartments and will most certainly have a hard time finding an apartment at an affordable monthly rent with a $20.73 per hour wage. It may end up being a second job for that single person who might end up living outside of the Kingston community due to the lack of affordable rentals in a county that has nearly a 0% vacancy rate.  

“In 2016, New York State awarded the City of Kingston the Downtown Revitalization Initiative (DRI) grant in the amount of $10 million. In preparation, the City of Kingston created a Strategic Investment Plan, which was prepared by a panel of community members along with City staff and local officials. The plan sought to address several critical issues that negatively affected the Stockade District. One of those problems was parking, which remains one of the biggest issues in Uptown Kingston.” – Mayor Noble

On May 24, 2019 Hillary Harvey interviewed three Downtown Revitalization Initiative (DRI) community members on her show “The Source”.  She asked the former DRI local committee members, Theresa Widmann, Kate Heidecker, and Micah Blumenthal about their experience with the DRI process.  The gist of what the Kingston community panel members felt was that they had little input and that many of the significant decisions about the direction of development had already been made by others with greater authority. The panel provided a veneer of community input rather than true collaboration. 

“In implementation of that plan, the City of Kingston issued an RFQ (request for proposals) from qualified developers to design, construct, and operate a transformative multi-use development on three separate parcels owned by the City of Kingston. The city requested that developers provide housing units, commercial and retail space as well as public parking. The Kingstonian plan, which includes a 420-car parking structure, came directly from this community-developed grant application and is now a priority DRI project. With the addition of 143 units of housing, the Kingstonian also addresses a dire housing shortage, with 10% of those units designated for affordable housing. The developer will completely subsidize 14 units without any other state or federal subsidies.” – Mayor Noble

The RFQ process was an odd, twisted road where the original developer selected to design the project sold his rights to the Kingstonian applicant for $50,000.00.

Citing from The Kingstonian MUOD and RFQ on “The Source” with Hillary Harvey:  “The Kingstonian development has been billed as a plan packaged by local architect Andrew Wright, but if you trace the paperwork from the City’s RFQ for the Kingstonian, it tells a more complicated story.  When the Noble administration put out an RFQ in 2016, Andrew Wright was one of two developers to respond. The other was Charles Blaichman. Andrew Wright’s submission for the RFQ, which won, included an architectural rendering and proposal that gave a two year horizon to develop funding for the project.  In September 2017, a press release from Mayor Noble described the RFQ purchase process as one where the City selected Wright Architects to launch a redevelopment effort. The site chosen for the effort would include a mixed use building with residential and commercial space, as well as expanded public parking.  Then in October 2017, Andrew Wright told Hillary Harvey in an interview for Chronogram that he was chosen by Mayor Noble to package a plan for developers and choose a team to win the development rights.  So how did Andrew Wright go from winning the RFQ to choosing the development team?  In January 2019, Brad Jordan explained on Kingston Community Radio what had happened.  In that same WGHQ interview, Joe Bonura discussed seeking the Governor’s Downtown Revitalization Initiative as a funding source for the Kingstonian project.”  

As it pertains to the affordable housing component, typically, not-for-profits (NFP) who are working on affordable housing projects receive state tax credits and in return are bound by rules.  As a private developer, the Kingstonian isn’t relying on the state and therefore, can use the “affordable housing” language without being bound by the same rules. The PILOT agreement at this point is perhaps the only avenue to provide guarantees preventing the affordable units from escalating in value. The PILOT  could outline the units’ starting rent, their size and annual escalator rate.  Without that outlined somewhere, the Kingstonian projects “affordable housing” could become market rate at any given time.

“The 420-car parking structure will cost an estimated $17 million to build, and the Kingstonian will be responsible for all operation and maintenance costs for the life of the project at an annual cost of approximately $268,000. The City of Kingston will have the use of 277 parking spaces at zero cost to the taxpayers. If the City were to build the parking structure, the estimated municipal cost for 25 years is $30,000,000, more than $1.2 million a year.  According to the 2008 Uptown Transportation Study, conducted by the Ulster County Transportation Council, “Over 95 percent of the people who park on-street sometimes have difficulty finding parking, while about 75 percent on those who park off-street have difficulty. Survey responses indicate that the critical on- and off-street parking periods are weekday mornings and midday. It should be noted that this survey was conducted just prior to the 317-car parking area being torn down, and the problem has far worsened with fewer spots now available.”  – Mayor Noble

According to the Kingston zoning code, the minimum number of spaces needed to serve the Kingstonian project (for luxury housing, a boutique hotel and retail space) is 313 parking spaces. The proposed parking garage with 420 parking spaces is insufficient to replace the existing 144 public parking spaces while providing for an additional 313 parking spaces needed by the Project.  The Project would therefore result in a net loss of publicly available parking spaces. In addition, the Kingstonian will set the parking rates. Is the Kingston community, which may not be able to afford the air conditioned parking rates or find an available less costly, metered  spot, expected to park in the Kingston Plaza parking lot? 

“The City of Kingston currently pays no taxes on the land used for public parking. Because the Kingstonian will be built on that property, there will be absolutely no loss of any tax revenue to any jurisdiction (City, County or School). Under the PILOT, the developers will continue to pay all current property taxes plus 3% annual increase for the length of PILOT, which is $1,077,408 over 25 years, with no new PILOT sought after its termination. If the Kingstonian is more profitable than projected, the developers will share 3% of the additional profit with the taxing jurisdictions at a rate proportional to the current tax rate.”  – Mayor Noble

The Mayor’s assertion rests on the idea that because the lot is publicly owned with no taxes paid, granting the property to someone else who will use the lot to generate large amounts of money means no tax losses to the City. Yet such a calculation defies common sense. When we buy real estate, we pay taxes based upon the increased value. No individual gets to pay taxes at the rate established at the purchase of the property. As the market value rises, as you earn more from the investment, you pay more. Fair and progressive taxes rest upon not just the current value but future values. Such accounting measures as those deployed by the Mayor benefit no one but the developer. 

“The Kingstonian plans also include 32 hotel rooms and 8,000 square feet of commercial space. Sales tax revenue from these ventures is estimated to provide the City of Kingston with a direct increase of $19,000 based on our current sales tax sharing formula. Additionally, based on the economic impact studies, the result will be a $4.6 million dollar boost to our economy.” – Mayor Noble

The city says the Kingstonian plans 8,000 square feet of commercial space, while the application lists it at 9,000 feet.  This has been a problem all along. The council and the public must have accurate numbers and a value placed on the PILOT agreement before a substantive discussion can be had.

“The value of this project for Kingston is enormous. If the City were to build a parking structure of this scale and magnitude, it would cost taxpayers millions of dollars,” said Mayor Noble. “With the tax revenue generated from the new businesses, new resident spending in our community, and over 150 new jobs created, the positive ripple effects from this project will be felt in nearly every aspect of our quality of life in Kingston.” – Mayor Noble

So far, the developers characterize their financial information as “trade secrets” and 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.  The public also doesn’t know who the investors are and whether a conflict of interest exists.  Instead we are expected to rely upon “assurances” from our politicians as is occurring in the Mayor’s press release today. 

The 150 jobs that the Mayor highlights are construction jobs, which are neither permanent nor guaranteed to be local.

“If this project does not proceed under the current scenario, the parking lot will remain at its current capacity, there will be no new jobs, no new sales tax revenue, no affordable housing units, and the private property associated with this project will continue to pay the current taxes.” – Mayor Noble

The Mayor is trying to frighten those who are in support of the Kingstonian project suggesting that if the project don’t get the PILOT as is (for an air-conditioned/heated parking garage that will mainly serve their luxury apartment tenants and hotel guests at a daily/monthly rate that they control and will be collecting revenues from starting on day one) then the project will go away.  

The principal developer Joe Bonura tried the same tactic at the IDA during their meeting in July, 2020  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 an IDA 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.”    

Providing complete financial data would enable independent evaluators to determine whether the project is a deal that balances the community’s interests with that of the developer. The community appears to forgo a great deal of its future tax base without much explanation for this in return. 

“Mayor Noble urges the community to support this project: “Our local economy has suffered a major setback with the pandemic. It will be vital in our recovery to get our economy back on track so that the City can continue to have resources to invest in public safety, infrastructure, waterfront revitalization, parks and recreation and quality of life. These are the aspects that make or break a City and we want Kingston to not only survive this economic downturn, but to thrive. I believe the Kingstonian project will help us achieve all of our shared goals as a City.”  – Mayor Noble

At a time of financial crisis when the coronavirus pandemic has led to cuts in city services and jobs, loss of tax revenue could be simply devastating. The proposed Kingstonian PILOT deal could potentially harm the least well off in the city as well as hardworking taxpayers who already struggle to pay school and property taxes. For Council members advocating for social justice in housing, services for the poor, and children in need, the PILOT should be particularly worrisome. 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. Furthermore, new residents and businesses will be adding costs to the City’s budget for things like police, fire and sewer maintenance. These costs are normally covered by property taxes. For all of these reasons, their proposed $30.6 million dollar subsidy deserves increased scrutiny for the actual benefits to the city. 

“Beyond the public parking, the design includes a pedestrian plaza, which will be open to the public. At the request of the Uptown businesses, the project will include public bathrooms, which will be maintained and operated by the developer.” – Mayor Noble

A pedestrian plaza that will allow uptown residents the opportunity to safely cross off Schwenk Drive to shop at a mall owned by one of the developers and use public bathrooms! That’s some public benefit.

The applicant also says that it will “contribute $5,000 annually over a ten-year period to create a scholarship fund, and will offer two paid internships to mentor high school students in the hospitality and real estate fields” none of which replace the substantial tax dollars that the city school system will lose under this PILOT. 

The Payment in Lieu of Taxes Agreement will be discussed at the Common Council’s Special Finance Committee meeting on Tuesday, July 28 at 6:30pm. Log-in details for the meeting can be found at www.kingston-ny.gov. – Mayor Noble

You’ll never find the call in number if you don’t know to look for the agenda wherein it is posted. We’ll provide that here for you.  Additionally, the public should submit their questions and concerns prior to the meeting tomorrow night.  It appears that the council members of the Finance and Audit committee intend to vote tomorrow evening.  Encourage them, instead, to table the PILOT until all of the public’s questions are answered and that include all relevant back-up documents for the public’s review.

Send your comments to the Council Finance and Audit Committee: 

Ward 2 Alderman Doug Koop, Chairman
ward2@kingston-ny.gov

Ward 3 Alderman Rennie Scott Childress
ward3@kingston-ny.gov

Ward 6 Alderman Tony Davis
ward6@kingston-ny.gov

Ward 8 Alderman Steve Schabot
ward8@kingston-ny.gov

Ward 9 Alderwoman Michelle Hirsch
ward9@kingston-ny.gov

RESOURCES

KingstonCitizens.org Letter to Kingston Common Council Finance and Audit Committee and the Kingstonian PILOT

Kingstonian PILOT: “Serious deficiencies in the application currently pending before the IDA”

Affordable Housing and the Kingstonian Project PILOT

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