By Michael Lebron
Last minute Christmas shopping didn’t keep a crowd from packing Newburgh’s City Hall for a hearing over a controversy about a PILOT.
One year ago, after receiving only two bids, the Orange County Legislature voted unanimously to award the former Masonic lodge, American Legion Hall and YMCA on Grand Street to Foster Supply Hospitality. The developer plans to convert them into an 80-room boutique hotel with a 100-seat restaurant, a spa, a rooftop lounge and event space.
Support seemed to be sky high for the project until the Newburgh Industrial Development Agency (IDA) held a hearing a month ago. Senator James Skoufis, among others, railed against “…the largesse of the tax breaks being sought—a 90 percent reduction for the first six years of operation, followed by an additional six years of abatements…” At a later City Council meeting, many councilmembers grumbled about the PILOT’s size and even the IDA itself.
The IDA, in an effort to increase transparency, scheduled a second hearing for Monday December 20.
Michael N’dolo of the MRB Group presented a third-party report (http://www.cityofnewburgh-ny.gov/574/IDA-Projects).It provided Test of Reasonableness Findings with benchmarked revenues and financing terms. A Cost Benefit Analysis summarized fiscal impacts. The report concluded with details of the PILOT schedule. The buildings would generate $3.7M in taxes and $12.8M in wages during the 12-year PILOT. The buildings have generated no tax revenue for decades.
Public comments were fairly evenly split between pro and con. Many in opposition appeared to be allied with the incoming 1st ward councilmember Giselle Martinez. They self-identified as being young, out-of-town, and one stated that he was from the Democratic Socialists of America. They brought up concerns such as whether local or union workers would be hired.
Speaking with passion, eloquence and with decades of boots on the ground experience were two of Newburgh’s African American elder statesmen.
Fred Watson, board member of SUNY Orange County Community College and of Garnett Health’s Board and founder of Three Cities Management, spoke of Newburgh’s many deteriorating buildings and how these large, historic structures will not be easy to renovate. He felt that this was an opportunity to make something happen and that it held the potential for collaboration with other community stakeholders.
Kevin White, Executive Director of The Boys and Girls Club, said he’s seen the city turn down many projects and developers walk away from others, leaving behind trauma, despair and homelessness in the face of vacant, garbage strewn buildings. He spoke of the bullet holes in his office windows that he leaves there to remind him of why he is in Newburgh. With tears in his eyes, he said that he, too, thought that this was the start of something. He said that Newburgh should not blow it over the PILOT, that he didn’t care if Foster paid no taxes at all and that the jobs and other businesses that Foster will bring will help Newburgh keep its kids here, especially with the added educational opportunities.
Interestingly, it was two of the Council’s three African American members, Mayor Harvey and Mr. Grice, who, pivoting from their earlier criticism, came to this hearing… this time clearly supporting the project. Said Grice: “While the PILOT may seem high, it is on a graduated scale, and, based on the data, is in line with what is needed”.
Meanwhile,the developer himself was sitting in the front row: not with a group of lawyers as is usually the case, but by himself, quietly taking it all in.
I later spoke to Senator Skoufis to get some added clarification on the finances. He said that Foster got a $1.25M grant after the 12-year PILOT was proposed: why therefore shouldn’t the PILOT be reduced by that amount? An IDA member responded that Foster had asked for $2.5M, and that the grant and the PILOT had been concurrently factored into the analysis. He pointed out that while the PILOT provides banks with tax stability during the critical first years, it also gives the city the ability to rescind the abatements in the event that the developer fails to deliver on his community promises. He concluded that this is still an ongoing process with the final terms of the deal still evolving.
So, will this deal take off? The Fosters are already doing renovations on their new home (presumably, no PILOT needed) near the other end of Grand Street. It seems they expect to be here for a while.