Batavia Towne Center

Another news service in Batavia published an editorial supporting tax incentives for a retail plaza.

http://thedailynewsonline.com/opinion/article_89f5b4b4-a5f6-11e2-a613-0019bb2963f4.html

I sent them this letter. I want to thank them and I want to share it here as well.

Thank You Howard & Billie Owens for this open, public forum.

Regarding your April 16, 2013 Editorial: The Arguments for Tax Incentives, I as a founding member of the Genesee County Libertarian Committee, respond.

Sorry, editor, but the basis of your argument for tax incentives is flawed right from the onset. The only reason the former Lowe's location is empty now is because it probably never should have been built in the first place. Certainly the developer should never have received incentives to help them do it. Not to mention the ludicrously laughable notion of calling a shopping plaza a tourist destination. The Batavia Towne Center is a classic example of over-development. Communities all across New York State desperate to improve their economies continue to waggle tax incentives at large retail chain stores in the mistaken belief that there will be future sales tax income and jobs. The reality, unfortunately, is usually a bit different. The jobs are typically entry-level, non skilled and part time with low pay and high turnover. The actual sales don't result in a net bottom line increase for a community - they're sales that would have been captured by another retailer, but now at a lower price thereby actually generating less sales tax revenue for the community while the business profits leave town. Lowe's leaving shows that Batavia is already over-developed, and you admit in your editorial that it never lived up to it's expectations. Neither will Dick's in my opinion. It's fine if Dick's and whoever else will be sharing the space want to take the risk, then I'll wish them good luck. It's the American way: if you take the risk, you should reap the rewards. I do not, however feel the taxpayers should be sharing in this risk. That to me is precisely what COR Development is asking us to do, they took the risk (albeit with our help) and it didn't work out, predictably. Now they want the taxpayers to mitigate their loss. Sorry, you can't have it both ways guys.

Your argument that the local companies, such as Adam Miller and Genesee Lumber have survived in the face of big box retailers may have some merit. Yes, Dick's will never match the service of a homegrown Batavia sporting goods store, and maybe they will all survive, but at what cost? Just because they did not immediately close doesn't mean they have been doing well all this time. How do we know that if demand had increased, one of those companies could not have expanded, or a new local start-up would have come along? The answer is we don't know and we never will as long as incentives are continued to be offered to large chain retailers. It's true that the land where The Batavia Towne Center sits was under utilized and producing much less revenue before the plaza was built, but it's also true that we will never know what might have been there instead. What we can predict is Lowe's will not be the last empty store in that plaza. COR themselves have admitted in your paper that they ask for these types of incentives routinely. Will we have to ante up again in a few years?

If the county wants to help spur retail activity, then they can instead spread the million dollars that would otherwise be designated for COR evenly among all retail businesses in Genesee County, including the ones at Batavia Towne Center, to use as the owners see fit. One of the base libertarian principles is that people know best what to do with the fruits of their labor, not government and certainly not an unelected, semi-private-sort-of-public entity which appears to lead the County Legislature around by the nose. However, I would be against that as well, even though it would be better, because we will never get property taxes and government reined in if we continue to allow the GCEDC to choose who gets to pay less and who should keep on shouldering the rest of the load. Government costs keep rising, the population keeps shrinking and there is no magic powder. We can make Genesee County prosperous again, but we have to think differently, we can't keep trying the same tired old failed practices of the past. According to Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance and the author of “Big-Box Swindle”: “…between 1990 and 2005, the amount of retail space per capita in the U.S. doubled, from 19 to 38 square feet. In contrast ............. since the early 1990s, per capita retail spending, adjusted for inflation, has increased by only about 14 percent.” (Site www.ilsr.org/wp-content/uploads/files/msnarticle.pdf ) It appears to me that Batavia is a microcosm of this oversupply that has occurred around the state, and actually we are running about 8 years behind.

Let's take the lead instead, let's continue to find ways we can reduce government through privatization where feasible. It has worked with the ambulance service, it will work for the city's trash collection and it can work in other areas as well. Let's find functions that can be consolidated or eliminated completely. Ultimately, the goal should be a lower and lower tax burden on everyone in Genesee County. We can't control the state and federal taxes, but we can whittle away at our property and sales tax. If Genesee County has the lowest property tax rate and the lowest sales tax rate of our surrounding counties, what might that do for Economic Development, organically? We wouldn't need an EDC, and we wouldn't have to endure the chairperson of our county legislature making us a joke by declaring a shopping plaza a tourist destination.

Malign Libertarians if you must editor, but we are the ones who truly have a vision for the future of ALL Genesee County residents, and we are the ones who are advocating for freedom.

David Olsen, Vice Chairperson, Genesee County Libertarian Committee

Press release:

The Genesee County Economic Development Center (GCEDC) announced today that the public hearing on the COR Development project application, originally scheduled for Tuesday, April 23rd at 4 p.m., has been rescheduled to April 30th at 7 p.m. to accommodate requests for the meeting to be conducted outside of normal business/working hours.

“The GCEDC strives to be a transparent and accommodating agency so when we get these types of requests we do everything we can to honor them,” said Charlie Cook, GCEDC board chairman. “It’s evident that this project has generated quite a bit of interest so we want to make sure that the community has the opportunity to learn more about the project and have their voices heard.” 

At the meeting, the GCEDC will provide a comprehensive overview of the project – including the benefits COR Development is applying for to develop the vacant Lowe's building – as well as a full disclosure of the fiscal and economic impacts the Batavia Towne Center has had on the surrounding community since it came to fruition. Following the presentation, the hearing will be open for public comment; the GCEDC also will read any written comments received by the agency prior to the public hearing.

Written comments can be sent to the GCEDC’s Marketing and Communications Director, Rachael Tabelski at Genesee County Economic Development Center, 99 MedTech Drive, Suite 106, Batavia, NY 14020.  Written comments must contain the individual’s contact information, including address and phone number, and should indicate if he or she would like the comment read at the hearing. All comments and public hearing testimony will be reviewed by the GCEDC board prior to a vote on the COR Development application for support.

A public hearing has been set for COR Development's request to receive financial assistance to renovate the former Lowe's location in Batavia Towne Center.

UPDATE 7:40 p.m.: The hearing has been rescheduled. It is now at 4 p.m. April 23 at Batavia Town Hall. (It was previously set for April 22.)

COR is seeking nearly $1 million in tax incentives for the project.

The way Damian Ulatowski sees it a retail project should be able to stand on its own without taxpayers helping foot the bill to open a new store.

"I'm just kind of old-fashioned that way," said the Town of Clay supervisor. "If you believe in your project, you should be able to reap the rewards if it succeeds. If it fails, you should suffer the consequences as well. It shouldn't be up to the taxpayers to shoulder the burden. I just guess that's the way I was raised.

"We're rather conservative here," he added.

Ulatowski has been on the town board for 13 years and he's seen a lot of retail development within the town's borders during that time.

None of it, he said, has been built with a single dime in tax breaks.

In Clay, you will find dozens of Big Box retailers -- Walmart, Lowe's, Dick's Sporting Goods, Target, Bed, Bath & Beyond, Home Depot, Kohl's, Petsmart, Sam's Club, Barnes & Noble and even Wegmans.

"These businesses can survive without tax breaks but we've trained them that they can't," Uratowski said. "Clay is one of the most commercially built locations in all of Onondaga County. We have several business complexes. All of them are thriving. No stores are closing. None of them got any kind of subsidy."

One of the largest retail developers in Clay is COR Development, the Fayetteville-based company that is also responsible for Batavia Towne Center.

COR's two centers in Clay contain more than 700,000 square feet, with the first and largest development starting the permiting process in 2005, about two years before Batavia Towne Center.

COR, according to Genesee County Economic Development Center records, was promised $4.6 million in tax abatements to complete Batavia Towne Center, including a 10-year PILOT that is not yet expired (not all of the tax savings have been realized yet). 

Now COR is seeking nearly $1 million in additional tax breaks, ostensibly to help attract Dick's Sporting Goods and possibly a T.J. Maxx to Batavia, as well as at least one other retailer.

A public hearing will be required before the GCEDC board can vote on the incentive package, because under recently reenacted state law, retail projects cannot receive tax breaks unless there is a finding that the project is a tourist destination or fills retail needs not being met locally.

A date for the public hearing has not yet been set.

While COR apparently doesn't always need tax incentives to build, lease and sell its construction projects, the company has accepted at least $9 million in such incentives from three IDAs in the state, according to records obtained by The Batavian from the Authorities Budget Office.

The ABO did a search for "COR" (to capture possible subsidiary names that also use the COR name) as well as COR's business address to check for IDA handouts.

It's possible not all of COR's IDA-approved subsidies turned up in the search.

It apparently also left out projects where COR sold off assets. With Batavia Towne Center, for example, COR sold the Target property to the Target company, and those subsidies are not reflected in the ABO spreadsheet.

Besides Batavia Towne Center, COR has received IDA assistance for:

• A $42 million apartment complex in Watertown. There was no PILOT on the project, but COR did receive $2.2 million exemption on state and local sales tax for construction materials. The project was approved in 2012.
• On a $6.7 million retail project on Route 5 in Fayetteville, COR was approved for tax incentives in 2008, 2009, 2010, 2011 and 2012 totalling $3.5 million.
• Also in Fayetteville, in 2009, COR received $1.2 million in breaks on a 69,000-square-foot manufacturing and research facility for Sensis Corp.
• COR also built in Fayetteville a 24,467-square-foot office complex for Northwestern Mutual Life Insurance Co. at a cost of $3.7 millon and received $406,000.

Besides Clay, other COR retail projects that don't show up in the ABO report are center's in Canandaigua, Latham, New Hartford, Erwin and Webster (COR's creative naming for all of these projects tend to be some variation of "Towne Center").

It's possible some of those projects received local tax assistance -- assistance that didn't go through an IDA (Industrial Development Agency, such as GCEDC) and therefore doesn't show up in the ABO report.

That's case in Webster where Town Supervisor Ron Nesbitt said he uses Section 485-b of the state's real estate code to grant tax breaks.

While the code allows up to 50 percent of a property's assessed value to be forgiven each year (decreasing over the years in increments of 5 percent), Nesbitt said he only grants relief on 20 percent of assessed value, which decreases in increments of 2 percent per year.

That's 20 percent off the entire assessed value, not just on the increase in assessed value, as in the standard PILOT granted by GCEDC. A project that begins with an assessed value of $200,000 and then jumps in value by $1 million after development will be taxed on 80 percent of the entire $1.2 million of assessed value.

Because it's not an IDA-sponsored tax break, the agreement only covers Webster's property taxes, not Monroe County or school district taxes.

Nesbitt made it clear, he's no fan of the County of Monroe Industrial Development Agency (COMIDA). If a developer receives help from COMIDA, the company might find tough sledding in Webster.

"I have control over that building permit," Nesbitt said. "I'm not saying I'm playing hard ball, but I have control over the building permit and just how fast it goes through. You've got to remember, somebody is making a lot of money off these tax breaks."

Businesses should pay their fair share of taxes, Nesbitt said. They consume the local services, they should pay. He thinks IDA tax breaks give away too much.

"The pot is getting smaller and smaller," he said.

The Webster tax rate is $4.33 per thousand.

"The town tax isn't killing me," he said. "It's the school tax that's eating me up."

A developer in Webster would need to strike a separate deal with the school district since there's no IDA involved. The school tax is $22.90 per thousand.

Nesbitt said he even carries out his everybody-pays-a-fair-share philosophy to nonprofit agencies.

If a nonprofit wants to build in Webster, they need to agree to pay town taxes.

"I sit down with the president or CEO and I tell them, if you're not going to use any police service, any ambulance service or any other service, you don't have to pay a tax," Nesbitt said. "If you're going to use services, you pay the town tax."

Nesbitt said even with his hard line on tax breaks, companies still build in Webster.

As for Batavia Towne Center being a tourist destination, the City of Batavia has recently received a new study by W-ZHA, LLC, that indicates the center does fulfill one of the legal definitions of a "tourist destination." It is bringing in visitors from outside the city and town, but part of the justification for a tourist destination is spin-off spending.

That doesn't seem to be happening, according to the report. Shoppers are not stopping for meals at Batavia's restaurants.

Town and city residents alone should generate about $192 million in retail spending, but sales annually exceed $231 million, a gain of $39 million above what the city and town should generate.

"Both the town and the city are shopping destinations," the report states.

 How much of that $39 million comes from outside the county is unclear.

With the additional visitors for retail, the county's eating and drinking sales potential is $89 million. Local restaurants and bars are getting only about $59 million of that market, according to the report.

Last year, a study released by the consultants for czb found that the city was losing about $12 million in annual restaurant spending to surrounding counties.

The full W-ZHA report will be released at a later date.

Press Release from Phil Ricci, chairman of the Gensee County Libertarian Committee:

Dick's Sporting Goods also does not expect to win, or ask for, tax abatements to expand here. "Our goal is to deliver everything at the lowest price," Hennion said. "We really don't feel like we should be using customers' money to build our stores."

That was a direct quote from the VP of Dick's Sporting Goods!

The classification of the Batavia Towne Center as a "tourist destination" is laughable at best, and a complete deception regardless. More than $6 million dollars has already been promised to COR over a 10 year period. Yet even though the company did not complete many of the promises within the original project, they are asking for an additional $ 1 million in "tax incentives" to re-fit a previously failed space!

No tax payer should be asked to subsidize a multi-billion dollar retail chain, so they can do business in their town, but what's even worse is when that retailer is not asking for the help!

Stop the abuse! Tell Mary Pat Hancock and the GCEDC Board to not approve the additional funds!

Sign the petition: http://www.thepetitionsite.com/706/682/307/stop-the-additional-funding-of-tax-incentives-to-cor-for-dicks-sports/

NOTE: There was a big mistake in the original headline of this post about the amount of property taxes that would be generated over 10 years.  The correct number is $4.3 million, not the significantly higher number previously quoted.

Batavia Towne Center, in the four years since the first stores opened there, has generated more than $500,000 in new property tax revenue for schools and county government.

It's also generated more than $500,000 in new fire tax revenue for the Town of Batavia.

We don't know how much sales tax it's generated because those figures are considered confidential. But COR Development estimated -- when it applied to GCEDC in 2006 for tax abatements for the project -- that at build-out, the center would add more than $4.5 million in annual sales tax to the state and county treasuries.

Under the current terms of the agreement between COR and the Genesee County Economic Development Center, Batavia Towne Center will generate an estimated $4.3 million in property tax and fire tax revenue by 2018.

COR is asking that the original agreement be modified to help the company attract Dick's Sporting Goods along with one or two other retailers to the former Lowe's location.

There are three tax abatements under consideration:

• $180,000 sales tax exemptions
• $43,750 mortgage tax exemption
• $828,390 property tax exemption

Before there was a Batavia Towne Center there was 47-acre parcel of land that didn't have much on it except for the Wood Hill Trailer Park off Park Road that -- according to a June 22, 2006 article in the Batavia Daily News -- was filled with aging trailers that once housed race jockeys from Batavia Downs.

The total assessed value in 2008 was $1.6 million.

After Batavia Towne Center opened, the assessed value jumped to $14.5 million.

Under the terms of the original agreement with GCEDC, COR received a $6 million tax incentive package:

• $2,078,400 sales tax exemption
• $312,500 mortgage tax exemption
• $3.6 million property tax exemption

COR was planning a 375,000-square-foot shopping plaza that would be anchored by Target and Lowe's with Bed, Bath & Beyond, PetCo and Michael's, as other key tenants.

It would cost COR an estimated $40 million to build the center.

COR estimated at build-out the stores would employ 364 full-time equivalents (FTEs), who would be paid $9.9 million in annual wages, and the stores would generate $4.6 million in annual sales tax on $667 million in gross annual sales.

In 2007, the project was split into two parts, because Target insist on owning the building and real estate of their own stores, so the benefits and liabilities of the project are now split between COR and Target.

For the life of the agreements, both COR and Target are required to submit an annual report to GCEDC on employment.

By the time all of the stores were open in 2009, COR and Target reported a combined 365 FTEs.

As the economy declined after 2009, so did employment, dropping to 341 FTEs in 2011.

After Lowe's closed, the number of FTEs dropped to 270 in 2012.

The bulk of the incentive package for COR (all numbers in this story roll up COR and Target as if it were still a single project) was the property tax abatement.

The abatement is known as a PILOT (payment in lieu of taxes). 

A PILOT is designed to forgive a portion of property taxes on the increased assessed value on a parcel of real estate that are the result of improvements.

In the case of Batavia Towne Center, as stated above, the property's assessment rose from $1.6 million to $14.5 million.

COR continued to pay property taxes on the original $1.6 million assessed value, but in 2010, when the assessed value jumped so dramatically, it paid no property taxes on that additional $12.9 million in assessed value.

Under state law, fire district taxes cannot be waived, so when the assessed value jumped, so did the amount COR pays for fire services in the Town of Batavia.  Currently, COR and Target pay more than $266,000 annually in fire protection taxes.

Starting in 2011, COR began paying taxes on 20 percent of the increased assessed value, or on $2.6 million of the new additional assessed value.

This year, COR's share jumps to 40 percent of the assessed value.

By 2017, COR will be paying 80 percent of the increase in assessed value and the PILOT expires in 2019, at which point, COR and Target will be paying property taxes on 100 percent of the increased assessed value, or about $4.1 annual in property taxes.

The bulk of those taxes go to the school district with the rest going to the county.  The Town of Batavia currently has a zero property tax rate.

The projected numbers are based on the current assessed value, which is subject to change annually.

For the exemption of the center to accommodate Dick's and other retailers, COR is asking for the PILOT to be amended to cut the taxes on the new assessed value of that portion of the project.

Currently, the portion of the property that contains Lowe's is assessed at $6.9 million.

The improvements will increase the assessment to an estimated $8.6 million.

COR is asking for an amended PILOT just for that parcel that will begin at the 40 percent of increased assessment value and extend the life of the PILOT (just for that parcel) through 2024.

Rather than going up 20 percent every two years, the 40 percent of assessed value would last for three years, then go up to 50 percent for two years, 60 percent for two years, 70 percent for two years and 80 percent for two years.

In 2007, as we reported earlier, the project was only eligible, as a retail project, for tax incentives, because it was declared a "tourist destination."

Under terms of IDA law, a tourist destination is defined as a location that will attract a significant amount of traffic from people living outside of the IDA's service area.

In this case, from outside Genesee County.

The agency also had to find that the project would offer a service not otherwise available to county residents.

In a June 8, 2007 letter, COR's VP and attorney Joseph B. Gerardi, wrote in a letter to Steve Hyde, CEO of GCEDC:

It is anticipated that the Towne Center will provide economic and/or tourism opportunities for commercial uses not otherwise readily available to residents of the Genesee County Economic Development Region. ... The Towne Center project is also anticipated to retain a significant percentage of the retail sales available in the Economic Development Region that is likely to be leaving the Region, and create additional economic development activity. This is a result of the potential for Towne Center to attract retail sales from counties that are in near proximity to the Region and/or development.

Legislature Chairwoman Mary Pat Hancock wrote in a letter dated Jan. 2, 2007:

In order to assist the Agency in making such a finding, the Company has represented that the Project is the sole comparably-sized shopping center available to residents of Genesee County and therefore provides a service that would otherwise be unavailable.

Hancock's letter did not address the "tourism destination" designation.

While the project was in development, GCEDC was apparently interested, according to a February, 2007 article in the Batavia Daily News, in adding a multi-screen theater to the project.

COR seemed less than thrilled with the idea, noting that adding theaters would mean less parking, and theater patrons would take up a lot of parking spaces that would otherwise be filled with store shoppers.

The original project proposal also promised restaurants, but none of have been built in the plaza.

COR also promised to plant $200,000 in trees in the parking area.

It's expected that if GCEDC is to grant new tax incentives to COR for Dick's Sporting Goods and other additional retail space, the project will need to be approved as a "tourism destination" and provide goods and services not otherwise available in Genesee County.

In 2005, while discussing sports retail outlets in Forth Worth, Jeff Hennion, then VP of strategic planning for Dick's Sporting Goods, told the Star-Telegram that Dick's wasn't interested in tax incentives for their stores.

"Our goal is to deliver everything at the lowest price," Hennion said. "We really don't feel like we should be using customers' money to build our stores."

UPDATE: Original site plan map added, courtesy COR Developerment.

Batavia Towne Center -- the location of Target, Bed Bath & Beyond, Michael's, Petco and Radio Shack -- is a tourist destination.

It became a tourist destination in 2007 when the board of the Genesee County Economic Development Center voted to proclaim it a tourist destination and Mary Pat Hancock, chair of the Genesee County Legislature, gave the designation her stamp of approval.

Without the designation, the GCEDC could not have awarded -- under state law at the time -- some $4.5 million in tax breaks for COR Development Company to build the retail shopping center.

The law lapsed in 2008, but is back in force this year, just in time for COR to request another $1 million in tax incentives to help lure Dick's Sporting Goods to Batavia.

The Buffalo News reported on the revival of the law last week, noting that it's the intention of the governor's office to crack down on tax incentives for purely retail projects.

Those retail projects were magnets for controversy because critics said they did not generate new wealth within the region, served a strictly local clientele and favored one business over others that were fighting for a piece of a shrinking local retail market.

Among the exceptions to the law banning tax incentives for retail projects is the declaration that the project is, or is part of, a "tourist destination."

The statute is pretty clear that Albany wants these incentives going only to retail projects that will likely "attract a significant number of visitors from outside the economic development region ... "

Who decides if a project is a tourist destination? According to the Govenor's Office, it's purely a local decision.

It's up to the GCEDC board to conduct a public hearing on the topic. After the public hearing, the board votes. If it votes to declare the project a "tourist destination," there's one last step, and that's for the chair of the governing agency -- in this case, Mary Pat Hancock of the County Legislature -- to approve the designation.

There's no other process to confirm the designation nor appeal the decision.  There's nothing in the statute that allows another authority to overrule the local decision.

For her part, Hancock seems quite convinced that Batavia Towne Center is a tourism destination.

Hancock noted that Batavia Towne Center is right next to the Clarion Hotel, with its new water park, conveniently located near the Thruway and there are lots of hotels in the area. Those hotels bring families to town for hockey tournaments and soccer tournaments, and business travelers might bring their families along these days.

And those people, she said, will want convenient shopping in the area.

"We would certainly like to see that empty building (the former Lowe's location) put to good use and see something there that brings people to the area," Hancock said. "It's conveniently located for people who come here and with the price of gas, it's wonderful that people can come here and mix business with pleasure."

Kelly Rapone, head of tourism for the Genesee County Chamber of Commerce, wanted to emphasize that she's supportive of the proposed project at Batavia Towne Center, but admitted that she's never considered the shopping center a tourism destination and the chamber has never promoted -- as far as she can recall -- the shopping center as a tourism location.

One measure in New York of whether a location is a tourism destination, as established by the promotion campaign "I Love NY," is whether a signficant number of people from more than 50 miles away will travel to the location.

That definition is used in awarding grants to tourism projects, Rapone said.

While the shopping center is good at pulling people from neighboring GLOW counties to Batavia, she isn't sure Batavia Towne Center would measure up to I Love NY's criteria.

"(Batavia Towne Center) is definately an asset to have when people are deciding where to stay while traveling," Rapone said. "They're not going to stay in a hotel when there's nothing around."

She doesn't think, though, that people are going to travel to Batavia and stay in a hotel just to shop at Dick's.

We asked Hancock about a remark by the owner of Barrett's Batavia Marine, Mike Barrett, that tax breaks to COR is like "using your own tax money to put yourself out of business," and Hancock said she certainly hopes that isn't the case.

She doesn't think that's GCEDC's purpose, she said.

"The GCEDC has done great work with our present businesses and works with our businesses to help them expand or move to different locations," Hancock said. "Part of the GCEDC's mission is to retain business and retain jobs and they've been doing a really good job."

LATER THIS WEEK (we hope): Details on the 2007 financial package that helped create Batavia Towne Center.