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City of Rochester Communications Burear

The City of Rochester wants to continue giving 10-year tax breaks to rich people who buy condos downtown.

The city first started giving incentives to downtown homeowners in 2007. Anyone who buys a newly-constructed or converted unit in an existing building gets 90 percent off his tax bill the first year, 80 percent off the second year and so on. The goal is to increase home ownership and the availability of affordable housing units downtown.

The program expires in May and the city wants to renew it. According to legislation submitted to City Council, the program hasn’t substantially met its goals. Of 2,914 downtown housing units, only 94 are owner-occupied. Only 20 homes have been built since the program went into effect.

Most downtown housing is high-end and the tax breaks have done nothing to change the dynamic. The average assessment of the 20 new homes built is $230, 323. That’s not exactly affordable housing. People who want to live downtown are choosing a lifestyle and the market indicates price isn’t a concern.

Finally, most downtown developers get tax breaks and other incentives before they sell a single unit. For example, the state awarded $335,000 in Restore NY grants to a developer building only two condos and retail space on East Ave. for $1.2 million. The developer plans to live in one of the units, which he won’t have to pay full taxes on for 10 years.

I understand wanting to get people to own homes downtown.  But the market says only the wealthy can afford it right now – tax breaks or not.

19 Responses to Tax Break for the Rich in Rochester

  1. April 9, 2012 at 1:14 pm Ken Zobel responds:

    this is bull the city is facing a 25 million dollar short fall now they want tax credits restore for the rich also why hasn`t the city foreclose on the sibley buldging the wilmorwirtes oew the city over 30 millin in back taxes why hasn`t city councle done anything about this

  2. April 9, 2012 at 1:20 pm Reggie Henderson responds:

    “..average..$230,323. That’s not exactly affordable housing. People who want to live downtown are choosing a lifestyle and the market indicates price isn’t a concern”

    Hey Rachel, I think that the idea that $230,000 (and that’s the average, not the lower half) is not affordable housing and for the rich who don’t care about price, is a view that would be pretty unique to Rochester . The cities with the most similar population to Rochester in the US are: Irvine CA, Birmingham AL, San Bernadino CA, Spokane WA. I haven’t researched it, but I’m guessing 3 of those 4 would have average prices double those of Rochester. For most areas of this size (and larger and smaller) $230k for a downtown house is really cheap.

  3. I am a downtown resident and receiver of the tax breaks and I certainly wouldn’t consider myself and my husband “rich.” We are very middle class and decided to move downtown based upon the tax incentive. 5 units in my building sold for under $200K, which I certainly wouldn’t say only the “rich” can afford. Did you look at the median assessment as well or only the average, as average household values is not a favorable way to measure values. I believe that at this time in Rochester, these incentives are needed to convince people to move downtown and that as people move downtown, more development will occur, and eventually people will move downtown without the tax incentive. I think it is great that there is assistance to people wanting to move downtown and help make Rochester a great downtown to live in!

  4. April 9, 2012 at 2:43 pm Ben C. responds:

    subsidized gentrification. what’s this world coming to?

    • I think this happens in lots of cities. I know in other cities they do a lot of “for cost” developments based off of city grants in gentrifying neighborhoods. Basically, homes will be sold at what they cost to build, and the city will front the difference to the developer. I don’t think it is as uncommon as people think – it is just not advertised or debated in other cities.

  5. April 9, 2012 at 3:22 pm Pat C responds:

    There’s lots of property in grand homes in Edgerton with prices tags around $50k. Gentrify them. They are actually historic, and some seem to be in pretty good shape (I know from first hand experience.)

  6. This program obviously has not worked as advertized and should be done away with. If anything, there should be increased tax incentives for landlords to improved housing that they manage.

  7. April 9, 2012 at 7:45 pm Reggie Henderson responds:

    @PD, excellent point, i wonder what the median is?

  8. April 10, 2012 at 10:34 am Peking Humonculous responds:

    You can’t decry tax breaks to the rich, Rachel, and never mention a word about the millions of dollars owed to this city in back taxes by the Wilmorites. Why is no one discussing this? The city keeps on handing out tax breaks to developers and the wealthy while the misdle class continues to carry the tax burden and the poverty in this city is never even touched. But yeah- let’s forgive millions in back taxes owed by popular Democratic funders!

  9. Mr. Humonculous,

    How long have you been reading this blog? Rachel has mentioned the Sibley taxes several times including stories focused exclusively on that particular fiasco. Why is that every time there is a discussion of questionable tax breaks that are not effective in achieveing their stated goals there’s always someone who has to come along yelling about how that doesn’t matter because the Sibley Building is also a failure?

  10. April 10, 2012 at 12:32 pm Peking Humonculous responds:

    You are correct, it has been mentioned. My hope was that it would be more than mentioned as this writer tends to dig quite a bit deeper than other local “news” sources. Perhaps the reason the unpaid taxes on the Sibley building keeps coming up when this city’s financial straits are discussed is because the amount owed would balance the shortage of funds this city is experiencing. After all, if you needed five dollars to buy something, then recalled that I owed you five dollars, would you not ask me to pay up? I would expect you to, just as I would expect this city to collect on debts owed, especially when they would make up the shortfall. Or perhaps the reason why the money owed by Wilmorite keeps coming up is because we are facing decisions like discontinuing parking garage maintenance and closing the soccer stadium… things that could be avoided if they simply paid what they owed. I’m really not sure what is so confusing about that. If you want to ignore the fact that this city has money troubles yet is forgiving millions of dollars in taxes which a big Democratic backer owes, go right ahead. I can’t bring myself to do that.

  11. April 10, 2012 at 5:30 pm PJ Birkman responds:

    I don’t think that Mike was saying that we should ignore it, just that there isn’t a need to talk about Sibley every time you about a story covering some different aspect of taxes or city finances – like a targeted tax break that isn’t doing what it is supposed to do. This is a story about something else – a specific tax break with a specific justification and an examination of if it is performing as advertised. Rachel has covered Sibley before including this fairly recent story which is all about Sibley and the money owed the city. http://www.13wham.com/content/blogs/story/Will-City-Ever-Get-Paid-Money-Owed-on-Sibley/4Hdx1ZMku0SgBu_SDWf5VQ.cspx

  12. My wife and I moved Downtown within the last year and we too are recipients of the tax breaks of which you speak. These tax breaks were definitely a meaningful incentive for us and I think the same can be said for several of our fellow neighbors. Like many in our building, we feel obligated to do all that we can to make our neighborhood and our City a better place and look forward to making it our home for years to come. I’d have to agree that all of my neighbors/fellow tax break recipients are indeed rich–rich in their diverse backgrounds and life experiences, rich in their desire to use their varied skills in ways that can make our City better, and rich in their belief that many positive developments are happening in the City, with its best days yet to come.

  13. Well said MB! My husband and I also moved into the city with these tax incentives and would not have been able to do it otherwise! As newly weds, and a struggling educator trying to find a permanent job, these tax breaks make it possible for us to own a home. And where better than downtown Rochester! If you ask me, there are many people you couldn’t pay to live downtown and we choose to live here and have invested in our future and our city!!

    If we don’t stop with the negativity our city will never rebound! I am hopeful our investment will prove to be the start of a better and more prosperous downtown!

  14. November 30, 2012 at 2:12 am Flamingo responds:

    The city has plenty of cheap houses and poor people already. We need a broader economic base and these subsidies are helping.

  15. Pingback: Condo Craziness » The Rochesterian

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