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Links of the Day:

– DestinyUSA planners talked more about how to get tax dollars than how to secure tenants, according to a former insider who spilled his guts to the Syracuse Post-Standard. Robert Congel led a team of executives who thought no idea was too grand and no request of government was too much. They viewed City Hall as an obstruction and thought they could bend politicians to their will. Groupthink was pervasive in their meetings, with everyone required to complement each other’s ideas. Here is an excerpt from the story:

Tapping the state’s Empire Zone tax credit program was a key topic, Malfitano said. He recalled former Destiny executive Michael Lorenz at a whiteboard, laying out how it would work.

Destiny would collect tax money from its tenants, submit its payment-in-lieu-of-taxes (or PILOT), then get the entire amount reimbursed under the Empire Zone program, Malfitano said.

Destiny’s payments aren’t treated like taxes, which pay for city services. Instead, Destiny’s PILOT money gets diverted to pay off its construction debt. It’s like having your taxes pay off your mortgage.

The group talked about how it would be good to have bigger PILOT payments — the more Destiny paid, the more it got back from the state, he said.

Congel has estimated $10 million a year in Empire Zone credits on Carousel Center. The credits could be worth at least $70 million through 2018, when the benefits expire.

Lorenz once drew a diagram on the board: It was a circle, representing a perpetuating process of funding the mall with public money, (Marc) Malfitano said.


All of Pyramid’s previous malls were the result of a common business model, Malfitano said: Make a budget, figure out rents, then see how much financing that could generate and raise enough money to build the project.

Destiny had no such business model, Malfitano said. Instead, it relied on tax breaks, such as Empire Zones, federal environmental bonds and the state brownfields program, he said.

DestinyUSA ultimately failed, but not before the mall was awarded 30 years of no property taxes. This is scary stuff and it shows why we must be vigilant when awarding tax breaks. This article is a must-read for those working with Scott Congel, Robert’s son, on the Medley Centre project.

– The Susan B. Anthony House wants to expand, but faces physical and financial challenges.

– With the expansion of the University of Buffalo Medical Campus, the city is embracing light rail. A columnist in the Buffalo News says building more parking ramps isn’t the answer to accommodating the center’s 17,000 workers. Meanwhile, the University of Rochester employs 20,000 and sees the solution as a highway exit ramp. Talk about different approaches.

– In an article about the cost of being a Rochester sports fan, Red Wings GM Dan Mason admits no one really comes to the ballpark to watch a game.

The NFL could be easing blackout rules.

– This obituary is straight out of a spy novel. Actually, no one could make anything like this up.

6 Responses to Scheming for Tax Dollars

  1. July 1, 2012 at 2:40 pm lynn e responds:

    It is obvious to anyone that Congel is ripping the tax payers off and it was never enough to tell Irondequoit taxpayers or the state that there were no other offers. Talk about abusing vulnerable people.

  2. July 1, 2012 at 3:04 pm theodore kumlander responds:

    what galls me th emost is city and county official fell for the scam and helped congel and son rip off the taxpayer.

    this is my beef it is not the public unions that are ripping of fthe taxpayers it is the guys at the top.

  3. July 1, 2012 at 7:27 pm Ginny B responds:

    Rachel, you could continue to do a real service to our community by exposing that the deal at Medley has all the same components as the one at Destiny. The mall is in an Empire Zone. Congel has given money to numerous politicians to help get favorable treatment. The PILOT is designed to funnel the payments back into the financing (I.e. using property taxes to pay the mortgage). The zoning has been modified to give the developer the ability to make changes without town board review. Deadlines have been ignored, and then changed. The developer is making bad faith interpretations do language in the PILOT.

    If Irondequoit and the county are to avoid the fate of Syracuse, the press has to help shine a light on this so that the politicians will act in the people’s best interest, not the developers. As we speak, COMIDA is supposedly reviewing input from the developer as to whether he has met the investment targets. We heard this was happening well over a month ago, and the PILOT says that no response from COMIDA within 30 days as to whether the investment is acceptable is the same as saying “yes, it is acceptable.”. I’ve tried to find out from COMIDA where they are in the process of review, but they won’t respond to a simple little citizen. Maybe a reporter can get somewhere!

    • July 1, 2012 at 10:48 pm Rachel responds:

      Ginny, thanks for your continued diligence. I agree, we need some answers to the questions you’re asking and issues you’re raising.

  4. In business, real business, not transactions that involve governments, especially municipalities, there’s such a thing as “due dilligence.” This practice must escape the muni lawyers or their contract lawyers when it comes to government subsidies for real estate development proposals.

    In contracts, there might also be considiered graduated performance benchmarks which when not met and upon notice could at the descretion of the grantor halt or terminate a delevopment project and its subsidies and default termination penalties.

    Then, there’s the practice of drop dead dates, performance bonds, contracted and scheduled return of invested public capital by a developer upon default.

    I know, the muni is so hard-up to gain an interested developer for an infeasible site in its jurisdiction all the above is considered superficial to the fact that certtain redevelopers need a free ride to become an in-town player (well, except for some contributions to political campaigns and dinners.)

    You reap what you sow in the public re-development game.

  5. Pingback: “Metal Box in Medley” » The Rochesterian

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