- By Dan Veaner
"I believe a lot of people would shop there who go to Sam's Club in Elmira or BJ's in Auburn," Pinney said. "When people go out of town for those things they not only shop in those places, but they also fill up with gas, they may go out to eat... so we take a lot of sales tax revenue out of our county. In light of all that I think we should pass a resolution in support of that project."
They passed the resolution unanimously. That made three of the four taxing authorities including the Village of Lansing and the Tompkins County Legislature that supported the agreement. The fourth, the Ithaca City School District, was scheduled to vote on it this week as well, but did not do so after its defeat at the IDA.
The issues surrounding Monday's defeat are very complicated, and very political. Depending on who you talk to it's the City of Ithaca's fault for wanting the store to locate where it could reap tax benefits, the Village of Lansing's fault for tying senior housing to the commercial development, IDA members' fault who are also county legislators who voted against the will of the Legislature... the list of accusations and reasons goes on, and is confusing and contradictory.
The application for the tax abatement came from Triax Management Group/Arrowhead Development. Despite implications by opponents, BJ's would not receive any benefits at all from the tax agreement. They would be paying full price in taxes and fees it takes for any retail operation in Tompkins County. As the manager of the property Triax would be BJ's landlord, and the beneficiary of the tax abatements which were characterized as facilitating the construction of the senior housing units. Those housing units were a condition the Village of Lansing put on the project, to create a buffer between the retail and residential portions of the Village.
But opponents didn't see it that way. While supporting the ideas of a BJ's in Tompkins County and the notion of the Village driving projects to fulfill their comprehensive plan, IDA (and County Legislature) Chairwoman Martha Robertson spoke in opposition to the abatement during a debate before the vote Monday. She objected to County taxes supporting market-rate senior rental units that Triax would own and continue to profit from after the term of the agreement. She said her vote was not ideological, but she didn't support not having a level playing field.
"If we're talking about the housing that is a subsidy to Triax $150,000 per unit of housing for units that aren't even affordable," she said. "Eric (Triax Principal Partner Eric Goetzmann) will pay $30,000 per unit. He will receive the market rate rents and will end up owning 12 very nice appartments. County Assessor Jay Franklin has written that the value of this project could range from one to three million dollars, depending upon the rental rates for the units. For that asset Eric will pay $360,000 and taxpayers will divert $1.8 million dollars."
But Goetzmann sees the project in terms of overall benefit to county residents. According to estimates the project would create around 70 jobs and could generate about $750,000 in
annual sales tax revenue for county municipalities, including a possible $400,000 for the County alone. That could be significant in the current economy that forced Tompkins County to cut programs in next year's budget, while still raising the tax levy by 5.98% and the tax rate by about 7.9%.
"It's disappointing that an economic development agency has chosen to politicize this vote and taken an action contrary to the desires and votes of the taxing jurisdiction affected, we are still evaluating our options and next step," Goetzmann says. "It is especially surprising that an agency appointed by the County Legislatures voted contrary to the majority of the County Legislators who supported the project. This is a real disservice to county tax payers who will continue to experience cuts in services and programs while seeing their property tax bill rise."
Triax was asked by the IDA to provide a market feasibility study to quantify the benefits or pitfalls of the project. The study was referred to during the debate Monday, and while some IDA members questioned the monetary projections, it was one of the principal documents used during the negotiation and deliberations.
The study estimates additional retail sales of between $34 and $40 million for Tompkins County for the reasons Pinney stated on Wednesday. It breaks that down to $22 million in sales of general merchandise, apparel, furniture, and other, and $18 million in food and pharmacy. The lower $34 million estimate takes into account sales shift -- buying groceries, for example, that they may have otherwise bought at Tops. Robertson challenged the sales tax impact of those numbers based on the actual impact of non-taxable items and sales shift. Proponents noted that stores like BJ's increase sales in neighboring businesses.
The study also addresses a sales gap, or leakage. Leakage comes from county residents going to other counties to spend money, typically because they can access kinds of stores that don't exist where they live, or other factors that make shopping there attractive. For example, the Carousel Mall in Syracuse attracts shoppers from surrounding areas because of the large array of choices all in one place. Because there is no discount club store in Tompkins County, people typically drive to Auburn or Horseheads to shop at BJ's or Sam's Club. Goetzmann has often told Village of Lansing Trustees and planning board members that he wants The Shops at Ithaca Mall to be a retail destination for shoppers in and out of Tompkins County, to stop the flow of dollars leaving the county.
The study looked at six neighboring countys, and showed that Chemung County enjoys a $276,826,722 surplus in retail sales, while Tompkins County showed a gap of $61,011,273. The lower estimate of BJ's sales would approximately halve that.
The study also broke down spending potential in the six counties. Tompkins County came out highest in estimated 2010 expenditures, at $383,604,556. The next highest is Chemung County (301,274,834), followed by Cayuga($261,523,382), Tioga($180,706,643), Cortland ($180,706,643), and Schuyler at 60,039,325. A breakdown by 31 product categories showed Tompkins County residents spending 18% more than the average shoppers who live in the other five counties overall.
County Legislator Pat Pryor said Monday that a nearby discount store would help families who are struggling to recover from Layoffs at Borg Warner and Cornell, by providing a local outlet with more affordable goods, and also because of the sales and property tax impact, both of which would increase county income, whatever the numbers actually turn out to be.
"The tax revenue is bad news in this community," she said. "I think if this conversation were taking place a couple of months ago when we were trying to put together a budget... when I heard the amount the County is expected to get from sales tax... when I think of what we could support in the County, whether it's youth services or other excellent local programs, it's hard to agree that the IDA should turn this project down."
Projections by Tompkins County Finance Director David Squires show the County realizing sales tax revenues of $420,750 on sales of $34 million, and $900,000 on sales of $40 million. 15 other municipalities would also benefit from the increased sales tax. That is on top of what they already receive in sales tax revenue.
Many people think the Village of Lansing gets the lion's share of sales tax revenue because the mall is located there. That is actually not true. The affected municipalities get a percentage of the local share based on population. On sales of $40 million the Village would get $35,373.19 and the Town of Lansing $73,541.46 according to Squires' projections. The largest portions would go to the towns of Ithaca ($155,023.00) and Dryden ($115,891.98).
Who voted for or against the abatement was surprising if you go strictly by the numbers and who benefits by them. Robertson, who represents Dryden voted against in both the Legislature and IDA votes. Dooley Kiefer, who represents the Town of Ithaca and the Village of Lansing voted against. IDA member and County Legislator Nathan Shinagawa, an Ithaca representative, voted yes, and passionately defended the proposal as beneficial to all county municipalities including the city.
Shinagawa listed public benefits including producing local construction jobs, permanent jobs, at least five living wage or better jobs, entry level jobs, 50 or more new jobs, includes housing, cleans up a ground field or environmentally contaminated site, is constructed on vacant or underutilized facilities, makes sufficient use of infrastructure, will generate additional property taxes,at least $100,000 additional sales taxes, attracts out of town visitors to spend money locally, discourages sprawl and includes mixed uses, public amenities. He said a part of IDA policy dealing with density says the IDA can choose other perceived benefits, and he suggested senior housing and compliance with the comprehensive plan as possible candidates.
"If you add all those benefits, that's 24 public benefits," Shinagawa said. "24 public benefits that are already defined in our policy. It doesn't apply specifically to PIFs, but it is specifically talked about in IDA policy. I think we have a framework to deal with because we have the density policy."
IDA member Larry Baum, who also favored the abatement, said he was comfortable with the net gain of $800,000 per year figure as a result of BJ's locating at the mall.
"That's 26.67 times what the current property tax value is on that piece of ground in the Village of Lansing," he said. "I can't ignore that number. Sales tax and property tax will be somewhere in the vicinity of $800,000 the first year. If this body decides not to vote for this project and the City of Ithaca makes a phone call saying 'it didn't pass, come on to Ithaca' it's going to take them at least another year to bring on a project. The property tax number that we're talking about -- it could take almost five years to make that amount back, assuming that BJ's showed up in another area in the community."
Baum noted that it took Goetzmann almost three years to negotiate a deal with BJ's. Assuming BJ's would agree to come to Tomkins County at all, Baum estimated that if it takes a rival another three years it could take 16 years to recover the loss from not having them move to the Shops at Ithaca Mall location now.
But opponents said they didn't like the amount of benefit to the developers, and complained they were not given adequate information in the application to make an informed decision, that the IDA doesn't have a policy on supporting retail projects, and that the 'I' in 'IDA' stands for 'Industrial,' not 'Retail.' The arguments pro and con are too numerous and complicated to adequately cover in this article, the bottom line is that the IDA voted not to grant the tax abatement. Questions abound in the aftermath: was it just about money, or was it about fairness and procedures? Did the IDA maintain a fair consistent policy, or did it bite off its nose to spite its face?
While frustrating to supporters of the project, that doesn't necessarily mean that the project is dead. Robertson said she would support County involvement in alternate solutions such as convincing the Village to separate the residential portion of the project from the retail piece, or delaying the senior housing while keeping it part of the project. Goetzmann has not said what his next move will be, but it is unlikely that he will give up the project without a fight. Village Trustees will likely discuss their next move in a meeting Monday.