Don Hartill
Lansing Mayor Don Hartill along with the village’s Board of Trustees required housing to be a part of the proposed BJs Wholesale project.

When it came right down to it, the Lansing Meadows project - a retail store, 12 housing units and a wetland - was resurrected for frankly pragmatic reasons: Tompkins County needs the money.

"We're looking at a property tax cap, probably without mandate relief," said Martha Robertson, the chair of the Tompkins County Industrial Development Agency (IDA) and the county legislature. "There's no tax cap yet, but let's not lull ourselves. It is increasingly clear that there are new cost shifts to the counties [in the state budget]."

Robertson, who sided against the project in December, voted for it this time around, which was enough to make it go forward.

The Village of Lansing has worked with Arrowhead Ventures (Triax Development Corp.) since 2009 to craft a project that suited the village's planning vision. Arrowhead wanted to build a BJ's Wholesale Club, but Lansing convinced them to turn an 11-acre site behind the YMCA into a mixed-used development that included the retail store, 12 units of senior housing and a wetland with walking trails.

"The parcel was originally zoned ‘low traffic commercial,'" said Lansing Mayor Don Hartill. "It was for modest office development and restaurants, nothing else."

Arrowhead asked the village to change the zoning, and Lansing agreed, with a condition.

"If they changed the use on part of the parcel," said Hartill, "then they would have to have a compensating use on the other part of the parcel."

To balance the higher traffic retail store, the village suggested constructing senior housing and preserving wetland acreage.

Arrowhead looked at the cost of a multi-use project and approached the IDA with an idea for financing the senior housing portion of the project. The Tompkins County IDA has hitherto hewed closer to a mission that corresponds with its name and focused on industrial development.

"We've never had a project like this," said Jeff Furman, who has been on the IDA board for 11 years. "Big box retail, never, and housing, only density-driven projects in the city, and they included rent structures. This is market-priced housing."

Furman voted against IDA involvement in December and did so again with the latest resolution when Robertson unexpectedly brought the project back to the board.

IDA board member and county legislator Will Burbank also voted against involving the IDA with the Arrowhead project in December. (He was absent for the most recent vote, but states he would have voted no.)

"The IDA is using leverage to fund a project that will indirectly help one big box retailer," said Burbank. "Technically, the IDA will be helping to build the senior housing constructed by the same developer. The only reason [the developer] is doing it is because the village insists on building the housing with the BJ's. It's a bad precedent. I'm sorry that the village was intransigent."

"We spent over a year talking with Arrowhead," Hartill said. "We needed to allow for PDAs [planned development areas] in our zoning."

The Village of Lansing had allowed PDAs in the past, but had removed it from their zoning. Restoring a more stringent definition - Hartill described its previous incarnation as "wild West" - was a six-month process.

The minutes of the Village of Lansing Board of Trustees and Planning Board reveal a great deal of discussion about the Lansing Meadows project over a period of several months. The village planning board has been discussing the Triax/Arrowhead proposal to build a BJ's since August 2009. In January 2010, Jim Bold of Triax was present at the planning board meeting as they set their goals for the year. "Some studies suggest that shopping malls may be losing viability," read the minutes of January 11, 2010, "and alternate models such as those mixing residential and commercial uses might be gaining in popularity. Being prepared for such changes is a function of good planning." To that end the village put in motion a process that would allow planned development areas (PDAs).

By March 1, 2010, they had changed their zoning law to allow for PDAs. On June 29, 2010, the village conducted its public hearing to finalize the Lansing Meadows "grant of authority" and the completed full environmental assessment form (EAF) was submitted. The special permit for the commercial component of the project was approved on July 27, 2010.

According to Hartill, in order to meet the village's demand to couple the housing with the retail, Arrowhead proposed a "PILOT (payment in lieu of taxes) incremental financing" or a PIF. In this scheme, a portion of property taxes that would ordinarily be collected by taxing jurisdictions are diverted into a fund that is used to pay down debt incurred through construction costs.

"This is the first one around here," said Hartill. "It has been used elsewhere, in Massachusetts and the Hudson Valley."

In its initial proposal the Syracuse developer asked for a $1.8 million PIF to be repaid over 20 years. Attorney Russ Gaenzle of Harris Beach had introduced the PIF concept at the May 2010 IDA board meeting because of "a possible project in the future that may ask to have a PIF set up." The IDA board first discussed the Lansing Meadows project in June 2010.

That the tenant was BJ's was not initially disclosed, but several board members immediately bridled at the idea of the IDA aiding a commercial project. Andrew Sussman of Arrowhead explained that tax streams from the retail store would be used to repay the debt on the housing portion of the project. The PIF was the conduit through which those streams were diverted. Sussman told the board that converting the land to residential use lowered the value; without the PIF it was more economical to let the land remain undeveloped.

Through several meetings IDA board member Larry Baum was a consistent supporter of the project. In the first discussion in June 2010 he noted that property taxes on the parcel would immediately rise from $30,000 per annum to $120,000.

Before the July 2010 meeting Robertson and other IDA members met with Village of Lansing officials to try to get them to double the number of housing units from 12 to 24. They refused to entertain the idea. Village officials have repeatedly stated that the purpose of the housing to create a transition between a commercial to a residential zone; increasing the density of the housing runs counter to this aim.

Because the PIF process required permission from each taxing jurisdiction involved, Robertson had suggested that Arrowhead meet with the Ithaca City Schools administration. At the July IDA meeting, Furman, a former school board member, said he believed the district would be amenable, as the project meant additional property taxes without the expense of additional children.

By October Arrowhead had met with a receptive Ithaca City Schools finance committee. IDA member and City of Ithaca Alderman Dan Cogan expressed opposition to supporting market-rate housing, contrasting it with IDA support of the city's density policy. Baum countered that the BJ's was projected to bring in $1.4 million in sales tax revenue.

In November 2010, the terms of the PIF settled on diverting 100 percent of property taxes to debt service on the housing for the first five years, and then decreasing the diversion by 5 percent each year for 15 years. Arrowhead projected $1 million in addition property taxes.

The developers admitted that there would be "cannibalization" of sales tax; BJ's would simply be collecting tax that would have been taken in by other retailers, but they argued that consumers were leaving the county to shop in significant numbers ("sales tax leakage"). IDA board members admitted that leakage was real and voted to allow the project to go to a public hearing with Cogan and Furman voting no.

On Dec. 7, 2010, after a lengthy debate, the Tompkins County legislature voted 8 to 6 to support extending IDA support to Lansing Meadows. Legislator Jim Dennis introduced it as a member resolution because he believed (correctly) that the Planning, Development, and Environmental Quality Committee would not advance it to the full legislature. But on Dec. 13, 2010, the IDA board voted down support for the project 4 to 3, with Cogan casting the deciding vote after initially stating he would support it.

Robertson voted against it in the legislature and at the IDA board meeting, but the increasingly dire news from Albany, culminating with the Feb. 1 announcement of Gov. Andrew Cuomo's budget, caused her to approach both the Village of Lansing and Arrowhead again. She found Mayor Don Hartill "intractable" on the subject of splitting the housing from the retail. "The developer even offered to donate the land for the village to do with what they wanted," Robertson said, "but Don said no without consulting the trustees."

Her conversations with Arrowhead met with more success. They decided to bring down the price of the housing.

"They are changing the construction method, but getting better insulation, a higher R value," Robertson said, "and using more pre-fabricated materials, and simplifying trim details like the moldings and the finishes."

The PIF amount came down from $1.8 to $1.2 million. Federal bond money that expired on Dec. 31 was no longer needed. Arrowhead shortened the PIF period from 20 to 15 years and began the drop from 100 percent diversion after two years instead of five.

"The housing is now completely on the tax rolls," said the IDA chair, "and not part of the PIF. It's a better deal for the jurisdictions."

The new deal still needs to be approved by all the taxing jurisdictions. Robertson said that the Ithaca City Schools have proposed a different distribution scheme, which she hopes they will abandon, as the delay would likely cause the entire project to be abandoned.

Furman is still unhappy with the quality of the language in the contracts negotiated with Arrowhead Ventures. He has been scrutinizing the documents as they have evolved and suggested several changes.

"The amount of money used as an economic incentive [i.e. the PIF] has to be capped," he said. "You have to do that or it will just get higher. Also, if the housing doesn't move forward, then the incentive doesn't go forward."

Furman was bothered that these sort of things were not specifically stipulated.

Burbank remains opposed to using a financing agreement to help - even indirectly - a big box retailer.

"I'm concerned about the economic viability of the community," he said. "We're doing relatively well, but the loss of manufacturing and production has been replaced by service and some high tech manufacturing."

And the low-density, market-rate housing still rankles.

"It would have been better if they were creating a village. Why only 12 units? We need affordable housing," Burbank said. "I would have been warmer to the proposal, if it included affordable housing."

 

(1) comment

Lament

All these kind of sales and revenue projects are optimistic and are seldom realized. Thus, this decision, like many others, is based on baloney.

And putting revenue gain ahead of spending control is a bad idea.

It is ICSD which gives up most of the projected tax benefit because ICSD does receives only property tax, no sales tax.

Allen

Welcome to the discussion.

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