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July 23, 2007
What Ratner & Gehry won't tell you about Brownfield bucks
An article which appeared nearly a month ago in the Albany Times Union reports that Governor Spitzer is taking a hard look at NY State's Brownfield Redevelopment program, which has become a windfall for developers like Bruce Ratner.
ANOTHER WINDFALL FOR DEVELOPERS
From "Brownfields bloom green":
Critics fear the tax deals are not being used effectively for their prime intent: to convert polluted sites in poor neighborhoods to industrial, commercial and residential space.
In adopting the program in 2003, the state offered very attractive financial incentives: tax credits for 10 to 22 percent of the cost of cleaning and -- what turned out to be even more important -- all new construction without limitation. Property-tax credits are also offered for 10 years.
ATLANTIC YARDS TOO!
Today's Journal News editorial explains:
There are 123 more projects in the pipeline for approval under the program; a flurry of the approved projects were OK'd just as former Gov. George Pataki was concluding his three terms in office.
NoLandGrab: This list of projects presumably includes Bruce Ratner's Atlantic Yards.
HOW MUCH? WHO KNOWS?
From an article in the Poughkeepsie Journal:
The tax credits due to the next 123 projects “could easily be twice as much” as the $1 billion already committed, [Environmental Conservation Department Deputy Commissioner Val] Washington said.
But the state actually has no idea of the potential tax liability, since it is based on what the projects cost - and so far there is no estimate of the total tab for them.
BROWNFIELD BUCKS HELP OFFSET GEHRY PREMIUM
And if you think we're just blowing smoke, lookie who scored with another Frank Gehry-designed project:
Barry Diller, owner of the Home Shopping Network, Ticketmaster and Lendingtree.com, could get tax credits totalling $157.6 million for the new $770 million Frank Gehry-designed corporate headquarters Diller is building in Manhattan's trendy Chelsea neighborhood. If that's not a windfall, what is?
Note that earlier this month, The NY Times reported that the documents recently obtained and released by NY State Assemblyman Jim Brennan "cite architectural costs of just over $12 a square foot for the project, roughly three times the industry average."
NoLandGrab: It's no secret that there's a steep premium associated with designing and constructing a cutting-edge project by starchitect Frank Gehry, but the numbers get easier to swallow when 10-22% is covered by the Brownfield program.
BROWNFIELD BUCKS, ANOTHER KNOWN UNKNOWN
The amount of Brownfield subsidy that Bruce Ratner's Gehry-designed Atlantic Yards will earn is one of the "known unknowns" that could significantly boost the total amount of subsidy for the already subsidy-rich project that, at last count, could suck up $1.9 billion in taxpayer dollars (see, Public Subsidies (For Dummies?), PDF). What's worse, is that, under the current program, we won't know the final cost of Ratner's Atlantic Yards Brownfield credits until all project's cost overruns have been run up.
WWSD?
Will Governor Spitzer dare to lift a finger against this well meaning clean-up program turned developer windfall? Last month's article in the Albany Times Union reported:
The future of the program is now is flux. Last week, Eliot Spitzer, a Democrat, proposed changes that would limit the size of the tax credits to $5 million, prevent developers from speculating by reselling credits, and direct more assistance to cleanup costs instead of construction.
The tax credits already approved, along with another 29 projects where cleanups have begun, could cost the state "hundreds of millions of dollars over the next few years," according to Spitzer's bill.
Posted by lumi at July 23, 2007 10:51 AM