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COLONIE — Tax breaks are in the minds of many a curse word.
Especially in a town like Colonie, where developers already love to build, and where the type and volume of development is an issue. But a project by Galesi Group to develop the old Starlite Theater site will be in front of the town’s Industrial Development Agency on April 23 to talk about an incentive package for a new headquarters for Ayco, a financial company under the immensely wealthy Goldman Sachs umbrella.
But, there are times when offering tax breaks or incentives outweigh the cost. For example, some properties are vacant and pay little or nothing in taxes so getting something is better than nothing at all. Or, the project will add to the community in other ways such as bringing or retaining jobs or making otherwise unaffordable infrastructure improvements.
And, in a classic chicken and egg dilemma, communities across the state and beyond offer tax incentives so if one opts out developers will, of course, go where they can get the best deal.
On the flip side, developers do have bankrolls, they don’t need handouts and they and their clients – tenants – should be good corporate citizens and pay their fair share of taxes to help offset the cost of municipal government for homeowners.
It’s a fine line. And Industrial Development Agencies across the state are charged with straddling it.
The Colonie IDA and Ayco
“In my mind it is a competitive nature. There were 29 sites Ayco was looking at and we were fortunate enough to get chosen,” said Joe LaCivita the IDA executive director who also serves as the chair of the town’s Planning and Economic Development Department. “And if it is so easy and desirable to develop why has it been vacant since 1998?”
Ayco and Starlite Associates, an arm of the Galesi Group who purchased the parcel and is building the 150-000-square-foot headquarters, is asking for more than a total of $12 million in tax exemptions from local and state sources.
At least at the local level, where they are looking for mortgage and sales tax relief and some $4.2 million in property taxes over the proposed 10-year Payment in Lieu of Taxes agreement, Colonie won’t lose money by offering the incentives, it just won’t get as much revenue.
They are also asking for $5 million in state money to help build a connector road between the state owned Route 9 and Route 9R, something town officials say is an absolute necessity for the project to work as designed. That money wasn’t included in the latest round of funding from the state but David Buicko, president of the Galesi Group, said the road will be built regardless.
LaCivita said the benefits of the project are not all monetary. For example, the connector road will alleviate congestion at the Route 9 and Route 9R intersection, which is already past capacity and can’t be built any larger. It’s something that will help the town but the town can’t afford the $25 million price tag to build.
Also, he said, there is an impact fee associated with building in Colonie and the tax incentives, as proposed, would offset those fees to put a building on that site on more equal ground with the 20-something other sites Ayco was considering including nearby Saratoga.
The impact fee is based on traffic generation so the exact cost has not been calculated but LaCivita said Canterberry Crossing, a 200-unit housing complex located across Boght, paid $1.4 million in impact fees.
“Tax breaks and creating properties that pay some taxes are two different things,” said Buicko, the developer who said he’s done some $1 billion worth of projects in the Capital District including the casino complex in Schenectady. “We have brought projects that were not paying taxes and brought them to paying full taxes to the benefit of communities across the Capital District.
“The only way these projects get done is with IDA or Metroplexes to make them cost effective. Colonie had to be competitive with the other communities and they were.”
While Galesi’s pockets are not shallow by most standards, they are compared to Goldman Sachs and some are already laboring to make that distinction – it’s a Galesi project, not a Goldman Sachs project.
The public hearing, though, while legally required is unprecedented at this stage and the board will struggle to keep that line as clear as possible and to keep people focused on the economics of the project rather than such things the Planning Board will deal with like drainage and traffic.
Probably one of the most boring town boards to serve on is the Colonie IDA. There are only three Payment in Lieu or Taxes in town right now and, if approved, the Ayco project could be the fourth.
The PILOTS are, according to the town’s Acting Comptroller Chris Kelsey:
• Colonie Senior Service Center, King Theil facility paid $65,000 the first year after it got a certificate of occupancy and will pay what is now the full tax bill of $86,743 in year 30.
• Shaker Pointe at Carondelet paid a flat fee of $750,000 and then paid $20,000 in year one maxing out at $70,000 in year seven.
• Afrims, which is not yet formally finalized, will pay between $125,000 and $180,000 as a fee for converting farm land to commercial use and then will pay $25,000 in year one max out at $110,000 after 20 years.
One scenario to consider, Kelsey said is what could go there. For example, a housing project was on the table for where Afrims is going and that would have further taxed the infrastructure and added to an already heavily trafficked area.
Another scenario to justify tax breaks is what the projects will bring to the community at large. For example, King Theil and Shaker Pointe cater to an ever growing senior population and Afrims will cater to children and bring tournaments to the area, which means it will help town restaurants and hotels.
The Ayco project will bring and retain well-paying jobs and it will build a connector road to But, it’s still a hard sell and, most agree, it should be.
“We look at what the project is providing the municipality. Is it a good project and what does it bring to the town,” said IDA President John Kearney. “With Afrims they are extending water and sewer so public infrastructure improvements is one thing we can look at. Ayco is building a $5 million road connector to help alleviate traffic.”
Pete Gannon, who serves on the IDA, said he thinks the IDA has been under utilized in Colonie and the town should look to use it more creatively in the future as more and more big-box retailers struggle with the shift to online shopping.
“In terms of work force development and jobs in the new economy, those are things I want to see happen and those are some of the things Ayco will bring to the table. “Right now Colonie is in a golden position with the airport and we are at center of everything so I would like to see us get more creative and take advantage of some of the things we have.”
Supervisor Paula Mahan said the IDA is ideally an independent body but she does appoint members pending Town Board approval.
‘”This IDA has always had a conservative approach and that is a very good thing,” she said. “You always have to look at the positives and the negatives. Sometimes it works in everyone’s best interest because the positives outweigh the negatives. Ayco comes with a lot of jobs and will allow us to retain some 600 jobs at other existing locations. That’s a pretty big positive. Bringing and retaining good jobs for the town is something people ask for.”
The public hearing is at the Town’s Public Operations Center located at 347 Old Niskayuna Road starting at 6 p.m.