PILOT Issue for Nonprofits in Syracuse Related to Recent City Council Vote

Two veteran Syracuse councilors corralled freshman Councilor Jake Barrett and tried one last time to change his mind.
The council had been summoned Monday to vote on an extraordinary 30-year tax exemption for a new Syracuse University bookstore, a controversial deal that could set a precedent for other projects.
Lawmakers were deeply divided.
Four councilors supported the tax deal for developer Cameron Group LLC, saying it would bring in revenue the city would not get otherwise.
Four councilors opposed the deal, calling it needlessly generous.
For weeks, they waited for Barrett, who was leaning toward approval, to break the tie. Now the vote was three hours away.
Majority Leader Lance Denno and Majority Whip Pat Hogan — both of whom hated the deal — met Barrett and “talked to him at length” in an effort to sway him, Hogan said.
They asked Barrett how he would explain to working class constituents that he supported a tax break benefiting a well-heeled developer and a richly endowed university. They questioned why the project needed a tax break to succeed in one of the city’s most vibrant commercial districts.
Barrett was sympathetic. The payment-in-lieu-of-taxes deal was far too long at 30 years, he said. And Barrett was annoyed at the way the measure was rushed to a vote, resulting in last-minute revisions.
But Barrett voted yes.
Afterward, he told a reporter the decision was too painful to talk about.
The next day, he offered this: Barrett said his main concern was to show that the city could pull the trigger on a novel agreement involving a major tax-exempt institution — imperfect though the deal may be.
That signal was important to send, he said, because the city will need help from big nonprofits like hospitals and colleges as it addresses looming budget deficits.
Still, it pained Barrett to vote against his impassioned colleagues.
“There was a wound that happened,” he said. “I could see it in their eyes when the vote came down.”

Supplied imageArchitectural rendering of Cameron Group LLC's proposed new building on University Avenue that would house a Syracuse University bookstore, fitness center for students and SU workers, and retail stores.

Hours after the vote, Barrett arrived home to find a voicemail from Tom Valenti, a principal at Cameron Group, who has spent six years seeking approval for the bookstore project.
As Barrett recalled it the next day, Valenti’s message said, “Jake, I think I know what you went through. And I’m not going to let you down.”
Opponents of the deal think the council let taxpayers down.
Hogan said the tax deal benefits nobody but SU and Valenti’s firm, and he was disappointed he could not convince Barrett to oppose it.
“It’s difficult for a freshman legislator to stand up to the powerful interests in this town,” Hogan said.

Seeking nonprofits’ dollars
Syracuse is dangerously close to the edge of a financial cliff, most officials agree, and part of the problem is that more than half of all property in the city is exempt from taxation.
A year ago, Syracuse University acknowledged that problem and agreed to pay the city $500,000 a year for five years to help offset the cost of city services that benefit the university.
Mayor Stephanie Miner said her goal was to get other major nonprofits to contribute similar payments. Four months ago, Miner sent letters to the leaders of several hospitals and colleges urging them to “work with us to execute a mutually agreeable service agreement.”
Thus far, she has not announced any new agreements.
A month before those letters went out, Miner said the SU bookstore PILOT, which had been talked about for years, was being revised in a way that could serve as a model for wringing more revenue from tax-exempt institutions than they would normally pay.
Under the PILOT agreement, Cameron Group will pay 17 percent of full taxes. Over 30 years, that’s expected to bring in about $1.9 million for the city and county, while saving the developer more than $9 million.
Cameron Group will lease the bookstore site for $1 from SU. If the university built and owned the bookstore, the property would be taxed only on portions of the building leased to commercial interests, expected to be about 8.5 percent of the total area. That would yield half as much tax revenue as Cameron Group will pay.
Critics say the bookstore deal is a loser for the city. Former city assessor John Gamage said the project should be treated like any other commercial development. The lengthy tax break given to Cameron Group is “outrageous,” he said.

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