Students and Seniors UnitePosted: July 18, 2013
by Emma Pulaski
The Broome County Industrial Development Agency (BCIDA), with full support of Broome County Executive Preston and Binghamton Mayor Matt Ryan, have subsidized and continue to subsidize a number of luxury student housing projects. The dorms in University Plaza and Twin River Commons are two prominent examples. Recently, another developer, One Wall Street LLC, petitioned for the same tax breaks for the new project in downtown Binghamton. The Newman Development Group also announced plans to seek tax breaks to build yet another student housing complex in University Plaza.
The logic for giving tax incentives to these types of projects is shaky at best. The idea is that by putting dorms in downtown Binghamton and University Plaza, businesses will benefit from high concentrations of students; more students equals more dollars for businesses which, it is hoped, will translate into more jobs. At the same time, students get nice places to live.
Although there is a small benefit to the local business community, the people who really come out on top, however, are big developers. Of the $15 million given out in tax breaks to companies by the BCIDA between 2008 and 2011, at least $1.7 million went to luxury student housing developers. That is $1.7 million that did not go to public services and schools. Seniors are also impacted by these deals because it means less money is available to fund things like the Willow Point Nursing Home and the Loyal D. Greenman Senior Center. At the same time, developers are charging exorbitant prices which students can only pay for through the acquisition of more debt.
These projects produce negative results for students, seniors, and the general public good. The rents charged to students are on par with the most expensive rental markets in the country. A two bedroom apartment in Twin River Commons rent is $1720 a month. That is $300 more expensive than a two bedroom in New York City, the 11th most expensive rental market in 2012 according to the Center of Housing Policy. In 2009 median rent for all apartments in Broome County was $521 a month. Students can reasonably expect to pay between $300 and $400 a month per person living outside of these complexes.
How can these developers charge so much money?
Students pay for these accommodations largely through debt. In New York State student debt is the second largest source of consumer debt behind mortgage debt, greater than debt from credit card or auto loans. The average student in New York in 2010 held over $26,000 in debt, well above the national average. Luxury student apartment developers are feeding off low interest rates for students. The fact that developers earn their money by creating more student debt is devastating for the future. When students graduate in NYS, the average payment on their debt is almost $400 a month. This means that students will not be able to buy cars, homes or any of the other trappings of a middle class life. Four hundred dollars a month to creditors is $400 less a month graduates can use to build a stable, secure life.
Does it make sense to subsidize luxury student housing?
In a word: NO! If developers want to build new facilities, let them. But why do we as tax payers have to give them $1.7 million to gouge students and the public purse? Even in the economics of supply and demand it makes no sense to grant these tax breaks. Binghamton University and Broome Community College are set to expand their student populations by over five thousand students in the coming years. Even though we here in Broome County are still in a housing glut, there is no doubt that more housing for students will be needed. IDA tax breaks are meant to incentivize companies that might not otherwise choose to locate or remain in the area; they encourage private companies to come, stay, and create jobs in Broome County. Why does Broome County need to encourage developers to build student housing when there is clearly a demand for it and high profits to made? Why do we need to subsidize developers charging more for rent than landlords in expensive markets like San Jose, CA and Washington DC?
We don’t need to, nor should we subsidies luxury student housing. Students are not benefiting. Local schools and governments are losing tax revenue (which can increases tax rates for everyone else). Private developers are benefiting while the future for this generation of students and the present for local residents suffers.
At the same time the BCIDA is subsidizing these debt factories – student housing built with the expressed intention of creating more student debt – local and county governments are cutting public services for seniors. The Loyal D. Greenman Senior Center was shut down because the city could not afford to pay the $180,000 required for repairs. This is at the same time Broome County is attempting to privatize the Willow Point Nursing Home to the detriment of residents and staff alike. Broome County and the BCIDA are giving money to overcharging landlords (many of whom are not local) at the expense of students, seniors, and all of our futures. The $1.7 million given out to developers would fund Greenman Senior Center ten years and pay for the repairs to it!
What Should Be Done?
Students and seniors need to unite to bring these injustices to an end. We, as students and seniors, must realize that our interests are the same. The example given here is just one of many. We must fight the Payment-In-Lieu-Of-Taxes (PILOT) agreement between the BCIDA and One Wall Street LLC, and all future deals of this kind. Only through the collective action of these two groups can we hope to restore funding for programs for seniors and give an economically secure future to graduating students.