Newman-Akel, Area’s Biggest Tax Avoiders and Welfare Recipients to Broome County: “U.P. YOURS!”Posted: June 30, 2014
By Emma Pulaski firstname.lastname@example.org
Two months ago the BCIDA struck again, doling out a $17 million tax break to the largest recipient of corporate welfare in Broome County, the Newman Development Group owned by the Newman-Akel. After holding the Town of Vestal hostage through property assessments challenges, and litigation for years, the Newman Development Group won big with this new tax “deal.” The “deal” does several things. First, it takes the entire University Plaza (UP) off the tax rolls. Second, it freezes assessments and property tax rates for two decades (imagine what it would mean for school districts if your tax bill was the same for 20 years). Third, it gives a massive discount for “upper class” (Newman’s words, not mine) student housing. Why are we subsidizing “upper class” student housing when working-class families can hardly afford to send their kids to college? Why are we giving tax breaks to a landlord of low paying service sector jobs? Why did we allow the BCIDA to bargain away our future? If these guys are such great business people, why do they need a subsidy in the first place?
The newest Newman tax abatement sham is advertised as a $17 million deal to create five jobs, amounting to less than $200,000 a year in salary and benefits. Citizens attending the BCIDA and Town of Vestal meetings expressed their outrage over Newman-Akel receiving this huge sum for “creating” so few jobs. These citizens are correct: Newman is robbing the county while County and Town officials are driving the getaway cars. What they don’t realize is how much Newman-Akel are getting. The first part of the deal includes bigger tax breaks for the existing student housing. The University Plaza Apartments initially received IDA sponsorship in 2006, when they were first built in 2006. Soon after Newman and the BU Foundation challenged the assessment and called for increased tax relief. Now that the University Plaza Apartments are reaching the later part of their tax abatement deal, the Newman Development Group (under the name “Vestal Park LLC”), moved the bar again forcing a 22 year tax abatement deal for the same property. This means the University Plaza Apartments will never pay their fair share of taxes even though they charge rents on par with Manhattan. In fact, the apartments are getting a tax reduction: it will take 10 years for these apartments to even pay the discounted rate they pay now. Furthermore, the property is set to go back on the tax rolls in a few short years, which would bring in at least an additional $150,000 a year!
The second part of the deal includes the “Metroplex” a luxury student apartment complex even bigger and more luxurious (and more expensive) than University Plaza Apartments. According to BCIDA records the Metroplex will include 750 beds and an additional 40 beds for “upper class” residents. These are places for the elite of the elite. The “Metroplex” also includes, for tax purposes, the already existing retail space, like Tully’s, and the Dollar Tree; the Metroplex tax bill includes all the other retail, exercise and office space in the University Plaza. Outrageously, the tax bill for the new student housing development plus the existing stores will only contribute $5 million more over 22 years than the current apartment complex. The first and more pertinent question we should ask is: how does a bigger, more expensive apartment complex pay taxes on par with a smaller complex? Secondly, we should ask why are we subsidizing the landlord of businesses that in some cases are huge companies (Chipotle, Tully’s, Subway) and in all cases low paying service sector jobs?
This “deal,” then, takes the entire Vestal Plaza off the tax rolls. Right now, some, but not all parcels in the UP are subsided. So when property taxes go up in the county or Town, so do the property taxes for Chipotle and Planet Fitness’s landlords, aka Newman-Akel. With this new deal every parcel will come off the tax rolls, meaning Newman-Akel will not be impacted by any property tax increases for the next two decades. This despite the fact that the UP relies on County and Town services. Indeed, a 2006 article by Newman in The Press and Sun BULLetin called for Broome County to raise sales taxes to provide an “infusion of funds to upgrade the area’s infrastructure.” What would happen to the Vestal Parkway or the Vestal School district if everyone’s property taxes were frozen for a decade? Should the people and companies who get the most out of this infrastructure pay their fair share? The $17 million figure is also misleading because it does not take into account tax increases in the next two decades. As costs for schools and services go up, so do property taxes for home and property owners. This means, in effect, when property taxes go up in Vestal and Broome County, home and property owners not named Newman or Akel will have to make up even larger gaps. When Newman and Akel get a tax break everybody else gets a bigger tax hike.
This so-called “$17 million” tax break is more like a $50 million tax break, and it comes after a decade of continuing public subsidy to the University Plaza. In the first instance, the project gets an additional $2 million tax break through a sales tax and mortgage recording exemption (this after the University Plaza Apartments received a similar set of discounts). These come standard with BCIDA projects, and lose revenues for the County and Town. In the second case, these properties will not see their assessed value go up or their taxes affected by property tax increases. Rather, their tax bill starts very low, increasing 5-8% a year for 22 years until they finally pay, for the first time, the full tax bill from 22 years previous. What do you think will happen in 22 years? Another tax break? Will they even make it 22 years before they start challenging assessments? Maybe they will just tear the whole thing down and demand a new deal in 10 years!
This is not the first tax break Newman and Akel have received from the BCIDA. Indeed, Newman and Akel are the area’s biggest welfare recipients and the biggest property tax evaders. When Akel was president of the BCIDA board he gave tax breaks to Twin River’s Common’s on Washington St. (over $175,000 in 2013 alone), the NCI call center in University Plaza (which is currently moving to Endicott), the now defunct AIG building ($300,000 over four years), and the University Plaza Apartments (over $12 million since the project began). The Wal-Mart Plaza also received a local tax break. This is on top of the sale tax exemptions and special grants from New York State that Newman-Akel projects have racked up over the years. At the same time the Akel-Newman alliance has been challenging assessments and tax bills. In 2007, the year after Newman received a multi-million tax exemption from the BCIDA, they sued Vestal to reassess the University Plaza Apartments. More recently, Akel has been challenging the Town over the taxes on the new United Health Services building. Akel, the owner of the land underneath the building, charged that he should not have to pay taxes on the land because it’s used by a non-profit. Akel, however, has no problem cashing his rent checks! This is how Newman and Akel show their gratitude to a County and Town that put money in their pockets: they sue, costing taxpayers in litigation!
The ways in which this “deal” screws the residents of Broome County and the Town of Vestal are many, and sometimes very technical. The takeaway, however, is very simple: a massive company run by two of the County’s most powerful “business” people is getting public money to charge really high rents to wealthy students, which in turn will cause county services to go down and everyone’s property tax bill to go up. The Newman-Akel partnership has been using our County and Town officials’ fears and ineptitude as a bottomless piggy bank. In doing so they put the future of our local governments and out County’s children at risk. And let’s not forget: these student housing projects are already, even before they received tax exempt status by the BCIDA, subsidized by the State and Federal government. Who provides those low-interest loans so students can pay huge rents? Who decided to expand enrollment at Binghamton University? We have sat back for far too long. It’s time for action!
The University Plaza Deal: What does it mean?
-The entire University Plaza is taken off the tax rolls.
–Another tax reduction for the existing University Plaza Apartments.
-Subsidizing the construction of “upper class” student housing.
-A tax break for the area’s largest landlord.
-Between a $25 and $50 million in real, effective tax breaks.
-Increase property taxes for residents of BC and Vestal.
-At least $3.7 million of taxpayer money for a single new job in UP, the lifetime wage of a university professor or high skilled IBM worker.
When we say “$17 million tax break” what do we mean?
We mean that if tax rates stay the same and the property owners paid full taxes on its assessed value for the next two decades, then the savings achieved for the development would be $17 million. This does not include the sales tax and mortgage recording fees exemptions. Has your property tax bill stayed the same since 1994? If you live anywhere in Broome County and either vote for school budgets and/or own your home, you know what the answer to that is. So while a man like Marc Newman can call for a greater investment in infrastructure and higher taxes (taxes he would never be subjected to), he can avoid paying his fair share. Who benefits from nicely maintained and paved roads on the Vestal Parkway: Marc Newman more than anyone else! Why shouldn’t his business enterprises pay for them?