Empire State Devel Corp. Formally Votes to Postpone Roosevelt Island Tax Equiv. Bill Increases

The Empire State Development Corporation formally voted Thursday, February 21, 2008, to authorize postponement of Tax Equivalency Payment increases for North Town Phase II Houses, Inc. and North Town Phase III Houses, Inc. on Roosevelt Island, which currently have Ground Leases with the New York State Urban Development Corporation.

It's always comforting when you finally see this type of information formally voted and passed. Although I am unsure why the vote took so long to occur after the ESDC and the DHCR formally announced this same decision at the end of last month.

Assembly Member Kellner Confirms ESDC FMV Real Estate Tax Bills Rescinded

In a press release issued today Assembly Member Micah Z. Kellner (65th AD) confirms that ESDC Chairman Patrick Foye has rescinded the FMV real estate tax equivalency bills issued to Island House, Rivercross and Westview.

ESDC's decision puts a greater burden now on the Rivercross Privatization Committee as that buildings anti-privatization tenants will claim that the state no longer has a loaded gun to their heads and other avenues might be worthy of exploration regarding securing financing for capital projects and other issues. Pro-privatization tenants will still argue that the building has a right to leave the Mitchell-Lama program and that they expect that their plan is worthy of exploration which is all the upcoming vote is really for next week. But even such exploration has a price and it is expected to cost a few hundred thousand dollars to go through such a process.

A few excerpts of the Assembly Member's press release are as follows:

"ESDC has decided to rescind the tax bills sent last September to Westview, Island House, and Rivercross and to continue to allow the buildings to receive their tax exemptions as long as they remain in the Mitchell-Lama program. I’m glad to see, after six months of playing keystones cops, that the administration has finally come to its senses and rescinded this unfair tax bill."

“I could never understand how the administration could argue that threatening to raise taxes was an appropriate tactic to bullying struggling tenants and shareholders into remaining in the Mitchell-Lama program. This was a dangerous game of chicken that could have gone horribly wrong, costing thousands of families their homes."

“Let’s not kid ourselves, this issue is far from settled and the devil is always in the details. As we go forward I will continue to monitor the situation to ensure that the ground lease amendments are negotiated in such a way such that retroactive, unfair taxes are never again a possibility that looms over the heads of Islanders.”

ESDC / DHCR: No FMV Tax Bills if Continuation of Mitchell-Lama Status

According to RIOC President Steve Shane, the NYS Division of Housing and Community Renewal and the Empire State Development Corporation have jointly indicated that the Fair Market Value Tax Equivalency Bills issued earlier this Winter (to Westview, Island House, and Rivercross) will be rescinded so long as each building that received them stays within the Mitchell-Lama affordable housing program. Mr. Shane made this announcement informally following his attendance at the Community Board 8 Roosevelt Island Committee meeting held yesterday evening, January 22nd, at the Church of the Good Shepherd.

Once a building exits the Mitchell-Lama program the FMV bills will again be issued. Until that point each building would continue to be responsible for the subsidized tax equivalency bills they have been enjoying all these years. No word when each building is to be formally informed of this development, by either the DHCR or the ESDC, or if they already have been.

It is assumed that the Privatization Committee at Rivercross will continue to push for privatization as they had been prior to the ESDC FMV tax bill debacle claiming that knowing what the FMV tax bills will be gives them one more number for their exit calculations.

ESDC Update: DHCR’s VanAmerongen Promises Response Within Week

As previously reported the New York State Empire State Development Corporation issued FMV tax equivalency bills to the Westview, Island House and Rivercross buildings during the closing months of 2007.

On January 17, 2008 NYS Division of Housing and Community Renewal Commissioner Deborah VanAmerongen met with members of the Rivercross Board of Directors. Subsequent to that meeting, the Rivercross Board issued an update memo (under its resident apartment doors) to its shareholders stating that “the DHCR Commissioner has been “charged with resolving” the ESDC tax bill program”.

As per the Rivercross Board memo,VanAmerongen stated she would be in contact with the ESDC and was committed to getting Rivercross a response by next week. Presumably her efforts would also impact the bills issued also to Westview and Island House.

Roosevelt Island Residents: Spitzer Administration Screws Mitchell Lama Residents

Updated to remove photograph.

Printed in time for the Rivercross Tenants Association 30th Anniversary Party the Main Street WIRE published a one page special previewing this coming week’s issue (Saturday November 17, 2007) regarding the issuance of full value real estate tax equivalency bills to three of the four original Roosevelt Island Mitchell-Lama buildings. The poster was not an official editorial as the situation is fluid and the WIRE's official editorial will not be set until it is is formally published. See my previous two posts for more background.

The below image is of the poster taken late Sunday night as it dominates the internal Rivercross message board.



Most residents expect the politicians to work this out as the issuance of these bills does seem to run counter to the stated goals of ensuring affordable housing but it certainly does seem that the Spitzer administration does not have control of the state agencies charged with ensuring this goal is kept by sending out FMV tax bills. Not exactly a friendly way to gather support for buildings to stay in the Mitchell-Lama program. Expect this issue to dominate island news for a few weeks at a minimum.

WIRE: 2005 City Council Resolution Extending Exemption DOES NOT Apply to Roosevelt Island Mitchell-Lama Buildings

A review of back issues of the Main Street Wire from 2005 yielded the following articles and texts. Ultimatelty it appears that the WIRE concluded that the City Council resolution extending the tax exemptions did not apply to Roosevelt Island.

If this is true the issuance this week of the tax equivalency bills by the Empire State Development Corporation to Westview, Island House and Rivercross could prove disastrous for the residents who expected that the 50 year additional exemption applied to their buildings.

What I don't understand is why then if the WIRE reported the conclusions reached by the State and City officials back in 2005 was the issuance of the bill to Rivercross something so unexpected as indicated in the flyer posted in Rivercross and distributed to their residents.

As reported in the Main Street Wire on February 19, 2004:

“At press time, attorneys for the City's Department of Housing Preservation and Development (HPD) and the State's Division of Housing and Community Renewal (DHCR) had still reached no conclusion about exactly what the action could mean on Roosevelt Island, which is unique in the State's constellation of Mitchell-Lama developments because the Island,while owned by the City, is leased to the State for development (to 2068),and the PILOT payments - which substitute for "real" taxes - go to the State, not the City. A key question: Did the State Legislature, in amending the PHFL, intend to give the City Council the authority to forgive payments in lieu of taxes (PILOTs) to the State? That issue was raised when a WIRE question was relayed by Lappin to HPD and DHCR. Lappin said HPD and DHCR would have to be consulted. On Thursday, however, a DHCR spokesman said, "That's really a question for the City Council."

While the Island's PILOT payments would normally be passed through to the City, they are not. That's because the Urban Development Corporation (UDC) has substantial "credits" with the City by virtue of its original development of the Island. The PILOT income stops in the State's coffers.”

After several issues of the Main Street Wire offering nothing substantive other than resident commentaries, Dick Lutz in the May 14, 2005 Main Street Wire states that the Resolution has no applicability to the Roosevelt Island Mitchell-Lama buildings:

"It may be a technicality of sorts, but Roosevelt Island buildings will not get the 50-year extension of tax abatements the State Legislature authorized the New York City Council to grant to Mitchell-Lama apartment buildings.

"The [Legislature's] bill itself refers to taxes," said Jessica Lappin, an aide to Council Speaker Gifford Miller, "and the buildings on Roosevelt Island don't technically pay taxes. They look and smell and feel like taxes, but they're not technically taxes."

When the City Council granted the tax-abatement extensions earlier this year, materials accompanying the Council resolution specifically listed Westview, Island House, Rivercross, and Eastwood. It held out the possibility of a Mitchell-Lama future with tax costs remaining low. But that was a mistake.

What "look and smell and feel like taxes" for Roosevelt Island are PILOTs - "payments in lieu of taxes" - made to the State. For those who pay them, they are the functional equivalent of taxes, and for the Island's Mitchell-Lama buildings, they are scheduled to rise significantly over the next couple of years - a provision of the ground leases under which the buildings were placed on land owned by the City, but leased from the City by the State.

The WIRE raised questions about the Island's eligibility for the abatement extensions in February in a report on the City Council's action, and again in April in a commentary written by Tim Johns, an Island House resident who has kept close tabs on the laws, leases, and regulations that apply to the Island's Mitchell-Lama buildings. As a result, State and City lawyers looked into the matter and realized that earlier statements affirming applicability to the Roosevelt Island buildings were incorrect."