After Monday’s Village budget meeting was over, I realized that I forgot to ask a critical question: what about the Riverspace development proposal? It was not even mentioned at the meeting.
There is a budget gap to fill for next year, and the big new expense discussed was the streetscape improvements costing around $50k next year. But if the Village is serious about redeveloping the under-performing, paved paradise at its heart, the Village needs to think big and devote money and resources. We can’t afford to make a mistake. Saving a little money now could cost us for 50-100 years.
First I will attempt to explain in general terms the Village’s current standing, and I am sure I will be corrected since I am still unclear of the details, but here it goes.
The Village is luckier than a typical consumer oriented business in that there is a fixed asset, taxable property, that does not go away even in economic downturns, so the majority (55%) of the income is guaranteed, even though property owners will placed under greater strain. Another chunk comes from water fees, which the Village owns, and once again, everybody needs water even when the economy suffers. Then there are parking fees, which accounts for about $600k, or 13% of the Village budget. Another 13% is State aid, which the Village is helpless to control, and that is definitely going to be cut in the upcoming year.
Revenues are projected to decrease by $325k, which is about 6.5%. I’m not sure exactly where the decrease will be, but its more than just State cutbacks. The Village intends to keep property tax increases to a minimum, possible no increase if that is possible. Parking revenues will be the savior. Revenues will increase for sure since the parking area behind Riverspace is back online and was not generating revenues for 9 months this year. The talk is to increase parking fees and/or fines to make up the rest of the gap.
The budget gap, however, will only be around $100k, since expenses will actually go down by about $220k.
The problem is that the Village is thinking small. It is scrimping to get some extra revenues from parking to pay for streetscape improvements and has no money toward planning and development. The Riverspace block is a HUGE asset that is being under-utilized, which is costing us through unrealized revenues. We can monetize this asset, but it will take an investment to do it right. A large scale development is a 100 year commitment, and it would be foolish not to devote resources to make sure it is done correctly.
Nyack is in the relatively fortunate position of having significant credit available through bonding. It has used only about 30% of its bonding capacity. I can’t think of a better purpose to borrow money than to invest in a major development at the heart of downtown. The initial costs for planning would be modest in terms of capital budgeting. Much of the planning work may not be viable capital costs, but perhaps the Village could bond money for DPW work and use the money freed up to pay for expertise in planning and development.
The Village lacks the capacity to plan its own future. We paid for a comprehensive plan, but that just sets the framework. The Village hires an attorney because it needs legal expertise. For a project of this scale, the Village needs development expertise.
We are lucky to have Riverspace who WANTS to build a wonderful long-term asset for us. This is very complicated, and the Village needs to step to the plate and act as a full partner. This project is for all of us, and we have to do it right.
Joe, I agree with what you say. The intent of my original article was not to judge the details of the Riverspace proposal as it currently stands, and I still am trying to understand the under publicized details.
These are issues that can be negotiated as we go a little farther down the road. It’s early in the process and of course the first proposal by Riverspace will skew things in their favor as a negotiating point. That’s part of the process.
I think it is worth pursuing the concept with Riverspace. What I was saying is that the Village doesn’t have the capacity to negotiate a deal like this, because the expertise and information is not available to it. And, unfortunately, both those commodities will cost money.
I believe the Village should invest in the expertise, which does not necessarily mean full time staff. I was suggesting a situation like our Village Attorney, where we could retain expertise from a firm, although we should consider hiring a Village Manager.
Any decisions of course need to made in context of the tough times we are in and the limited tax base, but I think we are in the unfortunate position of not having enough expertise to plan adequately for our own future.
November 28, 2008
TWIMIC:
It looks like whoever wrote this is really trying to grasp tax and budget issues, but there are a few points that need mention. The first is that the belief that parking fees will be the “savior” is misguided. Parking fees are an essential part of the Nyack budget, but they are also the ONLY part of the Nyack budget, or at least its revenue inputs,that can be manipulated or changed by unilateral action of the Village Board, unlike all the other revenue inputs like real estate taxes, sales taxes etc. That leads the Board, or certain of its members, to think that upping parking rates is the surefire solution to revenues shortfalls, with no downside consequences in terms of VOTES in elections, since many merchants are either not Nyack residents, or too few in number to impact elections, even if they are. This is a fundamental flaw, because upping parking rates,like any price rise factor on a supply and demand basics, can cause folks to stay away from Nyack, so that an additional “price” is paid by the merchants, from lost traffice, for whom parking is a chronic problem, and Village attitudes even a more “chronicER” problem.
Nyack already has a bad reputation as to parking, and people who stay in office by refusing to consider this problem, need to see there are better ways to raise $$.
The right way for the Village to increase its tax base is to free things up so that people who want to build and can build (i.e. have money) can actually build things in Nyack, which unfortunately is often not regarded as a valued or desired activity. I do not mean just big projects like Pavion, but nearly any project where people try to build is discouraged, burdened with rules that do not work (e.g. the requirement that 20% of new construction for housing be “affordable”, which has not produced yet ONE affordable housing unit, but imposes a cost on new building that can stop projects (i.e. 20 % of profit can be often the entire profit in a deal..), or the requirement that you effectively hire the non-professionals on the Architecture Review Board as your design consultants.
Better attitudes on this topic would do a lot more that boosting parking fees to be the “saviour” of the Nyack Village budget.
From this main comment, it seems that the writer thinks that the Riverspace project is a classic example of this problem, but I am not so sure about that. The ESSENCE of the Riverspace real estate proposal has finance and tax related components that are NEVER MENTIONED in its PR pieces, but potentially damaging, to wit:
1) The Village would basically GIVE its land to the RS development entity for ZIP
2) The Village is being asked to forego increasing new updated tax assessment on the proposed $100 million project once it is finished, so that tax revenues will NOT increase commensurately with the level of services and infrastructure needs likely to be created by the project,
3) The Village is being asked to put part or all — I think ALL — of the downtown block into NON-PROFIT ownership so it goes off the tax rolls, OUCH!!!!!
4) The Village is being offered a basically deceptive fig-leaf tax deal that qould have the RS development entity pay a PILOT (payment in lieu of taxes) at about the same rate as tax and parkig revenues exist TODAY, with some minor CPI increase, which if the numbers are run I predict MUST show a radical failure to provide a tax substitute equal to what the revalued property would generate, and which would represent a radical deficit as to FUTURE SPENDING NEEDS, which must at least significantly increase with the value and type of development that is planned, i.e. 100 apts., an big office complex, and the mid-Hudson equivalent of the NYC Lincoln Center, on a development plan in which it is NOT clear that enough parking would be provided even for the new developments, let alone existing need.
Equally to the point, this is a HIGH RISK real estate development that only makes sense because of the radical reduction in land and tax costs being asked from the Village; it could easily fail and then if the Village had topped off its bonding capacity to support the project, the Village government would be looking at the world out of the fifth floor window of a US Bankruptcy Court in White Plains.
What the community needs I think is a fair and frank discussion about OTHER types of less intense real estate development in the downtown block and elsewhere, and there is little of that.
Best.
Nyackjoe aka Joseph Adams