Why Binghamton schools rejected a planned apartment complex at this empty downtown lot

Binghamton City School District board members unanimously voted against a major tax break for a multi-million dollar project planned at the former Boscov's parking garage site in downtown Binghamton Tuesday, forcing city officials to return to the drawing board.

Two weeks ago, Binghamton city council members voted the 28-year payment-in-lieu-of-taxes (PILOT) agreement for The Apex at Water Street project through 4-2, despite discussions lasting several hours between frustrated residents and councilmembers.

Costs for the project total around $60 million — $22 million for the parking garage and an additional $37 million for the housing element, according to city officials — an increase of $10 million to the overall project since the original proposal, Leadership Alliance CEO Stacey Duncan said.

"I think that the fact that this PILOT structure with the PILOT bond is something brand new," Binghamton Mayor Jared Kraham said, "it's not surprising that there's going to be a bump or two in the road on the way to getting something built."

Tuesday's meeting was an example of that, Kraham said, and they will need to regroup and figure out a structure that works for the project.

Is the project still going forward?

The short answer is yes.

During a June 6 Binghamton City Council meeting, a representative for the developer, Jeff Smetana, said without the PILOT the apartment units would be too expensive and the project wouldn't happen.

But Kraham said this setback isn't deterring him.

"I'm working with city staff, the developer, the IDA to see what other structures are possible for the project," Kraham said. "This, to me, after being in project development phase seemed to be the cleanest, easiest and most efficient and effective way of getting something financed. If we have to go to alternate means, then we're going to have to look at all those variables and come up with something new."

When calculating PILOT benefits, Duncan said the IDA looks at multiple factors, including the total project cost and what the full taxes are upon completion, which is what would get abated.

Looking at the per-unit property tax burden — this project's would have been over $6,800 — the IDA tries to cut that burden in half through the PILOT agreement, and would bring it down to about $3,500 in this case.

"Housing projects in New York, in this community, whether they're affordable housing projects or market rate, they require the participation of the IDA on these PILOT programs because we have to work to stabilize that tax burden," Duncan said.

Binghamton complex under scrutiny: Why it's still going forward

Why Binghamton school district's vote matters

Without the PILOT, the developer would be paying almost $23 million over the 28-year term in taxes for the housing portion of the project. With it, the developer's full PILOT payment would come in around $11-12 million.

In this agreement, which Duncan said is "by no means a typical project," the terms would also include PILOT bond payments.

Typically, the $11-12 million would be split between the taxing jurisdictions — in this case, the city, school district and county.

But under this agreement, the developer proposed to first take about $7 million to pay down the debt on an infrastructure piece of the project — a podium needed to build housing on top of the garage — and then split up the remaining payments to the taxing jurisdictions.

According to an April PILOT schedule document, UB Family LLC would, with the 28-year term, be paying only $507 to the city, $545 to the school district and $115 to the county annually in taxes for the first 10 years, a total of $1,167 per year. Those payments would then exponentially increase over the remaining 18 years.

Since the taxing jurisdictions are being asked to divert the payment, their vote is necessary for the PILOT agreement to be approved.

What happens next

With the school district's refusal of the PILOT proposal Tuesday, this exact agreement will not be passed through and the county has opted to pause their decision.

All entities involved will go back to the drawing board, Kraham said, which will take at least a couple months. The PILOT, though, only affects the housing portion of the project, not the parking garage.

"We still think that there's time enough where we can get going on some portions of the parking garage, potentially, as the housing part of this gets figured out," Kraham said.

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This article originally appeared on Binghamton Press & Sun-Bulletin: Binghamton schools hit pause on Boscov's garage site housing project