The Glen Cove City Council held a special meeting on Tuesday, July 19, and passed a resolution consenting to the amount and allocation of certain in lieu of tax payments for the Garvies Point project. City Hall was packed with residents eager to voice their concerns about the project, from both a financial and personal health standpoint, and to get their questions answered. The bond to fund public amenities was approved by the Industrial Development Agency (IDA) and the Glen Cove Local Economic Assistance Corporation (GCLEAC) in late June, after RxR Glen Isle Partners LLC requested $97 million to fund construction of the public use improvements, infrastructure and amenities through Increment Financing Bonds. These bonds are non-recourse with no liability to the City of Glen Cove in case of default.
“The resolution asks for a changing of the allocation to allow the bond to be repaid, as well as approximately $600 million above and beyond the bond to pay to agencies in taxes,” said Michael Zarin, special counsel for the city. “The school would receive 53 percent and the city would receive 39 percent. The city would also receive $100 million in bond proceeds to pay for public improvements. These proceeds will be used exclusively for the building of public amenities.”
A total of 28 acres of the 56-acre site will consist of parks and public access. Zarin said this resolution will allow the city to realize more of the tax proceeds so that it can pay the bond, as well as receive an additional $225 million and for the schools to receive $290 million over the term of the bond.
Zarin clarified that in past agreements, the redeveloper was supposed to be responsible for the public amenities, but it was always a possibility to look for other means of assisting with infrastructure costs.
“The city started the project in 2003, and everyone thought it would be done in a year or so. But here it is 2016 and we’re at the finish line. Economics have changed, construction costs have gone up, the cost of the road almost doubled because of the conditions in the road,” said Zarin. “We have been fortunate in keeping this redeveloper involved through the recession because we have gone back and looked at the agreement through the years and how we can keep this project viable. Many projects died during the recession years and the redeveloper has financed $42 million into the project without owning a square foot of property. We have always looked at how it can work for the city and the developer or we’re going to lose our partner.”
People primarily raised questions about the longterm financial risk and voiced concern about the potential health risks for those who would live and work at the site.
Drew Lawrence said the redeveloper has a contract to pay for the construction of the public amenities and that he has a problem with the payment proposal.
“You’re going to be short every year, if the budget stays flat,” said Lawrence.
Zarin said Lawrence cited language that was correct based on negotiations in 2012, but the amendment was later added. The maintenance will still be the redeveloper’s responsibility in perpetuity.
Roger Friedman said the IDA should not have voted since the contracts have not been finalized and questioned how it could be stated that the city will unequivocally receive the funds.
Amy Peters said, “I feel like we’ve been sold a bill of goods. Last October, we were not privy to this financial scheme. I feel like the developer is taking advantage of the city…I cannot fathom how a $17 billion company can purchase 56 acres for $15 million and not afford to build. We would not need this money if it was a smaller project.”
Marsha Silverman said it will cost a “fortune” to build the units and support them through the school system.
“When I look at the numbers, it will cost the city millions,” said Silverman.
Former councilman Tony Gallo spoke from the angle of small business owners.
“It’s unfair to every small business in Glen Cove where they are struggling to get by day by day and we speak of a multi-billion dollar company and we’re going to give them almost $200 million in tax breaks. This is wrong; I urge you to vote against these tax breaks and allocation of funds,” said Gallo.
In the end, the resolution passed in a 4 to 3 vote, with council members Nick DiLeo Jr., Pamela Panzenbeck and Joe Capobianco, along with Mayor Reggie Spinello, in favor and Councilmen Efraim Spagnoletti, Roderick Watson and Tim Tenke opposed.
“I know there’s a lot of emotions and positions on both sides,” said Spagnoletti. “My job is to make the best decision based on the information in front of me. I need to vote no.”
“If we’re at the phase of still negotiating, to me, if this gentleman has gone to the bondholders and they say he’s in good standing, why can’t he get his own funding?” said Watson. “He’s not walking away from this deal…he wants this to happen and we do need development in Glen Cove. But…the developer is responsible for all of this. I cannot support it.”
“This was really a single issue that was before us, but a lot of people have very strong feelings and they voiced them tonight,” said Tenke. “I have been a supporter of this project from the beginning and I do think it’s something that would be good for Glen Cove. This bond issue that we’re talking about tonight, I just think is not equitable for the tax payers of Glen Cove. I think it’s speculative and I cannot vote for it.”
“We cannot lose sight of why we’re here tonight, which is to change the normal allocation of a PILOT payment,” said Capobianco. “Normally, 29 percent goes to the city and with the deviation, we get 39 percent. I think it’s in the city’s best interest, whether we like the project or not. We’re not here to debate the height of the buildings or whether the site has been cleaned up. Under the distribution, we’re getting more money.”
“For 20 years the can has been kicked down the road, the city has incurred millions and millions of dollars. Without this project, the city would have to have a 40 percent tax increase over the next three years,” said Spinello. “I didn’t create this project, I didn’t pour the toxins in the water, I didn’t pick the redeveloper, but I inherited it, and my job is to bring economic growth into this city and to turn Glen Cove around. This project will make Glen Cove whole and back on the path to financial stability.”
The full resolution can be viewed on www.glencove-li.us.