In this series, we’re discussing a concept I call “Responsible Development,” primarily by analyzing the irresponsible development that has been going on for too long in Mount Vernon. To get to the root of that, we need to spend some time looking at the Mount Vernon Industrial Development Agency (MVIDA). Before we do that, though, I wanted to recap briefly Part 1 of this series where we learned that “industrial development agencies” are a creation of state law given exceedingly broad powers to spur local investment and development. The track record of these IDA’s is decidedly mixed, with more taxpayer dollars going out the door than coming in usually. As we’ll see with the MVIDA, these “black box” agencies operate in the shadows with very little oversight and can cost taxpayers more money and do it faster than any other agency in city government.
In Part 3 of the series, I’ll go into some of the important foundational pieces of Responsible Development, including ways to bring the taxpayers’ voices back into the conversation. To see why that’s important, let’s turn back to the MVIDA.
Like industrial development agencies around the state, the MVIDA is tasked with trying to attract investment in Mount Vernon, whether that’s new commercial or residential developments. Ultimately, the idea is to increase the overall tax base of the city so as not to overburden existing taxpayers with increased spending on city services. As you might imagine, services cost more every year. If you don’t grow your tax “base,” existing taxpayers take the hit in the form of increased property taxes. The absolute worst thing you can do is to increase city service spending while allowing consumers of those services to avoid contributing to that increased cost. But, that’s exactly what the MVIDA has been specializing in lately.
In a shameless attempt to make it look like development is happening in Mount Vernon, the MVIDA has made some devastatingly bad deals, ones which we will be paying for over the next four or so decades. A common tool used by IDAs all over, but particularly by the MVIDA is something called Payment in Lieu of Taxes (called PILOTs or PILOT programs). These programs are designed to encourage developers to build in Mount Vernon, instead of somewhere else. Generally speaking, these developers agree to make some up-front “donation” to the MVIDA and, in return, they receive huge tax breaks, which can last for decades.
Just two residential projects alone which have been approved by the MVIDA in the last few years involve over $120 million in tax giveaways over the next FORTY years, meaning Mount Vernon’s taxpayers will be subsidizing these developments for the foreseeable future. These developments continue to use city services like police, fire, education, and sanitation – but they won’t contribute to the cost of those services until most of us are long gone. The developers turn around and sell the rights to the building’s ownership at the end of the PILOT program, pocket a huge gain, and leave the city’s taxpayers to foot the bill. These are just the ones we already know about. There are more in the pipeline.
If the goal is to increase the tax base, why does the MVIDA give away so many tax breaks to get people to build here? Seems counterintuitive, right? That’s because it is. The sad fact is that these developers are part of a larger game and the city is often a willing participant. They’re not looking to build in Mount Vernon because they want to build here. They’re looking to find property that is depressed now but potentially valuable in the future, especially if improved. They’ll get state and federal agencies to subsidize the building for “affordable housing,” they’ll get the city to eliminate the property taxes, and they’ll sell the whole thing for a huge profit. It’s big business, and it will sink this city.
We can argue the benefits of “affordable housing” as a concept, but let’s save that for another time. Let’s just focus here on how it impacts our tax base. This housing is generally not designed for current Mount Vernon residents and has the effect of “importing” new residents who consume city services, especially education services. Unfortunately, Mount Vernon has too often been the dumping ground for people other cities in Westchester County don’t want or won’t support. While we are generous with our time and tax dollars, at some point the breaking point will occur, and we’ll no longer be able to afford it.
Let’s not forget the sheer lack of transparency in how the MVIDA funds are spent. Recall that IDAs generally have tremendous discretion in how they choose to “attract” new investment. All of those Easter Egg and Pumpkin Patch events? Probably paid through the MVIDA. All of those festivals and concerts? Same thing. I’m not suggesting they are unnecessary, just that they are un-budgeted items that come out of our pockets without any oversight or control by the City Council or the Comptroller. Who gets paid to put on these events? Certainly no one who has been vetted by the Board of Estimate & Contracts for conflicts of interest, for example. The larger concerns are the “meetings” held with “potential” investors, justifying trips across the country to meet with Puff Daddy (over three years’ worth of those) or gaming companies who want to “invest” hundreds of millions in Memorial Field. These are just boondoggles that have no real likelihood of success – just pure tax dollar waste. Again, maybe there’s nothing corrupt going on there, but then again, how would anyone know?
What we do know is that the auditors have asked for a lot more controls over how the MVIDA operates. We do know that we’re seeing a lot of new PILOTs rushed along through the pipeline. And, we do know that developers are contributing to this Mayor’s campaign in record numbers. You can do your own math on that.
Maybe, it’s time we start asking ourselves if there’s a better way?
If you have thoughts or comments about this issue or any other, reach out to me at ADWCMV@gmail.com.