Like a lot of you, I read the story Wednesday about attorney Steve Barnes buying a waterfront penthouse for $1.1 million. I imagine a lot of readers thought that was a lot of money.
Me, I thought something else: "He's not going to pay a penny in property taxes for a long time."
I made some calls, got some data, crunched some numbers and it turns Barnes will save $221,595 at present tax rates.
But then I got to thinking, why stop there, what are the abatements worth for the buyers of the other 52 units at Waterfront Place?
Answer: $5.3 million.
Then I got to thinking, why stop there, The condos at Avant on Delaware Avenue are selling for even more money. What are those abatements worth?
The Avant project is using a different tax abatement program, and the savings for the 28 buyers there are worth an estimated $4.8 million.
Now don't get me wrong: It's a good thing that high-priced real estate is being built in and around downtown and that those able to afford it are ponying up.
But do the rest of us have to subsidize them?
The average condo at Waterfront Place is selling for about a half-million-dollars and buyers, according to my calculations, will save about $100,000 in property taxes over 10 years.
Units at Avant are going for more like $750,000 and buyers will save on average about $170,000 over 12 years thanks to a different abatement program.
If you buy a $1 million condo and put 20 percent down, your monthly principal and interest payments are going to run $4,417. Buy a $500,000 pad and you're talking $2,209.
Gee, given the size of the checks that buyers have to write the bank every month, is it asking too much for them to pay property taxes like the rest of us to pay for the police and fire protection, the snow plowing and street repairs, etc., that city property taxes pay for?
But don't blame Steve Barnes, or anyone else buying at Avant or Waterfront Place. They didn't make up the rules, they're just playing by them.
No, blame the politicians and the downtown business interests who have put them up to the shenanigans that lead to millionaires living property-tax free in the third-poorest city in the nation.
The Empire Zone program was conceived in the mid-1980s as a way to promote investment and job creation in impoverished neighborhoods and down-and-out commercial and industrial areas. The old Republic Steel site, inner-city neighborhoods, places like that.
But the downtown business crowd persuaded Tony Masiello and the Common Council to draw the zone boundaries in ways that benefited them. That's why companies like M&T Bank under Bob Wilmers have reaped millions in tax breaks over the years, why Cellino and Barnes over four years saved three quarters of a million-dollars.
Gov. David Paterson pushed for a major overhaul in the program earlier this year and the howls from Buffalo, in particular, could be heard all the way to Albany. Among those lining up against reform were Mayor Byron Brown, Buffalo Niagara Partnership President Andrew Rudnick and many of the developers who have been feeding at this particular public trough over the past decade.
They're all for bringing the public employee unions to heel. But leave their perks alone.
The Avant project is another matter.
I think most people agree something had to be done with the hulking 15-story building. The federal government had abandoned it, asbestos and all, and it was too big and too ugly to just sit. It was the successor to the old Nemmer Building on Main Street as the biggest eyesore on the downtown landscape.
In addition to tax breaks for the condo buyers, the developer also will enjoy a long-term freeze on property taxes that amounts to big-time savings that will be passed along to business tenants. That comes on top of $18 million in state grants and a few lesser public goodies, put towards work that totals $83 million.
So, who are the lucky tenants who get to set up shop?
Well, one of the city's biggest law firms, Damon and Morey, has leased two floors.
Great, we're helping out lawyers, like they need it.
There's also an Embassy Suites hotel occupying nearly half the building. Almost every hotel built in downtown in the last 20 years has been subsidized and many of them are struggling financially. I did a story last December that detailed the problem, and operators like Paul Snyder said the last thing the downtown market needs is another subsidized competitor.
But it has one.
Anthony Armstrong, program officer of the Local Initiatives Support Corp., a non-profit development organization, said there's a double standard when it comes to subsidies for working class people and the affluent.
"The way we talk about subsidized development shifts, depending on who is getting the
subsidy," he said.
"There is a stigma assigned to low-income housing, when we are really talking about working people trying to make it. But we don't seem to have the similar push-back against the use of public funds for people in a higher-income bracket."
Somehow, I think a line of people ready to push back is beginning to form.
taggedEconomic Development | Subsidies