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April 4, 2013 - 4:00pm

Batavia Towne Center expected to generate more than $4.3 million in new tax revenue by 2018

posted by Howard B. Owens in batavia, business, GCEDC, Batavia Towne Center.

NOTE: There was a big mistake in the original headline of this post about the amount of property taxes that would be generated over 10 years.  The correct number is $4.3 million, not the significantly higher number previously quoted.

Batavia Towne Center, in the four years since the first stores opened there, has generated more than $500,000 in new property tax revenue for schools and county government.

It's also generated more than $500,000 in new fire tax revenue for the Town of Batavia.

We don't know how much sales tax it's generated because those figures are considered confidential. But COR Development estimated -- when it applied to GCEDC in 2006 for tax abatements for the project -- that at build-out, the center would add more than $4.5 million in annual sales tax to the state and county treasuries.

Under the current terms of the agreement between COR and the Genesee County Economic Development Center, Batavia Towne Center will generate an estimated $4.3 million in property tax and fire tax revenue by 2018.

COR is asking that the original agreement be modified to help the company attract Dick's Sporting Goods along with one or two other retailers to the former Lowe's location.

There are three tax abatements under consideration:

  • $180,000 sales tax exemptions
  • $43,750 mortgage tax exemption
  • $828,390 property tax exemption

Before there was a Batavia Towne Center there was 47-acre parcel of land that didn't have much on it except for the Wood Hill Trailer Park off Park Road that -- according to a June 22, 2006 article in the Batavia Daily News -- was filled with aging trailers that once housed race jockeys from Batavia Downs.

The total assessed value in 2008 was $1.6 million.

After Batavia Towne Center opened, the assessed value jumped to $14.5 million.

Under the terms of the original agreement with GCEDC, COR received a $6 million tax incentive package:

  • $2,078,400 sales tax exemption
  • $312,500 mortgage tax exemption
  • $3.6 million property tax exemption

COR was planning a 375,000-square-foot shopping plaza that would be anchored by Target and Lowe's with Bed, Bath & Beyond, PetCo and Michael's, as other key tenants.

It would cost COR an estimated $40 million to build the center.

COR estimated at build-out the stores would employ 364 full-time equivalents (FTEs), who would be paid $9.9 million in annual wages, and the stores would generate $4.6 million in annual sales tax on $667 million in gross annual sales.

In 2007, the project was split into two parts, because Target insist on owning the building and real estate of their own stores, so the benefits and liabilities of the project are now split between COR and Target.

For the life of the agreements, both COR and Target are required to submit an annual report to GCEDC on employment.

By the time all of the stores were open in 2009, COR and Target reported a combined 365 FTEs.

As the economy declined after 2009, so did employment, dropping to 341 FTEs in 2011.

After Lowe's closed, the number of FTEs dropped to 270 in 2012.

The bulk of the incentive package for COR (all numbers in this story roll up COR and Target as if it were still a single project) was the property tax abatement.

The abatement is known as a PILOT (payment in lieu of taxes). 

A PILOT is designed to forgive a portion of property taxes on the increased assessed value on a parcel of real estate that are the result of improvements.

In the case of Batavia Towne Center, as stated above, the property's assessment rose from $1.6 million to $14.5 million.

COR continued to pay property taxes on the original $1.6 million assessed value, but in 2010, when the assessed value jumped so dramatically, it paid no property taxes on that additional $12.9 million in assessed value.

Under state law, fire district taxes cannot be waived, so when the assessed value jumped, so did the amount COR pays for fire services in the Town of Batavia.  Currently, COR and Target pay more than $266,000 annually in fire protection taxes.

Starting in 2011, COR began paying taxes on 20 percent of the increased assessed value, or on $2.6 million of the new additional assessed value.

This year, COR's share jumps to 40 percent of the assessed value.

By 2017, COR will be paying 80 percent of the increase in assessed value and the PILOT expires in 2019, at which point, COR and Target will be paying property taxes on 100 percent of the increased assessed value, or about $4.1 annual in property taxes.

The bulk of those taxes go to the school district with the rest going to the county.  The Town of Batavia currently has a zero property tax rate.

The projected numbers are based on the current assessed value, which is subject to change annually.

For the exemption of the center to accommodate Dick's and other retailers, COR is asking for the PILOT to be amended to cut the taxes on the new assessed value of that portion of the project.

Currently, the portion of the property that contains Lowe's is assessed at $6.9 million.

The improvements will increase the assessment to an estimated $8.6 million.

COR is asking for an amended PILOT just for that parcel that will begin at the 40 percent of increased assessment value and extend the life of the PILOT (just for that parcel) through 2024.

Rather than going up 20 percent every two years, the 40 percent of assessed value would last for three years, then go up to 50 percent for two years, 60 percent for two years, 70 percent for two years and 80 percent for two years.

In 2007, as we reported earlier, the project was only eligible, as a retail project, for tax incentives, because it was declared a "tourist destination."

Under terms of IDA law, a tourist destination is defined as a location that will attract a significant amount of traffic from people living outside of the IDA's service area.

In this case, from outside Genesee County.

The agency also had to find that the project would offer a service not otherwise available to county residents.

In a June 8, 2007 letter, COR's VP and attorney Joseph B. Gerardi, wrote in a letter to Steve Hyde, CEO of GCEDC:

It is anticipated that the Towne Center will provide economic and/or tourism opportunities for commercial uses not otherwise readily available to residents of the Genesee County Economic Development Region. ... The Towne Center project is also anticipated to retain a significant percentage of the retail sales available in the Economic Development Region that is likely to be leaving the Region, and create additional economic development activity. This is a result of the potential for Towne Center to attract retail sales from counties that are in near proximity to the Region and/or development.

Legislature Chairwoman Mary Pat Hancock wrote in a letter dated Jan. 2, 2007:

In order to assist the Agency in making such a finding, the Company has represented that the Project is the sole comparably-sized shopping center available to residents of Genesee County and therefore provides a service that would otherwise be unavailable.

Hancock's letter did not address the "tourism destination" designation.

While the project was in development, GCEDC was apparently interested, according to a February, 2007 article in the Batavia Daily News, in adding a multi-screen theater to the project.

COR seemed less than thrilled with the idea, noting that adding theaters would mean less parking, and theater patrons would take up a lot of parking spaces that would otherwise be filled with store shoppers.

The original project proposal also promised restaurants, but none of have been built in the plaza.

COR also promised to plant $200,000 in trees in the parking area.

It's expected that if GCEDC is to grant new tax incentives to COR for Dick's Sporting Goods and other additional retail space, the project will need to be approved as a "tourism destination" and provide goods and services not otherwise available in Genesee County.

In 2005, while discussing sports retail outlets in Forth Worth, Jeff Hennion, then VP of strategic planning for Dick's Sporting Goods, told the Star-Telegram that Dick's wasn't interested in tax incentives for their stores.

"Our goal is to deliver everything at the lowest price," Hennion said. "We really don't feel like we should be using customers' money to build our stores."

UPDATE: Original site plan map added, courtesy COR Developerment.

Phil Ricci
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So in 4 years, the plaza has generated $500,000, but received over $6 million?

Also, they want an additional $44,758,390? and in return they're projecting $1.1 Billion? How are they getting these numbers?

They funneling over $200 million dollars a year locally!?!?!? Can I call BS? If that one parcel was able to generate that kind of money then we would not be talking about taxes at all!!!

Mike Weaver
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Nope. Still not a tourist attraction.

Howard B. Owens
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Phil, I'm away from the computer but I don't think you're groking the numbers or I didn't explain something right.

Where are you getting that they're asking for another $44 mil?

Dave Olsen
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There is a misprint, I think, in the amount of mortgage tax assessment reduction asked for. I believe it should 43,750.00 instead of 43,750,000.

Mark Potwora
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I agree Phil...Its 2013 in 5 years ,2018 They want us the taxpaying public to believe that they will have paid over 1.1 billion dollars in property taxes.What kind of accounting are they using..Why are we giving Target a property tax break.We have a Kmart and a Walmart selling the same crap..How can they get away with any of this..As long as Target owns their own store then any tax abatement should of ended..Sounds like it was set up as a scam from the beginning..As for COR they made their deal back in 2006 now live with it..They haven't lived up to the first agreement by adding restaurants and movie theaters and 200,000 dollars worth of trees..Why would anyone think they will live up to any other agreement......I can not believe that the GCEDC would grants tax breaks.for movie theaters and restaurants to be built when we have many locally owned restaurants and movie theater that don't need to have such an unlevel playing field..The city of Batavia suffers..The town gets help paying for their fire dept and we get nothing......Where is all the city's representation as the GCEDC sells us out..The Batavia school district doesn't have the same protection built in as the town of batavia fire dept......The city of Batavia is getting screwed ........................

Phil Ricci
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Howard, Dave is correct.

I agree, Mark.

Robert Brown
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If COR has not lived up to any part of a prior agreement, why hasn't legal action been taken? Why isn't 100% occupancy and delivery to set criteria on tax income part of any abatement agreement? Enough of the hand waving!

By the way, if people like to gamble, there's a wonderful tourist attraction in walking distance from the Batavia Towne Center! Stop gambling with taxpayer money!!!

Howard B. Owens
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Dang it ... I made two big mistakes. First, I was looking at the wrong line on a spreadsheet and not reading it correctly ... decimal point mistake in the first place. Second, there were three lines I needed to add together to get the total paid by 2018, not just the one line.

I should have been more skeptical of such a large number and triple checked it ... but as I was going through it to respond to these comments, I caught my mistake.

Sorry everybody: The actual number of NEW taxes paid will be $4.3 million.

Howard B. Owens
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Like most journalists, I suck at math ...

Frank Bartholomew
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Lowes lasted for 5 years, and now this plaza,( oops) I mean "tourist attraction" will pay 4.3 mil. in taxes in 5 years

The only semblance to any "reaping" will be "raping" the taxpayer
a second time for the same property (Lowes) that probably was due to pay their own taxes this year
.

Dave Olsen
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So, correct me if I'm wrong, the developer has received about 6 million in benefit and now wants another million or so to renovate a 4 year old building because there was a rush to fill it up while they were still on the county tit, but since Lowe's predictably failed we're supposed to help them out of a pickle? That's 7 mill to make 4.3. I understand the employment and multiplier factors and future income, blah blah blah. What happens when Target or Bed Bath and whatever decide this isn't working either or get a better offer? Will we have to ante up again? This is a "bail-out"; Plain and simple.

Howard, you are a human, you make mistakes,as do I. A wise man once told that what you do about your mistakes is what really matters, since we all are fallible. You fixed yours, today, I try to fix mine all the time. It's time for the County Legislature to realize their mistake and if they can't fix it, they can at least not make another.

Howard B. Owens
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Dave (and Phil) ... to before, COR hasn't technically received all of the $6 million.

They've assuredly received all of the sales tax and mortgage tax benefit, which comes to $2.4 million.

The PILOT benefit is $3.6 million.

The PILOT is front loaded, for sure, but they've received only the first four years of the PILOT benefit, with six years yet unrealized.

tim raines
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Where are all the cars, shoppers and tourists that couldn't park if a movie theatre was built?

They must be shopping out of Genesee county the times I've been there.

Dave Olsen
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That's a good point, Howard, but it doesn't really matter. the real value of a shopping center to a community is property taxes and jobs. The sales tax income increase is arguable because it's based on the premise of money spent here that wouldn't be otherwise, hence the tourism clause (bogus in this case). The two questions that need to be asked are: Would COR have built this thing without EDC involvement? I guess we can't know that, but I'm pretty sure I know the answer to the 2nd one which is: Would they do the renovations to bring in Dick's and whoever without our throwing in? I'd say yes. So the real benefit is jobs, I'm for people having jobs, but at what cost? The EDC gets a cut of every project they give our money up to, so i question the motive here as a bottom line.

Taxes should be lowered for everyone across the board, government should be shrunk across the board and sales tax rate should be cut, leaving everyone with more spendable income which will create an environment which makes sense for a retail center without government incentives, and creates jobs so more folks will have money to spend. The whole thing is far more complex than it needs to be.

Mark Potwora
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Howard great story..We all learned more about how this deal was set up..None of these facts are ever in those GCEDC press releases..Very good investigative reporting...The one thing i was very surprised at and never realized was that Target owns their own building and gets a tax abatement on it..I am all for free enterprise but a dept big box store should never get a tax abatement....It also means the Target back in 2007 had to be designated a tourist destination to get all those tax breaks... ..It is just totally unbelievable..Hope this article wakes up someone in the county legislature to stop this... Again Howard thanks for great reporting..

Howard B. Owens
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Thanks, Mark ... wish I hadn't made that stupid mistake though ... still kicking myself.

Dave, the big unknowns that makes this argument so difficult when arguing those who favor these incentives is -- what are the lost opportunities to existing business, what is the local business costs, who might not start a local business because X is here after getting incentives, and would the developer still have developed or the still have come or not.

I believe that if you're a savvy developer and a savvy chain store owner, you're not going to pass up a good market just because you don't get incentives.

If a market is really worth building in, it's worth building in with or without incentives, except maybe the most marginal market, but then the marginal market takes a big risk giving incentives to a questionable business proposition.

If Dick's opens here and four years from now, a current local business closes, nobody may ever make the connection between the two events, not even the local store owner, but a great more than tax revenue and jobs are lost when a local business closes. It's more than just a pure economic issue, and those who favor incentives for retail will argue it as purely an economic issue.

Doug Barnard
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This negative, glass half empty mentality is driving me crazy.

The original land was a run down trailer park with a $1.6 mil assessed value.
The plaza is now assessed at $14.6 mil and there are still 270 FTE jobs.
According to the article, since 2011 COR has been paying taxes on $2.6 million of assessed value.
So to sum up there is a $1million dollar increase of assessed value being taxed and we gained 270 jobs…that’s not a glass half empty.

Is it a tourist destination? NO.
Is there and has there been a jobs benefit? Yes.
Have we “lost” tax revenue? No.

How about some positive suggestions?
Grant the sales tax on materials provided X amount has to be purchased locally.
The mortgage tax is a scam anyway. Why do we have to pay a tax every time we record a real estate transaction? Did they learn this one from the DMV?
How about taking X amount of the Pilot and provide grants for existing local business’s in the same retail category?

Small mom and pop stores biggest competition is online, a store like Dick’s will never compete with the knowledge and service of a Barrett’s.

Just my thoughts…..flame away.

Dave Olsen
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I couldn't agree more, Howard.

Dave Olsen
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The problem, for me Doug is multi-layered. First we, the taxpayers who are partially on the hook for these speculative investments, have no say in the matter, the deal is cut and the legislature is easily persuaded by the promise of future benefits. Secondly, we'll never find out what kind of investment or what may have been built there, because every deal is now clouded by what kind of incentives are going to be tossed in. Your positive suggestions are good, but the problem is systemic and we all have to start taking stands across NYS , west of the Hudson anyways, if ever it is to end. This isn't just whining. The times, they are a-changing, in other municipalities and counties there is beginning to be some push-back on IDAs/EDCs, but it can only be defeated if we all stand strong. Put down the Kool-aid and back slowly away from the counter, Doug. We're all pulling for you, brother.

Doug Barnard
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Dave, how is it that we the taxpayers are on the hook? Last time I checked if someone doesn’t pay their property tax the county eventually forecloses and sells…made a small profit on the last auction.
I have been voting continuously since I turned 18 and have found that even if the people I wanted don’t get elected (rarely do!) the least I can do is offer some positive criticism and feedback.
I try to set realistic goals so my suggestions were a way to at least bring some common sense to the system, as I don’t see it going away anytime soon.
And no Kool-Aid…Bourbon please.

Mark Potwora
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Doug we should also remember that COR didn't build this plaza for the benefit of the citizens of this area..They did it to make money by renting out retail space...the same goes for Target...If they can't survive without property tax breaks then they shouldn't be built....How are they going to be able to pay full property tax in 2018 if they can't afford to pay them now...IDA's were not meant to be used for retail..How many are those 270 FTE are minimum wage jobs..Its these type of plaza's that are ruining our Main Streets..Capitalism is spose to be about risks and rewards.COR got stiffed by Lowes...That a risk they took.....If i have rental property and a tenant breaks a lease and i'm stuck with an empty apartment should i get my property taxes lowered until i can rent it out.

Dave Olsen
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Well, they are back asking for more. When tax breaks and incentives are given to one, it has to get made up someplace else, either by cutting a service or raising taxes. So the taxpayers are invested in the success or failure of all these projects. How much revenue has been lost by the Lowe's building sitting empty when something else could have been there for the last couple of years. How much has been lost on unemployment payments to those who lost jobs? Rhetorical questions I know, we have no way of knowing. I bet Lowe's would not have taken a chance on that without a sweet deal to get started. It never made a lick of sense. I don't think your ideas are bad, I just, again, think the problem is large and systemic and has gone too far. Common sense suggestions are good, I just don't think anyone is listening, so let's get some different people who do listen and who do stand up for what's right.

Come to Celebrate Liberty Night and I'll join you for an old grandad on the the rocks.

Howard B. Owens
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Mark, and others, one thing I should point out ... this story would not have been possible without the full cooperation of GCEDC.

Rachael Tabelski, in particular, did the lion shares of the work. She spent most of three days, while dealing with a sick toddler at home, going through all of their files and reports on the project and preparing a three page summary history of the project. She prepared the spreadsheet in PILOT payments. She made copies of the letters I quoted. My contribution was to organize all that information into a presentation that made sense (combining with a little of my own other research).

It's a fact: GCEDC either is or is pretty darn close to the most transparent public agency I've ever dealt with. They pretty much give me without any fuss any information I ask for that isn't exempted by "trade secret."

When I was trying to confirm Pepsi was coming to the ag park, I couldn't pry any information out of staff. I know they've got a couple of big fish they're trying to land for STAMP, and mums the word. I can't even get a clue that might lead me to something.

Other than that, they're always willing to share information. A couple of years ago I wanted try to take a comprehensive look at the history of their projects -- the scope of the work proved too big for me alone, so I never finished -- but they gave me every document I wanted.

In my journalism career, I've found that agencies that haven't had a lot of media coverage often keep expense records by top officials that show some pretty darn interesting (and questionable) expenses. When I FOIL'd all the expense reports for five years from GCEDC two years ago, I got them easily (and they showed nothing even close to inappropriate).

After Rachael had her documents ready, she along with Chris Suozzi and Mark Masse met with me for about 30 minutes and we went over everything and they answered all my questions.

Mark made the point that a good deal of their work is public record. Their meetings are public. The public is more than welcome to come to the board meetings and offer their input. Their will be a public hearing on this project and he said the board will listen and serious consider feedback from the public (it's important to remember, the board members are people in our community, too -- usually people who grew up here and run businesses here and have friends and neighbors they interact with, so they're not just going to shut themselves off to public input).

At the 2007 public hearing for COR's project, only one non-GCEDC person showed up (Tony Mancuso). If the public doesn't show up to these hearings, then GCEDC will operate with the information they have available sans any public feedback. The oft-heard phrase is "If you don't vote, don't complain about the government you get." I've never been a fan about that phrase, but I will say, "If you don't go to GCEDC public hearings, should you really be complaining about the results you get?"

This is a public body and a public agency. If you want to have some influence on what they do, make your voices heard.

JoAnne Rock
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" I know they've got a couple of big fish they're trying to land for STAMP, and mums the word. I can't even get a clue that might lead me to something."

Howard, here's a clue: Project Azalea

Although, the general consensus of those that follow such things, do not put the WNYSTAMP site in the running for this project.

Dave Olsen
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The STAMP project is pure speculation which in my opinion taxpayers' money should not be involved in. If they have a REAL buyer who is willing to commit to something, then it's a different situation.

JoAnne Rock
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I agree 100% Dave.

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