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Batavia Develoment Corp.

March 26, 2019 - 11:15am

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A change in federal tax law in 2017 could help attract Downstate investors to Upstate communities such as Batavia and the Batavia Development Corporation is planning on pursuing those dollars for economic development in wards three and six.

The new tax law allows investors who have realized profits from prior investments, known as capital gains, to defer and reduce capital gains taxes on those profits if they invest those gains in economically distressed neighborhoods.

Wards three and six -- which contain the City Centre mall and the Harvester Center, among other distressed properties -- were previously designated Opportunity Zones by the City of Batavia and would be eligible to attract investment under the terms of the revised Federal Tax Code.

Rachael Tabelski, BDC director, asked the City Council on Monday night to approve at its next business meeting a resolution that would allow the BDC to invest $20,000 in setting up a Batavia Opportunity Zone investment vehicle.  

"These wards are distressed and would benefit from both large and small investment projects," Tabelski said.

The goal is to attract $5 million in investment funds. Tabelski said there are already potential investors Downstate who have expressed an interest in such investments.

Urban Vantage LLC, a Buffalo-based urban planning firm, would assist, including financially, in setting up the investment package.

The $20,000 would come from BDC's revolving loan fund, which has a current balance of $319,000.

At its next business meeting, the City Council will also be asked to approve a resolution that would allow the revolving loan fund, first established with Federal grants in 1997, to start assisting small businesses in Batavia with cash grants (in addition to continuing revolving grants).

Tabelski told the council that the purpose of the fund is to get money into the hands of local businesses to help spur economic development and the fund isn't accomplishing that goal if the money isn't being put to use.

The $20,000 initial investment would be used for legal preparation of the investment vehicle, listing and marketing the project, along with filing and accounting fees.

"We're setting this up so we are on the map as a proactive community taking advantage of a new federal tax law that is allowing investment into low-income census tracks and to show investors and developers that we're serious about moving our sites forward and creating our own fund as a city," Tabelski said.

There's much about how the new investments will work that hasn't yet been determined by the Treasury Department. The final guidelines should be released in a few weeks.

In general, the idea is if an investor has capital gains, the investor can move those funds to an opportunity zone investment fund and defer any capital gains tax until 2026. After five years, the basis of their taxable gains would be reduced by 10 percent. For example, if an investor had $100,000 in capital gains and invested those gains in an opportunity zone, the investor would owe taxes only $90,000 of those gains. After 10 years, the basis would be reduced another 5 percent.

Also, after 10 years, the investor would not owe any taxes on any additional gains on their opportunity zone investments. In other words, if that investor put $100,000 into an opportunity zone and at the end of 10 years, exited the investment and got back $150,000, there would be no capital gains tax on that additional $50,000 realized from the investment.

"It's really designed to attract investment in projects that have a high likelihood of appreciation," said Richard Rogers, a principal in Urban Vantage.

Tabelski first met Rogers and his partner Travis Gordon during the Downtown Revitalization Initiative process, when they represented Ken Mistler on the Carrs Reborn project. They worked together on developing a plan to create the opportunity zones under the tax code revisions.

Tabelski and Gordon both said Batavia could be attractive to investors not just because of a break on capital gains tax but also because of other credits available, such as historic building tax credits, new market tax credits, and the availability of PILOTs (Payment In Lieu Of Taxes) on building improvements.

"This is a marketable location for people from places like Downstate to put the money into to actually get a good return on their investment as well," Gordon said.

The BDC-initiated fund will focus on real estate investment but there's no reason private investors can't establish their own funds to support business startups and expansions. So long as the business is based in designated opportunity zones, investors would be eligible, potentially, for the same tax breaks on capital gains.

There are some guidelines yet to come yet, however, that will either expand or limit those opportunities. For example, initially, the tax code would have required at least 50 percent of a business's revenue to come from within the opportunity zone.

That would seriously limit, as Rogers noted, a new firm's ability to scale, which would make a much less attractive investment for venture capital.

Tabelski said there is already an investment fund established in Buffalo that might be interested in projects in Batavia.

Photo: Rachel Tabelski presenting the project to the City Council on Monday, accompanied by Richard Rogers and Travis Gordon.

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February 22, 2018 - 11:32am
posted by Howard B. Owens in bdc, Batavia Develoment Corp., batavia, news, notify.

During a budget workshop Wednesday night, the occasionally controversial Batavia Development Corp. received across the board support from members of the City Council.

Up for discussion was the $110,000 the city provides to the BDC to fund its operations, including paying the salary of Economic Development Coordinator Julie Pacatte.

Councilman Al McGinnis opened the discussion suggesting that while it might be OK to fund BDC this year, he would like the funding reviewed next year.

By the end of the meeting, however, McGinnis backed off that request because he learned funding for BDC comes from the video slot machine proceeds paid to the city by Batavia Downs.

"As long as it's the VLT money, that's fine," McGinnis said after the meeting.

He said he doesn't have a problem with the BDC and likes the work Pacatte and the board of directors are doing. He would just like to see a more detailed, nuanced regular report from the BDC on its projects.

At that point, Councilwoman Kathy Briggs jumped in and said the BDC regularly emails council members about its projects.

As for residents who are sometimes critical of the BDC, she thinks more of them are excited to see what's coming, and once the two in-progress breweries open up, that will help validate the work of the BDC in the eyes of a lot of people.

"Once they start seeing something, they’re going to get excited," Briggs said. "They’ve been hearing it for so long and they ask when, but when they start seeing a little progress, they’re going to get excited."

Both during the meeting and after, Councilman Paul Viele said the money the City is providing the BDC is money that is being well spent.

"For the $110,000 that we’re giving them, we’re getting a bang for our buck," Viele said. "You see what the result is. It’s great for the city. Whatever we can do to help them, let’s move forward."

During the meeting, Councilwoman Rose Mary Christian questioned why BDC's budget was $125,000 last year. Interim City Manager Matt Worth explained that $15,000 was added to the budget because of some anticipated environmental remediation. It turned out that work wasn't necessary, the money wasn't spent and it was moved back into the general fund.

Worth also provided a short history of the BDC, which dates back a couple of decades. At one time, Ed Flynn, now a consultant working on the Downtown Revitalization Initiative for the state, worked for the city handling economic development. The BDC received federal funds to establish a revolving loan fund. After Flynn's position was eliminated, the BDC board and the loan fund remained but with nobody to administer it. That led to some problems with collections on the loans. A coordinator's position was created both to help with the administration of BDC functions, but also to pursue economic development opportunities.

Since then, during Pacatte's tenure: several new market-rate apartments have been added to the downtown residential stock; the Carr's Warehouse has been converted into a mixed-use complex; a developer has been secured for the former Della Penna property and the Santy's Tires property; and soon the J.J. Newberry building will become the Eli Fish Brewing Company with the FreshLab restaurant incubator as part of the project.

Councilman Adam Tabelski expressed concern that talk of defunding the BDC could hamper the BDC's relationship with developers and other development partners, creating uncertainty about the BDC's continued operation.

"It perplexes me that this matter is even coming up as a topic," Tabelski said.

Christian asked about the BDC's contribution to the city winning the region's Downtown Revitalization Inititiviative contest, with its $10 million prize for economic development, and Council President Eugene Jankowski said that Pacatte assisted in the application process plus the fact that the city has the BDC, as well as the Batavia Business Improvement District, gave the city more points to help in its winning score.

The budget workshop started off with a discussion about funding a part-time staff position at the youth bureau. In the past, the position was filled by a member of AmeriCorps but the Federal government has eliminated AmeriCorps.  

The County's Youth Bureau Director Jocelyn Sikorski, who operates the city's youth bureau program as part of a shared services agreement, said the job is critical to the operation of the youth bureau. 

After a discussion about the importance of the programs the youth bureau provides to give children in the city, especially children from poorer homes, constructive activities and meals, the council voted to fund the position.

"We pay now or we pay later," McGinnis said. "And if we pay later, we pay dearly."

The council also addressed the topic of a spray park on the south side of the city. On Christian's request, with council support, Worth said staff will work up a report on the cost of the smallest possible spray park in Farrall Park, just to give council members of an idea of what it might cost, not that the spray park will be located there or be a park like the one in the report.

In today's dollars, the Austin Park spray park would cost $500,000.

Tabelski said Albion is building a small spray park for a couple hundred thousand dollars.

The current spray park uses about six million gallons of water each summer. To picture that much water, he said, imagine filling and emptying the water tower over by the VA Center four times.

The city buys that water at a wholesale price.

December 8, 2016 - 4:45pm
posted by Mike Pettinella in news, Ellicott Station, Batavia Develoment Corp..

The Batavia Development Corp. and Buffalo developer Samuel Savarino received the news they have been waiting for today when the Finger Lakes Regional Development Council announced the release of $1.9 million in funding for the Ellicott Station project on Ellicott Street in the City of Batavia.

“This is fantastic for Ellicott Station, phenomenal for the City of Batavia, but what is really great is that the governor (Andrew Cuomo) and the regional leaders believe that we can transform Batavia, and they’re ready to help us do that,” said Julie Pacatte, BDC coordinator.

The $1.9 million Consolidated Funding Application grant is the second-largest award of this round of funding in the Finger Lakes Region – surpassed only by the $2 million awarded to the Sibley’s project in Rochester.

Gov. Cuomo announced that more than $700 million in economic and community development funding was awarded today to the state’s 10 regional councils through Round VI of the Regional Economic Development Council initiative.

In the press release from the governor’s office, he said that “through the Regional Economic Development Councils, we have replaced the ‘one-size-fits-all’ approach to economic growth with a ‘ground-up’ strategy that focuses on cooperation and investing in regional assets to generate opportunity.

“By bringing together ideas from local government and community leaders with state resources, we are giving these councils the tools to create jobs and drive economic activity in their communities for generations to come.”

Rachael Tabelski, marketing director for the Genesee County Economic Development Center, applauded the news, adding that the support of FLREDC Co-Chairs Anne Kress and Danny Wegman gives the city a strategic edge.

“It’s a major, major project for downtown Batavia that is going to transform everything, and the backing of the regional co-chairs ensures that this project will happen, and happen on its full scale,” she said.

Other project awards coming to Genesee County include:

-- $150,000 to Sysco (Western NY Depot) to clear land and build a facility to house delivery management for distribution services;
-- $96,000 to Genesee County Chamber of Commerce (Haunted History Trail of NYS, 2017 initiatives) to conduct a conversion/economic impact study for the haunted history trail, the first and only statewide paranormal tourism trail in the United States;
-- $47,500 to Genesee County (Genesee County Housing Needs Assessment) to complete a housing needs study;
-- $50,000 to City of Batavia to complete a stormwater capital plan;
-- $25,000 to the City of Batavia (Downtown Batavia Healthy Living Campus) for a feasibility study for a comprehensive, multipurpose health campus downtown;
-- $12,500 to the Batavia Business Improvement District (Downtown Batavia Public Market Study) for an assessment and conceptual market master plan for sites in downtown Batavia.

Pacatte noted that the Healthy Living and Public Market grants are for areas within the Batavia Opportunity Area that her agency has been focusing on for redevelopment.

“Both initiatives are BOA-centric, and will improve the core – the civic center – of our county,” she said.

As far as Ellicott Station is concerned, three weeks ago Savarino provided an update to City Council, and specifically mentioned that the CFA grant that came through today along with a $500,000 Restore NY grant and new market tax credits were essential to making the project work.

Savarino’s plan is to convert the former Santy's Tire Sales and Soccio & Della Penna Construction sites a mixed-use, commercial/retail/residential complex.

The project is expected to cost around $17 million. 

August 17, 2016 - 3:14pm
posted by Mike Pettinella in news, START-UP Genesee, GCC, Batavia Develoment Corp., GCEDC.

Project organizers see the START-UP Genesee seminar series as a necessary starting point for prospective entrepreneurs to navigate what could become a complicated road to success.

But, ultimately, it is the funding component of this partnership among local and state agencies that will generate the fuel to enable new businesses to survive and thrive.

As reported on Tuesday in The Batavian, START-UP Genesee has been formed to assist all types of businesses from early stage planning to site selection, access to capital and product development or diversification.

The initiative will kick off with an open house at 3:30 p.m. Aug. 31 at the Harvester Center, 22 Masse Place, Batavia, and continue with six programs for entrepreneurs every other month starting in November.

The Batavia Development Corp. and the Genesee County Economic Development Center are two of the eight agencies that have come together to set START-UP Genesee in motion.

BDC Coordinator Julie Pacatte and GCEDC Marketing Director Rachael Tabelski believe the effort will produce results largely due to the current funding streams available to entrepreneurs.

“At the BDC, we primarily work with microenterprise – start-ups with five or fewer employees -- and we have had a lot of success with the 'Get Underway' grant program,” Pacatte said, noting that numerous start-ups have taken advantage of City of Batavia microenterprise grants.

Pacatte added that BDC directors are exploring programs that provide more programming, including mentorship and ongoing improvement strategies.

Tabelski touts the GCEDC’s commitment to entrepreneurship, calling it one of her employer’s three pillars of economic development, and she dismisses suggestions that the agency only doles out tax breaks to businesses.

“We administer loan funds, and can point someone in the direction of the Batavia Development Corporation or the Genesee County Chamber of Commerce for smaller ‘micro’ loans,” she said.

Both Pacatte and Tabelski have high praise for the START-UP NY program offered through Genesee Community College.

“As far as tax incentives, START-UP NY is basically a feeder program that helps (entrepreneurs) move in the right direction,” Pacatte said. “It’s a key component in Genesee County, thanks to the efforts of William Emm, (executive vice president of planning and institutional effectiveness), who is the architect of the GCC START-UP NY plan.”

Tabelski said that “entrepreneurship is the key to employing more people and a way to get tax incentives through START-UP NY at GCC.”

“The idea of START-UP Genesee is to find out if someone has an idea that could turn into a viable business plan and be eligible for space."

START-UP NY offers new and expanding businesses the opportunity to operate tax-free for 10 years on or near eligible university or college campuses in New York State.  GCC has designated 50.6 acres of vacant land at the Batavia campus as well as 19,678 square feet of vacant space at the Dansville campus.

The college targets businesses in agribusiness, advanced manufacturing, technology, energy development (bio-digesters and advanced energy management systems) and agricultural research. For further information on the qualifications for the START-UP NY program and the application process, go to: http://startup-ny.com/

Additional grant funding is available through New York State’s Consolidated Funding Application and Empire State Development, and through programs such as 43 North in Buffalo and Hi-Tech Rochester’s Venture Challenge.

Tabelski said that Batavian Georgeann Carrubba, who came up with an invention to help those with ostomy bags, was “shepherded” by the GCEDC’s Innovation Zone, which provides access to “venture capital folks and enables businesses to scale up more quickly.”

In related developments:

Pacatte said that her agency has submitted grant requests to ESD for Ellicott Station remedial work, and received CFA funding last year to study the feasibility of subdividing the 20-acre core Harvester Park, encompassing parts of Harvester Avenue, Masse Place and Swan Street.

She said that Samuel Savarino, developer of Ellicott Station, is closing in on a couple of tenants – one to operate an entertainment/retail destination and the other two to lease office space. 

The Harvester Park plan will be revealed in the next 30 days, she said, adding that owners of the land on Swan Street that has been considered as a possible site for a new City of Batavia police headquarters, had been talking about developing the parcel “before the police conversation came up.”

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