Tonawanda News

October 23, 2013

GUEST VIEW: City will benefit from Vets Park deal

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The Tonawanda News

Tonawanda News — Recently you published a letter written by an opponent of a proposed housing development near Veterans Park. My administration negotiated the proposed agreement for this development with Natale Builders. I sent the proposed agreement to the City of Tonawanda Common Council for its consideration and possible approval of the sale of city land to the developer. This letter provides my position on this matter as supported by the facts.

This proposal makes the most economic sense for the City of Tonawanda. Instead of the city selling bonds to borrow money for the construction of roads and the infrastructure, we sell the land to the developer and have them finance, at their own cost, the roads and infrastructure. The city has no risk in this scenario. Think of the situation we would be in if we bonded and built at city cost the entire infrastructure, assumed all the risk, and the developer walked away. The city would be left with the need to try and sell the lots, while still incurring the cost of the bonds. This cost would fall to the taxpayers. An example of how this can go wrong can be seen in Lackawanna at their Martin Road development. The city paid for all the development (close to $1 million) only to see after three years, only two lots being sold. The City of Lackawanna incurred the cost and risk, and is now paying the price. In my proposal we sell the land, the vacant land goes on the tax roll, and we have zero risk on the project.

There have been questions if the $192,000 we will be getting from the developer is a fair price, and why the value is different from some older appraisals. Note that the appraisal that was submitted in 2009, used comparable sales from 2002 and 2004, and included properties sold for the building of apartments on Union Road in West Seneca. We had a new appraisal done in 2013 and the appraisal was $90,000 if the land was bought by a developer, who would use his own money to develop as a subdivision and incur the carrying costs. We are getting over double at $192,000. The $10,000 per acre is well within what this type of sale is being appraised at in other parts of Erie and Niagara counties.

Yes the developer is requesting condominium tax status in return for his cost of building the road and infrastructure. Keep in mind, it is granted by the State Attorney General’s office. It is not something our city can grant. While this law requires the municipality to assess on an income approach, and this does result in a lower assessment, these homes will still be assessed in a range of $110,000 to close to $200,000. Note that the average assessment of a home in the city is $90,000, so some of these properties will have an assessment almost double the average city homeowner. This scenario allows for the best marketability of these new homes for the contractor. We also want these homes to sell to bring new residents and property tax revenue to the city.

With this condominium status, the maintenance, repair, and rebuilding of the streets, sidewalks, sewers and street lights will not be the responsibility of the City, but the homeowners. This will result in savings to the city.

The plan to develop this in phases is common to many of the developments that happen throughout Erie County. The developer has to invest his own money into the development, and needs to be able to sell some of the lots to gain the necessary cash flow for further development. The city has no risk, and loses nothing as the vacant land will pay taxes.

My plan has taxpayers’ interests in mind. We secure revenue for the sale of the vacant land and place it back on the tax roll. Further, we have an opportunity to add much needed tax base to the city with the first major residential development in the city in almost 30 years. During recent budget presentations in Lancaster and Amherst, the town supervisors there have been able to tout tax decreases in their communities due to the increases in their tax base created by new residential and commercial development. The Spaulding Commerce Park is giving us this opportunity on the commercial side. This development near Veterans Park will now give us this opportunity on the residential side.

After many years of trying, we have an established developer, ready to begin an exciting new development for our city. We have negotiated what we feel is the best agreement for the financial well being of our city. To start all over again, down a path where city taxpayers pay the infrastructure cost and assume all the risk, makes no sense and is unacceptable.

Ron Pilozzi is the mayor of the City of Tonawanda.