City gives tax credits for hotel building

From Crains:

Little recent attention has been paid to the tax breaks, which have helped developers build a wave of hotels in onetime industrial neighborhoods—a pattern that Mayor Bill de Blasio has decried for pushing out manufacturers.

The city’s Industrial and Commercial Abatement Program dates back to the 1970s. ICAP was intended to spur landlords to invest in their real estate when few were doing so, and to attract and strengthen manufacturers, like those that once thrived in Williamsburg.

The program nearly zeros out property taxes for as long as 15 years and discounts them for up to a decade beyond that. The William Vale, for instance, used ICAP to wipe out about $1.7 million of its roughly $1.8 million recent annual tax bill, according to the city’s Independent Budget Office. The Williamsburg Hotel sought the benefit but missed a deadline to apply; sources said the developer is still seeking to qualify for the program.

Ironically, the incentive has helped to elbow out some of the businesses it was created to preserve.

“It appears to have fostered hotel growth in areas like Gowanus, Sunset Park, Williamsburg and other neighborhoods that were once primarily industrial,” said Doug Turetsky, chief of staff at the IBO, which has studied ICAP and its predecessor, the Industrial Commercial Exemption Program.

Hotel development has spread rapidly into those areas as tourism in the city has set record highs year after year.

Because hotels such as the Wythe tend to be more lucrative than industrial and other commercial uses in many areas of the Bronx, Brooklyn and Queens, hotel developers can afford to pay more for land. Also, unlike retail and residential uses, hotels generally have not needed special permission from the city to be in areas zoned for manufacturing. The result has been that hotels have been supplanting manufacturing and industrial businesses that once populated Williamsburg, Long Island City and similar areas.

Real estate investment firm Madison Realty Capital has estimated that 10 million square feet of industrial space has been converted to hotels or other uses in the city during the past decade. The tax break has fueled that.

MTA seriously needs to upgrade signals

From the Daily News:

The MTA has got a problem with delays when it comes to repairing critical signal equipment, according to an analysis the city’s Independent Budget Office released Tuesday.

Projects that keep signals in good working order can be months, even years, behind schedule, according to the budget office’s analysis of three Metropolitan Transportation Authority capital plans, from 2004 to 2019.

From 2005 to 2014, 19 out of 33 signal projects were completed late or will wrap up behind schedule. Meanwhile, nearly a third of projects begun over that time are still underway.

Signal malfunctions can be devastating, creating a ripple effect from line to line that can last for hours. The problems the malfunctions cause are complicated by the age of the equipment. Much of the signal work involves painstakingly repairing ancient parts that can date to the 1930s. An upgrade to a signal and track system on the Queens Blvd. lines at 71st. Ave. and Union Turnpike that should have been done in April was pushed back a whopping 14 months.

And this is the problem with our electeds. They like making headlines with splashy proposals for new transit systems, like BQX and light rail while the current system is allowed to go to pot.

421a didn't do what it was supposed to do

From the Daily News:

The city lost out on as much as $2.8 billion in wasted tax breaks for condos under a program meant to spur housing development, according to a new study by a budget watchdog group.

The Independent Budget Office estimates that $2.5 to $2.8 billion of the property tax breaks given out over a decade as part of the 421-a program were wasted because they benefited homeowners rather than advancing the program’s stated goal of encouraging housing development.

Kew Gardens has worst streets in the city

From the Daily News:

If you want to avoid potholes, choppy roads and flat tires, you may want to steer clear of Kew Gardens, Queens.

The neighborhood’s streets are in the worst shape of all the roads in the five boroughs, according to a report the city Independent Budget Office released Tuesday.

The report tracked city Department of Transportation street-condition assessments from 2014 and 2015 across the city and found that only 28.2% of streets in Kew Gardens are listed in “good” condition.

The neighborhood had 66.4% of its roads listed in “fair” condition and 5.4% in “poor” condition.

It landed at the bottom — No. 188 — in the citywide rankings of neighborhoods.

$1B spent on NYC homeless

From the Daily News:

Spending on the city homeless shelters rose a whopping 62% in the past eight years, with the total expected to reach close to $1 billion this year, according to a new report.

The staggering number includes all money spent on the city’s 271 shelters from city, state and federal funds, according to the Independent Budget Office report released Thursday.

In 2007, the three government entities spent a total of $604 million on Big Apple shelters.

That will rise to an estimated $976 million this year.

Hudson Yards not a great bargain for taxpayers

From DNA Info:

The creation of Hudson Yards will cost the city another $368 million through 2019, bringing the city’s total payout to more than $947 million, according to projections from the Independent Budget Office.

The city has been footing the bill for Hudson Yards preparations — including most of the cost of the 7 train subway expansion — by floating $3 billion in bonds through the Hudson Yards Infrastructure Corporation (HYIC).

The cost of the project was supposed to be offset by revenue from commercial and residential taxpayers moving into the area. But the IBO found that taxes have yet to cover the cost of the project, leaving the city on the hook for hundreds of millions of dollars more than expected, as the Daily News reported previously.

Tax benefits are lucrative for builders of luxury high rises

From Capital New York:

One57, the luxury condominium building on West 57th Street in Manhattan, was thrust into the center of a debate this year about the future of a controversial tax break known as 421-a.

Affordable housing activists railed against a maneuver by lawmakers in Albany in 2013 that allowed developer Extell and four other building owners to receive the lucrative tax break for high-end condos without requiring affordable housing, even though they did not qualify for it.

Yet almost two-thirds of Extell's tax relief last year resulted from a state-controlled property tax system that benefits condos and co-ops, and only one-third came from 421-a, according to a study released Tuesday by the New York City Independent Budget Office.

The I.B.O. found that in the 2014 tax year, Extell received $25.4 million in tax breaks—$16 million from the assessment system and $9.4 million from 421-a, which, come January, will require affordable housing of its recipients with few exceptions.

The eight-page report demonstrates that the abatement pales in comparison to the property tax system in how it affords relief to expensive condos.

Hudson Yards is more than the city bargained for

Dan Doctoroff

From the Daily News:

Wherever you wander along midtown Manhattan’s far West Side, you’ll come across the dusty din of jackhammers, cranes and construction crews lifting new hotels, condos, and office buildings into the sky.

Welcome to Hudson Yards, the 26 acres around the MTA’s West Side railyards that New York’s real estate moguls keep touting as this city’s next great commercial district.

But the slick pitchmen for Hudson Yards rarely mention the scandalous subsidies taxpayers have shelled out the past 10 years for this megaproject.

The city will have paid nearly $650 million in subsidies into Hudson Yards by the end of this fiscal year, according to a review by the city’s Independent Budget Office — and more will be needed in the future.

That’s not exactly how the project was sold when the City Council approved it in January 2005.

It never is. It's always lies.

Shelter placements cause neighborhood wars

From WPIX:

In the quiet neighborhood of Glendale, on Cooper Avenue, sits a dormant, run-down factory building hidden behind a chain-link fence. Neighbors see the building and surrounding facilities as a solution to overflowing classrooms in their neighborhood and others in the borough.

“It’s the most overcrowded school district in the City of New York. And this would be a complex for all district 24,” said former school board member Kathy Masi. “Kids from Ridgewood, kids from Corona, kids from Middle Village, Maspeth, everyone would be able to come here.”

But instead of a school, the building is slated to become a shelter. Once a rumor, the $27 million plan continues to inch closer to reality. And in the meantime, other shelters have popped up around the borough, seemingly overnight. That was almost exactly the case at the site of the former Pan Am hotel where families moved in under the cover of darkness back in June.

“This is going on all over Queens,” said Dawn Scala with the Glendale Civic Association. “There’s a total lack of transparency. They’re putting shelters in with no community notice or involvement. And every time we ask questions we get answers that are vague and inconsistent with prior information they’ve given us.”

The Pan Am shelter has been so controversial that both the shelter residents and neighbors protested outside shortly after it opened. Those staying in the shelter say they’re cramped into small rooms, have no way to control the temperature, and are told when they can eat.

“Being here is like being in Rikers Island, being in prison,” said shelter resident Weny Jamison.

And now for the good stuff. The IBO released a report that revealed the following (see pages 12-13):

Over the 2002 through 2012 study period, addresses of families prior to their shelter entrance were concentrated in the Bronx, central Brooklyn and upper Manhattan. The largest share of preshelter addresses were in the Bronx (39 percent), followed by Brooklyn (34 percent). About 13 percent of families listed prior addresses in Manhattan, with roughly 12 percent of entries coming from housing located in Queens and 2 percent from Staten Island. These distributions show an over-representation of shelter entries from the Bronx and, to a lesser extent, from Brooklyn. According to the 2010 census, 31 percent of New York City households lived in Brooklyn, followed by 27 percent in Queens, 19 percent in Manhattan, 17 percent in the Bronx, and 6 percent in Staten Island.

Despite more homeless families coming from the Bronx than any other borough, the top three neighborhoods where families lived prior to shelter were all located in Brooklyn.

Here's a map of where the homeless are coming from.

SO IF QUEENS DOESN'T SEND ALL THAT MANY PEOPLE TO SHELTERS, THEN WHY ARE MORE SHELTERS BEING DUMPED IN QUEENS, IN NEIGHBORHOODS THAT AREN'T SENDING PEOPLE TO SHELTERS?

Hello, Queens elected officials?

DOB fines going unpaid

From the Epoch Times:

Every time someone is ticketed for littering, not shoveling their sidewalks, or any other “quality of life” violation, the city’s Environmental Control Board (ECB) is charged with holding hearings and issuing judgments and fines.

In fiscal year 2014, the 13 agencies issuing these types of tickets sent ECB 567,000 violations.

To date, New York City has $1.48 billion of uncollected debt stemming from these violations. Half of it comes from violations over two years old. About $350 million of that is interest on the uncollected fines.

Council members have been pushing for more efficiency in collecting this debt for years. In 2011 the Independent Budget Office (IBO) had released a report with these numbers at then-council member Gale Brewer’s request.

On Oct. 14, the Finance Committee discussed legislation to require the ECB to start submitting annual reports to the council so there is more transparency in the process.

Elizabeth Brown from IBO testified at the hearing in favor of annual reports, and suggested they be made available online as well.

“In the past IBO has been able to provide snapshots of the city’s unpaid fines. However, regular reporting would add another layer of transparency,” Brown’s testimony states.

In a 2007–2009 report, IBO found that the biggest share of unpaid fines came from violations issued by the Department of Buildings ($200 million).

City on the hook for $236M for Trump's golf course

From the Daily News:

The price keeps growing for Trump Golf Links at Ferry Point, the course the Parks Department has spent the past 14 years building at the foot of the Whitestone Bridge in the Bronx.

The city now expects to spend an astonishing $236 million to complete the Ferry Point project by next spring over a former landfill, according to new figures compiled for the Daily News by the Independent Budget Office.

That includes $181.4 million for the 190-acre golf course itself, plus another $54.6 million for 30 acres of adjacent new parkland and a waterfront esplanade, the IBO says. The total is more than 10 times the original cost when construction started in August 2000.

Even though the course will not open until spring 2015, former Mayor Michael Bloomberg held a symbolic ribbon cutting there in October with golf legend Jack Nicklaus, who designed the course, and with Donald Trump, the developer City Hall selected two years ago to operate it.

What Bloomberg did not mention then is that construction costs have continued to climb during the past two years — by another $32 million for the course and another $13 million for the adjacent parks, according to the IBO.

Trump could end up paying less in annual fees to the city than some hot dog vendors do for their stands.

Ferry Point, in other words, will be one of the most expensive golf courses ever built, not too far behind the Trump National Golf Club in Los Angeles ($260 million) or the new local favorite for Wall Street executives, the Liberty National Golf Club in Jersey City ($250 million). It will even surpass the luxurious Bayonne Golf Club ($160 million) in New Jersey.

The others are exclusive private clubs and were built with private money. Ferry Point, on the other hand, is being financed by the taxpayers. It is still labeled a public course despite greens fees that are expected to cost more than $125.

Everyone's got their hands out

From the NY Times:

A rosier-than-expected financial picture has left Mayor Bill de Blasio with an unanticipated predicament as he releases his first preliminary New York budget on Wednesday: how to hide a surplus that could easily exceed $3 billion.

The problem is not that the city does not have ways to spend it. Its 152 labor unions are demanding some $7 billion in back pay. Members of the City Council want to increase spending on social programs and repairs to public housing. And the mayor has his own ideas.

But if Mr. de Blasio acknowledges that there is extra money in the next budget, fiscal experts warn, it will become open season for different groups to make demands for it. “City Council members, member items — he doesn’t want a lot of time to go by with people coming up with their own priorities,” said Carol Kellermann, the president of the Citizens Budget Commission, a business-backed watchdog group.

Hence, the ritual game of hide and seek.

On the eve of the budget presentation, Mr. de Blasio’s aides played down the likelihood of a big surplus, saying that such talk was exaggerated and that there were many potential risks to the budget, like the unsettled labor contracts and reduced support for the city from the federal and state governments.

In his State of the City address on Monday, the mayor warned that the city was “in the midst of a budgetary challenge that is unprecedented.”

Still, the numbers are the numbers: The Independent Budget Office projected in December that the city would have a surplus of $1.9 billion in the fiscal year that starts July 1.

On top of that, the Bloomberg administration accounted in its financial plan for 1.25-percent-per-year raises for municipal unions in this fiscal year and the next one — putting aside some $730 million for that purpose. If that money is not spent on raises, it will be added to the surplus.

Moreover, each year, sometimes as early as February, the city’s administration adjusts its financial plan to reflect both anticipated income that did not materialize and planned expenditures that did not end up being spent. Typically, the result has been a net gain of several hundred million dollars.

City workers are raking it in

From the NY Post:

Municipal workers made nearly twice as much as their counterparts in the private sector in former Mayor Michael Bloom­berg’s last years in office — earning a median salary of $65,300 in fiscal year 2012, a new analysis found.

By comparison, median income for a private sector worker was roughly $34,100 that year, according to the city’s Independent Budget Office.

The analysis was based on a little-noticed city report that had been quietly released on Bloomberg’s last day at City Hall.

The IBO found that while median city worker salaries stayed relatively flat over the past 10 years when adjusted for inflation, they climbed by about $6,000 between fiscal years 2005 and 2012.

“That small gain might look pretty good to a large share of the rest of the city,” IBO Chief of Staff Doug Turetsky wrote in a blog post.

That’s because private- sector salaries dropped by $3,000 on average over the same time period.

Despite the relatively steady state of municipal salaries, city payroll costs ballooned from $23.5 billion in fiscal 2003 to $37.2 billion in fiscal 2012, largely due to soaring pension and health-care costs.

DeBlasio plans to overdevelop the hell out of everywhere

From Crain's:

Call it Exhibit A. On part of an irregularly shaped block in the Highbridge section of the Bronx, a chain-link fence wraps around a three-acre property that has sat vacant for decades. Trees and weeds have run riot, in the process encroaching upon the sidewalks along University Avenue, even as the property's assessed value in the past decade has quietly soared from $716,000 to $9 million, according to city records.

And yet, because most of the property is zoned for residential use, and is assessed in the same low-density class as single-family homes, the Olnick Organization, which owns the land, pays less than $8,000 annually in property taxes on that residential portion.

Cases like that spurred Public Advocate Bill de Blasio in April to push for tax hikes on vacant land to force owners either to put it to use and build housing or to sell it to those who will. As mayor-elect, Mr. de Blasio is pledging to carry out his idea, which today would affect more than 10,500 lots in the five boroughs, with the largest concentration on Staten Island. The plan, after a five-year phase-in period, would hike yearly rates by an average of $15,300, according to estimates by the Independent Budget Office.

As for the long-vacant Highbridge lot, the city property taxes on the large residential portion would balloon to about $180,000.

By increasing the cost of inactivity to prohibitive levels, the hope is that more land can be put back into use and much-needed housing can be built. Many observers think it can work if the costs of holding land idle are driven high enough.

The measure could also produce another undesirable effect.

Mr. de Blasio estimated his plan would eventually generate $162 million annually.

"Maybe a guy says, 'I'm not going to pay these taxes, I'm going to build a taxpayer,'" said Eric Anton, a managing partner at investment bank Brookfield Financial, referring to a small development on a piece of property that generates just enough money to cover payments to the government.

Mr. de Blasio's plan targets not active developers, but what the mayor-elect brands as "speculators"—owners who sit on buildable land waiting for prices to rise. In the past, Mr. de Blasio has singled out booming neighborhoods like Brooklyn's Williamsburg as prime locations for people warehousing real estate—all while the city suffers a critical housing shortage.

Enter Exhibit B. In the middle of Williamsburg, where land prices have doubled and redoubled in the past 20 years, Frank Fristachi and Suzannah Matalon have clung to an 8,900-square-foot parcel of fenced-off land at the corner of South First Street and Driggs Avenue. The owners insist they do not fit into Mr. de Blasio's mold.

"It's not vacant—it contains a beautiful garden, trees, bushes and plants, and was rescued from being a dump owned by the city," Mr. Fristachi said. "I think I should get a tax rebate for supplying this neighborhood with clean air and light."

Mr. Fristachi also disputes the suggestion that he's a speculator, pointing out that if he were one, he'd have already unloaded the parcel and banked his fat profits. Nonetheless, he conceded that Mr. de Blasio's proposal has made him unsure about what he should do if his property taxes rise from about $6,800 annually to an estimated $17,000 under the mayor-elect's plan.

This will build nothing but luxury condos and the same crap we've been seeing all over Queens for decades, but at a faster pace. Notice that there's no mention of infrastructure improvements.

City properties taxed unfairly

From the Daily News:

On Autumn Ave. in working class Cypress Hills sits a modest $462,000 brick two-family home with a postage-stamp sized front yard and a warning sign, “These Premises Protected by Video Surveillance.”

The owner pays $6,919 in property taxes.

Six miles away on Fourth St. on one of upscale Park Slope’s most exclusive blocks sits an impressive $2.5 million four-story brownstone with a lush backyard garden, four bedrooms and three baths.

The owner of that lovely home pays $6,209 in property taxes — $710 less than his fellow Brooklynite, whose plot sits in one of the city’s poorest zip codes.

When it comes to property taxes, New York City homeowners live in an upside-down “Alice In Wonderland” world — a system that often favors the rich and punishes lower- and middle-income property owners, a Daily News investigation has found.

Because of the bizarre way the city taxes residential property, owners in upscale gentrified New York neighborhoods like Park Slope, Brooklyn Heights and the upper East Side often wind up paying less than owners in hardscrabble zip codes like East New York and Canarsie in Brooklyn, South Jamaica in Queens and Mott Haven in the Bronx.

Property taxes collected under this unequal system are the city’s biggest single source of money, accounting for 40% of all revenue and totaling $18.7 billion this year.

By law, the city is supposed to treat everyone the same, assessing taxes based on what the Finance Department determines as the “estimated market value" of a property and then applying a uniform 6% assessment ratio to that number.

Records show it doesn’t happen that way.

At the request of The News, the city’s Independent Budget Office performed an analysis of tens of thousands of property tax records citywide and found “wide disparities" in how the Finance Department nails down its version of “market value.”

Pols say no to more MSG tax breaks

From DNA Info:

City and state politicians rallied on the steps of City Hall Tuesday morning to drum up support for a measure that would eliminate a decades-old, multimillion-dollar tax break for The Madison Square Garden Company, which owns "The World's Most Famous Arena," as well as the Knicks and Rangers.

The company, led by executive chairman James Dolan, has been given as much as $16 million a year in tax breaks since 1982, according to the city's Independent Budget Office — or nearly $350 million over the past 31 years, politicians who oppose the tax break said.

Assemblymen David Weprin and Brian Kavanagh and State Senator James Sanders have said that the money should instead go toward cash-strapped city services. In April, they introduced bills in both houses of the State Legislature that would erase the tax exemption.

On Tuesday, they announced that the bills have gained more than 40 co-sponsors, as well as support from City Council members across New York, including incoming Councilman Corey Johnson, whose district includes Madison Square Garden.

There is "no possible justification at this point, with needed revenue for New York," Weprin said at Tuesday's press conference, speaking in front of about 20 labor union members. "We've lost police, lost firefighters. There's talk of closing firehouses, senior centers."

Tennis fees cause drop in permits

From A Walk in the Park:

As expected the Bloomberg Administration's dramatic fee increases implemented last year saw a precipitous drop in tennis permit purchases and memberships to recreation centers while projected revenue increases fell far below expectations.

Tennis permits declined 43 percent, single-play permits fell 46 percent and revenue fell $1.3 million short of the projected increase. The number of recreation center memberships sold in 2012 declined by 52 percent with the doubling of membership fees for adults and seniors while revenue came in about $4.0 million below the Bloomberg Administration’s expectations.

"The failure to achieve the expected revenue gains was the result of a greater-than-projected fall-off in the number of permits sold for tennis and memberships for recreation centers following the price rise," according to the City Independent Budget Office.

City not making as much in fines

From CBS New York:

There are dozens of ways New Yorkers can get fined by the city — failing to clean up after your dog, not bundling up your magazines on recycling day and, of course, parking your car in the wrong spot.

Sometimes, irate residents seem convinced the city is trying to balance its budget by catching them committing minor infractions. But according to a blog post by the city’s Independent Budget Office on Tuesday, the Bloomberg Administration is actually hauling in less money from fines than it did a few years ago.

The city estimates that fine revenue will total $812.5 million this fiscal year, which is up about $13 million from last year. However, the 2013 fiscal year, which ended June 30, was an an anomaly because in the aftermath of Hurricane Sandy, the city suspended some parking rules and rededicated parking enforcement officers to direct traffic instead.

This year’s estimated total of fine revenue is about $42.5 million less than what the city collected in 2010.

Believe it or not, however, not all fines are money-makers for the city. In a 2003 report, the IBO found that only parking tickets generated more money than it cost to enforce regulations and collect fines.

That's because the ECB dismisses a lot of fines, especially for developers. A building inspector could probably make enough money for the city in fines in one day to pay his yearly salary. But when $10,000 fines are regularly dismissed by ECB, that becomes unachievable. But it's funny how residents can seem to never get a parking ticket dismissed.

City will probably never see money from parking garage

From Crains:

The embattled Bronx Parking Development Co., which has defaulted on its bonds and owes millions of dollars to the city, is trying to raise money by selling development rights to two street-level parking lots it owns near Yankee Stadium-area, but the outcome is unclear.

In April, the BPDC issued a request for proposals to develop two lots on city-owned land under a sublease from the parking company, which holds the lease. The request for proposals, which was posted on the website of the city's Economic Development Corp., specified that the development be built to sustainable standards and include a rent schedule for the entire term for the sublease, which would run through 2106.

Responses were due back in June. Edward Moran, who was brought in as BPDC's chief restructuring officer in March after the company, which owns a total of five garages and nine street-level lots, defaulted on its bonds, could not be reached for comment on Friday.

The BPDC has been losing money since last year, driven by lower-than-expected demand for parking at its 9,294 parking spaces, which remain half-empty on some game days. The company missed its last payment to bondholders, due April 1, after dipping into its reserve fund to make the previous payment.

The city is not on the hook for the bonds, but as of last October, the BPDC owed $25.5 million to the city in rent and payments in lieu of taxes. The Mayor's Office of Management and Budget did not respond to questions of how much is currently owed the city.

But unless the BPDC can dramatically turn around its fortunes the city is unlikely to see the monies it is owed anytime soon, said Doug Turetsky, chief of staff at the Independent Budget Office.

Turning parks into huge billboards didn't pay off

From the Daily News:

A Bloomberg administration plan to sell naming rights on dog runs, basketball courts and other spots in municipal parks has been a bust, leaving the city with a $13 million hole in its budget, a budget watchdog said Tuesday.

No one applied to the revenue-raising program, which the Parks Department launched last year in partnership with NYC and Company and IMG, a sports marketing company, the Independent Budget Office said.

But while the city made no money, IMG did.

The marketing firm was paid $135,000 to trumpet the city’s parks to potential sponsors, the budget office said.

All of that money came from private donations, provided through NYC & Company, according to a spokeswoman.

The city will continue trying for sponsors in the next budget year, when it is counting on the program raising $7 million, according to the Independent Budget Office.