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More information needed on proposed CDBG grant

Sunday, February 16, 2014
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The Schenectady City Council should use its review of this year’s CDBG (Community Development Block Grant) requests to take a more careful look at the $3 million the city wants to borrow from its future CDBG awards for a “neighborhood stabilization program.”

In particular, the council needs more information than it now has about the $500,000 included in this loan application for a private developer (Maxon Alco Holdings, a Galesi company) to demolish the old county Department of Social Services building on Nott Street across from Union College.

The loan application states Galesi is to build 14 apartments on the Nott Street site, with eight apartments reserved, “according to tenant earning limits established by HUD regulations,” whatever that may mean.

My efforts to get more information about this proposed $500,000 grant by using the state Freedom of Information Law (FOIL) have been stymied. With some difficulty, I obtained the loan application itself. However, my request for background information, including records of meetings and the written preliminary understanding between the city and Galesi, have been denied by Mayor Gary McCarthy, on the basis that there are no such documents.

Anything in writing?

It is frankly difficult to believe that the city is proposing to give $500,000 to this private developer without having reached any written understandings, as the mayor claims.

My hope was that these FOIL-ed backup materials would spell out how many years Galesi has committed to making the eight low-income apartments available, and how Galesi’s compliance with this pledge will be monitored with reports back to the City Council and the public.

Are there preliminary written understandings between the city and the developer regarding penalties for non-compliance or underperformance? Is there a written understanding of what will happen should Maxon Alco Holdings, LLC sell the developed property? Would a new owner also be required to honor the eight-apartment pledge?

It is also unclear why this $500,000 grant is needed at all. The asbestos in the Nott Street building likely makes the site eligible for tax credits through the state’s Brownfield Restoration Program, which Galesi has used to its great advantage in building the Golub headquarters on Nott Street.

The 487 Nott St. property is now tax-exempt, since it is owned by the county Industrial Development Agency and leased by Galesi’s Maxon Alco Holdings. Since Galesi has aggressively and successfully pursued PILOTs (Payments in Lieu of Taxes) on other properties they own, it seems reasonable that they would seek a PILOT on this property, too, when they “buy it” from the IDA. Simply, the City Council and city residents should have more information from the mayor on this than has been provided so far.

Conflict of interest?

A retelling of how the county came to sell 487 Nott St. to the county IDA in itself is of concern.

In a January 2008 memo, Ray Gillen (chairman of Metroplex and county commissioner of planning) advised the county manager that the IDA wished to purchase the Nott Street property from the county for $200,000. This price was based on a private appraisal, paid for by the IDA, and is well below the property’s assessed value.

Then as now, the county IDA had a seven-member board of directors. Four members of the board were county legislators: Gary Hughes, Judith Dagostino, James Buhrmaster and Martin Finn. As IDA board members they all voted in favor of the IDA purchasing this property from the county. A month later (voting as county legislators), they all voted in favor of the county selling this Nott Street property to the IDA on which they served.

To the untrained eye, voting as both the buyer of this property as an IDA board member, and as the seller as a county legislator, appears at the very least inappropriate, if not a conflict of interest. In addition, the $200,000 that was paid to the county for 487 Nott was not paid by the IDA but rather by a Galesi corporation. It is reasonable to assume the Galesi interests knew they would own 487 Nott St. and the adjacent parking lot at some point in the future.

It may be beyond the scope of the City Council’s responsibility to question what process was followed to sell this public property to a Galesi corporation without the Legislature or the public being told in advance who the final buyer was or how that buyer was selected.

But it is indeed the responsibility of the council to know more than it does now about the $500,000 grant the mayor proposes giving Galesi’s Maxon Alco Holdings, and to see written documentation of any agreements in principal or any “memorandum of understanding” that have been developed by the mayor with Galesi.

Elmer Bertsch lives in Niskayuna. The Gazette encourages readers to submit columns on local issues for the Sunday Opinion section.

 
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