It doesn't always take massive tax subsidies to get COR to build in a community

The way Damian Ulatowski sees it a retail project should be able to stand on its own without taxpayers helping foot the bill to open a new store.

"I'm just kind of old-fashioned that way," said the Town of Clay supervisor. "If you believe in your project, you should be able to reap the rewards if it succeeds. If it fails, you should suffer the consequences as well. It shouldn't be up to the taxpayers to shoulder the burden. I just guess that's the way I was raised.

"We're rather conservative here," he added.

Ulatowski has been on the town board for 13 years and he's seen a lot of retail development within the town's borders during that time.

None of it, he said, has been built with a single dime in tax breaks.

In Clay, you will find dozens of Big Box retailers -- Walmart, Lowe's, Dick's Sporting Goods, Target, Bed, Bath & Beyond, Home Depot, Kohl's, Petsmart, Sam's Club, Barnes & Noble and even Wegmans.

"These businesses can survive without tax breaks but we've trained them that they can't," Uratowski said. "Clay is one of the most commercially built locations in all of Onondaga County. We have several business complexes. All of them are thriving. No stores are closing. None of them got any kind of subsidy."

One of the largest retail developers in Clay is COR Development, the Fayetteville-based company that is also responsible for Batavia Towne Center.

COR's two centers in Clay contain more than 700,000 square feet, with the first and largest development starting the permiting process in 2005, about two years before Batavia Towne Center.

COR, according to Genesee County Economic Development Center records, was promised $4.6 million in tax abatements to complete Batavia Towne Center, including a 10-year PILOT that is not yet expired (not all of the tax savings have been realized yet). 

Now COR is seeking nearly $1 million in additional tax breaks, ostensibly to help attract Dick's Sporting Goods and possibly a T.J. Maxx to Batavia, as well as at least one other retailer.

A public hearing will be required before the GCEDC board can vote on the incentive package, because under recently reenacted state law, retail projects cannot receive tax breaks unless there is a finding that the project is a tourist destination or fills retail needs not being met locally.

A date for the public hearing has not yet been set.

While COR apparently doesn't always need tax incentives to build, lease and sell its construction projects, the company has accepted at least $9 million in such incentives from three IDAs in the state, according to records obtained by The Batavian from the Authorities Budget Office.

The ABO did a search for "COR" (to capture possible subsidiary names that also use the COR name) as well as COR's business address to check for IDA handouts.

It's possible not all of COR's IDA-approved subsidies turned up in the search.

It apparently also left out projects where COR sold off assets. With Batavia Towne Center, for example, COR sold the Target property to the Target company, and those subsidies are not reflected in the ABO spreadsheet.

Besides Batavia Towne Center, COR has received IDA assistance for:

• A $42 million apartment complex in Watertown. There was no PILOT on the project, but COR did receive $2.2 million exemption on state and local sales tax for construction materials. The project was approved in 2012.
• On a $6.7 million retail project on Route 5 in Fayetteville, COR was approved for tax incentives in 2008, 2009, 2010, 2011 and 2012 totalling $3.5 million.
• Also in Fayetteville, in 2009, COR received $1.2 million in breaks on a 69,000-square-foot manufacturing and research facility for Sensis Corp.
• COR also built in Fayetteville a 24,467-square-foot office complex for Northwestern Mutual Life Insurance Co. at a cost of $3.7 millon and received $406,000.

Besides Clay, other COR retail projects that don't show up in the ABO report are center's in Canandaigua, Latham, New Hartford, Erwin and Webster (COR's creative naming for all of these projects tend to be some variation of "Towne Center").

It's possible some of those projects received local tax assistance -- assistance that didn't go through an IDA (Industrial Development Agency, such as GCEDC) and therefore doesn't show up in the ABO report.

That's case in Webster where Town Supervisor Ron Nesbitt said he uses Section 485-b of the state's real estate code to grant tax breaks.

While the code allows up to 50 percent of a property's assessed value to be forgiven each year (decreasing over the years in increments of 5 percent), Nesbitt said he only grants relief on 20 percent of assessed value, which decreases in increments of 2 percent per year.

That's 20 percent off the entire assessed value, not just on the increase in assessed value, as in the standard PILOT granted by GCEDC. A project that begins with an assessed value of $200,000 and then jumps in value by $1 million after development will be taxed on 80 percent of the entire $1.2 million of assessed value.

Because it's not an IDA-sponsored tax break, the agreement only covers Webster's property taxes, not Monroe County or school district taxes.

Nesbitt made it clear, he's no fan of the County of Monroe Industrial Development Agency (COMIDA). If a developer receives help from COMIDA, the company might find tough sledding in Webster.

"I have control over that building permit," Nesbitt said. "I'm not saying I'm playing hard ball, but I have control over the building permit and just how fast it goes through. You've got to remember, somebody is making a lot of money off these tax breaks."

Businesses should pay their fair share of taxes, Nesbitt said. They consume the local services, they should pay. He thinks IDA tax breaks give away too much.

"The pot is getting smaller and smaller," he said.

The Webster tax rate is $4.33 per thousand.

"The town tax isn't killing me," he said. "It's the school tax that's eating me up."

A developer in Webster would need to strike a separate deal with the school district since there's no IDA involved. The school tax is $22.90 per thousand.

Nesbitt said he even carries out his everybody-pays-a-fair-share philosophy to nonprofit agencies.

If a nonprofit wants to build in Webster, they need to agree to pay town taxes.

"I sit down with the president or CEO and I tell them, if you're not going to use any police service, any ambulance service or any other service, you don't have to pay a tax," Nesbitt said. "If you're going to use services, you pay the town tax."

Nesbitt said even with his hard line on tax breaks, companies still build in Webster.

As for Batavia Towne Center being a tourist destination, the City of Batavia has recently received a new study by W-ZHA, LLC, that indicates the center does fulfill one of the legal definitions of a "tourist destination." It is bringing in visitors from outside the city and town, but part of the justification for a tourist destination is spin-off spending.

That doesn't seem to be happening, according to the report. Shoppers are not stopping for meals at Batavia's restaurants.

Town and city residents alone should generate about $192 million in retail spending, but sales annually exceed $231 million, a gain of $39 million above what the city and town should generate.

"Both the town and the city are shopping destinations," the report states.

 How much of that $39 million comes from outside the county is unclear.

With the additional visitors for retail, the county's eating and drinking sales potential is $89 million. Local restaurants and bars are getting only about $59 million of that market, according to the report.

Last year, a study released by the consultants for czb found that the city was losing about $12 million in annual restaurant spending to surrounding counties.

The full W-ZHA report will be released at a later date.