The Long Arm, or Arm-Twisting, of Albany

Cuomo Rep Calls KSD Board members to push tax break, threatens $3.8M grant will be withdrawn

Ed.Note: Updated August 8, 2021 to include exchanges between School Board Trustee James Shaughnessy and Cuomo appointee Tom Scaglione.

April 12, 2021

Kingston, NY – Late last summer, the Vindicator debunked threats by developer Joseph Bonura Jr. that a $10 million state grant would “go away” if he didn’t get a $30 million tax break for his proposed luxury Kingstonian housing project.

Apparently, Gov. Cuomo never saw the memo, because he sent one of his lieutenants to call school board members with veiled threats to withhold $3.8 million of the grant if they voted against the PILOT tax break.

Kingston School Board Finance Chair James Michael said he received a phone call in November from Thomas Scaglione, the NYS Department of Labor representative for the Hudson Valley, to relay that the $3.8 million portion of the DRI allocated for the Kingstonian project would be withdrawn if the school board voted down the tax break. Scaglione said he was from the Governor’s office, according to Michael.

At the time, a Yes vote from the KIngston School Board was required by the Ulster County Industrial Development Agency before it could award the $30 million PILOT. On Dec. 2, 2020, the School Board voted against the tax break. On Jan. 20, 2021, the IDA changed its rules to permit the tax break even though the School Board voted No.

Michael said that before Scaglione’s call, he had received assurance from James Kostenblatt, Director of the Mid-Hudson Regional Economic Development Council, that the $3.8 million would be re-allocated to a different project.

Michael said he asked Scaglione, “ ‘Who’s lying, is it you or Mr. Kostenblatt?’ And then well that’s when he got a little offended about it and he said to me, ‘I’m not going to get confrontational with you.’ So I said ‘Fine, please, whatever you say to me now put it in writing and send it to the district.’ ”

Michael said Scaglione neither emailed nor called him again.

School Board trustee Jim Shaughnessy reported a similar exchange with Scaglione, although the two, who live near each other in Kingston, seem to be on better terms. Shaughnessy said Scaglione told him in November that “Albany was watching” the brouhaha because of state grant money allocated to the Kingstonian and that despite the written regulations as well as confirmation from the Department of State and Kostenblatt, no other projects in Kingston would qualify for the re-allocation. Despite the veiled threat, the school board voted down the tax break. After the school board vote, Shaughnessy said he asked Scaglione, “What do you think now?” Scaglione replied that Albany didn’t pay attention to such local elections.

Scaglione was not the only person to repeat misinformation about the DRI grant. According to Michael, Kingston Mayor Steve Noble also said the $3.8 million would be withdrawn and made those comments at a meeting where he was present, along with KSD Superintendent Paul Padalino and Asst. Supt. for Business Allen Olsen.

On Friday, the Vindicator sent Scaglione a Facebook message requesting comment. By Sunday, that message was still showing as unread, so the Vindicator left a note in Scaglione’s physical mailbox. An email requesting comment was sent once a valid address was identified. As of Monday at noon, Scaglione had not replied.

According to his LinkedIn page, Scaglione was promoted in April 2021 to Hudson Valley Regional Director, Empire State Development.

An earlier Vindicator article quoted two REDC directors as well as a statement from the NYS Department of State explaining that the grant would be re-allocated.

In response to Bonura’s statements that the DRI grant would be withdrawn if the Kingstonian tax break failed to pass, in September 2020 the Vindicator contacted directors of two different Regional Economic Development Councils as well as two Department of State officials. All four, who asked to remain anonymous, confirmed that if a project is cancelled, that money can be re-allocated. “Why would you listen to a developer,” laughed one REDC director.

The Department of State spokesperson sent a statement via email: “The DRI Round IV Guidebook and Frequently Asked Questions describe the process including “What happens to DRI funds if a project does not move forward?” As with most grant programs, there may be unspent funds that need to be reallocated if a grantee declines an award, is unable to undertake a project, or completes the project under budget. Funds that are unspent by a grantee will be repurposed to one or more projects included in the DRI Strategic Investment Plan for the community for which the funds were intended consistent with program rules.”

Watch this clip of the July 8, 2020 IDA meeting starting at 1:46 as developer Brad Jordan prompts his business partner Joe Bonura Jr. to tout Governor Cuomo’s support. Following is a list of questionable talking points such as:

Statement: The parking is at no cost to the city because of the PILOT.
Fact Check: NYS Comptroller Thomas DiNapoli has often said tax breaks burden residents either through higher tax payments or reduced services.

Statement: The DRI grant goes away if the PILOT doesn’t pass.
Fact Check: No, it doesn’t. It’s supposed to be reallocated.

Statement: The governor supports it.
Fact Check: Believed to be true.

Statement: The governor supports it because there’s private investment.
Fact Check: Private investment is minor. Construction will be funded entirely, or almost entirely, by tax breaks and cash grants. See p. 20 of the application where the developers acknowledge that 60.15% of the roughly $55 million cost is funded by local property tax breaks and NYS cash grants. The giveaway is rounded out by the Opportunity Zone federal capital gains tax exemption, which could bring the total tax break funding to 100%. The developers and their investors are probably putting in about $6 million of their own money and will walk out with an estimated $80-220 million depending on when the property is sold.

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