AstroTurf Campaign Targets Tax Break Opponent

If the grass is greener on the other side, it is probably astroturf – Nicky Gumbel

There are two fundamental problems in American politics. The first is that most Americans do not believe that elected officials represent their interests. The second is that they are correct – John Gastil, Penn State University

April 20, 2022

Kingston, NY – A look back at events surrounding the 2020 firing of a key KIngstonian tax break opponent showed that efforts to purge the opponent, Ulster County Industrial Development Agency (IDA) Chair Randall Leverette, included a manufactured letter-writing campaign complaining about a pretext that was outside Leverette’s legal purview.

Team Kingstonian circulated one or more form letters targeting Leverette for failing to help small businesses impacted by the Covid pandemic. But the letters contained paragraphs supporting housing/hotel projects, which was code for the Kingstonian, while they failed to name potential Covid-related remedies. Moreover, even after Leverette’s removal the IDA provided no Covid-related aid until June, two months later, when former Gov. Andrew Cuomo changed the law to allow IDAs to do so.

Leverette was known to oppose tax breaks for market-rate housing, and as chair of the Ulster County Industrial Development Agency with sway over other IDA members’ opinions, he presented an obstacle to securing the $30 million tax break sought by Team Kingstonian. The letters appeared designed to validate efforts to remove Leverette and pave the way for new IDA members who would defer to Team Kingstonian.

County Officials Cite Letters in Bid to “Reform” IDA

On April 28, Ulster County Executive Patrick Ryan announced his “Resilience Economic Initiative” Covid assistance plan for Ulster County. A mere two days later, a joint press release with county legislators who favored the tax break said, “Nearly two dozen letters [critical of the IDA] were delivered to both the County Executive and the Legislature days after County Executive Ryan unveiled his Ulster County Resilience Economic initiative.” The press release quoted Ryan as saying, “I have received dozens of letters from business owners and community leaders that have made it clear they do not have confidence in the current leadership of our IDA.”

For the most part, the letters were dated April 27 and 28. It was unclear how 20 letters dated so close together and containing identical sentences could have arrived in Ryan’s inbox during the two days after Ryan unveiled his initiative. Ryan omitted any mention of the similarity of the letters and their dates.

With annual IDA appointment process underway in the Ulster County Legislature Economic Development Committee, it meant the tax break might be delayed another year if Leverette was reappointed. On April 30, Ryan and the Ulster County Legislature committed to fast-tracking rapid reform at the IDA in response, allegedly, to the letters.

Not All Signatories Understood the Agenda

One business owner who signed the letter told this reporter he had no idea who Leverette was and that he knew little about the IDA. He said he was told the letter would be good for business. The signatory was so upset he called the next day to ensure his anonymity and said something to the effect that those in power could ruin his life. A second signatory was also said to be unaware of the true purpose of the letter, although this reporter did not hear that claim directly from the second signatory.

Form Letters Support Hotels & Tourism, Cite Nearby IDA

Locally, the press reported on the purported need to reform the agency and provide Covid assistance. But while most of the 20 letters opened with paragraphs about Covid, there were no specific, achievable Covid-related requests. Moreover, six of the letters contained identical sentences calling for the IDA to approve “tourism” projects. (Please see this satire poking fun at the developers’ inclusion of moveable kiosks with tourism brochures as supporting evidence in favor of the tax break.)

The letters indicate that Team Kingstonian prepared one or more templates and circulated them during the last days of April to coincide with Ryan’s announcement and to give cover to Ulster County Legislator David Donaldson’s push to remove Leverette in the Legislature’s contemporaneous IDA reappointment proceedings.

  • Number of letters with the same opening sentence: Five.
    “I’m writing as a business owner in Ulster County who has been affected by the Covid-19 pandemic.”
  • Number of letters with this sentence: Five.
    “I have read/I notice that Industrial Development Agencies throughout the region have mobilized to supplement the recovery efforts currently underway in nearby counties.”
  • Number of letters with this sentence: Eight.
    “The economic fallout from this pandemic is unprecedented and will take action by all levels of government to get us get out from underneath it.”
  • Number of letters with this sentence urging incentives for hotels: Six.
    “With several critical development projects on the horizon, I believe it is imperative that the IDA leadership do everything in its power to offer incentives to these businesses, to ensure that they build in Ulster County. Since tourism is the number one driver of our local economy, I strongly request that the IDA offer maximum incentives to those developers who are proposing build hotels and resorts. Unless we work with them, they will simply decide to go elsewhere.”
  • A letter from real estate professional Gene Gruner was more direct. “It has come to my attention that IDA Chair Randall Leverette has made his intention clear that he will not consider IDA assistance for any development project that includes housing of any type. This stance places several important projects in jeopardy… [Another former IDA member’s] position, and mine, was that anyone that is willing to invest in Ulster County warrants consideration. I urge you and the legislature to reorganize the IDA to include open minded members.”

COVID Complaints Immaterial to Ulster County 

A few letters complained about the lack of an IDA program to lend money to Covid impacted businesses. But the Ulster County IDA lacked, and still lacks, such a vehicle. Neighboring Orange County, on the other hand, had an ancillary body, the Orange County Funding Corporation, that was permitted to lend money. In April 2020, the Orange County IDA announced the OCFC would start making loans to businesses with fewer than 25 employees.

With Leverette gone, did the IDA embark on an all-out effort to help with Covid assistance? No, because it couldn’t, which was exactly what Leverette had been protesting when informed by local reporters of allegations he wasn’t helping Covid-impacted business. It wasn’t until late June that former Gov. Andrew Cuomo changed the law to allow IDAs to grant up to $10,000 to small businesses to procure PPE.

Asked what aid the UCIDA had provided, a spokesperson sent the following email dated April 14, 2022. “IDAs are not permitted, by law, to give grants or donations. NYS passed a one-time exception in 2020 for IDAs to be able to provide grants to small businesses for PPE. [The IDA and related group CRC] spent over $325,000 on the program.”

In other words, Leverette was powerless to provide such loans or grants during his time in office. The signatories themselves may not have known about the Orange County initiative, but Dan Ahouse, the public relations mastermind behind the Kingstonian, had business dealings with the Orange County IDA and would have been familiar with the OCFC.

In September 2021, three employees of the Orange County IDA were ordered to repay more than $1 million in illegal payments but they escaped jail time.

UC Legislator Calls for “Loose Construction” of IDA Law

Discussions in the Ulster County Legislature began in earnest in April 2020 to replace Leverette. On April 14, former legislator David Donaldson told the committee charged with recommending new members, “We will need a very flexible IDA… I certainly don’t want any rules or regulations broken. But, as you know and everybody understands, just like the Constitution of the United States there’s ways of interpreting things and there’s a loose construction and a strict construction of the interpretation. Right now, we need a loose construction.”

Donaldson was referring to the IDA law, which does not permit market rate housing except under certain conditions. The Kingstonian does not conform to those conditions. However, Team Kingstonian relied on a loosely worded 1985 State Comptroller’s Opinion that housing can qualify for tax breaks if local officials find the project is commercial under the meaning of the IDA law — in other words, even the proverbial ham sandwich could qualify if the county executive liked the idea. (New York State Judge Sol Wachtler famously said a good prosecutor could get grand juries to “indict a ham sandwich.”) For more on what Donaldson called “loose construction” see “IDA Commercial Resolution.”

Leverette has said he opposed tax breaks for market rate housing because it did not conform with IDA law. He said it would place significant burdens on school districts and would hinder their ability to provide services. 

Almost from the moment IDAs were established under former Gov. Nelson Rockefeller, complaints arose about cronyism, back room deals, and failure to achieve the IDA law’s goals. See this report from 2006. More recently, subsidy expert Pat Garofalo called the IDAs a corrupt network of local development offices.

Donaldson and Cahill were the Legislature’s most outspoken supporters of the tax break. With the Kingstonian as flash point, a farmer named Phil Erner primaried Donaldson in 2021, and to the surprise of many, won. Kingston’s Democratic establishment, which is top heavy with real estate professionals and backs Team Kingstonian, was lukewarm in its support for Erner. Donaldson ran on a Good Government line. The voters, fed up with Team Kingstonian’s machinations, elected Erner by a large margin.