Litany of Lies

When government is no longer a countervailing force to private power but a co-conspirator – Scott Galloway

We don’t pay taxes; only the little people pay taxes — Leona Helmsley

Note: This story was updated Sept. 9 to include one more false assertion, in this case the claim that the entire DRI $10 million grant will be withdrawn if the Kingstonian does not receive a $30 million tax break.

Aug. 20, 2020

Kingston, N.Y. – While America descends into a Dickensian nightmare of homelessness and hunger, government hands wealthy investors unbridled millions to create low paid jobs for people who will need Medicaid and Food Stamps and whose downstream effects force the closure of small business. A snapshot of Washington’s Republican dysfunction, to be sure, but this article is about the Democrats in Kingston.

If you are new to the issue of the Kingstonian, please start with the main article. Otherwise, read here for the latest recap.

THE HERD OF ELEPHANTS IN THE ROOM

The Kingstonian luxury housing and air-conditioned garage project is so riddled with lies, conflict of interest and all-around inequity that it seems inconceivable that the $30 million PILOT tax giveaway could have passed Kingston’s Common Council. Yet in today’s environment, anything goes. After all, Trump is dismembering the Post Office and the U.S. Census to rig the vote, the NRA is Wayne LaPierre’s personal piggy bank, and a doctor blames demon sperm for social problems. In keeping with the zeitgeist, sly power grabs, greed and nonsense claims are also on parade in Kingston.

Here’s a guide to the City Hall and developers’ true assertions, evidence-free assertions, false assertions (aka lies) and Machiavellian scheming.

THE DRI GRANT WILL ‘GO AWAY’ WITHOUT THE $30 MILLION TAX BREAK (False) Developer Joseph Bonura has threatened that the other recipients of the DRI $10 million grant will lose their funding if his project does not go through. But four highly placed officials say that claim is false. The developers may have floated the idea in order to arm-twist other recipients into voting for the tax break, or to at least tamp down opposition.

LOW WAGE JOBS (True) According to the IDA application, 84% of the 40 jobs to be created by the Kingstonian will result in 33.6 “living wage” jobs – livable, that is, as long as you don’t have children and can move in to your parents’ basement. Will the developers themselves guarantee these 33.6 jobs? Or are they making promises on behalf of future corporate tenants who specialize in low-paid service jobs?  After all, no one will be able to afford the new rents other than the likes of BofA, Starbucks and Yum Brands. Ciao, local farm-to-table restaurants and cafés. Second, and more important, why on earth is anyone getting a $30 million handout to create $15-an-hour, or less, jobs? The argument that a low wage job is better than no job is the far right’s justification for the glaring inequality of the past four decades. If we cannot trust local Democrats or the IDA job mandates to protect us from radical Republican rapacity, then who? A $15 wage might be fine for a teenager living at home, but it won’t help the working families of Kingston. Who needs Ayn Rand, Charles Koch and Donald Trump when we have Noble, Jordan and Bonura.

HOUSING LIES (True and False) “Desperately needed” is the cliché slapped on housing and/or parking. Curiously, the “desperately needed” housing numbers vary depending on which politically-connected groups will benefit. Kingston’s vacancy rate is 2.17%, “so low that’s it’s unhealthy,” Bonura told the Chamber of Commerce on Aug. 12. But when Kingston was surveyed last winter, the 6.7% vacancy rate measured then showed that housing wasn’t “desperately needed” enough to qualify the city for rent stabilization, a law that is unpopular with landlords. What’s really desperately needed is housing that people can afford to live in, but shucks, that won’t put $37 million in subsidies and tax breaks and perhaps that much cold, hard cash profit in investor pockets.

“PUBLIC BENEFITS” (False) After moveable kiosks got laughed off stage as a “public benefit,” the developers started talking up public bathrooms and a $5,000 scholarship offered in hopes school board members won’t notice they’re being stiffed to the tune of $571,900 per year, or $18 million over the 25-year PILOT. Two internships are also available. (Expect a fresh-faced kid each year in the paint department at Herzog’s, i.e. someone who would have had to be hired anyway to replace retiring employees. Plus, these new hires won’t be asking for permanent job perks, like 401ks or better insurance.) Tax-deductible and even refundable, these “public benefits” are nothing more than a public show of make-believe public beneficence that will reveal themselves at tax time to be a private benefit to private investors. Flashing shiny objects to the few aldermen who seemed embarrassed by their vote in favor of the PILOT on Monday Aug. 3, the developers offered an extra $419,719 in total PILOT payments plus a minuscule increase of 2% in greater-than-projected profit sharing. You read that right: 2% of greater-than-projected profit. Who wants to bet that the extra 2% of greater-than-projected profit will be eaten up by the extra $419,719. Meanwhile, the developers still won’t be paying $30 million in property, mortgage recording and sales taxes (a burden shifted onto remaining taxpayers) while at the same time they will at the very minimum triple their $10 million cash investment.

“TRADE SECRET” RATIONALES FROM CITY HALL (False) The developers have asked that project financials and investor identities be kept under wraps on grounds they are a “trade secret.” At the City Council vote on Aug. 3, 2020, City Assessor Dan Baker equated the privacy rights of a taxpayer claiming a STAR exemption with the investors’ right to keep their identities and projected profit secret. But STAR exemptions are for middle- and lower-income homeowners and exclude the über-wealthy, whereas the Kingstonian is a commercial project funded by millionaires hoping to make a killing on the public dime.

In a spectacularly circular piece of illogic, during the same meeting Alderman Rennie Scott-Childress claimed the investors’ “trade secret” canard was justified because competitors were lurking in the shadows, as evidenced by landlord Neil Bender’s lawsuit. But Bender is not a competitor for that piece of property. Brad Jordan owns his warehouse, the City owns the parking lot, and no matter how much Bender begs, he will never get those properties unless he offers enough money. In addition, Bender filed the lawsuit more than two years AFTER the project was announced. Not only did Scott-Childress fail to come up with a fun post hoc fallacy, he actually reversed cause and effect as well as the calendar.

But maybe Scott-Childress shouldn’t bring up the competition between the Kingstonian and Bender’s proposed businesses, which were clearly in the works before Andrew Wright decided he needed spare cash for his kids’ college tuition. After all, the IDA law itself calls for a close look at “the impact of a proposed project on existing and proposed businesses and economic development projects in the vicinity.” Let’s congratulate Scott-Childress on his time-reversed converse post hoc non-fallacy. Got it? Put another way, Bender’s lawsuit, if successful, will find that Jordan and Bonura are competing with him, and to boot unfairly, not the other way around.

A more plausible cause for the secrecy is that local officials are invested in the Kingstonian and want to hide the conflict of interest as they triple their money while they stiff the schools, the fire district, the library and all the other services Kingston residents rely on. Also, see the Opportunity Zone section below, which explains the mechanism behind the obscene tax-free profit.

BRAD JORDAN PAYS LESS ANYWAY (Secret recently exposed)

The $24,848 annual PILOT payment? Anyone else would pay twice as much. (Note that the developers have offered to raise their PILOT to $40,000 a year. Still, a cost of community services/fiscal impact comparison would be welcome. If the normal yearly property tax would be $932,000, one can assume community services will cost a lot more – like, maybe $892,000.)

Kingston property tax maven Bruce McLean looked at the comps and found the assessment on Brad Jordan’s warehouse was roughly half that of comparable properties. Not only is this PILOT unfair, but it is doubly unfair. For City Assessor Dan Baker, love thy neighbor as thyself obviously means twice as much love when it comes to Brad Jordan, who sits on the Police Commission as well as the Kingston Development Corporation, not to mention attending the commission where he helped award himself $3.8 million in DRI grants.

NEW ECONOMIC ACTIVITY (Evidence-free)

Ah, the never-ending “feet on the ground” trope. Yes, there will be new feet on the ground buying butter at Brad Jordan’s Hannaford and anti-depressants at his Walgreen’s. There will be a year’s worth of business for local moving companies. Beyond that, these are unsubstantiated empty promises, absent a study on the cost of community services. Please enjoy this podcast as a George Mason University economist debunks ED aka Economic Dysfunction Development studies and the flimsy pie-in-the-sky projections the developers are citing. More business for Uptown shop owners? Don’t count on it. Small businesses are closing left and right throughout the nation, with one-third predicted to close in New York City. Covid may have pulled the trigger, but it was not the cause. They say that when the tide ­­­goes out you see who’s not wearing pants, and too many small businesses can’t afford a set of skivvies thanks to four decades of Washington policies that pushed liquidity into real estate inflation and monopolistic price hikes elsewhere. The mom-and-pop shop, the yeomanry of yore, has been beaten on the unequal battlefield of money sluiced to the rich, and this is just another skirmish over whether to open the spigots. (The difference between Washington and Kingston, of course, is that the latter’s budget needs to be balanced. Here, a $30 million vanishing act actually means something, not to mention almost $7 million in direct subsidies.) For proof, consider the empty storefronts in New York City, which has seen rampant real estate development in recent years. Or consider the empty storefronts on Kingston’s Wall Street, vacated by tenants who cannot afford the rents needed to pay today’s insane mortgages. To the victor go the spoils, and small business owner, that’s not you. Don’t count on the Kingstonian to increase your foot traffic, but do count on it to increase your rent, or, if you own a building, your taxes.

MACHIAVELLI WOULD BE PROUD For a look at how the developers, the mayor and their groveling lackeys strong-armed their way into skirting the law, see how the mayor fired commission members who wanted an environmental review (expensive for the developers) and replaced them with yes-men. Have a good belly laugh watching Planning Board members try to dismiss the first commission’s letter calling for the environmental review on grounds that the new yes-man commission was still deliberating. If you’re having trouble sleeping, try this clip of local commissions toggling through different shades of neutral as they flip through a personal color view application but ignore whether local school, police, fire, sewer, water, geotechnical, flood plain and traffic systems can absorb new residents.

GREEN (False) For a look at the developer’s definition of green – and I guarantee that it’s not yours – see here.

AFFORDABLE HOUSING (False) City Hall has delayed implementing its own mandate on affordable housing, spelled out in the Comprehensive Plan passed in 2016, so the Kingstonian can be grandfathered in. The 14 so-called “affordable” units still don’t fulfill the law, because they are earmarked for people who make up to 110% AMI, which in Kingston can mean $60,000 for a single person. See here for the slight “concession” that the developers bemoan as a “loss” and “public benefit” – tax deductible to them, of course, and which may possibly generate a refund.

PARKING (False) “Desperately needed” parking was the raison d’être for building the 420-car garage at a cost of approximately $17 million, with 277 spaces available to the public for paid hourly, or monthly use. See here for KingstonCitizens.org report, and see here where the swindle becomes public knowledge as developer Brad Jordan agrees to create more spots in the mall parking lot, which he could have done anyway without the garage.

NO COST TO TAXPAYERS (False) According to Noble, the project would “provide a substantial increase in parking with an associated transformative project, at no tax cost to City of Kingston tax payers.” No cost to Kingston taxpayers? No less a person than New York State Comptroller Thomas DiNapoli would disagree. “Since exemptions result in other taxpayers generally bearing financial responsibility for the offset in tax burden, it is vital that exemptions be carefully considered,” wrote the comptroller in a 2018 report.

Mr. Noble is either ignorant or fibbing. Here is a further look. Also, see KingstonCitizens.org’s excellent report on school taxes.

OPPORTUNITY ZONES (Silence) Here’s an area where the developers haven’t lied, because the words never cross their lips. After all, why let the “little people” know investors will pay ZERO tax on their OZ boondoggle. That’s right, no federal income tax, no state income tax, no capital gains tax, no sales tax, no mortgage recording tax, no property tax. The developers have stated several times that the project cannot go forward without the PILOT. Does this mean that no bank would give them a mortgage otherwise? Does it mean the project can’t exist without the PILOT scam they want to cram down Kingston’s throat? What exactly ARE Opportunity Zones? See here for an explanation, and see this priceless YouTube video where it becomes apparent that OZs became a gold rush for scammers once their Wall Street boiler room jobs were shut down.

Opportunity Zones were supposed to be a force for good by providing a tax free incentive to launch business revitalization in downtrodden areas. You know, downtrodden areas like the historic Uptown where buildings sell for upwards of a million bucks.

PREVENTING ECONOMIC DETERIORATION (False) A criterion used to justify granting PILOTs for residential properties is that it will prevent economic deterioration. But is that a looming risk in Kingston? Here’s a Bloomberg piece finding that Kingston’s housing has increased in price faster than anywhere else in the nation, making it hard to reconcile with an argument about economic deterioration. Might Jordan himself be losing customers in his mall? His individual situation might deteriorate without the Kingstonian because of the decimation of retail apart from big box Walmarts and the like. But does everyone else have to pay?

-0-