“Independent” Scrutiny or New Subterfuge?

Company Chosen for Review Specializes in Facilitating Developments, Garages, Has Links With Developer

“No man can serve two masters: for … he will hold to the one, and despise the other.” (Matthew 6:24)

Oct. 14, 2020

Kingston, NY – A look at the pro-development leadership, mission and history of National Development Council shows it would be difficult for this group to complete an independent review of the fanciful economic impact numbers provided by the Kingstonian’s team. Possible, yes, but it would go against the grain.

Background

The Kingstonian is a proposed $58 million development consisting of 143 apartments, boutique hotel, garage and retail space that is seeking a $30 million tax break. The developers have produced an assortment of job creation and economic activity projections, which are necessary conditions to secure the tax break. In response to public outcry about the wildly optimistic numbers, Ulster County officials have agreed to an independent review by the National Development Council, or NDC.

CEO Dan Marsh: A career spent promoting economic development, with decades of links to the Kingstonian team.

• The CEO, Dan Marsh, sat on the Kingston Local Development Council for at least several years with Brad Jordan, one of the Kingstonian’s developers. See here for one of many KLDC memoranda/minutes with participation of both men.
• Before he was hired by NDC, Marsh sat on Orange County’s IDA. The purpose of an IDA is to encourage economic development.
• Marsh was one of the founders of the Newburgh Local Development Corporation. (Its counterpart in Kingston was where he was in contact over the years with Brad Jordan.)
• Marsh was the adviser to Kingston developer Charles Blaichman in his unsuccessful attempt to build the Noah boutique hotel and commercial real estate complex on the old Forst meat-packing plant in the Rondout.
• Marsh hails from Newburgh, making it unlikely that his path never crossed the Bonuras or Patrick Page, another investor in the Kingstonian.

 Tax returns spell out a pro-development mission

According to an assortment of 990s, the tax return that not-for-profits must file, the NDC oversees various subsidiaries. In all, the mission is pro-development. A look through this tax return shows that the buzzword of sparking development in “economically distressed” areas shows up, as it does in the Kingstonian’s IDA application. This, of course, is the loophole that allows for the siphoning of tax dollars into private hands. As the saying goes, socialization of loss, privatization of profit.

The NDC also boasts an education program. Pay special attention to the fourth course listed here, where students learn to “overcome the myriad obstacles—economic, financial, political, and social—to the successful structuring of business finance and real estate projects.” Community opposition is not identified per se, but clearly falls under the heading of political and social obstacles.

The NDC itself is a developer

Check out this lovely public private partnership garage. (Sound familiar?) Scroll down through the many developments for the section on garages. Or, see the fourth item here.

The ads promise a luxury living experience: well appointed hotel, high end apartments, garage and shops to revitalize a city center. This is the Kingstonian, right? Nope. It’s Seneca Way in Ithaca, near Cornell. Who financed it? None other than NDC.

The National Development Council is an umbrella organization with total revenues in 2017 of almost $92 million. One of its subsidiaries, the NDC Housing and Economic Development Corporation, was organized for the following charitable purposes: “to construct new and support existing safe and adequate low-income housing for disadvantaged persons; thereby assisting generally in the alleviation of housing shortages throughout the United States; to stimulate economic development in economically distressed areas of the country; and to assist in the erection and maintenance of public buildings, monuments or facilities; to lessen the burdens of government; and to promote social welfare.” The Kingstonian developers stress their project will stimulate economic development and that Kingston is an economically distressed area — preconditions for tax breaks. As advertised by the developers, the proposed garage, plaza and two restrooms would fall under the rubric of public facilities.

Nowhere does the NDC website mention vetting projects for suitability or benefits to a community. This is a group that favors economic development; one of its specialties is teaching groups to navigate the funding and regulatory processes and to consult in that process. The mission identifies affordable housing as a goal, but it does not exclude market rate housing, and as shown above, is also an investor in such projects.

At an Oct. 1 UCIDA hearing on the PILOT, Ulster County Legislator Lynn Archer called for an independent review to be “undertaken immediately by a firm which routinely does these types of reviews for other IDAs.” Ulster County Executive Pat Ryan then announced the county would hire NDC for the review.

The problem, of course, is that firms that do this for IDAs routinely are not necessarily impartial.

Camoin Associates, which also routinely does these types of studies and produced the pie-in-the sky numbers for the developers, appears to tailor its findings depending on who is doing the paying.

In this article published by the New York State School Boards Association, Camoin vice-president Michael N’dolo said, “In effect, the way the legislation is currently formulated, school districts and municipalities are materially adversely affected by PILOT arrangements.”

But when the Kingstonian was signing the check, Camoin put forth a fantabulous set of numbers.

With no easily available information indicating the results of previous NDC reviews of this nature, it was unclear whether NDC personnel steeped in its pro-development culture would be able to provide a neutral opinion.

Matt Mitchell, an economist at George Mason University who studies economic incentives, said, “The ideal independent evaluator would be someone who isn’t in the business of financing these sorts of deals. Someone without a financial stake in the game who simply studies this stuff would be a good choice. And there are plenty of economists who have studied these sorts of programs for decades.”

Tom Tresser, a Chicago activist with a master’s degree in Urban Development, predicted the NDC would “never question the fundamental conflicts of interest, the fundamental ethical questions of diverting precious property tax dollars away from local units of government. Their consultants will look and sound like the lawyers and consultants hired by the developer.” He suggested that Ulster County “give a citizen’s group the same amount [of compensation] to do a grassroots review of the project.”

Legislator Brian Cahill defended the choice of NDC to review Camoin’s projections. Of possible conflict of interest on the part of its CEO, Dan Marsh, Cahill wrote in Facebook post that Kingston was a “small community” where people “wear many hats,” and that did not preclude an “independent” review.

However, Cahill also said another legislator had made the actual choice. “The company doing the review was selected by Legislature [sic] Archer.” It was not immediately clear how Archer learned of NDC. An email was sent asking for clarification.

Feint-and-parry maneuver, or well-intentioned misstep?

Worst case scenario: This is a head fake by county officials to establish their bona fides as impartial and concerned, when in fact they knowingly picked a pro-development team whose CEO is a long time associate of ones of the developers; that specializes in shepherding construction projects, including garages, through regulatory thickets; financing them, and sometimes investing directly in market rate housing.

Best case scenario: Legislators who don’t have the time to dig into every possible developer ploy accepted the recommendation of someone who appeared to be even-handed.

An email sent to Ulster County Executive Pat Ryan asked for a copy of the RFP and contract with NDC, if they were drawn up, and the process by which NDC was chosen. An email sent to NDC CEO Dan Marsh asked how a review could be truly independent given the history of Mr. Marsh and the NDC’s mission and operations.

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