Trade secrets, or conflict of interest

Corruption Scandals Play Out in Big Cities Across U.S., blares a recent headline in the New York Times.
Why would it be different in Kingston?

It is hard to imagine a project that stinks of conflict of interest more than the Kingstonian.

The developers and their lackeys in Kingston’s city government have told so many lies, half-truths and fluff that any reservoir of trust in our elected and appointed officials has long since been depleted. It’s surprising that the IDA personnel didn’t float away in their chairs, given the amount of hot air billowing from Brad Jordan and Joseph Bonura, the developers, and Kingston Mayor Steve Noble during their July 8 presentation asking for more than $30 million in tax giveaways.  

Even in the unlikely event there turns out to be no conflict of interest, at this point the appearance of official impropriety is so overwhelming that full daylighting of the “trade secret” swindle is warranted.  

The crux of the stench is the identity of investors in the Kingstonian.

The most obvious beneficiary of the multi-use Kingstonian is Brad Jordan, who owns the land and the mall that will benefit from 300 new residents crossing his bridge for their grocery shopping. (See upcoming sidebar on commercial real estate problems and potential disasters in flood plains due to global warming to explain why he might need to branch out his sources of revenue, and why he might need more customers to persuade Dutch giant Ahold to build a new supermarket at least eight feet off the ground.)

In addition, rumors have been swirling for more than one year that an alderman on the Common Council is invested in the Kingstonian.

Opportunity Zone funds do not require that investors be identified.

But the moment an entity asks the taxpayers of Kingston to fork over $30 million in a payment-in-lieu-of-taxes (PILOT), the equation changes. The IRS does not require the ID’ing of investors in Opportunity Zone funds, but it does not prohibit it either, and this is why the investors have sought to conceal their identity under the guise of trade secrecy. Statutory and case law on IDAs, trade secrets and FOILs are discussed in an upcoming sidebar.

First, let’s dispense with the lie that this project will not cost Kingston taxpayers a dime. Noble, Jordan and Bonura can repeat that til the cows come home, hoping if the sheep hear it enough, they will baa in approval.

Where is the discussion of special assessments, equalization rate changes, tax base totals, a look-back at other PILOTs and the other mind-numbing details to prove that the rest of Kingston won’t eventually shoulder the burden? Where, Mr. Noble? This reporter submitted a long list of questions to City Assessor Dan Baker, but not surprisingly, there has been no answer. Given New York State Comptroller Thomas DiNapoli’s statements many times that the tax burden of exempt properties is shifted onto the remaining population, the people of Kingston deserve an explanation.

Another statement repeated often, but substantiated never, is the assertion that the new feet on the ground will generate much economic activity and replenish Kingston’s coffers. But Kingston gets its tax revenue from property tax and a share of Ulster County sales tax, not from its own sales tax. Economic activity ripple effects can be estimated in so-called Fiscal Impact studies, but if any have been done, they have not been made public. Fiscal Impact studies attempt to measure the benefit to a small geographical area surrounding the property in question. For a biased model, check the National Association of Home Builders or the National Association of Realtors sites.

On the other side of the fence is the Cost of Community Services study that looks at how much the extra school, water, fire, police, sewer and road activity will cost the city. The American Farmland Trust has shown time and again that developments cost more to the local taxpayers than they deliver in benefits, but that applies to new land, not infill.

As Suze Orman says, show us the money.

Conflict of Interest

Investor identities must be revealed so the citizens of Kingston can be sure that no government officials stand to profit from of the tens of millions of dollars that will flow into private pockets courtesy of this project.

“Craven Lives Matter” should be the inscription in meeting rooms that host the ZBA, the Planning Board, the reshuffled Landmarks and Heritage Area commissions, and of course, the Common Council, not to mention the many commissions that include Brad Jordan.The people of Kingston need to know that the palms of these servants of the public have not been crossed with silver.

Of interest also is the investor status of outside architects and developers. For example, Charles Blaichman’s boutique hotel and smaller properties no doubt will suffer from the Kingstonian competition. Longtime master of the PILOT that he is, was he offered a piece of the investment pie to compensate for the business he will lose from the Kingstonian’s hotel rooms and restaurants?

And what about Andrew Wright, the developer who signed the original agreement to develop the space? One bit of revisionist history bandied about by the developers is that Wright’s job was limited to picking the real developers. But the agreement reads differently, and Wright himself told me a year ago that he couldn’t find financing. This “fact discordance” leads one to wonder whether he received more inducements than just the reported $50,000 in return for giving up the contract. (Other rumors placed the price at multiples of that.)

A look at the law surrounding trade secrets is forthcoming.

-0-