City of Beacon could approve new pact
Related Companies, the owners of the Tompkins Terrace low-income housing complex, has shifted gears and plans to ask the Beacon City Council, rather than Dutchess County, to approve a 40-year payment-in-lieu-of-taxes (PILOT) agreement in advance of beginning a $14.5 million rehabilitation project.
If approved, the deal would allow the company to make annual payments in place of property taxes for the duration of the agreement. The payments would be split among four jurisdictions: the city, the Beacon school district, Dutchess County and the Howland Public Library.
The company will still ask the Dutchess County Industrial Development Agency (IDA) for sales tax exemptions for equipment and materials used in the rehab and for tax-free bonds, which are needed to secure state tax credits for below-market-rate housing.
Related said it plans to spend more than $75,000 per apartment to upgrade the 193 units with new doors, painting and kitchen and bathroom improvements. HVAC equipment will be replaced and community upgrades, such as a computer lab, free Wi-Fi in all units, new playgrounds and new water heaters will also be installed, it said.
The company hopes to begin construction in mid-2023, with a target completion date of July 31, 2024. Related will pay to place residents in hotels while their apartments are renovated.
Bypassing the IDA would allow the city to write provisions into the PILOT agreement guaranteeing that tenants cannot be forced out and that Tompkins Terrace remains below market rate, City Administrator Chris White told the council during its meeting on Monday (Jan. 23).
“The most important factor for me is locking in the affordability for 40 years,” White said on Tuesday.
The complex has an existing PILOT agreement that was approved in 1976 by the state Division of Housing and Community Renewal; it would be replaced by a deal with the city.
If the PILOT is approved by the council, five of the seven property-tax-abatement agreements in Beacon would be administered by the city. It oversees agreements with the Beacon Housing Authority, West End Lofts and the Meadow Ridge II and Highland Meadows senior developments — all below-market-rate housing complexes or, in the case of the Housing Authority, agencies that manage affordable housing sites.
The two other PILOTs in Beacon — for 23-28 Creek Drive and the Davies South Terrace low-income development — were approved by the Dutchess IDA.
Under the existing Tompkins Terrace agreement, Related’s annual payment is 10 percent of the rent collected by the development in the previous year, or about $284,000 for 2022. Related has proposed starting a new PILOT with a Year 1 payment of $310,000. The payment would increase 21/4 percent each year, peaking at $738,297 in Year 40 — for a total of $19.75 million over four decades.
Justin Glanda, a Related representative, said working with the city “simplifies the process and allows us to move faster to make capital upgrades and extend the affordability protections at the property.”
However, the proposal puts the City Council in the position of approving a contract that involves the Beacon school district, as well as the county and the Howland library.
The annual payment from Tompkins Terrace is distributed to the four taxing entities based on their tax rates. For 2022, that meant the school district received 56 percent of the money, while the city got 34 percent, the county 8 percent and the library 2 percent.
Because Related is seeking a long-term PILOT, the IDA would have required the company to ask the Beacon school board (and the city) for letters of support.
Meredith Heuer, the president of the school board, said on Wednesday that “this is the first I’ve heard” of the pivot from the IDA. Before she could comment on the change, Heuer said she would “have to take this to the rest of the board, because that’s our process.”
City Attorney Nick Ward-Willis said on Monday that the next step is for him to bring a draft agreement to a City Council workshop for it to review.
Several residents who spoke at the Jan. 30 public hearing about the proposed payment-in-lieu-of-taxes (PILOT) agreement with the developers who own Tompkins Terrace in Beacon felt the city has an obligation to be as informed and critical as possible in its consideration of this 40-year deal. It would affect not just the city’s future tax revenue but also that of the school district, Howland Public Library and Dutchess County.
We absolutely need to maintain our affordable housing, and maybe a deal with Related Companies is a reasonable way to do it. But given that Related Affordable is a for-profit arm of a multibillion-dollar real-estate firm that has an army of financial and legal experts crafting deals to maximize its financial return and minimize risk, it’s safe to assume that the initial terms are heavily in its favor. I’m sure a much better deal for Beacon could be reached if our city was equipped to engage in such negotiation.