$38 million bond guaranty for Great Falls projects is ‘fiscally irresponsible,’ says Paterson developer
By Ekaterina Valiotis
Published: June 30, 2020
The recent actions by Paterson mayor Andre Sayegh and a majority of the City Council to burden the city’s already strained taxpayers with a vague $38 million “tourism development” bond guarantee for the Great Falls, is a disservice and betrayal of the citizens.
While the projects may be worthy developments, handcuffing taxpayers, during a lame duck session in the middle of a pandemic and steep economic recession, is fiscally irresponsible. Why not wait until the duly elected new members can take their seats, a proper due diligence is conducted, financials presented, and a developer’s agreement executed?
The city of Paterson has been ravaged by COVID-19 (nearly 8,000 cases and more than 300 deaths so far), has an unemployment rate hovering near 25% and is in urgent need of resources for underperforming schools and public safety.
Any reasonable person can recognize there are a multitude of emergencies to be addressed, rather than adding a $38 million bond guarantee onto the city’s balance sheets.
When weighing such costly and long-term decisions, the focus has to be on jobs, immediate economic development, and tax ratables, key components missing from its inception.
Why would the taxpayers invest and take on debt for this project?
The Great Falls project – a $25 million visitors center, $15 million parking garage and $8 million community center – was rushed through in June 2019 and awarded $38 million in tax credits.
A year later, at the same 11th hour meetings, the city is called to sign for the debt despite zero project timelines, no developer performance guarantees, default terms, remedies, recapture rights, indemnification, or insurance requirements.
These are all standard inclusions in most every development agreement, especially private-public partnerships. My own firm’s Center City Mall project has them, as we have in every other city or town in which we build.
Why does this project get a special sweetheart deal with none of the standard protections for taxpayers?
Few know that the Great Falls project had, in essence, already defaulted on mandated timelines established last year. Now, with little public notice, the mayor and his council cronies try to bring the non-viable project back from the dead. Why?
Either all developers and projects are held to the same standards, vetted and approved by both the administration and the council, or Paterson will continue to saddle future generations with the social ills caused by underinvestment in jobs, infrastructure, education and municipal services.
As an existing developer and large tax-paying property owner, we have an undying faith in Paterson’s potential and its people. It is why we have been investing so heavily in the city for over 20 years, building projects intended to create jobs and quality housing, which are the necessary foundation for economic revival.
To ensure taxpayers are protected, in exchange for the bond guarantee, the city ought to take some of the following steps:
- The City Council should be able to hire its own exclusive redevelopment counsel/consultant, with costs covered by the developer, which is customary practice.
- Developers’ agreements involving city participation or tax benefits should be approved by the City Council with a super majority vote
- The city should retain the rights to operate the parking facility with all revenues in excess of operational costs and debt service to be put in a trust fund reserved for sorely needed city services.
- All non-profit properties included in the project that are not transferred to the National Park Service should commit to a tax PILOT agreement, by which a small percentage of assessed value is used to support the city’s dire financial condition and to provide their fair share for the overburdened services they use, namely police, fire, and sanitation.
As a company committed to Paterson and the great potential of its downtown, we have been blessed to withstand obstacles that now exist for economic development in this city, including political retribution, the loss of business opportunities, the increased cost of doing business, personal attacks, and threats.
It is crucial for Paterson’s future that leaders do everything they can to overcome a reputation of political patronage, special favors, and double standards.
We remain confident, hoping to continue key investments to help jumpstart the economy and breathe life into downtown.
Written by Ekaterina Valiotis, director of property management for Alma Realty, owner of the Center City Mall in downtown Paterson.