Plans for a fitness center and bookstore on University Avenue could face difficulties after Syracuse Common Council members expressed concern about an agreement that would grant tax-exempt status of university-owned property to a private developer.

Council members and those in the audience had issue with the length of the 30-year payment in lieu of taxes agreement as well as the precedence the agreement may set for other businesses at a City Hall meeting Tuesday.

Khalid Bey, council member and chairman of the Economic Development, Downtown and Metropolitan Planning Committee, said he does not believe the agreement will survive Monday’s scheduled vote.

Under the proposed PILOT agreement, SU would lease the property to the Cameron Group for $1. The private developer would construct and finance the $20 million project, said Tom Valenti, a Cameron partner.

Cameron would recoup the financing with payments from SU totaling about $1.48 million annually for 30 years, at which time the property would be re-leased to the university. The Cameron Group would be taxed 17 percent on city services during the 30-year lease period.

The fitness center and bookstore would occupy a majority of the 85,000-square-foot space, with retail businesses taking up the remaining 8.5 percent of the building, Valenti said. Under the proposed agreement, SU would pay 8.5 percent in taxes for the building’s retail space after 30 years.

Former city assessor John Gamage opposes granting the project tax-exempt status on a matter of principle. He said approving the PILOT agreement – in which the building would be owned by a for-profit business – would set a bad precedent for future businesses that may take advantage of the model.

For a building to be considered tax-exempt, it must be owned by a nonprofit, Gamage said. Nonprofits throughout the city lease space to businesses that are not entitled to tax-exempt benefits, he said. He added that it is problematic that more than 50 percent of property in the city is tax-exempt. Gamage also echoed concerns from some council members who took issue with the length of the 30-year agreement.

‘I’m sorry, but I think that is simply outrageous,’ said Gamage, who voted against the agreement when it was proposed to the Syracuse Industrial Development Agency in February.

Valenti countered and said the PILOT agreement would be financially beneficial for the city, as the University Avenue property is already tax-exempt because SU owns it. Should SU develop the plot of land on its own, the university would see only the 8.5 percent in retail space taxes.

Joseph Lore, director of the Department of Recreation Services, said after the meeting that equipment from Archbold Gymnasium would furnish the fitness center on University Avenue, freeing up space in Archbold for more basketball courts. The addition of another fitness center would not affect students’ co-curricular fees, Lore said.

During the meeting, SIDA was criticized by Councilman Lance Denno for recently appointing Darin Price to the organization. Price is liable for $96,896 in property taxes on a vacant Syracuse lot, Denno said. SIDA recommended the proposed PILOT agreement to the Common Council by a 3-2 vote in February. Price voted in favor of the agreement.

Denno questioned William Ryan, SIDA’s chief of staff.

‘Do you think that it’s appropriate that the Common Council should accept … the property tax recommendation of a board that can’t assess the current tax status of members?’ Denno said.

‘Should we? Should we accept the recommendation of SIDA?’

dbtruong@syr.edu 

Published on March 20, 2012 at 12:00 pm

Contact Debbie: dbtruong@syr.edu | @debbietruong