The Mount Vernon Board of Education is claiming that Mayor Richard Thomas and the city’s Industrial Development Agency have approved an illegal tax abatement deal with a developer.
Even aside from the legality of the deal, the school board claims, the size of the tax break is excessive.
“The agreement operates as a gift of public funds,” the school board states in a complaint filed on Jan. 16 in Westchester Supreme Court in White Plains.
“We think the lawsuit is baseless and an unnecessary waste of tax dollars to the city and the school district,” IDA spokesman Ned McCormack said.
The developer, Enclave Equities, did not respond to a request for comment.
Enclave Equities of Purchase is building 179 apartments on MacQuesten Avenue near the Metro-North Fleetwood train station.
The developer has razed a warehouse at 645 MacQuesten, next to Classic Audi repair shop, and it has begun demolition of a warehouse at 525 MacQuesten.
The plans for The Enclave at Fleetwood call for building two clusters of low-rise buildings. The market-rate apartments are designed for young professionals without children.
But state law does not sanction the use of payment in lieu of tax agreements for market-rate apartments, the complaint states. The IDA’s own uniform tax-exempt policy includes only “affordable housing” and “senior housing” as types of residential properties eligible for PILOT benefits.
McCormack said the IDA does have the authority to approve such projects and it took every step necessary to comply with its policies.
The school board complaint calculates that the tax abatement will enable Enclave Equities to pay lower taxes on properties that will be worth $47.9 million than it has been paying on the warehouses valued at $10 million: $184,260 versus $475,057.
The completed project without a PILOT agreement, the complaint claims, should pay $1,146,205.
The school board calculated that Enclave Equities will realize a net operating income of nearly $2.7 million in the first year, including the reduced tax payments, and nearly $3.4 million by the ninth year.
“Even if the proposed agreement were legal,” states the complaint filed by attorney Thomas Scapoli, the deal is an “illegal gift of public funds.”
The IDA, McCormack said, hired Urvashi Kaul, an adjunct professor of international finance at Columbia University, to analyze the deal.
“It’s going to create economic activity in an area that needs to be revitalized,” McCormack said. The development will create a “virtuous economic cycle,” whereby jobs are created, new residents shop locally, more developers are attracted to the area and the tax base is revitalized.
He said the developer’s profit, about 5 percent, is a fair return for the risk it is taking.
The school board claims that the IDA failed to provide evidence or analysis in support of its decision to approve the deal.
It is demanding that the tax abatement agreement be voided, that the IDA be stopped from making similar deals and that Enclave be required to pay the full tax rate.
Nine Mount Vernon residents joined in the lawsuit: Serigne M. Gningue, Rosemarie Jarosz, Micah J.B. McOwen, Stanley Russo, Adriane G. Saunders, Arlen Torres, Wanda White, Israel Williams and Lesly Zamor.
The tax exemptions, the complaint states, “are excessive and improperly shift the tax burden from the wealthy developers to the remaining taxpayers of Mount Vernon.”
McCormack said that it’s a nice piece of property that needs to be developed and added, “We can’t have the city not developing.”