See inside for link to full report.
September 18, 2009
by Christine Yeres
In the town board work session this Tuesday, John Alschuler of HR&A Associates, the financial consultant hired by the town board to assess the tax revenue figures for Chappaqua Crossing presented in the draft environmental impact statement, made his final report. In its DEIS, the developer Summit Greenfield claims that its Chappaqua Crossing project would bring $520,000 in tax revenues to the town. But Alschuler told board members that, according to his calculations, the net financial gain to the town was $124,000.
Report recommends unbundling town, school and library jurisdictions
Alschuler’s first criticism was of the $5.2 million figure the DEIS states as the overall tax revenue coming to New Castle from the project. That figure, he said, “commingled all revenues to all jurisdictions – school board, library and town – in a single bucket. You don’t commingle your revenues. You need to look at each and balance revenue and expenditure for each jurisdiction.”
Second, according to Alschuler, the $5.2 million is a net revenue number “which ignores all costs, in our judgment, a fundamentally flawed number that ought not to be a significant factor in your consideration.” He told board members that the DEIS both overestimated the value of the proposed residential properties and underestimated the value of the commercial property.
Summit Greenfield’s analysis, Alschuler said, overestimated the incremental value of the proposed condominiums by 33%, on average, and of the entire residential component by approximately 23%. This needed correction in the DEIS, he believed, because market conditions are poorer and a recovery will be slower than was projected in the developer’s DEIS. He also cited lower market values for age-restricted units as compared with non-age-restricted units than are stated in the DEIS.
Fate of Reader’s Digest considered an exogenous factor
“The applicant,” said Alschuler, “valued the commercial property at $7 million. We think today’s value should be $11 million. The fate of Reader’s Digest is exogenous to the base case. If there is a problem in cash flow as a result of Reader’s Digest bankruptcy, we put those aside. We projected a modest increase in commercial revenue, and we agree with the applicant that there should be an increase in assessed value due to increased occupancy by eliminating the cap [on the number of tenants, now limited to four].”
Public costs: marginal or average?
On the question of how to calculate the public costs of the proposed development, Alschuler told the board, “You could accept the applicant’s projections of costs on a marginal basis, or you could accept the average cost, which produces a substantially higher estimate. In an incremental approach, existing residents of the town are paying for services such as police, which future residents would enjoy. There might be no incremental cost [no police personnel or equipment added], but it’s appropriate to say that the cost of each citizen should be calculated the same as every other citizen.” Alschuler concluded, “The town board should request the applicant to also produce an analysis based on an average cost.”
Report urges board to consider all revenues in terms of 2008 dollars
Contributing to the confusion on the financial data in the DEIS, said Alschuler, is Summit Greenfield’s use of 2015 dollars in projecting the value of future revenues, when, the HR&A report states, “it is more appropriate to present the projections in 2008 dollar terms.” To arrive at a more realistic projection for the year 2015, Alschuler recommended recalculating revenues in 2008 dollars, and subtracting the taxes that Summit Greenfield already pays to the town as well as the incremental public costs of the project. This would help to create an “apples to apples” comparison of the numbers, he said.
Using 2008 dollars and removing taxes already paid, the projected $519,621 in town tax revenue became $195,207. Alschuler then subtracted incremental costs to the town of around $71,000 leaving a net financial gain to the town of about $124,000.
School board will make its own assessment of costs
Alschuler reminded board members that they had not asked his firm to determine incremental costs for schools, library, county and sewer district, but he provided figures for all those entities after applying 2008 dollars and deducting current taxes paid. His report showed that the $3.9 million Summit Greenfield stated in its DEIS as its projected school tax revenue contribution would actually be closer to $1.3 million. The rounded figures for Summit Greenfield’s tax revenue to the Chappaqua Library went from $85,000 to $35,000; to the County, from $626,000 to $230,000; and to the Saw Mill Sewer District from $97,000 to $43,000. The school board will soon complete its own assessment of the incremental costs to the school district of the proposed development of Chappaqua Crossing.
Summit Greenfield’s counsel defends DEIS
Stephen L. Kass of New York’s Carter Ledyard & Milburn LLP, counsel to Summit Greenfield, asked Alschuler, “Is it your impression that the developer did not show in the DEIS the existing tax flows to the various jurisdictions?”
Alschuler responded: “It depends on how you define ‘show.’ Although the numbers are there, and if you look between the DEIS and the appendices they can be found, we believe that they were not used appropriately [in reaching the projected tax revenue figures].”
A town board member asked, “When the applicant makes these changes, will it result in different figures?”
Alschuler responded: “Yes. I can’t give you net numbers [minus the costs because the school board is producing its own assessment of projected costs], but we’ve projected that, for example, the $3.8 million in revenues for the school district drops to $1.3 million.”
Alschuler found fault also in Summit Greenfield’s use of a 6.9% compounded tax rate increase to project its 2015 revenue figures, and advised the board that future tax revenues be calculated by multiplying projected assessed value by the current tax rate reported in current dollars. Kass responded, “We tried to make clear that the $5.19 million was gross, and I believe that the DEIS is clear on that.”
When Supervisor Barbara Gerrard pointed out to Kass that Summit Greenfield’s promotional material neglected to point out that the $5.19 million figure was gross, not net, Kass responded that the promotional material “is not the DEIS.”
“But it does get read by more people than have sat down to read the DEIS,” Gerrard observed dryly.
Click HR&A Final Report to see the report in its entirety.
Copyright 2012 NewCastleNOW.org