Collegetown Loan is really a grant

Monday, April 30, 2012

At the April City Council, meeting I spoke against the $20 million loan to the developers of the "College Town" project.  It turns out I had one fact wrong, though it does not change my opinion about the loan.  Originally, it was my understanding that the City would be getting $500,000 in taxes from this project. I assumed that was before the loan repayment was taken out, but it is after the loan payment is deducted.

Even though I like the concept of College Town, I am still against the loan as it is blatant corporate welfare. For those not following this at home, College Town is a project near Strong Hospital and the University of Rochester.  It is a $100 million investment which will create 150 apartments, a hotel, lots of commercial space and some restaurants.

With the loan almost 60% of the financing for this project comes from government sources.  The city is also doing $8.5 million in street improvements to facilitate this development.  A deal was made to tax this $100 million project as if it is only worth $30 million.  This set their tax payment at $1.7 million but almost $1.3 million or over 75% goes towards repaying this loan.  The rest is split between the City and County leaving the city with only $333,000.  The loan is a Section 108 loan, which is supposed to be paid back using taxes but if the taxes are lowered to a special rate for the project then this loan is taken out this seems like the development is not paying its fair share of taxes.  As $1.7 would have to be paid in taxes by this project anyways they are not really paying back the loan unless their taxes are raised by the amount needed to repay the loan.

Thus we are really giving them a grant not a loan.  We are getting a loan and then the City is paying it off out of our tax revenues.  Of course while the project wants to get this free money the City has not made the argument that this project would not go forward without it. So it seems like once more we are helping a developer make large profits which they will take out of the area at the expense of Rochester taxpayers.

Now the city believes that this project will create hundreds of jobs, but in their analysis no compensation is made for the jobs which will be transferred here or the businesses which will close because of this project.  Meanwhile, the total revenue for taxes in the next 20 years from College Town will only barely cover the street improvements we are doing.   I was the only person who spoke against this loan and the city approved it. Now we will all have to tighten our belts and give up city services so we can enjoy the new College Town after all we are paying for it.


Unknown said...

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