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Viewpoint: Building purchase by DSIC too hasty, based on faulty data

Viewpoint: Building purchase by DSIC too hasty, based on faulty data

John McDonald, a member of the board of the Downtown Schenectady Improvement Corporation, explains w

A Dec. 13 Gazette article on the special Downtown Schenectady Improvement Corporation (DSIC) board meeting on Dec. 12 discussed the purchase of a building for the published price of $137,500. Your article quoted Vice Chairman Richard Antokol, who I assume provided information about the meeting and the vote because the reporter wasn’t present. I was one of the two board members who voted “no” on this proposal. Let me explain why I oppose using taxpayer money to purchase this building.

The building purchase price listed as $137,500 is misleading because it does not include the extensive rehabilitation work that is necessary. The roof is leaking and needs to be replaced. The exterior masonry wall is cracked, and the heating and air conditioning equipment is inoperable. The poor condition of the building was ferreted out well after Mr. Antokol had introduced a resolution to purchase the building for $137,500, and it was seconded by board member Peggy King. After some arm-twisting, we learned that staff-obtained estimates for the above repair work indicate those projects will cost upward of $80,000. My experience with old buildings is that the repair costs will be more rather than less. There are legal fees, and other related closing costs that will add another $3,000 to the project costs.

Spinning the story

So the total cost to the DSIC taxpayers is upward of $220,000, not $137,500. Where is the money coming from? Earlier Gazette articles indicated that a mortgage was being obtained from First Niagara or First National Bank. We were told at the special meeting that only Key Bank could move quickly enough to close on the mortgage by the end of the year. The mortgage that has been approved from Key Bank is for $150,000, at an interest rate of 7.9 percent. So that leaves an immediate cash-flow shortfall of at least $70,000, which we found out at the meeting will have to be transferred from other DSIC accounts. This will drain our bank accounts. It is a safe bet that the taxpayers paying a special assessment will be on the hook for a lot more before this is over.

We can lease quality office space for a lot less. Leasing or renting commercial space would make the most sense, but the “DSIC clique” wants to be one of the only business improvement districts in New York state that owns a building. We are a service organization that is funded by a special tax assessment paid by more than 500 property owners in and around downtown. These funds should be used for their intended primary purposes, and real estate investment is not one of them. Also, staff should not be spending their time dealing with construction and maintenance issues.

The current staff consists of four employees. The new office space is more than twice the size of the current office space. We have been led to believe that we have to move quickly. How difficult would it be to move four people into another rented space? Why the big rush? A self-imposed crisis situation prevents sound decision-making.

I also object to the fact that the purchase of the building will take another property off the tax rolls. We have suggested sharing space with other service groups like the Chamber of Commerce or Channel 16, but that was given little consideration.

Shell game

Lastly and more importantly, the taxpayers who provide the funding should have had a say in this decision. The taxpayers pay a special assessment that is adopted by the City Council based on a budget prepared by the DSIC. The city collects taxes through the Downtown Special Assessment District (DSAD), and those funds are turned over to the DSIC under contract with the city. The arrangement is pretty confusing — just think shell game.

It is clearly written in the DSIC by-laws that the board shall prepare and submit a recommended capital budget to the mayor at least 30 days prior to the submission of the operating budget. Buying a building with DSIC/DSAD funds is a capital expense. No capital budget was prepared by our board and none was submitted to the mayor. When this issue was brought up, the DSIC attorney, who happens to be one of the founding fathers, ruled that the City Council legislation that created our organization does not apply to the DSIC. Think shell game.

It just doesn’t seem reasonable that this DSIC board can borrow money that will have long-term financial impacts without approval of the City Council or the district taxpayers.

Would the taxpayers prefer that DSIC staff remain in rented space, and use the $220,000 for better services? Or perhaps instead they would prefer that their taxes be reduced. St. John the Evangelist Church on Union Street, for example, pays an annual tax of $1,113 toward the DSIC. The Annie Schaefer Senior Center and senior apartments on the corner of Eastern Avenue and Nott Terrace pay more than $4,300 in annual taxes for services provided by DSIC.

Well-kept secret

Why are these properties even paying for downtown services — certainly they would not be considered part of the downtown district. That is one of the best-kept secrets. My feeling is that most of the 500 property owners don’t even know they are assessed a fee for special downtown services.

If the important decisions that affect the taxes of 500 property owners are made by appointed board members, one can only hope that there is a good representation. It is interesting to note that of the eight board members, only three are business owners who own property and pay their DSIC taxes directly. Two of those three voted against buying the building. You can draw your own conclusions from that observation.

Jack McDonald lives in Schenectady and is a business owner. The Gazette encourages readers to submit material on local issues for the Opinion section.

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