Columbia Development Companies is at odds with the City of Albany Industrial Development Agency over an alleged breach of contract at 677 Broadway, one of the city’s biggest privately backed downtown developments at the foot of Clinton Avenue.
The Albany developer filed a lawsuit Jan. 24, alleging the city’s IDA has overcharged it by nearly $3.2 million over the course of seven years.
The suit in state Supreme Court, Albany County, centers around a payment in lieu of taxes agreement reached in May 2004 by Columbia 677 LLC and the IDA over the 12-story, 180,000-square-foot office building at 677 Broadway that today houses Angelo’s 677 Prime and law, investment and consulting firm offices.
Under the PILOT agreement, Columbia Development Companies would pay the agency an amount equal to the taxes the company would normally pay to taxing jurisdictions, but could also claim the Qualified Empire Zone Enterprise Credit for Real Property Taxes. This allowed Columbia to claim a refundable credit against business or income tax based on real property taxes paid in the zone. (The Empire Zone program expired in 2010, but businesses were allowed to continue claiming refunds if they remained in the zones).
The crux of the lawsuit was a stipulation in the PILOT that reset this formula if the QEZE credit expired or was amended — which it was — one year after both parties agreed to it.
The stipulation said that if and when the credit expires or is amended, and if Columbia no longer receives the same overall benefit levels for the credit because of one of these changes, Columbia is required to pay the IDA only half the amount of real property taxes it would have owed if 677 Broadway were not exempt.
In 2005, the state Legislature imposed a cap on the amount of QEZE credit businesses making payments through a PILOT were allowed to receive. Businesses making regular real property tax payments weren’t subject to the cap.
Columbia 677 LLC argues in the 6-page suit that this amendment caused Columbia Development Companies to miss out on more than $1 million in credits from 2006 to 2011 it would have been eligible for under the 2004 law. In addition, Columbia expects to be denied QEZE credits for payments made last year.
Columbia says it paid the IDA more than $6.3 million from 2006 to 2012, an amount equal to the real property taxes it would normally pay to taxing jurisdictions.
“AIDA overcharged the company by not issuing PILOT bills in an amount that was half of the amount of real property taxes that the company would have paid if the property were taxable,” the lawsuit argues.
The amount the IDA allegedly overcharged Columbia adds up to $3.157 million. Columbia is asking for the lost money back, as well as interest.
“AIDA has neither refunded that amount nor agreed to cease issuing incorrect bills, even though the company made a written demand for a refund and for AIDA to issue accurate bills,” the lawsuit alleged.
Michael Yevoli, CEO of the Albany Industrial Development Agency, was not in the office Wednesday to comment, said IDA officials.
“Typically, any questions on pending litigation would go through our attorney,” said Sarah Reginelli, director of economic development at Capitalize Albany Corporation.
Attorney Joseph Scott, of Albany firm Hodgson Russ LLP, did not respond to request for comment Wednesday.