This is an expanded version of a story that appeared in print July 16, 2014.
SCHENECTADY - In a split vote, the Schenectady City Council decided it would be “reasonable” to give Galesi Group $500,000 to demolish a building owned by the private developer.
The council voted 4-2 Monday to apply for a $3 million demolition loan from the Department of Housing and Urban Development. That loan, which the city would pay off over 20 years, would include the $500,000 for Galesi. The rest of the loan would be used to demolish about 88 vacant buildings in the city, prioritized by their likelihood of collapse.
To get the loan from HUD, the city had to include some rebuilding project. But council members were initially critical of the proposed project: $1.3 million to help Galesi renovate the former Department of Social Services building on Nott Street into an apartment building.
Council members and some members of the public immediately objected. The project would not only take up nearly half of the loan, but it would go to a private developer who would use it to make a profit.
Councilwoman Leesa Perazzo proposed a compromise: demolish the building and let Galesi pay for a new apartment complex. Demolition would still be costly, but not nearly as expensive as renovating, she argued.
On Monday, at a special council session, three of her colleagues agreed with her. But Councilwoman Marion Porterfield and Councilman Vince Riggi voted against the idea, saying the city shouldn’t spend such a large amount of taxpayer money on a building that would be used by a private developer.
Galesi would pay taxes on the new building, but spokesman Gerald Hennigan said he would apply for any PILOT or other initiatives available to other developers in the city.
It was not clear whether he would be able to get a PILOT. A payment in lieu of taxes agreement is usually part of an economic deal to persuade a developer to take on a project. Galesi has already committed, in writing, to building the apartments if the city pays for the demolition.
But the company has not paid taxes on the building in the two years it has owned it. Mayor Gary McCarthy said the city held the title in the Industrial Development Agency until city officials could create a deal to make a project happen.
He emphasized that approving the deal would help the city.
“Right now we’re not getting anything,” he said. “You’re going to have a brand-new building there, going on the tax roll.”
Hennigan told the council that Galesi had to have help with the building.
“There’s nothing we could do with it that was economically viable,” he said. “If we have assistance with demolition, we will pledge to have a building up in 18 months, with at least 14 apartments, maybe more, depending on the market.”
Perazzo said she was convinced that Galesi couldn’t do the project without help.
“I respect this plan because it’s a way of moving forward,” she said, before adding, “It’s also uncomfortable.”
She said she understood that many of her constituents opposed the idea of giving half a million dollars to a private developer.
But, she said, it was worth getting the project done.
“I’m in full support of that while also recognizing it’s a difficult decision to make,” she said.
Councilman Carl Erikson said he too was “skeptical” about the proposal.
“I’m not happy having to spend any taxpayer money on this,” he said.
He decided to vote for it to ensure that something was done with the building.
“We’re bridging the gap between a feasible project and an unfeasible project,” he said. “Spending $35,000 per unit is reasonable.”
Riggi begged to differ.
“They’re not Robin Hood. They’re in it to make money,” he said of Galesi Group, trying to explain why taxpayer money shouldn’t be used. “That’s not the thing to do, to spend taxpayer money on this.”
Porterfield said she wanted more of a “return on our investment.” She suggested requiring Galesi to hire city residents to work on the 18-month construction project.
Without such an agreement, she said, the project wasn’t worth the city’s investment.