Several Syracuse common councilors are puzzled and expressed mixed opinions regarding Wednesday’s announcement that the current phase of Destiny USA’s expansion project to the Carousel Center will be its last.

Pyramid Cos., the developer of Destiny USA, will not follow through on its promise of constructing an Erie Canal replica, aquarium, waterpark and a 39-story environment-themed hotel.

But it will retain its tax-exempt status for the next 30 years.

Syracuse Common Councilor Patrick Hogan said he thinks it is unacceptable that the developer is declaring this construction phase the final one, and claiming the property as tax-exempt.

‘I’m a supporter of the project, but I’m furious they’ve used this legal subterfuge to escape paying taxes,’ he said.

As former Deputy Commissioner of the Syracuse City Parks and Recreation Department, Hogan said Pyramid has brought positive changes, such as spurring the development of Franklin Square, and removing the junkyard and oil tank field that used to occupy the location of the mall’s addition. The Carousel Center and its Destiny USA expansion fall under Hogan’s district.
Still, ‘a deal is a deal,’ he said.
In every agreement he viewed, Hogan said it was implied the developer would have to begin work on the second phase of the project in order to retain its tax-exempt status. This was something discussed with lawyers multiple times, he said.

The ambiguity of the wording, Hogan suggested, enabled the developer to claim this is not the case.

‘You’re talking about legal documents that are numerous, been amended and can be interpreted in a body of different ways. And they’re choosing to interpret that in a way that prevents them from being put on the tax roll,’ he said.
Kathleen Joy, a common councilor at-large with a professional background as an attorney in real estate and land use planning, said agreements from 2002 and 2006 — which the council did not approve — allowed the developer to decide what the final phase of the project is.
Yet there are still some aspects of the announcement she finds unclear.
When the Syracuse Industrial Development Agency and Pyramid’s lawyers presented the project, they argued it would require a 30-year payment-in-lieu-of-taxes agreement, Joy said. Typically, PILOT funds enter the city’s general fund, as if they were taxes.
But the mall is different, she said.
The PILOT payments go toward paying off the developer’s own debt from the project, she said, and never go to the city. This would also allow the company to pay for road improvements and bonds needed to build the next phase of the project, she said.
Syracuse was willing to forgo property tax revenue with Pyramid’s assurance that additional buildings, such as a hotel, would be built, Joy said.
Members of SIDA are claiming there will continue to be a PILOT, though there is no additional development being planned, she said. In 2006, they testified the expansion would be put on the tax roll if a second phase was not built, she said.
‘Where are those PILOT payments going to go? Are they going to go to pay off the existing bond debt? Well, that’s not quite fair because they already have a revenue stream. That’s the existing mall,’ Joy said.
Though Joy and her constituents did not find the other proposals of the project realistic, they’re seeking clarification on how the city is now benefiting — and if Pyramid is unjustly profiting.
Others common councilors, such as Bob Dougherty, said he was not shaken by the developer’s announcement.
‘It’s not a surprise to me that they’re not going forward with any further phases of the expansion,’ he said. ‘I’ve been kind of a cynic of this right along.’
The community generally distrusts developer Robert Congel, though Dougherty said he feels the economic concerns Pyramid cites are mostly truthful. But most of the company’s lofty promises for the city’s Northside seemed like a ‘pipe dream,’ he said.
Nonetheless, he does not believe the city will not file litigation, because of the resources involved and the fact the courts have ruled in Congel’s favor in the past.
Dougherty said several members he spoke to seemed skeptical of the council’s authority on this issue.
‘They don’t think there’s anything the council can actually do — that it’s pretty much that the ball is in the mayor’s court,’ he said. ‘And if the mayor does not want to pursue it, then it’s not going to get pursued.’
Joy suspects there was a deal reached between SIDA, the developer and Syracuse Mayor Stephanie Miner that allowed for the announcement to go forward.
‘It is what it is,’ she said. ‘Or it is whatever they say it is.’
Destiny USA’s final phase is expected to open Aug. 2. The 2.1 million square-foot expansion is expected to draw an annual visitation of more than 29 million people, according to its website.

dmsegelb@syr.edu

 

Published on June 8, 2012 at 12:00 pm

Contact Dylan: dmsegelb@syr.edu | @dylan_segelbaum