There's a question hanging in the air this Christmas season.  It has to do with gifts.  One gift in particular, given by RIOC to the developers of Southtown.

It may not be the gift you're thinking of – selling off the land for Southtown buildings 1 through 3 for less than a dollar per buildable square foot, a patent giveaway for which the word "scandal" is desperately inadequate.  No, it's not that; it's another gift.

The developers are selling condominium apartments there.  With each apartment goes a property tax abatement – no taxes for 20 years, then taxes phased in over five years.  Over that period, an owner will save from $100,000 to over $200,000 in taxes he won't have to pay.  That saving shows up as a lower monthly charge.

In whose political conscience is it OK to divert 25 years of property taxes into the pockets of political contributors?

It makes an apartment more attractive to a buyer.  So much more valuable, in fact, that the lower monthly cost makes a buyer willing to pay considerably more for an apartment than they otherwise might.  How much is “considerably more?” That's a question of “net present value:”  What is the value today of a savings, over two decades, of as much as $200,000?  Answer:  It works out to something over $75,000 per average unit.

The unspoken sales pitch ringing in each potential buyer's brain is:  Invest more now in something that will surely appreciate, and save a bundle every month.

The bundle saved, of course, is tax revenue that will never be seen by government.

The premium value is collected, instead, by the developers, on each apartment sold.

In effect, it is a transfer of 25 years of taxes from government coffers to the developers.

Tax abatements are nothing new on Roosevelt Island.  To make this Island happen as a residential community, the Mitchell-Lama program gave builders long-term tax relief.  But there's a difference.  In exchange, those original developers of Roosevelt Island's housing had to run on a non-profit basis for the period of those State-backed mortgages, waiting a quarter century for any possible profit.

That's not the case at Southtown, where the forgiven property tax goes immediately into the pockets of the developers in the form of higher apartment prices – effectively a gift from the RIOC Board that approved the deal to generous contributors to the campaigns of Governor George Pataki.

The question?  In whose political and governmental conscience is it OK to give away a quarter century of property taxes to boost the immediate profits of political contributors?

DL