Updated: 11/3/21 – 8:40 P.M.
VESTAL, NY (WSKG) — Binghamton Mayor Rich David is requesting city council vote to establish a local development corporation, LDC, to manage the construction and financing of the proposed $48 million Water Street Parking Garage mixed-use development.
A resolution establishing the City of Binghamton Water Street Development Corporation was presented to city council during its work session Monday with a request to expedite the item to be voted on Wednesday. Council held over the resolution to its next meeting, currently scheduled for Nov. 17.*
City officials plan to use the proposed sole purpose LDC to manage the construction and future operation of the mixed-use development project which includes a new high-end housing complex on top of the reconstructed parking garage. While the city would still back debt issued by the LDC, the newly created entity would effectively absolve the city from liability should anything go awry with the project’s construction.
“This is very standard. This is, we have obviously, we have put a lot of thought from the very beginning on how this is going to be structured in an effort to advance this project and protect the city,” Binghamton Mayor Rich David told WSKG in an interview Wednesday morning.
David said his plan is to sell the Water Street property to the newly created LDC then lease it to the city, which would then sublease it to the company that currently manages Binghamton’s other parking structures. He said this was the recommendation of developers and attorneys working on the Water Street project.
“The developer that we work with has done these sort of mixed-use projects across New York and across the nation and when we brought in our legal counsel that focuses on business development and contracts, this was the recommendation,” David said. “It wasn’t Rich David and Chuck Shager sat down and said ‘what do we want, how do we want to structure this?’ This is something that’s new to the community, this sort of, type of mixed-use project. So we go up and we meet with industry experts and look at what the industry standards are, how are these projects done in other communities, and this was what came back.”
City Comptroller Chuck Shager told WSKG he believes the sale of the property will be made sometime in early 2022 once the demolition of the existing garage has taken place. Under New York State law, the city will have to hold a public hearing prior to the sale.
That law requiring public hearing for a sale of real property to a local development corporation from a municipality was revised after a push by New York State Comptroller Tom DiNapoli to reform LDC’s in the state. The push followed a 2011 report by DiNapoli’s office analyzing the use, and sometimes misuse, of LDC’s by municipalities.
“New York’s counties, cities, towns, and villages frequently utilize local development corporations (LDCs) and other private entities for economic development and other activities,” the executive summary to the report reads in-part. “These LDCs and similar private entities are exempt from many of the constitutional and statutory provisions that guide the operations and financial transactions conducted by local governments. For example, LDCs and similar entities are not subject to public procurement laws that require certain contracts to be bid competitively, and the debt that these entities issue, even if for the benefit of a local government, is not subject to the limits on debt established for most municipalities in the New York State Constitution. The use of LDCs and similar organizations to finance local government operations and projects increases the risk of waste, fraud, or abuse of taxpayer dollars or assets.”
The proposed LDC would be governed similarly to the existing Binghamton Local Development Corporation with an initial board of directors appointed by the mayor and city council. The resolution indicates that the board will consist of between three and seven members, with four of the initial directors appointed by the mayor and one by city council.
The initial directors named in the resolution include former Binghamton Mayor Richard Bucci, current City Comptroller Chuck Shager, former Councilman Chris Papastrat and local business owner Ron Sall.
A previous iteration of the resolution also included Lori Clift, a staffer in the city’s information technology department to serve on the board of directors. David said her name was included on the piece of legislation by mistake, but that she will be referred to city council as its appointee to the board.
“The main reason was, is, in order to have council make an appointment, we had to remove a name and that was the name that we removed and we’re going to submit her name to council as a potential, for them to make the appointment,” David said.
Councilwoman Angela Riley, a Democrat, said during Monday’s work session that council members had not been sent a copy of the resolution prior to the meeting. The meeting agenda packet, which includes the actual pieces of legislation being discussed by council, had not been posted on the website until Tuesday morning.*
*This story has been updated to note that the vote on establishing the LDC has been delayed.