A House of Cards . . .

According to the Rome Sentinel on 10/24/15:

The owner of a large hangar complex at Griffiss International Airport wants to substantially reduce its payments made to the county in lieu of property taxes, starting this year. The current schedule calls for $462,468 in each of the next three years. However, 394 Hangar Road Corp. now wants to pay the county $200,000 this year, $150,000 in 2016 and $100,000 in 2017 . . .

But if you have followed the goings on at Griffiss "International" Airport, you may have a sense of deja vu. About a year ago, per  a 10/16/14 Sentinel article, 394 Hangar Road Corp. requested from the Oneida County Industrial Development Agency (OCIDA) a $300,000 per year reduction in its PILOT payments, which were then about $750,000/year.

“Without a modification to the existing PILOT agreement, the building will not generate a positive cash-flow,” [said] a summary of the proposal.

Why was the building not generating a positive cash-flow?

The PILOT changes are being sought as annual refunds received by 394 Hangar Road through the state’s Empire Zone program are starting to decrease and will be zero after four years.

Since the Empire Zone funds were not available to governmental entities, and since the payments to the County go into operation of the airport, it sure looks like 394 Hangar Road Corp. was used to funnel state Empire Zone funds to cover Oneida County airport's operating expenses.  BTW, 394 Hangar Road Corp. is not just another private company.  It is a creature of Mohawk Valley EDGE,  with whom Oneida County contracts for economic development services .  .  .

The 2014 request was subsequently approved with the reduction effective for 2014, so if the current request is approved, the taxpayers would be on the hook to make up the difference of about $2,100,000 over 2014 - 2017. (Is it any wonder why the County has taken $2,500,000 this year from Oneida Nation gaming revenue for "tax stabilization?")

The Sentinel's current article indicates more clouds are on Griffiss "International's" horizon:

No matter what the IDA decides, PILOT payments from 394 Hangar Road will end after 2017. The county has the option of assuming ownership of the complex in 2018, a status that would make it exempt from taxes. And even if ownership remains with 394 Hangar Road, zero payments are required in 2018 and after. . . .

Additionally, the county is selling the former county airport in Whitestown to the state for $10 million later this year. The state has been leasing the older airfield with the annual rent being counted as revenue in the Griffiss budget since the airport moved from Whitestown to Griffiss in 2007. New York is paying $743,342 this year for the Whitestown location, which is home to the state Emergency Preparedness Center. That revenue stream ends when the sale is completed.

When all is said and done, as of 2018, between the $750,000/year in lost PILOT payments and another $750,000/year in lost rental from the old airport, the taxpayers will have to make up an additional $1.5 million per year in lost revenue on top of what they had been paying, as of 2013, to keep the airport running.  While the proceeds from the sale of the old airport may mask the airport's true financial picture for awhile, the discontinuance of both the PILOT and the rental income suggest that . . .

Griffiss "International" Airport's house of cards, built on payments from higher levels of government, is about to come tumbling down.

Partners in Poverty . . .

Oneida County, with the highest sales tax north of New York City and one of the highest sales tax rates in the country, is giving money away! Yes, believe it or not, as overtaxed as we are in Oneida County, the County has given away almost $3,000,000 so far this year.  It is called "Partners in Prosperity Funding" with the money coming from gaming revenue from the Oneida Indian Nation Settlement Agreement.

All the giveaways become occasions for press releases and big announcements. The latest grant announcement was Thursday: $500,000 to the Vernon Verona Sherrill School District for an "Animal Science Center." From WUTQ . . .

The money will go toward the construction of a building that can house 6 different types of livestock.

The funding and new center will expand the already established agriculture program at VVS High School. “What this does is allows our students to have an animal science program,” said VVS Superintendent Martha Group. “It also allows them to partner with local agriculture farmers, production individuals, and companies. So what the students can do is take on a real life experience working in the agriculture and science field.”

Without a doubt, this project will help students going into agricultural fields.  It will also increase the stature of the already award-winning VVS School District. But why is the County funding this project, rather than the Vernon Verona Sherrill School District, because, ultimately, the Vernon Verona Sherrill School District will be responsible for maintaining it?

There are many projects listed as being funded by Oneida County through its "Partners in Prosperity Funding" program. Like the Animal Center project at VVS, they all have merit -- and all raise the same question:  Why County funding rather than funding raised directly by the entity being benefited?

As already noted, these giveaways total almost $3 million -- this figure EXCLUDES amounts for "Tax Stabilization" and pursuant to "Revenue Sharing Agreements" with certain local jurisdictions.

"Revenue Sharing" was excluded because the Oneida Nation does not pay taxes to the entities listed, and revenue sharing somewhat replaces those taxes.  In this regard, VVS SD, which is getting the $500,000 grant for the Animal Center, is also getting $643,415.00 in revenue sharing.  Which all the more makes one wonder why VVS-SD does not fund the Animal Center itself?

The $2,500,000 listed for "Tax Stabilization" is really a grant by the County to itself.  While the County lists this as "resulting in 0% raise to the tax levy in 2015" it could also be listed as "masking an increase in County spending." 

In the end, the taxpayers (anyone and everyone who buys almost anything in Oneida County) are still being taken advantage of by their own county government.  Money that should go to sales tax relief is instead being used to buy votes among constituencies and to mask more spending.

Rather than "Partners in Prosperity" we are "Partners in Poverty." The County takes more from us than it needs -- driving more of us to leave -- and making those left behind poorer.

Risky Businesses . . .

Per the Rome Sentinel: County seeks bankruptcy court OK to evict Midair

Oneida County wants to take possession of the hangar at the county airfield that was under lease to Midair USA before it filed for bankruptcy protection last month. . .

On Sept. 9, Midair filed for Chapter 7 bankruptcy protection, meaning it is likely to liquidate all assets in order to repay secured creditors. The company said it had assets of between $1 million and $10 million, as well as debts between $1 million and $10 million.

It is unclear where Oneida County stands when it comes to recovering even some of the money it is owed by Midair. . .

At the time of the bankruptcy filing, the old debt [to Oneida County] had been reduced to about $587,000. An additional $43,200 was owed for unpaid rent since the new lease was approved and before the bankruptcy filing.

So at this point, Oneida County taxpayers likely have lost at least $600,000 in the County's dealings with MidAir.

Being in business is always risky, requiring expertise to minimize risk, and sufficient return to not only cover expenses and balance out losses when they occur, but to make being in business profitable in the long run.  Here, MidAir lost out and will go out of business.  When its major client, Russian airline Transaero ran into trouble, Transaero's troubles caused Mid-Air's troubles.

Mid-Air and Transaero are not the only businesses in this story.  Oneida County, by virtue of being a landlord, has gone into business as well.  And in a domino-like effect Transaero's troubles which caused Mid-Air's troubles now cause trouble for Oneida County --  with the County's loss ultimately falling on the taxpayers.

-> Why should Oneida County taxpayers be exposed to risks originating in Russia?
-> Why should Oneida County taxpayers be exposed to business risks in general?
-> Why should Oneida County even be in business?

Certain things are best done by government, others best done by private business, and yet others where it may not be clear who can best do a particular task -- with trial-and-error being the determiner.

If they are not fatal (as in the case of MidAir) set-backs can be a learning experience for the business owner.  Sometimes the experience leads an owner to decide it is better to not be in business.

Oneida County may be at that point.  Should the County continue in the leasing business, exposing its taxpayers to business risks,  or, instead, should it sell its assets and transfer the risks to the private sector?

Perhaps a larger question, given the steep drop in use of the County Airport since its move to the former Griffiss AFB from the more appropriately-sized Whitestown facility, is whether the County should continue in the airport business at all?

The County needs to decide whether the risks to the taxpayers of being in business outweigh the potential benefits.  

Downtown Hospital: Stepping Over the EDGE. . .

The right to private property, and the sense that one is secure to keep the fruits of their labor, encouraged the entrepreneurship that built this nation. So how would you feel if, unbeknownst to you, your property had been marketed to a potential buyer by an agency funded with your own tax dollars? Would you feel more or less secure to know that the same agency had previously taken private property by eminent domain merely to make adjoining property "more appealing" to potential customers? Would you feel better to know that the agency is run by local business people?  Or that the agency believes itself to be a "private" organization not subject to public disclosure laws?

While everyone debates the merits of the Downtown Hospital, the bigger story has gone unnoticed: Mohawk Valley EDGE's role in the decision to locate the hospital downtown and the threat presented by EDGE to local residents' and businesses' private property rights.

EDGE's operation may be legal in light of the Supreme Court's recent Kelo vs New London decision which broadened the scope of what could be taken for "public" purposes -- but it is bad public policy because it discourages private entrepreneurship.  The hospital illustrates how this happens.  From its website:

The footprint for the hospital would be located on 17 acres. There are an additional 17 acres surrounding the hospital which could potentially be used for parking garages, medical office buildings or other complementary facilities. Development of the 34 acres may not happen at one time but it is important to be future-focused on the expansion needs of the organization.

So while 17 acres will be immediately developed, a surrounding 17 acres will be in limbo until the "organization" determines what its "future-focused" expansion needs will be. What is the likelihood that anyone will want to invest near the hospital while the "organization" makes up its mind?  What is the likelihood that anyone will even maintain the surrounding properties? Those who think the hospital will "spur" more development downtown need to think again.

EDGE did not have to market this site to the hospital -- the hospital is not going to leave the area. There are other sites that would not involve taking private property, including the hospital's own St. Luke's campus.  So why was this site chosen by EDGE?  We can only speculate because we still do not know who originated the idea of a Downtown hospital.  Was it a politician?  Was it someone on the EDGE board? Someone with connections to the EDGE Board? Was it one of the hospital officials? Was it an owner of a business -- or a property -- that might want it to be taken? Who knows who? or Why.

As Justice O'Connor wrote in her powerful dissent in Kelo:

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

EDGE's practices place us all at the mercy of those "with disproportionate influence and power in the political process." In the end, this discourages private investment in Oneida County.

The Hospital Board: Presumption and Arrogance on Display . . .

The guest editorial in today's OD by the Mohawk Valley Health Systems Board of Directors entitled "MVHS board welcomes public discussion on hospital proposal" reveals a level of presumption and arrogance on the part of the Board that the general public should find disturbing. Here are some highlights from the editorial and commentary.

The opportunity to build a new hospital for our community is significant and we, the Mohawk Valley Health System (MVHS) board of directors, welcome the public conversation that the project has initiated.

"Welcoming" public conversation now is too little too late.   The decision to permanently remove 34 acres from the tax rolls, close streets, and dedicating such to a single use, is a significant departure from the mixed-use, small scale, private tax-paying "walkable" development envisioned in the Utica Master Plan -- a plan that was duly approved by the public's representatives after numerous public hearings. The Board's proposal not only threatens the viability of the Master Plan's vision for the remainder of Downtown, it also adversely impacts Utica's future financial sustainability.  It was presumptuous on the part of the Board to propose a project of such magnitude Downtown without engaging the public first.    

When we, the MVHS board, conducted the site evaluation process for the new hospital it was very thorough. The meetings were not held “in smoke-filled rooms.” There was open, candid and robust debate at each meeting. This “game changing” opportunity has been discussed at virtually every board meeting for nearly a year. Over the summer the MVHS board held two special meetings with a single topic: where best to site the new facility.

The "open, candid and robust" debate occurring over a year and at two special meetings was anything but, since it was done in private without the participation of the public. It was arrogant for this Board to think it could make decisions on behalf of the public. As for the "not in smoke-filled rooms" comment, smoking has pretty much been banned -- but the concept contained in that phrase accurately reflects what has happened here.

As board members we shared our thoughts, differences of opinions and concerns. In the end, we voted for the downtown site. The vote was unanimous in favor of downtown provided we can do it in a fiscally responsible way.

From this it is clear that the Board (1) is only concerned with its own financial stability and (2) will resist any costly modifications to its project that may be necessary to reduce adverse impacts to the rest of Downtown. Anyone wanting such modifications will be marginalized as threatening the loss of the $300 Million grant.

At our board meeting on Thursday, Sept. 24, we . . . also discussed the assertion that representatives of the #NoHospitalDowntown have made . . . This week we sent a letter, much like this one, to a representative of that site asking him to stop. He does not represent any of the MVHS board members or our organization.

And you, MVHS Board, do not represent the public.

Our promise is to be as transparent as possible, understanding that this is a very complex project that will require input from community members, businesses and governmental agencies.

Your promise, MVHS Board, is belied by your past behavior.
- - - 

For another good read on the Downtown Hospital proposal, check out the Utica Phoenix!

The Hospital: An Inside Job . . . But by Who?

Today's article in the OD - New hospital: Separating fact from confusion - is more revealing if you read between the lines.

Why hasn’t there been more public discussion and disclosure?
As a private, nonprofit organization, the health system does not need public approval for its decision to build a hospital or its decision where to put it...

This is the excuse for not involving the public in deciding to impose a significant change on Downtown.  It is also a mischaracterization.  The project decision does need public approval as revealed in the remainder of that paragraph:

. . .It will, however, need planning and zoning approvals as well as county and/or city cooperation for any accommodations it might need, such as the closing of local roads.

Planning, zoning, street closures, "accommodations," etc., apparently are minor annoyances to the proponents of the plan, but are the points where the public has a direct interest and is why the public should have been brought into this process from the very beginning.  This proposal is totally inconsistent with the Utica Master Plan's vision of a mixed-use, small scale development, "walkable" Downtown -- a plan that was duly adopted by the public's representatives after many public hearings. No doubt the Downtown hospital idea will now be pushed through the public bodies making required decisions (following a bunch of "window dressing" "public hearings") as an "all or nothing at all" proposition with individual board members pressured not to stand in the way of $300 Million.

Why do we need a new hospital when we have three?
Need is a relative term and it’s not certain that a new hospital is needed...

So, really, the hospital is not "needed" which makes it a "want" rather than a "need." That makes a Downtown hospital even more a "want" rather than a "need."

This raises the question WHO "wants" a Downtown Hospital?    

Health system officials and their consultants considered 12 sites – three in the city – but will not release the list. They also have declined comment on any sites other than downtown and St. Luke’s. They did say that the other two sites in Utica were not determined to be suitable and were not put before the health system board.

If the health system board only was presented with two sites for consideration, then it was the health system "officials" and their "consultants" who restricted the board's consideration of sites.  Who are the "officials," who are the "consultants" . . . and, perhaps more importantly, who are their connections?  

Come on O-D.  There is a golden opportunity for some real journalism here.  Don't take at face value and merely report what you hear from the "officials" involved.

Someone originated the idea of a new hospital, Someone originated the idea as being ripe for state funding, and Someone originated the idea of putting it Downtown.  

Exposing the Someones and the complete chain of events will expose who really pulls the strings in Utica and the region.