Avalon East, otherwise known as Avalon 2, is being offered for sale exclusively by Holliday Fenoglio Fowler, LP (HFF), a Texas Limited Partnership. The listing cites a 39-story tower with 588 market rate apartments (98% occupancy as of 5/7/13) and 7,607 square feet of ground floor retail (32% economically occupied).
This listing adds insult to injury after Avalon 1 was sold to Hartz Mountain with the remainder of the 30-year tax abatement intact. The current listing also boasts, “The property benefits from a PILOT (payment in lieu of taxes) agreement with the City of New Rochelle” through 2035. (emphasis added).
This is another glaring example of what happens when savvy corporate wheel-dealers negotiate with politicians only interested in attaining higher office. While this will be dumped on the New Rochelle Industrial Development Agency (NR IDA) make no mistake it is the New Rochelle City Council who must sign off on any sale agreement.
There are may side stories, or should I say horror shows here, one worst than the other. First, let’s remember that in order for the sale of Avalon 1 to be completed, the City had to grant a parking variance to Avalon East. At that time there was no renegotiation of the contract in terms of the PILOT and although the original agreement allows the transfer of the PILOT the City chose a quick money grab of $9 million for the property as opposed to reducing the length of the PILOT, hanging the taxpayers of New Rochelle out to dry.
Avalon East will be a very attractive sale because it comes with a PILOT that permits the purchaser to avoid paying over $7 million a year in City, School & Library taxes. Add to that another $1.5 million for cost taxpayers must bear to educate the students from Avalon East and any potential buyer is up $8.5 million going into negotiations.
When the smoke clears, I believe the City will agree to a price with transfer of the PILOT for a pittance, as they did for Avalon 1, in an attempt to plug a projected $29 million shortfall.
30-year tax abated buildings being sold less than 10-years into their PILOT’s, over $10 million in lost in City, School & Library taxes and over $3 million taxpayer dollars to educate the children from the Avalon Project while firefighters, police officers and DPW staffing’s plummet to new lows putting public safety at risk. All this while Mayor Bramson touts a $15 million net benefit from development in a feeble attempt to sell the Echo Bay development.