I held off on this entry for a few days. Not because I was particularly low on time, but because I was waiting for the latest planning board project review minutes to come out, to see if there was anything newsworthy (and pretty much everything on there was minor, or I’ve already covered it, so…nope, nothing newsworthy). So I’m going to take a closer look at an article recently posted by the Ithaca Journal.
It was noted that the Collegetown Terrace (aka the giant hard hat-bedecked property south of State Street between Quarry and Valentine) is quite the tax revenue generator for the county. Now, here’s some of their numbers: The initial properties on the land, small apartment buildings and single-family homes (~29 total), were valued at $19,143,000, which would (by my calculation) generate taxes of around $700,000 per year. Just under half of that would go to the school district, with a little more than one-third (~35%) going to the city coffers, and the rest to the county. The partially-built property, as it was assessed in March, was assessed at $526,800, according to the IJ, with a property value of $14,430,000.
Now let’s keep in mind two things. The property wasn’t even finished, and finished properties garner much more in taxes; and the property is being developed in three phases, with the currently assessed phase counting for just 18 percent of that.
It would be hard for me to say what the value of the finished property is, so let’s conservatively go for 20% greater than the current value, for the sake of this exercise. That gives $17.32 million. Now let’s apply that to the developed project, 100% complete: ([100/18] * 17.316=) $96.2 million. Five times its former value before the property was sold. If taxes are kept the same, that would be a tax bill of about $3.5 million. And for the city, an extra $1 million in cash would go a long way, since the annual revenue is about $61.5 million. An extra million is equivalent to the amount Cornell pays annually in its PILOT agreement with the city.
It would not be out of place to think, “oh, but with the slow rate of growth, this is just cannibalizing other local properties”. To some extent, yes. But these are properties that have a very captive market, namely, 20,000+ Cornell students. The landlords that will be hurting the most will be those with properties furthest from campus, of which a good chunk of that hinterland lies outside city limits, in the neighboring town of Ithaca, or Lansing. In my mind, the biggest concern will be if this project pulls grad and professional students away from downtown and Fall Creek, but I imagine the effect will be minor, all things considered (most notably, because if apartments in this place are going for $1,000+ per month, then that $600 one bedroom in Fall Creek is still going to appeal to a lot of folks with tighter purse strings).
In conclusion, I think that if a developer approaches the city regarding new student housing in the Collegetown area, they’ll have a powerful card in there hand – the tax argument. I’ll be curious to see if Novarr-Mackesey mentions it when they release their proposal for the Palms property and its neighbors along the 200 block of Dryden Road.