The Swinging Pendulum of the CIITAP Program

If I had seen this before the Friday news roundup, I’d have included it there. But since I have no Monday night post scheduled this week, discussing the latest changes to CIITAP will be a fair substitute.

So, background. CIITAP stands for Community Investment Incentive Tax Abatement Program, and it’s a property tax abatement program that gives developers the opportunity to apply for abatement for a portion of their property taxes for a period of up to 7 years, or for an enhanced abatement of up to ten years if they can demonstrate financial hardship (i.e. without the abatement, there’s no way the project will be cost-effective; if it’s not cost-effective, a bank won’t offer construction loans, and the project doesn’t happen). Basically, it’s a tool designed to promote development in certain parts of the city where density is expected and/or encouraged, rather than lose tax-generating and job opportunities to the suburbs. A more substantial description can be found in a write-up for the Voice that I did back in January here.

The first version, which went into effect in 2001 as the Downtown Density Program, led to five projects being built, six if you split Cayuga Green into its garage and mixed-use components. The projects were worth about $62 million, and the earliest ones are now paying full taxes. Then the city decided it wanted more from the density incentive, and it created the CIIP Program, which was created in 2006. Over the following six years (2006-2012), that led to just one project, the $3.5 million Ital Thai renovation on the Commons. Part of it was that from 2006-2007, there was a moratorium on abatements, and another part was the recession. But another part of that was that CIIP was really lengthy and burdensome – it had 48 stipulations, and a project had to meet 15 for partial assistance, and 23 for full assistance. It was so much paperwork that developers were disinterested and opted for other parts of the county.

Onto round three, the current CIITAP – much more simplified, it initially had three stipulations – one, that it be in the density district; two, that it was a $500,000 investment in either a new building, or in the renovation of a historic building; and three, that if a new building, that it be at least three floors. A fourth was later added that said that all your other properties had to be up to code and have no outstanding violations, which arguably was a tacit response to Jason Fane’s application for 130 East Clinton while he let the Masonic Temple rot. However, in the past couple of years there have been complaints from various groups that the city wasn’t getting enough out of the bargain. You can kinda see how the pendulum swings – the political consensus is that the first version was too generous, the second version two burdensome, and the third version too generous.

The city put together a study group to examine revisions to CIITAP, chaired by a Common Council member (Ellen McCollister of the 3rd Ward), and consisting of City Planning and IURA staff, a representative from TCAD, a representative from a local labor union, a developer, and a representative from the Coalition for Sustainable Economic Development. In short, the city’s trying to get a broad spectrum of perspectives. The revised CIITAP is to presented at the PEDC meeting Tuesday night.
Here are the goals:

1. Retain the program as an effective tool to incentivize smart growth and discourage sprawl

2. Improve the program’s ability to deliver broad community benefits that may include:

*** An increased use of local labor

*** An increase in living wage job creation

*** More environmentally friendly building

*** Increased economic opportunities for people of all backgrounds

Note that given the previous versions, they’re easier said than done.

In addition the standard 7-year and 10-year abatement, there’s also a new very stringent “enhanced” 12-year abatement option. All the 7-year and 10-year stipulations carry over, but now there’s a few more requirements on the list in four categories – “Environmental Sustainability”, “Local Construction Labor”, “Diversity and Inclusion”, and “Living Wage” .

• In the “Environmental Sustainability” category, the new rule on the standard 7-year abatement and 10-year abatement is one of two two choices. The first choice is an annual benchmarking of energy usage during the abatement period using free software from the EPA. The report would be given to the city, IDA and made public, to prove the building is using energy at the level designed. The second choice is that they could submit paperwork indicating they’re pursuing LEED Certification, and provide proof of certification upon completion.

• The “Local Construction Labor” category defines “local” as tompkins or any of the counties it borders (Cayuga, Seneca, Schuyler, Chemung, Tioga, and Cortland Counties — so no Syracuse, Rochester or Binghamton). In order to be eligible for a tax abatement, an applicant must commit to the City in writing and submit to the IDA proof that the general contractor has solicited bids from local sub-contractors for all major trades required for the construction project, such as HVAC, electrical, plumbing, carpentry and masonry. Secondly, they must submit a copy of their monthly payroll monthly payroll reporting of all workers on site during construction with a summary of how many employees are “local”, using the address, zip-code, and total payroll amount per employee. I’m not sure if all this will be public info – privacy advocates might push for keeping the employee address and payroll information confidential to the city and IDA.

• In the “Diversity and Inclusion” category, the new requirement for all applicants is a company or primary tenant’s workforce demographic analysis by gender, race/ethnicity, age, disability, job class with gender, and job class with race/Hispanic ethnicity; as well as acknowledgement they have read and understood the City’s Anti-Discrimination employment ordinance; and a statement of their company’s or the major tenant’s goals for workforce diversity.
• The program does touch on an affordable housing fund or mandate, but it’s stated that members don’t feel CIITAP can adequately address affordable housing, and the committee recommends exploring inclusionary zoning.

Under this plan, the number of stipulations for the 7-year and 10-year abatements goes from four to seven. The rest of the procedure is as before – the city holds a public meeting, then decides whether or not to endorse the project, and it goes to the county (TCIDA) for their vote, which is typically in line with the city’s recommendation.

Now, a new option is the 12-year “super-abatement”. Along with the demonstrated financial need, a project must also commit to one of the following – 40% local labor, energy usage 20% less than NYS Energy Code Requirements, or living wages for single-use entities like hotels. This is in addition to the previous stipulations for 10-year abatements.

So now’s the magic question? Will it be acceptable to the broader community? The city’s HR director wrote in an email attached to the PEDC agenda that the program doesn’t do enough for diversity, and needs to mandate rather than encourage it. Without a doubt, this whole program, as we’ve seen in the past fifteen years, is a delicate balance between encouraging density while getting community benefits. Hopefully, the abatement pendulum stops swinging and it finally comes to rest in a comfortable middle ground.