Pricing the Farash gift

At first glance, news that a big-time local developer wants to donate
high-profile downtown property to the County of Monroe sounds good.

            But Max Farash has handed county
legislators a dilemma: Is it wise to accept the gift — even if it will cost
the cash-strapped county and city money for at least a few years?

            Farash has offered to donate three
downtown properties to the county: 150 East Main Street, 34 St. Paul Street,
and 37 South Fitzhugh Street. Farash is also offering 152 parcels totaling
roughly 30 acres in the Miller Heights subdivision of Brighton.

            Of the downtown properties, 150 East
Main is easily the largest and most high-profile.

            Largely vacant, 150 East Main is
actually a series of buildings made to look like one by its façade. Old,
deteriorating, and filled with asbestos, the property would be a massive and
costly rehab project.

            Monroe County officials have not
returned requests to name the potential usages for the buildings. But in a
press release issued on July 16, Doyle said the county would work with business
leaders, community representatives, and the city to determine a productive use
for each property. And Doyle told the Democrat
& Chronicle that 150 East Main, known as the Gateway Center, will
likely be demolished.

Which leads to
cost. The Gateway building itself, approximately 325,000-square-feet, is assessed at
$2.15 million. And the land on which it sits is assessed at $1.05 million.

            For the venture to make sense in the
short run, the county would have to demolish the property at a cost less than
the value of the land. And the range of the demolition cost depends largely on
the amount of asbestos in the Gateway.

            But there are other losses
potentially in store for the county on this deal. By taking ownership of the
properties, the county is removing them from the city and county property tax
rolls. But if a private developer eventually buys them and develops them,
they’ll go back on the tax rolls, perhaps at a higher value than they were
under Farash. The question is: How long will it take to find a private
developer?

            According to 2003-2004 property tax
records, the three downtown properties brought in $264,807.17 to the city.
County property taxes on the three downtown buildings for 2003 total
$101,550.95. Both city and county property taxes on the buildings have been
paid through the current tax year.

            There are potential gains for
Farash: He will no longer have to pay property taxes on any of the buildings he
donates. And he might be able to get a tax write-off on the donations.

The Farash
donations are likely to be the subject of discussions at the County Legislature’s next
Ways and Means Committee meeting on August 6. And the full legislature is
expected to vote on the issue at its next meeting, August 12.

            But some Democratic legislators say
they simply don’t have enough information to vote. (The lej’s Republican
majority leader, Bill Smith, did not return City‘s
calls for comment.)

            In his July 1 referral, Doyle makes
no mention of the impact the donations will have on the county’s finances. That
sort of information is typically included in referrals to the Lej.

            But since the county administration
has no specific use for the properties in mind, Doyle’s exclusion of any
potential costs and benefits in his referral is understandable. It just doesn’t
make the Lej’s job any easier.

            “I don’t know what their plans are,”
says Stephanie Aldersley, the Lej’s Democratic minority leader. Aldersley says
she and assistant minority leader Chris Wilmot met with a county official and
“he purported not to know what the county is planning to do with the
properties.”

            “Obviously we’re still gathering
information on this,” Aldersley says.

            County Legislator Mitch Rowe is in
the same boat as Aldersley. “Clearly there are going to be carrying costs for
the county for whatever period of time they’re going to be the owners. And
clearly there’s going to be lost revenue to the county and city in forgone
taxes,” says Rowe, who also serves as assistant to Rochester Deputy Mayor Jeff
Carlson. “There are some questions that need to be asked about the true impact
to the county in terms of lost revenue and what it’s going to cost the county
to take over ownership of these properties. And just what is the plan?”

“I think
they’re asking legitimate questions,” says City Council President Lois Giess
of the county legislators. “What’s the purpose of the building [at 150 East
Main]? Are we going to be saddled with the expense of taking it down or dealing
with the asbestos issues?”

            “But acquiring those properties as a
donation really gives an opportunity to do something with that land,” Giess
says. “You acquire these properties where the expense of cleaning them up is
balanced by the public benefit. In this case, it could be really open-ended.”

            One scenario has 150 East Main
and 34 St. Paul being demolished to make room for the downtown transit center.
Both properties are adjacent to the site the transit center would occupy. And
if those properties are demolished for this purpose, federal funding could be
used to pay for the demolition.

            But the Rochester Genesee Regional
Transportation Authority, the developer of the transit center, has already
spent millions of dollars on designs for the project that do not include those
properties, making this scenario unlikely.

            Still, Giess sees other reasons why a
new transit center will add to the value of the Farash donations. “I think the
transit center project is going to make all of that land in the northwest
quadrant — the Main and Clinton downtown area — more valuable. And I think
we’re going to see people more interested in investing in that property.”

This article appears in Jul 23-29, 2003.