The Glen Cove Industrial Development Agency is planning to issue $97 million in bonds and grant tens of millions of dollars in tax breaks to developer RXR Realty to help fund a giant waterfront redevelopment project.
The quasi-municipal IDA is holding a public hearing on the proposal for the Garvies Point project at 7 p.m. Wednesday at City Hall.
Uniondale-based RXR is planning to build 1,110 condominiums and apartments, public parks, marinas, restaurants and retail and office space.
The $97 million would pay for public amenities and infrastructure, including parks, a reconstruction of Garvies Point Road, a marina, bulkhead rebuilding, an esplanade and an amphitheater, said Frank Haftel, director of the project for RXR.
The money for the bonds and what likely would be millions of dollars of interest on them would come from future tax revenue from the development. In addition, the IDA would exempt RXR from sales, use and mortgage taxes worth an estimated $24 million and reduce property taxes by a still-to-be-determined amount.
Opponents of the project say the city shouldn’t help finance a for-profit company’s project.
But Haftel said it’s “not economically viable” for RXR to shoulder all the cost of a development in which half of the 56 acres will be parks and other public amenities.
RXR’s application to the IDA for financial assistance says the project will cost nearly $960 million. The company expects to borrow more than $560 million and invest $302 million of its own money.
Mayor Reginald Spinello said that, even with the bonds, tax breaks and increased city services needed for Garvies Point, the city, county and the library and school districts would net $400 million over 40 years in taxes.
“If not for the project being done, there would be no tax money,” he said.
RXR’s agreement to maintain the parks in perpetuity is worth far more than $97 million, he added.
Spinello said the duration and interest rates of the bonds are still being worked out. They’re structured so city taxpayers are at no risk if there is a default, he said.
Philip Pidot, who runs a Manhattan-based financial products startup, said the prediction of massive tax revenue is based upon assumptions that may or may not be borne out.
Even though bondholders carry the risk of losing money in a default, a default would hurt the city’s already shaky credit rating, increasing borrowing costs, said Pidot, an unsuccessful 2015 City Council candidate.
If Garvies Point were to go into foreclosure — something Spinello said is highly unlikely given RXR’s successful track record — the city could end up shelling out millions to keep it afloat rather than let it turn into blight, Pidot said.
Pidot said the $97 million in public amenities and infrastructure would financially benefit RXR as well as residents.